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Appeal No. 501 of 1966.
Appeal by special leave from the judgment and order dated October 23, 1964 of the Mysore High Court in Writ Petition No. 1985 of 1963.
H. R. Gokhale, A. N. Sinha and D. N. Gupta, for the appellants B. R. L. Iyengar, Bisliamber Lal and H. K. Puri, for respon dent No. 1.
The Judgment of the Court was delivered by Vaidialingam, J.
This appeal, by the Management concerned, by special leave is directed against the judgment of the Mysore High Court, dated October 23, 1964, dismissing Writ Petition No. 1985 of 1963, and declining to issue a writ of prohibition,, restraining the, second respondent, the Industrial Tribunal, Bangalore 1 from proceeding with the adjudication, in 1.
D. No. 8 of 1963.
The short facts, leading up to the State of Mysore, making the reference, which is the subject of adjudication, by the second respondent, in I.D. No. 8 of 1963, are as follows: The appellant is a textile mill, in Bangalore, manufacturing cotton, silk and cotswool piece goods.
After the (Act XX of 1946) (hereinafter to be referred to, as the Standing Orders Act), came into force, the standing orders of the appellant 's establishment were duly drawn up, and certified by the authorities.
Those standing orders, among other things, related to the question of leave, to, be granted 583 to the workmen.
By its order, dated August 2, 1955, the Government of Mysore referred to the Industrial Tribunal, Bangalore, for adjudication, an industrial dispute, raised by certain categories of workmen, of the appellant company.
That reference was numbered as I.C. No. 11 of 1955.
The dispute that was referred, was "Whether the Standing Orders filed by the Management and now certified by the certifying authority be modified as a modification to the existing Standing Orders as amended by the employees through their association in the light of the views and as indicated in the Annexure to this notification".
The Industrial Tribunal, Bangalore, made an award, Exhibit M 6, on September 25, 1956, whereby the Tribunal directed the addition of certain clauses, in the Certified Standing Orders of the appellant company.
There is no controversy, that paragraphs 50 to 70, of Exhibit M 6, deal with privilege leave, sick leave and casual leave, which could be availed of, by the workmen.
Exhibit M 5 is a copy of the Certified Standing Orders of the Management company.
After the amendments, effected to those Standing Orders, in pursuance of the award, Exhibit M 6, clauses 1, 2, 3 and 4, of Order 9, of Exhibit M 5 deal with festival holidays,.
leave with wages, medical leave and casual leave, respectively.
The award, Exhibit M 6, after publication in the State Gazette, on October 18, 1956, came into operation on November 18, 1956, under the provisions of section 19(3), read with section 17A(1), of the (Act XIV of 1947) (hereinafter referred to, as the Act).
The first respondent began to make certain claims, for revi sion of the provisions, regarding leave, and as the appellant was not willing to concede those.
claims, the first respondent appears to have approached the State Government, to refer the dispute, regarding this matter, to the Tribunal, for adjudication , but, the State Government, by its order, Exhibit M 2, dated October 10, 1962, declined to refer the matter for adjudication.
In the said order, the Government is of the view that, as compared with leave facilities, provided for, in similar major industries, in Bangalore, the leave facilities then granted by the Management to the workmen of the appellant company, cannot be considered to be inadequate, and, therefore, the issue raised, by the workmen, does not merit reference, for adjudication.
But, nevertheless, later on, the State Government, referred for adjudication, by its order, dated March 20, 1963, the following matters, to the second res pondent: "Whether the workmen of Bangalore Woollen, Cotton & Silk Mills Co. Ltd., are entitled to the following leave benefits: (a) Privilege leave for one month in a year with pay.
584 (b) Casual leave of 12 days in a year with pay.
(c) Sick leave of 30 days in a year with full pay less E.S.I. benefits.
If not, to what reliefs they are entitled to" This reference, out of which the present proceedings arise, was registered as I.D. No. 8 of 1963.
From the questions, referred to above, it will be seen that the dispute, that was referred, for adjudication almost exclusively relates to the question of privilege leave, casual leave, and sick leave, which are already provided for.
in the Standing Orders, of the Management, Exhibit M 5.
The first respondent has placed its demands, in respect of this question, before the Industrial Tribunal, and the Management have also placed their points of view, on these matters.
It is not necessary to refer to the pleas made, either by the appellant ,or the first respondent, regarding the merits of the claim, which has not been adjudicated, by the Industrial Tribunal.
But the Management raised two preliminary objections, to the jurisdiction, of the Industrial Tribunal, to entertain and adjudicate upon the questions, referred by the State Government.
Those two preliminary objections were to the effect: (i) The award, Exhibit M 6, dealing with leave and other facilities, not having been terminated by the first respondent, by issue of a notice, as contemplated under section 19(6) of the Act, continues to be in force and, therefore, the question of leave cannot form the subject matter of adjudication.
(ii) The question regarding leave facilities, having been provided for, in the Certified Standing Orders, framed by the company under the Standing Orders Act, any modifications to those provisions, as is now sought to be done, can only be in the manner provided for, in the Standing Orders Act, and cannot form the subject of adjudication, by the Industrial Tribunal, under the Act.
The Workers ' Union met these contentions by stating that the various representations, made by it, to the Management.
as well as the presentation of a Charter of Demands, amounted to notice of termination of the Award and that, notwithstanding the Standing Orders Act, when an industrial dispute was raised, regarding matters which might be covered by the Standing Orders of the Management, by the workmen and such a dispute was referred,.
for adjudication, under the Act, by the Government concerned, the Tribunal had full jurisdiction to adjudicate upon that dispute.
These two questions have been answered, by the Industrial Tribunal, against the Management, by its order, dated August 26, 1963.
The High Court, in its order under attack, has also agreed 585 with the findings, recorded by the Tribunal.
In considering the first objection, both the Tribunal and the High Court have gone into the question as to whether the notice, contemplated under section 19(6) of the Act, should be in writing, or, whether it can be ,oral, and have expressed the concurrent view that such notice can be oral also; but the ultimate finding, recorded by the Tribunal, and accepted by the High Court, is that the various correspondence, that passed between the Management and the Union, will clearly show that the Union has terminated the Award.
On .the second objection the Tribunal, whose findings have, again, ,been accepted by the High Court, has held that the scope of the Standing Orders Act is very limited, and that there is really no conflict, between the Act and the Standing Orders Act.
It is the further view of the Tribunal that, in spite of the provisions, contained in the Standing Orders, framed by the company, under the provisions of the Standing Orders Act, it is nevertheless open to a Tribunal, to adjudicate upon those matters, when the question is referred to it, as an industrial dispute, under the Act.
In this appeal, on behalf of the Management, Mr. H. R. Gokhale, learned counsel, has raised the same two contentions, relating to the jurisdiction of the Industrial Tribunal to adjudicate upon the dispute, in question.
In respect of the first objection, that the award, Exhibit M 6, has not been terminated by a written notice, under section 19(6) of the Act, counsel urged that the views, expressed by both the Tribunal, and the High Court, that there could be a notice, given even orally terminating the award, is not correct.
No doubt.
the findings, in this regard, that there can be an oral notice, given under section 19(6) of the Act, has been sought to be supported, by Mr. B. R. L. Iyengar, learned counsel, appearing for the Union.
In our opinion it was not really necessary either for the Tribunal or for the High Court, to embark upon, and express an opinion, on the question, as to whether the notice of termination of an award, under section 19(6), of the Act, can be oral, because.
so far as we can see, the Union has not raised any plea that the termination of the award, Exhibit M 6, in this case, has been brought about, by its giving an oral notice to the Management.
On the other hand, the specific plea of the Union, on this aspect, was that the various representations, made by it, to the Management, as well as the presentation of the Charter of Demands.
amounted to a notice of termination of the award.
The various representations and the Charter of Demands, referred to, by the Union, are the representations and charter given in writing, to the Management, on various matters.
Therefore, we express no opinion, on this case, as to whether the termination of an award, can be brought about by an oral notice being given, under section 19(6), of the Act.
We will then consider the _question, as to whether there has been a termination of the award, Exhibit M 6, in the manner pleaded by the Union.
It cannot be over emphasized that an 586 intimation, claimed to have been given, regarding the termination of an award, must be fixed with reference to a particular date, so as to enable a Court to come to the conclusion that the party, giving that intimation, has expressed its intention to terminate the award.
Such a certainty regarding date, is absolutely essential, because, the period of two months, after the expiry of which, the award will cease to be binding on the parties, will have to be reckoned, from the date of such clear intimation.
It is also necessary to state that, in this case, the High Court and the Tribunal, have proceeded on the basis that the decision of this Court, in The Workmen of Western India Match Co. Ltd. vs The Western India Match Co. Ltd.(1), supports the proposition that an inference of an intention to terminate an award or a settlement, can be gathered from the various correspondence that passed, between the Management and the Union.
That decision, in our opinion, does not lend any support to such a view.
From the facts of that case, it is seen that there was a settlement, between the parties, on April 29, 1955, and there was a Charter of Demand, given by the workmen, on January 25, 1957.
On January 14, 1953, the Government of West Bengal referred, to the Industrial Tribunal concerned, for adjudication the demands made by the workmen.
Earlier to that date, on March 29, 1957, the management had sent a reply to the Union that the Charter of Demands, of January 25, 1957, could not be considered, inasmuch as the settlement of April 29, 1955, had not been validly terminated, under the Act.
In answer to that communication, the Union wrote, on April 8, 1957, that the various representations, made by it, to the management and the representation of the charter of demands, amounted to a notice of termination of the settlement.
In dealing with this point, it will be seen that this Court observes that no formal notice, as contemplated by section 19(2), of the Act, has been given by the Union.
But, this Court, ultimately, held that though no such formal notice was given, the letter of April 8, 1957, written by the Union, could itself be construed as notice, within the meaning of section 19(2), and therefore the Tribunal had jurisdiction to adjudicate upon the claim, as the reference was made, by the State Government, long after the expiry of two months, from April 8, 1957.
It will therefore be seen, that this Court treated the letter, of April 8, 1957, written by the Union, as amounting to a notice of intention to terminate the settlement.
in the instant case, we specifically desired Mr. lyengar, counsel for the Union, to state which was the particular letter, or representation, made by the Union, which could be considered to amount to a notice of termination of the award.
Learned counsel stated that he relied upon the letter, dated June 26, 1961, written by the Union, to the Management, as amounting to a notice, given by his client, intimating its intention to terminate the award, Exhibit M 6.
In view of this stand, taken by the counsel for the Union, we are not referring to the events that took place, subsequent to this ; 587 date, viz., June 26, 1961, excepting to state that, ultimately, the State Government, referred the present dispute, for adjudication, to the Industrial Tribunal.
We have already stated that the award, in I.C. No. 11 of 1957, remained in operation, till November 18.
1957, under section 19(3), of the Act, but notwithstanding the expiry of the period of operation, of the award, under sub section
(3), the said award will continue to be binding on the parties, unless it is terminated, in accordance with section 19(6), of the Act.
Even during the period, when this award was in operation, i.e., within; November 18, 1957, the workers made certain demands, as mentioned in their letter, dated October 28, 1957.
The demands referred to, in the said letter.
related to various claims.
made by the Union.
In particular, item 3, of Annexure A, to the said letter, related to certain claims, made by the several employees, regarding privilege leave and casual leave.
On September 19, 1958, there was a settlement, arrived at, between the parties, under Exhibit M 3.
It is only necessary to note clause 5 of this agreement, whereby the Staff Association withdrew the demands, in respect of the various claims, made on October 28, 1957, including the claim made, for privilege leave and casual leave.
The Staff Association also agreed that, for a period of three years, commencing from January 1, 1958, they would not raise any dispute regarding any of the subjects covered by Annexure A to their original demands, which included also the claim for privilege leave and casual leave.
No doubt there is a reservation, regarding gratuity,.
with which we are not now concerned.
Therefore, it will be noted that though a claim was made, in respect of leave, on October 28, 1957, the Union withdrew that claim, under the agreement, M 3, and they also agreed not to make any demands, for three years.
This is a settlement, arrived at.
by the parties, and this settlement will be binding on them.
unless it is terminated.
in accordance with section 19(2) of the Act.
On August 1.4, 1961, the Union issued a notice, Exhibit W 3 to the Management, under section 19(2) of the Act, stating that the settlement, of September 19, 1958, will stand terminated, and cease to be binding, after the expiry of two months.
from the date of receipt of that letter, by the Management.
it is in between September 19, 1958, the date of the settlement M 3 and August 14, 1961, the date of the notice W 3, terminating the settlement, that the letter, dated June 26, 1961, relied on by Mr. Iyengar, as amounting to a notice of termination of the award, %,as sent by the Union.
No doubt, in this letter, the Union has, among other matters, claimed leave facilities.
as stated therein.
That claim related to privilege leave, casual leave and sick leave.
Even this letter does not, as such, intimate the Management, of the Union 's intention to terminate the award, Exhibit M 6.
Mr. Iyengar.
learned counsel, urged that the very fact that the Union has made claims, in this letter, regarding leave facilities which are inconsistent with the award , Exhibit M 6, will clearly show that the Union is not standing by the award.
From the facts.
mentioned 588 above, it will be clearly seen that the parties have entered into a settlement, on September 19, 1958, and one part of the agreement is that the Union is withdrawing its claim regarding leave facilities and it has also agreed not to raise any disputes, regarding that matter, for a period of three years.
This settlement is binding,on both the Management and the Union, and will continue to be binding, until it is terminated, in accordance with section 19(2),of the Act.
Notice of intention to terminate the settlement was given on August 14, 1961, and, under section 19(2) of the Act, the settlement will cease to be binding, after the expiry of two months, i.e., on October 14, 1961.
This letter, written on June 26, 1961, long before the issue of the notice, on August 14, 1961, terminating the settlement, under section 19(2), is, in our opinion, of no avail.
Unless the settlement is terminated, the Union had no right to make any demands regarding leave facilities*, as it has purported to do, on June 26, 1961.
Therefore, in our opinion, this letter cannot be considered to be a notice, given by the Union, expressing its intention to terminate the award.
Apart from the fact that :it does not convey any such intention, it is also invalid, inasmuch as it has been given, even before the settlement was terminated.
From this, it will follow that when there is a subsisting award, binding on the parties, the Tribunal will have no jurisdiction to consider the same points, in this reference.
Normally, this conclusion, arrived at, by us, may be enough to dispose of this appeal , but the second question, relating to the jurisdiction of the Tribunal, functioning under the Act, to adjudicate upon a dispute, which may result in the modification of the Standing Orders.
framed by the management.
under the Standing Orders Act, has also been adjudicated upon by the Tribunal, and the High Court and the correctness of those findings, have been canvassed.
before us.
If, later on, there is a proper reference to the Tribunal, the same questions may arise, for consideration; and therefore.
we shall proceed to express, our views on that aspect also.
The contention of Mr. Gokhale.
learned counsel for the appellant, is that the Management, after the coming into force of the Standing Orders Act, had framed standing orders which have been certified, by the Certifying Officer.
Those Standing Orders, originally framed, made provision for the grant of privilege leave, sick leave, casual leave and other allied matters.
The Award, Exhibit M 6, dealt with the claim of the workmen, in this regard, and gave certain directions.
Those directions have been incorporated, by the Management.
by amending the Standing :Orders and the provisions regarding leave.
, are all to be found in those Standing Orders Exhibit M 5.
The Standing Orders Act, as the various provisions therein will show, is a self contained statute, imposing obligations on the Management and also conferring rights.
on the parties concerned.
for the framing of and ,,effecting modifications, in the Standing Orders.
The manner in 589 which the modification is to be sought, is also indicated, in the Act.
In this connection, learned counsel referred us to the interpretation, placed upon item 5, in the Schedule to the Standing Orders Act, by this Court, in The Bagalkot Cement Co. Ltd. vs R. K. Pathan(1), that it is open, to the authorities functioning under the Standing Orders Act, to make substantive provisions for the granting of leave and holidays, along with conditions in respect of them.
Mr. Gokhale pointed out that the Standing Orders Act placed an obligation, on the management, to have the Standing Orders certified; it imposes a duty on the Certifying Officer and the Appellate Authority, to adjudicate upon the reasonableness and fairness of the Standing Orders , a right has been given.
both to the workmen, and the management, to apply to the Certifying Officer to have the Standing Orders modified; there is provision for appeals; penal provisions are provided, for failure to submit draft standing orders, or for modifying standing orders, otherwise than in accordance with section 10; and, finally, jurisdiction is given under section 13 A, to the Labour Court, constituted under the Standing Orders Act, to entertain any dispute that may be referred to it, by the employer or workman, regarding the application, or interpretation of a standing order.
These provisions, according to the learned counsel.
clearly show that the Standing Orders Act is a self sufficient statute.
by if any provision made.
in respect of leave.
in any Standing Orders,. requires modification.
the only procedure to be adopted by the party concerned.
is as indicated in the Standing Orders Act.
In respect of all matters which are to be so dealt with.
regarding industrial establishments.
to which the Standing Orders Act applied, the Industrial Tribunal, constituted under the Act, will have no jurisdiction to entertain a claim or adjudicate upon the same.
When two statutes.
as in this case.
the Act and the Standing Orders Act, more or less deal with some common matters, the proper and reasonable view to hold will be that the Act can be invoked only in respect of industrial establishments which are not governed by the Standing Orders Act.
Mr. Gokhale also pointed out that under such circumstances, the remedy to be adopted is the one, under the Standing, Orders Act; and this is also to be deduced from the views, expressed by this Court.
in certain deci sions, to which he has drawn our attention.
Mr. lyengar, learned counsel for the Union, on the other hand, points out that the Act and the Standing Orders Act.
have been enacted for different purposes; the scope of an adjudication, under the Standing Orders Act, counsel points out, is only regarding the fairness or reasonableness, of standing orders.
The Standing Orders, certified under the Standing Orders Act, are no doubt binding on the parties and, in individual cases, it may be possible for a workman to apply for a modification of a particular Stand (1) [1962] Supp. 2 S.C.R. 697.
590 ing, Order or raise a question, regarding the application or interpretation of a Standing Order, and refer it to the Labour Court.
But, counsel points out.
that does not mean that there cannot be a larger question, by way of an industrial dispute.
raised by the Union, or the workmen, as a body, concerned, which will necessitate an adjudication, by the Industrial Tribunal, under the Act.
In this connection, counsel drew our attention to the fact that the Act and the Standing Orders Act, were amended by a common Act the Industrial Disputes (Amendment And Miscel laneous Provisions) Act, 1956 (Act KXXVI of 1956).
This Amending Act made provision for, adjudication, by the certifying authority and the appellate authority under the standing Orders Act, ,Upon the reasonableness and fairness of standing orders.
It made :a provision, giving a right to a workman also to apply to the Certifying Officer, to have the standing orders modified.
Section 13A, regarding reference being made to the Labour Court, by a workman or an employer, in respect of the application, or interpretation of a standing order, was also incorporated, by the Amending Act.
Side by side with these amendments, made to the Standing Orders Act, various amendments were effected, in the Act also.
Provisions regarding the constitution of the Labour Court, as well as the Industrial Tribunals, and matters over which they have jurisdiction, as enumerated in the particular Schedules to that Act, were also made.
An adjudication, made by the Labour Court, or the Industrial Tribunal, is binding on the parties, referred to, in section 18 of the Act.
No doubt section 13A, of the Standing Orders Act, enables an employer or a workman, to refer to the Labour Court, any question relating to the application, or interpretation, of a standing order.
But the same Amending Act has incorporated, in the Second Schedule to the Act, item 2, relating to 'the application and interpretation of standing orders ', over which the Labour Court has jurisdiction to adjudicate upon. 'Similarly, counsel points out, the Industrial Tribunal, constituted ,under the Act, has been given jurisdiction to deal with matters, referred to, in the Second and Third Schedules to the Act. 'Leave with wages and holidays ' is item 4, of the Third Schedule to the Act, over which jurisdiction has been given only to the Industrial Tribunal.
If the contention of the appellant is accepted, it will mean.
that in respect of a similar question, covered by the standing orders framed by a company, the Labour Court, which is denied jurisdiction, under the Act, will be competent to adjudicate upon the same.
Therefore, counsel points out, that the matters, ,covered by the standing orders, in respect of the various items contained in the Schedule to the Standing Orders Act, can no doubt, be dealt with, in accordance with the provisions contained therein; but a general or a larger controversy regarding those matters, can certainly form the subject of an 'industrial dispute ', as that expression is defined in the Act, and, if that is so, the Industrial Tribunal will have jurisdiction to adjudicate upon those matters, when a reference is made, by the State Government.
591 We are in agreement with the contentions of Mr. Iyengar, on this point.
The scheme of the Standing Orders Act, has been dealt with, by this Court, in three of its reported decisions: Guest, Keen, Williams, Private Ltd. vs P. J. Sterling(1); The Bagalkot Cement Co. Ltd. vs R. K. Pathan(2); and Salem Electricity vs Employees( ').
Therefore, we do not think it necessary to cover the ,around over again.
Those decisions have also noted the amendments effected to the Standing Orders Act, by the Amending Act XXXVI of 1956.
Those are the decisions, which have been referred to, by Mr. Gokhale, in support of his contention that the observations made, therein, will show that after the amendment of the Standing Orders Act, in 1956, no industrial dispute can be raised, under the Act, in respect of the matters covered, by the Standing Orders Act, and that the remedy of the parties concerned, will only be, as laid down, therein.
On a perusal of those decisions, we do not find that any such proposition, has been laid therein.
On the other hand, we will presently show, that in the latest decision of this Court, the question, as to whether there can be an industrial dispute, raised, which can form the subject of an adjudication, under the Act, has been specifically left open.
In Guest, Keen, Williams, Private Ltd. vs P. J. Sterling(1), the Management had framed standing orders which had been certified, under the Standing Orders Act.
On the basis of those standing orders, certain workmen were voluntarily retired, at the age of 55 years, and the dispute, regarding this matter, was referred to the Industrial Tribunal, under the Act.
The order of the Management was set aside, and reinstatement of some of the workers, was ordered.
An objection was raised, on behalf of the Management, before this Court, that the reference, by the Government, itself, was bad, on the ground that section 7 of the Standing Orders Act makes the standing orders binding, between the employer and his employees, and, till those standing orders, are modified, the parties, will be governed by those standing orders, and the legality of the action, taken by the Management, on the basis of the standing orders, cannot form the subject of a reference, under the Act.
But this Court, after referring to the scheme of the Standing Orders Act, observed that before the Standing Orders Act was amended, in 1956, if the employees wanted to challenge the reasonableness, or fairness of any of the standing orders, the only course was to raise an industrial dispute in that matter, but that this position was altered, by the amendments made, to the Standing Orders Act, by which it bad been made obligatory, on the part of the Certifying Officer, and the Appellate Authority, to adjudicate upon the reasonableness and fairness of a standing order, and a right had been given to the workman also.
to apply (1) ; (2) [1962] Supp. 2 S.C.R. 697.
(3) ; 592 for the modification of any standing order.
This Court further observed, at p. 358: "The standing orders certified under the Act no doubt become part of the terms of employment by operation of section 7; but if an industrial dispute arises in respect of such orders and it is referred to the tribunal by the appropriate government, the tribunal has jurisdiction to deal with it on the merits.
According to Mr. Gokhale, these observations will clearly indicate that the view of this Court is that prior to 1956, the questions regarding standing orders, could form the subject of an industrial adjudication, under the Act, and he wants us to draw the inference that, after 1956, the view of this Court is, that the jurisdiction of the Industrial Tribunal, in such matters, has been taken away.
We are not inclined to accept this contention of the learned counsel, for, this Court, in the above decision, had no occasion to consider the provisions of the Standing Orders Act, in relation to the Act.
In fact, there is no reference at all to the amendments effected in 1956, to the Act.
The next decision is The Bagalkot Cement Co. Ltd. vs R. K. Pathan(1).
In that decision, this Court had to consider, again, the effect of the Standing Orders Act, prior to its amendment, in 1956.
No doubt the amendments, effected in 1956, are also adverted to when considering the scheme of the Standing Orders Act.
In particular, the scope of item 5, of the Schedule to the Standing Orders Act, to the effect 'conditions of, procedure in applying for, and the authority which may grant.
leave and holidays ', came up for consideration.
The contention, on behalf of the Management, appears to have been that the jurisdiction.
conferred on a Certifying Authority, under this clause, does not empower the said Authority to deal with the substantive question of the extent and quantum of leave and holidays.
It was further contended that the said clause only required the Standing Orders to provide for conditions, subject to which, leave and holidays could be granted, as well as the procedure, in respect thereof.
In short, it was contended that the quantum of leave and holidays, to be granted to workmen, was outside the purview of the Schedule to the Standing Orders Act and, as such, they could not be included by the Certifying Officer, or the Appellate Authority, in the Standing Orders.
This contention was rejected, by this Court, and it was held that the substantive provisions, for the granting of leave and holidays, along with conditions in that respect, could be provided for, in the Standing Orders, under cl. 5, of the Schedule.
It will be noted that this decision was also concerned, solely with the question of the jurisdiction of the Certifying Officer and the Appellate Authority, under the Standing Orders Act, in relation to the standing orders, which came up for consideration, before them.
In this decision also this Court did not have occasion to 593 consider whether those matters could form the subject of an industrial adjudication, under the Act.
Mr. Gokhale, no doubt, relied upon the observation, at p.710, to the following effect: "It is not disputed that the claim for leave and holidays can become the subject matter of an industrial dispute and if such a dispute is referred for adjudication to an Industrial Tribunal, the Tribunal can fix the quantum of holidays and leave.
What the Tribunal can do on such reference is now intended to be achieved by the Standing Orders themselves in respect of industrial establishments to which the Act applies.
We have noticed that the Certifying Officer as well as the appellate authority are, in substance, industrial authorities and if they are given power to make provision for leave and holidays as they undoubtedly are given power to provide for termination of employment and suspension or dismissal for misconduct, there is nothing inconsistent with the spirit of the Schedule or With the object of the Act." and attempted to persuade us to hold that in respect of all the matters, covered by the standing orders, exclusive jurisdiction is vested only in the authorities, constituted under the Standing Orders Act.
Though, prima facie, the above observations may appear to give some support to this contention of Mr. Gokhale, in our opinion, those observations must be limited to the question that this Court was considering, in that case, which.
again.
was with reference to the powers of the authorities, under the Standing Orders Act, as well as the rights of the parties, with reference to those standing orders.
But, at any rate, as we shall presently show, in the later decision, the question of jurisdiction of the Industrial Tribunal, in such matters, has been specifically left open.
We then come to the decision of this Court, in Salem Electricity vs Employees(1).
In that case, the appellant had framed standing orders and got them certified, in or about 1947.
under the Standing Orders Act.
In 1960, the appellant made an application, before the Certifying Officer, for amendment of certain standing orders.
By virtue of the proposed amendment, the management wanted to have two sets of standing orders.
to govern the relevant terms and conditions of its employees.
Both the Certifying Officer, as well as the Appellate Authority, declined to modify the standing orders, as desired by the management.
The question that arose for decision was it short one, as to whether the rejection of the application of the management, was justified or not.
This Court, again, considered the scheme of the Standing Orders Act, both before and after its amendment in 1956, and held that in regard (1) L J(N)6SCI 12 594 to the certification of the standing orders, the Standing Orders Act provided for a self contained 'code, and ultimately held that the refusal of the Certifying Officer and the Appellate Authority, to modify the standing orders, was perfectly justified.
Here, again, this Court had no occasion to consider the position of standing orders, framed under the Standing Orders Act, in relation to an industrial dispute that may be raised, and referred for adjudication, under the Act.
In fact, that no decision was intended to be given, on that aspect, is made clear by the learned Chief Justice, when he observes, at p. 506: "It may be that even in regard to matters covered by certified Standing Orders, industrial disputes may arise, between the.
employer and his employees, and a question may then fall to be considered whether such disputes can be referred to the Industrial Tribunal for its adjudication under section 10(1) of the .
In other words, where an industrial dispute arises in respect of such matters, it may become necessary to consider whether, notwithstanding the selfcontained provisions of the Act, it would not still be ,open to the appropriate Government to refer such a dispute for adjudication.
We wish to make it clear that our decision in the present appeal has no relation to that question.
In the present appeal, the only point which we are deciding is whether under the scheme of the Act, it is permissible to the employer to require the appropriate authorities Under the Act to certify two different sets of Standing Orders in regard to any of the matters covered by the Schedule.
" None of the above decisions lend support to the contentions :of the learned counsel for the appellant that, after the amendment .effected in 1956, to the Standing Orders Act, the Industrial Tribunal will have no jurisdiction, under the Act, to adjudicate upon any disputes in relation to matters, covered by the Standing Orders, framed under the Standing Orders Act.
Further, accepting the contention of the learned counsel for the appellant, will be to practically wipe out the existence of the Act, so far as industrial establishments, governed by the Standing Orders Act, are concerned.
The Legislature, in 1956, amended, .by the same Act viz., Act XXXVI of 1956, both the Act and the 'Standing Orders Act.
Schedules were also incorporated in the Act, and.
in particular, the same item.
which is referred to in section 13A, of the Standing Orders Act, is again referred to, as item 2.
of the Second Schedule to the Act, over which the Labour Court has jurisdiction.
Item 5, of the Schedule to the Standing Orders Act, as interpreted, by this Court.
gives jurisdiction to the authorities under that Act, to frame standing order,;.
with reference 595 not only to the procedure for rant of leave and holidays, but also in respect of the quantum of leave, and allied matters.
The Legislature, in item 4 of the Third Schedule to the Act, dealing with 'leave with wages and holidays ', has conferred jurisdiction, In that regard, on the Industrial Tribunal.
The Standing Orders Act which, has for its object, the defining, with sufficient precision, the conditions of employment, under the industrial establish ments and to make the said conditions known to the workmen employed by them, has provided more or less a speedy remedy to the workman, for the purpose of having a standing order modified, or for having any question relating to the application, or interpretation of a standing order, referred to a labour Court.
But there is no warrant, in our opinion, for holding that merely because the Standing Orders Act is a self contained statute, with regarded to the matters mentioned therein, the jurisdiction of the Industrial Tribunal, under the Act, to adjudicate upon the matters, covered by the standing orders, has been, in any manner,abridged or taken away.
It will always be open, in a proper case,for the Union or workmen to raise an 'industrial dispute ', as that expression is defined in section 2(k) of the Act, and, if such a dispute is referred by the Government, concerned, for adjudication, the Industrial Tribunal or Labour Court, as the case may be.
will have jurisdiction to adjudicate, upon the same.
But, it must also be borne in mind that an 'industrial dispute ' has to be raised by the Union, before it can be referred and, it is not unlikely that a Union must.
be persuaded to raise the dispute, though the grievance of a particular workman, or a member of the Union, be otherwise well founded.
Even if the Union takes up the dispute, the State Government may, or may not, refer it to the Industrial Tribunal.
The discretion of the State Government, under section 10 of the Act, is very wide.
It may be that the workmen.
affected by the standing orders, may not always, and in every case, Succeed in obtaining a reference to the Industrial Tribunal, on a relevant point.
These are some of the circumstances for giving a right and remedy, to the workman, under the Standing Orders Act itself, but there is no indication, in the scheme of the Standing, Orders Act, that the jurisdiction of the Industrial Tribunal, to entertain an 'Industrial dispute ', bearing upon the standing orders of in industrial establishment, and to adjudicate upon the same, has any manner been abridged, or taken away, by the Standing Orders Act.
Therefore, on this aspect, we are in agreement with he conclusions, arrived at, by the Industrial Tribunal, and the High Court.
But, in view of our finding on the first point, that the award, Exhibit M 6 'had not been terminated.
it follows that the reference.
made by the State Government, dated March 20,1963, in his case, is incompetent, and the Industrial Tribunal has no jurisdiction to adjudicate upon the same, in I.D. No. 8 of 1963.
In the result, the order :of the High Court is set aside, and a writ of 596 prohibition, restraining the second respondent, from proceeding_ with the adjudication, in I.D. No. 8 of 1963, will issue, and the appeal allowed, to that extent.
Parties will bear their own costs, in this appeal.
G.C. Appeal allowed in part.
| IN-Abs | The Standing Orders of the appellant 's establishment, duly certified under the , dealt, inter alia, with provisions relating to leave to be granted to the workmen.
In I.C. 11 of 1955 the Industrial Tribunal by its award modified the said standing orders and made provisions for certain kinds of leave.
The award came into operation on November 18, 1956 under section 19(3) read with section 17A(7) of the .
On further disputes arising the parties entered on September 19, 1958 into a settlement under section 12(3) of the whereby in return for the revision of the scales of pay, the workmen agreed that for a period of three years commencing from January 1, 1958, they would not raise any dispute on certain matters including leave.
This settlement was terminated by the workmen by notice dated August 14, 1961 under section 19(2) of the .
In 1963 the State Government again referred to the Industrial Tribunal an industrial dispute between the appellant and the workmen.
This dispute was registered as I.D. No. 8 of 1963 and the questions referred related to privilege leave, casual leave and sick leave.
The appellant urged before the Tribunal that it was not competent to hear the reference because (i) the earlier award in I.C. 11 of 1955 which dealt with matters relating to leave had not been terminated by a notice under section 19(6) of the ; (ii) the Standing Orders in question could be modified only by the procedure under the Standing Orders, Act and not under the because the former Act was self sufficient in regard to the matters covered by it.
The Tribunal and the High Court both rejected the appellant 's objections, whereupon, by special leave, appeal was filed in this Court.
On behalf of the workmen it was stated that notice of termination of the earlier award under section 19(6) of the Industrial disputes Act had been given by them in a letter dated June 26, 1961.
HELD:(i) When there is a subsisting award binding on the parties the Tribunal has no jurisdiction to consider the same points in a fresh reference.
In the present case the earlier award had not been terminated and the reference was therefore incompetent.
[588D] The letter of June 26, 1961 could not be treated as a notice under s.19(6) of the terminating the earlier award in I.C. 11 of 1955 because it did not convey any such intention.
Moreover it was written while the settlement of September 19, 1958 by which the workmen had bound themselves not to raise any dispute regarding leave facilities for three years was still in force, for the notice of.
termination of the settlement under section 19(2) was given by the workmen only on August 14, 1961.
Until the said settlement was terminated the union of workmen had no right to make demands about leave facilities as it purported to do on June 26, 1961.
[587G 588C] 582 The Workmen of Western India Match Co. Ltd. vs The Western India Match Co. Ltd., ; , referred to.
(ii) The Standing Orders Act which has for its object, the defining with sufficient precision.
the conditions of employment, under the industrial establishments and to make the said conditions known to the workmen, has provided more or less a speedy remedy to the workmen, for the purpose of having a standing order modified or for having any question relating to the application, or interpretation of a standing order.
referred to a labour court.
But there is no warrant for holding that merely because the Standing Orders Act is a selfcontained statute with regard to the matters mentioned therein, the jurisdiction of the Industrial Tribunal under the Act.
to adjudicate upon the matters covered by the standing orders, has been in any manner abridged or taken away, It will always be open in a proper case, for the union or workmen to raise an 'industrial dispute ' as that expression is defined in section 2(k) of the , and if such a dispute is referred by the Government concerned for adjudication the Industrial Tribunal or Labour Court as the case may be will have jurisdiction to adjudicate upon the same.
[595B D] Guest, Keen, Williams., Private Ltd. vs P. J. Sterling, ; , The Baualkot Cement Co. Ltd. vs R. K. Pathan, [1962] Supp.
2 S.C.R. 697 and Salem Electricity vs Employees. , distinguished.
|
Appeals Nos.
369 to 375 of 1967.
599 Appeals from the judgment and order dated October 15, 1966 of the Gujarat High Court in Special Civil Applications Nos.
1475, 1479, and 1480 of 1965, and 119, 120, 12.2 and 125 of 1966 respectively.
G.L. Sanghi and Ravinder Narain, for the appellants (in all the appeals).
Bishan Narain, R. H. Dhebar and section P. Nayar, for respondents Nos. 1 and 2 (in all the appeals).
Arun H. Mehta and I.N. Shroff, for respondent No. 3 (in all the appeals).
The Judgment of the Court was delivered by Shelat, J.
These appeals by certificate are directed against the judgment of the High Court of Gujarat dismissing the writ petitions filed by the appellants for quashing the notifications dated August 28, 1964 and October 18, 1965 respectively issued under sections 4 and 6 of the Land Acquisition Act,1 of 1894.
The appellants are the owners of the lands in question situate at Ranoli, District Baroda.
The 3rd respondent Company also owns about 140 acres of land in the same village.
The appellant 's lands are either situate adjacent to and between the Company 's lands and the railway lines or are enclaves surrounded by lands belonging to the Company.
On July 22, 1961 the State Government issued a notification under sec.
4 of the Act to the effect that the appellants ' said lands were or were likely to be needed for a public purpose,, viz., for a fertilizer factory.
That notification was withdrawn on September 11, 1961 as the lands were stated to be unsuitable for such a factory.
The Government however issued the very next day a fresh notification under sec.
4 in respect of the same lands, this time for the purpose of the 3rd respondent Company.
Some of these appellants thereupon filed writ petitions challenging its validity.
While these petitions were pending before the High Court this Court delivered its decision in what is known as the first Arora Case(1).
To get over the difficulties arising from that decision, first an Ordinance and then the Amendment Act XXXI of 1962, were passed.
The Amendment Act was brought into force from July 20, 1962 with retrospective effect.
The Central Government thereafter made Rules under sec.
55 of the Act called the Land Acquisition (Companies) Rules which were brought into force from June 22, 1963.
On July 24, 1963 the State Government withdrew the notification dated September 12, 1961 whereupon the writ petitions filed by the appellants challenging the said notifications were withdrawn.
In the meantime one D.K. Master, who was then the Special Land Acquisition Officer, Baroda, started an inquiry under Rule 4 of the said Rules.
On August 28,1964 the State Government issued a notification under (1) [1962] Supp. 2 S.C.R. 149:A.I.R. 600 sec.
4 stating that the appellants ' said lands were needed or were likely to be needed for the establishment of a factory of the 3rd respondent Company.
The appellants filed their objections in the inquiry then held under sec.
5A but they were rejected.
On October 18, 1965 the State Government issued sec.
6 notification declaring that the said lands were needed for the factory of the 3rd respondent Company which it was stated was taking steps or en,gaging itself for manufacture of optical bleaching agents, interme diate dye stuffs etc., which according to the Government was for a public purpose.
The appellants thereupon filed writ petitions from which these appeals arise challenging the two notifications dated August 28, 1964 and October 18, 1965 respectively.
When these writ petitions came on for hearing the State Government produced a notification dated October 11, 1963 authorising the Special Land Acquisition Officers of the State to perform the functions of the Collector under sec. 3(c).
On certain contentions having been raised on the basis of this notification, the High Court adjourned the hearing to enable the State Government to explain the circumstances and the reasons for issuing the said notification.
On August 25, 1966 the said Master filed a further affidavit clarifying the Government 's position and the circumstances in which he performed the functions of the Collector under sec. 3(c).
Before the High Court the appellants contended that the pro cedure laid down in the said Land Acquisition (Companies) Rules was not followed, that the purpose for which the acquisition was being made was not a public purpose within the meaning of sec.
40(1)(a), that the acquisition was made mala fide and in colourable exercise of power, that the State Government had not applied its mind to the facts of the case and lastly that the inquiry under sec.
5A was a quasi judicial inquiry and that as an opportunity to be heard was not given to the appellants the proceedings under sec.
5A violated natural justice.
Counsel, however, conceded that the inquiry under section 5A was administrative but contended that the appellants were still entitled to be heard before the State Government formed its satisfaction that the lands were required for the Company.
The High Court rejected all these contentions and dismissed the writ petitions.
Hence these appeals.
Counsel for the appellants formulated the following five pro,positions on which he impugned the High Court 's judgment: (1)that the inquiry under Rule 4 of the Land Acquisition (Companies) Rules and the consequent report made by Master to the Government were invalid; therefore there being no valid report under Rule 4 read with section 40, no notification either under s.4 ,,or sec.
6 could be validly issued; 601 (2) that sec.
6 notification was issued without complying with Part VII of the Act and without a valid consent of the State Government as required by sec.
39 and therefore no notification either under sec.
4 or sec.
6 could be lawfully issued; (3) that the acquisition was made mala fide and without ap plication of mind to the relevant facts; (4) that the acquisition did not involve any public purpose; and (5) that the State Government was bound to give an oppor tunity of being heard to the appellants before taking decision under sec.
5A, particularly when the report of the said Master was against the acquisition.
We shall consider these propositions in the order in which they were urged.
As regards propositions 1 and 2.
the argument was that Mas ter was only a Sp.
L.A. officer but was not the Collector within the meaning of Rule 4 and therefore the inquiry held by him under that Rule and the report made consequent thereto were invalid; that even if Master can be held to have been authorised to perform the functions of the Collector he was not "specially appointed" as Collector; that the State Government had not given any direction to him to make a report as required by Rule 4 and that the notification dated October 11, 1963 did not "appoint" but simply authorised him to perform the functions of the Collector.
It is not in dispute that as required by the said Rules the State Government had apponited a Land Acquisition Committee before it issued the notification under sec.
The affidavit of Master establishes that he worked as a Sp.
L.A. officer at Baroda from December 6, 1961 to April 29 1965.
On February 11, 1963 he was appointed to officiate as Special Land Acquisition Officer, Baroda.
On October 1. 1963 the Government wrote a letter to him forwarding the application dated September 11, 1963 of the 3rd respondent Company requesting the Government to acquire the lands in question and directing him to hold an inquiry according to the said Rules and to make a report.
The letter also stated that be was being authorised separately to perform the functions of the Collector and that on such authorisation he would be competent to make the inquiry.
On the same day,the Government issued a notification under sec.
3(c) authorising him to perform the function of the Collector within Baroda District.
But on October 11, 1963 the Government issued another notification superseding the notification of October 1, 1963 and authorising all Special Land Acquisition Officers in the State to perform the functions of the Collector under the Act within the area of their respective jurisdiction.
On October 10, 1963 Master had addressed a letter to the 602 Company to supply information for his inquiry under Rule 4.
On October 22, 1963 he issued notices to 27 owners of the lands proposed to be acquired but only 10 of them appeared before him and he recorded their statements on October 31, 1963.
There is thus no doubt that Master was instructed by the State Government to hold an inquiry and to submit his report.
Rule 4 requires the Collector to make an inquiry regarding the matters stated therein, such matters inter alia being that the land requested by the Company for acquisition is not excessive, that the Company has made efforts and offered reasonable.
price to buy the land from the owners, that if the land happens to be good agricultural land, there is no other alternative land suitable for the Company 's purpose and the approximate amount of compensation which would be payable if the lands were acquired.
The Collector after making such inquiry has to submit his report to the Government.
The Government then forwards it to the Land Acquisition Committee and the Committee has to advise the Government.
Rule 4 prohibits the Government from issuing notification under section 6 unless it has consulted the Committee and considered the said report as also the report made under section 5A and unless an agreement with the Company under section 41 has been executed.
The contention was that though Master held the inquiry and made the report he had functioned not as the Collector but in his capacity as the Special Land Acquisition Officer, Baroda, and therefore the notification under sec.
4 and section 6 were invalid.
The argument was, firstly, that Rule 4 does not define "collector" and therefore the word "collector" must mean the Collector of the District and secondly, that even if Master was appointed as the Collector as defined by sec.
3(c) his appointment as Collector was not valid as he was not specially appointed to perform the functions of the Collector.
It was said that the notification dated October 11, 1963 did not "specially" appoint Master but was a general notification authorising not only, Master but all the Special Land Acquisition Officers in the State appointed not only before the date of sec.
4 notification but also those who would be appointed in future.
In our view, these contentions cannot be upheld.
Section 3(c) defines a Collector to mean Collector of the District and includes Deputy Commissioner and any officer specially appointed by the Government to perform the functions of a Collector under the Act.
Section 20 of the General Clauses Act, X of 1897 provides that where a Central Act empowers making rules, the expressions used in such rules, if made after the commencement of that Act shall have the same meaning as in the Central Act, unless there is anything repugnant in the subject or context.
There being nothing repugnant in the subject or context, the word "collector" must have the same meaning in the rules as in sec.
3(c) which includes an officer specially appointed to perform the functions of the Collector.
If therefore Master can be said to have.
608 been specially appointed to perform the functions of the Collector Linder the Act no challenge can be entertained as to his competence to make the inquiry and the report under Rule 4 of the said Rules.
Sanghi conceded that the notification dated October 1, 1963 did "specially" appoint Master as the Collector.
Baroda but argued that as that notification was superseded it would not avail the respondents and therefore the question was whether the noti fication dated October 11, 1963 can be said to have specially appointed Master as Collector.
He argued that since that notification appointed all the Special Land Acquisition Officers to perform the functions of the Collector within their respective areas the appointments made thereunder must be regarded as general and not appointments specially made and therefore it cannot be said that Master or any one of them was specially appointed as required by sec. 3(c).
The argument therefore resolves itself to what is the true meaning of the words "specially appointed".
In our view, those words simply mean that as such an officer is not a Collector and cannot perform the functions of a Collector under the Act, he has to be "specially appointed", that is ' appointed for the specific purpose of performing those functions.
The word "specially ' has therefore reference to the special purpose of appointment and is not used to convey the sense of a special as against a general appointment.
The word "specially" thus connotes the appointment of an officer or officers to perform functions which ordinarily a Collector would perform under the Act.
It qualifies the word "appointed" and means no more than that he is appointed specially to perform the functions entrusted by the Act to the Collector.
It is the appointment therefore which is special and not the person. from amongst several such officers.
Besides, sec.
15 of the General Clauses Act provides that where a Central Act empowers an authority to appoint a person to perform a certain function, such power can be exercised either by name or by virtue of office.
There would therefore be no objection if the appointment is made of an officer by virtue of his office and not by his name.
Therefore even if the meaning of the word "specially" were to be that which is canvassed by Mr. Sanghi the Government could have issued separate notifications for each of the Sp.
L.A. officers authorising them individually to perform the functions of the Collector within their respective area of jurisdiction.
Instead of doing that, if one notification were to be issued authorising each of them to perform those functions there could be no valid objection.
Such a notification would have the same force as a separate notification in respect of each individual Sp.
L.A. officer.
Such a notification Would mean that the Government thereby appoints each of the existing Sp. L. A. officers to perform the functions of the Collector within, their respective areas.
It is true that the notification also declares that such of the Sp.
L.A. officers as may be appointed in future are also authorised to preform the Collector 's functions.
That only means that whenever a person would be appointed as a Sp.
L.A. 604 officer for a particular area, the notification would in effect invest him at the same time with the authority to perform the Collector 's functions.
The appointment of each of these officers therefore must be held to be special and not general.
But Mr. Sanghi argued that even so the notification did not "appoint" Master but merely authorised him to perform the Collector 's functions.
In our View.
the distinction is without difference.
In the context of sec.
3(c) when an officer is authorised to perform the functions of the Collector it means that he is appointed to perfore those functions.
The clause does not contemplate a separate or an additional post.
What it means is that some officer who is already in the Government employment is authorised to work as a Collector for the purposes of the Act.
In this sense whether he is appointed or authorised to perform the Collector 's functions he would be complying with the terms of that clause.
It was then urgued that the inquiry under Rule 4 is a quasi judicial inquiry and therefore it was incumbent on Master to give an opportunity to the appellants to be heard.
The Rule however provides that the officer conducting the inquiry has to hear the Company before making his report.
Whether he has also to hear tile owners of the land or not need not be decided in these appeals as Master had in fact given such an opportunity to the appellants by serving them with notices and recorded the statements of such of them who cared to appear before him.
There is therefore no merit in that contention.
Next it was urged that the inquiry under Rule 4 has to be held after the notification under sec.
4 is issued and not before and therefore the inquiry held by Master was no , valid.
We do not find anything in Rule 4 or in any other Rule to warrant such a proposition.
The inquiry, the report to be made consequent upon such inquiry.
obtaining the opinion of the Land Acquisition Committee, all these are intended to enable the Government to come to a tentative conclusion that the lands in question are or are likely to be needed for a public purpose and to issue thereafter sec.
4 notification.
In our view, no objection to the appointment of Master to perform the functions of the Collector under sec.
3(c) or to his competence to make the inquiry and the report under Rule 4 or their legality can be validly made It follows that the consent given by the State Government for initiating acquisition proceedings was validly given and was in compliance with the provisions of Part VII of the Act and the State Government could validly issue the impugned notifications.
This disposes of Mr. Sanghi 's propositions 1 and 2.
The third proposition is that the State Government exercised the power under the Act mala fide and without applying its mind to the facts of the case.
Paragraph 10 of the petition containing the plea as to mala fides is in general terms without any particulars.
Even such of the allegations that are to be found there arc more against the 3rd respondent Company than against the State Government.
These are based on the fact that the Company had 605 sufficient land of its own and the acquisition was therefore being made so that the Company may acquire the neighbouring lands without utilising its own lands.
It is true that the Company owns.
140 acres of land.
But as the affidavit of the Company 's officer shows out of these 140 acres 48 acres are ravine lands, unfit as factory sites.
According to the Company, those lands however will be utilised for housing accommodation for its 700 workmen and for amenities for them such as play grounds, a sports club.
a recreation centre and a co operative consumer society.
Forty acres out of, the rest of the land have already been used for constructing some: of the factories ' warehouses and godowns.
As regards the balance: of 60 acres, they do not form a compact block and contain in them small pockets belonging to the appellants.
The Company 's case was that unless these pockets are acquired and these 60 acres are made, into one compact lot it would not be possible to use them as factory site.
These lands are, besides, divided by a Nal which if filled Lip would block access to the appellant 's lands.
Unless the enclaves are acquired.
the said Nal which divides the Company 's lands car,not be filled up.
A portion of the lands in question is also necessary for an approach road leading to the proposed railway siding.
Some of the land will have to be kept open as otherwise the noxious fumes omitted by the factories would prove detrimental to the: health of the neighbours.
The documents produced by Master reveal that the inquiry,.
held by him ",as on the question whether the Company was trying to acquire excessive land.
It is therefore not possible that the Government failed to apply its mind having had Master 's report before it as also the report under sec.
5A as regards the extent of land needed by the Company.
It was however arzueed though somewhat vaguely that the Company would not require as much, as 40 acres for housing its workmen and also that the Company has its own land near the railway lines which can well be used for the proposed railway siding.
No effort however was made to show that the Company would not really need 40 acres for housing purposes.
As regards the proposed railway siding also there is no data to show that the Company 's land near the railway lines would be suitable for constructing such railway siding.
The appellant 's lands appear to be near the existing goods platform.
It may be that the Government found on the basis of the reports before it that the appellants ' lands near the goods platform would be more suitable for the railway siding than the Company 's land near the railway lines.
Mr. Sanghi then contended that the fact that the Government had been trying to acquire these lands since 1962 and has been issuing one notification after another shows the exercise of the, power to acquire was mala fide.
No 1 such inference can be drawn from such a fact only.
The fact, on the other hand, that the Government cancelled its first notification on the ground that these 606 lands were not suitable for a fertiliser factory gives a clear indication that it had applied its mind and relatives the allegation of mala fide exercise of power.
The correspondence which the Company produced during the hearing of the petitions shows that as soon as the decision in the first Arora Case(1) was given the Government at once cancelled the notification in spite 'of the Company 's request to continue it.
This negatives any suspicion as to collusion between the Company and the acquiring authority.
It is true that Master 's opinion was adverse to acquisition but the Government was not bound to accept it.
However, the fact that a responsible officer of the Government gave an adverse opinion is yet another indication that he was acting independently without being influenced by the Government or the Company.
In our view, the appellants failed to establish their allegation either as to mala fide or the non application of mind by the State Government.
The third proposition of Mr. Sanghi therefore must fail.
As regards proposition No. 4, the only argument urged was that when a particular land is being already used for one public purpose, in this case the manufacture of "sagol", a building material made from lime, the legislature could not have intended to empower the Government to destroy that purpose and substitute in its place another public purpose.
We need only say that a similar argument was urged in Somavanti 's Case (2 ) and rejected by this Court.
The last proposition of Mr. Sanghi was that even though an inquiry under section 5A may be an administrative inquiry, the State Government was bound to give an opportunity to be heard to the appellants after receiving the report thereunder and before making up its mind for the purpose of issuing sec.6 notification.
It is not in dispute that during sec.
5A inquiry the appellants were heard and their objections were taken on record.
Under sec.
5A, the Collector has to hear the objections of the owner.
take them on r ecord and then submit his report to the Government.
The section also requires him to send along with his report the entire record of his inquiry which would include the objections.
The report has merely recommendatory value and is not binding on the Government.
The record has to accompany the report as it is for the Government to form independently its satisfaction.
Both are sent to enable the Government to form its satisfaction that the acquisition is necessary for a public purpose or for the Company.
It is then that sec.
6 notification which declares that particular land is needed for either of the two purposes is issued.
The Government thus bad before it not only the opinion of Master but also all that the appellants had to say by way of objections against the proposed acquisition.
The appellants therefore had an opportunity of (1) [1962] Supp. 2 S.C.R. 149, (2) 607 being heard.
Neither sec.
5A nor any other provision of the Act lays down that a second opportunity has to be given before the issuance of section 6 notification.
This contention also therefore cannot be sustained.
These were all the contentions urged before us.
As none of them can be upheld the appeals have to be dismissed.
The appellants will pay to the respondents the costs of these appeals.
(One hearing fee).
R.K.P.S. Appeals dismissed.
| IN-Abs | On October 1, 1963, the State Government issued a notification under section 3(c), authorising one M who was then the Special Land Acquisition Officer, Baroda, to perform the functions of a Collector and also directed him to hold an enquiry under the Land Acquisition (Companies) Rules on the application of the third respondent company requesting the government to acquire the appellant 's land.
In supersession of that notification, the Government issued another notification on October 11, 1963 authorising all Special Land Acquisition Officers to perform the functions of the Collector under the Act within the area of their respective jurisdiction.
After M had made an enquiry under Rule 4, the respondent State Government issued a notification under Section 4 of the Land Acquisition Act, 1894, on August 28.
1964 in respect of the appellant 's land which was stated to be required for the establishment of a factory by the third respondent company.
Objections filed by the appellants in an enquiry under section 5A were rejected and the State Government thereafter issued a notification under section 6 on October 18, 1965.
The appellants challenged the notification by writ petitions but these were, dismissed by the High Court.
In the appeal to this Court, it was contended on behalf of the appellants, inter alia.
(i) that M was only a Special Land Acquisition Officer and not the Collector within the meaning of Rule 4; in any event the notification of October 11, 1963 did not "specially" appoint him but was a general notification authorising all the Special Land Acquisition Officers in the State appointed not only before the date of section 4 notification but also those who would be appointed in future,.
furthermore, the notification did not "appoint" but simply authorised him to perform the functions of the Collector, the State Goverrunent had not given any direction to him to make a report as required by .Rule 4; therefore the enquiry held by him under that Rule and the ,report made was invailed and consequently no notification either under section 4 or section 6 could be validly issued; (ii) that the section 6 notification was issued without complying with Part VII of the Act and without the valid consent of the State Government as required by section 39; (iii) that the acquisition was made mala fide and without application of mind to the relevant facts: (iv) that the acquisition did not involve any public purpose: and (v) that the State Government was bound to give an opportunity of being heard to the appellants before taking a decision under section 5A particularly when the report made by M was against the acquisition, 598 HELD: Dismissing the appeal.
(i) No objection to the appointment of M to perform the functions of the Collector under section 3(c) or to his competence to make the enquiry and the report under Rule 4 or their legality can be validly made.
It follows that the consent given by the State Government in initiating acquisition proceedings was validly given and was in comp liance with the provisions of Part VII of the Act and the State Government could validly issue the impugned notifications.
[604G] There being nothing repugnant in the subject or context, the word "Collector" must, by virtue of section 20 of the , have the same meaning in the Rules as in section 3(c) of the Act which includes an officer specially appointed to perform the functions of the Collector.
[602H] The words "specially appointed" simply mean that as a Sp.
L.A. Officer is not a Collector and cannot perform the functions of a Collector under the Act.
he has to be "specially appointed", i.e. appointed for the specific purpose of performing those functions.
The word "specially" has therefore reference to the special purpose of appointing and is not used to convey the sense of a special as against a general appointment.
Furthermore, section 15 of the General Clauses Act provides that where a Central Act empowers an authority to appoint a Person to Perform a certain function such power can be exercised either by name or by virtue of office.
[603C F] In the context of section 3(c) when an officer is authorised to perform the functions of the Collector, it means that he is appointed to perform those functions.
The distinction between the two is without a difference.
[604B] There is no force in the contention that the enquiry under rule 4 has to be held after the notification under section 4 and not before.
There is nothing in rule 4 or any other rule to warrant such a proposition.
(ii) On the facts, the appellants had failed to establish their allegation either as to mala fides or the non application of mind by the State Government.
(iii) There is no force in the contention that when the appellant 's lands were already being used for the manufacture of a building, material and that was also a public purpose, the legislature could not have intended to empower the Government to destroy that purpose and substitute in its place another Public purpose.
[606D] Arora Case, [1962] Supp, 2 'S.C.R. 149: referred to.
(iv) It is not disputed that during the section 5A enquiry the appellants were heard and their objections were taken on record.
The record of the enquiry is required under section 5A to be sent to the Government so as to enable the Government to decide whether the acquisition is necessary for a public purpose or for a company.
The Government thus had before it not only the opinion of M but also all that the appellants had to say by way of objections against the proposed acquisition.
The appellants therefore had an opportunity, of being heard.
Neither section 5A nor any other provision of the Act lays down that a second opportunity has to be given before the issuance of the Section 6 notification.
[606F 607A]
|
Appeal No. 34 of 1965.
Appeal by special leave from the judgment and decree dated November 6, 1962 of the Allahabad High Court in Second Appeal No. 3745 of 1958.
B. C. Misra and section section Shukla, for the appellants.
section P. Sinha, E. C. Agarwala and P. C. Agarwala, for the respondents.
The Judgment of the Court was delivered by Shah, J.
A piece of agricultural land bearing Survey Nos. 723/2, 724, 725 and 726 of Naugawan, tahsil Fatehabad, District Agra, originally belonged, to two brothers Tota Ram and Lajja Ram.
Tota Ram and Lajja Ram were declared to be bhumidhars in respect of that land and a Sanad was issued in their favour under section 7 of the U.P. Act 10 of 1949.
On October 20, 1951, Tota Ram and Lajja Ram sold their interest in the land 619 to two brothers Sri Ram and Ram Prasad who will hereinafter be called 'the plaintiffs '.
Disputes arose thereafter about the possession of the land between one Pritam Singh and the plaintiffs, and proceedings under section 145 of the Code of Criminal Procedure were started before the Sub Divisional Magistrate at the instance of Pritam Singh.
The Sub Divisional Magistrate attached the land and called upon the parties to agitate the dispute as to their respective rights therein in a civil suit.
The plaintiffs then commenced an action in the Court of the Munsif, Fatehabad, against Pritam Singh and Tota Ram for a declaration of their rights as bhumidhars in possession of the land in suit and for an order "expunging" the name of Pritam Singh from the revenue records.
Pritam Singh resisted the suit contending, inter alia, that the land was abandoned by Tota Ram and Lajja Ram and that since it was under his cultivation continuously since Fasli year 1356 (the year commencing from July 1, 1948 and ending on June 30, 1949) he had acquired the rights of an adhivasi in the land and he was not liable to be evicted from the same.
The Munsif referred the following issue arising out of the pleadings to the Assistant Collector, Agra, for decision: "Whether the defendant No. 1 (Pritam Singh) has acquired adhivasi rights, if so, its effect?" The Assistant Collector held that the revenue records did not "how that Pritam Singh was in possession at any time in or before 'the end of 1359 Fasli and that the entries in the khasra relied upon by Pritam Singh had been fabricated to support his case.
Consistently with the finding of the Assistant Collector, the Munsif passed judgment in favour of the plaintiffs.
But in appeal to the District Court, Agra, that judgment was reversed.
The Appellate Judge held that the revenue entries were genuine entries posted by the Patwari in discharge of his duty and that Pritam Singh was in possession in the year 1356 Fosli and also in 1359 Fasli and he had acquired the rights of an adhivasi.
The plaintiffs then carried the dispute to the High Court of Allahabad.
The High Court reversed the decree passed by the First Appellate Court and restored the decree of the Munsif.
With special leave, the heirs and legal representatives of Pritam Singh have appealed to this Court.
It was not the case of Pritam Singh that he has acquired title to the land by transfer or by adverse possession.
Pritam Singh relied merely.
upon the entries in khasra for 1356 Fasli and his claim of possession of the land in Fasli 1359, and upon statutory consequences arising from the entries under section 20(b) of the U.P. Zamindari Abolition and Land Reforms Act 1 of 1951, and section 3 of the U.P. Land Reforms (Supplementary) Act 31 of 1952.
The U.P. Zamindari Abolition and Land Reforms Act 1 of 1951 was brought into force from July 1, 1952.
By section 20 certain rights were conferred upon persons whose names were recorded 620 in the revenue records in respect of agricultural land.
The material clause (b) of section 20 on which reliance is placed reads as follows: "20.
Every person who (a) (b) was recorded as occupant (i) of any land (other than grove land or lands to which section 16 applies) in the khasra or khatauni prepared under sections 28 and 33 respectively of the U.P. Land Revenue Act, 1901, or who was on the date immediately preceding the date of vesting entitled to regain possession thereof under clause (c) of sub section (1) of section 27 of the United Provinces Tenancy (Amendment) Act, 1947, or The land in dispute is not grove land, nor it is land to which section 16 of the Act applies.
Pritam Singh claimed that his name was entered as an occupant in the khasra of 1356 Fasli prepared under the U.P. Land Revenue Act, 1901, and he was on that account entitled to the rights of an adhivasi in respect of the land.
It was held by this Court in Amba Prasad vs Abdul Noor Khan and Others(1) that section 20 of U.P. Act 1 of 1951 does not require proof of actual possession: it eliminates inquiries into disputed possession by accepting the record in the khasra or khatauni of 1356 Fasli or its correction before July 1, 1952.
In view of that decision it must be held that the Civil Court in adjudging a claim of a person to the rights of an adhivasi is not called upon to make an enquiry whether the claimant was actually in possession of the land or held the right as an occupant: cases of fraud apart, the entry in the record alone is relevant.
But the entries on which reliance was placed by Pritam Singh do not support his case that he was recorded as an occupant in the khasra or khatauni of 1356 Fasli.
In the certified extract of the khasra for 1356 Fasli (Ext.
A/ 1) tendered in evidence by Pritam Singh in the column 'Name and caste of cultivator ' the entry is "Tota Ram and others" and in the column for 'remarks ' the entry is "Pritam Singh s/o Pyarelal of Sankuri".
Our attention has not been invited to any provision of the U.P. Tenancy Act or instructions issued by the Revenue authorities which tend to establish that the name of an occupant of land is liable to be entered in the column reserved for 'remarks '.
In order that a person may be regarded as an adhivasi of a piece of land, section 20(b) of Act 1 of 1951 requires that his name must be recorded in the khasra or khatauni for 1356 Fasli as an occupant.
The Assistant Collector has pointed out that according to paragraph 87 of the Land Records Manual it is necessary for a Patwari to make an (1) ; 621 enquiry about the status of the occupant, and if he thinks that a claimant is an occupant, he should enter the name in red ink in khsra as "Kabiz, sajhi etc.".
Admittedly Pritam Singh was not shown as Kabiz or sajhi nor was the entry posted in red ink.
There is also strong evidence on the record which shows that the name of Pritam Singh was surreptitiously entered in the khasra for 1356 Fasli.
In the khasra Barahsala i.e. consolidated khasra for 1347 to 1358 Fasli Tota Ram and Lajja Ram are shown its persons cultivating the land and there is no record of the name of any sub tenant on the land.
Before the Assistant Collector two certified extracts of the khasra for 1356 Fasli in respect of the land in dispute were produced.
In the certified extract Ext.
A/ 1 tendered by Pritam Singh his name was shown in the 'remarks ' column.
in the certified extract tendered by the plaintiffs there was no such entry.
The Assistant Collector did not call for the original record, nor did he attempt to probe into the circumstances in which the entry of Pritam Singh dame to be made.
He, however, observed that in Ext.
A/ 1 the name of Pritam Singh was entered in the 'remarks ' column against Survey No. 723/1 which had fallen in an earlier partition to the share of one Kunjilal and in respect of which Pritam Singh had never claimed any right.
The First Appellate Court did not refer to these important pieces of evidence.
His conclusion cannot be regarded as binding upon the High Court in Second Appeal.
It must therefore be held that relying upon the entry of his name in the 'remarks ' column in the khasra for 1356 Fasli Pritam Singh could not claim that he had established his rights as an adhivasi of the land under section 20(b) of the U.P. Zamindari Abolition and Land Reforms Act 1 of 1951.
The alternative case under section 3 of the U.P. Land Reforms (Supplementary) Act 31 of 1952 may now be considered.
Section 3 of Act 31 of 1952 provides, insofar as it is material: "(1) Every person who was in cultivatory possession of any land during the year 1359 fasli but is not a, person who as a consequence of vesting under Section 4 'of the U.P. Zamindari Abolition and Land Reforms Act, 1950 (U.P. Act 1 of 1951) (hereinafter referred to as the said Act), has become a bhumidhar sirdar, adhivasi or asami under Sections 18 to 21 of the said Act shall be and is hereby declared to be, with effect from the appointed date (a) if the bhumidhar or sirdar of the land was, or where the land belongs jointly to two or more bhumidars or sirdars, all of them were, on the appointed date person or persons referred to in item (i) to (vi) of sub section (2) of Section 10 of the said Act, an asami from year to year, or 622 (b) if the bhumidhar or sirdar was not such a person, an adhivasi, and shall be entitled to all the rights and be subject to all the liabilities conferred or imposed upon an asami or an adhivasi, as the case may be, by or under the said Act.
Explanation A person shall not be deemed to be in cultivatory possession of the land, if he was cultivating it as a mortgagee with possession or a thekedar, or he was merely assisting or participating with a bhumidhar sirdar, adhivasi or asami concerned in the actual performance of agricultural operations.
" The section appears to be somewhat involved in its phraseology.
But its purport is fairly clear.
A person who is not in consequence of the provisions of sections 18 to 21 of the U.P. Act 1 of 1951 a bhumidhar, sirdar, adhivasi or asami but who is in "cultivatory possession" of land during 1359 Fasli shall be entitled to the rights in respect of that land of an asami from year to year if the bhumidhar or sirdar of the land was on the appointed date a person who is referred to in item (i) to (vi) of section 10(2) of the U.P. Act 1 of 1951, and he shall be entitled to the rights of an adhivasi if the bhumidhar or sirdar of the land was not a person referred to in items (i) to (vi) of section 10(2).
The U.P. Act 31 of 1952 was enacted to grant protection to certain persons who had been in "cultivatory possession" of land in the holdings of bhumidhars or sirdars, and had been or were being forcibly evicted from the land by the tenure holders.
The language of the section clearly shows that it was intended to grant the rights of an asami or adhivasi according as the case fell within cl.
(a) or cl.
(b) to a person who had been admitted to cultivatory possession and who was in such possession in 1359 Fasli.
Pritam Singh had no right to the land at all and the revenue record shows that till the end of 1358 Fasli i.e. till June 30, 1951, the land was not in his possession.
Pritam Singh is recorded in the khasra of 1359 Fasli in the column for shikmi (sub tenant) as without settlement of rent", and Tota Ram and Lajja Ram are entered as cultivators.
In the khatauni for 1359 Fasli Pritam Singh is shown as "cultivator for ' one year, without settlement of rent".
There are similar entries in the khasra and khatauni for 1361 Fasli, and in 1362 Fasli the names of the plaintiffs are entered in the column of cultivator, and the name of Pritam Singh is shown in the column for shikmi.
The scheme of section 3 of the U J.P. Land Reforms (Supple mentary) Act, 1952 is different from the scheme of section 20(b) of the U.P. Zamindari Abolition and Land Reforms Act 1 of 1951.
Whereas under Act 1 of 1951 the entry is made evidence without further enquiry as to his right of the status of the person who is recorded as an occupant, under section 3 of the U.P. Land Reforms (Supplementary) Act, 1952, a person who claims the status of an asami or an adhivasi must establish that he was in "cultivatory 623 possession" of the land during the year 1359 Fasli.
The expression " cultivatory possession" is not defined in the Act, but the Explanation clearly implies that the claimant must have a lawful right to be in possession of the land, and must not belong to the classes specified in the explanation.
"Cultivatory possession" to be recognized for the purpose of the Act must be lawful, and for the whole year 1359 Fasli.
A trespasser who has no right to be in possession by merely entering upon the land forcibly or surreptitiously cannot be said to be a person in "cultivatory possession" within the meaning of section 3 of U.P. Act 31 of 1952.
We are of the view that the Allahabad High Court was right in holding in Ram Krishna vs Bhagwan Baksh Singh(1) that a person who through force inducts himself over and into some land and succeeds in continuing his occupation over it cannot be said to be in cultivatory possession of that land so as to invest him with the rights of an asami or an adhivasi, and we are unable to agree with the subsequent judgment of a Full Bench of the Allahabad High Court in Nanhoo Mal vs Muloo and others(2) that occupation by a wrongdoer without any right to the land is "cultivatory possession" within the meaning of section 3 of the U.P. Act 31 of 1952.
A person who has no right to occupy land may rely upon his occupation against a third person who has no better title, but he cannot set up that right against the owner of the land.
It must be remembered that by section 3 of U.P. Act 31 of 1952 the Legislature conferred rights upon persons in possession of land against the tenure holders, and in the absence of any express provision, we are unable to hold that it was intended by the Act to put a premium upon forcible occupation of land by lawless citizens.
We have no doubt therefore that by forcibly occupying the land after 1358 Fasli, Pritam Singh could not acquire as against the bhumidhar of the land the rights of an adhivasi by virtue of section 3 of U.P. Act 31 of 1952.
Counsel for the appellants contended that the finding recorded by the First Appellate Court that Pritam Singh was in "cultivatory possession" in 1359 Fasli was binding upon the High Court in Second Appeal.
For reasons already set out, possession of a person in wrongful occupation cannot be deemed cultivatory possession.
Again the Appellate Judge in arriving at his conclusion ignored very important evidence on the record, and on that account also the conclusion was not binding on the High Court.
Pritam Singh 's name was recorded in the khasra for the year 1359 Fasli as sub tenant "without settlement of rent".
Pritam Singh did not offer to give evidence at any stage of the trial before the Assistant Collector, and it was not his case that he had entered into any contract of sub tenancy with Tota Ram and Lajja Ram.
The entry which records him as a sub tenant of Tota Ram and Lajja Ram for the year 1359 Fasli is on his own case (1) (2) I.L.R. [1963] All. 751.
624 untrue.
There is further no oral evidence in support of the case of Pritam Singh that he was in actual "cultivatory possession" of land and the entry relied upon by him does not support his case.
To get the benefit of section 3 of U.P. Act 31 of 1952, it had to be established that Pritam Singh was in actual cultivatory possession of the land and that fact is not established by direct evidence of possession, nor is it established by the entry relied upon by him.
The conclusion of the learned Appellate Judge that Pritam Singh was in "cultivatory possession" was partially founded on the conclusion recorded by him that in 1356 Fasli Pritam Singh was in possession of the land.
We have already pointed out that in so concluding he misread the khasra entry for 1356 Fasli and gave no effect to the khasra Baralisala which showed that Pritam Singh was not in possession of the land till the end of 1358 Fasli.
The learned Judge also inferred that because it was stated by Sri Ram the first plaintiff and his witness Maharaj Singh that no crops were cultivated during the Kharif season and as the khasra for 1359 Fasli showed that Bajra was sown in one of the plots in 1359 Fasli and gram was raised in all the plots, Pritam Singh must have been in possession as a sub tenant and must have cultivated the land in the Kharif season of 1.359 Fasli.
This was, in our judgment, a far fetched inference.
The Appellate Judge also did not refer to other evidence to which pointed attention was directed in support of his conclusion, by the Assistant Collector Agra: for instance, Banwari Lal, Naib Registrar examined on behalf of the plaintiffs had clearly stated that Pritam Singh was not in possession of the land prior to 1359 Fasli and that Tota Ram who was examined as a witness stated that Pritam Singh was not in possession of the land and he had not given the land to Pritam Singh on lease, and that he did not receive rent from Pritam Singh.
We are unable, therefore, to hold that a conclusion arrived at only from an entry in the revenue records which does not prima facie support the case of Pritam Singh, that he wrong fully trespassed upon the land and cultivated it may be regarded as conclusive in Second Appeal.
The High Court was, in our judgment, right in reaching the conclusion that Pritam Singh was not in "cultivatory possession" of the land in 1359 Fasli within the meaning of section 3 of Act 31 of 1952.
Counsel for the appellants finally contended that the High Court was incompetent in this suit to grant a decree for possession of the land to the plaintiffs.
Counsel submitted that a suit for possession, even against a trespasser, could lie only in the Revenue Court and not in the Civil Court, and the High Court by allowing amendment of the plaint in the Second Appeal before it could not assume to itself the jurisdiction which the Civil Courts do not possess.
Our attention was not invited to any provision which enacts that even against a rank trespasser the Civil Court may not pass a decree, in favour of an owner of the land, in ejectment in respect of agricultural land.
But even assuming that the statute 625 law in the State of U.P. warrants that submission, we think that the High Court had jurisdiction in the circumstances of the Present case to allow amendment of the plaint and to grant a decree for possession.
it may be recalled that the plaintiffs had originally tiled a suit for a declaration of title and for injunction restraining Pritam Singh from interfering with their possession.
The land was at the date of the suit under attachment by the order of the Magistrate, Ist Class, Agra, in proceedings under section 145 of the Code of Criminal Procedure, started by Pritam Singh, and the Magistrate had directed the parties to establish their possession or right to possession in a competent Civil Court.
A suit for declaration and injunction in that state of affairs was Properly filed.
If the plaintiffs established their title to the land, they could claim an order from the Criminal Court for delivery of Possession, and an injunction restraining Pritam Singh from interfering with their possession was an appropriate relief.
But it ap pears that pursuant to the order of the First Appellate court Pritam Singh obtained possession from the Criminal Court and hereafter the plaintiffs amended the plaint with the leave of the High Court and a decree for possession was claimed.
When the High Court held in favour of the plaintiffs and rejected the claim made by Pritam Singh, in our judgment, the High Court was justified, and indeed bound, to avoid giving a fresh lease of life to his litigation, to make an order consistently with the rights declared by it, since Pritam Singh had during the pendency of the suit managed to obtain possession of the land from the Court Officer who was in possession of the land.
A party who is defeated on the merits of the dispute may not by securing an order from another Court during the pendency of a ,suit be permitted to displace the jurisdiction of the Civil Court to, try the suit which was within its competence when the suit was filed.
The appeal therefore fails and is dismissed with costs.
Appeal dismissed.
| IN-Abs | The respondents purchased the land in dispute from the bhumidhars thereof, but 'P ' (predecessor in interest of the appellants) claimed to be in possession of the land and a dispute was raised under section 145 of the Code of Criminal Procedure.
The Magistrate attached the land and relegated the parties to a suit.
The respondents filed a plaint seeking a declaration of their rights and removal of 'P 's name from the record of rights.
The trial court after getting a finding from the Revenue Court granted a decree to the respondents.
The first Appellate Court however decided in favour of 'P ' and on the basis of that finding 'P ' got possession from the criminal court.
The respondents went in second appeal to the High Court which decided in their favour and gave them a decree for possession of the land after allowing them to amend their plaint by adding a prayer for possession.
The appellants came to this Court and urged: (i) 'P ' was recorded as an occupant ' in the khasra of 1356 Fasli and therefore under section 20(b) of the U.P. Zamindari Abolition and Land Reforms Act 1 of 1951 he was an adhivasi, (ii) 'P ' was recorded as in 'cultivatory pos session ' of the land in 1359 Fasli and on that ground also he was an adhivasi; (iii) the High Court was bound by the findings of the first Appellate Court that the appellant was an 'occupant ' in 1356 Fasli and in cultivatory possession in 1359 Fasli: (iv) A suit for possession even against a trespasser could lie only in the 'Revenue Court and not in the Civil Court, and the High Court by allowing amendment of the plaint in the second appeal could net assume to itself jurisdiction which civil courts do not possess.
HELD: (i) The entry in the Khasra of 1356 Fasli on which the appellants relied did not fulfil the requirements of s 20(b) of Act 1 of 1951.
'P ' was not shown in the entry as 'Kahiz ' or 'Snihi ' etc.
There was also strong evidence which was relied on by the Revenue Court but not considered by the first Appellate Court that the name of 'P ' was surreptitiously entered in the Khasra of 1356 P.
The appellant 's case under section 20(b) of the Abolition Act therefore failed.
[621A F] Amba Prasad vs Abdul Noor Khan & Ors., ; , referred to.
618 (ii) The appellants ' case under section 3 of U.P. Act 31 of 1952 also could not be sustained.
To get the benefit of the section it had to be.
established that P was in actual cultivatory possession of the land in 1359 F and that fact had not been established by direct evidence of possession, nor was it established by the entry relied on by him.
A person who has no right to occupy land may rely upon his occupation against a third person who has no better title, but he cannot set up that right against the owner of the land.
Section 3 conferred rights upon persons in possession of land against the tenure holders, it was not intended to put a premium upon forcible occupation of land by landless citizens.
Possession of a person in wrongful occupation could not be deemed to be 'cultivatory possession ' within the meaning of the section.
[622F 623F] Ram Krishna vs Bhagwan Baksh Singh, , ap proved.
Nanhoo Mal V. Muloo and Ors., I.L.R. [1963] All. 751, disapproved.
(iii) The High Court was not bound in the present case by the, findings of the first Appellate Court as the latter had ignored important evidence on record which proved that the entries relied on by 'P ' were not genuine.
[623G] (iv) The High Court rightly granted to the respondents a decree for possession after allowing the respondents to add a prayer for possession to their plaint.
When the High Court held in favour of the plaintiffs respondents and rejected the claim made by 'P ' it was justified and indeed bound, to avoid giving a fresh lease of life to the litigation and to make an order consistently with the rights declared by it, since 'P ' had during the pendency of the suit managed to obtain possession of the land from the Court Officer who was in possession of the land.
A party who is defeated on the merits of the dispute! may not by securing an order from another court during the pendency of the suit be permitted to displace the jurisdiction of the civil court to try the suit which was within its competence when the suit was filed.
[625D E]
|
Appeals Nos. 29 to 33, 89 and 90 of 1949.
Appeals from the Judgment and Decree dated the 30th October 1945 of the High Court of Judicature at Madras (Lionel Leach C.J. and Rajamannar J.) in Appeals Nos. 230, 300 302, 355, 356 and 413 of 1943.
G.S. Pathak (T. section Santhanam, with him) for the appellant in Civil Appeals Nos. 28 and 29 of 1949, respondent No. 1 in Civil Appeals Nos. 30, 32 and 33 of 1949 and respondent No. 2 in Civil Appeal No. 31 of 1949, for respondent No. 3 in Civil Appeal No. 31 of 1949 and for respondents Nos. 1 and 2 in Civil Appeals Nos. 89 and 90 of 1949.
V.V. Raghavan, for the appellant in Civil Appeals Nos. 31 to 33 of 1949, respondent No. 1 in Civil Appeals Nos. 28 and 29 of 1949 and respondent No. 2 in Civil Appeal No. 30 of 1949.B. Somayya (K. Subramaniam and Alladi Kuppuswami, with him) for the appellant in Civil Appeals Nos. 30, 89 and 90 of 1949, respondent No. 1 in Civil Appeal No. 31 of 1949 and respondent No. 2 in Civil Appeals Nos. 28, 29, 32 and 33 of 1949.
December 14.
The Judgment of the Court was delivered by MAHAJAN J.
244 MAHAJAN J.
These eight appeals arise out of a common judgment of the High Court of Madras dated the 30th October, 1945, given in seven appeals preferred to it against the judgment of the District Judge of Madura in four suits, O.S. Nos. 2, 5, 6 and 7 of 1941, all of which related to the zamindari of Bodinaickanur "in the Madura district and the properties connected therewith.
The appeals were originally before the Privy Council in England, some by leave of the High Court and others by special leave and are now before us for disposal.
The zamindari of Bodinaickanur is an ancient impartible estate in the district of Madura, owned by a Hindu joint family.
The genealogical tree of the family is as follows : 245 Thirumalai Bodi Naicker Faisal Zamindar : : Rajaya Naicker(Died) : : (1) Bangaru Thirumali Bodi Naicker Zamindar 1849 1862(Died) : : : : : : T. B. Kamaraja Pandia Naicker Vadamalai Raja Zamindar1962 1888(Died15 12 1888) Pandia Naicker (Widow) Kamuluammal Zamindarini (Died in 1901) 1888 1921(Died 13 1 1921) : : Meenakshi Ammal (Died) : : : : : : : Peria Thayi Chainnathayi alias Satpur alias Muthumeenakshi Veeralakshmi Ammal Zamindar Veerakamulu Ammal (2nd Deft.) T.V.K. (3rd defendant) Kamaraja pandia Naicker, late Zamindar (2) Viswanatha Naicker (Died before 1888) : : Kandasami Naicker plff in O.S. 16 of 1889(Died 20 2 1901) : : : : : : Viswanatha Kamaraja Pandia T.V.K. Kamaraja (No.II) Naicker (Died on 29 7 1918) Pandiaya Naicker (Died 16 2 1941) Zamindar 1921 1941 Widow Chinnathayi alias Veeralakshmi Ammal (2nd Deft.) (3) Sundara Pandia Naicker (Died in 1893) : : : : : : : : : : : : Viswanathaswami Thirumalai Seelaraja Seela Kamaraja Naicker Muthu Vijaya Naicker Bodi pandia (died) Dalapathi Died on Naicker Naicker Pandia 25 9 1931) Naicker (Died) : : : : : : : T.B.S.S. Rajaya Pandiya Chokkalingaswami Naicker (Plaintiff) Naicker (4) Kulasekara pandia Naicker(No.1) (Died after 10 5 1889 but before 1902) : : : : : : Kulasekara pandiya Muthu Bangaruswami Naicker (No. 2) Naicker (Died) (Died before 1902) : : : : V.Kulasekara pandiya Naicker (1st Deft.) : : : : Vadamalai Muthu Thirumalai Bodaya Kulasekara Sundararaja Pandiya Naicker Pandiya Naicker (5) Chokkalingasami Naicker (Died after 10 5 1889 but before 1902) : : : : : : : : : Tirumalai Bodaya Chhokkalingasami T.B. Kamaraja Sundararau Pandiya Naicker (Died) Pandiya Naicker Naicker (Died) : : : : : : T.B.M.S.K.
Pandiya Pandiya Raja Naicker Naicker 246 The zamindari was last held by Kamaraja II of the second branch.
He died on 16th February, 1941, without male issue, but leaving him surviving a widow Chinnathayi alias Veeralakshmi Ammal, and members of the family belonging to the third, fourth and fifth branches.
Succession to the zamindari is admittedly governed by the rule of lineal primogeniture modified by a family custom according to which the younger son by the senior wife is preferred to an eider son by junior wife.
According to this custom T.B.S.S. Rajaya Pandiya Naicker of the third,branch was entitled to the zamindari after the death of Kamaraja II of the second branch.
His claim was denied by the widow and by Kulasekara Pandiya Naicker of the fourth branch, both of whom claimed the zamindari on different grounds.
It was alleged by the widow that the zamindari was the separate and exclusive property of her husband and that being so, she was entitled to it under the rule of Mitakshara applicable to devolu tion of separate property.
Kulasekara of the fourth branch claimed it on the basis that Sundata Pandiya Naicker of the third branch who died in 1893, had separated from the family and had renounced his and his descendants ' rights of succession to the zamindari and the third 'branch having thus lost all interest in the joint family zamindari, he was the next person entitled to it by survivorship.
On 28th April, 1941, the revenue officer allowed the claim of Kulasekara and held that he was entitled to posses sion of the zamindari and the pannai lands (home farm lands) which were in the possession of Kamaraja II.
As regards one of the villages comprised in the zamindari, viz., Boothipu ram, the title of the widow was recognized.
In pursuance of this order, Kulasekara got into ,possession of the zamindari and the pannai lands after the death of Kamaraja II.
Boot hipuram village remained in the possession of the widow.
Dissatisfied with the order of the revenue officer, the parties have instituted the suits out of which these appeals arise.
247 On the 22nd June, 1941, the widow (Chinnathayi) brought suit No. 5 of 1941 for possession of the zamindari against Kulasekara of the fourth branch, Rajaya and his uncle Seela bodi Naicker of the third branch, T.B.M.S.K. Pandiya Naicker and Kamaraja Pandiya Naicker of the fifth branch, on the allegations set out, above.
On the 4th July, 1941, she and her sister instituted suit No. 2 of 1941 against the same set of defendants for cancellation of the deed of release that had been executed by her and her sister in favour of Kamaraja II on the 9th June, 1934, in respect of the pannai lands that were in the possession of Kulasekara of the fourth branch under the order of the revenue officer.
The third suit, O.S. No. 6 of 1941, was brought by Rajaya of the third branch on 27th August, 1941, for posses sion of the zamindari, Boothipuram village and the pannai lands, against Kulasekara of the fourth branch and the two plaintiffs in suit No. 2 of 1941, on the allegation that under the rule of lineal promogeniture he was the person next entitled to succeed to the zamindari after the death of Kamaraja II.
The last suit, O.S. No. 7 of 1941, was instituted by Kulasekara of the fourth branch on 13th October, 1941, against the widow and Rajaya, his rival claimants to the zamindari for a declaration that he was the rightful heir and successor to the zamindari and was entitled to posses sion of Boothipuram village registered in the name of the widow.
The zamindari of Bodinaickanur orginally consisted of fifteen villages mentioned in schedule (A) to the plaint in O.S. No. 6 of 1941 and of certain pannai (home farm)lands and buildings.
Tirumalai Bodi Naicker was the holder of this impartible raj.
He was succeeded by his son Rajaya Naicker who died in 1849, leaving him surviving five sons, Bangaru Tirumalai Bodi Naicker, Viswanatha Naicker, Sundara Pandiya.
Naicker, Kulasekara Pandiya Naicker and Chokkalin gaswami Naicker, representing the first, second, third, fourth and fifth branches respectively.
Rajaya 248 Naicker was succeeded by his eldest 'son Bangaru Thirumalai Bodi Naicker who died on the 27th October, 1862, and was succeeded by his son.
T.B. Kamaraja Pandiya Naicker (Kamara ja I) who remained as zamindar till his death on 15th Decem ber.
He had no son and on his death his widow Kamulu ammal got into possession of the estate.
Proceedings for transfer were taken in the revenue court for registry of the zamindari and statements of the male members of the family belonging to the second, third, fourth and fifth branches and of the widow were recorded by the Deputy Collector.
On 18th December, 1888, the representatives of these branches stated that they had no objection to Kamuluammal enjoying the zamindari.
On the 19th Kamuluammal asserted that her husband by his will had bequeathed the zamindari to her and had given her permission to make an adoption.
On the same date the representatives of all branches of the family made a joint statement before the Deputy Collector.
The relevant portion of it is in these terms : "We four persons are his heirs to succeed and yet we agree to his widow Kamuluammal taking and enjoying the above said zamin and all other properties save the undermentioned lands set apart for our maintenance.
Remission of the tirwah of the said lands allowed to us and of the tirwah of the lands registered in our names and enjoyed till now, should be granted to us.
" 544 kulies of pannai lands under the Bangaruswami tank and the Marimoor tank were earmarked for the maintenance of the four branches.
The widow made a statement on 20th ac cepting this arrangement.
The Deputy Collector submitted his report on the 5th of January, 1889, to the Collector upholding the will.
The Collector in his turn also recorded the statements of the representatives of the several branch es of the family.
Persons representing the third, fourth and fifth branches adhered to the previous statements made by them but Kandasami of the second branch resiled from his earlier statement and asserted that the 249 family being divided he was the next heir to the zamindari.
No notice was taken in these proceedings of Vadamalai, the half brother of Kamaraja I Sundara Pandiya 's statement before the Collector on the 9th January, 1889, was in these terms : "The wish of the family is that the widow should be in charge of the estate.
I know nothing about the execution of the will.
After the death of the widow, the next heir should succeed.
He is Kandaswami, son of Viswanathaswami Naicker, my eldest brother, deceased. ' ' To the same effect were the statements of Kulasekara of the fourth branch and of Chokkalingaswami of the fifth branch.
Kandaswami 's statement was recorded on the 14th January, 1889, and he said as follows : "I am the next heir to the zamin, the family being undivided.
I must get it." He repudiated his earlier statement on the ground that at that time he was ill and was drowned in sorrow and "some rogue imitated his signature" and put it on his previous statement.
The revenue Officer ordered that the widow 's name be registered as the next person entitled to the zamindari subject to any order that the civil court might make in the case.
On the 1st May, 1889, Kandasami filed O. S No. 16 of 1889 in the court of the Subordinate Judge of Madura im pleading the widow and the Collector as defendants for recovery of the entire zamindari as it then existed, includ ing the villages of Boothipuram and Dombacheri and the pannai lands.
He alleged that he as a member of the undivided Hindu family was entitled to succeed to the zamindari by survivor ship and in accordance with the established rule applicable to the devolution of this zamindari.
Kamuluammal denied this claim and asserted that the zamindari was the separate property of her husband and she was entitled to it in pref erence to her husband 's collaterals.
She also based her claim on the alleged will of her husband.
Sundara Pandiya of the third branch laid a claim to the zamindari and the 33 250 pannai lands on the ground that he as senior in age amongst the family members was entitled to them in preference to Rajaya on the rule of simple primogeniture.
In view of the pending and threatened litigation the contesting parties thought it fit to end their disputes by a mutual settlement beneficial to all of them.
Sundara Pandiya was the first to strike a bargain with the widow.
On the 6th May, 1890, a deed of release (Exhibit P 17) was executed by him in favour of Kamuluammal incorporating the terms of the agreement.
He managed to get from her in consideration of the release the village of Dombacheri absolutely for himself and his heirs.
She bound herself to pay the peishkush and road cess of the said village without any concern about that on the part of Sundara Pandiya.
He was also allowed to enjoy free of rent from generation to generation with power of alienation by way of gift, sale, etc.
the one fourth share in the pannai lands under the irrigation of the Bangaruswami tank and the Marimoor tank and mentioned in the joint state ment made by the several branches of the family before the Deputy Collector in December 1888.
Over and above this, he received a cash payment of Rs. 3,000.
With the exception of Dombacheri village and of the one fourth share in the said pannai lands, all the other properties which belonged to Kamaraja I were to be held and enjoyed with all rights by Kamuluammal and her heirs with the power of alienation thereof by way of gift, sale etc.
absolutely.
The fourth clause of the release is in these terms : "Whatever rights over the said zamin properties and in all the other above mentioned properties, the said Sundara Pandiya Naicker Avargal might possess, he gives up such rights absolutely in favour of the said Kamuluammal Avargal and her heirs enabling them to enjoy them with the power of alienation thereof by way of gift, sale, etc.
and whatever rights the said Kamuluammal might possess over the Dombach eri village and over the lands lying under the irrigation of the Bangarusami tank and the Marimoor tank and specified in the third column of the schedule hereto, 251 which are given up to the aforesaid Sundarn Pandiya Naicker Avargal, the said Kamuluammal Avargal hereby gives up such rights absolutely in favour of the said Pandiya Naicker Avargal and his heirs, enabling them to enjoy them with the power of alienation thereof by way of gift, sale etc.
" Clause 5 runs thus : "The said Kamuluammal and her heirs shall have no claim at all to the properties shown as belonging to Sundara Pandiya Naicker Avargal as aforesaid and the said Sundarn Pandiya Naicker Avargal and his heirs shall have no claim at all to the properties shown as belonging to the said Kamu luammal Avargal.
" This deed was presented for registration on 10th May, 1890.
On the same day O.S. No. 16 of 1889, i.e., Kandasami 's suit, was also compromised Exhibit P 18 contains the terms of that compromise.
The following are its important provi sions : (a) The zamindari shall be enjoyed by Kamuluammal till her lifetime and she shall have no right to mortgage those properties in any way prejudicial to the plaintiff.
(b) Kandasami and his heirs shall after the lifetime of Kamuluammal, enjoy the zamindari excepting Dombacheri vil lage together with such rights if any as the first defendant Kamuluammal may have acquired under the deed of release executed between her and Sundarn Pandiya.
(c) Boothipuram village shall be given to the plaintiff by Kamuluarnmal so that she may enjoy it with absolute rights.
The entire peishkush and the road cess for the entire zamindari inclusive of the said village shall be paid by Kamuluammal.
(d) The one fourth share in pannai lands situated on the irrigation areas of Bangaruswami tank and Marimoor tank shall be enjoyed by Kandaswami and his heirs with powers of alienation and with absolute rights.
(e) Rs. a5,000 shall be paid to Kandasami by Kamuluam mal.
252 (f) All the other pannai lands, buildings and movables which belonged to the deceased Kamaraja Pandiya Naicker shall be held and enjoyed by Kamuluammal and her heirs with powers of alienation etc.
and with absolute rights free from any future claim on the part of Kandaswami and his heirs.
(g) The movable and immovable properties which may be acquired by Kamuluammal from out of the income of the za mindari shall belong to her with power of alienation etc.
and shall go to her own heirs after her lifetime.
(h) Kamuluammal shall not make an adoption.
By the proceedings taken before the Collector and by the arrange ment made under Exhibits P 17 and P 18, the disputes that had then arisen in the family were settled.
Kamuluammal, however, did not with good grace part with the properties which she had agreed to give to others under the arrange ment.
The terms of the compromise had to be enforced against her by a number of suits and actions one by one.
Be that as it may, it is not denied now that the arrangement arrived at was eventually acted upon.
Kandasami and his sons enjoyed the Boothipuram village and one fourth of the pannai lands in the two tanks absolutely.
Sundara Pandiya and his descendants enjoyed Dombacheri and one fourth pan nailands, the fourth and fifth branches obtained possession of one fourth share of the pannai lands under the two tanks.
Kamuluammal secured revenue registration and remained in possession of the property down to the date of her death on lath January, 1921.
On her death the estate became vested in the possession of Kamaraja II, the sole male representative of the second branch, his father Kandasami and his brother Viswanathaswami having predeceased Kamuluam mal.
He had been married to Chinnathayi (Veeralakshmi) one of the grand daughters of Kamuluammal during her lifetime.
In the year 1925, the zamindar of Saptur, the son of Kamulu 's deceased daughter Meenakshi, instituted 253 O.S. No. 7 of 1925 against his sisters, Chinnathayi and Periathayi, and Kamaraja II, for recovery of the pannai lands and buildings which had vested absolutely in Kamulu under the compromise decree, on the allegation that these were held by her as a widow 's estate and that he as the daughter 's son was entitled to succeed to them.
The suit was resisted by the two sisters on the plea that these lands were stridhanam properties of Kamulu and they as stridhanam heirs were entitled to them in preference to their brother.
Kamaraja II contended that he was entitled to these lands and buildings as they formed an integral part of the zamind ari and were treated as such by Kamulu.
This suit was dis missed and the plea of the two sisters was upheld.
On 9th June, 1934, both of them executed a deed of release in favour of Kamaraja II whereby they conceded his claim to the pannai lands and the buildings as being appurtenant to the zamindari in consideration of his agreeing to pay Rs. 300 per mensem for life to each of them.
On the death of Kamaraja II on the 16th February, 1941, as already stated, the second branch of the family became extinct, and disputes arose in regard to the succession to the zamindari, pannai lands, buildings etc.
and the village of Boothipuram.
As above stated, the claimants to the za mindari are three in number, Rajaya of the third branch, Kulasekara of the fourth branch, and Chinnathayi alias Veeralakshmi, the widow of the late zamindar.
The District Court and on appeal the High Court have concurrently held that Rajaya was the person entitled to the zamindari.
The District Court further held that the village of Boothipuram continued to be part of the zamin and decreed the same to the plaintiff Rajaya.
As regards the pannai lands, it was held that these had been conveyed absolutely to Kamulu under Exhibit P 18 and that her daughter 's daughters, Periathayi and Chinnathayi.
succeeded to the same as her stridhanam heirs and that the release deed executed by them on the 9th June, 1934, was invalid and inoperative to convey a valid title to Kamaraja 11.
On appeal the High Court 254 confirmed the findings of the District Court as regards the pannai lands and buildings but reversed its findings as regards succession to Boothipuram.
It held that Kandasami obtained Boothipuram village as his selfacquired property and that Chinnathayi was entitled to succeed to the same on the demise of her husband Kamaraja II.
The various sets of parties have preferred the above appeals against the deci sion of the High Court to the extent it goes against them.
The points for determination in these appeals are the following : 1.
Who out of the three claimants is entitled to the zamindari.
Whether Boothipuram village is still an integral part of the zamindari or did it become the self acquired property of Kandasami by the compromise, Exhibit P 18. 3.
Whether the pannai lands and buildings are part of the zamindari or became the stridhanam of Kamuluammal by the compromise decree and did not merge in the zamindari by the release deed of 1934.
The question relating to the pannai lands and buildings can be shortly disposed of.
Both the courts below have held that under the arrangement arrived at amongst the members of this family in the year 1890 these lands became the stridha nam of Kamuluammal and passed on to her stridhanam heirs, i.e., her granddaughters Chinnathayi and Periathayi, and that the deed of release executed by the two sisters in favour of Kamaraja II was vitiated by fraud and was not binding on Chinnathayi and the other heirs.
This finding could not be seriously disputed by Mr. Somayya appearing for Rajaya or by Mr. Raghavan appearing for Kulasekara.
It was faintly argued that the pannai lands were left with the widow in the same status in which she was allowed to retain the zamindari.
This contention is contrary to the clear recitals of the compromise deed.
Kamuluammal was a forceful personality and it seems clear that she agreed to accept the title of Kandasami as next entitled to the 255 estate and to give up her contention based on the will because she was given the zamindari for her lifetime and these pannai lands and buildings absolutely.
Kandasami in whom the inheritance had vested was competent, in view of the decision in Sartaj Kuari 's case(1), to alienate these lands in her favour and to vest her with absolute interest in them.
It has therefore been rightly held that Kamulu became the absolute owner of the lands which in due course devolved on her grand daughters and ceased to be part of the joint family estate.
Moreover, it does not lie in the mouth of Sundarn Pandiya 's descendants to challenge Kamuluammal 's absolute title to these lands while retaining absolute title in the village of Dombacheri which under the same arrange ment Sundarn Pandiya got absolutely with rights of aliena tion.
It was conceded that to the family arrangement ar rived at in the year 1890 and evidenced by the statements made before the Collector, the recitals contained in the release deed, Exhibit P 17, and those made in the compromise deed, Exhibit P 18, all the members of the family were either parties or they accepted it and acted upon it.
The result is that the widow Chinnathayi is entitled to the possession of those lands and no other person has any right to them whatever.
As regards Boothipuram village, the point is a simple one.
Under the compromise, Exhibit P 18, this village was left with Kandasami, the person next entitled to the zamind ari after the death of Kamaraja I.
It was separated from the zamindari estate which remained m possession and enjoyment of Kamuluammal for her lifetime.
It was said in the compro mise that Kandasami would be the absolute owner of this village.
It was argued by Mr. Somayya, and the same was the view taken by the trial Judge, that Kandasami being the holder of an impartible estate could not by his own unilat eral act enlarge his estate and take a part of this estate in a different right than the right of a holder of an im partible zamindari and that he could not make it separate property by his own act.
(1) (1888) 15 I.A. 51.
256 The High Court did not accept this view but reached the decision that all the branches of the family agreed to Kandasami having this village as his private property and that by common consent it was taken out of the zamindari and given to him absolutely and it was thus impressed with the character of separate property.
On Kandasami 's death it devolved on his son by succession and not by survivorship and Chinnathayi has a widow 's estate in it after the death of her husband.
In the High Court it was conceded that all the members of the family were aware of the terms of the family arrangement and were bound by them.
In view of this concession it seems to us that it is not open to any of the parties to these appeals to deny at this stage the right of the widow to this village as an heir to her husband 's es tate.
The main fight in all these appeals centres round the title and heirship to the zamindari.
The question four determination is, whether the zamindari by some process became the separate property of Kandasami and that of his son Kamaraja II.
If it became the separate property of Kamaraja II, then Chinnathayi, his widow, would succeed to it on his death; on the other hand, if the zamindari re tained its character of joint family property in the hands of Kamaraja II, then the question to decide is whether as a result of the arrangement made in 1890 Sundarn Pandiya relinquished his right to succeed to the family zamindari on the failure of nearest male heirs of Kandasami.
If such relinquishment on his part is held satisfactorily estab lished, then Kulasekara of the fourth branch would be enti tled to succeed to the zamindari; otherwise Rajaya of Sun darn Pandiya 's branch alone is entitled to it under the rule of succession applicable to the devolution of the zamindari.
The claim made by the widow that the zamindari became by the arrangement of 1890 the separate property of Kandasami was disallowed by the High Court on the short ground that the documents, Exhibits P 17 and P 18, read along with the various statements made in 1889 cannot be read as changing the character 257 of the estate from that of an impartible estate belonging to the joint family to an estate owned by Kandasami in his individual right.
In the view of the High Court the only change effected by the arrangement so far as the estate was concerned was to defer the right of Kandasami to its posses sion as the next in succession until after the death of Kamuluammal.
Kandasami could not himself make it his own private property and this was conceded by all.
After hear ing Mr. Pathak at considerable length we are in agreement with the High Court on this point.
Mr. Pathak argued that on the true construction of Exhibits P 17 and P 18 and on the evidence furnished by these two documents and the statements made antecedent to their execution and also in view of the subsequent conduct of the parties, the correct inference to draw was that all the five branches of the family separated in the year 1890 and thus put an end to the joint family character of the zamindari that Kandasami was allotted the zamindary, Boot hipuram village and one fourth pannai lands under the two tanks, Sundara Pandiya was allotted Dombacheri village and one fourth of the pannai lands and that the fourth and fifth branches in lieu of their share were assigned one fourth of the pannai lands irrigated by the two tanks mentioned above and by these allotments the joint family was completely disrupted and the properties allotted to the different branches became their separate properties.
Reference was made to the decisions of the Privy Council in Vadreun Ranganayakamma vs Vadrevu Bulli Ramaiya (1); Sivagnana Tevar vs Periasami(2); Thakurani Tara Kumari vs Chaturbhuj Narayan Singh (3); and it was contended that the present case was analogous to the facts of those cases and should be decided on similar lines.
We are of the opinion that the facts of none of those cases bear any close resem blance to the facts of the present case.
The decision in (1) (3) (1915) 42 I.A. 192, (2) (1877) 5 I.A. 51. 34 258 each one of those cases was given on their own peculiar set of circumstances.
In the first case the owner of an impartible zamindari forming part of family property died leaving four sons and an infant grandson by his eldest son.
During the minority of the grandson the four surviving sons executed a sanad which directed that the zamindari should be held by the grandson and that they should take an equal share of the inam lands and also manage the zamindari during the infancy of the grandson, which on his attaining majority had to be handed over to him, each confining himself to the share of the inam lands allotted to them.
Certain family jewellery was also divided in a similar manner.
This grandson then died leaving a son, who also died without any issue but leaving a widow.
Her title to the zamindari was denied by the descendants of the four sons of the zamindar.
It was held that the sanad amounted to an agreement by which the joint family was divided and that on the death of the last holder his widow was entitled to the zamindari.
It was observed in this case that having partitioned the lands, the parties to the sanad proceeded to partition the jewels and this circumstance was inconsistent with the supposition that the document was executed with the intention of merely providing allotments in lieu of maintenance.
It is clear from the facts of this case that the family owned other coparcenary properties besides the zamindari and the zamind ari in dispute fell to the lot of the grandson as his sepa rate property.
There were other materials in the case indicating that there was complete separation between the members of this family.
In the next case an impartible zamindari had devolved on the eldest of three undivided Hindu brothers.
He exe cuted an instrument appointing his second brother to be zamindar.
The instrument recited that if the widow of the deceased who was pregnant did not give birth to a son but a daughter, he and his offspring would have no interest in the zamindari of 259 which his younger brother would be the sole zamindar who would also allow maintenance to the third brother.
The widow gave birth to a daughter and the second brother took over the zamindari.
The third brother also died without issue.
On the death of the second brother his son succeeded and the zamindari devolved on him who died leaving a widow.
The son of the eldest brother who had renounced the zamind ari sued to recover the estate against the widow.
It was held that the instrument executed by the eldest brother was a renunciation by him for himself and his descendants of all interests in the zamindari either as the head or as a junior member of the joint family and consequently it became the separate property of the second brother and the widow was entitled to succeed to it in preference to the line of the eldest brother.
The document on the interpretation of which this decision was given was in these terms : "I and my offspring shall have no interest in the said palayapat, but you alone shall be the zamindar and rule and enjoy the same, allowing, at the same time, as per former agreement to the younger brother, P. Bodhagurusami Tevar, who in the pedigree is called Chinnasami, the village that had been assigned to him before.
" These words were interpreted as amounting to a renuncia tion of all interest in the palayapat either as the head of or as a junior member of the joint family.
The rights of the youngest brother Chinnasami were expressly reserved.
It was said that the effect of the transaction was to make the particular estate the property of the two instead of the three brothers, with, of course, all its incidents of im partibility and peculiar course of the descent, and to do so as effectually as if in the case of an ordinary partition between the eider brother on the one hand and the two young er brothers on the other, a particular property had fallen to the lot of the other two.
Other clauses in the deed and the attending circumstances fully corroborated the construc tion placed upon it.
260 In the last case the holder of an impartible estate of a joint Hindu family made a mokurari grant to his younger brother for maintenance.
The grantee built a separate house, divided from his brother 's by a wall, established therein a tulsi pinda and thakurbari, and lived there sepa rately from his brother.
He derrayed the marriage expenses of his daughter subsequently to the grant.
Upon these facts it was held that there was a complete separation between the brothers, and that the impartible estate consequently became separate property of the holder whose widow was entitled to succeed and have a widow 's estate in the zamindari.
It was observed that the evidence clearly proved that there had been complete separation between Thakur Ranjit Narayan Singh and his brother Bhupat Narayan Singh in worship, food and estate.
In our opinion, the decision in this case must be limited to the facts therein disclosed and can have no general application to cases of impartible estates where the only right left to the junior members of the family is the right to take the estate by survivorship in case of failure of lineal heirs in the line of the last zamindari.
The junior members can neither demand partition of the estate nor can they claim maintenance as of right except on the strength of custom, nor are they entitled to possession or enjoyment of the estate.
In our opinion, division amongst the members of this family by allotment of properties was not possible as the only property known to belong to the family was the imparti ble zamindari of which partition could not be made or de manded.
To establish that an impartible estate has ceased to be joint family property for purposes of succession it is necessary to prove an intention, express or implied, on the part of the junior members of the family to give up their chance of succeeding to the estate.
In each case, it is incumbent on the plaintiff to adduce satisfactory grounds for holding that the joint ownership of the defendant 's branch in the estate was determined so that it became the separate property of the last holder 's branch.
The test to be applied is whether the 261 facts show a clear intention to renounce or surrender any interest in the impartible estate or a relinquishment of the right of succession and an intention to impress upon the zamindari the character of separate property.
Reference in this connection may be made to the decision of the Privy Council in Konammal vs Annadana (1).
In that case on the death of a holder, his eider son being feeble in mind, his younger son succeeded to the zamindari by an arrangement with the adult members of the family in the year 1922.
The estate then descended from father to son till 1914 when the junior branch became ex tinct and possession was taken by a senior member of the branch who claimed it by survivorship; while the mother of the last holder claimed the estate as an heir to separate property, and it was held that the setting aside of the eider son in 1822 did not deprive his descendants of their rights as members of the family to succeed on failure of the junior branch.
In this case there was complete passing over of one branch of the family to succession vested in the next junior branch; yet when that branch failed, the mem bers of the senior branch were held yet to possess their right to succeed to the zamindari by survivorship.
In Collector of Gorakhpur vs Ram Sundar Mal(1), the claim of a Hindu to succeed by survivorship to an ancestral impartible estate was in issue in the suit.
The family admittedly had been joint.
It appeared that the common ancestor of the deceased holder and of the claimant had lived 200 years before the suit, that for a long period there had been a complete separation in worship, food and social intercourse between the claimant 's branch of the family and that of the deceased holder, and that upon the death of the holder the claimant had not disputed that the widow of the deceased was entitled to succeed.
It was held that there was not to be implied from the circumstances (1) (1928) 55 I.A. 114.
(2) All. 468 (P.C.).
262 stated above a renunuciation of the right to succeed so as to terminate the joint status for the purposes of that right.
In Sri Raja Lakshmi Devi Garu vs Sri Raja Surya Nara yana Dhatrazu Bahadur Garu (1), the last zamindar died without any issue in 1888, and when his widow was in posses sion, the suit was brought for possession by a male collat eral descended from a great grandfather common to him and to the last zamindar.
The plaintiff claimed to establish his right as a member of an undivided family holding joint property against the widow who alleged that her husband had been the sole proprietor.
In proof of this she relied on certain arrangements as having constituted partition, viz., that in 1816, two brothers, then heirs, agreed that the eider should hold possession, and that the younger should accept a village, appropriated to him for maintenance in satisfaction of his claim to inherit; again, that in 1866, the fourth zamindar compromised a suit brought against him by his sister for her inheritance, on payment of a stipend to her having already, in the claim of his brother, granted to him two villages of the estate; and by the compromise, this was made conditional on the sister 's claim being set tled; again, that in 1871, the fourth zamindar having died pending a suit brought against him to establish the fact of an adoption by him, an arrangement was made for the mainte nance of his daughter, and two widows, who survived him, the previous grant for maintenance of his brother holding good, the adoption being admitted, and the suit compromised.
It was held that there was nothing in the arrangement which was inconsistent with the zamindari remaining part of the common family property and that the course of the inheritance had not been altered.
The facts of this case were much stronger than those of the present one.
The mere circumstance that by an arrangement a village out of the zamindari was given to one of the brothers was not inconsistent with the zamindari remaining part of the common family property.
(1) (1897)I.L.R. 263 The document executed by the brother in the reported case was in these terms : "I or my heirs shall not at any time make any claims against you or your heirs in respect of property movable or immovable, or in respect of any transaction.
As our father put you in possession of the Belgam zamindari, I or my heirs shall not make any claim against you or your heirs in respect of the said zamindari.
" It was observed by their Lordships that they did not find any sufficient evidence in the arrangement made by these documents of an intention to take the estate out of the category of joint or common family property so as to make it decendible otherwise than according to the rules of law applicable to such property, that the arrangement was quite consistent with the continuance of that legal charac ter of the property, that the eider brother was to enjoy the possession of the family estate, and the younger brother accepted the appropriated village for maintenance in satis faction of such rights as he conceived he was entitled to and that it was nothing more in substance than an arrange ment for the mode of enjoyment of the family property which did not alter the course of descent.
The evidence in the present case is trivial and incon clusive and from the documents above mentioned no intention can be deduced on the part of the junior members or on the part of any other member of the family of disrupting and dividing the family and renouncing their expectancy of succession.
On the other hand, the statements made in 1880 and 1800 by the members of the family clearly indicate that none of them had any intention of giving up his rights of heirship to the zamindari.
There was no change of this frame of mind at any later stage of the family arrangement.
Sundara Pandiya on the 9th January, 1889, clearly stated that the wish of the family was that the widow should be in charge of the estate and after her the next heir should succeed and that it was Kandasami.
Kandasami said that he was the next 264 heir, the family being undivided.
In the compromise this statement was reiterated.
Their intention was to preserve their rights to take the zamindari if the line of Kandasami became extinct.
Mr. Pathak then put his ease from a different point of view.
He urged that Kandasami had the power to alienate 'the zamindari or any part of it and by an act of alienation he could defeat the right of survivorship vesting in the other members to claim the zamindari on failure of his line.
Similarly he said he could divide the impartible estate amongst the different members of the family and that is what he must be presumed to have done in the present 'case.
The argument, though plausible, is fallacious.
The right to bring about a partition of an impartible estate cannot be inferred from the power of alienation that the holder thereof may possess.
In the case of an impartible estate the power to divide it amongst the members does not exist, though the power in the holder to alienate it is there and from the existence of one power the other cannot be deduced, as it is destructive of the very nature and character of the estate and makes it partible property capable of partition.
It seems to us that Kandasami instead of intending to separate from the family was by his actions consolidating the family unity.
By the family arrangement he no doubt successfully got himself declared as the next person enti tled to hold the joint family zamindari, but he evinced no intention of converting it into his own separate property: He preserved the estate for the family by saving it from the attack of the widow who wanted to take it under the will of her husband and antagonistically to the family.
By the suit which he brought and which was eventually compromised he successfully avoided that attack on the family estate at the sacrifice of his right of enjoying it during the lifetime of the widow.
He also by this arrangement safeguarded himself against the attack of Sundara Pandiya on his title as an heir.
By his act the rule of descent of lineal primogeni ture prevailing in the family with regard to the zamindari was firmly 265 established.
It would be unjust and uncharitable to conclude from the circumstances that the actions of Kandasami in 1890 were in any way hostile to the interests of the family.
As he was throughout acting for the benefit of the family his actions were approved by all the members and they got a provision made for themselves for their maintenance in the arrangement.
In the suit that he filed against Kamuluammal he in unambiguous terms alleged that he was claiming the zamindari as a member of the undivided Hindu family and it was in that status that he made the compromise with her and agreed to obtain possession of the estate after her death.
After Kandasami 's death ' when the zamindari came by descent to Kamaraja II, he also followed in the footsteps of his ancestor.
During the period of his stewardship of the estate he tried to implement it by recovering the pannai lands which under the compromise had gone out of the estate to Kamulu absolutely.
He was successful in his efforts though as a result of the decision in the present case his labours in this direction have proved futile as the release deed has been held to be vitiated by fraud.
For the reasons given above we hold that there exist no satisfactory grounds for holding that the arrangement made in 1890 evidences a partition amongst the members of the joint family or proves an intention on the part of the junior members of the family to renounce their expectancy of succession by survivorship on failure of male lineal de scendants in the second branch of the family.
The question whether there was separation among the members of the family is primarily a question of fact and the courts below having held that it is not proved, there are no valid grounds for disturbing that finding.
Chinnathayi 's claim therefore to the zamindari must be held to have been rightly disallowed.
As regards the claim of Kulasekara to the zamindari, it has been disallowed in the two courts below on the ground that the deed of release, Exhibit P 17, 35 266 does not extinguish the right of survivorship of the third branch to take the estate on the second branch becoming extinct and that the document could not be read as evidenc ing an intention on the part of Sundara Pandiva to surrender the right of succession of his branch.
It has been further held that the release was not executed in favour of the head of the family or in "favour of all the members of the family in order to be operative as a valid relinquishment.
There can be no doubt that a member of a joint family owning an impartible estate can on behalf of himself and his heirs renounce his right of succession; but any such relinquish ment must operate for the benefit of all the members and the surrender must be in favour of all the branches of the family, or in favour of the head of the family as represent ing all its members.
Here the deed was executed in favour of the widow of a deceased copgrcener who as such was a stranger to the coparcenary, the family being admittedly joint at the death of Kamaraja I.
It was contended that in view of the attitude taken by the parties before the High Court that the deed of release and the compromise evidenced only one arrangement to which all the members were in reali ty parties it should be held that the surrender of his rights by Sundara Pandiya was made in favour of Kandasami, the head of the family, and it extinguished the rights of the third branch in the family zamindari.
We think, howev er, that Kandasami in dealing with Sundara Pandiya was safeguarding his own right of succession against the attack personally directed against him and was successful in buying him off by agreeing to hand over to him a village.
Both of them were claiming headship of the family on different grounds and both were asserting that the zamindari belonged to the joint family.
In the compromise Kandasami was acting for his own benefit and was not making any bargain with Sundara Pandiya on behalf of the family.
The family as such could not have been prejudiced in any way by the circum stance that succession went to one or the other.
Be that as it may, we think the decision 267 of this case can be made to rest on a more solid foundation than furnished by the considerations set out above.
The whole emphasis of Mr. Raghavan who represented Kulasekara was on the words of the deed contained in clause 5 set out above.
Sundara Pandiya by this clause stipulated that he will have no right to the property shown as belonging to the widow.
Sundara Pandiya was then agreeing that the widow should retain the zamindari absolutely, his mind being affected by the will.
Later on by the compromise made in Kandasami 's suit what had been given absolutely to the widow was converted into a life estate with the excep tion of the pannai lands and Kandasami was acknowledged as the rightful heir.
The recitals in the release deed there fore have to be read in the light of the terms and condi tions of the deed of compromise and the proper inference from these is that Sundara Pandiya relinquished his rights to succeed to the zamindari immediately as the seniormost member of the family but that he did not renounce his con tingent right of succeeding to it by survivorship if and when the occasion arose.
It is well settled that general words of a release do not mean release of rights other than those then put up and have to be limited to the circum stances which were in the contemplation of the parties when it was executed: vide Directors etc.
of L. & S.W. Ry.
Co. vs Richard Doddridge Blackmore (1).
In that case it was said that general words in a release are limited to those things which were specially in the contemplation of the parties when the release was executed.
This rule is good law in India as in England.
The same rule has been stated in Norton on Deeds at page 206 (2nd Ed.) thus : "The general words of a release are limited always to that thing or those things which were specially in con templation of the parties at the time when the release was given, though they were not mentioned in the recitals." (1) 268 In Hailsham 's Edition of Halsbury 's Laws of England, Vol. 7, at para 345 the rule has been stated in these terms : "General words of release will be construed with refer ence to the surrounding circumstances and as being con trolled by recitals and context so as to give effect to the object and purpose of the document.
A release will not be construed as applying to facts of which the creditor had no knowledge at the time when it was given." In Chowdhry Chintaman Singh vs Mst.
Nowlukho Kunwari(1), where the document was drafted in almost the same terms as Exhibit P 17, it was said that though the words of the petition of compromise were capable of being read as if the executants were giving up all rights whatever in the taluka of Gungore, yet in the opinion of their Lord ships the transaction amounted to no more than an agreement to waive the claim to a share in and to the consequent right to a partition of the taluka and there was no intention to change the character of the estate or the mode in which it was to descend.
The parties in the year 1890 were not thinking of their future rights of survivorship at all.
What Sundara Pandiya must be taken to have said by this release was "I am giving up my present rights as a senior member in favour of Kandasami whom I recognize as the right ful heir to the zamindari as a member of the joint Hindu family." Kandasami agreed to give him the village of Domb acheri in lieu of recognition of his title by him.
It was not within the ken of the parties then as to what was to happen to the zamindari in case Kandasami 's line died out.
For the reasons given we are of the opinion that by the release Sundara Pandiya did not renounce his rights or the rights of his branch to succeed to the zamindari by survi vorship in case the line of Kandasami became extinct.
We hold therefore that (1) (1874) 2 I.A. 263.
269 Kulasekara 's claim was rightly negatived in the courts below and that of Rajaya was rightly decreed.
In the result all these appeals fail and are dismissed with costs.
Appeals dismissed.
Agent for the appellant in Civil Appeals Nos.
28 & 29 of 1949, respondent No. 1 in Civil Appeals Nos. 30, 32 & 33 of 1949 and respondent No. 2 in Civil Appeal No. 31 of 1949 and for Respondent No. 3 m Civil Appeal No. 31 of 1949: M.S.K. Sastri.
Agent for the appellant in Civil Appeals Nos. 31 to 33 of 1949, respondent No. 1 in Civil Appeals Nos. 28, 29 of 1949 and respondent No. 2 in Civil Appeal No. 30 of 1949: M.S.K. Aiyangar.
Agent for the appellant in Civil Appeals Nos. 30, 89 and 90 of 1949, respondent No. 1 in Civil Appeal No. 31 of 1949 and respondent No. 2 in Civil Appeals Nos.
28, 29, 32 & 33 of 1949: section Subrahmanyam.
Agent for the respondents Nos. 1 and 2 in Civil Appeals Nos. 89 and 90 of 1949: V.P.K. Nambiyar.
| IN-Abs | To establish that an impartible estate has ceased to be joint family property for purposes of succession it is necessary to prove an intention, express or implied, on the part of the junior members of the family to give up their chance of succeeding to the estate.
In each case it is incumbent on the plaintiff to adduce satisfactory grounds for holding that the joint ownership of the defendant 's branch in the estate was determined so that it became the separate property of the last holder 's branch.
The test to be applied is whether the facts show a clear intention to renounce or surrender any interest in the impartible estate or a relinquishment of the right of succession and an inten tion to impress upon the zamindari the character of separate property.
The right to bring about a partition of an impartible estate cannot be inferred from the power of alienation that the holder thereof may possess.
In the case of an imparti ble estate the power to divide it amongst the members does not exist, though the power in the holder to alienate it is there, and from the existence of the one power the other cannot be deduced, as it is destructive of the very nature and character of the estate and makes it partible property.
A member of a joint family owning an impartible estate can on behalf of himself and his heirs renounce his right of succession but any such relinquishment must operate for the benefit of all the members and the surrender must be in favour of all the branches of the family as representing all its members.
General words of release in a release deed do not mean release of rights other than those then put up, and have to be limited to the circumstances which were in the contempla tion of the parties when it was executed.
32 242 On the death of the holder of an impartible estate who represented the first branch his widow K got into possession claiming that the estate was the separate property of her husband and also under a will.
Disputes arose between her and the members of the 2nd, 3rd and 4th branches of the family and these were settled amicably.
S who was the senior member of the 3rd branch obtained village D and one fourth of certain pannai lands as absolute owner and exe cuted a release deed on 6th May, 1890, in these terms: "Whatever rights over the said zamin properties and in all other above mentioned properties S might possess he gives up such rights absolutely in favour of the said K and her heirs enabling them to enjoy them with the power of alienation thereof by gilt, sale, etc. .
The said S and his heirs shall have no claim at all to the properties shown as belonging to K 'S who represented the 2nd branch and had instituted a suit against K compromised the suit on the 10th May, 1890, under a deed which provided inter alia: (i) that the zamindari shall be enjoyed by K till her lifetime and that KS and his heirs shall after the lifetime of K enjoy the zamindari except village D which was given to S; (ii) village B and one fourth of certain pannai lands shall be given to KS absolutely; (iii)all other pannai lands, build ings and movables which belonged to K 's husband shall be enjoyed by K and her heirs absolutely." On the death of K the estate became vested in Z, the son of KS.
On the death of Z without issue the second branch became extinct and disputes arose with regard to the ownership of the pannai lands and buildings, village B, and the zamindari between the widow of Z (who was the grand daughter of K) and the senior members of the 3rd and 4th branches: Held (i) that as KS was competent to alienate the pannai lands and buildings in favour of K and vest her with absolute title, and S had also agreed to give them to her absolutely, K became the absolute owner of these lands and buildings and these ceased to be part of the joint estate and devolved on the grand daughters of K as her stridhana heirs.
(ii) In view of the arrangement of 1890 it was not open to any of the parties to deny that the village B was separated from the zemindari and given to KS absolutely as his private property.
The village consequently devolved on Z as separate property and on his death it devolved on his widow.
(iii) The arrangement made in 1890 did not evidence a partition amongst the members of the joint family or prove an intention on the part of the junior members of the family to renounce their expectancy of succession by survivorship on failure of the male lineal descendants in the branch of KS.
(iv) That the recitals in the release deed executed by S had to be read in the light of the compromise in the suit of KS, and the 243 proper inference from both the documents read together was that S renounced only his right to succeed to the zemindari immediately as the seniormost member of the family and that he did not renounce his right or the right of his branch to succeed to the zemindari by survivorship if and when occa sion arose; the senior member of the 3rd branch was there fore entitled to succeed to the zemindari in preference to the senior member of the 4th branch and the widow of Z. Vadrevu Ranganayakamma vs Vadrevu Bulli Ramaiya (5 C.L.R.439), Sivagnana Tear vs Periasami (5 I.A. 51) and Thakurani Tara Kumari vs Chaturbhuj Narayan Singh (42 I.A. 192)distinguished.
Sartaj Kuari 's case (15 I.A. 51), Konammal vs Annadana (55 I.A. 114), Collector of Gorakhpur vs Ram Sunder Mal (I.L.R. 56 All. 468 P.C.), Sri Raja Lakshmi Devi Garu vs Sri Raja Surya Narayana (I.L.R. P.C.) and Directors etc.
of L.& S.W. Ry.
Co. vs Richard Doddridge referred to.
The Judgment of the Madras High Court affirmed.
|
Appeal No. 752 of 1966.
Appeal by special leave from the Award dated February 18, 1965 of the Labour Court, Assam in Reference No. 38 of 1962.
H. R. Gokhale, G. L. Sanghi and K. P. Gupta, for the appellants.
section V. Gupte, Solicitor General and D. N. Mukherjee, for respondent No. 1.
M. M. Kshatriya, G. section Chatterjee for P. K. Bose, respondents Nos. 2 and 3.
The Judgment of the Court was delivered by Vaidialingam, J.
This appeal, by special leave, by the workmen of Brahmputra Tea Estate, is directed against the award, dated February 18, 1965, of the Labour Court, Assam, in Reference No. 38 of 1962, holding that the Reference has become infructuous.
The circumstances.
under which the Reference was made, by the Government of Assam, may be stated.
The Brahmputra Tea Estate (hereinafter called the Tea Company), comprised of three gardens, viz., Negheritting, Rangamati and Missamara Tea Estates, with their outer gardens, were owned and managed by Brahmputra Tea Co. (India) Ltd. The Tea Company had incurred very heavy liabilities; and hence, on November 6, 1956, it created an equitable mortgage, by deposit of title deeds, in favour of the Eastern Bank Ltd., (hereinafter called the Bank).
The gardens, mentioned above, formed part of the security covered by the equitable mortgage.
This memorandum of equitable mortgage was registered on November 26, 1956.
As the Tea Company failed to make payment of the money due to the Bank, the latter filed Suit No. 21 of 1957, in the Court of the Subordinate Judge, Upper Assam, District Jorhat, for enforcing its rights, under the equitable mortgage.
A preliminary decree was passed, on February 21, 1958; this was followed, by a final decree, on September 19, 1960.
L/J(N)76SCI 14(a) 628 In the meantime, on September 16, 1958, the Calcutta High Court had ordered the winding up of the Tea Company, because of certain defaults made by it.
Mr. D. A. Weatherson, of the Bank, who had been appointed, by.the,Jorhat Court, as Receiver of the Tea Gardens, by his letter.
dated December 30, 1958, intimated the Superintendent of the Tea Gardens, about the windingup order, passed by the Calcutta High Court on September 16, 1958, and stated that the winding up order operated as a statutory 'notice of discharge, of all officers and employees of the Tea Company; nevertheless, the Receiver stated that he desired to offer employment to all the members of the staff who were employed in tile Tea Gardens on November 18.
1958, with the exception of fifteen employees, mentioned by him.
The Superintendent was requested to obtain the consent of the members of the staff, regarding the offer made by the Receiver.
It may be stated, at this stage, that the fifteen employees, who were excluded in the letter of the Receiver, were the persons, whose claims were referred, by the Government of Assam, to; the Labour Court.
in Reference No. 38 of 1962.
The Superintendent, in his turn, sent communication, dated January 19, 1959, to the various workmen, offering employment, on behalf of the Receiver, and requesting them to intimate acceptance; but, so far as the fifteen workmen, referred to above, were concerned, the Superintendent sent communication.
to each of them on August 21, 1961, terminating their services, with one month 's notice.
The workmen concerned were also promised to be paid the Provident Fund amounts that might stand to their credit.
It was specifically stated, by the Superintendent, that the communication was being sent, by him.
on behalf of tile Receiver of the Tea Company and that the termination of the services of the workmen was because of their age.
The Assam Chah Karmachari Sangha (hereinafter called the Karniachari Sangha) complained to the Conciliation Officer, Assam, stating that the termination of the services of the fifteen workmen, concerned, was illegal and arbitrary.
Though tile Conciliation Officer appears to have taken some steps to effect conciliation, he could not proceed further, because the Superintendent of the Tea Gardens regretted his inability to participate in the conciliation proceedings, as he had not been authorized to do so, by the Receiver of the Tea gardens.
Nevertheless, the Conciliation Officer, on September 18, 1961, wrote to the Receiver, direct, suggesting payment of compensation to the workmen concerned; but that suggestion was riot accepted.
by the Receiver.
On February 18, 1961.
the Bank assigned all its rights, under the mortgage dated November 6, 1956 and the decree in Suit No. 21 of 1957, in favour of M/s Shaw Wallace & Co. Ltd. The Registrar of Companies, West Bengal, Calcutta, in or about 1960, 629 had filed a petition, in the Calcutta High Court for the winding up of the Tea Company, as it had failed to comply with certain statutory requirements.
By order dated June 16, 1961,the Calcutta High Court ordered the winding up of the Tea Company.
and appointed Shri H. K. Ganguli, the Official Liquidator of the High Court, as the Official Liquidator of the Tea Company.
On September 19, 1961.
the Calcutta High Court passed an order, withdrawing to its file, suit No. 21 of 1957, from the Jorbat Court, and the said suit was numbered as Transfer, Company Suit No., 7 of 1962.
On October 5, 1961.
the Calcutta High Court directed the substitution of the name of M/s Shaw Wallace & Co. Ltd., in (lie place of the Eastern Bank Ltd., in the suit; and it also appointed Shri K. C. Ganguli as Receiver of the Tea Gardens in the place of the Receiver appointed by the Jorhat Court.
The new Receiver, Shri K. C. Ganguli, was also put in possession and management of the said properties.
Therefore, the position was that the Tea Company, whose windingup had been ordered, was with the Official Liquidator.
and the Tea Gardens of the company, were in the possession and management of tile Receiver, appointed in the mortgage suit.
On July 27, 1962, the Government of Assam referred to the Labour Court, Assam, an industrial dispute between the management of Brahmaputra Tea Estate (Receiver in Possession) and their workmen, represented by the Karamchari Sangh.
The dispute that was referred, related to the justification, of the action of the management of the Tea Estate, in terminating the services of the fifteen employees, and, as to whether.
those fifteen workmen were entitled to reinstatement, or any other relief, in lieu thereof.
The fifteen workmen, referred to in this reference, are the identical workers whose services had been terminated, by the issue of the notice on August 21, 1961, by the Superintendent of the Tea Gardens, on behalf of the Receiver.
This is the reference, which had been numbered as Reference No. 38 of 1962.
We shall advert, later, to the claims made by the workmen, as well as the contest made, by the first respondent, before us.
The Labour Court, on receipt of this reference.
issued the necessary notices, on August 26, 1962.
In the liquidation proceedings, the Calcutta High Court, on August 17, 1962, permitted the Official Liquidator to sell the Tea Gardens, which were the subject of mortgage, and also certain other items of moveables.
The Official Liquidator, on the basis of this order, conveyed, by registered sale deed, dated August 11.
1962, in favour of Shri Ram Gopal Sahariya, the first respondent herein, the equity of redemption in the three Tea Gardens, and also certain tractors, lorries and other items of machinery, for a total consideration of Rs. 5,20,000.
This total consideration was made Lip of Rs. 2,20,000, being the price of the moveables and 630 Rs. 3,00,000 stated to be the value of the equity of redemption.
The sale, in favour of the first respondent, was specifically by the Official Liquidator, acting on behalf of the Tea Company, and what was conveyed in the Tea Gardens, was the equity of redemption, owned by the Tea Company, and the sale was subject to the mortgage decree and the liabilities payable to M/s Shaw Wallace & Co., Ltd. On September 18, 1962, the first respondent 's name was ordered, by the Calcutta High Court, to be included in Transfer Company Suit No. 7 of 1962.
The Court further ' discharged Shri K. C. Ganguli, from his Receivership in the suit, and he was also directed to deliver possession of the three Tea Gardens belonging to the Tea Company, to the first respondent.
The first respondent, on his own claim, by virtue of the purchase from the Official Liquidator, has become the sole proprietor of the Tea Gardens; he also got actual possession of the Tea Gardens, on September 21, 1962.
To resume the narrative, regarding the proceedings in Refer ence No. 38 of 1962, the Labour Court, as we have stated earlier, had issued notices to the parties concerned, on August 26, 1962.
The workmen filed a written statement, on February 23, 1963.
In that statement, they had stated that the fifteen workmen, concerned, had completed service, ranging from 8 to 47 years, in the Tea Estates, and that the termination of their services, by the Superintendent of the Tea Gardens, on behalf of the Receiver, was absolutely illegal and arbitrary.
They also referred to various other matters, which it is not necessary to advert, in this appeal.
It is enough to note that the workmen required relief, by way of reinstatement On June 27, 1963, one K. A. Muddu, as Superintendent of the Tea Estates, filed a written statement, on behalf of the management.
He has stated therein.
that the services of the fifteen employees were terminated on account of their age, and also because some of them were too ill to be continued in service.
He has adverted to the fact that two of the workmen had expressed a desire to retire voluntarily, from service.
It is further stated therein, that, as the employees concerned were 60 years or more, of age, it was not possible to continue them in service.
Again, the action of the Receiver, who was in management of the Tea Gardens, in terminating the services of the workmen, was also be justified.
The workmen filed an additional written statement, on Sep tember 2, 1963, controverting the allegation that they were either too ill or they had completed 60 years of age.
They again reiterated that the stand, taken by the management, was absolutely illegal and the Receiver bad no right to authorize the termination of their services.
631 On July 18, 1964/September 10, 1964, Shri R. G. Sahariya, as sole proprietor of the Tea Estates, filed an additional written statement, before the Labour Court, on behalf of the incoming management.
He has referred therein to the fact that the Tea Estate was no longer in the hands of a Receiver, and its management had vested in him as sole proprietor.
He has further referred to the fact that there is no continuity between the present management of the Tea Company, represented by him, and that of the past, when the Tea Gardens were owned by the Tea Company and were managed by the Receiver, appointed by the Court.
He then refers to the purchase made by him, on August 18, 1962, from the Official Liquidator of the Tea Company, of the equity of redemption in the Tea Gardens.
He has further stated that the services of the workmen concerned, had been terminated by the Superintendent of the Tea Gardens, acting on behalf of the Court Receiver, as early as August 21, 1961, long before the Tea Estates were purchased by him.
Shri Sahariya has further stated that, on July 27, 1962, when the Government of Assam made the present Reference, the incoming management was nowhere in the picture and it was not, in any manner concerned with the claim of the workmen, inasmuch as it had no liability, whatsoever, towards them.
He averred that he had not purchased the Tea Estates with the goodwill of the Tea Company, or, as a running concern.
Therefore, on all those grounds, he urged, that he was, in no manner, bound to reinstate or to compensate for the loss of employment of the workmen, concerned.
In fact, he has specifically prayed that an order may be passed, by the Labour Court, that the dispute, referred to it, by the Government of Assam, has lapsed.
The Labour Court, in its order under attack, has taken the view that the services of the workmen concerned, have been terminated, under instructions of the Receiver of the Tea Gardens, appointed in the suit, long before the first respondent became owner of the Tea Gardens.
It is also of the view that "the Brahmputra Tea Estate (Receiver in possession)".
is the only party impleaded, and the new management, viz., the first respondent, has not been brought on record, nor was it a party to the reference, made by the State Government.
The purchase of the Tea Gardens, by the first respondent, does not show that the latter has taken over any liabilities, of the previous management, with regard to the claims of the workmen, and that there has been no purchase of the goodwill of the Tea Company.
On these grounds, the Labour Court held that no relief could be granted, as against the first respondent, and that the reference itself had become infructuous.
Mr. Gokhale.
learned counsel for the workmen appellants.
raised two contentions before us: (i) that the view of the Labour Court, that the first respondent is not liable for the claims of the 632 workmen, is erroneous; and (ii) that even if it is held that the first respondent is not liable, the Labour Court, which had ample jurisdiction, in this regard, should have issued notice, either to the Receiver, appointed in the suit, or the Official Liquidator, to the both of them, and proceeded to investigate and adjudicate upon the claims of the workmen.
In this connection, Mr. Gokhale pointed out that the document of purchase, by the first respondent, would clearly show that the Official Liquidator ha(1)realised a sum of Rs. 5,20,000, as sale consideration, and there might also be other assets of the company; if a proper adjudication, in the presence of those parties, had been made, and relief granted to the workmen, they would have been in a position to enforce their claims, as against these amounts and assets of the company.
The learned Solicitor General.
appearing on behalf of the first respondent, urged that his client was not, in any manner, answerable to the claims made, by the workmen.
The first respondent was not the successor in interest of the Tea Company , nor did he claim through the Receiver, who wag one of the parties to the Reference, before the Labour Court.
Even if the Tea Company could be considered to be a party to the Reference.
his client Could not be considered to be a successor in interest of the Tea Company, because, he had purchased only some of the assets belonging to the said company, by virtue of the sale.
The document of purchase, by the first respondent.
would clearly show that he has not taken over any other liabilities of the Tea Com pany, in that regard .
The learned Solicitor General further pointed out that the remedy.
if any.
of the appellant, if so advised, was only to proceed against the Receiver, or the Official Liquidator; even if it be held that the ownership or management of the undertaking had been transferred in favour of the first respondent, the rights of the workmen would have to be worked out, as against the Receiver, or the Official Liquidator, under section 25FF, of the (Act XIV of 1947) (hereinafter called the Act), inasmuch as there was nothing to show that the transfer, in this case, came within the proviso to that section.
We are in agreement with the contentions of the learned Solicitor General that the view of the Labour Court, that the first respondent is not liable to answer any of the claims of the workmen concerned, is perfectly justified.
From the various facts, given above, it will clearly be seen that the order terminating the services of the workmen, was made on August 21, 1961, by the Superintendent of the Tea Gardens, under instructions from The Receiver appointed by the Jorhat Court, in the mortgage suit.
On October 5.
1961, the High Court had appointed a Receiver, for the Tea Gardens.
as separate from the Tea Company, in the suit, Transfer Company Suit No. 7 of 1962.
The order, referring the dispute to the Labour Court was made, by the Government, on July 27, 1962, The 1st respondent, admittedly, 633 was not in the picture, on these various dates.
It cannot also be stated, having due regard to the various recitals, contained in the sale deed, dated August 11, 1962, and considered, in the light of the principles, laid down by this Court, in Anakapalla Cooperative Agricultural & Industrial Society Ltd., vs Workmen(1), that the first respondent is the successor in interest of the Tea Company.
What was purchased, by the first respondent, was only the equity of redemption in a part of the assets of the Tea Com pany, in respect of which the Official Liquidator was still functioning.
Therefore, the learned Solicitor General is perfectly justified in his contention that the first respondent cannot be considered to be a successor in interest of the Tea Company nor can he be considered to claim through the Receiver, or Liquidator.
Even on the basis that the first respondent is considered to be a person, to whom the ownership of the undertaking has been transferred, it will be seen that the claims of the workmen will have to be considered.
as against the Tea Company, in accordance with section 25FF of the Act, when its proviso cannot be invoked.
Learned counsel, for the appellant, has not been able to satisfy us that the transfer, in this case, in favour of the respondent, comes within the proviso to section 25FF.
The appellants, ,is laid down by this Court, under the circumstances, in the decision referred to above, will not be entitled to claim reinstatement, as against the first respondent.
Section 25FF was first introduced in the Act, by the Industrial Disputes (Amendment) Act, 1956 (LXI of 1956), and, in its present form, it has been substituted, by the Industrial Disputes (Amendment) Act, 1957 (Act XVIII of 1957).
Section 25F was in force, on August 21, 1961, when the services of the workmen were terminated, and s, 25FF had(1) come into effect long before the purchase, by the first respondent of the Tea Gardens; and, we have already shown, that there is no liability, so far as the first respondent is concerned.
Therefore, the first contention of Mr. Gokhale, will have to be rejected.
But we are impressed by the second contention of Mr. Gokhale, that the Labour Court should have issued notices to the Receiver, or Official Liquidator.
or to both, as it was entitled to.
and proceeded to consider, as to whether any reliefs Could be granted to the appellants.
In this connection, counsel pointed out that section 18 of the Act clearly visualizes parties being summoned ', to appear, by the Labour Court, in proceedings, as parties to the disputes, in which case, the award made, will be binding on them also.
In this appeal, before us.
the Tea Company, in Liquidation, and the Official Liquidator of the Tea Company, figure as respondents Nos. 2 and 3, respectively, and are represented by same counsel.
Learned counsel, appearing for those parties, pointed out that the Official Liquidator may have various defences, (1) [1963] Supp. 1 S.C.R. 730.
634 available to him, if any claim is sought to be enforced against the company, in liquidation, or the Official Liquidator.
Those matters do not arise for consideration, at this stage, in this appeal, because the claim of the appellants, as against those persons, remains yet to be considered by the Labour Court.
We are satisfied that, even after negativing the claims, of the workmen, as against the first respondent, the Labour Court should not have merely closed the proceedings, by holding that the reference has lapsed.
On the other hand, the Labour Court should have issued notices to the Receiver, or the Liquidator.
or to both, and, in their presence, should have considered the question as to whether the workmen were entitled to claim any relief.
In fact, the order of reference also clearly shows that the Labour Court will have full jurisdiction to consider as to whether the termination, of the services of the workmen concerned, is justified and, whether they are entitled to either reinstatement, or any other relief, in lieu thereof.
When the proceedings are being dealt with, afresh, as against the parties indicated above, the Tribunal will bear in mind the observations made above, and consider the nature of the relief, if any, that may be granted to the workmen concerned .
We make it clear, that if and when either the Receiver, or the Tea Company, in liquidation, or the Official Liquidator, or all of them, are brought before the Labour Court, they will be entitled to raise any plea in defence of the claim of the workmen, that may be available to them, in law.
In that adjudication, the first respondent herein, will be completely out of the picture, as no relief can be claimed by the workmen, against him.
Further, if the claim of the workmen, is that their services have been dispensed with, by way of retrenchment, that claim will have to be adjudicated in accordance with section 25F, of the Act.
If, on the other hand, their claim is based, on the event of a transfer having been effected, that claim will have to be adjudicated, under section 25FF of the Act.
All these aspects will have to be properly considered, and adjudicated upon, by the Labour Court.
In the result, while confirming the findings of the Labour Court, that the first respondent is not answerable for any of the claims of the workmen, the award, dated February 18, 1965, is set aside and the Labour Court is directed to take up the Reference, over again, for being dealt with, afresh, in the light of the directions contained above.
The appeal is allowed, to the extent, indicated above, and in other respects, will stand dismissed as against 1st respondent.
Parties will bear their own costs, in this appeal.
| IN-Abs | On reference of an industrial dispute, the Labour Court took, the view that the services of the workmen concerned had been terminated, under instructions of the Receiver of the Company appointed in a suit long before the first respondent became owner of the company; that the Receiver in possession was the only party impleaded and the new management, viz., the first respondent had not been brought on record, nor was it a party to the reference, made by the State Government; that the purchase of the company, by the first respondent, did not show that the latter had taken over any liabilities of the previous management, with regard to the claim of the workmen; and that there had been no purchase of the goodwill of the company.
On these grounds, the Labour Court held that no relief could be granted, as against the first respondent, and that the reference itself had become infructuous.
In appeal to this Court, the workmen appellants contended that (i) the view of the Labour Court that the first respondent was not liable for the claims of workmen was erroneous; and (ii) even if it be held that the first respondent was not liable, the Labour Court, which had ample jurisdiction, in this regard, should have issued notice, either to the Receiver appointed in the suit, or the Official Liquidator, or to both of them an proceeded to investigate and adjudicate upon the claims of the work men.
HELD: (i) The first respondent was not liable to answer any the claims of the workmen.
He was not in the picture when the order terminating their service was made, nor when the order referring the dispute to the Labour Court was made.
Having due regard to the various recitals in the sale deed and considered in the light of the principles laid down by this Court, in Anakapalla Cooperative Agricultural & Industrial Society Ltd. vs Workmen, the first respondent was not the successor in interest of, the Company.
What was, purchased, by the first respondent, was only the equity of redemption in a part of the assets of the Tea Company, with respect to whit the Official Liquidator was still functioning.
Even on the basis that the first respondent was considered to be a person, to whom the ownership of the undertaking has been transferred, the claims of the workmen had to be considered, as against the Company, in accordance with section 25 FF of the Industrial Disputes Act, when its pro viso could not be invoked.
Section 25F was in force when the se vices of the workmen were terminated and section 25FF had come in effect long before the purchase by the first respondent.
[632G 633F] 627 Anakapalla Co operative Agricultural and Industrial Society Ltd. V. Its Workmen, [1963] Supp. 1 S.C.R. 730, followed.
(ii) Even after negativing the claims of the workmen, as against the first respondent, the Labour Court should not have merely closed the proceedings, by holding that the reference had lapsed.
On the other hand, the Labour Court should have issued notices to the Receiver, or the Liquidator or to both, and, in their presence, should have considered the question as to whether the workmen were en titled to claim relief.
In fact, the order of reference also clearly showed that the Labour Court had full jurisdiction to consider as to whether the termination of the services of the workmen, was justified, and whether they were entitled to either reinstatement, or any other relief, in lieu thereof.
[634B D]
|
Appeal No. 642 of 1966.
Appeal by special leave from the judgment and order dated October 21, 1962 of the Punjab High Court (Circuit Bench) at Delhi in Civil Original No. 11 D of 1960 read with judgment and order dated October 26, 1964 of the said High Court in R.S.A. No. 245 D of 1964.
N. section Bindra and D. D. Sharma, for the appellant.
G. R. Rajagopaul, section P. Nayyar for R. H. Dhebar, for the respondents.
The Judgment of the Court was delivered by Wanchoo, C. J.
The appellant obtained a decree for over Rs. 41,000 against Modern Electric Iron and Brass Works, Delhi, which was the property of two partners, namely, Mohd. Sabar and Noor Mohd. Butt.
in January 1950.
He also obtained an other decree for over Rs. 95.000 against the same two persons and ,one more to which proceeding the Custodian of Evacuee Property (hereinafter referred to as the Custodian) had also been made a party.
Before.
however, the first decree was obtained by the appellant.
Mohd. Sabar and Noor Mohd. Butt had in April 1947 executed two deeds of release with respect to their property in favour of their wives.
Later Mohd. Sabar and Noor Mohd. Butt and their wives migrated to Pakistan and their properties were declared evacuee properties under the , No. 31 of 1950, (hereinafter referred to as the 499 1950 Act).
Under section 10 of the 1950 Act the Custodian had the power to pay any debt due from the evacuee to any person subject to rules framed thereunder.
Further under the Rules a person to whom an evacuee owed money could apply for registration of his claim and the Custodian could register such claim; but mere registration of a claim did not entitle the claimant to payment, and the Custodian could refuse payment for reasons to be recorded.
The claim of the appellant, based on the first decree passed in his favour, was registered by the Custodian.
But in June 1950 the Custodian held that the evacuee property in question in the present case belonged to the wives of the judgment debtors (namely, Mohd. Sabar and Noor Mohd. Butt).
He further directed the appellant to go to the civil court to Yet the release deeds set aside.
On November 28. 1955.
the appellant filed the suit out of which the present appeal has arisen in the court of the subordinate Judge First Class, Delhi, claiming that the release deeds in question were of no effect a being in fraud of the creditors.
He claimed a declaration that the building in suit belonged to Mohd. Sabar and Noor Mohd. Butt and not to their wives and that the release deeds of April 1947 were fictitious and fraudulent and intended to defeat and delay the creditors and were not binding on the appellant.
He also claimed that the Custodian was bound to open the account of the income of the said building in the names of Mohd. Sabar and Noor Mohd. Butt and the proceeds of the said building were bound to be adjusted against the claims of the appellant.
The suit was resisted by the Custodian and the Union of India.
Their case firstly was that the civil court had no jurisdiction to entertain the suit.
Secondly, it was pleaded that the property in dispute which was a building in the city of Delhi had been acquired by the Central Government in pursuance of a notification issued on June 3, 1955, under section 12 of the .
No. 44 of 1954.
(hereinafter referred to as the 1954 Act) and therefore the appellant could not get a declaration to the effect that the proceeds of the suit building should be adjusted against his claim.
The appellant had also pleaded in his plaint that the acquisition of the building by the notification of June 3. 1955 was subject to his rights and that in any case the notification and section 12 of the 1954 Act were ultra vires.
Originally, the trial Court dismissed the suit holding that as the property in suit had been acquired by the Central Government by the notification dated June 3, 1955, the appellant could not claim to proceed against the property or its income.
The appellant went in appeal and the appellate court remanded the suit on the ground that the appellants plea that the notification 500 and section 12 of the 1954 Act were ultra vires had, not been decided.
When the suit went back for re trial on this issue, the appellant applied for transfer under article of the Constitution to the High Court praying that the constitutional issue be first determined by the High Court.
This application was allowed and finally the constitutional question relating to the validity of section 12 of the 1954 Act was considered by a Division Bench of the High Court.
It may be mentioned here that it had been decided by the Subordinate Judge that the civil, court had jurisdiction and that matter is not in dispute before us.
When the matter came to the High Court, the appellant further challenged the amendment made to the 1950 Act by which cl.
(m) of section 10(2) was amended as ultra vires.
Reliance in this connection was placed on article 19 of the Constitution and also on article 14.
The High Court held against the appellant on both points and sent the case back to the trial court for further consideration in the light of its judgment on the constitutional issues that were raised.
The appellant then applied to the High Court for grant of a certificate to appeal to this Court, which was refused.
Thereupon the appellant applied for and obtained special leave from this Court , and that is how the matter has come up before us.
The same two points which were urged before the High Court have been raised before us on behalf of the appellant.
So far as the first point relating to the invalidity of the amendment to section 10(2)(m) is concerned, the matter is now of academic interest in view of the decision of this Court in Raja Bhanupratap Singh vs Assistant Custodian Evacuee Property U.P.(1).
It was held by the Court that "the power to pay the evacuee 's debts was derived both under cls.
(m) and (n) of section 10(2).
Therefore the deletion from cl.
(m) of the Custodian 's power to pay the debts, by the Amending Act of 1956, and the consequential deletion of r. 22 of the Rules framed under the Act.
by which 'a machinery was provided for exercising that power did not affect the power which is conferred by section 10(2) (n) and by section 10(1).
The power to administer, under section 10(1) is not merely a power to manage on behalf of the evacuee so as to authorise the Custodian only to recover and collect the assets of the evacuee; it includes power to discharge his obligations as well, to pay such debts which, in the opinion of the Cus todian, are binding upon the evacuee".
This Court further held that the decree of the civil court was not decisive of the question whether a person making a claim was entitled to the money claimed by him; it was for the Custodian to determine whether he was so entitled.
In view of this decision it is unnecessary to express any opinion as to the invalidity of the amendment of cl.(m) of section 10(2) for the amendment made no difference to the legal (1) ; 501 position as the power of the Custodian to pay the debts of the evacuee still remained, unimpaired.
If be was of opinion that the debts were genuine, he could pay them.
This brings us to the main question that has been argued in the present appeal, namely, that section 12 of the 1954 Act is invalid because it is an infringement of the right to hold property which the appellant has under article 19(1)(f) of the Constitution and is not saved as a reasonable restriction thereon.
The argument is put thus.
The appellant had advanced money to the two evacuees, namely.
Mohd. Sabar and Noor Mohd. Butt.
On the basis of the loan, be had obtained a decree in January 1950.
He had the power to execute that decree against the property of his judgment debtors.
By taking away the property of the judgment debtors, ,After they bad become evacuees and by vesting that property free from all encumbrances in the Central Government under section 12 of the 1954 Act the appellant 's right to proceed against that property had disappeared.
Therefore section 12 of the 1954 Act was violative of article 19(1)(f).
as the appellant 's holding of the decree had been rendered illusory.
Reliance in this connection is placed on four decisions of the Supreme Court of the United States of America.
namely, (i) Von Hoffman vs The City of Quincy(1), (ii) Ranger vs City of New Orleans,(2) (iii) Peirce Coombes vs Milton E. Getz(3) and (iv) W. B. Worthen Co. vs Mrs. W. D. Thomas(4) Before we consider the argument raised before us we may say at once that the four cases on which reliance has been placed on behalf of the appellant are entirely beside the point and of no assistance.
These cases were based on a provision in article 1, section 10 of the American Constitution which inter alia lays down that "no State shall. pass any law impairing the obligation of contracts. .
There is no such provision in our Constitution and.therefore the appellant cannot be beard to say that as section 12 of the 1954 Act impairs the obligation of the contract between him and the two evacuees, the section is bad.
Now let us turn to the argument based on article 19 (1)(f).
It is clear to us that the argument as put forward on behalf of the appellant is fallacious and untenable.
Section 12 of the 1954 Act does not in any manner affect the decree held by the appellant against Mohd. Sabar and Noor Mohd. Butt.
All that it provides is that the property, which upto the time the Act of 1954 was passed, was in law the property of the evacuees, though it was under the administration of the Custodian and vested in him for that purpose under the 1950 Act, would on a notification issued under section 12 of the 1954 Act become the property of the Central (1) 18 L.Ed.
Wallace 403.
(2) (3) ; (4) ; 502 Government and the right, title, interest of the evacuee in such property would thereupon be extinguished and the property shall vest absolutely in the Central Government free from all encumbrances.
At no time did the appellant have any right whatsoever in the property which vested in the Central Government on the issue of the notification under section 12.
It may be that if the owners had not become evacuees and if the property had not been declared evacuee property, the appellant might have proceeded against that property in execution of his decree.
It may also be that he cannot do so now after the said notification under section 12.
But section 12 does not in our opinion interfere with the appellant 's right to acquire, hold and dispose of his property, namely the decrees against Mohd. Sabar and Noor Mohd. Butt.
As the appellant had no interest in the property in suit, the fact that it was acquired by the Central Government by a notification under section 12 of the 1954 Act did not in any way affect the appellant 's right to acquire, hold and dispose of his property.
In the circumstances, the appellant cannot claim protection under article 19(1)(f) at all with respect to the property in suit and it is not necessary to consider whether section 12 could be saved under article 19(5).
We therefore agree with the High Court that the appellant cannot claim that section 12 is ultra vires article 19(1)(f) and therefore the notification made thereunder affects his fundamental right to acquire, hold and dispose of property.
Further the argument that section 12 is bad under article 14 has also no force.
The contention under this head is that the creditors who have decrees against non evacuees can execute their decrees against the properties of non evacuees, but the creditors having decrees against evacuees cannot execute them against their properties after they had vested in the Central Government by a notification under section 12 of the 1954 Act; and this amounts to discrimination under article 14.
But it is well settled that the Constitution does not contemplate equality of all laws or application of all laws equally to every person.
There is a clear classification between evacuee property and non evacuee property.
There is a clear nexus between the object to be achieved by the enactment of the 1954 Act, namely, rehabilitation of evacuees from Pakistan and the provision in section 12 by which the property of evacuees in India is to be utilised for such rehabilitation.
There is therefore.
no infringement of article 14 in the circumstances.
Lastly it is urged on behalf of the appellant on the basis of the decision of this Court in Raja Bhanupratap Singh(1) that the appellant was entitled to ask the Custodian to consider his case under section 10(2) (n) read with section 10(1) of the 1950 Act, and for that purpose it is necessary to decide the main question raised in the suit, namely, that the release deeds of 1947 in favour of the wives (1) ; 503 were of no effect and therefore the property, though evacuee property, was the property of the judgment debtors of the appellant, namely, Mohd. Sabar and Noor Mohd. Butt.
It is also pointed out that the notification of June 3, 1955 was only with respect to immovable property and there was nothing to show that the Central Government had issued a notification under section 14(1)(b) of the 1954 Act relating to cash balance, if any, lying with the Custodian on the date the property was acquired.
It is urged that all that the notification of June 3, 1955 means is that as from that date no action could be taken against the property in suit or its income.
But if there was any money with the Custodian on the date of vesting and if no order had been passed in respect thereof under section 14(1)(b), the appellant would be entitled to ask the Custodian to consider whether he should be paid anything out of the moneys lying with the Custodian provided he could establish that the property was the property of his judgment debtors, namely, Mohd. Sabar and Noor Mohd. Butt and not of their wives.
The declaration that the appellant sought was wide in terms in as much as he claimed that he was entitled to have his claim adjusted against the proceeds of the said building and these proceeds will include any income of a period before the date of vesting under the notification under section 12.
It is urged that as such it is necessary to decide the issue whether the release deeds of April 1947 were fictitious and fraudulent intended to defeat and delay the creditors and therefore the property belonged to Mohd. Sabar and Noor Mohd. Butt.
If that is held in his favour by the civil courts he would be entitled to go to the Custodian and ask him to pass an order in his favour under section 10(2)(n) read with section 10(1) and pay him out of the moneys lying with him on the date the property vested in the Central Government under the notification under section 12.
We are.
of opinion that there is force in this contention.
Though the appellant cannot claim to proceed against the property in suit or its income after the date on which it vested in the Central Government by virtue of the notification under section 12, he can ask the Custodian to pay him out of the moneys lying with him on the date of such vesting if he can satisfy him in the manner provided in section 10(2)(n) read with section 10(1) of the 1950 Act.
We therefore direct that when the case goes back to the trial court as ordered by the High Court, the trial court will decide the issue whether the deeds of release of April, 1947 are fictitious and fraudulent intended to defeat and delay the creditors and not binding on the appellant.
If the trial court decides in favour of the appellant it will then be open to him to approach the Custodian under section 10(2)(n) read with section 10(1) for such orders as the Custodian thinks fit to pass with respect to moneys, if any, lying with him on the date of vesting.
It may be mentioned that learned counsel for the appellant submitted that this property in fact 504 vested in the Central Government by some notification in 1958 and not by the notification dated June 3, 1955, as mentioned in the plaint.
On the other side it has been submitted that some orders have been passed by the Central Government under section 14 (1)(b).
These are matters which may require to be gone into by the trial court and for that purpose it may be necessary to amend the plaint and the written statement, and this we permit.
We therefore dismiss the appeal subject to the observations made above.
In the circumstances we order parties to bear their ,own costs of this Court as also of the High Court.
Costs of other courts will abide the final result.
V.P.S. Appeal dismissed.
| IN-Abs | The appellant obtained a decree against two persons who, along with their wives, migrated to Pakistan.
Before the decree was passed, the two judgment debtors had executed two deeds releasing their property, which was a building in favour of the wives.
The property was declared evacuee property under the and on the appellant 's application, his claim based on the decree was registered by the Custodian.
Later, the Custodian held that the evacuee property belonged to the wives of the judgment debtors.
The appellant filed a suit for setting aside the release deeds on the ground that they were of no effect as being in fraud of the creditors.
But, before the suit was filed, the Central Government, in pursuance of a notification issued under section 12 of the , acquired the property.
As a result of the notification, the property which was in law the property of the evacuees though it was under the administration of and vested in, the Custodian under the 1950 Act became the pro perty of the Central Government free from all encumbrances.
So, in addition to the main plea in the suit the appellant also contended that section 12 of the 1954 Act and the notification issued thereunder violated articles 19(1)(f) and 14 of the Constitution.
He further contended that the amendment by Act 91 of 1956 of section 10(2)(m) of the 1950 Act, as a result of which the Custodian 's power to pay the eva cuee 's debts was deleted from the clause, was ultra vires.
On an application under article 228, the High Court tried the two constitutional issues and decided them against the appellant and remanded the suit to the trial court.
In appeal to this Court, HELD: (1)(a) Section 12 of 1954 Act did not interfere with the appellant 's right to acquire, hold and dispose of his property, namely, the decree against the evacuees.
At no time did the appellant have any right whatsoever in the property which vested in the Central Government on the issue of the notification.
Its only effect was that the appellant could not proceed against the property in execution of his decree.
Therefore the appellant could not claim the protection under article 19(1)(f).
[501A: 502A D] (b) It could not be said that there was violation of article 14 on the ground that decree holders against non evacuee property could execute their decrees while decree holders against evacuee property could not.
There is a reasonable classification between evacuee property and non evacuee property, and there is a clear nexus between the object to be achieved by the 1954 Act, namely, rehabilitation of evacuees from Pakistan, and the provision in section 12, by which 498 the property of evacuees in India is to be utilized for such rehabilitation.
[502E G] (c) The appellant cannot also be heard to say that section 12 impairs the obligation of the judgment debtors under contract between them and himself because, there is no prohibition against such a law in the Indian Constitution.
[501F] (2) The amendment of section 10(2)(m) made no difference to the legal position, for the power of the Custodian to pay the debts of the evacuee still remained unimpaired under section 10(2)(n) read with 10(1).
Therefore, it was unnecessary to consider the invalidity of the amendment of section 10(2)(m).
[500F H] Raja Bhanupratap, Singh vs Assistant Custodian of Evacuee Property, U.P. ; , followed.
(3) Though the appellant could not claim to proceed against the property in suit or its income, after the date on which it became vested in the Central Government by virtue of the notification under section 12, he could ask the Custodian to pay him out of the moneys lying with him on the date of such vesting if he can satisfy him in the manner provided in section 10(2)(n) read with section 10(1) of the 1950 Act. 'The trial court would therefore have to decide the issue whether the release deeds were fictitious and fraudulent, and, if it found in favour of the appellant it would then be open to him to approach the Custodian for such orders as the Custodian thinks fit to pass with respect to the moneys, if any, lying with him on the date of vesting.
[503F H]
|
Appeal No. 49 of 1965.
Appeal by special leave from the order dated January 14, 1964 of the Punjab High Court in Letters Patent No. 11 of 1964.
section Y. Gupte, Solicitor General and Naunit Lal, for the appellant.
Hardev Singh, section P. Nayar for R. N. Sachthey, for the res pondents.
The Judgment of the Court was delivered by Shah, J.
The appellant Vidya Vati who is the owner of 56.10 1/4 standard acres of agricultural land in the village Bishanpura, tahsil Jind, District Sangrur, in the State of Punjab, was ousted from the land sometime in 1954 by certain persons who had no tide to the land.
A civil suit filed by her for it declaration of titleand for possession of the land from the trespassers was decreed and she was restored to possession of the land on October 15, 1960.
The Pepsu Tenancy and Agricultural Lands Act 13 of 1955 was brought into force during the pendency of the civil suit with effect from March 4, 1955.
Under section 5 of the Pepsu Act 13 of 1955 every landowner owning land exceeding thirty standard acres was entitled to select for personal cultivation from the land held by him in the State as a landowner any parcel or parcels of land not exceeding in aggregate area the permissible limit and reserve such land for personal cultivation by intimating his selection in the prescribed form and manner to the Collector.
Since the land was in the occupation of the trespassers, the appellant 648 did not make any selection of land for personal cultivation.
The, Act was amended with effect from October 30, 1956 by the Pepsu Tenancy and Agricultural Lands (Second Amendment) Act 15 of 1956 and thereby, amongst other provisions, Ch.
IV A was added.
The provisions contained in that Chapter were designed to impose a ceiling on the holding of owners and tenants of agricultural land held for personal cultivation within the State and for imposing restrictions on acquisition of land and disposal of surplus ' area.
In respect of the land owned by her the appellant submitted a return in Form VII A prescribed under the Rules framed under the Act.
The Collector of the District after considering the objections of the appellant, declared that she held 21.14 3/4 standard acres in excess of the ceiling prescribed by the Act.
The order of the Collector was confirmed in appeal to the Commissioner, Patiala Division.
A petition moved by the appellant under articles 226 & 227 of the Constitution for the issue of a writ quashing that order was rejected by Gurdev Singh, J., and an appeal against the order was summarily dismissed by a Division Bench of the High Court.
The appellant appeals to this Court with special leave.
Counsel for the appellant contends that the provisions of Ch.
IV A have no application to the case of the appellant, since she was not in "cultivatory possessions of the land on the appointed date i.e. October 30, 1956; that the appellant has not acquired the land by transfer, exchange, lease, agreement or settlement, or by inheritance, bequest or gift front a person to whom she is an heir, and on that account sections 32 L & 32 M of the Act have no application to her case and that in any event the appellant should have been permitted to reserve out of her holding ten acres of land for an orchard under section 32 K of the Act.
Before considering the merit of these contentions it is necessary to notice the relevant provisions in Ch.
IV A of the Act which imposed a ceiling on holding of agricultural land under personal cultivation.
Section 32 A(1) of the Act provides: "Notwithstanding anything to the contrary in any law custom, usage or agreement, no person shall be entitled to own or hold as landowner or tenant land under his presonal cultivation within the State which exceeds in the aggregate the permissible limit.
" Counsel for the appellant contends that section 32 A(1) operates only at the point of time when the Act comes into force i.e. October 30, 1956, and not thereafter.
If on that date, says counsel, a person owns or holds within the State land under his personal cultivation as landowner or tenant in excess ' of the permissible limit, the State is entitled to take away the surplus land, and that if the holder or tenant after the commencement of Act 15 of 1956 acquires or possesses land by transfer, exchange, lease, agreement 649 or settlement, or acquires it by inheritance, bequest or gift from a person to whom he is an heir, and his total holding exceeds the permissible limit, by express provisions contained in sections 32 L and 32 M the ceiling on holding will be enforced, but where an owner of land for whatever reasons brings under cultivation land of his ownership.
after the commencement of the Act, the provision imposing a ceiling does not operate.
The entire argument is raised on an assumption that section 32A(1) operates only at the date on which the Act was brought into operation; that argument, in our judgment, is contrary to the plain terms of section 32 A(1).
It is true that sections 32 L and 32 M expressly deal with certain classes of acquisitions after the date of the commencement of the Act, but on that account no restriction may be imposed upon the connotation of the expression "no person shall be entitled to own or hold" occurring in section 32 A, that it is limited in its operation to the point of commencement and has no operation in the future.
It may be noticed that section 32 L renders all subsequent acquisitions as a result of which the holding of a person of land under his personal cultivation exceeds thirty acres "null and void", and section 32 M which deals substantially with involuntary acquisitions (such as acquisitions by inheritance or bequest) sets out the machinery for making declarations and the manner in which the land in personal cultivation in excess of the ceiling will be dealt with.
By an appropriate drafting device, it may have been possible to dovetail these provisions into the other sections, but if in the interest of clarity certain specific cases are separately dealt with, an intention to restrict the operation of the general provision contained in section 32 A(1) cannot be implied.
The scheme of Act 13 of 1955 as originally enacted was that by section 5 every landowner owning land exceeding thirty standard acres was required to select for personal cultivation from the land held by him as a landowner any parcel or parcels of land not exceeding in aggregate area the permissible limit and reserve such land for personal cultivation.
The selection could be made in respect of land under personal occupation as well as in respect of land in the occupation of tenants.
After making the selection, the landowner could take appropriate steps to evict the tenants from that land.
But in the land in the possession of the tenants and not included in the land selected and reserved under section 5 for personal cultivation, the tenant of the land could acquire proprietary rights in the manner and subject to the conditions provided under section 22.
This right was exercisable by the tenant in respect of land which was not selected for personal cultivation by the owner and in respect of which he was not liable to be evicted.
The scheme of the Act, therefore, was that the landowner was entitled to select for personal cultivation from the land held by him within the State any parcel or parcels of land not exceeding in the aggregate the permissible limit.
If the land so 650 selected was in the possession of a tenant he could.
subject to the. restrictions contained in section 7 A, evict the tenant.
The lands which were not selected for personal cultivation by the landowner could be purchased by the tenant in the manner and subject to the conditions provided in section 22.
The Legislature thereafter modified the scheme of the Act and, incorporated Ch.
IV A under which no person could own or hold land either as landowner or, as tenant in excess of the permissible limit.
The excess was to be treated as surplus land and appropriated to the State.
Whereas under the scheme of Chapters 11, III and IV as they originally stood the tenants were given the right to purchase the lands not selected by the landowner for personal cultivation, but the landowner was otherwise subject to no further restrictions; by Ch.
, V A it was intended to place a ceiling upon the owning or holding of land for personal cultivation by a landowner or a tenant in excess of the permissible limit.
Viewed in the light of that scheme, also, it is impossible to construe section 32 A as being operative only at the point of time at which the Amending Act incorporating Ch.
IV A was brought into force, for the words of the section contain no limitation, and the scheme of the Act indicates no such implication.
It is true that under section 32 B every person who owns or holds as landowner or tenant land under his personal cultivation exceeding the permissible limit at the commencement of the Act is required to make a return in respect of his holding.
But that is enacted with a view to provide machinery for effectuating the provisions imposing the ceiling on land held at the date of commencement: it does not even indirectly suggest that section 32 A is limited in its operation to the point of time at which the Act is brought into force and is spent thereafter.
Failure on the part of the Legislature to deal with cases in which it the date on which the Act was brought into force, the owner or holder of land was not cultivating the land because he was not in cultivatory possession thereof but was restored to his possession during the subsistence of the Act, cannot also be used to limit the operation of section 32 A(1) only to the point of time at which the Act was brought into force.
In our judgment the ban imposed by section 32 A operates whenever he is found to own or told land in personal cultivation exceeding the permissible limit.
Section 32 K provides for exemption of lands used or intend ed to be used for certain specified purposes to the extent indicated from the ceiling imposed by section 32 A(1).
By cl.
(vi) of section 32 K(1) it is provided that the provisions of section 32 A shall not apply where a landowner gives an undertaking in writing to the, Collector that he shall, within a period of two years from the commencement of the Pepsu Tenancy and Agricultural Lands (Second Amendment) Act, 1956, plant an orchard in any area of his land not exceeding ten standard acres, such area of land.
651 Sub section (2) of section 32 K provides that where a landowner has, by an undertaking given to the Collector, retained any area of land with him for planting an orchard, and fails to plant the orchard within a period of two years referred to in cl.
(iv) of sub section
(1), the land so retained by him shall on the expiry of that period vest in the State Government under section 32 E.
It is also provided by sub section
(3) which was added by Punjab Act 27 of 1962 with retrospective effect from October 30, 1956, that notwithstanding anything contained in the Act, the exemption specified in cl.
(vi) of sub section
(1) shall not be allowed unless the land planted within the period specified therein is found to be an orchard also at the time of granting the exemption.
In order to qualify for exemption from the ceiling to the extent of ten acres for the purpose of planting an orchard, the landowner has to give an undertaking that he will bring the land within two years from the commencement of the Amending Act under an orchard, and has to plant the orchard within that period and to maintain it as an orchard till the date of the grant of exemption.
A person who is not in possession of the land at the date when the Amending Act is brought into force may not ordinarily be in a position to give an undertaking under cl.
(vi) of section 32 K(1) to bring the land under an orchard, since such a person may not be able to say whether he will be able to obtain possession of the land so as to carry out the undertaking.
The Legislature has failed to make a provision enabling reservation to be made by persons belonging to the ex ceptional class to which the appellant belongs.
But on that account the Court is not competent to refuse to give effect to the plain words of the Act.
A lacuna undoubtedly exists in the Act, but it is for the Legislature to rectify it and not for the Courts to give a strained meaning to the words used by the Legislature which they do not bear.
The expression "within a period of two years from the commencement of the Pepsu Tenancy and Agricultural Lands (Second Amendment) Act, 1956" cannot be read as "within two years from the date on which the holder or tenant is restored to possession".
The Legislature has not made any provision for extending the time in respect of certain special cases like the one before us, or extending the time for planting an orchard.
The High Court was, therefore, right in holding that the appellant could not claim an additional area of ten acres of land for planting an orchard.
The appeal therefore fails.
There will be no order as to costs.
| IN-Abs | The appellant was the owner of 56 standard acres of agricultural land in Punjab from which she was ousted in 1954 by certain persons who had no title to the land and was restored to possession in 1960 after a suit filed by her was decreed in her favour.
The Pepsu Tenancy and Agricultural Lands Act 13 of 1955 was brought into force in March, 1955.
Under section 5 of that Act any land owner owning land exceeding 30 standard acres was entitled to select for personal cultivation a maximum area of land within the permissible limit and to inform the collector of his selection.
Since the appellant 's land was in the occupation of the trespassers at the time, she did not make any selection under section 5.
The Act was amended with effect from October 30, 1956 by the Fast Punjab Act 15 of 1956 which introduced Chapter IV A and the new section 32 A(1) provided that no person shall be entitled to hold land under his personal cultivation which exceeds in the, aggregate the permissible limit.
The appellant submitted a return in the prescribed form in respect of her land and the collector, after considering her objections, declared that she held 21 standard acres in excess of the ceiling prescribed by the Act.
This order was confirmed in appeal by the Commissioner and a writ petition to quash the order was rejected by the High Court.
In appeal to this Court it was contended on behalf of the appellant (i) that section 32 A(1) operates only at the point of time when the Act comes into force i.e. October 30.
1956; the ceiling could be enforced only if a person owned or held land in excess of the permissible limit on that day or if he acquired or possessed it after the commencement of Act 15 of 1956 by transfer, exchange, inheritance or any of the other ways expressly covered by sections 32 L and 32 M; and (ii) the appellant should in any event have been permitted to reserve 10 acres out of her holding under section 32 K for an orchard.
HELD: Dismissing the appeal.
(i) The ban imposed by section 32 A(1) operates whenever a person is found to own or hold land in personal cultivation exceeding, the permissible limit.
[650G] Although sections 32 L and 32 M deal expressly with certain classes of acquisitions after the date of commencement of the Act.
on that account no restriction can be imposed upon the connotation of the expression "no person shall be entitled to own or held" occurring in section 32 A. that it is limited in its operation to the point of commencement of the Act.
[649B D] 647 Such an interpretation is also contrary to the scheme of the Act.
Under the scheme of Chapters II, III and IV as they originally stood the tenants were given the right to purchase the lands not selected by the landowner for personal cultivation, but the landowner was otherwise subject to no further restrictions; by Ch.
IV A it was in tended to place a ceiling upon the owning or holding of land for personal cultivation by a landowner or a tenant in excess of the permissible limit and to provide that the excess land be appropriated to the State.
[650B, C] (ii) In order to qualify for the exemption for land upto 10 acres under section 32 K for planting an orchard, the landowner has to give an undertaking that he will bring the land within two years from the commencement of the Amending Act under an orchard, has to plant the orchard within that period, and to maintain it as such till the date of the grant of exemption.
A person like the appellant who is not in possession of the land at the date when the Amending Act is brought into force may not be in a position to give and fulfill the undertaking.
The legislature has not made any provision for extending the time in respect of special cases like the present or for extending the time for planting an orchard; it is for the legislature to rectify this lacuna and not for the Court to give a strained meaning to the words used by the legislature which they do not bear.
[651C F]
|
Appeal No. 82 of 1965.
Appeal from the judgment and order dated December 11/ 12, 1962 of the Bombay High Court in Special Civil Application No. 259 of 1962.
O. P. Malhotra, P. C. Bhartari and O. C. Mathur, for the appellant.
The respondent did not appear.
The Judgment of the Court was delivered by Shelat, J.
This appeal by certificate is directed against the judgment of the High Court at Bombay dated 11 / 12 12 1962 in Writ Petition 259 of 1962.
The appellant is the mahant of a public and religious trust called Kabir Nirnay Mandir.
The trust is being administered at Burhanpur, Madhya Pradesh and the bulk of its properties is situate 'there, except three pieces of land at Vadjai, a village in Dhulia District.
Respondent 1 is the tenant of two out of these three pieces of land situate at Vadjai.
The question in this appeal is whether the appellant can apply and obtain an exemption certificate under sec.
88B of the Bombay Tenancy and Agricultural Lands Act, 1948 (hereinafter referred to as the( Act).
The Act was originally passed in 1948 but was drastically amended by Amendment Act, XIII of 1956 which came into force on August 1, 1956.
The Amendment Act inducted into the Act inter alia sees.
32 to 32R and sees.
88A to88D. Sees.
32 to 32R deal with purchase of land by tenants.
Sub section 1 of sec.
32 provides that on the first day of April 1957, i.e., the tillers ' day, every tenant shall, subject to the other pro visions of this section and the provisions of the next succeeding sections, be deemed to have purchased from, his landlord the land held by him as a tenant.
In certain cases the said date, viz., April 1, 1957 has been postponed but we are not concerned in this appeal with 643 those provisions nor with any such postponed date.
88A to 88C exclude the operation of sees.
32 to 32R to land specified therein.
Section 88B inter alia provides: "Nothing in the foregoing provisions except sections 3, 4B, 9, 9A, 9B, 9C, 10, 10A, 11 13, and 27 and the provisions of Chapters VI land VIII in so far as the provisions of the said Chapters are applicable to any of the matters referred to in the sections mentioned above, shall apply (b)to lands which are the property of a trust or an institution for public religious worship.
" The proviso to the sub section reads as follows: "Provided that (i)such trust is or is deemed to be registered under the Bombay Public Trust Act, 1950, and (ii) the entire income of such lands is appropriated for the purpose of such trust.
" Sub section 2 of section 88B provides that "for the purpose of this section, a certificate granted by the Collector, after holding an inquiry, that the conditions in the proviso to sub section (1) are satisfied by any trust shall be conclusive evidence in that behalf." Thus for eligibility for an exemption certificate three conditions have to be satisfied: (i) that the land in question is the property of a trust or an institution for public religious worship, (2) that the trust is or is deemed to be registered under the Bombay Public Trusts Act, 1950; and (3) that the entire income of such lands is appropriated for the purposes of such trust.
There is no dispute with regard to conditions (1) and (3) and the only controversy is whether condition 2 is satisfied.
If all the three conditions are satisfied and a certificate is obtained by the trust under sub section 2 of sec.
88B, sees.
32 to 32R would not apply to the land belonging to such trust and the tenant of such land cannot be regarded a deemed purchaser under the Act.
The contention of respondent 1, the tenant is that though conditions 1 and 3 are satisfied, the Trust situate as it is at Burhanpur outside the Maharashtra State cannot be deemed to be registered under the Bombay Public Trusts Act.
The Bombay Public Trusts Act was passed in 1950 by the legislature of the then State of Bombay and its object as stated in its preamble is to regulate and to make better provision for the administration of public religious and charitable trusts in the State of Bombay.
1(3) provides that the Act shall come into force at once; but the provisions thereof shall apply to a public trust or any class of public trusts on the date specified in the notification under sub section (4).
Sub section 4 provides that the State Government may by notification specify the date on which the provisions of the Act shall apply to any public trust or any class of public trusts and different 644 dates may be specified for such trusts in different areas.
Under sections 18 and 19 a trustee of a public trust, to which the Act has been applied, is obliged to make an application for registration of the public trust giving in such application the information specified therein.
Under sec.
19, the Deputy or the Assistant Charity Commissioner appointed under the Act has to make an inquiry in the prescribed manner for ascertaining the various matters set out therein.
On completion of such inquiry and on its findings being recorded the Deputy or the Assistant Charity Commissioner has under sec.
21 to make entries in the register kept under sec.
17 in accordance with the findings recorded by him under sec.
20 or if appeals are preferred in accordance with the final decision of the competent authority provided by the Act, and such entries are made conclusive subject to the provisions of the Act or to any change recorded under the provisions therein after following.
Before its amendment in 1960 sec.
28 provided that all public trusts registered under any of the enactments specified in Schedule A thereto shall be deemed to have been registered under the Act from the date on which the Act is applied to them.
Schedule A sets out those Acts which are not relevant for the purpose of this appeal: As a result of reorganisation of the then Bombay State and the territorial changes made in 1956 and 1960 certain areas were excluded and certain other areas were brought into the new State of Maharashtra.
The legislature of that State therefore amended sec.
28 by sec.
15 of the Bombay Public Trusts (Unification and Amendment) Act, 6 of 1960.
A new Schedule amongst other things viz.
, Schedule AA, was added after Schedule A which included amongst other Acts the Madhya Pradesh Public Trusts Act, 1951 '.
The effect of sec.
28 and the insertion of Schedule AA in the Act was that the trusts registered under the Madhya Pradesh 'Public Trusts Act, 1951, were deemed to have been registered under the Bombay Act.
The amendment became necessary as new areas which originally formed part of the Madhya Pradesh State were brought into the Maharashtra State and the policy of the legislature was to save trusts already registered under the Madhya Pradesh Trusts Act, 1951 from having to be once again registered under the Bombay Act.
The Amendment Act 1960 was brought into force as from January 1, 1961.
By a notification dated January 31, 1961 issued under sec.
1(4) the Act was made applicable to certain kinds of trusts.
It is not in dispute that the present trust is one of the kinds of trusts to which the Act was made applicable as from February 1, 1961.
The said notification runs as follows: "In exercise of.
the powers conferred by sub section (4) of the Bombay Public Trusts Act, 1950 the Government of Maharashtra specifies the 1st day of February 1961 to be the date on which the provisions of the said Act shall, apply to the following classes of public trusts in the State, to which the Act does not already apply.
" 645 The question is whether sec.
28 can be said to apply to the present Trust.
Though sec.
28 is couched in general terms it cannot mean that all trusts registered under the Madhya Pradesh Act are to be deemed to be registered under the Bombay Act irrespective of whether they are still situate in Madhya Pradesh and are liable to be administered under the Madhya Pradesh Public Trusts Act, 1951.
The aforesaid notification itself makes this clear by using the words "shall apply to the following classes of public trusts in the State to which the Act does not already apply. ".
These words indicate clearly that the Act is to apply to those trusts which as a result of the re organisation of the State have come within the new State of Maharashtra and to which the Bombay Act did not apply.
Therefore, the Act cannot apply and is not intended to apply to trusts which are still outside the State and within the Madhya Pradesh State.
There can therefore be no doubt that such trusts in spite of the general language of sec.
28 would still be governed by and administered under the Madhya Pradesh Act.
If sec.
28 were to be construed, as the appellant desires us to construe, there would be the anomalous position that the authorities under both the Acts can claim the right to supervise and control the administration and management of the trust properties.
The curious result of such a construction would be that though the trust is situate and is administered at Burhanpur in Madhya Pradesh the authorities under the Bombay Act can claim to control its management.
There is no dispute that the trust is administered at Burhanpur and the bulk of its properties, except the three pieces of lands situate in the District of Dhulia, are all situate in the Madhya Pradesh State.
The fact that a part of its property is situate in Maharashtra State, though the trust is within Madhya Pradesh State, would not mean that the trust would be governed partly by the Madhya Pradesh Act and partly by the Bombay Act.
Such a division of the Trust and its administration is not contemplated by either of the two Acts.
It is therefore clear that the present Trust does not fall within the ambit of sec.
28 and is not one of those trusts which can be deemed to 'be registered under the Bombay Act.
That being so, it is obviously not a trust which fulfils the second condition of section 88B of the Bombay Tenancy and Agricultural Lands Act and the appellant cannot be said to be entitled to the certificate under that section.
The appeal is dismissed.
There will be, no order as to costs.
| IN-Abs | Section 32(1) of the Bombay Tenancy and Agricultural Lands Act 1948 as amended by, Act XIII of 1956 provides that on the first day, of April 1957 every tenant shall subject to certain provisions and exceptions be deemed to have purchased from his landlord the land held by him as a tenant.
Section 88B provides an exception in favour of trusts which are or are deemed to be registered under the Bombay Public Trusts Act, 1950 when the Collector after enquiry certifies to that effect.
After the territorial changes made by the States Reorganization Act 1956 and the further changes made in 1960 certain territories of the then State of Bombay were excluded and certain other areas were brought into the new State of Maharashtra.
Thereafter the Bombay Public Trusts (Unification and Amendment) Act, 1960 was passed, amending the Act of 1960.
Before this amendment, section 28 of the Act provided that all public trusts registered under any of the enactments specified in Schedule A thereto shall be deemed to have been registered under the Act from the date on which the Act was applied to them.
By the amendment Schedule AA was added to the Act and when read with section 28 the effect thereof was that the trusts registered under the Madhya Pradesh Act 1951 were deemed to have been registered under the Bombay Act.
The appellant in the present case was the mahant of a public and religious trust which was administered at Burhanpur, Madhya Pradesh.
The bulk of its properties were in Burhanpur but three pieces of land lay in the new State of Maharashtra.
The appellant relying on the amended section 28 of the Bombay Public Trusts Act and section 88B of the Bombay Tenancy and Agricultural Lands Act sought exemption from the operation of section 32 of the latter Act.
The matter having been decided against him by the High Court at Bombay, he appealed by certificate to this Court.
HELD: Though section 28 of the Bombay Public Trusts Act is couched in general terms it cannot mean that all trusts registered under the Madhya Pradesh Act are to be deemed to be registered under the Bombay Act irrespective of whether they are still situate in Madhya Pradesh and are liable to be administered under the Madhya Pradesh Public Trusts Act.
The Act is intended to apply only to those trusts which as a result of the reorganization of the State have come within the State of Maharashtra and to which the Bombay Act did not apply.
[645B D] 642 In the present case there was no dispute that the trust was administered at Burhanpur and the bulk of the properties, except the three pieces of land situate in Maharashtra lay in Madhya Pradesh.
The fact that a part of its property was situate in Maharashtra State, though the trust was within Madhya Pradesh State, would not mean that the trust would be governed partly by the Madhya Pradesh Act and partly by the Bombay Act.
Such a division of the Trust and its administration was not contemplated by either of the two Acts.
The present trust did not therefore fall within the ambit of section 28 and was not one of those trusts which could be deemed to be registered under the Bombay Act.
Con sequently it was also not a trust which fulfilled the conditions of section 88B of the Bombay Tenancy and Agricultural Lands Act and the appellant could not be said to be entitled to the certificate under that section.
[645F H]
|
Appeal No. 636 of 1967.
Appeal by special leave from the judgment all order dated November 11.
1966 of the Allahabad High Court, Lucknow Bench in Writ Petition No. 226 of 1963.
section T. Desai, J. P. Goyal, D. N. Jha and G. section the appellant.
Sarjoo Prashad and O. P. Rana, for the respondents.
Judgment of the Court was delivered by Sikri, J.
This appeal by special leave is directed against the judgment, dated November 11, 1966, of the Division Bench of tile Allahabad High Court dismissing the writ petition filed by tile appellant seeking to quash tile order of the State Transport Authority.
dated March 20/21.
The State Transport Authority had by this order rejected the appellant 's revision petition against the decision of the Regional Transport Authority oil the ground that a mere decision of the Regional Transport Authority limiting the number of stage carriages under section 47(3) of the (IV of 1939) hereinafter referred to as the Act could not form the subject matter of a revision application '.
It was of the view that "when the Regional Transport Authority actually proceeds to fill Lip the vacancies, which it has decided to create, then the persons whose interests would be adversely affected, would have a right of representation before the Regional Transport Authority, and in the case of their representation being rejected by the Regional Transport Authority the will have a right of appeal before the State Transport Appellate Tribunal.
" The High Court was of the view that an existing operator had no say in the matter of determination of the strength on a route under sub section
(3) of section 47, and, it was in the discretion of the Regional Transport Authority to determine the strength on a route, after considering various matters enumerated in cls.
(a) to (f) of sub section
(1) of section 47.
The High Court further observed that is the order passed under section 47(3), to revise which the appellant had filed a revision tinder section 64 A, was a good order and did not call for any interference, it did not consider it necessary to decide whether a revision lay against such an order under section 64 A of the Act.
The learned counsel for the appellant, Mr. section T. Desai, con tends that an order under section 47(3) of the Act, whether it is quasijudicial or administrative, does affect the existing operators on the route and their representations must be considered by the Regional Transport Authority before passing an order tinder section 47(3).
He further submits that a revision lay under section 64 A of the Act and the same should not have been dismissed on the ground that no revision lay.
637 The relevant statutory provisions are section 47 and section 64 A, of the Act, and read thus; "47.
Procedure of Regional Transport Authority in considering application for stage carriage permit: (1) A Regional Transport Authority shall, in considering an application for a stage carriage permit, have regard to the following matters, namely: (a) the interests of the public generally ', (b) the advantages to the public of the set vice to be provided, including the saving of time likely to be effected thereby and any convenience arising from journeys not being broken; (c) the adequacy of other passenger transport services operating or likely to operate in the near future, whether by road or other means, between the places to be served; (d) the benefit to any particular locality or localities likely to be afforded by the service; (e) the operation by the applicant of other transport services.
including those in respect of which applications from him for permits are pending; (f) the condition of the roads included in the proposed route or area; and shall also take into consideration any representations made by persons already providing passengers transport facilities by any means along or near the proposed route or area.
or by any association representing persons interested in the provision of road transport facilities recognised in this behalf by the State Government, or by any local authority or police authority within whose jurisdiction any part of the proposed route or area lies: Provided that other conditions being equal, an application for a stage carriage permit from a co operative society registered or deemed to have been registered under any enactment in force for the time being shall, as far as may be, be given preference over applications from individual owners.
(2) A Regional Transport Authority shall refuse to grant a stage carriage permit if it appears from any time table furnished that the provisions of this Act relating to the speed at which vehicles may be driven are likely to be contravened: 638 provided that before such refusal an opportunity shall be given to the applicant to amend the time table so as to conform to the said provisions.
(3) A Regional Transport Authority may, having regard to the matters, mentioned in sub section (1), limit the number of stage carriages generally or of any specified type for which stage carriage permits may be granted in the region or in any specified area or on any specified route within the region." "64 A. Revision The State Transport Authority may, either on its own motion or on an application made to it, call for the record of any case in which an order has been made by a Regional Transport Authority and in which no appeal lies, and if it appears to the State Transport Authority that the order made by the Regional Transport Authority is improper or illegal, the State Transport Authority may pass such order in relation to the case as it deems fit: Provided that the State Transport Authority shall not entertain any application from a person aggrieved by an order of a Regional Transport Authority, unless the application is made within thirty days from the date of the order: Provided further that the State Transport Authority shall not pass an order under this section prejudicial to any person without giving him a reasonable opportunity of being heard.
" It would be noticed that sub section
(3) of section 47 does not expressly say whether any representations can be made by persons already providing transport facilities or by associations representing persons interested in the provision of the transport facilities or by any local authority or police authority within whose jurisdiction the route or area lies.
This is expressly mentioned in section 47(1).
The learned counsel contends that the expression "matters mentioned in sub section (1)" occurring in sub section (3) refers back not only to matters mentioned in sub cls.
(a) to (f) to sub section
(1) in section 47 but also the right of representation mentioned in sub section
We are unable to accept this line of reasoning as being sound.
Even under section 47(1), the Regional Transport Authority can only have regard to the matters mentioned in sub cls.
(a) to (f), and those matters may be brought to the notice of the Regional Transport Authority by representations.
It could not have been the intention that representations would contain matters which the Regional Transport Authority could not take into consideration under section 47(1).
This is not to say that the matters mentioned in 639 sub cls.
(a) to (f) are exhaustive, but this point does not arise and we need not say anything as to this.
Therefore, this line of reasoning does not assist the appellant.
This Court in Abdul Mateen vs Ram Kailash Pandey(1) held that "where a limit has been fixed under section 47(3) by the Regional Transport Authority, and thereafter the said authority proceeds to consider applications for permits under section 48 read with section 57, the Regional Transport Authority must confine the number of permits issued by it to those limits and on an appeal or revision by an aggrieved person, the Appellate Authority or the Revisional Authority must equally be confined to the issue of permits within the limits fixed under section 47(3)".
But this Court did not feel it necessary to decide whether under section 64 A, inserted by Motor Vehicles (Amendment) Act No. 100 of 1956, it was open to the State Transport Authority to vary a general order passed under section 47(3).
If we look at the section, it would be noticed that section 64 A is very wide in terms; the only condition necessary for filing a revision is that it should be against an order made by the Regional Transport Authority and against which no appeal lies.
The word "order" is wide, and there is no doubt that an order made under section 47(3) is an order within section 64 A because, as held by this Court in Abdul Mateen vs Ram Kailash Pandey (1) it binds the Regional Transport Authority and the State Transport Authority in dealing with applications under section 48.
read with section 57, of the Act.
Mr. Sarjoo Prasad, the learned counsel for the State, con tends that no revision lies at the instance of an existing operator because he cannot be called an aggrieved person, and secondly, that even if a revision lies, the appellant is not entitled to any relief on the facts of this case, under article 136 of the Constitution, because the appellant never approached the Regional Transport Authority in the first instance.
We are unable to say that no existing operator can be aggrieved by an order made under section 47(3), increasing or decreasing the number of stage carriages; it would depend on the facts and circumstances of each case.
In a particular case it may be to his advantage and he then would not file a revision against it, but if he files a revision when an order made under section 47(3) is prejudicial to his interests, there is no ground for denying him the right to approach the revisional authority and seeking its order.
An order under section 47(3) affects the future working on a route and we are of the view that such an order would have repercussion on the working of the existing operators, whether for their good or not.
The High Court, as stated above, was of the view that at the stage of section 47(3) existing operators would not be entitled to be heard by the Regional (1) ; 640 Transport Authority.
But assuming that it is so, this does no affect the right of revision conferred by section 64 A.
We need not in this case decide whether it is implied that existing operators would be entitled to be heard by the Regional Transport Authority before an order under section 47(3) is made.
The learned counsel for the respondent further contends that a decision under section 47(3) is a tentative decision and can be revised.
But assuming that it can be revised by the Regional Transport Authority, till the order is in operation it is binding on everybody and if a revision can be filed against the order under section 64 A, the aggrieved operator cannot be compelled to approach the Regional Transport Authority first to revise its order. 'This argument, in a way, concedes that an operator can be a person aggrieved by an order under section 47(3).
The learned counsel for the appellant contends that if it is held that a revision lies under section 64 A against an order passed under section 47(3) of the Act, the State Transport Authority should be directed to hear the revision on merits.
He says that the High Court had no right to go into the merits of the order itself.
Ordinarily what Mr. Desai contends is correct, but here the facts are that the order under section 47(3) was passed as long ago as November.
During the last five years demand for stage carriages on this route would have, in the ordinary course, increased by now.
and further it has not been shown that the Regional Transport Authority has made any glaring mistake.
For the aforesaid reasons.
in exercising our discretion under article 136 of the Constitution we consider that we should not interfere with the order passed by the High Court.
In the result the appeal fails and is dismissed.
Under the circumstances there will be no order as to costs.
V.P.S. Appeal dismissed.
| IN-Abs | The Regional Transport Authority, by an order under section 47(3) of the , fixed the number of stage carriages, by increasing their number on a particular route.
The appellant, an existing operator, filed a revision against that order to the State Transport Authority, under section 64A, but the State Transport Authority held that a revision did not lie.
The appellant then filed a writ petition in the High Court and the High Court dismissed it, holding that: (1) at the stage of section 47(3), existing operators were not entitled to be heard by the Regional Transport Authority, and (2) since the order of the Regional Transport Authority was good on merits, it was not necessary to decide whether a revision lay to the State Transport Authority.
In appeal to this Court, HELD: (1) Unlike section 47(1), section 47(3) does not say expressly that representations could be made by existing operators and others.
The expression in section 47(3) that 'the Regional Transport Authority may, having regard to the matters mentioned in sub section
(1) ', only means that the Authority shall have regard to the matters mentioned in sub cls.
(a) to (f) of section 47(1) and has nothing to do the right of making representations.
[638F H] (2) But whether or not an existing operator has an implied right to be heard before an order under section 47(3) is made he can be aggrieved by an order made under that section increasing or decreasing the number of stage carriages depending on the circumstances of the case, and has therefore a right of revision under section 64A, the only condition for filing a revision being that it should be against an order made by the Regional Transport Authority against which no appeal lies.
[639C D, F H] Abdul Mateen vs Ram Kailash Pandey, ; , re ferred to.
(3) Since a revision could be filed under section 64A against the order under section 47(3) the aggrieved operator need not approach the Regional Transport Authority first to review its order.
[640B C] (4) The High Court should have directed the State Transport Authority to dispose of on merits the revision petition against the order under section 47(3), and not gone into its merits itself, but, in view of the time that lapsed since the order was passed (five years, during which the demand for stage carriages must have increased), this Court would not interfere in the exercise of its jurisdiction under article 136.
[640C E] 636
|
Appeals Nos.
511 514 of 1966.
Appeals, by special leave from the judgments and orders dated August 9, 1961, July 20, 1964, of the Bombay High Court, Nagpur Bench in Misc.
Civil Applications Nos. 1118 of 1959.
192 of 1961.
1360 of 1959 and 193 of 1961 respectively.
H. R. Gokhale, M. R. Bhandare, P. C. Bharta, and O. C. Mathur, for the appellant (in all the appeals).
N. section Bindra, P. C. Chatterjee, section P. Nayar for R.H. Dhebar, the respondents (in all the appeals).
The Judgment of WANCHOO C. J., MITTER and HEGDE, JJ. was delivered by HEGDE, J. The dissenting judgment of BACHAWAT and RAMASWAMI, JJ. was delivered by BACHAWAT, J. HEGDE, J.
The principal question canvassed in this group of appeals by special leave is whether section 11(4)(a) of the Central Provinces and Berar Sales Tax Act 1947, to be referred to as the Act hereinafter, is ultra vires Article 14 of the Constitution and consequently the notices impugned in the writ petitions from which these appeals arise are liable to be struck down and the respondents restrained from levying sales tax on the appellants for the period May 1, 1952 to October 31, 1955.
The appellants are a private limited company carrying on business inter alia as dealers in iron and steel materials in Vidharba region of the Maharashtra State.
In that region they have more than one place of business.
They registered themselves as dealers under section 8A of the Act and obtained a certificate of registration on August, 17, 1947.
Their assessment year as shown in their registration certificate is from November 1 to October 31.
They were required to submit quarterly returns of their turnovers.
They did so till April 30, 1952.
Thereafter no returns were submitted.
On September 13, 1955, the Assistant Commissioner of Sales Tax, the assessing authority at that time, issued a notice calling upon the appellants to show cause why action should not be taken against them under sections 10(3) and 11(4)(a), on account of their failure to furnish the return for the period 1.1.53 to 31.12.53.
Similar notices were issued to them on October 27, 1955 for the period 1.1.54 to 31.12.54 and on July 7, 1956 for the period 1.1.55 to 31.12.55.
It appears that the appellants repeatedly took time for submitting their explanation.
The first respondent to whom the appellants ' case stood transferred issued in 1958 fresh notices to the appellants similar to those issued in 1955.
At that stage the appellants objected to the validity of those notices both orally as well as in writing on the ground that their assessment year was not the calendar year as mentioned in those notices but the year ending October 31.
Evidently in view of that objection, the first respon dent issued another set of notices on July 8, '1959.
The appellants contended that those notices were barred by time.
Thereafter the appellants challenged the validity of the notices issued in 1959 in the petitions under article 226 from which these appeals arise.
In these apneals the questions arising for decision are whether section 11 (4)(a) or section 11 A(3) or any parts thereof contravene the guarantee of equal protection of the laws or equality before the law or whether those provisions are based on a valid classification which is reasonable in view of the object with which they were enacted.
Mr. H.R. Gokhale learned counsel for the appellants, urged that both these provisions deal with the same class of persons having common characteristics and Properties and hence there is no just 666 basis for the classification made.
According to him the classification complained of has brought about a discrimination.
Further he asserted that the Act had conferred arbitrary power on the assessing authority to pick and choose from the persons belonging to the same class to be dealt with either under section 11(4)(a) or under 11A(1).
He urged that as a case coming under section 11(4)(a) also falls under section 11 A, as the law now stands, the persons proceeded against under section 11A(1) will have the benefit of the period of limitation prescribed therein; while the said benefit is not available for those proceeded under section 11(4)(a).
According to the learned counsel for the revenue, sections 11(4)(a) and 11A deal with different classes of persons; the classification made under those provisions is a reasonable classification having nexus with the object sought to be achieved.
Before adverting to the points at issue, it would be convenient to set out the circumstances under which section 11A(3) which is said to have brought about the discrimination complained of came to be enacted.
The Act is in force ever since 1947.
Section 11A as it originally stood was inserted into the Act in 1953.
In Bisesar House vs State of Bombay(1) the question arose whether a notice under section 11(2) initiates a fresh proceeding and if that is so, whether the limitation prescribed under s.11A(1) is attracted to that proceeding.
A Full Bench of the Bombay High Court speaking through Chagla, C. J. held that a notice under section 11(2) initiates a fresh proceeding and to such a proceeding the limitation prescribed in section 11A is attracted.
From the ratio of that decision it followed that the limitation prescribed under section 11 A also governed proceedings under s.11(4)(a).
Evidently, to get over the effect of that decision, the Bombay Legislature enacted the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act 1959 (No. 22 of 1959) which came into force on April 18, 1959.
Section 6 of that Act inserted the new subsection (3) into S.11A and the reason for that amendment, as stated in the statement of objects and reasons, is as follows: "In its judgment in Bisesar House vs Commissioner of Sales Tax, Nagpur, the Bombay High Court has held that the period of limitation laid down in S.IIA of the Central Provinces and Berar Sales Tax Act, 1947, for reassessment of the turnover which has escaped assessment applies to original assessment also.
It has also been found that the said limitation applies to suo motu revisions also.
The said decision affects the original assess ments and suo motu revisions, which have been made after the expiry of the period of limitation laid down for the reassessment of turnover escaping assessment under the different sales tax laws in force in this State.
It has, (1) 60 B.L.R. 1395 667 therefore, become necessary to establish the validity of all such assessments and to provide that the period of limitation prescribed for reassessment of escaped turn overs does not apply to original assessment and suo motu revisions.
" In Ghanshyam Das vs Regional Assistant Commissioner of Sales Tax, Nagpur(1) this Court did not agree with that decision so far as the scope of s.11(2) is concerned.
Therein it was held that a notice under section 11(2) does not initiate a fresh proceeding and to that proceeding the limitation prescribed in section 11A does not apply.
Though in view of that decision, s.11A(3) became superfluous in respect of a proceeding in which a notice under section 11 (2) is given, it undoubtedly changed the law in respect of proceedings under s.11(4)(a).
Before we proceed to consider the aforementioned complaint of discrimination, it is necessary to have a survey of the relevant provisions of the Act.
'Dealer ' is defined in section 2(c) as meaning a person who whether as principal or agent carries on in the State the business of selling or supplying goods whether for commission, remuneration or otherwise and includes a firm, a partnership, a Hindu undivided family or a State government or any of their departments and includes also a society, club or association selling or supplying goods to its members.
A 'registered dealer ' is defined in section 2(f) as meaning a dealer registered under the Act.
Section 2(j) defines 'turnover ' as meaning the aggregate of the amounts of sale prices and parts of sale prices received or receivable by a dealer in respect of the sale or supply of goods or in respect of the sale or supply of goods in the carrying out of any contract effected or made during the prescribed period; and the expression 'taxable turnover ' means that part 'of a dealer 's turnover during such period which remains after deducting therefrom his turnover during that period in respect of the sale of goods declared tax free under section 6 The definition of the term 'year ' as provided in section 2(1) to the extent necessary for our present purpose reads: "year ' means the 12 months ending on 31st day of March, or if the accounts of the assessee are made up to any other day in respect of a year ending on any date other than the 31st day of March, than at the option of the assessee the year ending on the day to which his accounts have been so made up. . . ."
Section 8 says: "(1) No dealer shall, while being liable to pay tax under this Act, carry on business as a dealer unless he has been registered as such and possesses a registration certificate."
Section 8A provides for voluntary registration of a dealer.
Sub s.(3) thereof provides that every dealer who has been registered upon an application made under this section so long as his registration remains in force, be liable to pay tax under that Act.
Sub section(4) of that section stipulates that the registration of a dealer upon an application made under that section shall be in force for a period not less than three complete years and shall remain in force thereafter unless cancelled under the provisions of the Act.
Section 10 provides for returns by dealers.
It reads: "(1) Every such dealer as may be required so to do to by the Commissioner by notice served in the prescribe manner and every registered dealer shall furnish such returns by such dates and to such authority as may be prescribed."
Sub section(2) of that section is not necessary for our present purpose.
Sub section(3) of that section reads: "(3) it a dealer fails to comply with the requirement of a notice issued under sub section (1) or a registrate dealer fails to furnish his return for any period within prescribed time to the prescribed authority without any sufficient cause, the Commissioner may, after giving such dealer a reasonable opportunity of being heard, direct him to pay, by way of penalty, a sum not exceeding one fourth of the amount of the tax which may be assesses on him under section 11 ".
Sections 11 and 11A are important for our present purpose.
They deal with assessment and assessment on turnover escaping assessment.
They, to the extent necessary for our present purpose read: "11(1).If the Commissioner is satisfied that the returns furnished by a dealer in respect of any period are correct and complete, he shall assess the dealer on them, (2) If the Commissioner is not so satisfied he shall serve the dealer with a notice appointing a place and day and directing him (i) to appear in person or by an agent entitled to appear in accordance with the provision of section 11B, (ii) to produce evidence or have it produced in support of the returns or (iii) to produce or cause to be produced any accounts, registers, cash memoranda or other document, as may be considered necessary by the Commissioner for the purpose, (3) After hearing the dealer or his agent and examining the evidence produced in compliance with the requirements of clause (ii) or clause (iii) of sub section(2) and such further evidence as the Commissioner may be require, the Commissioner shall assess him to tax.
(4) If a registered dealer (a) does not furnish returns in respect of any period by the prescribed date or (b) having furnished such returns fails to comply with any of the terms of a notice issued under sub section (2), or (c) has not regularly employed any method of accounting or if the method employed is such that, in the opinion of the Commissioner, assessment cannot properly be made on the basis thereof, the Commissioner shall in the prescribed manner assess the dealer to the best of his judgment: Provided that he shall not so assess him in respect of the default specified in clause (a) unless the dealer has been first given a reasonable opportunity of being heard." (Sub sections 5 and (6) are not necessary for our present purpose).
Section 11A provides: "(1).If in consequence of any information which has come into possession, the Commissioner is satisfied that any turnover of a dealer during any period has been under assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom, the Commissioner may, at any time within three calendar years from the expiry of such period, after giving the dealer a reasonable opportunity of being heard and after making such enquiry as he considers necessary, proceed in such manner as may be prescribed to reassess or assess, as the case may be, the tax payable on any such turnover; and the Commissioner may direct that the dealer shall pay, by way of penalty in addition to the amount of tax so assessed, a sum not exceeding that amount.
The assessment or reassessment made under sub section (1) shall be at the rate at which it would have been made, had there been no under assessment or escapement.
Nothing in sub sections (1) and (2) (i) shall apply to any proceeding (including any notice issued) under Sections 11 or 22A or 22B, and (ii) notwithstanding any judgment, decree or order 'of a Court or Tribunal, shall be deemed ever to have been applicable to such proceeding or notice.
(b) The validity of any such proceeding or notice shall not be called in question merely on the ground that such proceeding or notice was inconsistent with the provisions of sub sections (1) and (2).
Rule 19 of the rules framed under the Act provides that every registered dealer should furnish to the appropriate sales tax 670 officer his quarterly return in the prescribed form within one calendar month from the expiry of the quarter to which the return relates.
Each of such returns submitted should be accompanied by a treasury challan in the form prescribed in proof of the fact that he had paid the tax payable on the basis of his return, The only other rule relevant for Our present purpose is r. 32 in Part VII of the Rules, which deals with assessment of tax and/ or penalty.
That rule provides that where a registered dealer has rendered himself to a best judgment assessment as well as penalty by reason of his default in furnishing the prescribed return or re turns in respect of any period by the prescribed date, the assessing authority shall serve on him a notice in form 12 specifying the default, escapement or concealment as the case may be and calling upon him to show cause by such date ordinarily not less than 30 days, from the date of issue of the notice, as may be fixed in that behalf, why he should not be assessed or reassessed to tax, or a penalty should not be imposed upon him and directing him lo produce on the said date his books of account and other documents which the assessing authority may require or which he may wish to produce in support of his objection.
That rule further pro vides that no such notice shall be necessary where the dealer, having appeared before the assessing authority, waives such notice.
Now we may turn to the questions formulated for decision.
As mentioned earlier, the main contention advanced on behalf of the appellants is that sub section(3) of section 11A has brought about a discrimination between those dealers proceeded against under section 11(4)(a) and those dealt with under section 11A.
The contention advanced on behalf of the appellants is that the turnover of a registered dealer who has failed to submit his return and also to deposit the tax due from him, has escaped assessment; the case of such a dealer comes both within section 1 1 (4) (a) as well as section 11A; therefore, he can be dealt with under either of those two provisions.
Where section 11A prescribes a period of limitation for a proceeding under that provision, in view of sub section 3 of section 11A a proceeding under section 11(4)(a) can be initiated at any time; under those circumstances it is open to the authorities to proceed against some of the same class of dealers under section 11(4)(a) and others under section 11A.
It was said on their behalf that it is well settled that in its application to legal proceedings, article 14 assures to every one the same rules of evidence and modes of procedure; in other words, the same rule must exist for all in similar circumstances.
On the other hand, it was urged on behalf of the revenue that section 11(4)(a) deals only with registered dealers who have certain advantages under the Act, whereas section 11A deals with dealers who do not come either under section 11(4) or section 11(5), and therefore the classification of dealers made under the various provisions is based on real and substantial distinction bearing a just and reasonable relation to the object sought to be attained.
671 We have now to see whether the dealers who come within the mischief of section 11(4)(a) can also be dealt with under section 11A.
Before a person can be dealt with under section 11A, it must be shown that in consequence of any information which has come into his possession, the Commissioner is satisfied that any turnover of that dealer during any period has been under assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom.
Quite plainly the expression 'dealer ' in section IIA(1) includes both registered and unregistered dealers.
In this case we are concerned with the escapement of assessment.
Therefore the first question that arises for decision is whether it can be said that the appellants ' turnovers for the period 1 5 52 to 30 10 55 had escaped assessment.
There is no dispute that those turnovers had not been assessed.
From the fact that those turnovers had not been assessed, can it be said that they had escaped assessment? In Maharaj Kumar Kamal Singh vs Commissioner of Income Tax, Bihar and Orissa,(1), this Court laid down that the expression "has escaped assessment" in section 34(1)(b) of the Indian Income Tax Act, 1922 is applicable not only where the income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted, but also where a return has been submitted but the income tax officer erroneously failed to tax a part of assessable income.
In Commissioner of Income Tax, Bombay City vs M/s. Narsee Nagsee and Co., Bombay(2) interpreting the words "profits escaping assessment" in section 14 of the Business Profits Tax Act, 1947, this Court held that those words apply equally to cases where a notice was received by the assessee but resulted in no assessment, under assessment or excessive relief and to cases where due to any reason no notice was issued to the assessee and there was no assessment of his income.
Kapur, J. speaking for the majority of Judges in that case, observed (at p. 993 of the report) that it is well settled that an income escapes assessment when the process of assessment has not been initiated as also in a case where it has resulted in no assessment after the completion of the process of assessment.
The true scope of the expression "escaped assessment" in section 11A came up for consideration before this Court in Ghanshyam Das vs Regional Assistant Commissioner of Sales Tax, Nagpur(3).
This is what Subba Rao, J. (as he then was) who delivered the judgment of the majority of the Judges, observed in that regard: "In Commissioner of Income Tax, Bombay vs Pirojbai N. Contractor the words 'escaped assessment ' in the Indian Income tax Act were defined.
It was held therein that the said words were wide enough to include cases where no notice under s.22(2) of the Income tax Act had been issued to the assessee and therefore his income had not been assessed at all under section 23 thereof.
The said view has been assumed to be correct by this Court in Maharaj Kumar Kamal Singh vs Commissioner of Income Tax, Bihar and Orissa [1959] Supp. 1 S.C.R. 10 and Maharajadhiraj Sir Kameshwar Singh vs State of Bihar ([1960] 1 S.C.R. 322) and extended to cover a, case where the first assessment was made in due course but a part of the income escaped therefrom.
This Court, in Commissioner of Income tax, Bombay vs Narsee Nagsee and Co. ([1960] 3 S.C.R. 988), construing the provisions of section 14 of the Business Profits Tax Act, 1947, reviewed the law on the subject and came to the following conclusion: All these cases show that the words "escaping assessment" apply equally to cases where a notice was received by the assessee but resulted in no assessment at all and to cases where due to any reason no notice was issued to the assessee, and, therefore, there was no assessment of his income. '
It is true that the said decisions were given with reference to either section 34(1) of the Income Tax Act or section 14 of the Business Profits Tax Act but so far as the present enquiry is concerned the said sections are in pari materia with section 11A of the Act.
In construing the meaning of the expression 'escaped assessment ' in section 11A of the Act there is no reason why the said expression should bear a more limited meaning than what it bears under the said two Acts.
All the three Acts are taxing statutes and the three relevent sections therein are intended to gather the revenue which has improperly escaped.
A division Bench of the Madras High Court in the State of Madras vs Balu Chettiar (7 S.T.C. 519) following the decision of a Full Bench of that Court, held that where an assessee did not tile at any time a return of his turnover for a year and, therefore, there was no assessment made, the turnover escaped assessment.
It was observed therein: 'Whether it was a case of omission or of deliberate concealment on the part of the assessee, he did not submit any return.
It was his default that led to the escape of the turnover for 1951 52 from assessment to the tax lawfully due.
It was the whole of the turnover for that year that escaped assessment. ' It is not necessary to multiply citations.
We, therefore, hold that the expression 'escaped assessment ' in section 11A of the Act includes that of a turnover which has not been assessed at all, because for one reason or other no assess ment proceedings were initiated and therefore no assessment was made in respect thereof."
In one of the appeals dealt with in that judgment, i.e. C.A. No. 102 of 1901, this Court had to consider whether a case under 673 (a) also comes under section 11A.
The Court answered that question in the affirmative seen earlier it was the duty of the appellants not only to submit their quarterly returns but send along with those returns the treasury challans in proof of the payment of the tax admittedly due from them.
As they have failed to do so within the prescribed period, it follows that the turnovers in question had escaped assessment.
This takes us to, the next question whether in the instant case the assessing authority can be said to have been satisfied about the escapement of the assessment as a consequence of any information which had come into his possession.
From the notices issued in 1955 as well as later on, it is clear that the assessing authorities were satisfied about the escapement of the assessment due from the appellants.
But the real question is whether they were so satisfied "in consequence of any information which had come into their possession".
The assessing authorities knew that the appellants had neither submitted their returns nor treasury challans in proof of the payment of the tax due from them.
From that circumstance it is reasonable to, hold that in consequence of the information that the appellants had not submitted their returns as well as the treasury challans the assessing authority should have been stisfied about the escapement of the assessment.
It was urged on behalf of the revenue that 'information ' contemplated by s.11A should be from some outside source and not something that could be gathered by the assessing authority from his own records.
According to the revenue in the instant case there was no information from any outside source, therefore, it cannot be said that the assessing authority was satisfied about the escapement of tax in consequence of any information which has come into its possession.
In our view, this contention is untenable.
In Maharaj Kumar Kamal Singh vs Commissioner of Income Tax, Bihar and Orissa, this Court held that the word 'information ' in section 34(1)(b) of the Income Tax Act, 1922, includes information as to the true and correct state of the law and so would cover information as to the relevant judicial decisions.
It was laid down therein that that information need not be about any fact; it may be even as to the legal position.
In other words, the term 'information ' in section 34(1)(b) of the Income Tax Act 1922 really means knowledge.
In Salem Provident Fund Society Ltd. vs Commissioner of Income Tax madras(1) a division bench of the Madras High Court interpreting the scope of the words 'information which has come into his possession ' found in section 34 of the Indian Income Tax Act, observed thus: "We are unable to accept the extreme proposition that nothing that can be found in the record of the (1) 674 assessment which itself would show escape of assessment or under assessment, can be viewed as information which led to the belief that there has been escape from assessment or under assessment.
Suppose a mistake in the original order of assessment is not discovered by the Income Tax Officer himself on further scrutiny but it is brought to his notice by another assessee or even by a subordinate or a superior officer, that would appear to be information disclosed to the Income Tax Officer.
If the mistake itself is not extraneous to the record and the informant gathered the information from the record, the immediate source of information to the Income, Tax Officer in such circumstances is in one sense extraneous to the record.
It is difficult to accept the position that while what is seen by another in the record is 'information ' what is seen by the Income Tax officer himself is not information to him.
In the latter case he just informs himself.
It will be information in his possession within the meaning of section 34.
In such cases of obvious mistakes apparent on the face of the record of assessment, that record itself can be a source of information, if that informa tion leads to a discovery or belief that there has been an escape of assessment or under assessment."
The meaning of the word 'information ' came up again for consideration before a division bench of the Kerala High Court in United Mercantile Co. Ltd. vs Commissioner of Income Tax Kerala(1).
Their Lordships held that to 'inform ' means to 'impart knowledge ' and a detail available to the Income Tax Officer in the papers filed before him does not by its mere availability become an item of 'information '.
It is transmuted into an item of information in his possession only if and when its existence is realised and its implications recognized.
Applying that test to the facts of the case before them the Court held that the awareness of the Income Tax Officer for the first time after the assessment order of November 19, 1957, that the bonus shares were issued not out of Premiums received in cash and the consequent result in the light of the Finance Act 1957, was information within the meaning of that expression as used in section 34(1) of,the Indian Income Tax Act, 1922, and consequently the reopening of the assessment under that provision was not illegal.
In our judgment, the knowledge of the fact that the appellants had not submitted their quarterly returns as well as the treasury challans.
constituted In information to the assessing authority from which it could be satisfied and in fact it was satisfied that the turnovers with which we are concerned in this case bad escaped assessment.
(1) 675 From the above conclusions it follows that the appellants ' case falls both under section 11(4)(a) and section 11A(1).
Therefore, it was open to the assessing authority to proceed against them under any one of those two sections.
But as they were proceeded against under section 11(4)(a) they cannot have the benefit of the period of limitation prescribed under section 11 A(1).
Hence, it must be held that the present case falls within the rule laid down by this Court in Suraj Mail Mohta and Co. vs A. V. Visvanatha Sastri & another(1).
On the facts found it follows that section 1 (4)(a) has become a discriminatory provision in view of section 11 A(3).
Hence the same is liable to be struck down under article 14.
But for the inclusion of sub section 3 in section 11A, there would have been no discrimination between those dealt with under section 11(4)(a) and those under section 11A(1).
The period of limitation prescribed in section 11A(1) would have attracted itself to proceedings under section 11(4)(a) as held by this Court in Ghanshyam Das 's case(2).
Mr. Bindra, learned counsel for the revenue, contended that a registered dealer has certain advantages over an unregistered dealer; therefore the classification made under the Act is a reasonable classification.
To be a valid classification, the same must not only be founded on an intelligible differentia which distinguishes persons and things that are grouped together from others left out of the group but that differentia must have a reasonable relation to the object sought to he achieved.
Both section 11(4)(a) and section 11A(1) concern themselves with escaped assessments.
The classification suggested has no nexus with that object.
That much is established by the decision of this Court in Ghanshyam Das 's case(1) which is binding on us.
It is true the State can by classification determine who should be regarded as a class for the purpose of legislation and in relation to a law enacted on a particular subject, but the classification must be based on some real and substantial distinction bearing a just and reasonable relation to the object sought to be attained and cannot be made arbitrarily and without any substantial basis.
Judged from the object sought to be achieved by the Act, we are of the opinion that the classification made between the registered and unregistered dealers is not a reasonable classification.
From this conclusion it follows that section 11(4)(a) is liable to he struck down as being discriminatory in view of section 11A(3).
Section 11(4)(a) is separable from the rest of the sub section.
Its separation from that sub section does not affect the implementation of the other provisions of the Act.
This takes us to the question which was debated at our in stance whether the notices issued by the assessing authority in 1955 were valid notices.
The High Court had not considered this question, though it appears that the same was presented to it for decision (1) ; , (2) ; L/P(N)7SCI 4 676 by the parties.
In the course of its judgment, the High Court observed: "In this view (in view of its earlier findings) of the matter it is not necessary to consider whether the earlier notices of the year 1955 are good and valid notices or whether they stood superseded by subsequent notices of 1958 and 1959".
For convenience we shall take up for consideration notice No. 4519/STN dated 13 9 55.
Our conclusions in respect of that notice would cover the other notices.
The material facts as set out by the High Court, the correctness of which was not disputed before us, are these: "On the 3rd September, 1955, the Assistant Commissioner, Sales Tax, issued a notice under section 10(3), section 11(4) (a), section 11A and sub section(1) of section 22C of the Act, calling upon the petitioners to show cause why action should not be taken against them under section 10(3) and section 11(4) of the Act on account of their failure to furnish the returns for the period 1 1 53 to 31 12 53.
Similar notices were given on 27th October, 1955 for the period 1 1 54 to 31 12 54 and on 7th July 1956 for the period 1 1 55 to 31 12 55.
From those facts, it is seen that no notice had been issued within three years in respect of the turnover relating to the period from 1 5 52 to 31 12 52.
The assessment in respect of that period is clearly barred in view of our earlier conclusion.
The period 1 1 1 52 to 31 1 53 forms part of the quarter commencing from 1 11 52.
No notice was given in respect of that quarter.
A quarter forms a unit by itself.
Therefore, it follows that the proceeding in respect of that quarter is also barred by limitation.
Now we shall take up the question whether the notices issued in 1955 in respect of the turnovers relating to other quarters were in accordance with law.
The notice No. 4519/STN dated 13 9 55 reads."Notice (for 1 1 53 to 31 12 53) dated 13 9 55.No. 4519/ STN.D/13 9 55.
Form XII (See rule 32) Notice under sub section (3) of section 10, sub section (4) (a) and (5) of section 11, sub section (1) of section 11 (A) and sub section (1) of section 22 of the Central Provinces and B erar Sales Tax Act, 1947.
Whereas Shri Anandji Haridas and Co., Ltd., Nagpur.
You have failed to furnish a return as required by a 677 notice in that behalf served on you under section 10(1) of the Central Provinces and Berar Sales Tax Act, 1947.
OR You being a registered dealer have failed to furnish a return for the periods 1 1 53 to 31 12 53 and have thereby rendered yourself liable under section 11 (4) to be assessed to the best of judgment; Further, you are hereby directed to attend in person or by a person authorised by you in writing in that behalf, being a person specified in section 11B(1) before me and to produce or cause to be produced your books of accounts and the documents specified in the schedule hereunder and any evidence on which you rely in support of your objection at Jabalpur at 11 00 A.M. on 22 9 55.
Sd/ Asstt.
Commissioner of Sales Tax Nagpur Region, Nagpur."
It is true that it is not a notice in respect of any particular quarter, it is a notice in respect of the period 1 1 53 to 31 12 53.
In the State of Orissa and another vs M/s. Chakobhai Chelabhai and Company,(1) this Court held that the issue of one notice under section 12(5) of the Orissa Sales Tax Act, 1947 which section is similar to section 11(4)(a), for several quarters was not contrary to law as the section makes reference to a period which might consist of more than one quarter.
From the notice in question it cannot be made out whether the assessing authorities wanted to deal with the appellants under section 10(1) or under section 11(4).
The notice says that the appellants "had failed to furnish the return as required by a notice in that behalf served on them under section 10(1) of the Act, or that they being registered dealers had failed to furnish return for the periods mentioned therein and thereby rendered themselves liable under section 11(4) to be assessed to the best of judgments Quite dearly, the first alternative mentioned in the notice did not apply to the appellants.
They are registered dealers.
No notice under section 10(1) had been given to them.
The assessing authority by mistake had failed to strike out the first alternative shown in the printed form.
That circumstance could not have prejudiced the appellants.
It was held by this Court in Chakobai Chelabhai 's case(1) referred to earlier that such a mistake does not vitiate the notice issued.
But the more serious mistake pointed out by Mr. Gokhale in that notice is that the assessment year mentioned in that notice is not the assessment year of the 'appellants.
Their assessment Years commenced from 1st November.
This error according to Mr. Gokhale vitiated the notices issued.
Yet another complaint made by Mr. Gokhale was that though r. 32 provides that ordinarily not less than 30 days notice should be given to the assessee, only 9 days notice was given.
But this defect was found only in the notice quoted above and not in the other notices issued in,1955.
For the reasons to be mentioned presently, we see no merit in either of these contentions.
We are unable to accept the contention of Mr. Gokhale that a notice under section 11(4)(a) or 11A(1) is a condition precedent for initiating proceedings under those provisions or that it is the very foundation for the proceedings to be taken under those provisions.
The notice contemplated under r. 32 is not similar to a notice to be issued under section 34(1)(b) of the Income Tax Act, 1922.
All that sections 11(4) and 11A(1) prescribe is that before taking proceedings against an assessee under those provisions, he should be given a reasonable opportunity of being heard.
In fact, those sections do not speak of any notice.
But r. 32 prescribes the manner in which the reasonable opportunity contemplated by those provisions should be afforded to the assessee.
The period of 30 days prescribed in r. 32 is not mandatory.
The rule itself says that 'ordinarily ' not less than 30 days notice should be given.
Therefore, the only question to be decided is whether the defects noticed in those notices had prejudiced the appellants.
It may be noted that when the assessees received the notices in question, they appeared before the assessing authority, but they did not object to the validity of those notices.
They asked for time for submitting their explanation.
The time asked for was given.
Therefore, the fact that only nine days were given to them for submitting explanation could not have in any manner prejudiced them far as the mistake in the notice as regards the assessment year is concerned, the assessees kept silent about that circumstance till 1958.
It was only when they were sure that the period of limitation prescribed by section 11A had expired hey brought that fact to the notice of the assessing authority.
It is clear that the appellants were merely trying to take advantage of the mistakes that had crept into the notices.
They cannot be permitted to do so.
We fail to see why those notices are not valid in respect of the periods commencing from February 1, 1953 till 31 10 55.
We are unable to agree with Mr. Gokhale 's contention that each one of those notices should, be read separately and that we should not consider them together.
If those notices are read together as we 'think they should be, then it is clear that those notices give the appellants the reasonable opportunity contemplated by sections 11(4) '(a) and 11A(1).
In Chatturain and Others vs Commissioner Pt 'Income Tax, Bihar,(1) the: (1) 679 Federal Court held that any irregularity in issuing a notice under section 22 of the Income Tax Act, 1922 does not vitiate the proceeding that the income tax assessment proceedings commence with the issue of the notice, but the issue or receipt of the notice is, however, not the foundation of the jurisdiction of the Income Tax Officer to make the assessment or of the liability of the assessee to pay the tax.
The liability to pay the tax is :founded on sections 3 and 4 of the Income Tax Act which are the charging sections.
Section 22 and others are the machinery sections to determine the amount of tax.
The ratio of that decision applies to the facts of the present case.
In our opinion, the notices issued in the year 1955 are valid notices so far as they relate to the period commencing from February 1, 1953 to 31 10 55.
In view of our conclusion that every escapement of assessment coming within the scope of section 11(4)(a) is also an escapement of assessment under section 11 A(1), a notice issued under section 11 (4)(a) would be a vaild notice in respect of a proceeding under section 11A(1).
In the result, we hold that the assessing authority has no competence to assess the turnovers of the appellants in respect of the quarters commencing from 1 5 52 and ending with January 31, 1953 as the same is barred by time under section 11A.
We further hold that section 11(4)(a) is void as it is: violative of article 14.
We accordingly issue a direction to the respondents to refrain from assessing the appellants in respect of those turn overs.
In other respects, the appeals fail and they are dismissed.
In the circumstances of these cases, we make no order as to costs.
Bachawat, J. Sections, 11(4), 11(5) and 11 A of the C.P. and Berar Sales Tax Act, 1947 are as follows: "11(4) If a registered dealer (a) does not furnish returns in respect of any period by the prescribed date, or (b) having furnished such ;return fails to comply with any of the terms of a notice issued under subsection (2), or (c) has not regularly employed any method of accounting, or if the method employed is such that, in the opinion of the Commissioner, assessment cannot properly be made on the basis thereof, the Commissioner shall in the, prescribed manner assess the dealer to the best of his judgment: Provided that he shall not so assess him in respect of the default specified in clause (a) unless the dealer has been first given a reasonable opportunity of being beard.
680 (5) If upon information which has come into his possession, the Commissioner is satisfied that any dealer has been liable to pay tax under this Act in respect of any period and has nevertheless wailfully failed to apply for registration, the Commissioner shall, at any time within three calendar years from the ex piry of such period, after giving the dealer a reasonable opportunity of being heard, proceed in such manner as may he prescribed to assess to the best of his judgment the amount of tax due from the dealer in respect of such period and all subsequent periods:and the Commissioner may direct that the dealer shall pay by way of penalty in addition to the amount of tax so assessed a sum not exceeding one and a half times that amount.
11 A. (1) If in consequence of any information which has come into his possession, the Commissioner is satisfied that any turnover of a dealer during any period has been under assessed or has escaped assessment or assessed at a lower rate or any deduction has been wrongly made therefrom the Commissioner may, at any time within three calendar years from the expiry of such period, after giving the dealer a reasonable opportunity of being heard and after making such inquiry as he considers necessary, proceed in such manner as may be prescribed to re assess or assess, as the case may be, the tax payable on any such turnover; and the Commissioner may direct that the dealer shall pay, by way of penalty in ad dition to the amount of tax so assessed, a sum not exceeding that amount.
(2) The assessment or reassessment made under subsection (1) shall be at the rate at which it would have been made, had there been no under assessment or escapement."
The Bombay Sales Tax Laws, (Validating Provisions and Amendment) Act, 1959 inserted the following sub section (3) in section 11A: "(3)(a) Nothing in sub sections (1) and (2) (i) shall apply to any proceeding (including any notice issued) under section 11, or 22A or 22B, and (ii) notwithstanding any judgment, decree or order of a court or Tribunal, shall be deemed ever to have been applicable to such proceeding or notice.
(b) The validity of any such proceeding or notice shall not be called in question merely on the ground that such proceeding or notice was inconsistent with the provisions of subsections (1) and (2).
" 681 The appellant is a registered dealer.
It failed to file returns for the periods 1 5 1952 to 31 10 1952, 1 11 1952 to 31 10 1953, 1 11 1953 to 31 10 1954 and 1 11 1954 to 31 10 1955.
The Sales Tax Officer, Non resident Circle, Nagpur issued four notices to the appellant initiating proceedings under sections 10(3), 11(4), 11A(1) and 22C(1) of the Act.
The appellant filed a writ petition in the High Court challenging the notices and asking for an order restraining the respondents from taking steps under the notices and making assessments or levying penalties in respect of the aforesaid periods.
The High Court dismissed the application.
From this order, the appellant has preferred the present appeals.
Notices under section 22C(1) can be issued only in course of any proceedings under the Act.
As no proceedings were pending against the appellant, no notice under section 22C(1) could be issued to it.
We shall presently show that no notice can be issued to a registered dealer under section 11A(1) for assessing the turnover which has escaped assessment by reason of his not filing a return.
The impugned notices so far as they were issued under sections 22C(1) and 11A(1) may be treated as surplusage and rejected.
Under section 10(3), if a registered dealer fails to furnish his return for any period within the prescribed time without any sufficient cause, the Commissioner may after giving him reasonable opportunity of being heard direct him to pay by way of penalty a sum not exceeding one fourth of the amount which may be assessed on him under section 11.
If no assessment can be made under section 11, no penalty can be levied under section 10(3).
Therefore, the point for determination is whether the impugned notices so far as they were issued under section 11(4) are valid.
The contention of the appellant is that the notices under section 11 (4) are invalid as they were not issued within three years from the expiry of the aforesaid periods.
We see no force in this contention.
Section 11(4) does not prescribe a period of limitation for the issue of a notice under it.
In Ghanshyam Das vs Regional Assistant Commissioner of Sales Tax, Nagpur(1), the Court by a majority decided with reference to section 11.(4) and section 11A, as it stood before its amendment by the Bombay Sales Tax Laws (Validating Provisions and Amendment) Act, 1959, that a notice under section 11(4) initiates new proceedings and it also decided or to be more accurate, assumed that the period of limitation prescribed by section 11A(1) should be imported into section 11(4).
The case was decided without reference to section 11A(3) inserted by the Amending Act and is no authority on the interpretation of that sub section.
Section 11A(3) now expressly provides that nothing in section 11A(1) shall apply to any proceeding including any notice issued under section 11.
The section is retrospective in operation.
It follows that the period of (1) , 682 limitation prescribed by section 11A(1) cannot be applied to a proceeding or a notice issued under section 11(4).
There is no period of limitation prescribed for a notice or a proceeding initiated under section 11(4).
Consequently, the impugned notices issued under section 11 (4) are not barred by limitation and are not invalid.
The argument then is that section 11(4)(a) offends article 14 of the Constitution in two ways.
Firstly, it is said that it is open to the sales tax authorities to proceed at their sweet will either under section 11(4)(a) or under section IIA(1) against a registered dealer for his failure to file returns and the principle of Shree Meenakshi Mills Ltd. vs Sri A. V. Viswanatha Sastri and Another(1) is invoked.
We find no merit in this contention.
Section 11(4)(a) specially pro vides for the initiation of proceedings against a registered dealer who has not furnished returns in respect of any period by the prescribed date.
Having made this special provision, the legislature must be taken to have intended that in a case falling under section 11(4)(a) the sales tax authorities must proceed against the registered dealer under section 11(4)(a) and not under section IIA(1).
The special provision must be taken silently to exclude all cases failing within it from the purview of the more general provision.
Moreover if a statute is capable of two constructions, that construction should be given which will uphold it rather than the one which will invalidate it.
Construing sections 11(4)(a) and 11A(1) together we should, therefore, hold that the cases falling within section 11(4)(a) are excluded from the purview of section 11 A(1).
The point that there is no over lapping of sections 11(4)(a) and 11A(1) is made clearer by s.11A(3).
The decisions under section 34(1)(b) of the Indian Income tax Act, 1922 such as Maharaj Kumar Kamai Singh vs Commissioner of Incometax, Bihar and Orissa(2) and under section 14 of the Business Profits Tax Act, 1947 such as Commissioner of Income Tax vs Narsee Nagsee & Co.(2) are distinguishable.
In those Acts, there was no special provision corresponding to section 11(4) for proceeding against registered dealers who have not filed returns, and the question how far the special provisions would exclude cases within it from the purview of the more general provision could not arise.
In Ghanshyam Das 's case(3), none of the notices in question was issued under section 11A, and the Court did not say that a registered dealer could be proceeded against under section 11 A for not filing a return.
Nor did the Court consider the effect of section 11 A(3).
It is true that the majority decision held that the phrase "escaped assessment" in section 11A includes that of a turnover which has not been assessed at all because no assessment proceedings were initiated.
But having regard to the special provisions of section 11(4) read with section 11A(3), the power under section 11 A(1) as interpreted in Ghanshyam Das 's case(4) to assess turnover which escaped assessment by reason of non filing of returns must be confined to cases of (1) (2) [1959] Supp. 1 S.C.R. 10.
(3) , (4) ; 683 unregistered dealers.
As pointed out already, cases of registered dealers falling within section 11(4) are excluded from the purview of section 11A(1).
It is next said that section 11 (4) offends article 14 of the Constitution because no period of limitation is prescribed for a notice under it, whereas periods of limitation are prescribed for notices under sections IIA(L) and 11(5).
We see no merit in this contention.
The Act 'deals with registered and unregistered dealers differently in many ways.
The classification and differential treatment of re gistered and unregistered dealers are based on substantial differences having reasonable relation to the object of the Act.
A registered dealer unlike an unregistered dealer is under a statutory obligation to file returns without any notice being served upon him and to pay the full amount of tax due from him before furnishing the return (sections 10 and 12).
A dealer who has registered himself under the Act admits his liability to furnish returns whereas a dealer who has not registered himself makes no such admission.
A registered dealer has certain advantages under the Act which are denied to an unregistered dealer.
Section 2(1)(a)(ii) exempts from tax sales of a registered dealer of goods specified in his certificate of registration as being intended for use by him as raw materials in the manufacture of goods for sale by actual delivery in the State for consumption therein.
An unregistered dealer cannot get the benefit of this exemption.
Moreover, section 2(j) (a)(ii) exempts from tax sales to a registered dealer of goods de clared by him in the prescribed form as being intended for resale by him by actual delivery in the State for consumption therein.
The sales to an unregistered dealer are not so exempt.
Consequently, a registered dealer call buy his goods from the producer or the wholesaler at a cheaper price and has thus ail economic advantage over an unregistered dealer.
In the matter of penalties, sections 10(3) and 22C(1) treat the two classes of dealers on the same footing, but sections 11 (4), 11(5) and 11 A(1) treat them differently.
No penalty can be levied on a registered dealer under section 11(4) but heavy penalties may be levied on an unregistered dealer under sections 11(5) and 11A(1).
While prescribing periods of limitation for proceedings against an unregistered dealer under sections 11(5) and 11A(1), the legislature has wisely not prescribed a period of limitation for a proceeding initiated under section 11(4)(a) against a registered dealer considering that (1) the registered dealer is under a statutory obligation to file the return, (2) no penalty is leviable under section 11(4)and (3) the registered dealer is given many advantages under the Act which are denied to an unregistered dealer.
The bar of limitation in the case (if an unregistered dealer and the absence of such a bar in the case of a registered dealer cannot be regarded as unjust or discriminatory.
Questions of policy are not to be debated in this Court.
There is no compulsion on the legislature to prescribe a period of limitation in every case.
In taxing statutes the legislature has a large measure of discretion.
We cannot strike 684 down section 11(4)(a) because of some preconceived notion that the same period of limitation should be prescribed for proceedings against both registered and unregistered dealers.
In Ghanshyam Das 's case(1), Raghubar Dayal, J. at p. 459 clearly held that section 11(4) is not violative of article 14.
The majority did not dissent from this opinion.
We hold that section 11 (4) is not violative of article 14 and we uphold it.
It follows that the notices issued on July 8, 1959 under section 11(4) are valid in respect of the entire period from 1 11 1952 to 31 10 1955.
As regards the alternative contention of the respondent, that the notices issued in 1955 validly initiated, proceedings under section 11(4) for the period from 1 2 1953 to 31 10 1955 we are glad to find that the majority has accepted this contention.
The irregularities, if any, in the notices do not invalidate them.
However, for the reasons already mentioned, we are of opinion that the impugned notices issued on July 8, 1959 are valid.
In the result, the appeals are dismissed with costs.
ORDER In accordance with the opinion of the majority these appeals are partly allowed with respect to turn over from 1 5 1952 to 31 1 1953.
In other respects the appeals are dismissed.
No order as to costs.
| IN-Abs | Under s.10(1) of the Central Provinces and Berar Sales Tax Act 1947 every dealer required so to do by the Commissioner by notice, and every registered dealer, shall furnish such returns by such dates and so such authority as may be prescribed, and r.19 of the Rules framed under the Act provides that every registered dealer should furnish quarterly returns accompanied by a treasury challan in proof of payment of the tax payable.
If the registered dealer does not so furnish his return, the Commissioner may, after giving the dealer a reasonable opportunity assess him to the best of his judgment (4)(a).
Under s.11(4) (a).
Rule 32 prescribes that ordinarily not less than 30 days notice should be given to an assessee for submitting his explanation before action is taken under s.11(4)(a).
In 1953, s.11A was added to the Act.
Under s.11A(1) if in consequence of any information which has come into his possession, the other Commissioner is satisfied that any turnover of a dealer has escaped assessment, the Commissioner may, within three calendar years from the expiry of such period, after giving the dealer a reasonable opportunity of being heard, proceed to re assess the tax payable on any such turnover and also direct the dealer to pay a penalty.
In 1959, s.11A(3) was added by which, nothing in s.11A(1) shall apply to any proceeding including any notice under s.11, that is, the period of limitation of 3 years mentioned in s.11A(1) shall not apply to a proceeding under s.11(4)(a) on best judgment basis.
The appellants were registered dealers.
Their assessment year was from 1st November to 31st October.
They submitted their quarterly returns upto 30th April 1952.
Since no returns were submitted thereafter, on 13th September 1955, the assessing authority issued a notice with respect to the period 1st January 1953 to 31st December 1953 calling upon them to show cause why action should not be taken against them under s.11(4) (a).
A similar notice was issued on 27th October 1955 for the period 1st January 1954 to 31st December 1954, and on 7th July 1956, for the period 1st January 1955 to 31st December 1955.
The appellants repeatedly took time for submitting their explanation.
In 1958, fresh notices were issued for L/P(N) 7SCI (3)(a) 662 the calendar years1952 to 1955 and the appellants raised the objection, for the first time, that their assessment year was not the calendar year, but 1st November to 31st October.
In view of that objection, the first respondent issued another set of notices on 8th July 1959 for the periods 1st May 1952 to 31st October 1952, 1st November 1952 to 31st October 1953, 1st November 1953 to 31st October 1954 and 1st November 1954 to 31st October 1955 respectively.
The appellants contended that those notices were barred by the 3 year period of limitation under s.11A(1), but the assessing authority assessed the appellants on best judgment basis under section 11 (4) (a).
The appellants thereupon filed writ petitions in the High Court challenging the validity of the notices and the order of assessment, but the petitions were dismissed.
In appeals to this Court, the appellant contended that: (1) Section 11(4), (a) read with s.11A(3) contravenes article 14 of the Constitution, because, a registered dealer who had failed to submit his return could be proceeded against either under s.11(4)(a) or s.11A(1), but, whereas s.11A(1) provides a 3 year period of limitation, a proceeding under section 11(4)(a) could be initiated at any time in view of s.11A(3); (2) the notices of 1959 were barred by time; and (3) the notices of 1955 and 1956 were not valid, because, (a) the issue of one notice for several quarters was contrary to law, (b) that portion of the printed notice which said that the appellants had failed to furnish the return as required by a notice in that behalf served on them under s.10(1) did not apply to the appellants as no notice under s.10(1) had been given to them, (c) the assessment year mentioned in the notice was the calendar year which was not the assessment year of the appellants, and (d) though r. 32 provides that ordinarily not less than 30 days notice should be given to the assessee for submitting his explanation, the first notice gave to the appellants only 9 days time.
Held: (Per Wanchoo C. J., Mitter and Hegde, JJ.) (1) Section 11(4) (a) is void as it is violative of article 14.
The expression 'dealer ' in s.11A(1) includes both registered and unregistered dealers, and it cannot be contended that dealers are classified into registered and unregistered dealers, the former coming under s.11(4)(a) and the latter under s.11A(1).
To be a valid classification, it must not only be founded on an intelligible differential which distinguishes persons and things that are grouped together from others left out of the group, but that differentia must have a reasonable relation to the object sought to be achieved.
In the present case, both s.11(4)(a) and section 11A(1) are concerned with taxing escaped assessments, and judged from this object sought to be achieved by the Act, the classification of dealers into registered and unregistered dealers is not reasonable.
Therefore, even registered dealers are covered by section 11A(1).
As the 'information ' contemplated by s.11A(1) need not be from outside sources but could be gathered by the assessing authority from his own records, his knowledge of the facts that the appellants had not submitted quarterly returns and treasury challans and that they were notassessed to tax with respect to the turnovers in question constituted 'information ' to the assessing authority from which he could be satisfied that the turnovers had escaped assessment.
It would thus be open to the assessing authority to proceed against the appellants either under s.11(4)(a) or s.11A(1).
But as they were proceeded against under section 11(4)(a), they could not get the benefit of the limitation prescribed under section 11A(1).
It follows that section 11(4)(a) has become a discriminatory provision in view of section 11A(3), [672 B; 674 D E; 675 H; 676 A G].
663 Ghanshyam Das vs Regional Assistant Commissioner of Sales tax, Nagpur ; and Suraj Mall Mohta & Co. vs A, V. Visvanatha Sastri & Anr. ; , followed.
Maharaj Kumar Kamal Singh vs Commissioner of Income tax, Bihar & Orissa [1959] Supp. 1 S.C.R. 10, Commissioner of Incometax, Bombay City vs M/s. Narsee Nagsee & Co. Bombay, Salem Provident Fund Society Ltd. vs C. I, T. Madras, and United Mercantile Co. Ltd. vs Commissioner of Income tax, Kerala, referred to.
(2) But s.11(4)(a) is severable from the rest of the Act and its severance does not affect the implementation of the other provisions of the Act.
Therefore, the validity of the notices should be tested under s.11A(1).
So tested, the notices of 1959 are all barred by the 3 year period of limitation.
[676 G H].
(3) Since there was no valid notice for the period 1st May 1952 to 31st October 1952, there could be no assessment in respect of that period.
As regards the quarter 1st November 1952 to 31st January 1953 also, there was no valid notice.
The notice issued on 13th September 1955, no doubt refers to the period 1st January 1953 to 31st January 1953, but that is only a part of the quarter.
As a quarter is a unit in itself and there should be a notice for the entire quarter, the proceeding in respect of the quarter from 1st November 1952 to 31st January 1953 is also barred by limitation [677 E F].
But the notices issued in 1955 and 1956 are valid notices in so far as they relate to the period 1st February 1953 to 31st October 1955.
Any irregularity in the issue of the notices does not vitiate the proceeding, because, the liability to pay tax is founded on the charging sections.
[680 B C].
Chatturam & Ors.
vs C.I.T. Bihar, ; , applied.
Further, (a) The issue of one notice for several quarters is not contrary to law.
[678 E].
State of Orissa and Anr.
vs M/s. Chakobhai Chelabhai & Co. ; , followed.
(b) The assessing authority, by mistake, had failed to strike out the portion in the printed form which was inapplicable to the appellants who were registered dealers and on whom no notice need be served to furnish a return.
But this circumstance could not have prejudiced the appellants and such a mistake does not vitiate the notice.
[678 H].
Chakobhai Chelabhai 's case; , , followed.
(c) The mistake as regards the assessment year in the notices does not render the notices invalid.
The assesses deliberately kept silent and when they felt that the period of limitation prescribed by section 11A had expired, brought the fact to the notice of the authority.
The assesses were not prejudiced and could not be permitted to take advantage of such a mistake.
[679 G H].
(d) Rule 32 prescribes that ordinarily 30 days ' notice should be given.
Therefore, the period is not mandatory.
All that ss.11(4) and 11A require is that an assessee should be given a reasonable opportunity before he is proceeded against.
Since, in the present 664 A case, the appellants appeared before the assessing authority and did not object to the validity of the notices but asked for sub mitting their explanation, and as the time asked for was given, the appellants had a reasonable opportunity, for submitting their explanation.
[679 D G].
(Per Bachawat and Ramaswami JJ.) (1) Section 11(4) is not violative of article 14.
Construing ss.11(4)(a) and 11A(1) together it must be held that cases falling within s.11(4)(a) are excluded from the purview of S.11A(1).
Section 11(4)(a) specially provides for the initiation of proceedings against a registered dealer.
Having made this special provision, the legislature must be taken to have intended that the sales tax authorities must proceed against.
a registered dealer under s.11(4)(a) and not under s.11A(1).
[683 C B].
The classification and differential treatment of registered and unregistered dealers are based on substantial difference having a reasonable relation to the object of the Act.
The legislature did not prescribe a period of limitation for a proceeding initiated under section 11(4)(a) against a registered dealer, because, (i) the registered dealer is under a statutory obligation to file a return, (ii) no penalty is leviable under s.11(4) and (iii) the registered dealer is given many advantages under the Act which are denied to an unregistered dealer.
Therefore, the bar of limitation in the case of an unregistered dealer and the absence of such a bar in the case of a registered dealer cannot be regarded as unjust or discriminatory.[684 B, G H].
Ghanshyam Das vs Regional Assistant Commissioner of sales Tax Nagpur, [1964]4 S.C.R. 436, Maharaj Kumar Kamal Sing vs Commissioner of Income tax, Bihar & Orissa, [1959] Supp. 1 S.C.R. 10 and Commissioner of Income tax vs Narsee Nagsee & Co. , explained.
(2) Section 11A(3) expressly provides that nothing in section 11 A(1) shall apply to any proceeding including any notice under section 11 and the section is retrospective.
It follows that the period of limitation provided by s.11A(1) cannot be applied to a proceeding or notice under section 11(4).
Consequently, the impugned notices of 1959, issued under s.11(4) are not barred by limitation and are not invalid [682 H; 683 A].
Ghanshyam Das 's Case; , , referred to (3) Even the notices issued in 1955 and 1956 initiated proceedings validly under section 11(4) for the period from 1st February 1953 to 31st October 1955, as the irregularities in the notices did not invalidate them.
[685 B C].
|
Appeal No. 72 of 1965.
Appeal by special leave from the judgment and decree dated August 28, 1962 of the Bombay High Court in Appeal No. 250 of 1959 from Original Decree.
section G. Patwardhan, R. R. Jhagirdar, V. G. Mudholkar and A. G. Ratnaparkhi, for the appellant.
R. H. Dhebar, section section Javali and section P. Nayar, for respondent No. 1.
section section Shukla, for respondents Nos.
2(ii) (v).
The Judgment of the Court was delivered by Shah, J.
One Sambhusing applied under section 19 of the Bombay Public Trusts Act 29 of 1950 for a declaration that City Survey Nos. 371 to 379 of Taloda were settled by one Dagadu Khushal in favour of the Municipality in 1883 for the benefit of the Johari Panch and for an order that the property be registered as property of a public trust under the Act.
The Assistant Charity Commissioner who heard the petition by his order dated January 20, 1956, held that "there was no such institution known as Johari Panch", and that the property in dispute had not been used for the benefit of that community, but Dagadu Khushal had trans ferred the property to the Municipality for the benefit of members of the public interested in the Samadhi of Nagabawa.
The Assistant Charity Commissioner declared that there was a public trust and City Survey Nos.
371 to 379 of Taloda Municipality were the property of the Trust and that the Municipality held it as trustee of that trust.
That order was confirmed in appeal by the Charity Commissioner.
In appeal, the District Court set aside the order of the Charity Commissioner and held that by the deed of transfer executed by Dagadu Khusbal no trust was created, that in any event the trust was not a public trust and that the property in City Survey Nos.
371 to 379 was not the property of any such trust.
In appeal under section 72(4) of the Act, the High Court of Bombay reversed the order passed by the District Court and restored the order passed by the Charity Commissioner.
The Municipality of Taloda has filed this petition with special leave.
A short history of the property may first be set out.
Land which now bears City Survey Nos. 371 to 379 originally be longed to one Charandas who erected a 'Dharamshala ' thereon.
On May 24, 1878, Charandas sold the land and the Dharamshala to Dagadu Khushal purporting to transfer the property absolutely to the vendee.
On August 27, 1883, Dagadu Khushal executed a deed in favour of the Municipality of Taloda, the relevant clause 655 of the deed (as translated in the judgment of the High Court) reads as follows "Having released all my rights, interest and title in the Property mentioned in the boundaries above, I am handing over today all that property in the possession of the Municipality for the purpose of sarvajanik kam (public purpose) as it has been utilised upto date for shelter of Atit, Abhyagat, Sadhu, Sant etc.
to be used in the same way as it has been used up till now.
" It was recited in the deed that in the property conveyed "there is a samadhi (grave) of Nagabawa".
The Municipality, pursuant to the deed, entered into the possession of the property.
It appears that thereafter the Municipality made certain constructions which were used for its offices and for shops.
On September 21, 1936, the Municipality of Taloda filed a suit against one Baba Haridas Guru Shamdas Udasi for a declaration that the defendant had no right or interest over the land City Survey Nos. 371 to 379 and that the defendant had taken unlawful possession thereof and for an order that the obstruction raised by the defendant be removed, and possession of the land be awarded to the Municipality.
In this suit it was claimed by the Municipality that it was in possession of the land for more than sixty years and the property was "utilised for municipal purposes and was enjoyed in all ways for necessary municipal requirements", but the defendant had made unauthorised construction thereon.
Baba Haridas contended that the Municipality had no right to utilise the property for municipal purposes since it was transferred in trust for the residence of "sages, saints, guests, visitors and others of the Nanak Sect", and the defendant being "a sage or saint of the Nanak Sect" had been residing in the property and was entitled to do so.
This suit was decreed by the Subordinate Judge.
In 1950 survey proceedings were started in the town of Taloda and an enquiry regarding the, title to the land was made.
The Secretary of the Municipality admitted before the City Survey Officer that in Survey No. 379 there existed "a temple of the Johari men and the members of that, community had the right to visit the temple at fixed times but they had no other right".
Members of the Johari Panch claimed that they had entrusted their temple to the Municipality for administering it for the community, but the "compound" belonged to them and that the Municipality was merely a trustee thereof.
The City Survey Officer declared the Municipality to be the owner of the property in question and further declared that the Municipality was not a trustee for the Johari Panch.
Sambhusing then submitted the application out of which this appeal has arisen.
The High Court has held that the Municipality held at all material times the property as a trustee of a public trust.
This 656 finding is challenged before us by the Municipality.
The first question which falls to be considered is whether the Municipality holds the property or any part thereof as a trustee.
Dagadu Khushal claiming to be the owner of the property by purchase from Charandas transferred it to the Municipality for public purpose i.e. to be utilised for giving shelter to "Sadhus, saints and religious mendicants" in the same manner in which it had been utilised upto the date of transfer.
We will assume that Dagadu Khushal could have, when he was the owner, stopped the user of the pro perty for the benefit of "Sadhus, saints and religious mendicants".
But after the transfer of the property was accepted by the Municipality for the purposes mentioned in the deed, it was not open to the Municipality to divert the use of that property for its own purposes.
Counsel for the Municipality urged that the Municipality is in a sense a trustee for the residents of the town of Taloda in respect of all the property vested in it by operation of the Act constituting it, and upon that trust another trust which restricts the use of the property for the benefit of.
a limited class of persons cannot be super imposed.
The Municipality was governed by Act VI of 1873 at the date of the settlement.
Section 17 of that Act provided: "All property of the nature, hereinafter specified shall be vested in and belong to the Municipality, and shall, together with all other property, of what nature or kind soever, which may become vested in the Municipality, be under their direction, management, and control, and shall be held and applied by them as trustees for the purposes of this Act; that is to say: (a) All public town walls gates, markets, slaughterhouses, manure and nightsoil depots and public buildings of every description not specially reserved by Government.
(b) All public streams, tanks, reservoirs, cisterns, wells, springs aqueducts, conduits, tunnels, pipes, pumps, and other water works, and all bridges buildings, engines, works, materials, and things connected therewith or appertaining thereto, and also any adjacent land (not being private property) appertaining to any public tank or well.
(c) All public sewers and drains, and all sewers, drains, tunnels, culverts, gutters and watercourses in, alongside, or under any street, and all works materials and things appertaining thereto, as also all :dust, dirt, dung.
ashes, refuse, animal matter or filth, or rubbish of any kind collected by the Municipality from the streets, houses, privies, sewers, cesspools, or elsewhere.
657 (d) All public lamps, lamp posts, and apparatus connected therewith, or appertaining thereto.
(e) All land transferred to them by Government, or by gift, or otherwise for local public purposes.
(f) All public streets, and spaces, and the pavements, stones, and other materials thereof, and also all trees, erections, materials, implements, and things provided for such streets and spaces.
" Property belonging to a Municipality governed by the Act must undoubtedly be held under its direction, management and control and must be applied by it as a trustee, subject to the provisions and for the purposes of the, Act.
But there is nothing in the Act or in the general law which prevents a Municipality from accepting a trust in favour of a section of the general public in respect of property transferred to it, or authorises the Municipality after accepting a trust to utilise it for its own purposes in breach of the trust.
It was then urged by counsel for the Municipality that by the decree passed in the suit filed against Baba Haridas, the right of the members of the Johari community to the property in dispute was negatived and the same right cannot, because of the rule of res judicata, be re agitated in these proceedings.
In that argument, in our judgment, there is no substance.
The only dispute in suit No. 5 10 of 1936 of the Court of the Second Class Sub Judge Nandurbar, was about the right of the Municipality to call upon Baba Haridas to vacate and deliver possession of the property which was in his occupation.
It is true that the defendant Baba Haridas had contended that the property was the property reserved for "Sadhus, saints and religious mendicants" and he as a Sadhu was entitled to reside therein.
But Baba Haridas was not sued in a representative capacity on behalf of the beneficiaries of the trust created in 1883; he was used as a trespasser.
The judgment of the civil court does not operate to prevent the Assistant Charity Commissioner from determining in an appropriate proceeding whether the property was the property of a public trust of a religious or charitable nature.
The argument of counsel for the Municipality that the decision of the City Survey Officer operates by virtue of s.50 A of the Bombay District Municipal Act, 1901, to destroy the rights of the public, is also without substance.
Sub section (1) of section 50 A of the Bombay District Municipal Act, 1901, authorises the City Survey Officer, in proceedings for survey of lands (other than land used for agriculture) in a Municipal District to determine the claim between the Municipality and other persons after formal enquiry of which due notice has been given.
By sub section
(2) any suit instituted in any civil court after the expiration of one year from the date of any order passed by the Collector, or if an appeal has been made I against such order within the period of limitation, shall be dismissed if the suit is brought to set aside such order, or if the relief 658 claimed is inconsistent with such order, provided that the plaintiff has had due notice of such order.
The property undoubtedly is entered in the City Survey record as private property of the Taloda Municipality.
But the legal ownership of the Municipality is not challenged in the proceedings before the Assistant Charity Commissioner.
It is merely contended in this proceeding under section 19 of the Bombay Public Trusts Act that the property 'is held by the Municipality subject to a public trust.
The proceeding under section 19 of the Bombay Public Trusts Act for a declaration that the property is the property of a public trust is not a suit to set aside the order of the Collector, nor is it a suit in which the relief claimed is inconsistent with the order of the City Survey Officer.
The learned Assistant Judge held that the beneficiaries referred in Ext.
14 as "Sadhus, saints and religious mendicants" do not, form the public or a section thereof, and on that account also the use of the property by them was not an object of general public utility.
The bounty of the settlor, observed the learned Judge, must be directed towards the public as a whole or a section of the public: if the object of his bounty is neither the public nor a section of the public, "but merely a conglomeration of men who constitute a mere group and the nexus which ties them is not a nexus which constitutes them a section of the public, the trust is not for advancement of any object of general public utility".
We are unable to agree with that view.
Section 9 of the Bombay Public Trusts Act provides: "For the purposes of this Act, a charitable purpose includes (1) relief of poverty or distress, (2) education, (3) medical relief, and (4) the advancement of any other object of general public utility, but does not include a purpose which relates (a) exclusively to sports, or (b) exclusively to religious teaching or worship." Section 10 of the Act provides, "Notwithstanding any law, custom or usage, a public trust shall not be void, only on the ground that the persons or objects for the benefit of whom or which it, is created are unascertained or unascertainable.
Explanation The expression "public trust" is defined in section 2(13) as meaning an, express or constructive trust for either a public, religious or charitable purpose, or both and includes a temple, a math, a wakf, a dharmada or any other religious or charitable purpose or for both 659 and registered under the .
A trust for either a religious or charitable purpose or for both by the express words of the definition is a public trust.
We are unable to agree with the learned Assistant Judge that Sadhus, religious mendicants and visitors to the samadhi of Nagabawa are not a section of the public.
They have a common bond of veneration for the samadhi.
The beneficiaries of the trust are an uncertain and fluctuating body of persons forming a considerable section of the public and answering a particular description, and the fact that they belong to a religious faith or a sect of persons of a certain religious persuasion does not make any difference in the matter: Mahant Ram Saroop Dasji vs section P. Sahi(1).
The property is entrusted to the Municipality for providing shelter to "sadhus, saints and religious mendicants", the purpose, in our judgment, is religious and charitable within the meaning of section 2(13), of the Act.
The plea that Dagadu Khushal had entrusted the property to the Municipality only for maintaining a Dharamshala for the benefit of persons visiting the samadhi of Guru Nagabawa and the trust was limited only to the building of the Dharamshala has also no force.
The terms of Ext.
14 are clear.
The trust was not limited to the buildings standing on the land, it extended to the entire property.
Two procedural objections which were raised by counsel for the, Municipality remain to be considered.
It was urged that since Sambhusing applied for a declaration that the purpose of the trust was to give shelter to sadhus, saints and religious mendicants during their sojourn in Taloda and to maintain and look after Nagabawa 's samadhi, and for an order that all the lands adjoining the samadhi of Nagabawa i.e. the Dharamshala, the whole building in which there was the Municipal office, may be given into the possession of the Johari Panchas, it was not open to the Assistant Charity Commissioner to give a findings that there existed a public trust for the benefit of persons interested in the samadhi.
It was contended that once it was found that the property was not for the benefit of the Johari Panchas the application should have been dismissed.
We are unable to agree with that contention.
The proceedings were commenced under section 1,9 of the Bombay Public Trusts Act, and it was open to the Assistant Charity Commissioner to determine whether a public trust existed, and if the Assistant Charity Commissioner was satisfied that there existed a public trust, whatever may be the claim made by the applicants.
the Assistant Charity Commissioner was bound to declare the existence of the public trust and register it.
Under section 19 of the Bombay Public Trusts Act an inquiry may be started by the Deputy or Assistant Charity Commissioner either on an application made under section 18 or on an application made by any person (1) [1959] Suppl.
(2) S.C.R. 583 ( 2 ) L/P(N)7SCI 3 660 having interest in a public trust or on his own motion.
The proceedings before the Assistant Charity Commissioner was not a proceeding inter partes, and Sambhusing was not claiming any personal relief.
He was entitled to set in motion an enquiry into the nature of the trust as a person claiming to be interested in the public trust.
If the Assistant Charity Commissioner found that a public trust existed, he could make an appropriate declaration and consequential orders consistent with his findings.
It was finally urged that against the finding of the District Court that there was no public trust, and if there was a public trust the beneficiaries were not the members of the public, the Charity Commissioner could not appeal to the High Court, for, it was said, the Charity Commissioner is constituted by the Act a judicial authority, and he cannot take up in the proceeding a contentious attitude.
We are unable to accept that contention also.
The powers of the Charity Commissioner under the Act are found in section 3.
That Officer is directed to exercise such powers and perform such duties and functions as are conferred by or under the pro visions of the Act, and shall, subject to such general or special orders as the State Government may pass, superintend the administration and carry out the provisions of the Act throughout the State.
If an adverse decision is arrived at by the Court under section 72 and if he is denied the right to appeal to the High, Court, it would be difficult for him, if he is of the view that the property is the property of the public trust and if the District Court rules otherwise, to carry out the provisions of the Act.
The Charity Commissioner was made a party to the appeal, and he was entitled to support his order before the District Court.
A person interested, as the Charity Commissioner is in the due administration of property, cannot be denied a right to appeal against an adverse decision in a proceeding to which he is a party, on the ground that he is pleading for acceptance of the view which he had declared as a quasi judicial authority at an earlier stage of that proceeding.
The appeal fails and is dismissed with costs in favour of the Charity Commissioner.
| IN-Abs | A property was conveyed to the respondent Municipality by a deed "for the purpose of Sarvajanik Kam (public purpose) as it has been utilised uptodate for shelter of Atit, Abhyaqat, Sadhu, Sant, etc.".
It was also recited in the deed that in the property conveyed there was "a Samadhi (grave) of Nagabawa.
" The Municipality entered possession and made certain constructions which were used for its offices and for shops.
Thereafter, the Municipality sued for a decree for delivering possession of a part of the property against a Sadhu who had unlawfully.
occupied it and the suit was decreed.
Later, in survey proceedings members of the Johari Panch claimed that they had entrusted their temple to the Municipality for administering it for the community, but the compound belonged to them and that the Municipality was merely a trustee thereof.
The Secretary of the Municipality admitted that in the property there existed a temple of the Joharis and that the members of that community had the right to visit the temple at fixed times but that they had no other right.
The Survey Officer declared the Municipality to be the owner of the property and not a trustee for the Johari Panch.
Thereupon, an application under section 19 of the Bombay Public Trusts Act was filed for a declaration that the property was settled in favour of the Municipality for the benefit of the Johari Panch and that the property be registered as property of a public trust under the Act.
The Charity Commissioner declared that there was a public trust, that the Municipality was the trustee thereof, and that the property was transferred in the Municipality for the benefit of members of the public interested in the Samadhi of Nagabawa; but he held that there was no such institution known as Johari Panch and that the property had not been used for the benefit of that community.
In appeal, the District Court set aside the order of, the Charity Commissioner.
The Charity Commissioner appealed to the High Court, which reversed the order of the District Court and restored the order of the Charity Commissioner.
In appeal, this Court, Held: The appeal must fail.
(i) The property was entrusted to the Municipality for providing shelter to sadhus, saints and religious mendicants.
the purpose was religious and charitable within the meaning of section 2 (13) of the 653 Bombay Public Trusts Act.
The trust was not limited to the buildings standing on the land; but extended to the entire property.
Sadhus, religious mendicants and visitors to the Samadhi of Nagabawa are a section of the public.
They have a common bond of veneration for the Samadhi.
The beneficiaries of the trust are an uncertain and fluctuating body of persons forming a considerable section of the public and answering a particular description, and the fact that they belong to a religious faith or a sect of persons of a certain religious faith or a sect of persons of a certain religious persuasion does not make any difference in the matter.
[660 A C].
Mahant Ram Saroop Dasji vs section P. Sahi [1959] Suppl.
2 S.C.R. 583 followed.
(ii) After the transfer of the property was accepted by the Municipality for the purpose mentioned in the deed it was not open to the Municipality to divert the use of that property for its own purposes.
There is nothing in Act 6 of 1873 or in the general law which prevents a Municipality from accepting a trust in favour of a section of the general public in respect of property transferred to it.
Nor does the Act authorise a Municipality, after accepting a trust, to utilise it for its own purpose in breach of the trust.
[657 B C; 658 C].
(iii) The contention, that once it was found that the property was not for the benefit of Johari Panches, the application should have been dismissed, had no force.
The proceedings were commenced under section 19 of the Bombay Public Trusts Act, and it was open to the Charity Commissioner to determine whether a public trust existed, and if the Charity Commissioner was satisfied that there existed a public trust, whatever may be the claim made by the applicants, the Charity Commissioner was bound to declare the existence of the public trust and register it.
Under s.19 an enquiry may be started by the Deputy or Assistant Charity Commissioner on tin application made under s.18 or on an application made by any person having interest in a public trust or on his own motion.
[660 G, H].
(iv) The Sadhu who had unlawfully possessed himself of a part of the property in dispute was not sued in a representative capacity on behalf of the beneficiaries of the trust; he was sued as a trespasser.
Therefore, the judgment did not operate as resjudicata, and the Charity Commissioner was not prevented from determining in an appropriate proceeding whether the property was the property of a public trust of a religious or charitable nature.
[658 F].
(v) The argument, that the decision of the Survey Officer, operates by virtue of section 50 A of the Bombay District Municipal Act, 1901 to destroy the rights of the public, is without substance.
By sub section
(2) of section 50A, if the Collector had passed an order, a suit in a civil court shall be dismissed if the suit was brought to set aside the order of the Collector or if the relief claimed was inconsistent with such order In the present case, the property was entered in the Survey record as that of the Municipality.
But the legal ownership of the Municipality was not challenged in the proceedings before the Charity Commissioner.
The proceeding under section 19 of the Bombay Public Trusts Act was for a declaration that the property was the property of a public trust and therefore was not a suit to set aside the order of the Collector.
nor was it a suit in which the relief claimed was inconsistent with the order of the Survey Officer.
[658 G 659 B].
(vi) A person interested as the Charity Commissioner is in the due administration of property, cannot be denied a right to appeal 654 against an adverse decision in a proceeding to which he is a party, on the ground that he is pleading for acceptance of the view which he had declared as a quasi judicial authority at an earlier stage of that proceeding.
[661 E F].
|
Appeal No. 126 of 1966.
Appeal from the judgment and order dated November 29, and December 2, 1963 of the Gujarat High Court in Special Civil Application No. 641 of 1962.
736 K. R. Chaudhuri, for the appellant.
R. M. Hazarnavis, K. L. Hathi and section P. Nayar, for the respondents.
section T. Desai and I. N. Shroff, for the intervener.
The Judgment of the Court was delivered by Hegde, J.
The main controversy in this appeal by certificate is as to the constitutional validity of section 12A(4) of the Bombay Sales Tax 1946, to be hereinafter referred to as the Act.
As in our judgment that provision is void, the same being violative of article 19(1)(f) of the Constitution, we have not thought it necessary to examine the other contentions raised ' in the appeal.
The facts material for the purpose of deciding the question formulated above, are these: The appellants are dealers registered tinder the Act carrying on business in art silk, cotton and hand loom cloth.
During the period January 26, 1950 to March 31, 1950, the appellants effected various sales outside the State of Bombay.
As those sales were protected by article 286(1)(a) of the Constitution, they were outside the reach of the Act.
But yet the sales tax officer assessed the turnover relating to those sales.
The tax levied in respect of that turnover was Rs. 4,494/3/9.
In appeal, the order of the sales tax officer was affirmed by the Assistant Collector of sales,tax.
But the Additional Collector of sales tax in revision revised the levy to some extent and, ordered a refund of Rs. 2,238/0/6.
That amount was paid to the assessees.
Not being satisfied with the order of the Additional Collector of sales tax, the appellants took up the matter in revision to the Sales Tax Appellate Tribunal.
But even before they moved the Tribunal in revision, the Additional Collector of sales tax by his letter dated May 17, 1958, informed the appellants that unless they furnished to the sales tax officer proof of their having refunded the amount paid to them in pursuance of his order to the purchasers within a period of three months from the date of that notice, the same would be liable to be forfeited under section 12A(4) The Tribunal by its 'order dated November 26, 1958, allowed the claim of the appellants in full and directed ' the refund of an addi tional sum of Rs. 2,256/2/6.
During the period April 1, 1950 to March 31, 1951 the appel lants effected various sales outside the State of Bombay.
The turn, over relating to those sales was also brought to tax by the sales tax officer and in that connection a tax of Rs. 23,806/3/6 was levied on the appellants.
In appeal, the Assistant Collector of sale tax allowed the appellants ' claim in part and ordered a refund or.
Rs. 12,154/15/ but at the same time he informed them that that amount would be forfeited to the State Government if not refunded to the purchasers from whom the same had been collected.
No being satisfied with the relief obtained, the appellants went up in revision to the Additional Collector of sales tax.
That officer by 737 his order dated November 1, 1958 granted further relief by ordering refund of an additional sum of Rs. 3,588/1/9.
But the sales tax officer did not give effect to that order.
As the Additional Collector did not accept the appellants ' claim in full, they went up in revision to the Tribunal.
The Tribunal allowed their claim in full.
The Revenue took up the matter in reference to the High Court but that reference was rejected.
From the foregoing it is seen that in respect of the period April 1, 1950 to March 31, 1951 the appellants are entitled to get a refund of Rs. 23,806/3/6.
Despite the aforementioned orders, the sales tax officer did not pay the amounts ordered to be refunded.
On the other hand, he threatened to take steps to forfeit the same by having recourse to section 12A(4).
On June 27, 1962, the sales tax officer called upon the assessees to remain present in their office on July 2, 1962 with particulars of the amount collected by them by way of sales tax from the purchasers in 'other States during the period January 26, 1950 to March 31, 1951.
At that stage, the appellants approached the High Court of Gujarat by special civil application No. 641 of 1962 under article 226 of the Constitution.
In that application, they prayed for several reliefs, the most important of which was to direct the respondents to comply with the orders of refund and to refrain from taking any action against them under section 12A(4).
The High Court dismissed that application.
Hence.
this appeal.
The Act provides for the levy of tax on the sale of goods in the then State of Bombay.
It came into force on March 8, 1946.
Any person who carries on business of selling or supplying goods in the State of Bombay whether for commission, remuneration or otherwise, is defined as a dealer in section 2(c).
Section 8 and section 8(a) of the Act provide for the registration of dealers.
As mentioned earlier the appellants are registered ' dealers.
Under section 2(k) of the Act, the assessment year is the financial year.
Section 5 prescribes the incidence of taxation.
Section 10 prescribes the returns to be made by the dealers.
The assessment is made under section 11.
Section 11 (a) provides for taxing the turnover escaping assessment.
Section 12 provides for the payment and recovery of tax.
Section 12A is the one with which we are concerned in this appeal.
It reads: "(1) No person shall collect any amount by way of tax under this Act in respect of sales or supplies of any goods which are declared, from time to time, under section 7 as sales or supplies on which the tax is not payable.
(2) No person selling or supplying any goods shall collect from the purchaser any amount by way of sales tax unless he is a registered dealer and is liable to pay tax under this Act in respect of such sale or supply: Provided that this sub section shall not apply in cases where a person is required to collect such amount of tax separately in order to comply with the conditions 738 and restrictions imposed on him under the provisions of any law for the time being in force.
(3) Every registered dealer whose gross turnover exceeds Rs. 60,000 a year shall issue a bill or cash memorandum signed and dated by him or his servant, manager or agent to the purchaser in respect of the goods sold or supplied by him showing the particulars of the goods and the price at which the goods are sold or supplied shall keep the counterfoil or duplicate of such bill or cash memorandum duly signed and dated and preserve it for a period of not less than two years from such date.
(4) If any person collects any amount by way of tax in contravention of the provisions of sub section (1) or (2) or if any registered dealer collects any amount by way of tax in excess of the amount payable by him under this Act, the amounts so collected shall, without prejudice to any prosecution that may be instituted against such person or dealer for an offence under this Act be forfeited to the State Government and such person or dealer, as the case may be, shall within the prescribed period, pay such amount into a Government treasury and in default of such payment, the amount shall be recovered as an arrear of land revenue.
" In view of article 286(1)(a) of the Constitution as it stood at the relevant time, the appellants ' sales outside the State of Bombay were not exigible to tax.
Therefore if the appellants had collected any amount from their purchasers in respect of those sales by way of tax they had undoubtedly contravened sub section 2 of section 12A.
Sub section 4 of section 12A provides for the forfeiture to State government any amount collected by a dealer by way of tax in excess of the amount payable by him under the Act.
For the purpose of deciding the point in issue it is not necessary to find out the scope of the expression "collects any amount by way of tax" in section 12A(4).
We shall assume, without deciding, the collection made by the appellants, if any, was by way of tax.
It was not contended nor could it have been contended that the impugned provision is a taxation measure bringing to tax directly or indirectly the sales effected outside the State of Bombay.
In Abdul Quadar and Co. vs Sales Tax Officer, Hyderabad,(1) interpreting section 11(2) of, the Hyderabad General Sales Tax Act 1952, a provision somewhat similar to, the impugned provision, this Court observed that legislation under Entry 54 of List II of the Constitution (similar to Entry 48 of List 11 of the Government of India Act, 1935, the entry with which we are concerned in this case) proceeds on 'the basis that the amount concerned is not a tax exigible under the law made under that entry, but (1) ; 739 even so lays down that though it is not exigible under the law, it shall be paid over to the government merely because some dealers by mistake or otherwise have collected it as tax; hence, it is difficult to see how such a provision can be ancillary or incidental to the collection of tax legitimately due under a law made under the relevant taxing entry.
Therein it was held that it cannot be said that the State legislature was directly legislating for the imposition of sales or purchase tax under Entry 54 of List 11 when it made the provisions of section 11 (2), for on the basis of the provision the amount that was collected by way of tax was not exigible as tax under the law.
According to the Revenue section 12A(4) is a penal provision; and it provides for the imposition of penalty on those who contravene section 12A(1) and (2).
It was said on its behalf that power to enact such a provision is incidental to the power to tax sales.
In support of that contention reliance was placed on the decision of the Gujarat High Court in Ram Gopal vs Sales Tax Officer, Surat and Another(1).
That decision upheld the validity of section 12A(4).
If that decision lays down the law correctly, then the appellants are out of court.
But we think that the said decision cannot be sustained.
We shall not go into the question whether from the language of the impugned provision it is possible to hold that it is a penal provision.
For our present purpose we shall assume it to be so.
We shall also assume that the legislature had legislative competence to enact that provision.
But the question is whether it is violative of article 19(1)(f) which guarantees the freedom to hold property.
Prima facie the appellants are entitled to get the amount ordered to be refunded to them.
It is for the respondents to establish that the same is liable to be forfeited.
Even according to the respondents that amount can be forfeited only as a measure of penalty for the contravention of section 12A(1) and (2).
Under our jurisprudence no one can be penalised without a proper enquiry.
Penalising a person without an enquiry is abhorrent to our sense of justice.
It is a violation of the principles of natural justice, which we value so much.
The impugned provision which provides for the forfeiture of the amount in the hands of the dealers, does not lay down any procedure for ascertaining whether in fact the dealer concerned bad collected any amount by way of tax from his purchasers outside the State and if so what that amount is.
Neither section 12A(4) nor any rule framed under the Act contemplates any enquiry much less a reasonable enquiry in which the person complained of can plead and prove his case or satisfy the authorities that their assumptions are either wholly or partly wrong.
The Act is silent as to the machinery and procedure to be followed in determining the question as to whether there has been a contravention of sections 12A(1) and (2), and if so, to what extent.
(1) 16 S.T.C. 1005.
L/P(N)7SCI 8 740 Hence it would be open to the department to evolve all the requisite machinery and procedure which means that the whole thing, from the beginning to end, is treated as of a purely administrative character, completely ignoring the legal position.
The imposition of a penalty on a person is at least of a quasi judicial character.
The impugned provision does not concern itself only with the amount admittedly collected by a person in contravention of sub sections 1 and 2 of section 12A. Even if there is any dispute either as to the facturn of collection or as to the amount collected, such a case also comes within the scope of section 12A(4).
Yet that section does not provide for any enquiry on disputed questions of facts or law.
The forfeiture provided for in section 12A(4) prima facie infringes article 19(1)(f).
Therefore it is for the respondents to satisfy the Court that the impugned provision is a reasonable restriction imposed in the interest of the general public.
Section 12A(4) does not contemplate the making of any order.
As mentioned earlier, that section prescribes that if any registered dealer collects any amount by way of tax in excess of the amount payable by him under the Act, the amount so collected shall, without prejudice to any prosecution that may be instituted against him for an offence under the Act, be forfeited to the State government and he shall within the prescribed period pay such amount into a government treasury and in default of such payment the amount shall be recovered as arrears of land revenue.
This section does not contemplate adjudication.
Nor does it, provide for making any order.
Hence, it is doubtful whether any appeal can be filed against a demand made under that section under section 21.
The question whether appellants in the instant case had been afforded a reasonable opportunity to establish their case or riot is besides the point.
The constitutional validity of a provision has to be determined on construing it reasonably.
If it passes the test of reasonableness, the possibility of powers conferred being improperly used, is no ground for pronouncing it as invalid, and conversely if the same properly interpreted and tested in the light of the requirements set out in Part III of the Constitution, does not pass the test, it cannot be pronounced valid merely because it is being administered in the manner which might not conflict with the constitutional requirements.
On a reasonable interpretation of the impugned provision, we have no doubt that the power conferred under section 12A(4) is unguided, uncanalised and uncontrolled.
It is an arbitrary power.
As held by this Court in Dr. N.B. Khare vs State of Delhi(1), whether the restrictions imposed by a. legislative enactment upon a fundamental right guaranteed by article 19(1) are reasonable within the meaning of article 19(5) would depend as much on the procedural portion of the law as the substantive part of it.
(1) ; 741 Rao(1) wherein it was observed that in considering the reasonable That view was reiterated by this Court in State of Madras vs V. G. ness of laws imposing restrictions on fundamental rights both the substantive and procedural aspects of the impugned law should be examined from the point of view of reasonableness.
This Court has taken that view consistently.
A provision like the one with which we are concerned in this case can hardly be considered reasonable.
For the reasons mentioned above, this appeal is allowed.
The order of the High Court is set aside and a writ of mandamus will be issued to the respondents to comply with the refund order set out in the petition filed before the High Court and to refrain from proceeding against the appellants under section 12A(4).
The appellants are entitled to their costs both in this Court and in the High Court.
Y.P. Appeal allowed.
| IN-Abs | In view of article 286 (1) (a) of the Constitution, as it stood at the relevant time, the sales by the appellants (registered dealers) outside the State of Bombay were not exigible to tax.
The appellants.were directed to refund amounts collected by them from their purchasers in respect of these sales by way of tax, failing which the amounts would be forfeited under section 12A(4) of the Bombay Sales Tax Act.
The appellants filed a writ petition in the High Court to restrain the respondents from taking action against them under section 12A(4), The High Court dismissed the petition.
In appeal, this Court, Held: section 12A(4) of the Bombay Sales Tax Act was void being violative of article 19(1)(f) of the Constitution.
Prima facie the appellants were entitled to get the amount ordered.
to be refunded to them.
It was for the respondents to establish that the same was liable to be forfeited.
Even according to the respondents that amount could be forfeited only as a measure of penalty.
Under our jurisprudence no one can be penalised without a proper enquiry.
[740 E F].
The impugned provision which provided forfeiture of the amount in the hands of the dealers, did not lay down any procedure for ascertaining whether in fact the dealer concerned hid collected any amount by way of tax from his purchasers outside the State and if so what that amount was.
Neither section 12A(4) nor any rule framed under the Act contemplated any enquiry,, much less a reasonable enquiry in which the person complained of could plead and prove his case or satisfy authorities that their assumptions were either wholly or wholly wrong.
This section did not contemplate adjudication nor provide for making any order.
Hence, it was doubtful whether any appeal could be filed against a demand made under that section under section 21 (740 G H; 741 E].
Abdul Quadar and Co. vs Sales Tax Officer, Hyderabad , Dr. N. B. Khare vs State of 'Delhi. ; State of Madras vs V. G. Rao, (19521 S.C.R. 597 followed.
Ram Gopal vs Sales Tax Officer, Surat and another, 16 S.T.C. 1005 disapproved,
|
Appeal No. 98 of 1965.
Appeal by Special Leave from the Judgment and Order dated the December 7, 1961 of the Madhya Pradesh High Court (Gwalior Bench) in Civil Misc.
Petition No. 77 of 1959.
A. K. Sen, B. D. Gupta, Rameshwar Nath and Mahinder Narain, for the appellant.
I. N. Shroff, for the respondent.
762 The Judgment of the Court was delivered by Shelat, J.
The appellant is the ex jagirdar of certain villages called Jagir Nevri Bhorasa.
It appears that while the jagir was in his possession he had constructed roads one of which is the road connecting Bhorasa with Dewas Astha Road.
The road about 1 1/2 miles in length was lined on both sides with mango trees.
In 1951 the Madhya Bharat Abolition of Jagirs Act, 28 of 1951 (hereinafter referred to as the Act) was passed for resumption of jagir lands in the State.
Under that Act, the right, title and interest of the appellant in his said jagir were extinguished and the jagir lands vested in the State.
In 1955, the Tehsildar put up the mangoes grown on the said trees for public auction.
By his application dated February 8, 1955 the appellant objected to the said auction claiming that the said trees were planted and reared by him, that they constituted a "grove" within the meaning of section 5(b)(iv) of the Act and therefore continued to belong to him.
The Tehsildar rejected the application.
The appellant 's appeal and thereafter a revision before the Board of Revenue were also likewise rejected.
The appellant then filed a writ petition in the High Court of Madhya Pradesh but that also was dismissed on the ground that the said trees could not be said to constitute a "grove".
The appellant has filed this appeal after obtaining special leave.
The only question arising in this appeal is whether the said trees standing on the two sides of the said road can be said to be a "grove" within the meaning of sec.
5(b)(iv).
The Act was passed for resumption of jagir lands in the State and to carry out certain land reforms in the jagir areas.
Section 3 provides for the date of resumption and sec.
4(1) lays down the consequences of resumption.
Under sub section (1) of that section, the right, title and interest of a jagirdar in his jagir lands including forests, trees, fisheries, tanks, wells, ponds, etc., stand resumed to the State as from the date of resumption.
The section also provides for resumption of the right, title and interest of the jagirdar in all buildings on jagir lands used for schools, hospitals and other public purposes.
Section 5, however, provides that notwithstanding anything contained in sec.
4 the jagirdar shall continue to remain in possession of land cultivated personally by him; of open enclosures used for agricultural or domestic purposes and in continuous possession for twelve years immediately before the date of resumption, all open house sites purchased for valuable consideration, all private buildings, places of worship, and wells situated in, and trees standing on lands included in the aforesaid enclosures and house sites and /or land appertaining of such buildings or places of worship within the limits of village sites.
Sub cl.
(iv) of sec.
5 (b) reads as under: "all groves wherever situate belonging to or held by the Jagirdar or any other person, shall continue to belong to or be held by such Jagirdar or other person, as the case 763 may be, and the land thereof with the areas appurtenant thereto shall be settled on him by the Government according to the provisions of the Madhya Bharat Revenue Administration and Ryotwari Land Revenue and Tenancy Act, Samvat 2007.
" Under cl.
(c) also the jagirdar is allowed to continue to remain in possession of all tanks, trees, wells and buildings in or on occupied land belonging to or held by the jagirdar or any other person.
These provisions show clearly that the legislature has used the word "trees" at three places in three different contexts, in secs.
4(a), 5(b) and 5(c) apart from the expression "all groves wherever situate" in sub cl.
(iv) of sec.
Whereas under sec.
4(a) the trees are to vest in the State Government along with the forests, fisheries etc.
, the trees mentioned in sec.
5(b)(iii) and (c) are allowed to continue to belong to and be held by the jagirdar.
Obviously, the word "trees" in these provisions has not been used in any uniform sense and therefore has to be construed in the context in which it is used.
For instance, the word 'trees ' in sec. 5(b)(iii) and (c) is placed in juxtaposition with other properties such as private buildings, places of worship, wells situated in lands included in the said enclosures and house sites referred to in sub cls.
(i) and (ii).
It appears that the policy of the legislature was that jagir lands including forests, trees in such forests, fisheries, wells, tanks, ponds, ferries, pathways, village sites etc., which were used by, the public and in which the members of the public were interested were resumed while the land in personal cultivation of the jagirdar, enclosures used for agricultural and domestic purposes, house sites purchased for valuable consideration, private buildings, places of worship, wells, trees standing on lands in such enclosures and house sites and tanks, trees, private wells and buildings in or on occupied land belonging to or held by the jagirdar were allowed to continue to belong to and be held by him.
It will be seen that groves in sub cl.
(iv) of sec.
(b) are included amongst properties allowed to continue to belong to and be held by the jagirdar.
Subclause (iv) also shows that such groves need not be of fruit trees nor need the trees thereof have been planted by the jagirdar.
The words "wherever situate" indicate that it is not necessary that they should be on lands or properties allowed to be retained by the jagirdar under section 5.
If a grove belonged to or was held by him, whether planted by him or of natural growth and wherever situate it is allowed to continue to belong to him and be held by him.
The intention of the legislature appears therefore to be that properties which the jagirdar was in personal use and possession of or in respect of which he had paid valuable consideration are to be retained by him.
It is in this context that we should construe subcl.
(iv) of sec.
A grove irrespective of where it is situate, but belonging to or held by the jagirdar is to continue to belong to or to be held by him.
To secure the full and proper use and, enjoyment of such a grove, if it is on land other than that which is 764 allowed to be retained by him, sub clause (iv) further provides that the land on which such a grove stands with the areas appurtenant thereto also shall be settled upon him in accordance with the M.B. Revenue Administration and Ryotwari Land Revenue and Tenancy Act, Samvat 2007.
What then is the meaning of the word "grove" within the meaning of sec. 5(b)(iv)9 Though the Act contains a definition section the legislature has not chosen to include therein any definition of a "grove".
It intended therefore that it should be understood in its ordinary dictionary sense.
In Webster 's New World Dictionary, p. 641, a grove has been defined as a small wood; groups of trees standing together without undergrowth.
The Shorter Oxford English Dictionary, Vol. 1, 838 also defines it as a small wood, a group of trees affording shade or forming avenues or walks.
In Corpus Juris Secundum, Vol.
98, p. 688 a grove is defined to mean a cluster of trees not sufficiently extensive to be called a wood; a group of trees of indefinite extent but not large enough to constitute a forest; especially such a group considered as furnishing shade for avenues and walks.
Though a grove in this sense may consist of a group of trees of indefinite extent it cannot be divorced from the idea of a homogeneous or at any rate.
a substantially homogeneous unit consisting of a cluster of trees close to each, other so as to serve as a shade to walks or avenues.
Apart from the meaning that the dictionaries offer the word "grove" has also been the subject matter of a number of decisions.
The case of Daropadi vs Mannu Lal(1) was, of course an extreme case of only 4 fruit trees in an area of 3 bighas and that too on the boundaries.
Ashworth J. could therefore easily discard the contention that the said trees formed a grove or that the land on which they stood was a grove land within the meaning of sec.
3 of the Agra Tenancy Act, 1926 which provided that so long as any considerable portion of a plot had a sufficient number of trees to prevent that plot from being cultivated, assuming the trees to have reached their full size, the entire plot would retain the character of grove but not otherwise.
It is true that when the learned Judge made, this observation he had in mind the definition of grove in section 3 of that Act, but he also observed that that was the sense in which a "grove" and "grove land" 'were ordinarily understood and that the definition did no more than to bring out the sense in which these terms were generally understood.
In Kashi vs Jagoo Bai(2) also, Bennet J. held that isolated trees cannot be said to constitute a grove.
But unlike these two cases, the land in Shiv Sahai vs Hari Nandan(3) had 13 mango trees fully grown, big in size and covering a major part of it.
It was held that the land was a grove land within the meaning of sec.
3(5) of the U. P. Tenancy Act, 1939, in spite of the fact that there was some cultivation on the land.
The Court there observed that the definition merely (1) A.I.R. 1929 All 557 (2) A.I.R. 1934 All 290.
(3) A.I.R. 1963 All 413.
765 required that the trees must be in sufficiently large number to preclude the land from being used primarily for a purpose other than as grove land.
In Hasan vs State of Bombay(1) the High Court was concerned with section 5(h) of the Madhya Pradesh Abolition of Proprietory Rights (Estates, Mahals, Alienated Lands) Act, 1 of 1951 which is in almost identical terms as section 5(b)(iv) of the present Act.
The Court interpreted the word "grove" to mean an area covered by a cluster of trees specially planted by human agency but not large enough to constitute a forest.
It would seem therefore that the word "grove" conveys com pactness or at any rate substantial compactness to be recognized as a unit by itself which must consist of a group of trees in sufficient number to preclude the land on which they stand from being primarily used for a purpose, such as cultivation, other than as a grove land.
The language of sec.
5(b)(iv) does not require however that the trees needs be fruit bearing trees nor does it require that they should have been planted by human labour or agency.
But they must be sufficient in number and so standing in a group as to give them the character of a grove and to retain that character the trees would or when fully grown preclude the land on which they stand from being primarily used for a purpose other than that of a grove land.
Cultivation of a patch here and a patch there would have no significance to deprive it of its character as a grove.
Therefore, trees standing in a file on the road sidle intended to furnish shade to the road would not fulfil the requirements of a grove even as understood in ordinary parlance.
Counsel, however, contended that although the trees in ques tion are situate on the road sides along the said road there may at some places be a group or groups of trees sufficiently large in number and closely standing together to preclude that particular area from being used for cultivation or for any other purpose.
In that case, be argued, there was nothing in subcl.
(iv) to prevent such a cluster of trees from being regarded as a grove.
We think there is some force in this argument which requires consideration.
Neither the revenue authorities nor the High Court approached the question from this point of view and no inquiry at any stage seems to have been made whether there are at any place or places such group or groups of trees to constitute a grove or groves.
All of them appear to have dismissed the appellant 's claim only because of the fact that the trees stand along the two sides of the road.
It is possible that the road might have been constructed in this particular area because of a number of trees standing on both sides of it which would provide shade over it and form an avenue.
In fairness to the appellant, we think it necessary that he should have an opportunity to establish that at some place or places along the said road there are trees sufficient in number and proximity to constitute a grove or groves.
(1) 766 The appeal is allowed, the judgment and order of the High Court are set aside and the case is remanded to the High Court to decide the writ petition in the light of the observations hereinabove made after calling a finding from the Board of Revenue on the question whether there are trees at any place or places along the said road sufficient in number and proximity to constitute a grove or groves.
The Board will give an opportunity to the parties to adduce on the aforesaid question such further evidence, as they may think necessary.
In the circumstances, there will be no order as to costs.
Y.P. Appeal allowed.
| IN-Abs | After the resumption of the appellant 's Jagir lands in the State by the enactment of the Madhya Bharat Abolition of Jagirs Act, he claimed the mango trees, planted by him on both sides of a long road, as constituting a "grove" within the meaning of section 5(b)(iv) of the Act, and therefore continued to belong to him.
HELD: A grove irrespective of where it was situate, but belonging to or held by the jagirdar was to continue to belong to or to be held by him.
To secure the full and proper use and enjoyment of such a grove, if it was on land other than that which was allowed to be retained by him, sub clause (iv) of section 5(b) further provides that the land on which such a grove stood with the areas appurtenant thereto also shall be settled upon him in accordance with the M. B. Revenue Administration and Ryotwari Land Revenue and Tenancy Act Samvat 2007.
The intention of the legislature appeared to be that properties which the jagirdar was in personal use and possession of or in respect of which he had paid valuable consideration were to be retained by him.
[764 H; 765 A].
The language of sec.
5(b) (iv) does not require that the trees need be fruit bearing trees nor does it require that they should have been planted by human labour or agency.
But they must be sufficient in number and so standing in a group as to give them the character of a grove and to retain that character the trees would or when fully grown preclude the land on which they stand from being primarily used for a purpose other than that of a grove land.
Cultivation of a patch here and a patch there would have no significance to deprive it of its character as a grove.
Therefore, trees standing in a file on the road side intended to furnish shade to the road would not fulfil the requirements of a grove even as understood in ordinary parlance.
[766 C E].
Daropadi vs Mannu Lal, A.I.R. 1929 All. 557.
Kashi vs Jagoo Bai.
A.I.R, 1934 All.
290, Shiv Sahai vs Hari Nandan, A.I.R 1963 All. 413, Hasan vs State of Bombay, , referred to.
|
Appeal No. 32 of 1965.
Appeal by special leave from the judgment and order dated May 13, 1963 of the Calcutta High Court in Award Case No. 119 of 1963.
Sachin Chowdhury, M. G. Poddar and D. N. Mukherjee, for the appellant.
Sardar Bahadur, for the respondent.
The appellants applied to the High Court of Judicature at Calcutta on its original side under section 33 of the Indian Arbitration Act 10 of 1940 for an order, inter alia, declaring that "there exists a valid arbitration agreement contained in contract No. 750 dated September 16, 1960 between the petitioners" and the respondents.
The appellants claimed that they entered into a contract with the respondents on September 16, 1960, for the purchase of 6,00,000 bags of B Twill at the rate of Rs. 132.50 nP per 100 bags, "on their own account" in Transferable Specific Delivery Form prescribed under the byelaws of the Association.
and on terms and conditions set out therein The respondents denied the existence of the contract and also its validity.
The High Court dismissed the application holding that M/J(N)6SCI 13 610 the contract was invalid in that it did not comply with the requirements of section 15 sub section
(4) of the Forward Contracts (Regulation) Act, 1952.
By special leave, the appellants have appealed to this Court.
The relevant recitals in the notes, which, it was claimed, constituted the contract between the parties may first be set out: "7A, Clive Row, Calcutta 1 Sunder Lal & Son.
Contract No. 750 Messrs. Bharat Handicrafts (Private) Ltd. Dear Sirs, We have, subject to the terms and conditions hereinafter referred to, this day sold to Messers.
, Sunderlal & Son by Your order, and on your account: Yours faithfully, Sunderlal & Sons. "Calcutta, 16th September, 1960 Messrs. Sunderlal & Son No. 750 Dear Sirs, We have, subject to the terms and conditions hereinafter referred to this day bought from Bharat Handicrafts (Private) Ltd., by your order, and on your account: Yours faithfully, Sunderlal & Son.
Validity of the contract was challenged by the respondents on, two grounds (1) that the appellants were not at the relevant time members of the Association; and (2) that the requirements of section (4) of the Forward Contracts (Regulation) Act were not complies with and the contract was on that account invalid.
The High Court decided both the grounds in favour of the respondents.
The appellants averred in their petition that they were at all" material times members of the Association.
Baburam Saraf principal officer of the.
Company in his affidavit in reply merely states 611 that he did not admit that averment.
The learned Judge observed that he was "unable to hold that the appellants had proved that the appellants were members of the Association at the time of the formation of the contract".
It is unfortunate that the attention of the learned Judge was not invited to the admission made by the respondents in paragraph 6 of the plaint filed by them in the City Civil Court, Calcutta, for a declaration that there was in fact no contract between them and the appellants bearing No. 750 dated September 16, 1960, in which the respondents had averred that they had discovered that the appellants "at all material times were the members of the said East India Jute & Hessian Exchange Ltd".
In view of this evidence, counsel for the respondents did not seek to support the decision of the High Court on the first ground, and nothing more need be said in that behalf.
In dealing with the second ground, it is necessary to summarise the relevant provisions of the Forward Contracts (Regulation) Act, 1952.
The Act was enacted to provide for the regulation of certain matters relating to forward contracts, the prohibition of options III goods and for matters connected therewith.
By Ch.
II the Central Government is given authority to establish and constitute a Forward Markets Commission with certain functions and powers.
By Ch.
Ill provision is made for granting recognition to associations, withdrawal of recognition and other incidental matters.
By section 11 sub section
(1) any recognised association may, subject to the previous approval of the Central Government, make bye laws for the regulation and control of forward contracts.
By sub section
(2), it is provided that such bye laws may provide inter alia for the terms, conditions and incidents of contracts, including the prescription of margin requirements, if any, and conditions relating thereto, and the forms of contracts in writing.
Sub sections (1), (2) and (4) of section 15 in force it the date of the contract were these: "(1) The Central Government may by notification in the Official Gazette, declare this section to apply to such goods or class of goods and in such areas as may be specified in the notification, and thereupon, subject to the provisions contained in section 18, every forward contract for the sale or purchase of any goods specified in the notification which is entered into in the area specified therein otherwise than between members of a recognised association or through or with any such member shall be illegal.
(2) Any forward contract in goods entered into in pursuance of sub section (1) which is in contravention of any of the bye laws specified in this behalf under clause (a) of sub section (3) of section 11 shall be void (i) as respects the rights of any member of the recognised association who has entered into such contract in contravention of any such bye law, and also 612 (ii) as respects the rights of any other person who has knowingly participated in the transaction entailing such contravention.
(3) (4) No member of a recognised association shall, in respect of any goods specified in the notification under sub section (1), enter into any contract on his account with any person other than a member of the recognised association, unless he has secured the consent or authority of such person and discloses in the note, memorandum or agreement of sale or purchase that he has bought or sold the goods, as the case may be, on his own account: Provided that where the member has secured the consent or authority of such person otherwise than in writing he shall secure a written confirmation by such person of such consent or authority within three days from the date of such contract: Provided further Section 20 prescribed, penalties for breach of the provisions of the Act.
The relevant section at the date of the contract insofar as it relates to the penalty for infringement of section 15(4) read as follows: (2) any person who enters into any forward contract in contravention of the provisions contained in subsection (4) 'of section 15 shall on conviction be punishable with fine.
" It is common ground that the Central Government has issued a notification declaring section 15(1) of the Act as applicable to forward contracts in jute and jute goods.
The appellants entered into the contract with the respondents who are not members of the association for buying jute bags on their own account.
Sub section (4) of section 15 imposes a prohibition against the entry into a contract on his own account by a member of the association with any person who is not a member of that association, unless the member has secured the consent of such other person and discloses in the note, memorandum or agreement of $ale or purchase that he has bought or sold the goods, as the case may be, on his own account.
The prohibition is removed only if two conditions exist (i) that the note must disclose that the purchase or sale is on the account of the member of the recognised association; and (ii) consent or authority of the other person has been secured independently of the disclosure in the note.
Where the consent or authority of the other person is secured but not in writing, the member has to secure a written confirmation 'of such consent or authority within three days from the date of such contract.
613 The "bought" and "sold" notes which are set out earlier are in the form prescribed in the Appendix to the Bye laws of the association.
At the foot of the prescribed form of the note there is a slip in which normally the confirmation of the other party to the contract would be obtained,.
The confirmation slip was it appears detached from the "sold" note, but it was not produced before the High Court by the appellants.
Counsel for the appellants says that the respondents did give a slip confirming the contract in the " sold" note, but it was unfortunately not tendered in evidence in the High Court, and he applies for leave to tender in evidence that confirmation slip in this Court.
The confirmation slip sought to be produced in this Court purports to bear the confirmation by a person who has signed it as 'M.L. Bahati '.
This document was admittedly in the possession of the appellants and could have been produced by them in the High Court.
No rational explanation is fur nished for not producing the document before the High Court.
Again the document does not prove itself: to make out the case that the respondents had consented in writing to the terms of the contract, evidence that the signature "M. L. Bahati" was subscribed by the person bearing that name and that he was authorised to confirm the note on behalf of the respondents would be necessary.
The " sold" note is addressed to the appellants: it purports to be made out in the name of the respondents, and is signed by the appellants as "Member Licensed Broker of the Association" " It is claimed that the appellants subscribed their signature to the sold" note under the authority of the respondents.
The authority of the appellants from the respondents to enter into the transaction does not appear from the terms of.
, the "sold" note.
But it is urged on behalf of the appellants that the bye laws framed by the association prescribe that this form of the note shall be adopted even in transactions in which a broker is entering into a contract on his own account, and if the contract is not in the form prescribed under the bye laws the contract would be void.
We need not dilate upon that question, for we ' are only concerned to point out that there is no evidence on the record that the appellants had secured the written consent or authority of the respondents to the contract.
Where the Appellate Court requires any document to be produced or witnesses to be examined to enable it to pronounce judgment, or for any other substantial cause, the Court may allow such document to be produced or witnesses to be examined.
We do not, require additional evidence to be produced in this case to enable us to pronounce judgment, nor do we think that any substantial cause is made out which would justify an order allowing additional evidence to be led at this stage.
The document relied upon was admittedly in the possession of the appellants, but they did not rely upon it before the High Court.
It was said at the Bar that the importance of the document was not realized by those in charge of the case.
We do not think that the plea would bring the case within the expression "other substantial cause" in 0.
41 r. 27 of the Code of Civil Procedure.
We therefore decline to allow this additional evidence to be brought on the record 614 There is accordingly no writing evidencing the consent or authority A to the appellants entering into a contract on their own account with the respondents in respect of jute goods, and it is 'not the case of the appellants that they had secured written confirmation of such consent or authority by the respondents within three days from the date of the contract.
Counsel for the appellants, however, contends that sub section
(4) of section 15 does not invalidate a contract merely because there is no writing evidencing or confirming the consent or authority of the non member, even if the member has entered into a contract in respect of goods purchased or sold on his own account.
Counsel says that the prohibition imposed by the Parliament against the entry into such a contract does not make it void: only by entering into the contract the appellants are rendered guilty of an offence under section 20 sub section
(2) of the Act.
In support of that contention, counsel says, that since in sections 15(1), 15(2), 17(2) and 19 the Parliament has expressly enacted that in certain eventualities forward contracts shall be illegal or void, but in section 15(4) no such consequence is indicated, a contract even in breach of the prohibition is enforceable, though it may expose the appellants to a criminal prosecution.
Reliance is placed in support of that plea upon Shri Bajrang Jute Mills Ltd. vs Lalchand Dugar(1), in which the Calcutta High Court observed in dealing with the validity of a contract entered into by a member of a recognised association on his own account with a non member in respect of specified goods: ". . .
We think that the first proviso to section 15(4) is directory in the sense that the securing of the written confirmation of the contract is no more than a condition subsequent as to which the responsible members may be blamable or punishable if be does not secure it, but his failure to do so does not invalidate the contract.
We think that on a true construction of section 15(4) the failure of the member to obtain the written confirmation of the oral consent or authority to enter into the forward contract on his own account does not render the contract either illegal or void." In our judgment that view cannot be accepted as correct.
The Legislature has by the Act imposed diverse restrictions upon the liberty of contract in respect of forward transactions in commodities specified in a notification under section 15(1).
By the first sub section of section 15 it is provided that contracts in respect of the specified goods or classes of goods in certain areas not between persons who are members of a recognized association or through or with any such member shall be illegal.
The effect of the sub section is that a forward contract for the sale or purchase of specified goods may be entered into (1) 615 only between members of a recognized association or with a member or through any member of such an association: otherwise the contract will be invalid.
The Act then proceeds to enact in sub section
(2) that a forward contract in goods entered into in pursuance of sub section
(1) shall still be void if it is made in contravention of the bye laws in that behalf under cl.
(a) of sub section
(3) of section 11.
By sub section
(4) the Parliament has then imposed a prohibition upon every member of a recognized association against entry into a contract on his own account with a non member in respect of specified goods: the prohibition is lifted when in the memorandum, agreement of sale or purchase or in the bought and sold notes it is expressly disclosed that the contract is by the member on his own account and that he has secured the consent or authority of the other person who is a party to the contract, and if such consent or authority be not in writing, the member has obtained a written confirmation by such person of such consent or authority within three days from the date of the contract.
It is therefore contemplated that for an enforceable 'contract to arise there shall be a writing evidencing or confirming the consent or authority of such person.
The prohibition imposed by cl.
(4) is not imposed in the interest of revenue; the clause is apparently conceived in the larger interest of the public to protect them against the malpractices indulged in by members of re cognized associations in respect of transactions in which their duties as agents conflict with their personal interest.
The Parliament has clearly made a writing evidencing or confirming the consent or authority of a non member as a condition of the contract, if the member has entered into a contract on his own account.
So long as there is no writing as is contemplated by section 15(4) or the proviso thereto, there is no enforceable contract: it is the consent or authority in writing or confirmation of such consent or authority which brings into existence an enforceable contract.
Any other view.
would attribute to the Parliament an intention to impose a prohibition which would be rendered for all practical purposes futile.
Under section 20 sub section
(2) of the Act a penalty is imposed on any person who enters into a forward contract in contravention of the provisions contained in sub section
(4) of section 5.
The penal clause is not clearly expressed.
A reasonable reading of that clause is that a person who enters into a contract without disclosing that he contracts on his own account is liable to be punished.
It could obviously not have been intended by the Parliament to punish a person for failing to secure the consent or authority of the other party to the contract an act which depends solely upon the volition of that other person.
The apparent obscurity in the penal provision cannot however be utilized to restrict the prohibition contained in section 15(4).
What is penalised under section 20(2) is entry into a forward contract by a member on his own account without disclosing to the non member contracting party that the contract is on the member 's own account.
We therefore bold that 616 the High Court was right in holding that the contract did not comply with the requirements of sub section
(4) of section 15 and was on that account invalid.
The appeal therefore fails and is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | Under section 15(1) of the Forward Contracts (Regulation) Act 1952, forward contracts for the sale or purchase of specified goods may be entered into only between members of a recognised association or with a member or through any member of such association otherwise, the contract will be invalid.
By sub section
(4), Parliament imposed a prohibition upon every member of a recognised association against entry into a contract on his own account.
with a non member, in respect of the specified goods: the prohibition is lifted when in the memorandum, agreement of sale or purchase, or in the bought and sold notes it is expressly disclosed that the contract is by the member on his own account and that he has secured the consent or authority of the other person who is a party to the contract, and.
if such consent or authority be not in writing, the member has obtained a written confirmation by such person of such consent or authority within three days from the date of the contract.
A notification was issued by the Central Government declaring section 15(1) to be applicable to forward contracts in jute goods, and the appellants, who were members of an Association recognised by the Act, entered into a contract with the respondents who were not members of any such association for buying jute bags on their own account.
The appellants applied to the High Court.
under section 33 of the , for an order declaring that there existed a valid arbitration agreement contained in the relevant bought and sold notes.
No evidence was tendered in the High Court to show that the appellants had secured the written consent or authority of the respondents, to the contract, and it was not their case that they had secured any written confirmation of an oral consent or authority by the respondents.
within three days of the date of the contract.
The High Court held that the requirements of section 15(4) were not complied with.
and that the contract was therefore invalid.
In appeal to this Court.
the appellants contended (1) that section 15(4) was complied with, because, the respondents did confirm the contract in the slip provided for such confirmation at the foot of the sold note, that the slip was detached from the sold note but was not tendered in evidence in the High Court as its importance was not realised, and that this Court should receive the document in evidence: and (2) that even if there was a breach of the prohibition in section 15 (4) the contract was enforceable, and the breach would merely expose the appellants to a criminal prosecution under section 20(2).
HELD: (1) The additional evidence could not be allowed to be brought on record.
[613H] 609 The document was in the possession of the appellants and no rational explanation Was furnished for not producing it before the High Court.
Further, the document did not prove itself and did not establish that the respondents had consented in writing to the terms of the contract.
This Court as the appellate court, did not require the additional evidence to enable it to pronounce judgment, nor was any substantial cause made out which would justify an order allowing additional evidence to be led in this Court, within the meaning of O. XLI, r. 27 of the Civil Procedure Code.
[613C D, G H] (2) The prohibition imposed by section 15(4) is not imposed in the interest of revenue: the clause is conceived in the larger interest of the public to protect them against the malpractices indulged in by members of recognised associations in respect of transactions in which their duties as agents conflict with their persona interest.
parliament has made a writing, evidencing or confirming the consent or authority of a non member, as a condition of the contract, if the member has entered into a contract on his own account.
So long as there is no such writing, as is contemplated by section 15(4) or its proviso there is no enforceable contract.
[615D F] The penal clause in section 20(2) cannot be utilised to restrict the prohibition contained in section 15(4).
What is penalized under section 20(2) Is entry into a forward contract by a member on his own account without disclosing to the non member contracting party that the contract is on the member 's own account; and not, for failing to secure the consent or authority of the other party to the contract.
[615G H] Shri Bajrang Jute Mills Ltd. vs Lalchand Dugar, , overruled.
|
Appeal No. 248 of 1953.
Appeal under Article 132(1) of the Constitution of India from the Judgment and Order dated the 1st October, 1953, of the High Court of Judicature at Allahabad in Civil Miscellaneous Writ No. 379 of 1953.
N.C. Chatterjee (P.K. Chatterjee, with him) for the appellant.
C. K. Daphtary, Solicitor General for India, K. L. Misra, Advocate General of Uttar Pradesh (C. P. Lal, with them) for respondent No. 1.
C. K. Daphtary, Solicitor General for India (Porus A. Mehta, with him) for respondent No. 2. 1954.
March 30.
The Judgment of the Court was delivered by DAS J.
This appeal arises out of an application made by the appellant to the High Court of Allahabad under, article 226 of the Constitution praying for an appropriate writ quashing the order made by the President of India on the 17th April, 1953, ordering the compulsory retirement of the appellant who had completed 25 years ' qualifying service.
The High Court by its judgment dated the 1st October, 1953, dismissed the application but, as the case involved a substantial question of the interpretation of the Constitution, the High Court granted leave to the appellant to appeal to this Court.
The material facts may be shortly stated as follows: The appellant passed his Civil Engineering degree examinaion from the Thomason College.
Roorkee, in 1922.
He stood first in order of merit and carried away the Gold Medal and other prizes awarded to the best student of that year.
He was appointed by the Secretary of State for India in Council to the Indian Service of Engineers as an Assistant Executive Engineer with effect from the 20th October, 1923.
The conditions governing the appellant 's terms of appointment, promotion, leave, pension, etc., will be found recorded in 28 a letter issued from India Office, London, on the 13th February, 1924.
A copy of that letter is annexed to the Petition filed under article 226.
He was posted in ,the United Provinces.
In 1944 the appellant was promoted to the rank of officiating Superintending Engineer.
After the attainment of independence by India a fresh agreement was entered into by and between the appellant the Governor of the United Provinces and the Governor General of India on the 16th September, 1948 confirming the appellant 's terms of appointment contained in the letter of the 13th February, 1924.
At or about this time the appellant along with several other officers was recommended by the Chief Engineer for confirmation as Superintending Engineer. 'The appellant, however, was not confirmed but continued to officiate as Superintending Engineer until the time hereinafter stated.
On the 4th January, 1950, the Public Works Department of the U.P. Government addressed a letter to the Chief Engineer, Irrigation Branch U.P. requesting him to communicate the letter enclosed therewith to the appellant and to ask him to submit as early as possible whatever explanation he might desire to give.
The enclosed letter called upon the appellant to show cause within three weeks why he should not be compulsorily retired under the provisions of article 465 A, Civil Service Regulations,as it appeared (1) that he had been making systematic and gross overpayments apparently for no other reason than to benefit the contractors concerned and (2) that he had spent large ' amounts of public money for his own personal convenience and (3) that he had taken recourse to devious and unscrupulous methods.
No less than, six instances on which these charges were based.
were them set out.
The covering letter concluded with the following remarks: "Under the rules Government reserve the right to compulsorily retire any officer whose retention in service they consider not to be in the public interest.
This is not, therefore, a formal enquiry under the Classification.
Control and Appeal Rules but before taking the action indicated above Government were pleased to and an opportunity to Shri Shyam Lal, I.S.E., 29 to show cause why he should not be compulsorily retired.
" A copy of the letter of the 4th January, 1950, together with a copy of the enclosure was sent to the appellant with the request that his explanation might be forwarded,.
within the period mentioned by the Government.
The appellant submitted his explanations which, together with the Chief Engineer 's comments thereon, were placed before the Union Public Service Commission.
The Commission came to the conclusion that five out of the six charges had been proved and submitted their report accordingly.
On the 17th April, 1953, the President, after considering the case and the recommendations of the Commission, decided that the appellant should retire forthwith from service under Note I to article 465 A of the Civil Service Regulations.
Before this order could be served on him the appellant on the 24th April, 1953, filed before the Allahabad High Court a petition under article 226 of the Constitution praying that the order made by the President on the 17th April, 1953, be quashed on the ground, inter alia, that the order was illegal and void in that it was made without affording him any opportunity to show cause against the action proposed to be taken in regard to him.
As already stated, the High Court dismissed the application on, the 1st October, 1953.
The present appeal is directed against that order of dismissal.
The order of the President which is imppgned by the appellant shows that action was purported to be taken in regard to the appellant under Note 1 to article 465 A of the Civil Service Regulations.
Chapter XVIII of the Civil Service Regulations deals with Conditions of Grant of Pension.
Article 465 A appears in that Chapter under section V the heading of which is " Retiring Pension.
" There are two notes appended to the article of which the first one is important for our present purpose.
The relevant part of article 465 A and Note 1 thereto are set out below: " 465 A. For officers mentioned in article 349 A, the rule for the grant of retiring pension is as follows: 30 (1). . . . . . . . . . (2) A retiring pension is also granted to an officer who is required by Government to retire after completing twenty five years ' qualifying service or more.
Note I. Government retains an absolute right to retire any officer after he has completed twenty five years ' qualifying service without giving any reasons, and no claim to special compensation on this account will be entertained.
This right will not be exercised except when it is in the public interest to dispense with the further services of an officer.
" Officers of the Indian Service of Engineers are included amongst 'the officers mentioned in article 349 A of the Civil Service Regulations.
The contentions urged before us are that the President 's Order of the 17th April, 1953, is invalid and inoperative for the following reasons : (1)that article 465 A of the Civil Service Regulations is not applicable to or binding on the appellant; (ii)that compulsory retirement is nothing but removal from service and the provisions of article 311 of the Constitution apply to the case of compulsory retirement; (iii)that Note I to article 465 A of the Civil Service Regulations, in so far as it confers on the Government an absolute right to retire an officer, who has completed twenty five years ' qualifying service without giving any 'reason, is repugnant to article 311 of the Constitution.
It will be necessary to deal with the above points seriatim.
It will be remembered that the appellant was employed by the Secretary of State in Council in October, 1923, that is to say, after the Government of India Act, 1919, came into operation.
Sub section (4) of section 96B of that Act provided, for removal of doubts, that all rules in operation at the time of the passing of that Act, whether made by the Secretary of State in Council or by any other authority, relating to 31 the Civil Service of the Crown in India, were duly made in accordance with the powers in that behalf and it confirmed the same.
But it is urged that as there is nothing to show that article 465 A of the Civil Service Regulations was in operation at the time of the passing of the Government of India Act, 1919, and that as all that has been shown is only that the article in question was amended and brought.
up to its present form in 1922 it cannot be said to have been validated by subsection (4) of section 96B.
Reference is then made to sub section (2) of that section which empowered the Secretary of State in Council to make rules for regula ting the classification of the Civil Services in India, the methods of their recruitment, their conditions, of service, pay and allowances, and discipline and conduct and, by such rules, to delegate the power of making rules to the Governor General in Council or to local Governments or to authorise the Indian Legislature or local Legislatures to make laws regulating the public services.
It is pointed out that sub section (2) did not empower the Secretary of State in Council to delegate the power to make rules concerning pensions to any authority in India.
Our attention is next drawn to sub section (3) of section 96B which specially safeguarded the interests of the civil servants employed by the Secretary of State in Council by providing that their right to pensions and the scale and conditions ,of pensions should be regulated in accordance with the rules in force at the time of the passing of that Act and that, although such rules might be varied or added to by the Secretary of State in Council, such variations or additions should not adversely affect the pension of any member of the service appointed before the date thereof It is urged that not only has article 465 A not been shown to have been in force at the time of the passing of the Government of India Act, 1919, it has also not been shown to have been made by the Secretary of State in Council.
In the premises, it is contended that article 465 A which is set out in section V of Chapter XVIII of the Civil Service Regulations and deals with retiring pensions and has presumably been made by the Governor General in Council cannot be 32 supported as a valid rule under sub sections (2), (3) or (4) of section 96B and can have no application to the appellant who was appointed by the Secretary of State in Council and consequently the order of the President made in accordance with Note I to that article is illegal and void.
The above line of reasoning found favour with the High Court but nevertheless the High Court repelled the conclusions sought to be established by it on the ground that rule 7 of the Civil Services (Classification, Control and Appeal) Rules read with rule 26 of those Rules impressed the stamp of validity upon article 465 A of the Civil Service Regulations and made it applicable to the All India Services.
Learned counsel for the appellant challenges the correctness of the decision of the High Court in so far.
as it is founded on a construction of rules 7 and 26 of the Civil Services (Classification, Control and Appeal) Rules which were first made in December, 1920, and were again pub lished in 1930 with subsequent amendments.
While agreeing with learned counsel that there is some force in his contention that the construction put upon rule 7 may not be quite cogent or convincing we do not consider it necessary to express any final opinion on that matter, for, in our judgment, the major, premise assumed by the High Court that Note 1 to article 465 A has no application to the appellant cannot be supported or sustained.
it appears that by Resolution No. 1085 E.A. passed on the 15th November, 1919, and published in the gazette of India on the same date the Government: of India, Finanance Department with the approval of the Secretary of State for India, announced certain new rules relating to retiring pensions of the officers (other than military officers or members of the Indian Civil Service) and the 'services specified therein.
The services so specified included the Public Works Department.
The new rules were,, by rule 1, made to apply only to officers joining the above services after the 29th August, 1919, And to those existing officers who elected in writing to come under their provisions,.
The appellant was, employed in October, 1923, and 33 consequently these new rules applied to him.
The material I part of rule 4 of these new rules was as follows : "Government will have an absolute right to retire any officer after he has completed twenty five years ' service, without necessity to give reasons and without any claim for compensation in addition to pension, and in that event. . . " These rules which came into force on their publication in the Official Gazette of the 15th November, 1919, were, therefore, in operation on the 23rd December, 1919, when the Government of India Act, 1919, was passed and were accordingly validated and confirmed by sub section (4) of section 96B of that Act to which reference has already been made.
The rules thus confirmed by section 96B(4) became applicable to the appellant on his employment by the Secretary of State in October, 1923.
In Resolution No. 714 C.S.R. dated the 10th May, 1920, it was announced that with a view to the exact scope of the new pension rules published in Resolution No. 1085 E.A. dated the 15th November, 1919, being made clear the Government of India intended to publish those rules in the form of amendments to the Civil Service Regulations.
Accordingly Resolution No. 1003 C.S.R. dated the 18th June, 1920, along with certain amendments to the Civil Service Regulations were published in the Gazette of India of the 19th June, 1920, for general information.
The amendments so published provided for the insertion in the Civil Service Regulations of a new article 349 A stating that the rules in certain articles including article 465 A would apply to officers in the services specified therein.
The services so specified included the Public Works Department.
The amendments also provided for the insertion in the Civil Service Regulations, amongst others, of a new rule as article 465 A with two notes appended thereto.
Omitting clause (1) and note (2) which are not relevant for our present purpose that article read as follows: "465 A. For officers mentioned in article 349 A the rule for the grant of retiring pension is as follows: 5 34 (1) . . . . . . . . . . . (2) A retiring pension is also granted to an officer who is required by Government to retire after completing twenty five years ' service or more.
Note I. Government retains an absolute right to retire any officer after he has completed twenty five years ' service without giving any reasons and no claim to special compensation on this account will be entertained.
It will be noticed that clause (2) and Note I quoted above are word for word the same as clause (2) and Note 1 of article 465 A as we find it now except that the last sentence in Note 1 in the present rule was not in article 465 A Note I when it was published in 1920.
It seems that this addition was subsequently made by amendment in 1922 as referred to in the High Court judgment under appeal.
It is contended by learned counsel for the appellant that article 465 A and Note I thereto came into force only in June, 1920, that is to say, after the Government of India Act, 1919, had been passed and therefore cannot be said to have been confirmed by section 96B (4) and being a pension rule made after the date of that Act but not being a rule made by the Secretary of State in Council it cannot under section 96B (3) apply to the appellant who was employed by the Secretary of State.
We are unable to accept this argument as sound.
As already stated, the new rules were announced by Resolution No. 1085 E. A. passed and published on the 15th November, 1919, and were in force on the 23rd December, 1919, when the Government of India Act, 1919, was passed and consequently acquired statutory force by virtue of section 96B (4) of,that Act.
The subsequent Resolution No. 714 C.S.R. dated the 10th May, 1920, and Resolution No. 1003 C.S.R. referred to above did not and could not affect the validity or force of the new rules announced on the 15th November, 1919.
The purpose of publishing the new rules in the form of amendments to the Civil Service Regulations, as Resolution No. 714 C.S.R. itself stated expressly, was only to clarify the exact scope of those new rules and not, 35 As suggested by learned counsel for the appellant, to bring them into force for the first time.
The new rules came into operation ex proprio vigore on their publication in the Official Gazette on the 15th November, 1919, and their subsequent publication for general information in the form if amendment to the Civil Service Regulations only served to make their exact scope clear.
The real purpose of the incorporation of these rules in the ' Civil Service Regulations was not to make any now rule at the date of such incorporation but to distribute and post up the rules announced in November, 1919, at appropriate places in the Civil Service Regulations for ready reference.
A comparison of the language used, in Note 1 to article 465 A with that employed in new rule 4 announced by Resolution No. 1085 E.A. dated the 15th November, 1919, will also make it clear beyond doubt that the purpose of Note I is not to confer on the Government any new right to compulsorily retire an officer on completion by him of twenty five years", service but that it is intended to serve as a reminder that the Government already has such right which it, means to "retain".
One "retains" only what one already possesses and the word "retain" is wholly inappropriate for the purpose of conferring a fresh right.
The last sentence of Note I is only an administrative direction, as to when the existing right of the Government is to; be exercised.
Indeed, article I in.
Chapter I of the: Civil Service Regulations clearly provides that the regulations therein are intended only to regulate salaries, leave, pension and other allowances and that they do not deal otherwise than indirectly with matters relating to recruitment, promotion, official duties, discipline or the like.
In short, the language of ' Note I to article 465 A makes it abundantly clear that the Government 's right to compulsorily retire an officer is not derived from Note 1.
Note I only assumes its existence aliunde and indicates when that existing right is to be, exercised and what consequences are to follow if that right is exercised.
That right is obviously derived from new rule 4 which was announced by Resolution No. 1085 E.A. on the 15th November, 1919.
Being in operation at the date of the passing of the Government of 36 India Act, 1919, that rule, by virtue of sub section (4) of section 96B of that Act, became binding on the appellant although he was employed by the Secretary of State for India.
We, therefore, agree with the High Court, though on different grounds, that the first question raised by the appellant must be answered against him.
It is unfortunate that the Gazette of India notifications of the several earlier resolutions referred to above were not made available to the High Court.
(ii) and (iii).
It will be convenient to deal with these two questions together.
Learned counsel for the appellant urges that even assuming that rule 4 announced by Resolution No. 1085 E.A. and on which Note I to article 465 A of the Civil Service Regulations was based had, on the passing of the Government of India Act, 1919, become binding on the appellants it nevertheless became void on the coming into operation of the Constitution of India by reason of its being repugnant to the provisions of article 31 1 of the Constitution.
The argument is that a compulsory retirement of an officer was nothing but his removal from service within the meaning of article 311 and as rule 4 as well as Note I to article 465 A of the Civil Service Regulations sanctioned compulsory retirement without assigning any reason which, in substance, meant without giving him any opportunity to show cause against such action being taken in regard to him, it became repugnant to article 311 of the Constitution and, therefore, became void.
The argument, although plausible and attractive, was nevertheless rejected by the High Court and we think it rightly did so.
A brief study of the history and development of the rule now embodied in article 311 and a consideration of the language of that article and the relevant rules will amply confirm the correctness of this conclusion.
In England the rule was well established from very early times that public offices were held at the pleasure of the Crown.
The English constitutional theory was that the King could do no wrong and accordingly the services of a civil servant could be terminated without assigning any reason and no action could be maintained in the King 's Courts for damages for wrongful 37 dismissal.
This principle appears to have been applied even to the servants of the East India Company and certainly to the civil servants after the British Crown took over the territories and the administration thereof from the East India Company.
This state of affairs continued until 1919 when section 96B of the Government of India Act, 1910, while maintaining that the tenure was during His Majesty 's pleasure, introduced a minor restriction on this power of dismissal.
The relevant portion of sub section (1) of that section was in the terms following : " 96B. (1) Subject to the provisions of this Act and of rules made thereunder, every person in the civil service of the Crown in India holds office during His Majesty 's pleasure, and may be employed in any manner required by a proper authority within the scope of his duty, but no person in that service may be dismissed by any, authority subordinate to that by which he was appointed, and the Secretary of State in Council may (except so far as he may provide by rules to the contrary) reinstate any person in that service who has, been dismissed.
The rest of the sub section need not be quoted.
As already stated, sub section (4) of this section validated and confirmed the then existing rules and sub section (2) gave power to the Secretary of State for India in Council to make rules for regulating the classification of the civil services in India, the methods of their recruitment, their conditions of service, pay and allowances,, and discipline and conduct.
In exercise of this power the Secretary of State for India in Council framed certain rules in December, 1920, which with subsequent modifications were published on the 27th May, 1930, as "The Civil Services (Classification, Control arid Appeal) Rules.
" Rule 49 provides: " 49.
The following penalties may, for good and sufficient reason and as hereinafter provided, be imposed upon members of the services, comprised in any of the classes (1) to (5) specified in rule 14, namely: (i) Censure.
38 (ii)Withholding of increments or promotion, including stoppage at an efficiency bar.
(iii)Reduction to a lower post or time scale, or to a lower stage in a time scale.
(iv) Recovery from pay of the whole or part of any pecuniary loss caused to Government by negligence or breach of orders.
(v) Suspension.
(vi) Removal from the civil service of the Crown, which does not disqualify from future employment.
(vii) Dismissal from the civil service of the Crown, which ordinarily disqualifies from future employment.
Explanation.
The termination of employment(a) of a person appointed on probation during or at the end of the period of probation, in accordance with the terms of the appointment and the rules governing the probationary service; or (b) of a temporary Government servant appointed otherwise than under contract, in accordance with rule 5 of the Central Civil Services (Temporary Service) Rules, 1949; or (c) of a person engaged under a contract, in accordance with the terms his contract does not amount to removal or dismissal within the meaning of this rule or of rule 55].
The, relevant portion of rule 55 runs thus " 55.
Without prejudice to the provisions of the Public Servants Inquiries Act, 1850, no order of dismissal, removal or reduction shall be passed on a member of a service (other than an order based on facts which had led to his conviction in a criminal Court or by a Court martial) unless he has been informed in writing of the grounds on which it is proposed to take action, and has been afforded an adequate opportunity of defending himself . . . . . . .
The rest of this rule which lays down the details of procedure to be followed need not be quoted for our present purpose.
Under article 353 of the Civil Service Regulations, no pension may be granted to an officer dismissed or removed for misconduct, insolvency or 39 inefficiency, but to officers so dismissed or removed compassionate allowances may be granted when they are deserving of special consideration, provided that such allowance shall not exceed two thirds of the pension which would have been admissible to him if he had retired on medical certificate.
It will be noticed that the rules just referred to con template and provide for both dismissal and removal from service.
As regards pension both dismissal and removal stand on the same footing, namely, that both of them entail loss of pension and even when a compassionate allowance is granted in either case such ' allowance is much less than the pension that had been earned.
The only difference between dismissal and removal is that while dismissal ordinarily disqualifies the officer from future employment, removal does not.
It may also be mentioned here that although the power of dismissal at pleasure was " subject to the provisions of this Act and of the rules made thereunder " the Judicial Committee held in Rangachari vs Secretary of State(1) and in Venkatarao vs Secretary of State(2) that those opening words of section 96B(1) did not qualify the unfettered discretion of the Crown to dismiss a servant at pleasure and that the remedy of the servant for the violation of the rules was not by a law suit but by 'an appeal of an official or political kind.
Then came the Government of India Act, 1935.
Section 240 is important for our purpose.
The relevant portions of that section were as follows: " 240.
(1) Except as expressly provided by this Act, every person who is a member of a civil service of the Crown in India, or holds any civil post under the Crown in India, holds office during His Majesty 's pleasure.
(2) No such person as aforesaid shall be dismissed from the service of His Majesty by any authority subordinate to that by which he was appointed.
(3) No such person as aforesaid shall be dismissed or reduced in rank until he has been given a reasonable (1) L.R. 64 I.A. 40; A.I.R. 1937 P.C. 27.
(2) L.R. 64 I.A. 55; A.1,R. , 40 opportunity of showing cause against the action proposed to be taken in regard to him.
" The rest of the section is not material for the present discussion.
In short, sub section (1) reiterated the English constitutional theory, sub section (2) reproduced the restriction introduced by section 96B (1) of the 1919 Act and sub section (3) gave statutory protection to the rights conferred by rule 55 of the Civil Service,% (Classification, Control and Appeal) Rules but which, prior to this Act of 1935, had been held by the Privy Council in the two last cited cases to be ineffective against the Crown 's plenary power of dismissal.
It will, however, be noticed that in sub section (3) the word " removed " was not used, although that word occurred in rule 55 and the other rules quoted above.
It was, however, held in I. M. Lal 's case(1) that removal was within section 240(3), which conclusion implies that removal is comprised within dismissals The position, therefore, is that both under the rules and according to the last mentioned decision of the Judicial Committee there is no distinction between a dismissal and a removal except that the former disqualifies from future employment while the latter does not.
Finally, we have our new Constitution.
Article 3 10(1) reiterates the constitutional theory of the tenure of office being during the pleasure of the President, the Governor or Rajpramukh as the case may be.
Article 311(1) reproduces the provisions of section 240(2) of the Government of India Act, 1935.
Clause (2) of article 311, leaving out the proviso, runs thus: "(2).
No such person aforesaid shall be dismissed, removed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him.
" The word " removal " which is used in the rules is also used in this clause and it may safely be taken, for reasons stated above, that under the Constitution removal and dismissal stand on the same footing except as to future employment.
In this sense removal is but a species of dismissal.
Indeed, in our recent decision (1) L.R 75 I,A. 225; A.I.R. 1948 P.C. 121. 41 in Satischandra Anand vs The Union of India(1) it has been ' said that these terms have been used in the same sense in article 31 1.
Removal, like dismissal, no doubt brings about.
a termination of service but every termination of service does not amount to dismissal or removal. ' A reference to the Explanation to rule 49 quoted above will show that several kinds of termination of service do not amount to removal or dismissal.
Our recent decision in Satishchandra Anand vs The Union of India (supra) fully supports the conclusion that article 311 does not apply to all cases of.
termination of service.
That was a case of a contract for temporary service being terminated by notice under one of the clauses of the contract itself and fell within clause (c) of the Explanation to rule 49 and article 311 was held by this Court not to have any application to the case.
The question then is whether a termination of service brought about by compulsory retirement is tantamount to a dismissal or removal from service so as to attract the provisions of article 311 of the Constitution.
The answer to the question will depend on whether the nature and incidents of the action resulting in dismissal or removal are to be found in the action of compulsory retirement.
There can be no doubt that,removal I am using the term synonymously with dismissal generally implies that the officer is regarded as in some manner blameworthy or deficient, that is to say, that he has been guilty of some misconduct or is lacking in ability or capacity or the will to discharge his duties as he should do.
The action of removal taken against him in such circumstances is thus founded and justified on some ground personal to the officer.
Such grounds, therefore, involve the levelling of some imputation or charge against the officer which may conceivably be controverted or explained by the officer.
There is no such element of charge or imputation in the case of compulsory retirement.
The two requirements for compulsory retirement are that the officer has completed twenty five years ' service and that it is in the public interest to dispense with his further services It is true that (1) ; at p. 659.
42 this power of compulsory retirement may be used when the authority exercising this power cannot substantiate the misconduct which may be the real cause for taking the action but what is important to note is that the directions in the last sentence in Note 1 to article 465 A make it abundantly clear that an imputation or charge is not in terms made a condition for the exercise of the power.
In other words, a compulsory retirement has no stigma or implication of misbebaviour or incapacity.
in the present case there was no doubt some imputation against the appellant which he was called upon to explain but it was made perfectly clear by the letter of the 4th January, 1950, that the Government was not holding any formal enquiry under rule 55 of the Civil Services (Classification, Control and Appeal) Rules and that before taking action for his compulsory retirement the Government desired to give him an opportunity to show cause why that action should not be taken.
In other words, the enquiry was to help the Government to make up its mind as to whether it was in the public interest to dispense with his services.
It follows, therefore, that one of the principal tests for determining whether a termination of service amounts to dismissal or removal is absent in the case of compulsory retirement.
Finally, rule 49 of the Civil Services (Classification, Control and Appeal) Rules clearly indicates that dismissal or removal is a punishment.
This is imposed on an officer as a Penalty.
It involves loss of benefit already earned.
the officer dismissed or removed does not get pension which he has earned.
He may be granted a compassionate allowance but that, under article 353 of the Civil Service Regulations, is always less than the pension actually earned and is even less than the pension which he would have got had he retired medical certificate.
But an officer who is compulsorily retired does not lose any part of the benefit that he has earned.
On compulsory retirement he will be entitled to the pension etc.
that he has actually earned.
There is no diminution of the accrued benefit It is said that compulsory retirement, like dismissal or removal, deprives the officer of the chance of serving 43 and getting his pay till he attains the age of superan nuation and thereafter to get an enhanced pension and that is certainly a punishment.
It is true that in that wide sense the officer may consider himself punished but there is a clear distinction between the loss of benefit already earned and the loss of prospect of earning something more.
In the first case it is a present and certain loss and is certainly a punishment but the loss of future prospect is too uncertain, for the officer may die or be otherwise incapacitated from serving a day longer and cannot, therefore,, be regarded in the eye of the law as a punishment.
The more important thing is to see whether b y compulsory retirement the officer loses the benefit he has earned as he does by dismissal or removal.
The answer is clearly in the negative.
The second element for determining whether a termination of service amounts to dismissal or removal is, therefore, also absent in the case of termination of service brought about by compulsory retirement.
The foregoing discussion necessarily leads us.
to the conclusion that a compulsory retirement does not amount to dismissal or removal and, therefore, does not attract the provisions of article 311 of the Constitution or of rule 55 and that, therefore, the order of the President cannot be challenged on the ground that the appellant had not been afforded full opportunity of 'showing cause against the action sought to be taken in regard to him ' Both the questions under consideration must also be answered against the appellant.
The result, therefore.
, is that this appeal fails and must stand dismissed.
In the circumstances of this case we make no order as to costs.
Appeal dismissed.
| IN-Abs | Held, that Article 465 A and Note I thereto of the Civil Service Regulations relating to the retiring pensions of officers was applicable to the appellant who was employed in 1923 as a member of the Indian Service of Engineers because Rule 4 of the new Rules published by the Government of India on 15th November, 1919, providing for compulsory retirement of any officer after the completion of 26 years ' service was validated and confirmed by section 96 B of the Government of India Act , 1919, which came into force on 23rd December, 1919, and the language of Note 1 to Article 466 A published in 1920 clearly indicates that the Government 's right to compulsorily retire an officer was not derived from Note 1 as Note 1 assumed its existence aliunde and the Government 's right was derived from new Rule 4 published on 15th November, 1919.
Held also, that a compulsory retirement under the Civil Services (Classification, Control and Appeal) Rules, does not amount to dismissal or removal within the meaning of Article 311 of the Constitution and therefore does not fall within the provisions of the said Article.
The word "removal" used synonymously with the term "dis missal" generally implies that the Officer is regarded as in some manner blameworthy or deficient.
The action of removal is founded on some ground personal to the officer and there is a levelling of some imputation or charge against him.
But there is no such element of charge or imputation in the case of compulsory retirement.
In other words a compulsory retirement does not involve any stigma or implication of misbehaviour or incapacity.
Dismissal or removal is a punishment and involves loss of benefit already earned.
The Officer, dismissed or removed, does not got pension which he has earned.
On compulsory retirement the Officer will be entitled to the pension that he has actually earned and there is no diminution of the accrued benefit.
Rangachari vs Secretary of State (L.R. 64 I.A. 40; A.I.R. ; Vankata Rao vs Secretary of State L.R. 64 I.A. 55; A.I.R, 1937 P.O. 37); I.M, Lal 's case (L.R. 76 I.A. 225 A.I.R. 1948 27 P.C. 121); Satischandra Anand vs The Union of India at p. 659) referred to.
|
Appeal No. 378 of 1965.
Appeal from the Judgment and decree dated April 9, 1963 of the Bombay High Court in First Appeal No. 616 of 1961.
Rai Bahadur and B. R. Agarwala, for the appellants.
section T. Desai, O. P. Malhotra and 0.
C. Mathur, for the res pondent.
547 The Judgment of the Court was delivered by Shelat, J.
Whether in determining the rateable value of a building the assessing authority under section 154(1) of the Bombay, Municipal Corporation Act, III of 1888 can take into consideration income derived by the owner under an agreement entitling an advertisement hoarding to be put up on the roof of such building is the question arising in this appeal.
For consideration of this question a few relevant facts may first be recited.
The appellants are the owners of "Fulchand Nivas", a building situate at the corner of what was known at the relevant time as Marine Drive and Sandhurst Road opposite Chowpatty Sea Face, Bombay.
The building consists of ground and five upper floors and a terrace.
The ground floor and five upper floors of the building were and are let out.
For the last few years the Municipal Corporation has been assessing the rateable value of the building as equivalent to the actual rents recovered by the owners.
After the rateable value for the year 1956 57 was assessed it was found that the terrace of the building was used for advertising Tata Mercedes Benz Automobile Trucks and Buses by means of a neon sign.
This was done under an agreement dated February 5, 1957 entered into by the appellants under which the Tata Locomotive and Engineering Co. Ltd., had a reed to pay to the appellants Rs. 800 per month in consideration of their being allowed to display the said advertisement and a further sum of Rs. 700 in consideration of the owners agreeing not to allow any one else to use any portion of the said building for displaying any advertisement save those of the tenants on the ground floor not above the level of the height of the ground floor.
The agreement provided also that it would be the owners who, during the continuance of the agreement, would pay all existing and future rates, taxes etc., which would be assessed, imposed, charged or become payable in respect of the said building or the said advertisement except the Municipal Licence fee in respect of the said advertisement which would be borne by the Company.
On March 3, 1958 the respondent corporation issued a notice under section 167 of the Act informing the owners that the assessment book had been amended and that the amount of the rateable value of the building was increased from Rs. 44,320 to Rs. 64,685.
The appellants thereupon filed a complaint under section 163(2) of the Act against the said increase and the assessing authority by an order dated February 21, 1959 reduced the rateable value from Rs. 64,685 to Rs. 59,600.
In maintaining the increase from Rs. 44,320 to Rs. 59,600 the assessing authority took into account the additional income arising from the said agreement and received by the appellants.
The appellants thereupon filed an appeal before the Chief Judge, Small Cause Court, Bombay, objecting to the said increase.
The Chief Judge disallowed the said increase and directed that the rateable value should be Rs. 44,320.
The Chief Judge held that under the said agreement 548 there was no demise or transfer of an interest in the said property in favour of the Committee, that the said agreement amounted merely to a licence revocable at any time though subject to the express terms of the agreement and was no more than a grant of 'a right in gross to display neon sign outside the property and that the, only user of the property was that of a small portion of the terrace used as a base for the said advertisement.
He held that it was not any inherent or intrinsic quality 'of any portion of the property which commanded such a high consideration as the sum of Rs. 1,500 per month.
Aggrieved by this order, the respondent Corporation filed an appeal before the High Court at Bombay.
The High Court held that the Chief Judge was in error in holding that the Municipal Corporation was not entitled to take into account income earned by the owners under the said agreement, set aside his order and restored the original value assessed by the assessing authority at Rs. 59,600.
The High Court analysed section 154 of the Act and after consideration of the rules as to rating recognised by several decisions both English and that of the High Court itself in Mahad Municipality vs Bombay S.R.T. Corporation(1) held that the said increase was justified.
The appellants then applied for and obtained a certificate under article 133(1)(a) of the Constitution and filed this appeal.
Counsel for the owners challenged the correctness of the High Court 's judgment and order and contended that in deter mining the annual rent of the building the assessing authority can, take into account the rent at which the.
building is expected to be let, that therefore the income derived from an agreement which amounts to a mere licence and not a demise cannot be added to such rent, such income being totally irrelevant to the concept t of annual rent envisaged in rating.
To appreciate the contention it is necessary first to examine section 154(1) of the Act.
The section provides that in order to fix the rateable value of any building or land assessable to a property tax, there shall be deducted from the, amount 'of the annual rent for which such land or building might reasonably be expected to let from year to year a sum equal to ten percentum of the said annual rent and, the said deduction shall be in lieu of all allowances for repairs or on any other account whatever.
The assessing authority for the purpose of fixing to rateable value has therefore to determine the annual rent.
that is, the annual rent for which such building might reasonably be expected to let from year to.
year and to deduct the 10 percent statutory allowance therefrom and arrive at the net rateable value which would be, equivalent to the net annual rent.
The rateable value is thus taken to be the same as the net annual rent of the property.
It is a well recognised principle in rating that both gross, value and net annual, value are estimated by reference to the rent at which the property might reasonably be expected to let from, year to year.
Various methods of valuation are applied (1) LXIII Bombay Law Reporter, 174.
549 in order to arrive at such hypothetical rent, for instance by reference to the actual rent paid, for the property or for others comparable to it or where there are no rents by reference to the assessments of comparable properties or to the profits earned from the property or to the cost of construction.
The expression "gross value" means the rent at which a hereditament might reasonably be expected to let from year to year.
The rent which a tenant could afford to give is calculated rebus sic stantibus, that is to say, with reference to the property in its existing physical condition and to the mode in which it is actually used.
The hypo thetical tenant includes all persons who might possibly take the property including the person actually in occupation, even though he happens to be the owner of the property.
The rent is that which he will pay in the "higgling of the market", taking into account all existing circumstances and any relevant future trends.
If the property affords the opportunity for the carrying on of a gainful trade, that fact also must be taken into account.
The property is assumed to be vacant and to let and the material date for the valuation is that of the proposal which gives rise to the proceedings.
The actual rent paid for the property is not conclusive evidence of value, though such actual rent may serve as an indication as to what a hypothetical tenant can afford to pay.
However, if the actual rent is paid on terms which differ from those of the hypothetical tenancy it must be adjusted, if possible, to the terms of the hypothetical tenancy before it affords evidence of value.
(See Halsbury 's Laws of England, (3rd ed.) vol.
32, p. 60 and onwards).
It is also well recognised that while valuing the property in question every intrinsic quality and every intrinsic circumstance which tends to push the rental value up or down must be taken into consideration.
In other words, in estimating the hypothetical rent "all that could reasonably affect the mind of the intending tenant ought to be considered." (Cartwright vs Sculcoates Union(1).
Scott, L. J. Robinson Bros. vs Houghton and Chester le Street Assessment Committee( ') observed: "It is the duty of the valuer to take into consideration every intrinsic quality and every other circumstances which tends to push the rental value up or down, just bec ause it is relevant to the valuation and ought there fore to be cast into the scales of the balance.
The 'objective being the real value of the actual hereditament, the inquiry is primarily economic and not legal , it is only legal in so far as logical relevance is the measure of legal admissibility." (See also Ryde on Rating, 11th ed., 385, 387).
The measure for purposes of rating is therefore the rent which a hypothetical tenant, looking at the building as it is, would be prepared to pay.
Though the tenant is hypothetical and the rent (1) (2) at 469.
550 too is, hypothetical, the property in respect of which he would estimate that which he would offer as rent is not hypothetical but concrete.
While estimating the rent which he would be prepared to pay he would naturally take into consideration all the advantages, together with the disadvantages attached to the property, that is, the maximum beneficial use to which he would be able to put the property.
In doing so he is bound to take into consideration the fact of the property being situated at an unique place as the instant property undoutedly is, viz., at the juncture of two of the most prominent roads with the additional advantage of Chowpatty Sea Face being opposite to it where in the evenings and on week ends, it cannot be questioned, large crowds usually gather.
Coupled with this would be the ' advantage that a neon sign advertisement can be vividly seen if fixed on the top of the building by people, pedestrians and those in vehicles, from fairly long distances in all directions, especially as the advertisement happens to be a rotating one.
There can therefore be no doubt that if a property possesses such an amenity, such amenity is bound to add to its beneficial value and the tenant who desires to take it on lease is bound to take into consideration while making up his mind as to the rent which he can profitably offer as to how much income he would be able to derive from exploiting such an amenity.
The measure of the hypothetical rent which such a tenant would offer would thus be the extent of the beneficial use to which he would be able to put the property on its being demised ' to him.
That being so it seems to us that the question whether an agreement under which such a tenant would be able to exploit the advantageous situation in which the property is situate amounts to a lease or licence is totally irrelevant for the purpose of assessing the rateable value.
Equally irrelevant is the question whether the income arising from such an agreement is rent or licence fee.
To consider such income as irrelevant in the process of rating on the ground that it does not amount to rent but to licence fee is to misconstrue the true measure of the rent expected from the prospective tenant.
The tenant would not only take into consideration the actual rent derived from the property but also such other income which he would be able to extract from the situation of the property by exploiting as best as he can the beneficial use to which the property is capable of being put.
Therefore, the mere fact that the income from the agreement is not rent but licence fee and therefore cannot be added to the actual rent fetched by the property does not justify on any principle 'of rating or any construction of section 154 of the Act, disregard of it while estimating the rent which ' the property would be expected to fetch.
It is true that the rating was so far made including the year in question on the basis of the actual rent derived from 551 the property.
That appears to have been done because 'of the restrictions under the Bombay Rent Act by reason of which the property cannot be leased at rent higher than the standard rent allowed under the provisions of that Act.
Since no hypothetical tenant would pay rent higher than such standard rent the actual rent would ordinarily be the rent expected ' from a hypothetical tenant.
The question would be whether the Corporation would be justified in enhancing the rateable value by adding the said sum of Rs. 1500 per month arising from the said amount? It is true, as 'observed earlier, that the hypothetical rent cannot be in view of the rent restrictions higher than the actual rent.
But the income arising under the said agreement is not rent realised from letting out any part of the property to the Company but is in consideration of the exclusive privilege granted to it of displaying its neon sign advertisement.
It is manifest that the user thereunder of part of the terrace adds to the beneficial value of the building.
For such user the owner can legitimately expect something extra over and above the standard rent of the building.
Though the owner of the building cannot charge rent over and above that which is permissible under the provisions of the Rent Act, there is nothing in that Act which prohibits him from charging an amount from an advertiser in consideration of the privilege of displaying his advertisement.
A hypothetical tenant, therefore, would take into consideration such extra income arising from the special advantage attached to the building and would be prepared to pay over and above the actual rent something in respect of such an additional advantage.
Counsel for the appellants relied upon certain decisions which we may now examine.
Taylor vs Overseers of Pendle ton(1) is a case where the question was whether the advertising agent was a tenant or a licensee.
If he was a licensee it would be the owner who would be the occupier; if a tenant it would be the advertising agent who would be the occupier.
Since under the English law it is the occupier and not the owner who is liable for rates it was held that the agent being the tenant was the occupier and it was he and not the owner who was liable to pay rates.
In Wilson vs Tavener(2) the defendant agreed by an agreement to let the plaintiff erect a hoarding upon the forecourt of a cottage and to allow him the use of a gable end for a bill posting station at yearly rent.
It was held the agreement did not amount to tenancy from year to year but was a licence and a quarter 's notice terminating at the end of the year of the currency of the agreement was a reasonable notice.
These decisions cannot be appropriately brought to aid by the appellants as under the English law it is the occupier who is liable for the tax and it is for that reason that the court had to determine in each case whether the agreement in question create (1) (2) 552 a demise or a licence.
But whether the advertiser was a lessee or a mere licensee, the income arising from advertisement hoardings has always been rated irrespective of the question as to who was liable to pay the tax.
Reliance was placed both before the High Court and also before us on the decision in Corporation of Calcutta vs Anil Prakash Basu(1).
The building there was let out to the tenant at Rs. 64 / 14 / . per month.
On the roof of it, however, the Calcutta.
Street Advertising Company had displayed a neon sign board of Capstain cigarette for which the owner was paid Rs. 125 per month.
The question was whether the Calcutta Corporation was right in treating this income as rent within the meaning of section 127(a) of the Calcutta Municipal Act, 1923 and take it into account while determining the annual letting value of the building.
Section 127(a) is as follows.
: "For the purpose of assessing land and building to the consolidated rate the annual value of land and the annual value of any building erected for letting purposes or ordinarily let shall be deemed to be the gross annual rent at which the land or building might at the time of assessment reasonably be expected to let from year to year less in the case of a building an allowance of 10% for the cost of repairs and for all other expenses necessary to maintain the building in a state.
to command such gross rent.
" The High Court held that the roof of the building on which the, sign board was put up could not be said to have been demised, that the amount paid to the owner by the advertising agency was therefore not rent and that the use of the roof for putting up the sign board amounted to a licence and therefore could not be treated as rent for the purpose of assessing the annual value of the building.
The High Court relied on certain English decisions and also on its own earlier ' decisions for deciding whether the agreement between the owner and the advertising agency amounted to a lease or licence.
Having held that the agreement amounted to a licence and not lease and, the income was licence fee and not rent it rejected the contention of the Municipal Corporation that it was entitled to treat the amount of Rs. 125 a month as rent over and above the actual rent of the building.
, It may be observed that it was never argued before the High Court that the agreement, whether the said amount was rent or licence fee, added to the beneficial value of the building, that though the roof 'on the terms of that agreement could not be said to have been demised, what had to be considered under section 127(a) for assessing the annual rent of the building was the,, rent which a hypothetical tenant was expected to pay and not the actual rent, and whether such hypothetical tenant would or (1) A.I.R. 1958 Cal.
553 would not take into consideration the extra income derived from the use of the roof for the advertising hoarding over and above the actual rent while deciding what rent he can profitably offer for the building.
Such a question not having been raised or decided this decision also cannot assist the appellants.
In our view if the building or a part of it yields am extra income over and above the actual rent derived from it such income on the terms of section 154(1) of the Act can legitimately be taken into consideration by the assessing authority while determining the annual rent on the ground that a hypothetical tenant would take such extra income into account while considering what rent he can afford to offer for such building.
That being the correct position under section 154(1) of the Act the High Court, was right in confirming the enhancement of the annual rent from Rs. 44,320 to Rs. 59,600.
The appeal fails and is dismissed with costs.
Y. P. n Appeal dismissed.
| IN-Abs | The respondent municipal Corporation increased the rateable value of a building assessed the actual rent recovered by Appellant owner, by adding the income derived by the owner under an agreement entitling a Company to display an advertisement on the roof of the building.
The owner successfully filed a complaint against the increase which was upheld by the Small Cause Court to the High Court, and its confirmed the enhancement In appeal, this Court: HELD: The High Court was right in confirming the enhancement of the annual rent.
If a building or a part of it yields an extra income over and above the actual rent derived from it, such income on the terms of, section 154 (i) of the Bombay Municipal Corporation Act, can legitimately be taken into consideration by the assessing authority while determining the annual rent on the ground that a hypothetical tenant would take such extra income into account while considering what rent he can afford to offer for such building.
[553B] The hypothetical tenant includes all persons who might possibly take the property including the persons actually in occupation, even though he happens to be the owner of the property.
The rent is that which he will pay in the "higgling of the market", taking into account all existing circumstances and any relevant future trends.
Therefore, the mere fact that the income from the agreement is not rent but licence fee does not justify on any principle of rating ,or any construction of section 154 of the Act, disregard of it, while estimating the rent which the property would be expected to fetch.
[549B; C; 550G H] Though the owner of the building could not charge rent over and above that which was permissible under the provisions of the Rent Act, there was nothing in that Act which prohibited him from charging an amount from an advertiser in consideration of displaying his advertisement.
[551D] Mahad Municipality vs Bombay S.R.T. Corporation, LXIII Bom bay Law Reporter, 174; Cartwright vs Sculoates Union, ; Robinson Bros. vs Houghton and Chester le Street Assessment Committee, , Taylore vs Overseers of Pandleton, , Wilson vs Tavender , Corporation of Calcutta vs Anil Prakash Basu A.I.R. 1958 Cal. 423, referred to.
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Appeal No. 1283 of 1967.
Appeal by special leave from the Order dated April 2/3, 1967, of the Court of Assistant Commissioner (Judicial) 1, Sales Tax, Kanpur Range, Kanpur in Appeal No. D.F.78 of 1966.
J. P. Goyal and Sobhag Mal Jain, for the appellant.
O. P. Rana, for the respondents.
The Judgment of the Court was delivered by Hidayatullah, J.
This is an appeal by special leave against an order 2/3 April, 1967, of the Assistant Commissioner (Judicial) 1, Sales Tax, Kanpur Range, Kanpur by which the Assistant Commissioner rejected as defective the memorandum of appeal filed by the present appellant against the assessment order passed by the Sales Tax Officer (S 1) Kanpur.
The defect, according to the Assistant Commissioner, was that the memorandum of appeal (which had been filed well within time) was not accompanied by the challan showing the deposit of admitted tax under section 9 of the Uttar Pradesh Sales Tax Act, 1948.
The appellant did not file an application for revision and did not also invite a reference to the High Court of Allahabad but came direct to this Court by special leave which was granted by us on August 23, 1967.
At the first hearing of the petition, the State of Uttar Pradesh represented by Mr. O.P. Rana objected to the grant of special leave inasmuch as the other provisions under which remedy could be obtained under the Sales tax Act had been bypassed.
At that time, we overruled the objection and in the course of this judgment, we shall briefly indicate the reasons which had then prevailed with us.
The facts of the case are as follows: The appellant had declared his turnover for the year 1964 65 at Rs. 3,70,941.7 P. on which the admitted tax under the Act came to Rs. 11,135,58p.
The Sales tax authorities, however, assessed his turnover at Rs. 30 lakhs on which tax was calculated at Rs. 90.000.
The appellant appealed to the Assistant Commissioner (Judicial) 1, Sales tax, Kanpur Range, Kanpur.
His appeal was filed on May 16, 1966, the order of assessment and the demand notice having been served on him on April 16, 1966.
The appeal was therefore filed within time.
Section 9 of the Act provides that no appeal against an ,assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due or of such instalments thereof as may have become payable.
As is stated earlier, the admitted tax came to 507 Rs. 11,135.58 P.
The appellant was required under this provisions of law to give satisfactory proof, at the time of the entertainment of the appeal, that this tax was duly paid.
It appears that the appellant had paid a greater portion of the tax even before the assessment order had been made, and a balance of Rs. 99.99 P. was due from him from the amount of admitted tax.
This amount was deposited on April 26, 1966 before the appeal was filed by him.
He did not however present any proof of such deposit, because there is a dispute in the case whether the assessee bad shown proof of it to the mumarim or not.
As the finding is that he had not shown it we shall proceed on the assumption that the assessee had not furnished proof at the time of the filing of the appeal that the balance of tax had been paid, It is on this premise that the present appeal has proceeded before us.
On August 16, 1966 the assessee addressed a letter to the Sales tax Officer and asked for a certificate of payment of tax and this certificate having been furnished he filed it on January 24, 1967 before the Assistant Commissioner.
He also, as a matter of abundant caution, filed an application for condonation of delay under section 9(6) of the Act read with section 5 of the Indian Limitation Act.
The order against which the present appeal has been brought before us was made on 2/3 April, 1967 and the appeal of the assessee was rejected,.
because in the opinion of the Assistant Commissioner section 9 of the Act read with r. 66(2) had not been complied with since no proof had been given along with the memorandum of appeal that the tax had been paid.
Simultaneously, the application for condonation of delay was also dismissed.
Against this order the assessee has filed the present appeal.
The short question in this case is whether having made the deposit even before the appeal was filed and well within the period of limitation, the assessee could be deprived of his right of appeal under section 9 of the Act.
Alternatively, it is to be considered whether the proof of the payment of the admitted tax had to accompany the memorandum of appeal as required by r. 66(2) and on failure to furnish such proof, the appeal itself became incompetent.
In support of his order the Assistant Commissioner relied on a decision of the Allahabad High Court reported in Swastika Tannery of Jaimau vs Commissioner of Sales tax, U.P. Lucknow(1) in which the learned Chief Justice of that Court and another learned Judge have laid down that the proof of payment must be as required by the rules and, therefore.
the memorandum of appeal ouaht to be accompanied by the Challan showing payment of tax before the appeal can be said to be competent.
We shall refer to that ruling presently.
in this appeal, learned counsel for the assessee has relied upon a number of authorities in which the interpretation runs (1) (1963) 14 S.T.C. 518.
508 counter to the decision of the learned Chief Justice just adverted to and had contended that section 9 of the Act does not create the bar which the ruling and the Assistant Commissioner 's reliance on that ruling has created in the way of the appeal.
His contention is that if satisfactory proof is given before the appeal is heard or at any rate before it is admitted, the requirement of law under section 9 is satisfied and that it is not always incumbent to produce a challan with the memorandum of appeal, r. 66(2) notwithstanding.
It is this point which has given rise to the great controversy before us and the matter was argued at great length both at the time of grant of special leave and today.
To consider the matter, we may begin by quoting section 9 of the Act.
Section 9 which gives the power of appeal provides as follows: (1) Any dealer objecting to an order allowing 'or refusing an application for exemption certificate under cl.
(b) of sub section (1) of section 4 or to an order refusing an application under section .30 or to an order imposing a penalty under section 15 A or to an assessment made under section 7, 7 A, 7 B, 18 or 21, may within 30 days from the date of service of the copy of the order or notice of assessment, as the case may be, appeal to such authority as may be prescribed; Provided that no appeal against an assessment shall be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due, or of such instalments thereof as may have become payable: Under section 24 of the Act power has been conferred upon the State ,"Government to make rules to carry out the purposes of the Act and in particular, to provide for all matters expressly required or allowed by this Act to be prescribed.
Under sub section
(4) of that section, it is provided that all rules made under the section shall be published in the Gazette and upon such publication, shall have effect immediately as if enacted in the Act and under the 5th sub section, it is further provided that all rules made under the Act shall be laid for fourteen days before the Legislature as soon as possible after they are made and shall be subject to such modifications as the Legislature may make during the session in which . they are so laid.
In exercise of this power, the State Government has framed the U.P. Sales tax Rules, 1948.
Rules 66 and 67 of these rules bear, among others, upon appeals.
Sub r. 1 of r. 66 provides for the content of the appeal by stating what the memorandum of appeal shall specify in relation to the name and address of the appellant etc.
We are not concerned with it.
Sub r.
509 2 then states that "the memorandum of appeal shall be accom panied by. . a challan showing deposit in the Treasury of the tax admitted by the appellant to be due or of such instalments thereof as might have become payable.
" Rule 67 days down how the appeals have to be presented.
Sub r. 1 provides that the memorandum of appeal shall be presented by the appellant or his lawyer or duly authorised agent to the Assistant Commissioner (Judicial) or may be sent by registered post addressed to the Assistant Commissioner,(Judicial).Sub r 2 provides that if the memorandum of appealis in order.
the Assistant Commissioner, (Judicial) shall admitit and on admission.
the Reader of the Assistant Commissioner (Judicial) shall endorse thereon the date of its presentation and shall register it in a book to be known as Register of Appeals.
The third sub rule says that if the memorandum of appeal is not in order.
it may be rejected or returned after the necessary endorsement on its back about the presentation and return to the applicant for correction and representation within the time to be fixed by the Assistant Commissioner (Judicial) or be amended then and there.
Lastly sub r. 4 provides that on admission of an appeal.
the Assistant Commissioner (Judicial) shall fix a date for hearing of the appeal and may send for the record,.
if necessary.
The contention of counsel for the assessee is that he had fully complied with the requirements of section 9 although not strictly as laid down in r. 66 which he characterised as directory.
The contention on the other side is that the rule lays down the only manner of compliance with the provisions of the Section and in support Counsel for the State refers to the provisions of section 24(4) and (5) in which it is stated that the rules on being framed become part of the Statute.
From this, counsel for the State infers that there is no other modeof compliance except the one stated in the rules and as in thiscase that mode of compliance was not followed, the appeal is rightly considered to be incompetent and properly rejected.
This in main represents the essence of the controversy between the parties.
To begin with it must be noticed that the proviso merely requires that the appeal shall not be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due.
A question thus arises what is the meaning of the word 'entertained ' in this context? Does it mean that no appeal shall be received or filed or does it mean that no appeal shall be admitted or heard and disposed of unless satisfactory proof is available ' The dictionary meaning of the word 'entertain ' was brought to our notice by the parties, and both sides agreed that it means either "to deal with or admit to consideration".
We are also of the same opinion.
The question, therefore, is at what stage can the appeal be said to be entertained for the purpose of the appllication of the proviso? Is it 510 entertained when it is tiled or is it 'entertained ' when it is admitted and the date is fixed for hearing or is it finally 'entertained ' when it is heard and disposed of? Numerous cases exist in the law reports in which the word 'entertained ' or similar cognate expressions have been interpreted by the courts.
Some of them from the Allahabad High Court itself have been brought to our notice and we shall deal with them in due course.
For the present we must say that if the legislature intended that the word 'file ' or 'receive ' was to be used, there was no difficulty in using those words.
In some of the statutes which were brought to our .notice such expressions have in fact been used.
For example.
under Order 41.
rule I of the Code of Civil Procedure it is stated 'that a memorandum shall not be filed or presented unless it is accompanied etc.
; in section 17 of the Small Causes Courts Act, the expression is 'at the time of presenting the application '.
In sec.
6 .of the Court Fees Act, the words are 'file ' or 'shall be received '.
It would appear from this that the legislature was not at a loss for words if it had wanted to express itself in such forceful manner as is now suggested by counsel for the State.
It has used the word 'e entertain ' and it must be accepted that it has used it advisedly.
This word has come in for examination in some of the cases of the Allahabad High Court and we shall now refer to them.
In Kundan Lal vs Jagannath Sharma(1) the Court was concerned with Order 21, rule 90, of the Code of Civil Procedure which bad been amended by the High Court by changing the pro visions of the original Code.
The changed rule is as follows: "Provided that no application to set aside the sale shall be entertained: (a) upon any ground which should have been taken by the applicant on or before the date on which the sale proclamation was drawn up: (b) Unless the applicant deposits such amount not exceeding 12 1/2 " of the sum realised by the sale or furnishes such security as the court may in its discretion fix, except when for reasons to be recorded it dispenses with the requirements of this clause. . " The word 'entertain ' is explained by a Divisional Bench of the Allahabad High Court as denoting the point of time at which an application to set aside the sale is heard by the court.
The expression 'entertain ', it is stated.
does not mean.
the same thing as the filing of the application or admission of the application by the court.
A similar view was again taken in Dhoom Chand Jain vs Chamanlal Gupta & Anr.(2) in which the learned Chief (1) A.I.R. 1962 All. 547.
(2) A.LR.
1962 AU.
511 Justice Desai and Mr. Justice Dwivedi gave the same meaning to the expression 'entertain '.
It is observed by Dwivedi J. that the word 'entertain ' in its application bears the meaning 'admitting to consideration ', and therefore when the court cannot refuse to take an application which is backed by deposit or security, it cannot refuse judicially to consider it.
In a single bench decision of the same court reported in Bawan Ram & Anr.
vs Kunj Beharilal(1) one of us (Bhargava, J.) bad to consider the same rule.
There the deposit had not been made within the period of limitation and the question had arisen whether the court could entertain the application or not.
It was decided that the application could not be entertained because proviso (b) debarred the court from entertaining an objection unless the requirement of depositing the amount or furnishing security was complied with within the time prescribed.
In that case the word 'entertain ' is not interpreted but it is held that the Court cannot proceed to consider the application in the absence of deposit made within the time allowed by law.
This case turned on the fact that the deposit was made out of time.
In yet another case of the Allahabad High Court reported in Haji Rahim Bux & Sons and Ors.
vs Firm Samiullah & Sons(2) a division bench consisting of Cheif Justice Desai and Mr. Justice section D. Singh interpreted the words of 0. 21, r. 90, by saying that the word 'entertain ' meant not"receive ' or 'accept ' but 'proceed to consider on merits ' or 'adjudicate upon '.
In our opinion these cases have taken a correct view of the word 'entertain ' which according to dictionary also means 'admit to consideration '.
It would therefore appear that the direction to the court in the proviso to section 9 is that the court shall not proceed to admit to consideration an appeal which is not accompanied by satisfactory proof of the payment of the admitted tax.
This will be when the case is taken up by the court for, the first time.
In the decision on which the Assistant Commissioner relied, the learned Chief Justice (Desai C.J.) holds that the words 'accompanied by ' showed that something tangible had to accompany the memorandum of appeal.
If the memorandum of appeal had to be accompanied by satisfactory proof, it had to be in the shape of something tangible, because no intangible thing can accompany a document like the memorandum of appeal.
In our opinion, making 'an appeal ' the equivalent of the memorandum of appeal is not sound.
Even under 0.
41 of the Code of Civil Procedure.
the expressions "appeal" and "memorandum of appeal" are used to denote two distinct things.
In Wharton 's Law Lexicon, the word "appeal" is defined as the judicial examination of the decisions by a hi her Court of the decision of an inferior court.
The appeal is the judicial examination; the memorandum of appeal contains the rounds on which the judicial examination is invited.
(1) A.I.R. 1961 All. 42.
(2) A.I.R. 1963 All.
512 For purposes of limitation and for purposes of the rules of the Court it is required that a written memorandum of appeal shall be filed.
When the proviso speaks of the entertainment of the appeal, it means that the appeal such as was filed will not be admitted to consideration unless there is satisfactory proof available of the making of the deposit of admitted tax.
Now the complicating factor is the existence of the rule, and here, the divergence of submission arises on whether the rules can be regarded as mandatory or merely directory.
It is quite obvious that the section as it stands only requires that at the time of the consideration of the appeal, There should be satisfactory proof that the admitted tax has been deposited.
It only says that no appeal shall be entertained unless accompanied by satisfactory proof of the payment of the tax.
This satisfactory proof may take any form; in fact in the present case satisfactory proof was tendered in the shape of a certificate from the Sales tax Officer that the admitted tax had been deposited and well within time.
Under section 9 and its proviso as they stand, it is quite obvious that 'entertainment ' means the point of time when the appeal is being considered.
There was thus satisfactory proof in the present case.
No doubt, proof was not tendered following the method required by the rules but the question is whether the rules can make the section narrower by prescribing a particular mode.
The section is general; it provides that the court should accept satisfactory proof.
The rule requires that the memorandum of appeal shall be accompanied by the challan showing payment of tax.
The rule lays down one uncontestable mode of proof which the Court will always accept but it does not exclude the operation of the proviso when equally satisfactory proof is made available to the officer hearing the appeal and it is proved to his satisfaction that the payment of the tax has been duly made and in time.
In this sense, the rule can be regarded as directory since it lays down one of those modes which will be unquestioned for its validity.
The other modes of proof are not necessarily shut out.
It is to be remembered that all rules of procedure are intended to advance justice and not to defeat it.
Here the right of appeal has been made subservient to the payment of the admitted tax.
If the admitted tax is paid and there is proof available that it has been so paid, there exists no reason to create a second impediment in the way of the appeal.
No doubt, rule makes it easy for the assessee to bring satisfactory proof in an uncontestable manner, but the provision of the rule is not to the exclusion of other satisfactory modes of proof.
Suppose for instance that the I challan was lost and the time for the filing of the appeal was expiring, could or could not the person concerned say that he had the certificate but had lost it and that he would produce a copy of the challan from the Treasury or obtain a certificate from the 513 Treasury Officer.
Could he not obtain from the bank the discharged cheque by which the amount of tax was deposited by him and produce it as the discharged counterfoil of payment.
All those modes of proof will be equally, irrefutable.
In the present case the,, assessee had in his petition of appeal 'stated that the amount of tax had been paid and had fortified the 'Statement by an affidavit.
Before the hearing he produced, a certificate from the.
Sales tax Officer that the tax had, been paid.
The Assistant Commissioner ought therefore to have proceeded: with the appeal because it was accompanied by satisfactory proof of,; the payment of the tax.
To hold otherwise would put a premium upon a technicality which we do not see will advance the case either for the collection of the tax or,, for the: administration of justice.
, The rule, as we have stated, indicate& what :is the best and easiest method of achieving satisfactory proof.
The certificate from the Sales tax Officer, however, is as good proof as the challan from the Treasury and if such certificate was produced at the admission of the appeal, how the memorandum of appeal can be said to be defective under the section as it stands.
In these circumstances, we hold that the rule is merely directory and indicates only one of the modes of satisfactory proof.
The distinction made by the learned Chief Justice between the tangible and intangible objects does not in our opinion fall for consideration in the present case.
If one holds that by 'entertainment ' is meant the time of admission of the appeal, satisfactory proof may be furnished at the time of admission of the appeal.
We are of opinion that by the word "entertain" here is meant the first occasion on which the court takes up the matter for consideration.
It may be at the admission stage or if by the rules of that Tribunal the appeals are automatically admitted, it will be the time of hearing of the appeal.
But on the first occasion when the court takes up the matter for consideration, satisfactory proof must be presented that the tax was paid within the period by limitation available for the appeal.
, In the present case when the Assistant Commissioner took up the appeal for consideration, satisfactory proof was available in the shape of a certificate which even today is not denied.
In our opinion the Assistant Commissioner was wrong in declining to consider the appeal in the presence of such uncontestable proof.
It remains to point out why we did not insist upon the assessee exhausting his other remedies under the Act before coming to this Court.
It was made to appear to us that there is a right of revision and right of reference to the High Court ' in all such cases and that this remedy was not resorted to by the assessee before making a petition for special leave in this Court.
We were taken through a number of cases in which it has been laid down by this Court that this Court will not ordinarily grant special leave to appeal against an order when other remedies are available and L/JN)6 SCI No 7 514 have not been exhausted.
But there is no inflexible rule that 'this Court will never entertain an appeal and numerous instances have occurred in, this Court where such appeals have been admitted.
It would have been ,futile in this.
case for the assessee to have gone to the court , of revision which was bound by the ruling of :the Allahabad High, Court reported in Swastika Tannery of Jaimau v Commissioner of .
Sales tax U.P. Lucknow (1 ') and ' it would have been equally futile to, have.
gone to the High Court; on a reference.
The matter was more easily disposed of by giving special leave in this Court and we therefore felt that this was one of those extraordinary cases, in which the ends of justice would be better served, by avoiding a circuity of action and by dealing with this matter in this Court directly.
It is for this reason that we granted special leave to appeal.
The appeal shall therefore be allowed and the appeal shall be remitted to the Assistant Commissioner (Judicial) 1, Sales Tax, Kanpur Range, Kanpur, for disposal in accordance with law.
There shall be no order as to costs.
Y.P. Appeal allowed and remitted.
(1) (1963) 14 S.T.C. 518.
| IN-Abs | The appellant assessee filed a memorandum of appeal to the Assistant Commissioner, Sales Tax, stating therein that the amount of admitted tax had been paid and forfeited the statement by an affidavit.
Before the hearing, he produced a certificate from the Sales Tax Officer that the tax had been paid.
The Assistant Commissioner relying on the Allahabad High Court 's decision in Swastika Tannery, Jaimau vs Commissioner of Sales tax, U.P. rejected as defective the memorandum of appeal, holding that it was not accompanied by the challan showing the deposit of admitted tax under section 9 of the Uttar Pradesh Sales Tax Act, 1948 and r. 66 of the U.P. Sales tax Rules.
Against this order the assessee directly filed special leave to appeal to this Court without exhausting the remedies of revision and reference provided in the Act.
This Court granted Special Leave and; HELD:The appeal must be allowed.
(i) By the word "entertain" in the proviso to section 9 is meant the first occasion on which the Court take up the matter for consideration.
It may be at the admission stage or if by the rules of that Tribunal, the appeals are automatically admitted, it will be the time of hearing of the appeal.
But on the first occasion when the court takes up the matter for consideration, satisfactory proof must be presented that the tax was paid within the period of limitation available for the appeal.
Rule 66(2) lays down one uncontestable mode of proof which the Court will always accept but it does not exclude the operation of the proviso when equally satisfactory proof is made available to the officer hearing the appeal and it is proved to his satisfaction that the payment of the tax has been duly made and in time.
[512E F; 513E G] In the present case, when the Assistant Commissioner took tip the appeal for consideration, satisfactory proof was available in the shape of a certificate.
Swastika Tannery of Jaimau vs Commissioner of Sales tax, U.P. Lucknow, (1963) 14 S.T.C. 518, disapproved.
Kundan Lal vs Jagannath Sharma, A.I.R. 1962 All. 547; Dhoom Chand Jain vs Chaman Lal Gupta and Anr.
A.I.R. 1962 All.
42: Haji Rahim Bux & Sons & Ors.
vs Firm Samiullah & Sons, A.I.R. 1963 All. 320, approved.
(ii) Though this Court would not ordinarily grant special leave to appeal against an order when other remedies were available and had not been exhausted, there is no inflexible rule that this Court will never entertain such an appeal.
It would have been futile in this case for the assessee to have gone to the court of revision which was bound by the decision in Swastika Tannery of Jaimau vs
Commissioner of Sales tax, U.P. and it would have been equally 506 futile to have gone to the High Court on a reference.
The matter was more easily disposed of by giving special leave in this Court and this was one of those extra ordinary cases in which the ends of justice would be better served, by avoiding a circuity of action and by dealing with this matter in this Court directly.
[513H 514C]
|
Appeal No. 1056 of 1966.
Appeal from the judgment and order dated July 6, 1965 of the Calcutta High Court in Appeal from Original Order No. 284 of 1961.
A. N. Sinha and D. N. Gupta, for the appellant.
R. N. Sachthey and section P. Nayar, for the respondent.
The Judgment of the Court was delivered by Bhargava, J.
The appellant, M/s. Braithwaite & Co. (India) Ltd., (hereinafter referred to as "the Company") filed an application before the Employees ' Insurance Court for a declaration that 'Inam ' paid or to be paid to its workmen under the Inam Scheme initiated on 28th December, 1955 is not "wages " as defined in the (No. 34 of 1948) (hereinafter referred to as "the Act"), and that no contribution, either as employer 's special contribution or employees ' contribution, is payable by the Company in respect thereof.
The opposite party in this application was the present respondent, the Employees ' State Insurance Corporation, and there was.
also a prayer for perpetual injunction restraining the respondent from realising any contribution in respect of past or future payments of Inam under that Scheme.
A further prayer was for a decree for Rs. 32,761 against the respondent, being the amount which the respondent had already realised from the appellant claiming that the Inam was " wages", and for costs.
The case was contested by the respondent, but the Employees ' Insurance Court allowed the application of the appellant, passed a decree with costs, making a declaration that Inam was not wages and that no contribution in respect of Inam paid to the workmen was payable by the appellant to the respondent, and decreeing the claim of the appellant for the sum of Rs. 32,761 against the respondent.
The respondent, thereupon, appealed to the High Court of Calcutta under section 82 of the Act.
The High Court allowed the appeal, held that the Inam was wages and dismissed the claim of the appellant, but made no order as to costs.
The appellant has now come up to this Court on the basis of a certificate granted by the High Court under article 133 of the Constitution.
The decision of this appeal depends solely on the question whether the Inam paid by the appellant under the Scheme dated 28th December, 1955 is covered by the definition of "wages" as given in section 2(22) of the Act.
That definition is reproduced below.
(22) 'wages ' means all remuneration paid or payable in cash to an employee, if the terms of contract of employment.
express or implied, were fulfilled and includes L/P(F)7SCI 10 (a) 774 other additional remuneration, if any, paid at intervals not exceeding two months, but does not include (a) any contribution paid by the employer to any pension fund or provident fund, or under this Act; (b) any travelling allowance or the value of any travelling concession; (c) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or (d) any gratuity payable on discharge.
" The High Court has held that the Inam in question is covered by this definition where it is laid down that "wages" means ill remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled.
Reliance is not placed on the second clause of the definition which includes other additional remuneration, if any, paid at intervals not exceeding two months.
Counsel appearing for the respondent before us also did not rely on this second part of the definition and sought to support the decision of the High Court only on the basis that it is Covered by the first part.
Counsel appearing for the appellant also did not rely on the last part of the definition which excludes from the definition of "wages" items mentioned in clauses (a), (b), (c) & (d).
In this case, therefore, we have to confine our decision to the interpretation of the first part of the definition of "wages".
The facts, which are relevant for deciding this question, are that conditions for the award of Inam were laid down in a Work Notice issued by the appellant on 28th December, 1955, and with this Work Notice were issued two separate Notices laying down the remaining conditions for payment of Inam which were required to be laid down by the Scheme contained in the first Work Notice which only stipulated the general terms.
One of these Notices issued on the same date covered the workmen employed in Structural and Tank Shop, while the other covered workmen employed in Wagon Shop.
The terms of the general scheme which are important for interpretation are those contained in paras.
4 to 10 of the Work Notice, and it was on the basis of the interpretation of these terms that the Employees ' Insurance Court accepted the plea of the appellant that Inam was not covered by the definition of " wages".
The High Court, on interpretation of the same terms, took a contrary view.
Both Courts concurrently held that the Inam paid under the Scheme was covered by the word "remuneration" used in the definition of "wages" and counsel appearing for the appellant did not challenge the correctness of this view.
The Employees ' Insurance Court held that the payments of Inam had nothing to do with the terms of employment and the workmen were not entitled to claim the Inam as a condition of service, so 775 that it could not be held that this remuneration was paid or payable, if the terms of the contract of employment, express or implied, were fulfilled.
On the other hand, the view of the High Court was that this remuneration was paid and became payable, if the terms of the contract of employment, express or implied.
were fulfilled.
This decision was given by the High Court after holding that, on an interpretation of the Scheme, the right of the employees to receive the Inam had become an implied term of the contract of employment.
It appears to us that, on a correct interpretation of the terms of the Scheme, the High Court committed an error in holding that the payment of this Inam had become a term of the contract of employment of the employees.
The features of the Scheme, which indicate that the payment of Inam did not become a term of the contract of employment, are clear from the Scheme itself.
The first is that this payment of Inam was not amongst the original terms of contract of employment of the employees.
In those terms, there was no 'offer of any reward or prize to be paid for any work done by the employees.
The employees were expected to work for certain periods at agreed rates of wages which, in some cases, left hourly rated and, in some, monthly rated.
This Inam Scheme was introduced at a later stage in December, 1955.
The only offer under the Scheme was to make incentive payments, if certain specified conditions were fulfilled by the employees.
Even though this offer of incentive payment was made, the appellant, in clear words, reserved the right to withdraw the Scheme altogether without assigning any reason or to revise its conditions at its sole discretion.
Clearly, if the right to the Inam had become an implied condition of the contract of employment, the employer could not withdraw that right at its discretion without assigning any reason, nor could the employer vary its conditions without agreement from the employees con cerned.
The payment of the Inam was dependent upon the em ployees exceeding the target of output appropriately applicable to him.
though primarily the right to receive the Inam depended on the efficient working of the employee, there was another clause which laid down that, if the targets were not achieved due to lack of orders, lack of materials, break down of machinery, lack of labour, strikes, lock outs, go slow or any other reason whatsoever, no Inam was to be awarded.
This condition is clearly inconsistent with the payment of Inam having become an implied term of the contract of employment, because Inam became nonpayable even if the production target was not achieved for reasons for which the employees were not at all to blame.
If the employer did not receive sufficient orders for sale of its output, or there was lack of raw materials, or there was breakdown of machinery and as a result, during the period for which the Inam was notified, it became impossible for the employee to achieve the minimum target fixed, there was no liability_on the appellant to pay the Inam.
Such exemption from payment of the Inam on grounds for which the employees could not be blamed and possibly for which the 776 appellant itself might be responsible clearly shows that the payment of this Inam was not enforceable as one of the terms of the contract of employment, whether implied or express.
The appellant had also laid down that, if any deterioration of workmanship was noticed on the part of the employees in order to achieve the targets prescribed for earning the Inam, the Scheme could be abandoned forthwith.
It was also made clear to the workmen in the Scheme that this payment of reward was in no way connected with or part of wages.
It was on these conditions that the employees were receiving the Inam.
Thus, though there was a payment to the employees and since that payment depended on their achieving certain targets, it has to be held to be remuneration, this payment of Inam cannot be held to have become a term of the contract of employment.
The High Court, in arriving at the contrary decision, referred to the Explanation to section 41 of the Act and held on its basis that, even if the terms of contract of employment are deemed to have been fulfilled, the remuneration paid would be wages.
The Explanation lays down,,.that for the purposes of sections 40 and 41, wages shall be deemed to include payment to an 'employee in respect of any period of authorised leave, lock out or legal strike.
It appears to us that the High Court committed an error in applying this legal fiction, which was meant for sections 40 and 41 of the Act only, and extending it to the definition of wages, when dealing with the question of payment in the nature of Inam under the Scheme started by the appellant.
The fiction in the Explanation was a very limited one and it only laid down that wages were to be deemed to include payment to an employee in respect of any period of authorised leave, lock out or legal strike.
It did not lay down that other payments made to, an employee under other circumstances were also to be deemed to be wages.
A legal fiction is adopted in law for a limited and definite purpose only and there is no justification for extending it beyond the purpose for which the legislature adopted it.
In the Bengal Immunity Co. Ltd. vs State of Bihar and Others,(1) this Court, dealing with the Explanation to Article 286(1) of the Constitution, as it existed before 11 9 1956, held: "Whichever view is taken of the Explanation, it should be limited to the purpose the Constitution makers had in view when they incorporated it in clause 1.
It is quite obvious that it created a legal fiction.
Legal fictions are created only for some definite purpose".
Applying the same principle, we have to hold that the Explanation to section 41 is not to be utilised fox interpreting the general definition of "wages" given in section 2(22) of the Act and is to be taken into count only when the word "wages" requires interpretation for purposes of sections 40 and 41 of the Act.
It cannot, therefore.
(1) , 646. 777 be held that remuneration payable under a scheme is to be covered by the word "wages", if the terms of contract of em ployment are taken to have been fulfilled.
What is really required by the definition is that the terms of the contract of employment must actually be fulfilled.
It is, therefore, not correct to hold that because payments made to an employee for no service rendered during the period of lock out, or during the period of legal strike, would be wages, Inam paid under that scheme must also be deemed to be wages.
The second reason which led the High Court to hold against the appellant was that, according to that Court, the Scheme contained an offer by the employer for payments to the employees for service rendered by them, and that offer was accepted by the employees impliedly by having worked on the terms of the Notice and having received payments on that basis.
The mere fact that a reward for good work offered by the employer is accepted by the employee after he has successfully satisfied the requirement laid down by the employer for earning reward cannot mean that this payment becomes a part of contract of employment.
In fact, in this case, there was no question of offer by the appellant and acceptance by the employees as a condition of their service.
The employees were already working in accordance with the terms of their contract of employment when the employer decided 'to make this extra payment if the employees did successfully what they were already expected to do under that contract.
It cannot, therefore, be held that this payment of Inam ever became even an implied term of the contract of employment of the employees of the appellant.
This Court in Bala Subrahmanya Rajaram vs B. C. Patil & Others,(1) had to interpret the meaning of word "wages" as defined in the Payment of Wages Act, where also wages were defined as remuneration which would be payable if the terms of the contract of employment, express or implied, were fulfilled.
The Court expressed its opinion in the following words: "Now the question is whether the kind of bonus contemplated by this definition must be a bonus that is payable `as a clause of the contract of employment '.
We think it is.
and for this reason.
" Thereafter, the Court proceeded to examine whether bonus was in fact, payable as a clause of the contract of employment.
The word "wages" in the Act having been defined in similar terms, a remuneration paid to an employee can only be covered by the definition of "wages" if it is payable under a clause of the contract of employment.
As we have indicated earlier, there was no express clause in the contract of employment of the employees of the appellant laying down the payment of Inam, and the Scheme, when brought into force, expressly excluded it from the contract of employment.
The terms on which the Inam was payable were (1) ; , 1508.
778 also not consistent with the Scheme having become a part of the contract of employment.
In this connection, counsel appearing for the respondent brought to our notice one other feature of the Scheme which was not relied upon by the High Court to hold that this Inam was wages.
That term is contained in the last paragraph of the Scheme where, after stating that the Company reserved the right to withdraw the Scheme altogether without assigning any reason or revise targets and any condition of the Scheme at its sole discretion, went on to add that the Company also reserved the right to discontinue the scheme at the end of any period, if the scheme is found to be in any respect unworkable or to be a source of labour discontent or for any other reason.
It was urged that the fact that the Scheme could only be discontinued at the end of a prescribed period and not in the midst of a period showed that the Inam was payable as one of the conditions of contract of employment of the employees, We do not think that there is any force in this submission.
It was again a one sided promise on behalf of the appellant not to deny this payment of Inam during a period for which the Inam Scheme had already been notified by the appellant, but such an assurance on behalf of the appellant does not indicate that the employees could claim that a right to receive the Inam had accrued to them as an implied condition of contract of employment.
The decision given by the High Court has, therefore, to be set aside.
The appeal is allowed with costs.
, The order passed by the High Court is set aside and the order passed by the Employees ' Insurance Court it restored.
V.P.S. Appeal allowed.
| IN-Abs | Section 2(22) of the , defines 'wages '.
Under its first part all remuneration paid or payable in cash to an employee.
if the terms of the contract of employment, express or implied, were fulfilled.
would be wages.
The Explanation to section 41 lays down that, for purposes of sections 40 and 41, wages shall be deemed to include payment to an employee in respect of any period of authorised leave, lock out or legal strike.
Under the original terms of the contract of employment between the appellant and its employees, the employees were expected to work for certain periods at agreed rates of wages and there was no offer of any reward or prize or inam to be paid for any work done by the employees.
An inam Scheme was introduced later by the appellant under which, there was an offer to make incentive payments, if certain specified conditions were fulfilled by the employees.
The appellant, however, reserved the right to withdraw the Scheme altogether without assigning any reason, or to revise its conditions at its sole discretion, even if the production target was not achieved for reasons for which the employees were not to be blamed.
The appellant had also laid down that, if any deterioration of workmanship was noticed on the part of the employees in order to achieve the targets prescribed for earning the inam, the Scheme could be abandoned forthwith.
It was also made clear to the workmen that this payment of reward was in no way connected with or part of wages.
The last paragraph of the Scheme stated that the appellant also reserved the right to discontinue the Scheme at the end of any period, if the Scheme was found to be in any respect unworkable or to be a source of labour discontent or for any other reason.
The appellant filed an application before the Employees ' Insurance Court constituted under the Act for a declaration that the inam paid or to be paid to its workmen was not wages as defined in the Act and for other reliefs.
The application was allowed.
On appeal, the High Court held that the inam was wages, because: (1) it was covered by the first part of the definition of wages; (2) even if the terms of the contract of employment were not in fact fulfilled but were only deemed to have been fulfilled.
the remuneration paid would be wages by, virtue of the Explanation to section 41; and (3) the Scheme contained an offer by the employer of payments to the employees for services rendered by them and as that offer was accepted by the employees impliedly, by having L, P(N)7SCI 10 672 worked on the terms of the Scheme and having received payments on that basis, the payment became a part of the contract of employment.
In appeal to this Court, the respondent sought 'co support the judgment of the High Court, also on the ground that, the fact that the Scheme could only be discontinued at the end of a prescribed period as laid down in the last paragraph of the Scheme and not in the midst of a period, showed that the inam was payable as one of the conditions of the contract of employment.
HELD: (1) A remuneration paid to an employee can only be covered by the definition of wages if it is payable under a clause of the contract of employment.
[778 H].
Bala Subrahmanya Rajaram vs B. C. Patil & Ors., ; , followed.
In this case there was a payment to the employees and since that payment depended on their achieving certain targets, A is remuneration, but this payment of inam cannot be held to have become a term of the contract of employment.
There was no express clause in the contract of employment for the payment of inam to the employees, and the Scheme, when brought into force, expressly excluded it from the contract of employment.
The terms in the Scheme were also not consistent with the Scheme having become a part of the contract of employment.
The fact that the appellant could withdraw the payment at its discretion and on grounds for which the employees could not be blamed, showed that the payment was not enforceable as one of the terms of the contract of employment.
[777 A C; 778 H; 779 A].
(2) A legal fiction is adopted in law for a limited and definite purpose only and there is no justification for extending it beyond the purpose for which the legislature adopted it.
The fiction in the Explanation to & 41 is a limited one and Is not to be utilised for interpreting the general definition of wages given in the Act, as it did not Iav down that payments made to an employee under other circumstances were also deemed to be wages.
The fiction is to be taken into account only when the word 'wages ' requires interpretation for purposes of sections 40 and 41 ' It cannot, therefore, be held that the remuneration payable under the Scheme is covered by the word wages if the terms of the contract are taken to have been fulfilled.
What is really required by the definition is that the terms of the contract of employment must actually be fulfilled.
[777 E G; 778 AB].
Beneaal Immunity Co. Ltd. vs State of Bihar and Ors. , followed.
(3) In this case, when the Scheme was introduced, there was no offer of any reward by the appellant which was accepted by the employees as a condition of their service.
The employees were already working in accordance with the terms of their contract of employment when the employer decided to make the extra payment if the employees did successfully what they were already expected to do under that contract.
The mere fact that the reward for good work was received by the employee after he had successfully satisfied the requirement laid down by the employer for earning the reward could not mean that the payment became a part of the contract of employment.
[778 C E].
(4) The term contained in the last paragraph of the Scheme was a one sided promise on behalf of the appellant not to deny the payment of inam during a period for which the Scheme had already 773 been notified by the appellant but such an assurance on behalf of the appellant does not indicate that the employees could claim that a right to receive the inam had accrued to them as an implied condition of the contract of employment.
[779 D E].
|
No. 11 of 1967.
Petition under article 32 of the Constitution of India for the enforcement of fundamental rights.
N. C. ChatterJee, K. B. Rohtagi and section BalakriShnan, for Petitioner.
C. K. Daphtary, Attorney General, A. section Nambiar, R. H. Dhebar and section P. Nayar, for the respondents.
K. B. Rohtagi, for the interveners.
723 Ramaswami, J.
In this case the petitioner, C. A. Rajendran has obtained rule from this Court calling upon the respondents to show cause why a writ in the nature of mandamus under article 32 of the Constitution should not be issued for quashing the office Memorandum dated November 8, 1963 which is Annexure C ' to the Writ Petition, and for directing respondent No. 1 to restore the orders passed by it in Office Memorandum No. 2 /11/ 55 RPS dated May 7, 1955 and No. 5/4/55 SCT (1) dated January 4, 1957.
Cause has been shown by the Attorney General on behalf of the respondents to whom notice of the rule was ordered to be given.
The petitioner is a permanent Assistant in Grade IV (Class 11, non gazetted ministerial) of the Railway Board Secretariat Service.
He was initially appointed as Accounts Clerk on February 6, 1953 in Southern Railway.
He was appointed as an Assistant on October 22, 1956 in the Railway Board and confirmed as Assistant on April 1, 1960.
The pay scale of the Assistant 's grade is Rs. 210 530.
The next post to which the petitioner claims promotion is that of the Section Officer in the same service.
The post of Section Officer is classified as Class II, Grade 11, Gazetted and it carries a pay scale of Rs. 350 900.
The Railway Board Secretariat Service (Reorganisation and Reinforcement) Scheme was drawn up in consultation with the Ministry of Home Affairs and introduced with effect from December 1, 954 with the approval of the Union Public Service Commission.
According to the new Scheme the Railway Board Secretariat Service consists of the following grades: "Grade IV Assistants in the scale of Rs. 210 530 (Class III non gazetted) (to which Petitioner belongs).
Grade III Section Officers in the scale of Rs. 350 900 (Class II gazetted) with effect from 1 7 1959.
(Section Offcers grade).
Grade II Amalgamated with effect from 1 7 1959 as Section Officers grade.
Grade I Assistant Directors/Under Secretaries in the scale of Rs. 900 1,250.
(Grade III was called, before 1 7 59, Assistant Superintendent in the scale of Rs. 275 500 and the scale of Grade II Superintendents was Rs. 530 800).
" L/P(N)7SCI 7 724 Recruitment to permanent vacancies of Grade III of the Rail way Board Secretariat Service are made by the following three methods as per para 18 of the Railway Board Secretariat Service Scheme: "(a) 33 1/3% by direct recruitment on the results of the combined Examinations held by the UPSC for the IAS, IPS & other Central Services Class I and Class 11.
(b) 33 1/3% by promotion on the basis of seniority subject to the rejection of the unfit.
(c) 33 1/3% by limited competitive examination on the basis of a test to be prescribed and conducted, by the UPSC for Assistants/Stenographers Grade 11 between 5 years and 10 years of service in the grade in the Board 's office.
Note For the years 1961 65 only 1/4 of the substantive vacancies were to be filled by direct recruitment on the results of the competitive examination under item (a) above.
In 1955 the Government issued Office Memorandum dated May 7, 1955 (Annexure 'E ' to the Writ Petition) whereby it reaffirmed its decision that there will be no reservation for Scheduled Castes and Scheduled Tribes in posts filled by promotion but that certain concessions were to be given to Scheduled Castes and Scheduled Tribes in the matter of promotion.
The concessions were as follows: "(i) While there would be no reservation for Scheduled Castes and Scheduled Tribes in regard to vacancies filled by promotion, where the passing of tests or examinations had been laid down as a condition for promotion, the authority prescribing the rules for the tests or examinations might issue suitable instructions to ensure that the standard of qualification in respect of members of Scheduled Castes and Scheduled Tribes was not unduly high.
(ii) Where promotions were made on the basis of seniority subject to fitness, cases of persons belonging to Scheduled Castes and Scheduled Tribes were to be judged in a sympathetic manner without applying too rigid a standard and cases of supersession of Scheduled Castes and Scheduled Tribes employees reviewed at a high level viz., if a, Scheduled Caste/Scheduled Tribes employee was superseded in the matter of promotion to Class I and II posts filled on the basis of seniority subject to fitness, the prior orders of the Minister or 725 Deputy Minister concerned were to be taken.
If, however, the supersession was in a Class III or IV post filled on the basis of seniority subject to fitness, the matter was to be reported to the Minister or Deputy Minister concerned within a month of the decision.
(Ministries were given powers to modify this procedure to suit their requirements with the approval of the Minister in charge)" In 1957 the Government decided that there should be provision for reservations for Scheduled Castes and Scheduled Tribes in all grades of services filled by promotion through competitive examination limited to departmental candidates, the quantum of reservation being 12 1/2% for Scheduled Castes and 5% for Scheduled Tribes.
The order of the Government is contained in Office Memorandum dated January 4, 1957, Annexure 'D ' to the Writ Petition.
In April, 1959 the Ministry of Railways issued an order laying down that in the case of any promotion from Class IV to Class III and from Class III to Class 11 and for any promotion from one grade to another in Class 111, where such promotions were made by "selection" and not on the basis of " seniority cum fitness", there should be reservation for the Scheduled Castes and Scheduled Tribes on the same scale as in the direct recruitment.
This order was challenged by Rangachari by a Writ Petition under article 226 of the Constitution which was allowed by the Madras High Court and a writ in the nature of mandamus was granted restraining the Railway Authorities from giving effect to the order of the Railway Board directing reservation of selection posts in Class III of the Railway service in favour of the members of the Scheduled Castes and Scheduled Tribes.
An appeal was brought to this Court by the General Manager, Southern Railway (The General Manager, Southern Railway vs Rangachari)(1) against the judgment of the Madras High Court and it was held in the majority judgment of this Court that the impugned circulars of the Railway Board were within the ambit of article 16(4) of the Constitution and the appeal must succeed.
Consequent upon the judgment in this case the matter was reviewed by the Union Government and it was advised that there was no constitutional compulsion to make reservations for Scheduled Castes and Scheduled Tribes in posts filled by promotion and the question whether the reservation should be continued or withdrawn Was entirely a matter of public policy.
The Union Government came to the conclusion that there should not be any special treatment of Government servants belonging to Scheduled Castes and Scheduled Tribes in the matter of promotions particularly in promotion to Class I and Class II services which require higher degree of efficiency and (1) ; L/P(W)78CI 7(a) 726 responsibility.
As a result of this review of the matter the Central Government issued a memorandum dated November 8, 1963 (Annexure 'C ' to the Writ Petition) which reads as follows: "In posts filled by promotion through competitive examinations limited to departmental candidates, reservations at 12 1/2 per cent and 5 1/2 per cent of vacancies were provided for Scheduled Castes and Scheduled Tribes respectively vide this Ministry 's O.M. No. 5/4/ 55 SCT(1) dated 4th January, 1957 and para 3(iii) of the Brochure issued with O.M. No. 1/2/61 SCT(1) dated 27th April, 1962.
In regard to promotions on the basis of seniority subject to fitness, and those by selection no reservations were provided, but certain concessions were allowed to persons belonging to scheduled ca stes and scheduled tribes vide Ministry of Home Affairs Office Memorandum No. 2/11/55 RPS dated 7th May, 1955 (as amended from time to time), No. 1/1/59 RPS dated 17th March, 1958 and No. 1/4/60 RPS dated 5th March 1960 and paras 20 and 21 of the aforesaid brochure.
The Government of India have reviewed their policy in regard to reservations and other concessions granted to scheduled castes and scheduled tribes in posts filled by promotion and have, in supersession of all previous orders in this regard, decided as follows: (1) Class I and Class II appointments: (a) There will be no reservation for Scheduled Castes and Scheduled Tribes in appointments made by promotion to a Class 11 or a higher service of post whether on the basis of seniority cum fitness, selection, or competitive examination limited to departmental candidates.
(b) In the case of promotions made in or to Class I or Class II on the basis of seniority subject to fitness, cases involving supersession of Scheduled Castes and Scheduled Tribe Officers, will, however, continue to be submitted for prior approval of the Minister or Dy.
Minister concerned.
(2) Class III and Class IV appointments: (a) In the cases of Class III and Class IV appointments, in grades or services to which there is no direct recruitment whatever, there will be reservation at 121 and, 5 per cent vacancies for Scheduled Castes and Scheduled tribes respectively in promotions made by (i) selection or (ii) on the results of competitive examinations limited to departmental candidates.
727 (b) Lists of Scheduled Castes and Scheduled Tribes Officers should be drawn up separately to fill the reserved vacancies; officers belonging to these classes will be adjudged separately and not along with other officers and if they should be included in the list irrespective of their merit as compared to that of the other officers '.
Promotions against reserved vacancies will continue to be subject to the candidates satisfying the prescribed minimum standards.
(e) There will be no reservation in appointments made by promotion on the basis of seniority subject to fitness; but cases involving supersession of Scheduled Caste and Scheduled Tribe Officers, if any, will as at present be reported within a month to the Minister or Deputy Minister concerned for information.
The above decisions take effect from the date of issue of these orders except where selections by the Departmental Promotion Committee under the old orders have already been made, or rules for a competitive examination published.
The contention of the petitioner is that this Office Memorandum (Annexure 'C ' to the Writ Petition) violates the guarantee given to backward classes under article 16(4) of the Constitution and is illegal and ultra vires.
It was alleged that the impugned Office Memorandum (Annexure 'C ') made a discrimination by making provision for reservations in certain types of Class III and IV Services only and not in Class II and I Services, and the classification was discriminatory and there was no rational nexus sought to be achieved by the impugned Office Memorandum.
The argument was also stressed that, Art ' 16(4) was not an exception engrafted on article 16, but was in itself a fundamental right granted to Scheduled Castes and Scheduled Tribes and backward classes and as such it was untrammeled by any other provision of the Constitution.
The petitioner accordingly prays for the grant of a writ in the nature of mandamus quashing the Office Memorandum (Annexure 'C ') and directing respondent No. 1 to restore retrospectively the orders made in its Office Memoranda No. 2/ 11/55 R.PS dated May 7, 1955 and No. 5/4/55 SCT I dated January 4, 1957 and, to consider the claim of the petitioner as member of the Scheduled taste for promotion as Section Officer in the Railway Board Secretariat Service.
Article 14 of the Constitution states: "The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.
" 728 Article 15 provides: "(1).
The State shall not discriminate against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them.
(2) (3) (4) Nothing in this article or in clause (2) of Article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Sche duled Castes and the Scheduled Tribes.
" Article 16 is to the following effect: "(1) There shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State.
(2) No citizen shall, on grounds only of religion, race, caste, sex, descent, place 'of birth, residence or any of them, be ineligible for, or discriminated against in respect of, any employment or office under the State.
(3) (4) Nothing in this article shall prevent the State from making any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the 'opinion of the State, is not adequately represented in the services under the State.
(5) Article 335 reads as follows: "The claims of the members of the Scheduled Castes and the Scheduled Tribes shall be taken into consideration, consistently with the maintenance of efficiency of administration, in the making of appointments to services and posts in connection with the affairs of the Union or of a State.
" The first question to be considered in this case is whether there is a constitutional duty or obligation imposed upon the Union Government to make reservations for Scheduled Castes and Scheduled Tribes either at the initial stage of recruitment and at the stage of promotion in the Railway Board Secretariat Service Scheme.
The relevant law on the subject 'is well settled,.
Under article 16 of the Constitution, there shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State or to promotion from one office to a higher office thereunder.
Articles 14, 15 and 16 from part of the 729 same constitutional code of guarantees and supplement each other.
In other words, article 16 of the Constitution is only an incident of the application of the concept of equality enshrined.
in article 14 thereof.
It gives effect to the doctrine of equality in the matter of appointment and promotion.
It follows therefore that there can be a reasonable classification of the employees for the purpose of appointment and promotion.
To put it differently, the equality of opportunity guaranteed by article 16(1) means equality as between members of the same class of employees, and not equality between members of separate, independent classes.
Dealing with the extent of protection of article 16(1) of the Constitution, this Court stated in General Manager, Southern Railway vs Rangachari(1) at pages 596 597 of the Report as follows: "It would, be clear that matters relating to employment cannot be confined only to the initial matters prior to the act of employment.
The narrow construction would confine the application of article 16(1) to the initial employment and nothing else; but that clearly is only one of the matters relating to employment.
The other matters relating to employment would inevitably be the provision as to the salary and periodical increments therein, terms as to leave, as to gratuity, as to pension and as to the age of superannuation.
These are all matters relating to employment and they are, and must be.
deemed to be included in the expression 'matters relating to employment ' in Article 16(1).
What Article 16(1) guarantees is equality of opportunity to all citizens in respect of all the matters relating to employment illustrated by us as well as to an appointment to any office as explained by us.
The three provisions Article 16(1), article 14 and article 15(1) form part of the same constitu tional code of guarantees and supplement each other.
If that be so, there would be no difficulty in holding that the matters relating to employment must include all matters in relation to employment both prior and subsequent, to the employment which are incidental to the employment and form part of the terms and conditions of such employment.
" The Court further observed in that case: "Article 16(2) prohibits discrimination and thus assures the effective enforcement of the fundamental right of equality of opportunity guaranteed by Article 16(1).
The words, in respect of any employment used in Article 16(2) must, therefore, include all matters relating to employment as specified in Article 16(1).
There fore, we are satisfied that promotion to selection posts is included both under Article 16(1) and (2)".
(1) ; , 730 It is manifest that the scope of cl.
(4) of article 16 is not co extensive with the guarantee of equality offered to all citizens by cl.
(1) of that Article.
In other words, cl.
(4) of article 16 does not cover the entire field covered by cls.
(1) and (2) of that Article.
For instance, some of the matters relating to employment in respect of which equality of opportunity has been guaranteed by cls.
(1) and (2) do not fall within the mischief of the exception cl.
As regards the conditions of service relating to employment such as salary, increment, gratuity, pension and age of superannuation, there can be no exception even in regard to the backward classes of citizens.
The only matter which cl.
(4) covers is a provision for the reservation of appointments in favour of a backward, class of citizens.
It is well settled that cl.
(4) of Art.16 is an exception clause and is not an independent provision and it has to be strictly construed (See the judgment of this Court in General Manager, Southern Railway vs Rangachari)(2).
It is also apparent that the language of article 16(4) has to be interpreted in the context and background of article 335 of the Constitution.
In other words, in making a provision for reservation of appointments or posts the Government has to take into consideration not only the claims of the members of the backward classes but also the maintenance of efficiency of administration which is a matter of paramount importance.
In this connection, GaJendragadkar, J., as he then was, speaking for the majority in General Manager, Southern Railway vs Rangachari,(1) observed at page 606 of the Report as follows: "It is true that in providing for the reservation of appointments or posts under article 16(4) the State has to take into consideration the claims of the members of the backward classes consistently with the maintenance of the efficiency of administration.
It must not be forgotten that the efficiency of administration is of such paramount importance that it would be unwise and impermissible to make any reservation at the cost of efficiency of administration.
That undoubtedly is the effect of article 335.
Reservation of appointments or posts may theoretically and, conceivably mean some impairment of efficiency; but the risk involved in sacrificing efficiency of administration must always be borne in mind when any State sets about making a provision for reservation of appointments or posts.
It is also true that the reservation which can be made under article 16(4) is intended merely to give adequate representation to backward communities.
It cannot be used for creating monopolies or for unduly or illegitimately disturbing the legitimate interests of other employees.
In exercising the powers under article 16(4) the problem of adequate representation of the back ward class of citizens must be fairly and (1) [1962) 2 S.C.R. 586. 731 objectively considered and an attempt must always be made to strike a reasonable balance between the claims of backward classes and the claims of other employees as well as the important consideration of the efficiency of administration.
" The same view has been reiterated in a later case, M. R. Balaji and Others vs State of Mysore(1), in which Gajendragadkar, J., as he then was, speaking for the unanimous Court stated as follows: "Whilst we are dealing with this question, it would be relevant to add that the provisions of article 15(4) are similar to those of article 16(4) which fell to be considered in the case of The General Manager, Southern Railway vs Rangachari ([1962] 2 S.C.R. 586).
In that case, the majority decision of this Court held that the power of reservation which is conferred on the State under article 16(4) can be exercised by the State in a proper case not only by providing for reservation of appointments, but also by providing for reservation of selection posts.
This conclusion was reached on the basis that it served to give effect to the intention of the Constitution makers to make adequate safeguards for the advancement of Backward Classes and to securer their adequate repre sentation in the Services.
The judgment shows that the only point which was raised for the decision of this Court in that case was whether the reservation made was outside article 16(4) and that posed the bare question about the construction of article 16(4).
The propriety, the reasonableness or the wisdom of the impugned order was not questioned, because it was not the respondent 's case that if the order was justified under article 16(4), it was a fraud on the Constitution.
Even so, it was pointed out in the judgment that the efficiency of administration is of such a paramount importance that it would be unwise.
and impermissible to make any reservation at the cost of efficiency of administration; that, it was stated, was undoubtedly the effect of article 335.
Therefore, what is true in regard to article 15(4) is equally true in regard to article 16(4).
There can be no doubt that the Constitution makers assumed, as they were entitled to, that while making adequate reservation under article 16(4), care would be taken not to provide for unreasonable, excessive or extravagant reservation, for that would, by eliminating general competition in a large filed and by creating wide spread dissatisfaction amongst the employees, materially affect efficiency.
Therefore, (1) [1963] Supp. 1 S.C.R. 439. 732 like the special provision improperly made under article 15(4), reservation made under article 16(4) beyond the permissible and legitimate limits would be liable to be challenged as a fraud on the Constitution.
" In the present case the respondents have alleged in the counteraffidavit that after the decision of Rangachari 's(1) case the Union Government reviewed the whole position and decided that there should not be any special treatment to Government servants belonging to the Scheduled Castes and Scheduled Tribes in the matter of promotion to Class I and Class II Services which require higher degree of efficiency and responsibility.
It was stated in the counter affidavit that the Union Government was satisfied that reservation quotas of promotion were harmful from the point of view of efficiency of Railway Service and therefore the Government issued the memorandum dated November 8, 1963 withdrawing the reservation quotas for Scheduled Castes and Scheduled Tribes officers made in the previous Government orders.
On behalf of the petitioner Mr. N. C. Chatterjee submitted the argument that the provision contained in article 16(4) of the Constitution was in itself a fundamental right of Scheduled Castes and, Scheduled Tribes and it was not open to the Government to withdraw the benefits conferred on Scheduled Castes and Scheduled Tribes by the Government orders dated May 7, 1955 and January 4, 1957.
The learned Counsel based his argument on the following observations of Subba Rao, J., as he then was, in the minority judgment of this Court in T. Devadasan vs The Union of India and Another(1): "The expression 'nothing in this article ' is a legislative device to express its intention in a most emphatic way that the power conferred thereunder is not limited in any way by the main provision but falls outside it.
It has not really carved out an exception, but has preserved a power untrammelled by the other provisions of the Article.
" But the majority judgment of this Court in that case took the view that article 16(4) was an exception and it could not be so construed as to render nugatory or illusory the guarantee conferred by article 16(1).
It was pointed out that though under article 16(4) of the Constitution a reservation of a reasonable percentage of posts for members of the Scheduled Castes and Tribes was within the competence of the State, the method evolved by the Government must be such as to strike a reasonable balance between the claims of the backward classes and claims of other employees, in order to effectuate the guarantee contained in article 16(1).
and for (1) ; (2) ; , at page 700.
733 this purpose each year of recruitment would have to be considered by itself.
Accordingly, the Court struck down the "Carry forward rule" on the ground that it contravened articles 14, 16 and 335 of the Constitution.
In any case, even the minority judgment of Subba Rao, J. does not support the contention of Mr. N. C. Chatterjee that article 16(4) confers a right on the backward classes and not merely a power to be exercised at the discretion of the Government for making a provision for reservation of appointments for backward classes which, in its opinion, are not adequately represented in the Services of the State.
Our conclusion therefore is that article 16(4) does not confer any right on the petitioner and there is no constitutional duty imposed on the Government to make a reservation for Scheduled Castes and Scheduled Tribes, either at the initial stage of recruitment or at the stage of promotion.
In other words, article 16(4) is an enabling provision and confers a discretionary power on the State to make a reservation of appointments in favour of backward class of citizens which, in its opinion, is not adequately represented in the Services of the State.
We are accordingly of the opinion that the petitioner is unable to make good his submission on this aspect of the case.
We shall next deal with the contention of the petitioner that there is discrimination between the employees belonging to Scheduled Castes and Scheduled Tribes in the Railway Service and similar employees in the Central Secretariat Service.
It was said that the competitive departmental examination for promotion to the grade of Section Officers was not held by the Railway Board for the years 1955 1963.
On the contrary, such examinations were held for the Central Secretariat Service and 74 employees belonging to Scheduled Castes and Scheduled Tribes secured the benefit of the provisions of reservation.
In our opinion, there is no substance in this contention.
The petitioner being an employee of the Railway Board ' is governed by the rules applicable to the officers in the Service to which he belongs.
The employees of the Central Secretariat Service belong to a different class and it is not possible to accept the argument that there is any discrimination against the petitioner and violation of the guarantee under article 14 of the Constitution.
It was also contended by Mr. N. C. Chatterjee that the im pugned order, Annexure 'C ', arbitrarily discriminates among Class III employees themselves and Class IV employees them selves.
Under the impugned order reservation is kept for appointments for which there is direct recruitment and for promotions made by (1) selection, or (2) on the result of a competitive examination limited to departmental candidates.
There is no reservation for appointments made by promotion on the basis of seniority cum fitness.
In our opinion, there is no justification for this argument as it is well established that there can be a reasonable 734 classification of employees for the purpose of appointment by promotion and the classification as between direct recruits and promotees is reasonable (See the decisions of this Court in Mervyn Coutindo vs Collector of Customs(1), Bombay, and in section G. Jaisinghani vs Union of India(2).
A grievance was also made by Mr. N. C. Chatterjee that there is discrimination as between Classes I and II where there is no reservation and Classes III and TV where reservation has been made for Scheduled Castes and Scheduled Tribes.
The respondent stated in the counter affidavit that in Classes I and II posts a higher degree of efficiency and responsibility was required and therefore reservation was considered harmful so far as Classes I and II were concerned.
In view of the requirement of efficiency in the higher echelons of Service it is obvious that the classification made in the impugned order is reasonable and the argument of Mr. Chatterjee on this point must also be rejected as untenable.
For the reasons expressed we hold that the petitioner has made out no case for the grant of a writ under article 32 of the Constitution.
The application accordingly fails but, in the circumstances of the case, we do not propose to make any order as to costs.
R.K.P.S. Appeal dismissed.
| IN-Abs | By an office memorandum of the Central Government issued on the 4th January 1957, in respect of posts filled by promotion through competitive examinations limited to departmental candidates, reservations at 12 1/2% and 5 1/2% of vacancies were provided for Scheduled Castes and Scheduled Tribes respectively.
By an earlier office memorandum of the 7th May 1955, in regard to promotions on the basis of seniority subject to fitness and those by selection, no reservations were provided but certain concessions were allowed to members of the backward classes.
After the decision of the Supreme Court in the case of the General Manager, Southern Railway vs Rangachari, ; , the matter was reviewed by the Central Government and it was advised that there was no consti tutional compulsion to make reservations for Scheduled Castes and Scheduled Tribes in posts filled by promotion and the question whether the reservation should be continued or withdrawn was entirely a matter of public policy.
Subsequent to the review, by a further office memorandum issued on the 8th November 1963 the Government notified its decision inter alia, that there would be no reservation for Scheduled Castes and Scheduled Tribes in appointments made by promotions to Class I and II services as these required a higher degree of efficiency and responsibility; but that such reservations would continue in certain grades and services in Class III and Class IV.
The petitioner was a class III employee of the Railway Board Secretariat Service and claimed promotion to the post of a Section Officer in Class II on the basis of the provision for reservations made in the Government 's Memorandum of January 4, 1957.
By a writ petition under article 32 of the Constitution he challenged the latest office memorandum of November 8, 1963 and prayed for a restoration with retrospective effect of the office memoranda issued on May 7, 1955 and January 4, 1957.
It was contended on his behalf, inter alia (i) that the impugned order violated the guarantee given to the backward classes under article 16(4) of the Constitution; article 16(4) was not an exception engrafted on article 16 but was in itself a fundamental right granted to the Scheduled Castes and Scheduled Tribes.
(ii) that the order was discriminatory,, because (a) it made a discrimination by making Provision for reservation in certain types of Class III and Class IV services only and not in Class II and I Services, (b) reservation was kept within Class III and Class IV for appointments for which there was direct recruitment and for promotions made by (1) selection, or (2) on the 722 result of a competitive examination limited to departmental candidates, but no reservation was provided for in respect of appointments made by promotion on the basis of seniority cum fitness; and (c) there was discrimination between the employees belonging to Scheduled Castes and Scheduled Tribes in the Railway Service and similar employees in the Central Secretariat Service on the ground that a competitive departmental examination for promotion to the grade of Section Officers was not held by the Railway Board for the years 1955 63 but such an examination was held for the Central Secretariat Service and 74 employees belonging to the Scheduled Castes and Scheduled Tribes secured the benefit of the provisions for reservation.
Held: (i) Article 16(4) does not confer any right on the petitioner and there is no constitutional duty imposed on the Government to make a reservation for Scheduled Castes and Scheduled Tribes, either at the initial stage of recruitment or at the stage of promotion.
Article 16(4) is an enabling provision and confers a discretionary power on the State to make a reservation of appointments in favour of a backward class of citizens which, in its opinion, is not adequately represented in the Services of the State [734 B D].
General Manager, Southern Railway vs Rangachari, ; , referred.
(ii) The impugned order was not discriminatory.
(a) In view of the requirement of efficiency in the higher echelons of service it is obvious that the classification made in the impugned order between Classes I and II where no reservation was made and Classes III and IV where reservation was provided for, was reasonable.
[735 B, C].
(b) It is well established that there can be a reasonable classification of employees for the purpose of appointment by promotion and the classification as between direct recruits and promotees is reasonable [734 H 735 A].
Mervyn Coutindo vs Collector of Customs, Bombay, ; and section G. Jaisinghani vs Union of India, ; referred to.
(c) The petitioner being an employee of the Railway Board was governed by the rules applicable to the officers in the Service to Which he belonged.
The employees of the Central Secretariat Service belonged to a different class and it could not be said that there was any discrimination against the petitioner in violation of article 14.
[734 F G].
|
Appeal No. 258 of 1967.
Appeal front the judgment and order dated October 3, 1966 of the Madras High Court in Writ Petition No. 1159 of 1966.
G. Ramaswamy, R. Gopalakrishnan and K. K. Venugopal, for the appellant.
M.N. Ranghachari, M.K. Ramamurthy, Shyamala Pappu and Vineet Kumar, for respondent No.1 The Judgment of the Court was delivered by Sikri, J.
This appeal by certificate granted by the High Court of Madras is directed against its order dated October 3, 1966, 15 allowing the writ petition filed under article 226 of the Constitution by M/s Raman & Raman (P) Ltd., Kumbakonam, and quashing the order of the Regional Transport Authority, Thanjavur, dated March 28, 1966, whereby the Regional Transport Authority had granted the application for variation of the route Sirkali to, Kumbakonam of M/s Sri Ram Vilas Service Ltd. Kumbakonam, in respect of two stage carriages.
On December 9, 1965, the application of M/s Sri Ram Vilas Service Ltd., Kumbakonam for variation of the route Sirkali to, Kumbakonam was notified under section 57(3) of the .
M/s Raman & Raman (P) Ltd., among others, filed objections and after hearing the objections, by order dated March 28, 1966, the Regional Transport Authority, Thanjavur, granted the application as, according to it, the variation applied for was in the interest of the travelling public.
The distance covered by the variation extended beyond 24 kilometers.
M/s Raman & Raman (P) Ltd. filed the petition under Art 226 of the Constitution to quash the order of the Regional Transport Authority.
The question which arises in this appeal is whether the Regional Transport Authority had jurisdiction to vary the route by extending it beyond 24 kms.
The High Court, following its earlier decision in M/s Swami Motor Transport (P) Ltd. vs M/s Murugan Transports, Tiruchirapalli and Others(1) held that "any variation in excess of 24 kilometers would be ex facie illegal and violation of the intendment of the legislature enacting Act 3 of 1964.
" The answer to the question posed above depends upon the true construction of some sections of the .
as amended by the Madras Act III of 1964.
The relevant statutory provisions are as follows : "48(1).
Subject to the provisions of section 47, a Regional Transport Authority may on an application made to it under section 46, grant a stage carriage pen nit in accordance with the application or with such modification as it deems fit or refuse to grant such a permit; Provided that no such permit shall be granted in respect of any route or area not specified in the, application.
(3)The Regional Transport Authority, if it decides to grant a stage carriage permit, may grant the permit for service of stage carriages of a specified description or for one or more particular stage carriages, and may, subject to any rules that may be made under this Act, (1) Writ Petition No. 3744 of 1965, judgement dated September 7, 1966.
16 attach to the permit any one or more of the, following conditions, namely : (i)that the stage carriage or stage carriages shall be used only on a specified route or routes or in a specified area. . .
(xxi)that the Regional Transport Authority, may after giving notice of not less than one month : (a)vary, extend or curtail the route or routes or the area specified in the permit.
Provided that in the case of (i)variation, the termini shall not be altered and the distance covered by variation shall not exceed 24 kms.
(ii)extension of the distance covered by the extension shall not exceed 24 kms.
from the termini (aa) vary any other condition of the permit." "section 57(8).
An application to vary the conditions of any permit other than a temporary permit by the inclusion of a new route or routes or a new area or by the variation, extension or curtailment of the route or routes or area specified in the permit or in the case of a stage ,carriage permit, by increasing the number of services above the specified maximum, or in the case of a contract carriage permit by increasing the number of vehicles, covered by the permit shall be treated as an application for the grant of a new permit.
" "Rule 208.
(a) Upon application made in writing by the holder of any permit, the Transport Authority may, at any time, in its discretion, vary the permit or any of the conditions thereof subject to the provisions ,of sub rule (b).
(b)If the application is for the variation of the permit by the inclusion of an additional vehicle or vehicles or if the grant of variation would authorize transport facilities materially different from those authorized by the original permit the Transport Authority shall deal with the application as if it were an application for a permit.
Provided that nothing contained in this rule shall prevent the Transport Authority or its Secretary, if authorized in this behalf, from summarily rejecting an application for the variation of a stage carriage permit 17 so as to provide transport facilities on a road which has been or is certified to be unfit for motor vehicular traffic by an officer not below the rank of Divisional Engineer of the Highways Department.
(c)Every application for variation of conditions of permit under sub section (8) of section 57 of the Act in respect of a transport vehicle shall be.
in form PVA.
(d)The provisions of rules 163(b) shall, mutatis mutandis, apply to application for the variation of a permit or the variation of the counter signature, if any, thereof by the inclusion of an additional vehicle sanctioned subject to the production of the registration certificate of the additional vehicle.
" Section 5 of the Madras Act III of 1964, reads as follows " 5(1).
Notwithstanding anything contained in the principal Act, the route or routes or the area specified in every stage carriage permit granted before the commencement of this Act shall be deemed to be a condition attached to such permit under sub section (3) of section 48 of the principal Act, as if this Act were in force on the date of grant of such permit.
(2)Notwithstanding any judgment or order of any Court, all proceedings taken for the grant of, and all orders passed granting any variation, extension or curtailment of the route or routes or the area specified in a stage carriage permit before the commencement of this Act by the State Transport Authority or by a Regional Transport Authority or by an authority or person to whom the powers and functions of the State Transport Authority or a Regional Transport Authority have been delegated, or by an authority exercising the powers of appeal or revision against the orders of the State Transport Authority or a Regional Transport Authority, shall not be deemed to, be invalid merely by reason of the fact that the State Transport Authority or the Regional Transport Authortiy, as the case may be, had no power to grant such variation, extension or curtailment and all such proceedings taken or orders passed shall be deemed always to have been validly taken or passed in accordance with law notwithstanding the distance covered by the variation or extension exceeded twenty four kilometers." The learned counsel for the respondent contends that section 4 8 3 (xxi), as amended, operates whether a condition to that effect has been put in a permit or not.
But we are unable to read section 48 18 in this sense.
Section 48 (3) clearly enables the Regional Transport Authorityto attach to the permit any or one of the twenty one conditions.
It may in a particular case put one or two or more of the condition,; or it may put all the conditions.
It seems to be common ground that if any of the first twenty conditions in section 48(3) is not attached to a permit it will not have effect.
What makes condition (xxi) different is hard to appreciate.
If condi tion (xxi) as amended is not attached to a permit it is difficult to see how the Regional Transport Authority can derive any power from the existence of section 48 (3) (xxi) in the Act.
Section 5 (1) of Act If of 1964 makes the route or routes or the area specified in every stage carriage permit granted before the commencement of the Amending Act a condition attached to such permit tinder subsection (3) of section 48 of the principal Act; it does not say that section 48(3) (xxi) shall be deemed to be a condition attached to every such permit.
The learned counsel for the respondent says that this was theintention of the amendment, but if this was so, the intention has not been carried out.
It was argued before us that the history of legislation supports the interpretation placed by the High Court but, in our view, the Act as it stands amended by Act III of 1964 is quite clear and it is not necessary to go into the history of the legislation.
It seems to us that the High Court erred in holding that section 48 (3) (xxi) of the Act, as amended, by itself gave power to the Regional Transport Authority to vary the route within certain limits.
This power, in our View, Would be exercisable only if a condition to that effect is put in the permit.
In the case of the appellant we saw the permit and what it contained was a condition similar to the condition mentioned in section 48 (3) (xxi) before its amendment by Act If 1 of 1964.
Therefore, for the purpose of this appeal we must treat section 48 (3) (xxi), as amended, as nonexistent.
If section 48(3)(xxi), as amended, is treated as non existent, then there can be no difficulty in coming to the conclusion that no limitation had been placed on the powers of the Regional Transport Authority in respect of the grant of applications for variation of the route.
The order of the Regional Transport Authority cannot, therefore, be challenged as being beyond its jurisdiction.
Another question that was debated before us was whether r. 208 of the Madras Motor Vehicles Rules, extracted above, confer powers on a Transport Authority to vary permits or whether it is merely a procedural rule.
It seems to us that as the Act stands at present, r. 208 does confer power on a transport authority to vary all kinds of permits or conditions attached therein.
This power is exercised on an application made in writing by the holder of any permit.
19 It follows from the above reasoning that the Regional Trans port Authority had the authority under r. 208 to vary the permit and nothing contained in section 48 (3) (xxi) limited its power in respect of the distance covered by the variation in this, case.
We may mention that it was argued before us that section 57(8) is not merely procedural but also implies a power to receive applications and vary the conditions in a permit.
This may be so, but it is not necessary to decide in this case because in Madras r. 208 clearly confers power on the Transport Authority to vary the conditions of the permit.
In the result the appeal is allowed and the judgment of the High Court set aside.
The appellant will have the costs incurred in.
this Court.
| IN-Abs | The appellant 's application for variation of a route extending beyond 24 kilometers was accepted by the Regional Transport Authority.
The respondent, who had unsuccessfully objected before the Authority filed a writ petition in the High Court to quash the order.
The High Court accepted the writ petition holding that any variation in excess of 24 kilometers was ex facie illegal and violation of the intendment of the legislature enacting Madras Act 3 of 1964.
which amended the Motor Vehicles Act.
In appeals this Court, HELD : The Regional Transport Authority had authority under r. 208 to vary the permit and nothing contained in section 48(3)(xxi) of the Motor Vehicles Act limited its power in respect of the distance covered by the variation in this case.
[19A] Section 5(1) of Madras Act 3 of 1964 made the route or routes or the area specified in every stage carriage permit granted before the commencement of the Amending Act a condition attached to such permit tinder sub section
(3) of section 48 of the Principal Act; it did not that section 48(3)(xxi) shall be deemed to be condition attached to every such permit.
[18c] The High Court erred in holding that section 48(3)(xxi) of the Act, is amended.
by itself gave power to the Regional Transport Authority to vary the route within certain limits.
This power Could be exercised only if a condition to that effect was put in the permit.
In the case of the appellant the permit contained a condition similar to the condition mentioned in section 48 (3) (xxi) before its amendment by Act 3 of f 964.
Therefore, for the purpose of this appeal section 48(3)(xxi).
is amendment has to be treated ,is non existent.
[18E G]
|
Appeal No. 572 of 1966.
Appeal by special leave from the Award dated September 2, 1964 of the Industrial Tribunal, Madras in industrial Dispute No. 19 of 1964.
B. R. Dolai, E. C. Agarwala, Champat Rai, Kartar Singh Suri, Ambrish Kumar and P.C. Agrawala, for the appellant.
H. R. Gokhale, M.R. Narayanaswamy Iyer and R. Ganapathy Iyer, for the respondent.
The Judgment of the Court was delivered by Hidayatullah, J.
The Industrial Tribunal, Madras by its award, September 2, 1964, has held that the management of the Gymkhana Club, Madras is not liable to pay bonus to its workmen for the year 1962 as the Club is not 'an industry '.
The Madras Gymkhana Club Employees Union now appeals to this Court by special leave.
The Madras Gymkhana Club is admittedly a members ' club and not a proprietary club, On December 31, 1962 its membership was about 1200 with 800 active members.
The object of the club is to provide a venue for sports and games and facilities for recreation and entertainment.
For the former, it maintains a golf course, tennis courts, rugby and football grounds and has made arrangement for billiards, pingpong and other indoor games.
As part of the latter activities it arranges dance, dinner and other parties and runs a catering department, which provides and refreshments not 745 only generally but also for dinners and parties on special occasions.
The club employs six officers (a Secretary, a Superintendent and four Accountants and Cashiers), twenty clerks and a large number of peons, stewards, butlers, gate attendants, etc.
Its catering department has a separate managerial, clerical and other staff.
Altogether there are 194 employees.
The affairs of the club are managed by a Committee,elected annually.
Two of the members of the Committee work as Hony.
Secretary and Hony.
Treasurer res pectively.
The membership of the club is varied.
There are resident members, non resident members, temporary members, garrison members, independent lady members, etc.
The resident members pay an entrance fee of Rs. 300 and Rs. 20 per month as subscription.
Garrison members and independent lady members do not pay any entrance fee and their subscription is Rs. 10 per month.
Guests, both local and from outside, are admitted 'subject to certain restrictions as to the number of days on which they can, be invited to the club.
The club runs tournaments for the benefit of members and for exhibition to non members.
The income and expenditure of the club are of the order of four and a quarter lakh rupees, its movable and immovable properties are worth several lakh rupees and its wage bill is between one and two lakh rupees.
The question in this appeal is whether the respondent club can be said to be an industry for the application of the .
The Tribunal, after considering many decisions rendered by this Court and also by the High Courts in India, came to the conclusion that the club was not an industry and the claim for bonus on behalf of its employees was therefore unsustainable.
The appellant union contends that the decision of the Tribunal is not correct and that the club must be treated as an industry for the application of the Act.
As we are concerned primarily with the question whether the club comes within the definition of 'industry ' as given in the , we may begin by reading that definition and other provisions which have a bearing upon the question.
The was passed to make provision for the investigation and settlement of industrial disputes and for certain other purposes appearing in the Act.
The emphasis in the Act is primarily upon the investigation and settlement of industrial disputes.
The expression "industrial despute" is defined by section 2(k) as follows: "industrial dispute" means any dispute or difference between employers and employers or, between employers and workmen, or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person".
746 A "Industry" is defined in cl.
(j) as follows: "industry" means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen".
The word "employer" is defined by cl.
(g) of the section as: "employer means (i) in relation to an industry carried on by or under the authority of any department of the Central Government or a State Government, the authority prescribed in this behalf, or where no authority is prescribed, the head of the department , (ii) in relation to any industry carried on by or on behalf of a local authority, the chief executive officer 'of that authority;" "Workman" is defined by cl.
(s) of the section and " means any person (including an apprentice) employed in any industry to do any skilled or unskilled manual supervisory, technical or clerical, work for hire Cr reward.
whether the terms of employment be expressed or implied, and for the purpose of any proceeding under this Act in relation to an industrial dispute, includes any person who has been dismissed, discharged Or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person (i) who is subject to the , or the , or the Navy (Discipline) Act, 1934: or (ii) who is employed in the police service or as an officer or other employee of a prison; or (iii) who is employed mainly in a managerial or administrative capacity; or (iv) who, being employed in a supervisor capacity, draws wages exceeding five hundred rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.
" These definitions have been before this Court on many occa sions and we have reached a point when one can say that at least some attributes of "industry" and "industrial disputes" may be taken as well established.
These cases concerned such diverse institutions and establishments as municipalities, hospitals, solicitor 's 747 firm and university.
Any enquiry to determine the application of the definitions to new establishments cannot overlook the settled view.
We find it convenient to say a few words about the earlier decisions of this Court, before embarking upon an analysis of the definitions in relation to a members ' club.
The earliest case in this Court involved a dispute between a Municipality and its employees (D.N. Banerjee vs P.R. Mukherjee & Ors.)(1).
The Municipality wag held to be an industry and the dispute was held to be an industrial dispute.
This Court observes that the non technical or ordinary meaning of 'industry ' is "an undertaking where capital and labour co operate with each other for the purpose of producing wealth in the shape of goods, machines, tools, etc." and for making profits, and an industry in this sense includes agriculture, horticulture etc.
The Court points out that this is too wide and that every aspect of employer employee connection does not result in an industry.
Holding, however, that municipal activity cannot be truly regarded as business or trade, this Court considers whether it can be an 'undertaking '.
The suggestion that the word 'undertaking ' takes its colour from the other four words in the first part of the definition is not accepted.
It is said that this interpretation renders the word superfluous and the latter part of the definition unnecessary.
Therefore, this Court includes non profit undertakings in the concept of industry even if there is no private enterprise.
Referring to the inclusion of public utility services in the scheme of the Act it is held that a dispute in a public utility service is an industrial dispute, and the fact that the enterprise is financed by taxation and not by capital is considered irrelevant.
In formulating these dicta the Court is obviously influenced by the analysis of an industrial dispute by Isaacs and Rich.
in Federated Municipal & Shire Council Employees of Australia vs Melbourne Corporation(2).
"Industrial disputes occur when, in relation to operations in which capital and labour ate contributed in co operation for the satisfaction of human wants and desires, those engaged in cooperation dispute as to the basis to be observed, by the parties engaged, respecting either a share of the produce or any other terms and conditions of their cooperation.
The question of profit making may be important from an income tax point of view, as in many municipal cases in England; but.
from an industrial dispute point of view, it cannot matter whether the expenditure is met by fares from passengers or from rates.
" In the second case (Baroda Borough Municipality vs Work men(3) a claim for bonus by municipal employees was rejected on (1) ; (2) ; (3) 748 the ground that the bonus formula was inapplicable.
The Court, however, went on to observe: "It is now finally settled by the decision of this Court in ; , that a municipal undertaking of the nature we have under consideration is an "industry" within the meaning of the word in section 2(j) of the and that the expression "industrial dispute" in that Act includes disputes between the municipality and their employees in branches of work that can be regarded as analogous 'to the carrying on of a trade or business." (emphasis added).
These two cases lay down that for an activity to be an in dustry it is not necessary that it must be carried on by private enterprise or must be commercial or result in profit.
It is sufficient if the activity is analogous to the carrying on of a trade or business and involves cooperation between employers and employees.
This result is reached by extending the meaning of 'undertaking ' to cover adventures, not strictly trade or business but objects very similar.
The definition of 'employer ' in our Act clearly shows that a local authority may become an employer if it carries on an industry.
This means that a municipality, 'if it indulges in an activity which may be properly described as industry, may be involved in an industrial dispute.
Local bodies are primarily subordinate branches of governmental activity.
They function for public purposes but some of their activities may come within the calling of employers although the municipalities may not be trading corporations.
Local authorities take away part of the affairs of Government in local areas and they exercise the powers of regulation and subordinate taxation.
They are ' political sub divisions and agencies for the exercise of governmental functions.
But if they indulge in municipal trading or business or have to assume the calling of employers they are employers whether they carry on or not business commercially for purposes of gain or profit.
The activity of the municipality in the first two cases was not attempted to be brought within the expressions business and trade.
The term 'undertaking ' was held to cover it.
In the third case (Corporation of City of Nagpur vs Employees (1) the need to consider 'trade and, business ' arose directly.
The question then was whether and to what extent the Corporation of Nagpur was an industry under the C.P. & Berar Industrial Disputes Settlement Act, 1947 That Act included a definition of industry which was different.
It included "(a) any business, trade manufacturing or mining undertaking or calling of employers (1) ; 749 (b) any calling, service, employment, handicraft or indus trial occupation or avocation of employees and (c) any branch of an industry or a group of industries." In this definition the qualifying words 'manufacturing or mining ' limited the word 'undertaking ' and it could not be given the wide meaning given earlier.
This Court did not attempt to bring municipal activity within the word 'undertaking ' but brought it within the expression 'trade and business '.
The Court observed that there was nothing in the earlier cases to show that a municipal activity was held excluded, from those words.
As a matter of fact it did (see p. 308).
Of course, there was nothing to show that this Court on the earlier two occasions thought it even remotely possible.
In the Nagpur Corporation 's(1) case the Court proceeded to consider whether a corporation could be legitimately said to be carrying on business or trade or calling.
It found the definition to be "very clear" and "not susceptible of any ambiguity", and observed that all the words were very wide and that even if the meaning could be cut down by the aims and objects of the C.P. & Berar Act as disclosed in the preamble, the main object, namely, social justice demanded a wide meaning.
The Court distinguished between (a) regal and (b) municipal functions of the corporation and found the latter analogous to business or trade because they were not regal and the activity was organised and service was rendered.
To distinguish between a regal function and a, municipal function the test applied was: Can the service be performed by an individual or firm for remuneration? This test was not applied in one later case but is not enlightening because there is hardly any activity which private enterprise cannot carry on.
As Mr. Gomme in his Principles of Local Government (1897) observes: "Any municipal service can be made to pay dividends on private capital if only the means of levying a revenue are granted to private owners.
" Even war can be financed and waged by commercial houses.
They manufacture ammunition and war equipment and can carry on war with mercenaries.
Even the infra structures of Adam Smith can be provided by private enterprise.
The East India Company did both.
It is not a little surprising that except in one case in which there is a passing reference to it, the Corporation of City of Nagpur case(1) has not been referred to in the later cases of this Court.
The later cases of this Court view the matter a little differently and formulate further tests.
Of the tests, the first is that the activity must be organised as business or trade is ordinarily organised.
This is to be taken with the earlier test that 'undertaking ' must be analogous to business, trade or calling.
It will be seen that these do not widen the meaning of 'undertaking ' but tend to narrow it.
The second is that the activity need not necessarily be preceded by procurement of capital in the business sense nor must (1) ; 750 profit be a motive.
So long as relationship of employer and workmen is established with a view to production of material goods or material services, the activity must be regarded as an undertaking analogous to trade or business.
We shall now review the cases in which these tests are established '.
In the State of Bombay vs Hospital Mazdoor Sabha(1) it is held that a hospital run by government is included in the definition of 'industry '.
It is recognised that the first part of the definition contains the statutory meaning and the second part means "an enlargement of it by including other items of industry".
As a matter of fact these are not other items of industry but aspects of occupation of employees which are intended to be an integral part of an industry for purposes of industrial disputes.
It is, however, recognised in the case that a line must be drawn to exclude some callings, services and undertakings.
It is hold that domestic, personal or casual services are not included and examples are given of such services.
The meaning of industry a,,, ` an economic activity ' involving investment of capital and systematically carried on for profit for the production or sale of goods by the employment of labour is again discarded because profit motive and investment of capital are considered unessential.
Another test reaffirmed is to enquire 'can such activity be carried on by private individual or group of individuals? Answering that a hospital can be run by a private party for profit, it is held that a hospital is an industry even if it is run by Government without profit.
Who conducts the activity or whether it is for profit, are considered irrelevant questions.
It is, however, again emphasised that an under taking to be an industry must be analogous to trade or business.
It is, therefore, laid down that an activity systematically or habitually undertaken for the production or distribution of goods or for rendering material services to the community at large or a part of such community with the help of employees is an undertaking.
In this way, the connection between trade and business on the one hand and undertaking on the other is established which seems to indicate that the expression 'undertaking ' must take its colour from the other expressions.
An industry is thus said to involve cooperation between employer and employees for the object of satisfying material human needs but not for oneself nor for pleasure nor necessarily for profit.
These dicta are based on the observations of Isaacs, J. quoted earlier and in a later case (The Federated State School Teachers ' Association of Australia vs The State of Victoria and Others(2).
In the next case Ahmedabad Textile Industry Research As sociation vs State of Bombay(3) the question was whether an Association for research maintained by the textile industry and employing technical and other staff was industry.
The case repeated the tests stated in the Hospital(1) case and applied them.
It was held (1) ; (2) ; (3) ; 751 that the Association was providing material services to a part of the community, was carried on with the help of employees, was organised in a manner in which trade or business is organised and there was co operation between employers and employees.
For the first time a fresh test was added that as the employees had no rights in the results of their labour or in the nature of business and trade the partnership is only association between the employer and employee.
However, in the next case of National Union of Commercial Employees vs M. R. Meher(1) where the employees of a firm of solicitors demanded bonus and the case satisfied the tests so far enumerated, a new test was added that the association of capital and labour must be direct and essential.
The service of a solicitor was regarded as individual depending upon his personal qualifications and ability, to which the employees did not contribute directly or essentially.
Their contribution, it was held, bad no direct or essential nexus with the advice or services.
In this way learned profes sions were excluded.
In the next two cases the difficulty of laying down tests from case to case was felt.
In Harinagar Cane Farm vs The Stale of Bihar(2) a cane farm was purchased by a sugar factory and worked As a department for supply of sugar cane.
The agricultural operations were held to be an industry on the facts but it was held that agriculture under all circumstances could not be called an industry.
This Court reversed its method of looking for the tests from other cases and referred to them only after it had reached its conclusion observing that the Court must refrain from laying down unduly broad or categorical propositions.
In the next case (University of Delhi and Anr.
vs Ramnath(3) the question was whether bus drivers employed by the University were workmen.
The concept of service was narrowed and it was held that the educational institutions were not an industry.
Their aim was education and the teachers ' profession was not to be assimilated to industrial workers.
This Court again stated that it must not be understood as laying down a general proposition.
The changes made in the meaning of the expressions used in the definition of industry in the Act, disclose a procrustean approach to the problem.
The words must mean something definite, but some of the tests were found unsatisfactory to cover new cases as the creation of new tests clearly shows.
For example, the emphasis resulting from the extension of the definition in its latter part to include services of employees, received little recognition in the later cases.
Too much insistence upon partnership between employers and employees is evident in the Solicitor 's(1) case and (1) [1962] Supp. 3 S.C.R. 157.
(2) ; (3) ; 752 too little in the Association(1) case.
And yet it is impossible to think that this test is universal.
What partnership can exist between the Company and/or Board of Directors on the one hand and the menial staff employed to sweep floors on the other? What direct and essential nexus is there between such employees and production? This proves that what must be established is the existence of an industry viewed from the angle of what the employer is doing and if the definition from the angle of the employer 's occupation is satisfied, all who render service and fall within the definition of workman come within the fold of industry irrespective of what they do.
There is then no need to establish a partnership as such in the production of material goods or material services.
Each person doing his appointed task in an Organisation will be a part of the industry whether he, attends to a loom or merely polishes door handles.
The fact of employment as envisaged in the second part is enough provided there is an industry and the employee is a workman.
The learned professions are not industry not because there is absence of such partnership but because viewed from the angle of the employer 's occupation, they do.
not satisfy the test.
A solicitor earns his livelihood by his own efforts.
If his work requires him to take help from menials and other employees who carry out certain assigned duties, the character of the solicitor 's work is not altered.
What matters is not the nexus between the employee and the product of the employer 's efforts but the nature of the employer 's occupation.
If his work cannot be described as an industry his workmen are not industrial workmen and the disputes arising between them are not industrial disputes.
The cardinal test is thus to find out whether there is an industry according to the denotation of the word in the first part.
The second part will then show what will be included from the angle of employees.
We shall now apply this approach to the definition in the light of the earlier decisions of this Court in so, far as they are consistent and then determine whether the club in this case can come within the meaning of 'industry ' as determined by us.
The definitions have been set out by us earlier in this judgment.
The definitions are inter related and are obviously knit together.
Stated broadly the definition of 'industrial dispute ' contains two limitations.
Firstly, the adjective Industrial ' relates the dispute to an industry as defined in the Act and, secondly, the definition expressly states that not disputes and differences of an sorts but only those which bear upon the relationship of employers and workmen and the terms of employment and conditions of labour are contemplated.
As such dispute may arise between different parties, the Act equally contemplates disputes between employers and employers or between employers and workmen or between workmen and workmen.
The definition of the expression 'industrial dispute ' further shows that certain disputes can never be considered under the Act.
For example, disputes between Government (1) ; 753 and an industrial establishment or between workmen and non workmen are not the kind of disputes of which the Act take notice.
The word 'employer ' is not specifically defined but merely indicates who is to be considered an employer for purposes of an industry carried on by or under authority of a department of Government and by or on behalf of a local authority.
This definition gives little assistance because it is intended to operate in relation to an activity properly describable as an industry and this takes one back to the definition of 'industry '.
The definition of 'workman ' is a little better.
Although it again refers one back to an industry, it gives some guidance.
Workman means any person employed to do skilled or unskilled manual, supervisory, technical or clerical work for hire or reward.
The expression, however, does not include persons employed in some named services of Government.
Even in an industry those employed mainly: in a managerial or administrative capacity and supervisors drawing more than live hundred rupees as wages or exercising functions mainly of a managerial nature, are also to be left out of the definition.
In this way the general nature of the dispute, the parties to the dispute and the contents of the dispute are, therefore, reasonably clear.
A dispute must however be an industrial dispute or, as the several definitions already noticed say, must arise in relation to an industry.
This is where the difficulty begins because the statutory definition of 'industry ' has led to some divergence of views in the Labour Tribunals, the High Courts and even in this Court.
The definition of 'industry ' is in two parts.
In its first part it means any business, trade, undertaking, manufacture or calling of employers.
This part of the definition: determines an industry by reference to occupation of employers in respect of certain activities.
These activities are specified by five words and they determine what an industry is and what the cognate expression 'indus trial ' is intended to convey.
This is the denotation of the term or what the word denotes.
We shall presently discuss what the words "business, trade, undertaking manufacture or calling".
comprehend.
The second part views the matter from the angle of employees and is designed to include something more in what the term primarily denotes.
By the second part of the definition any calling, service, employment, handicraft or industrial occupation or avocation of workmen is included in the concept of industry.
This part gives the extended connotation.
If the activity can be described as an industry with reference to the occupation of the employers, the ambit of the industry, under the force of the second part, takes in the different kinds of activity of the employees mentioned in the second part.
But the second part standing alone cannot define 'industry '.
An industry is not to be found in every case of employment or service.
An individual who employs a cook gets service from his employee whose avocation is to serve as a cook but as the activity of the individual is neither business, nor trade, nor an 754 undertaking, nor manufacture, nor calling of an employer, there is no industry.
By the inclusive part of the definition tile labour force employed in an industry is made an integral part of the industry for purposes of industrial disputes although industry is ordinarily something which employers create or undertake.
The definitions in the are borrowed from other statutes.
The definition of 'industrial dispute ' is taken from an Act of 1906 (6 Edw.
VII c. 47) and slightly modified.
There the definition ran " any dispute between employers and workmen, which is connected with the employment, or non employment, or the terms of the employment or with the conditions of labour, of any person".
Our definition only adds to the list of disputes one between employers and employers.
Similarly, the latter part of the definition of 'industry ' which has caused us some trouble is taken from section 4 of the Commonwealth Conciliation and Arbitration Act which inclu des in the concept of industry " any calling, service, employment, handicraft or industrial occupation or avocation of employers on land and water.
" Decisions rendered on these definitions (and some others very similar) have naurtally influenced opinion making in this Court.
The Australian cases in particular have been subrosa all the time.
The difficulty in using Australian cases with a text book approach is perhaps not quite noticed.
The term 'industrial dispute ' which the Australian High Court was defining was from section 51(XXXV) of the Constitution Act.
There was no definition of the expression and it was recognised that the common understanding of that expression was not what was meant but something different.
In a great body of cases the problem presented its many facets and the approach was pragmatic.
Higgins, J. in, 26 Com.
L. R. cautioned against giving a crystallised meaning to the expression.
He observed: "It is not necessary or, as I think, desirable that we should, in answering the specific question asked of us, commit ourselves to a final, exhaustive definition of a popular phrase as that in question." (p. 574).
In the Harinagar Cane Farm(1) and the University(2) cases this Court also made a similar observation.
In the former it was observed: "We have referred to these decisions only to emphasise the point that this Court has consistently refrained from laying down unduly broad or categorical propositions. ".
(1) ; (2) 2 S.C.R, 703.
755 The attempt to avoid generalisations (however commendable) has one disadvantage.
In Australia the Courts were dealing with, the problem without a definition and thought that they should move cautiously to avoid hardening any particular view too far.
We have all the terms except 'employer ' defined by the statute.
Our task is to give meanings to the words which are intended to lay down the full connotation.
Taking each operation by itself and determining on the basis of facts whether it is an industry without attempting to pin point whether it is a business, or a trade, or an undertaking, or manufacture.
or calling of employers, is to ignore somewhat the guidance afforded by the statute through its own dictionary.
Therefore, while we accept the views expressed uniformly we think any view which seems contradicted by later decisions because it was unrelated to the words of the definitions should not be allowed to harden.
We also take the opportunity of relying a little more on the guidance from the Act.
The principles so far settled come to this.
Every human activity in which enters the relationship of employers and employees, is not necessarily creative of an industry.
Personal services rendered by domestic and other servants, administrative services of public officials, service in aid of occupations of professional men, such as doctors and lawyers, etc.
employment of teachers and so on may result in relationships in which there are employers on the one side and employees on the other but they must be excluded because they do not come within the denotation of the term 'in dustry '.
Primarily, therefore, industrial disputes occur when the operation undertaken rests upon cooperation between employers and employees with a view to production and distribution of material goods, in other words, wealth, but they may arise also in cases where the cooperation is to produce material services.
The normal cases are those in which the production or distribution is of material goods or wealth and they will fall within the expressions trade, business and manufacture.
The word 'trade ' in this context bears the meaning which may be taken from Halsbury 's Laws of England, Third Edn.
38 p. 8 (a) exchange of goods for goods or goods for money; (b) any business carried on with a view to profit, whether manual, or mercantile, as distinguished from the liberal arts or learned professions and from agriculture; and business means an enterprise which is an occupation as distinguished from pleasure.
Manufacture is a kind of productive industry in which the making of articles or material (often on a large scale) is by physical labour or mechanical power.
Calling denotes the following of a profession or trade.
These words have a clear signification and are intended to lay down definite tests.
Therefore the principal question (and the only 756 legitimate method) is to see where under the several categories mentioned, a particular venture can be brought.
Of these categories 'undertaking ' is the most elastic.
According to Webster 's dictionary, 'undertaking ' means 'anything undertaken or 'any business, work or project which one engages in or attempts, as an enterprise '.
It is this category which has figured in the cases of this Court.
It may be stated that this Court began by stating in Banerji 's case(2) that the word 'undertaking ' is not to be interpreted by association with the words that precede or follow it, but after the Solicitor 's(2) and the University(3) cases, it is obvious that liberal arts and learned professions, educational undertakings and professional services dependent on the personal qualifications and ability of the donor of services are not included.
Although business may result in service the service is not regarded as material.
That is how the service of a Solicitor firm is distinguished from the service of a building corporation.
Otherwise what is the difference between the services of a typist in a factory and those of another typist in a Solicitor 's office or the service of a bus driver in a municipality and of a bus driver in a University? The only visible difference is that in the one case the operation is a part of a commercial establishment producing material goods or material services and in the other there is a non commercial undertaking.
The distinction of an essential or direct connection does not appear to be so strong as the distinction that in the one case the result is the production of material goods or services and in the other not.
It is, therefore, clear that before the work engaged it can be described as an industry, it must bear the definite character of 'trade ' or 'business ' or 'manufacture ' or 'calling ' or must be capable of being described as an undertaking resulting in material goods or material services.
Now in the application of the Act, the undertaking may be an enterprise of a private individual or individuals.
On the other hand, it may not.
It is not necessary that the employer must always be a private individual who carries on the operation with his own capital and with a view to his own profit.
The Act in terms contemplates cases of industrial disputes where the Government or a local authority or a public utility service may be the employer.
The expansion of Governmental or municipal activity in fields of productive industry is a feature of all developing welfare states.
This is considered necessary because it leads to welfare without exploitation of workmen and makes the production of material goods and services cheaper by eliminating profits.
Government and local authorities act as individuals do and the policy of the Act is to put Government and local authorities on a par with private individuals.
But Government (1) ; (2) [1962] Supp. 3 S.C.R. 157.
(3) ; 757 cannot be regarded as an employer within the Act if the operations are governmental or administrative in character.
The local authorities also cannot be regarded as industry unless they produce material goods or render material services and do not share by delegation in governmental functions or functions incidental thereto.
There is no essential difference between educational institutions run by municipalities and those run by universities.
And yet a distinction is sought to be made on the dichotomy or regal and municipal functions.
Therefore, the word 'undertaking ' must be defined as "any business or any work or project which one engages in orattempts as an enterprise analogous to business or trade.
" This is the test laid down in Banerji 's case(1) and followed in the Baroda Borough Municipality case(2).
Its extension in the Corporation case(3) was unfortunate and contradicted the earlier cases.
Next where the activity is to be considered as an industry, it must not be casual but must be distinctly systematic.
The work for which labour of workmen is required, must be productive and the workmen must be following an employment, calling or industrial avocation.
The salient fact in this context is that the workmen are not their own masters but render service at the behest of masters.
This follows from the second part of the definition of industry.
Then again when private individuals are the employers, the industry is run with capital and with a view to profits.
These two circumstances may not exist when Government or a local au thority enter upon business, trade.
manufacture or an undertaking analogous to trade.
The labour force includes not only manual or technical work men but also those whose services are necessary or considered ancillary to the productive labour of others but does not include any one who, in an industrial sense, will be regarded, by reason of his employment or duties.
as ranged on the side of the employers.
Such are persons working in a managerial capacity or highly paid supervisors.
Further the words are 'industrial dispute ' and not 'trade dispute '.
Trade is only one aspect of industrial activity; business and manufacture are two others.
The word also is not industry in the abstract which means diligence or assiduity in any task or effort but a branch of productive labour. 'This requires cooperation in some form between employers and workmen and the result is directly the product of this association but not necessarily commercial.
The expressions 'terms of employment ' and 'Conditions of labour ' indicate the kind of conflict between those engaged in in dustry on opposite but cooperating sides.
These words take in dispute as to the share in which the receipts in a commercial venture (1) ; (2) (3) ; L/P(N)78CI 9(a) 758 shall be divided and generally cover hours of work and rest, recognition of representative bodies of workmen, payment for piece work, wage ordinary and overtime, benefits, holidays, etc.
The definition takes in disputes between employees and employees such as demarcation disputes and disputes between employers and employers such as wage warfare in an area where labour is scarce and disputes of a like character.
The whole paraphernalia of settlement, conciliation, arbitration (voluntary as well as compulsory) agreements, awards etc.
shows that human labour has value beyond what the wages represent and therefore is entitled to corresponding 'rights in an industry and employers must give them their due.
Industry is the nexus between employers and employees and it is this nexus which brings two distinct bodies together to produce a result.
We do not think that the test that the workmen must not share in the product of their labours adopted in one case can be regarded as universal.
There may be occasions when the workmen may receive a share of the produce either as part of their wages or as bonus or as a benefit.
This ends discussion of what is an industry.
We are now in a position to consider whether the Madras Gymkhana Club fulfills the tests laid down by this Court and accepted here by us.
in sup.
port of the claim on behalf of the Employees Union, our attention was drawn to two decisions of the Calcutta High Court relating to the Bengal Club Ltd.(1) and Royal Calcutta Golf Club(2).
Both decisions are by a learned single Judge.
They were cases of incorporated companies running clubs for profit and as business.
There are, however, observations which are clearly obiter, that even a non proprietary members ' club is an industry.
Founding itself on those observations the Union contends that the club in the present case must also be treated as an industry.
In fine the claim is based on the following considerations (a) that the club is organised as an industry is organised on a vast scale with multifarious activities, (b) that facilities of accommodation, catering, sale of alcoholic and non alcoholic beverages, games etc.
are provided, (c) that the club runs parties at which guests are freely entertained and (d) that the club has established reciprocal arrangements with other clubs for its members.
In our opinion none of these considerations is sufficient to establish that the club is an industry within the We, cannot go by the size of the club or the largeness of its membership or the number or extent of there activities.
We have to consider the essential character of the Club activity in relation to the definition of industry.
As we said before, the definition is in two parts.
The first part which we called the denotation or the meaning of the word shows what an industry really is and the (1) A.I.R. 1956.
(2) A.I.R. Cal.
759 second, part contains the extended connotation to indicate who will be considered an integral part of the industry on the side of employees.
Beginning with the second part, it may at once be conceded that the activity of the club is conducted with the aid of employees who follow callings or avocations.
Therefore if the activity of the employers is within the realm of industry, the answer must be in favour of the Union.
But the first part of the definition it may also be said that the club does not follow a trade or business.
Its activity cannot be described as manufacture and the running of clubs is not the calling of the members or its managing committee.
The only question is, is it an undertaking? Here the appearances are somewhat against the club.
It is not of any consequence that there is no profit motive because that is considered immaterial.
It is also true that the affairs of the club are, organised in the way business is organised.
and that there is production of material and other services and in a limited way production of material goods mainly in the catering department.
But these circumstances are not truly representative in the case of the club because the services are to the members themselves for their own pleasure and amusement and the material goods are for their consumption.
In other words, the club exists for its members.
No doubt occasionally strangers also take benefit from its services but they can only do so on invitation of members.
No one outside the list of members has the advantage of these services as of right.
Nor can these privileges be bought.
In fact they are available only to members or through members.
If today the club were to stop entry of outsiders, no essential change in its character vis a vis the members would take place.
In other words, the circumstance that guests are admitted is irrelevant to determine if the club is an industry.
Even with the admission of guests being open the club remains the same.
that is to say, a member 's self serving institution.
No doubt the material needs or wants of a section of the community is catered for but that is not enough.
This must be done as part of trade or business or as an undertaking anlogous to trade or business.
This element is completely missing in a members ' club.
It is contended that, although there is no incorporation as such, the club has attained an existence distinct from its members.
It may be said that members come and members go but the club goes on for ever.
That is true in a sense.
We are not concerned with members who go out.
The club belongs to members for the time being on its list of members and that is what matters.
Those members can deal with the club as they like.
Therefore, the club is identified with its members at a given point of time.
Thus it cannot be said that the club has an existence apart from the members.
760 It is said that the case of the club is indistinguishable from the Hospital(1) case.
That case is one which may be said to be on the verge.
There are reasons to think that it took the extreme view of an industry.
We need not pause to consider the Hospital(1) case because the case of a members ' club is beyond even the confines established by that case.
In our judgment the Madras Gymkhana Club being a members ' club is not an industry and the Tribunal was right in so declaring.
The appeal fails and is dismissed but we make no order about costs.
G. C. Appeal dismissed.
| IN-Abs | The respondent is a non proprietary members ' club.
It is organised on a vast scale with multifarious activities providing a venue for sports and games, and facilities for recreation, entertainment and for catering of food and refreshment.
Guests are admitted but on the invitation of members.
It has 194 employees with a wage bill between one lakh and two lakh rupees.
For the year 1962, the employees claimed bonus but the Industrial Tribunal held that the club was not an 'industry ' within the meaning of the , and rejected the claim of the employees% In appeal to this Court.
Held: (1) The definitions of industrial dispute 'employer ' and 'workman ' show that an industrial dispute can only arise in relation to an 'industry '.
The definition of 'industry ' is in two parts, the first, from the point of view of employers and the second, from the angle of employees.
In its first part it means any 'trade, business, undertaking, manufacture or calling of employers '.
This part determines an industry by reference to occupation of employers in respect of those activities specified by the five words and they determine what an 'industry ' is, and what the cognate expression 'industrial ' is intended to convey.
But the second part standing alone cannot define 'industry '.
If the existence of an industry viewed from the angle of what the employer is doing is established, all who render service and fall within the definition of 'workman ' come within the fold of industry ' irrespective of what they do.
Thus, the cardinal test is to find out whether there is an industry according to the denotation of the word in the first part.
[753 A 754 H].
Taking the words in the definition of 'industry ' the word 'trade ' means exchange of goods for goods or goods for money, or, any business carried on with a view to profit, whether manual or mercantile as distinguished from the liberal arts or learned professions and from agriculture.
The word 'business ' means an enterprise which is an occupation as distinguished from pleasure.
and 'manufacture ' is a kind of productive industry in which the making of articles or material, often on a large scale, is by physical labour or mechanical power.
The word 'calling ' denotes the following of a profession or trade.
[756 F H].
The word 'undertaking ' has figured in the cases of this Court.
In D. N. Banerjee vs P. R. Mukherjee, [1953] S.C.R. 302 it was observed that the word is not to be interpreted by association with the words that precede or follow it in the definition of 'industry '.
But the settled view of this Court is: that primarily industrial disputes occur, when the operation undertaken rests upon cooperation between employers and employees with a view to production and dis tribution of material goods, in other words, wealth, but they may 743 arise also in cages where the cooperation is to produce material services.
For an 'undertaking ' to be an industry, it is not necessary that it must be carried on with capital by private enterprise or that it must be commercial or result in profit but there must be systematic activity and it must be analogous to the carrying on of a trade or business involving co operation between employers and em ployees.
But every human activity in which the relationship of employers and employees enters, is not necessarily creative of an industry.
Personal services rendered by domestic and other servants, administrative services of public officials .
services in aid of occupations of professional men such as doctors and lawyers etc.
, employ ment of teachers and so on, may result in relationships in which there are employers on the one side and employees on the other, but they have been excluded because they do not come within the connotation of the term 'industry ' as the service rendered is not a material service.
Therefore, the word 'undertaking ', though elastic, must take its colour from other expressions used in the definition of 'industry ', and must be defined as any business or any work or project resulting in material goods or material services and which one engages in or attempts as an enterprise analogous to business or trade.
L740 D; 756 D F; 758 D E; 757 B C; 758 B C].
In the present case, the activity of the club is conducted with the aid of employees who follow callings or avocations.
But taking the first part of the definition and the essential character of the club, the activity of the club cannot be described as a 'trade ' business or manufacture ' and the running of clubs is not the 'calling ' of the respon dent club or its managing committee.
Also, the club has no existence apart from its members.
It exists for its members though occasionally strangers also take benefit from its services.
Even with the admission of guests, the club remains a members ' self serving institution.
Though the material needs or wants of a section of the community is catered for it is not done as part of trade or business or as an undertaking analogous to trade or business.
Therefore, the Tribunal was right in holding that the respondent club was not an industry.
[760 A H].
Baroda Borough Municipality vs Workmen , referred to Observations contra in Bengal Club Ltd. vs Shantiranjan Som maddar & Anr.
A.I.R. 1956 Cal.
545 and Royal Calcutta Golf Mazdoor Union vs State of West Bengal, A.I.R. 1956 Cal.
550, disapproved.
(2) The case of State of Bombay vs Hospital Mazdoor Sabha, ; so far as it relied on the test, namely; could the activity be carried on by a private individual or group of individuals for the purpose of holding that running a Government hospital was an industry must be held.
to have taken an extreme view of what is an industry.
This test is not enlightening because, there is hardly any activity which private enterprise cannot carry on.
[751 D E; 761 A; 750 E F].
(3) In Corporation of City of Nagpur vs Employees. ; this Court relied upon the same test with an unfortunate result.
The Court held that the municipal functions of the Corporation, including running a primary school, were covered by the words 'trade and business ' in C.P. & Berar Industrial Disputer.
Settlement Act, 1947, since those functions were not regal, the activity was organised, service was rendered, and the functions could not be performed by an individual or firm for remuneration, while, in University of Delhi vs Ramnath [1964] 2 S.C.R. 703, this Court held that educational institutions were not 'industry '.
[750 B G; 758 A B].
744 (4) The fresh test laid down in Ahmedabad Textile Industry Research Association vs State of Bombay, ; that, to be an 'industry ', the employees therein must not share in the product of their labour cannot be regarded as universal, because, there are occasions when the workmen receive a share of the produce as part of their wages or as bonus or as a benefit.
[759 C].
(5) The additional test laid down in National Union of Commercial Employees vs Meher (The Solicitor case) [1962] Supp. 3 S.C.R. 157, that, to be an 'industry ' the association of capital and labour must be direct and essential cannot also be regarded as universal because, what partnership can exist between the Board of Directors of a Company on the one hand and the menial staff employed to sweep floors on the other? [753 A].
(6) In Harinagar Cane Farm vs State of Bihar, ; and in the University case this Court observed that it must refrain from laying down unduly broad or categorical propositions.
But the attempt to avoid generalizations his one disadvantage, because, taking each operation by itself and determining on the basis of facts whether it is an industry without attempting to pin point whether it is a 'business, or a trade, or an undertaking or manufacture, or calling of employers ' is to ignore the guidance afforded by the sta tute through its dictionary and to rely upon decisions dealing with the problem without a definition.
[755 H; 756 A C].
|
s Nos. 84, 174, 188, 241 and 242 of 1966.
Petitions under article 32 of the Constitution of India for the enforcement of fundamental rights.
M.R. M. Abdul Kari, K. Rajendra Chaudhuri, and K. R. Chaudhuri, for the petitioners (in W. P. No. 84 of 1966).
837 B. K. Bhattacharya and M. L Khowaja, for the petitioners (in W. P. No. 174 of 1966).
Daniel A. Latifi and M. I. Khowaja,.
for the petitioners (in W. P. No. 188 of 1966).
K. L. Gauba and section Saukat Hussain, for the petitioners (in W.P. No. 241 of 1966).
section Shaukat Hussain, for the petitioners (in W.P. No. 242 of 1966).
C. K. Daphtary, Attorney General, N. section Bindra, R. H. Dhe bar, section P. Nayar for R. N. Sachthey, foe the respondent (in W.P. Nos. 84, 174 and 242 of 1966) and the respondents Nos. 1 and 3 (in W.P. No. 188 of 1966).
C. K. Daphtary, Attorney General, Lily Thomas, P.C. Kapur, R. H. Dhebar for R. N. Sachthey for the respondent On W.P. No. 242 of 1966).
The Judgment of the Court was delivered by Wanchoo, C. J.
These five writ petitions raise common ques tions and will be dealt with together.
They attack the constitutionality of the Aligarh Muslim University (Amendment) Act, No. 62 of 1951 (hereinafter referred to as the 1951 Act) and the Aligarh Muslim University (Amendment) Act, No. 19 of 1965, (hereinafter referred to as the 1965 Act).
The principal attack is based on the provisions of article 30(1) which lays down that "all minorities whether based on religion or language, shall have the right to establish and administer educational institutions of their choice".
The case of all the petitioners is that the Aligarh Muslim University (hereinafter referred to as the Aligarh University) was established by the Muslim minority and therefore the Muslims had the right to administer it and in so far as the Acts of 1951 and 1965 take away or abridge any part of that right they are ultra vires article 30(1).
Besides this principal attack, the two Acts are also subsidiarily attacked for violating the fundamental rights guanteed under Articles 14, 19, 25, 26, 29 and 31 of the Constitution.
It is unnecessary to set out the nature of the attack under these Articles for that will appear when we deal with the matter in detail later.
suffice it to say that all the petitions do not make the attack, under ill these Articles, but the sum total of the subsidiary attack in all these petitions takes in its sweep all these six Articles.
The petitions have been opposed on behalf of the Union of India and its main contention is that the Aligarh University was established in 1920 by the , No. XL of 1920, (hereinafter referred to as the 1920 Act) and that this Establishment was not by the Muslim minority but by the Government of India by virtue of a statute namely the 1920 Act and, therefore the Muslim minority could not claim any fundamental right to administer the Aligarh University under article 30(1).
It /P(N)78CI 14(a) 838 was further contended that as the Aligarh University was established by the 1920 Act by the Government of India, Parliament had the right to amend that statute as it thought fit in the interest of education and the amendments made by the Acts of 1951 and 1965 were perfectly valid as there was no question of their taking away the right of the Muslim minority to administer the Aligarh University, for the minority not having established the University could not claim the right to administer it.
It was further contended that the fact that under the provisions of the 1920 Act the Court of the Aligarh University was, to be composed entirely of Muslims did not give any right to, the Muslim. community as such to administer the.
University which had been administered by the authorities established by the 1920 Act.
It was further contended that the attack based on the six Articles of the Constitution to which we have referred already had no substance and did not in any manner make the Acts of 1951 and 1965 unconstitutional.
We do not think it necessary at this stage to give in detail the reply of the Government of India on these points and shall refer to it as and when the occasion arises.
It is necessary to refer to the history previous to the establishment of the Aligarh University in 1920 in order to understand the contentions raised on either side.
It appears that as far back as 1870 Sir Syed Ahmad Khan thought, that the backwardness of the Muslim community was due to their neglect of modern education.
He therefore conceived the idea of imparting liberal education to Muslims in literature and science while at the same time instruction was to be given in Muslim religion and traditions also.
With this object in mind, he organised a Committee to devise ways and means for educational regeneration of Muslims and in May 1872 a society called the Muhammadan Anglo Oriental College Fund Committee was started for collecting subscriptions to realise the goal that Sir Syed Ahmad Khan had conceived.
In consequence of the activities of the committee a school was opened in May 1873.
In 1876, the school became a High School and in 1877 Lord Litton, then Viceroy of India, laid the foundation stone for the establishment of a college.
The Muhammadan Anglo Oriental College, Aligarh hereinafter referred to as the M.A.0.
College) was established thereafter and was, it is said, a flourishing institution by the time Sir Syed Ahmad Khan died in 1898.
It is said that thereafter the idea of establishing a Muslim University gathered strength from year to year at the turn of the century and by 1911 some funds Were collected and a Muslim University Association was established for the purpose of establishing a teaching University at Algarh.
Long negotiations took place between the Associationland the Government of India, which eventually resulted in the establishment of the Aligarh University in 1920 by the 1920 Act.
It may be mentioned that before that a 839 largo sum of money was collected by the Association for the University as the Government of India had made it a condition that rupees thirty lakhs must be collected for the University before it could be established.
Further it seems, that the existing M.A.0.
College was made the basis of the University and was made over to the authorities established by the 920 Act for the administration of the University along with the properties and funds attached to the college, the major part of which had been contributed by Muslims though some contributions were made by other communities as well.
It is necessary now.to refer in some detail to the provisions of the 1920 Act to see how the Aligarh University came to be established.
The long title of the 1920 Act is in these words: "An Act to establish and incorporate a teaching and residential Muslim University at Aligarh".
The preamble says that "it is expedient to establish and incorporate a teaching and residential Muslim University at Aligarh, and to dissolve the Societies registered under the , which are respectively known as the Muhammadan Anglo Oriental College, Aligarh and the Muslim University Association, and to transfer and vest in the said University all properties and rights of the said Societies and of the Muslim University Foundation Committee".
It will be seen from this that the two earlier societies, one of which was connected with the M.A.0.
College and the other had been formed for collecting funds for the establishment of the University at Aligarh, were dissolved and all their properties and rights and also of the Muslim University Foundation Committee, which presumably collected funs for the proposed University were transferred and vested in the University established by the 1920 Act.
Section 3 of the 1920 Act laid down that "the First Chancel lor, Pro Chancellor and Vice Chancellor shall be the persons appointed in this behalf by a notification of the Governor General in Council in the Gazette of India and the persons specified in the schedule [shall be] the first members of the Court" and they happened to be all Muslims.
Further section 3 constituted a body corporate by the name of the Aligarh Muslim University and this body corporate was to have perpetual succession and a Common Seal and could sue and be sued by that name.
Section 4 dissolved the M.A.0.
College and the Muslim University Association and all property, movable and immovable, and all rights, powers and privileges of the two said societies, and all property, movable and immovable, and all rights, powers and privileges of the Muslim University Foundation Committee were transferred and 'vested in the Aligarh University and were to be applied to the objects and purposes for which the Aligarh University was incorporated.
840 All debts, liabilities and obligations, of the said societies and Committee were transferred to the University, which was made responsible for discharging and satisfying them.
All references in any enactment to either of the societies or to the said Committee were to be construed ' as references to the University.
It was further provided that any will, deed or other documents, whether made or executed before or after the commencement of the 1920Act, which contained any bequest, gift or trust in favour of any of the said societies or of the said Committee would, on the com mencement of the 1920 Act be construed as if the University had been named therein instead of such society or Committee.
The effect of this provision was that the Properties endowed for the purpose of the M.A.0.
College were to be used for the Aligarh University after it came into existence.
These provisions will show that the three previous bodies legally came to an end and everything that they were possessed of was vested in the University as established by the 1920 Act.
Section 5 provides for the powers of the University including the power to hold examinations and to grant and confer degrees and other academic distinctions.
Section 6 is important.
It laid down that "the degrees, diplomas and other academic distinctions granted or conferred to or on persons by the University shall be recognised by the Government as are the corresponding degrees, diplomas and other academic distinctions granted by any other University incorporated under any enactment".
Section 7 provided for reserve funds including the sum of rupees thirty lakhs.
Section 's provided that "the Uni versity shall, subject to the provisions of this Act and the Ordinances, be open to all persons of either sex and of whatever race, creed or class", which shows that the University was not established for Muslims alone.
Under section 9 the Court was given the power to make Statutes providing that instruction in the Muslim religion would be compulsory in the case of Muslim students.
Sections 10, 11 and 12 made other provisions necessary for the functioning of a University but they are not material for our purpose.
Section 13 is another important section.
It provided that "the Governor General shall be the Lord Rector of the University".
Further sub section
(2) of section 13 provided that "the Lord Rector shall have the right to cause an inspection to be made by such person or persons as he may direct, of the University, its buildings, laboratories, and equipment, and of any institution maintained by the University, and also of the examinations, teaching and other work conducted or done by the University, and to cause an inquiry to be made in like manner in respect of any matter connected with the University.
The Lord Rector shall in every case give notice to the University of his intention to cause an ins pection or inquiry." After the enquiry, the Lord Rector had the 841 power to address the Vice Chancellor with reference to the result of such inspection and inquiry and the Vice Chancellor was bound to communicate to the Court the views of the Lord Rector with such advice as the Lord Rector might offer upon the action to be taken thereon.
The Court was then required to communicate through the Vice Chancellor to the Lord Rector such action if any as was proposed to be taken or was taken upon the result of such inspection or inquiry.
Finally the Lord Rector was given the power where the Court did not, within reasonable time, take action to the satisfaction of the Lord Rector to issue such directions as he thought fit after considering any explanation furnished or representation made by the Court and the Court was bound to comply with such directions.
These provisions clearly bring out that the final control in the matter was with the Lord Rector who was the Governor General of India.
Then comes section 14 which is again an important provision, which provided for the Visiting Board of the University, which consisted of the Governor, the members of the Executive Council, the Ministers, one member nominated by the Governor and one member nominated by the Minister in charge of Education.
The Visiting Board had the power to inspect ' the University and to satisfy itself that the proceedings of the University were in conformity with the Act, Statutes and Ordinances, after giving notice to the University of its intention to do so.
The Visiting Board was also given the power, by order in writing, to annul any proceedings not in conformity with the Act, Statutes and Ordinances, provided that before making such an order, the Board had to call upon the University to show cause why such an order should not be made, and to consider such cause if shown within reasonable time.
This provision, though not so all pervasive as the provision in section 13 of the 1920 Act, shows that the Visiting Board had also certain over riding powers in case the University authorizes acted against the Act, Statutes and Ordinances.
There is no condition that the Lord Rector and the members of the Visiting Board must belong to the Muslim community.
Sections 15 to 21 are not material$ for our purposes.
They made provisions for officers of the University and Rectors and laid down that "the powers of officers of the University other than the Chancellor, the Pro Chancellor, the Vice Chancellor and, the Pro Vice Chancellor shall be prescribed by the Statutes and the Ordinances".
Section 22 provided for the, authorities of the University, namely, the Court, the Executive Council and the Academic Council and such other authorities as might be declared by the Statutes to be authorities of the University.
Section 23 provided for the constitution of the Court, and the proviso to sub section (1) has been greatly stressed on behalf of the petitioners which laid down that "no person other than a Muslim shall be a member 842 thereof".
It may be added here that the Select Committee which went into the Bill before the 1920 Act was passed was not very happy about this proviso and observed that: " in reference to the constitution of the Court we have retained the provision that no person other than Muslim shall be a member thereof.
We have done this as we understand that such a provision is in accordance with the preponderance of Muslim feeling though some of us are by no means satisfied that such a provision is necessary." By section 23(2), the Court was to be the supreme governing body of the University and would exercise all the powers of the University, not otherwise provided for by the 1920 Act, the Statutes, the Ordinances and the Regulations.
It was given the power to review the acts of the Executive and the Academic Councils, save where such Councils had acted in accordance with powers conferred on them under the Act, the Statutes or the Ordinances and to direct that necessary action be taken by the Executive or the Academic Council, as the case might.be, on any recommendation of the Lord Rector.
The power of Making Statutes was also conferred on the Court along with other powers necessary for the functioning of the University.
Section 24 dealt with the Executive Council, section 25 with the Academic Council and section 26 with other authorities of the University.
Section 27 laid down what the Statutes might provide.
Section 28 dealt with the question of the first Statutes and how they were to be amended, repealed and addled to.
There is an important provision in section 28 which laid down that "no new Statute or amendment or repeal of an existing Statute shall have any validity, until it his been submitted through the Visiting Board (which may record its opinion thereon) to the Governor General in Council, and has been approved by the latter, who may sanction, disallow or remit it for further consideration.
" This provision clearly shows that the final power over the administration of the University rested with the Governor General in Council.
Section 29 dealt with Ordinances and what they could provide and section 30 provided which authorities of the University could, make Ordinances.
Section 30(2) provided that "the first Ordinances shall be framed as directed by the Governor General in Council." and sub section
(3) thereof lald down that "no new Ordinance, or amendment or repeal of an existing Ordinance shall have any validity until it has been submitted though the Court and the Visiting Board (which may record its opinion thereon) to the Governor General in Council, and has obtained the approval of the latter, who may sanction, disallow or remit it for further consideration".
This again shows that even Ordinances could not be made by the University withOut the approval of the Governor General In Council.
If any dispute arose between the, Executive and the Academic Council as 843 to which had the power to make an Ordinance, either Council could represent the matter to the Visiting Board and the Visiting Board had to refer the same to a tribunal consisting of three members, one of whom was to be nominated by the Executive Council, one by the Academic Council, and one was to be a Judge of the High Court nominated by the Lord Rector.
This again shows that in the matter of such disputes, the Court which is called the supreme governing body of the University, did not have the power to resolve it.
Section 31 provides for the making of Regulations, which had to be consistent with the Statutes and Ordinances.
It is only the Regulations which did not require the approval of the Governor General before they came into force.
Section 32 provided for admission of students to the University and sub section
(4) thereof provided that "the University shall not save with the previous sanction of the Governor General in Council recognise (for the purpose of admission to a course of study for a degree) as equivalent to its own degrees, any degree conferred by any other University or as equivalent to the Intermediate Examination of an Indian University, any examination conducted by any other authority".
This shows that in the matter of admission the University could not admit students of other institutions unless the Governor General in Council 'approved the degree or any other examination of the institutions other than Indian Universities established by law.
Section 33 provided for examinations, section 34 for annual report and section 35 for annual accounts.
Sections 36 to 38 provided for supplementary matters like conditions of service of officers and teachers, provident and pension funds, filling of casual vacancies and are not material for our purposes.
Section 39 laid down that "no act or proceeding of any authority of the University shall be invalidated merely, by reason of the existence of vacancy or vacancies among its members".
Section 40 is important and laid down that "if any difficulty arises with respect to the establishment of the University or any authority of the Uni versity or in connection with the first meeting of any authority of the University, the Governor General in Council may by order make any appointment or do anything which appears to him necessary or expedient for the proper establishment of the University or any authority thereof or for the firs meeting of any authority of the University.
" This again shows the power of the Governor General in Council in the matter of establishment of the University.
This brings us to the end of the sections of the 1920 Act.
There is nothing anywhere in any section of the Act which vests the administration of the University in the Muslim community.
The fact that in the proviso to section 23(1) it is provided that the Court of the University shall consist only of Muslims does not necessarily mean that the administration of the University was vested or was intended, to be vested in the Muslim minority.
If anything, some of the important provisions to which we have already referred show that the final power in almost every matter of importance 844 was in the Lord Rector, who was the Governor General or in the Governor General in Council.
Then follows the schedule which provides for the first Sta tutes of the Aligarh University.
These Statutes provided for the Rectors of the University, the Vice Chancellor, Pro Vice Chancellor, Treasurer, Registrar, Proctor and Librarian, the Court, constitution of the Court, the first Court, meetings of the Court and the powers of the Court, the Executive Council, the powers of the Executive Council, the Academic Council and its powers, departments of studies, appointments, register of graduates, convocations, Committees and so on.
The annexure to the 1920 Act gave the names of the Foundation Members of the Court numbering 124 who were all Muslims and who were to hold office for five years from the commencement of the Court.
Such were the provisions of the 1920 Act.
They continued in force till 1951 without any substantial amendment.
In 1951, the 1951 Act was passed.
It made certain changes in the 1920Act mainly on account of the coming into force of the Constitution.
We shall refer only to such changes as are material for our purposes.
The first material change was the deletion of section 9 of the 1920 Act which gave power to the Court to make Statutes providing for compulsory religious instruction in the case of Muslim students.
This amendment was presume ably made in the interest of the University in view of article 28(3) of the Constitution which lays down that "no person attending any educational institution recognised by the State or receiving aid out of State funds shall be required to take part in any religious instruction that may be imparted in such institution or to attend any religious worship that may be conducted in such institution or in any premises attached thereto unless such person or, if such person is a minor, his guardian has given his consent thereto.
" It was necessary to delete section 9 as otherwise the University might have lost the grant which was given to it by the Government of India.
Further section 8 of the 1920 Act was amended and the new section provided that "the University shall be open to persons of either sex and of whatever race, creed, caste, or class, and it shall not be lawful for the University to adopt or impose on any person, any test whatsoever of religious belief or profession in order to entitle him to be admitted therein, as a teacher or student, or to hold any office therein, or to graduate thereat, or to enjoy or exercise any privilege thereof, except in respect of any particular benefaction accepted by the University, where such test is made a condition thereof by my testamentary or other instrument creating such benefaction".
The new section 8 had also a proviso laying down that "nothing in this section shall be deemed to prevent religious instruction being given in the manner prescribed by the Ordinances to those who have consented to receive it".
Clearly section 9 was deleted and section 8 was amended in this manner to bring the law into conformity with 845 the provisions of the Constitution and for the benefit of the University so that it could continue to receive aid from the Government.
Some amendment was also made in section 13 in view of the changed constitutional set up and in place of the Lord Rector, the University was to have a Visitor.
Section 14 was also amended and the power of the Visiting Board was conferred on the Visitor by addition of a new sub section (6).
The next substantial change was that the proviso to section 23(1) which required that all members of the Court would only be Muslims was deleted,.
Other amendments are not material for our purpose as they merely relate to administrative details concerning the University.
It will thus be seen that by virtue of the 1951 Act non Mus lims could also be members of the Court.
But the Court still remained the supreme governing body of the University as provided by section 23 (1) of the 1920 Act.
It is remarkable that though the proviso to section 23(1) was deleted, as far back as 1951, there was no challenge to the 1951 Act till after Ordinance No. 11 of 1965 was passed.
The reason for this might be that there was practically no substantial change in the administrative set up of the 1920 Act and it was only when a drastic change was made by the Ordinance of 1965, followed by the 1965 Act, that challenge was made not only to the 1965 Act but also to the 1951 Act in so far as it did away with the proviso to section 23(1).
It is not our function in the present petitions to consider the policy underlying the amendments made by the 1965 Act nor do we propose to go into the merits of the amendments made by the 1965 Act.
We are in the present petitions concerned only with the constitutionality of the provisions of the 1965 Act.
If the provisions are constitutional, they were within the legislative competence of Parliament.
This brings us to the changes made in the 1965 Act which have occasioned the present challenge.
The main amendment in the 1965 Act was in section 23 of the 1920 Act with respect to the composition and the powers of the Court of the University.
Sub sections (2) and (3) of the 1920 Act were deleted, with the result that the Court no longer remained, the supreme governing body and could no longer exercise the powers conferred on it by sub sections
(2) and (3) of section 23.
In place of these two sub sections, a new subsection (2) was put in, which reduced the functions of the Court to three only, namely, "(a) to advise the Visitor in respect of any matter which may be referred to the Court for advice; (b) to advise any other authority of the University in respect of any matter which may be referred to the Court for advice; and (c) to perform such other duties and exercise such other powers as may be assigned to it by the Visitor or under this Act".
It further appears from the amendments of sections 28, 29, 34 and 38 that the powers of 846 the Executive Council were correspondingly increased.
The Statutes were also amended and many of the powers of the Court were transferred by the amendment to the Executive Council.
Further the constitution of the Court was drastically changed by the amendment of the 8th Statute and it practically became a body nominated by the Visitor except for the Chancellor, the ProChancellor, the members of the Executive Council who were ex officio members and three members of Parliament, two to be nominated by the Speaker of the House of the People and one by the Chairman of the Council of States.
Changes were also made in the constitution of the Executive Council.
Finally the 1965 Act provided that "every person holding office as a member of the Court or the Executive Council, as the case may be, immediately before the 20th day of May, 1965 (on which date Ordinance No. 11 of 1965 wais promulgated) shall on and from the said date cease to hold office as such".
It was also provided that until the Court or the Executive Council was reconstituted, the Visitor might by general or special order direct any officer of the University to exercise the powers and perform the duties conferred or imposed by or under the 1920 Act as amended by the 1965 Act on the Court or the Executive Council as the case may be.
The contention of the petitioners is that by these drastic amendments in 1965 the Muslim minority was deprived of the right to administer the Aligarh University and that this deprivation was in violation of article 30(1) of the Constitution; and it is to this question we turn now.
Under Article 30(1), "all minorities whether based on religion or language shall have the right to establish and administer educational institutions of their choice".
We shall proceed on the assumption in the present petitions that Muslims are a minority based on religion.
What then is the scope of article 30(1) and what exactly is the right conferred therein on the religious minorities.
It is to our mind quite clear that article 310(1) postulates that the religious community will have the rig establish and administer educational institutions of their choice mentoing thereby that where a religious minority establishes an educational institution, it will have the right to administer that.
An argument has been raised to the effect that even though the religions minority may not have established the educational institution, it will have the right to administer it, if by some process it been administering the same before the Constitution came into force.
We are not prepared to accept this argument.
The, Artice in our opinion clearly shows that the minority will have the right to administer educational institutions of their choice provided they have established them, but not otherwise.
The Article cannot be read, to mean that even if the educational institution has been established by somebody else, any religious minority would have the right to administer it because, for some reason or other, it might have been 847 administering it before the Constitution came into force.
The words "establish and administer" in the Article must be read conjunctively and so read it gives the Tight to the minority to administer an educational institution provided it has been established by it.
In this connection our attention was drawn to In re, The Kerala Education Bill, 1957(1) where, it is argued, this Court had held that the minority can administer an educational institution even though it might not have established it.
In that case an argument was raised that under article 30(1) protection was given only to educational institutions established after the Constitution came into force.
That argument wag turned down by this Court for the obvious reason that if that interpretation was given to article 30(1) it would be robbed of much of its content.
But that case in our opinion did not lay down that the words "establish, and administer" in Art 30(1) should be read disjunctively, so that, though a minority might not have established an educational institution it had the right to administer it.
It is true that at p. 1062 the Court spoke of article 30(1) giving two rights to a minority i.e. (i) to establish and (ii) to administer.
But that was said only in the context of meeting he argument that educational institutions established by minorities before the Constitution came into force did not have the protection of article 30(1).
We are or opinion that nothing in that case justifies the contention raised of behalf of the petitioners that the minorities would have the right to administer an educational institution even though the institution may not have been established, by them.
The two words in Art 30(1) must be read together and No read the Article gives this right to the minority to administer institutions established by it, If the educational institution has not been established by a minority it cannot claim the right to administer it under article 30(1) We have therefore to consider whether the Aligarh University was established by the Muslim minority; and if it was so established the minority would certainly have the right to administer it.
We should also like to refer to the observations in The purgah Committee, Ajmer vs Syed Hussain Ali(1).
In that case the Court observed while dealing with article 26(a) and (d) of the Constitution that even if it be assumed that a certain religious institution was established by a minority community it may lose the right to administer it in certain circumstances.
We may in this connection refer to the following observations at p. 414 for they appequally to article 30(1): "If the right to administer properties never vested in the denomination or had been validly surrendered by it or had otherwise been effectively and irretrievably lost to it, article 26 cannot be successfully invoked." [1959] S.C.R. 995.
(2) [1962] 1 S.C.P. 383.
848 We shall have to examine closely what happened in 1920 when the 1920 Act was passed to decide (firstly) whether in the face of that Act it could be said that the Aligarh University was established by the Muslim minority, (secondly) whether the right to administer it ever vested in the minority, and (thirdly) even if the right to administer some properties that came to the University vested in the minority before the establishment of the Aligarh University, whether it had been surrendered when the Aligarh University came to be established.
Before we do so we should like to say that the words "edu cational institutions" are of very wide import and would include a university also.
This was not disputed on behalf of the Union of India and therefore it may be accepted that a religious minority had the right to establish a university under article 30(1).
The position with respect to the establishment of Universities before the Constitution came into force in 1950 was this.
There was no law in India which prohibited any private individual or body from Establishing a university and it was therefore, open to a private individual or body to establish a university.
There is a good, deal on common between educational institutions which are not universities and those which are universities.
Both teach students and both have teachers for the purpose.
But what distinguishes a University from any other educational institution is that a university grants degrees of its own while other educational institutions cannot.
It is this granting of degrees by a university which dis tinguishes it from the ordinary run of educational institutions.
See St. David 's College, Lampeter vs Ministry of Education(1).
Thus in law in India there was no prohibition against establishment of universities by private individuals or bodies and if any university was so established it must of necessity be granting deges before it could be called a university.
But though such a university might be granting degrees it did not follow that the Government of the country was bound to recognise those degrees.
is a matter of fact as the law stood up to the time the Constitution time into force, the Government was not bound to recognise agrees of universities established by private individuals or bodies and gene rally speaking the Government only recognised degrees universities established by it by law.
of private individual or body could before 1950 insist that the degrees of any university established by him or it must be recognised by government.
Such recognition depended upon the will of government generally expressed through statute.
The importance of the recognition of Government in matters of this kind cannot be minimized.
This position continued even after the Constitution came into force.
It is only in 1956 that by sub section
(1) of section 22 of the University Grants commission Act, (No. 3 of 1956) it was laid down that "the right to conferring or granting degrees shall be exercised only by a (1) 849 University established or incorporated by or under a Central Act, a Provincial Act or a State Act: or an institution deemed to be a University under section 3 or an institution specially empowered by an Act of Parliament to confer or grant degrees".
Sub section (2) thereof further provided that "save as provided in sub section
(1), no person or authority shall confer, or grant, or hold himself or itself as entitled to confer or grant any degree".
Section 23 further prohibited the use of the word "university" by an educational institution unless it is established by law.
It was only thereafter that no private individual or body could grant a degree in India.
Therefore it was possible for the Muslim minority to establish a university before the Constitution came into force, though the degrees conferred by such a university were not bound to be recognised by Government.
There was nothing in 1920 to prevent the Muslim minority, if it so chose, to establish a university; but if it did so the degrees of such a university were not bound to be recognised by Government.
It may be that in the absence of recognition of the degrees granted by a university, it may not have attracted many students, and that is why we find that before the Constitution came into force, most of the universities in India were established by legislation.
The Aligarh University was also in the same way established by legislation and it provided under section 6 of the 1920 Act that "the degrees , diplomas and other academic distinctions granted or conferred to or on persons by the University shall be recognised by the Government as are the corresponding degrees, diplomas and other academic distinctions granted by any other university incorporated under any enactment.
" It is clear therefore that even though the Muslim minority could have established at Aligarh in 1920 a university, it could not insist that degrees granted by such a university should be recognised by Government.
Therefore when the Aligarh university was established in 1920 and by section 6 its degrees were recognised by Government, an institution was brought into existence which could not be brought into existence by any private individual or body for such individual or body could not insist upon the recognition of the degrees conferred by any university established, by it.
The enactment of s.6 in the 1920 Act is a very important circumstance which shows that the Aligarh University when it came to be established in 1920 was not established by the Muslim minority, for the minority could not insist on the recognition by Government of the degrees conferred by any university established by it.
It is true, as is clear from the 1920 Act, that the nucleus of the Aligarh University was the M.A.O College, which was till then a teaching institution under the Allahabad University.
The conversion of that college (if we may use that expression) into a university was however not by the Muslim minority; it took place 850 by virtue of the 1920 Act which was passed by the Central legislature.
There was no Aligarh University existing till the 1920Act was passed.
It was brought into being by the 1920 Act and must therefore be held to have been established by the Central Legislature which by passing the 1920 Act incorporated it.
The fact that it was based on the M.A.0.
College, would make no difference to the question as to who established the Aligarh University.
The answer to our mind as to who established the Aligarh University is clear and that is that it was the Central Legislature by enacting the 1920 Act that established the said University.
As we have said already, the Muslim minority could not establish a university whose degrees were bound to be recognised by Gov ernment as provided by section 6 of 1920 Act.
that one circumstance along with the fact that without the 1920 Act the University in the form that it had, could not come into existence shows clearly that the Aligarh University when it came into existence in 1920 was established by, the Central Legislature by the 1920 Act.
It may be that the 1920 Act was passed as a result of the efforts of the Muslim minority.
But that does not mean that the Aligarh University when it came into being under the 1920 Act was established by the Muslim minority.
A good deal of argument was addressed, to us on the nature of eleemosynary corporations and the difference between fundatio incipiens and fundatio perficiens and certain English cases were cited in support thereof.
It was urged that the word "establish" in the 1920 Act amounted only to, a case of fundatio incipiens and that so far as fundatio perficiens was concerned,, that was the Muslim minority.
We do not think it necessary to go into these distinctions of the English law; nor.do we think it necessary to consider the nature of eleemosynary corporations.
Suffice it to say that even if we assume that those who contributed money and property which was vested in the Aligarh University (and some of them were non Muslims) were in the post of fundatio perficiens, they could only have visitorial rights under the English common law.
But Muslim minority as such could not claim to be fundatio perficiens for that right would only be in the donors and no others.
Further even these visitorial rights must be held to have been negatived by the 1920 Act for it specifically conferred such rights on, the Lord Rector and the Visiting Board and no others.
Some argument was also based on some cases of the Supreme Court of the United States of America which depended upon the provisions of the Constitution of that country which Prohibits im pairment of contracts.
It is profitless to refer to the cases cited in that behalf for our Constitution has no such fundamental right.
Further we cannot under any circumstance read the 1920 Act as a kind of contrast.
What does the word "establish" used in article 30(1) mean? In Bouvier 's Law Dictionary, Third Edition, Vol. I, it has been 851 said that the word "establish" occurs frequently in the, Constitution of the United States and it is there used in different meanings; and five such meanings have been given, namely (1) to settle firm , to fix unalterably, as to establish justice; (2) to make or form: as, to establish a uniform rule of naturalization; (3) to found, to create, to regulate , as, Congress shall have power to establish post offices; (4) to found, recognize, confirm or admit: as, Congress shall make no law respecting an establishment of religion; (5) to create, to ratify, or confirm, as We, the people, etc., do ordain and establish this constitution.
Thus it cannot be said that the only meaning of the word "establish" is to found in the sense in which an eleemosy nary institution is founded and we shall have to see in what sense the word has been used in our Constitution in this Article.
In Shorter Oxford English Dictionary, Third Edition, the word "establish" has at number of meanings, i.e. to ratify, confirm, settle, to found, to create.
Here again founding is not the only meaning of the word "establish" and it includes creation also.
In Webster 's Third New International Dictionary, the word "establish" has been given a number of meanings, namely, to found or base squarely, to make firm or stable, to bring into existence, create, make, start, originate.
It will be seen that here also founding is not the only meaning; and the word also means "to bring into existence".
We are of opinion that for the purpose of article 30(1) the word means "to bring into existence", and so the right given by article 30(1) to the minority is to bring into existence an educational institution, and if they do so, to administer it.
We have therefore to see what happened in 1920 and who brought the Aligarh University into existence.
From the history we have set out above, it will be clear that those who were in charge of the M.A.O. College, the Muslim University Association and the Muslim University Foundation Committee were keen to bring into existence a university at Aligarh.
There was nothing in law then to prevent them from doing so, if they so desired without asking Government to help them in the matter.
But if they had brought into existence a university on their own, the degrees of that university were not bound to be recognised by Government.
It seems to us that it must have been felt by the persons concerned that it would be no use bringing into existence a, university, if the degrees conferred by the said university were not to be recognised by Government.
That appears to be the reason why they approached the Government for bringing into existence a university at Aligarh, whose degrees would be recognised by Government and that is why we find section 6 of the 1920 Act laying down that "the degrees, diplomas, and other academic distinctions granted or conferred, to or on persons by the university shall be recognised, by the Government. .
It may be accepted for present purposes that the M.A.O. College and the Muslim University Association and the Muslim University Foundation Committee were institutions established by the Muslim minority 852 and two of them were administered.
by Societies registered under the Societies Registration Act, (No. 21 of 1860).
But if the M.A.0.
College was to be converted into a university of the kind whose degrees were bound to be recognised by Government, it would not be possible for those who were in charge of the M.A.0.
College to do so.
That is why the three institutions to which we have already referred approached the Government to bring into existence a uni versity whose degrees would be recognised by Government.
The 1920 Act was then passed by the Central Legislature and the university of the type that was established thereunder, namely, one whose degrees would be recognised by Government, came to be established.
It was clearly brought into existence by the 1920 Act for it could not have been brought into existence otherwise.
It was thus the Central Legislature which brought into existence the Aligarh University and must be held to have established it.
It would not be possible for the Muslim minority to establish a university of the kind whose degrees were bound to be recognised by Government and therefore it must be held that the Aligarh University was brought into existence by the Central Legislature and the Government of India.
If that is so, the Muslim minority cannot claim to administer it, for it was not brought into existence by it.
article 30(1), which protects educational institutions brought into existence and administered by a minority, cannot help the petitioners and any amendment of the 1920 Act would not be ultra vires article 30(1) of the Constitution.
The Aligarh University not having been established by the Muslim minority, any amendment of the 1920 Act by which it was established, would be within the legislative power of Parliament subject of course to the provisions of the Constitution.
The Aligarh University not having been established by the Muslim minority, no amendment of the Act can be struck down as unconstitutional under article 30(1).
Nor do we think that the provisions of the Act can bear out the contention that it was the Muslim minority which was administering the Aligarh University, after it was brought into existence.
It is true that the proviso to section 23(1) of the 1920 Act said that "no person other than a Muslim shall be a member of the Court", which was declared to be the supreme governing body of the Aligarh University and was to exercise all the powers of the University, not otherwise provided for by that Act.
We have already referred to the fact that the Select Committee was not happy about this provision and only permitted it in the Act out of deference to the wishes of preponderating Muslim opinion '.
It appears from paragraph 8 of the Schedule that even though the members of the Court had to be Muslims, the electorates were not exclusively Muslims.
For example, sixty members of the Court had to be elected by persons who had made or would make donations of five hundred rupees and upwards to or for the purposes of the University.
Some of these persons were and could 853 be non Muslims.
Forty persons were to be elected by the Registered Graduates of the University, and some of the Registered Graduates were and could be non Muslims, for the University was open to all persons of either sex and of whatever race, creed or class.
Further fifteen members of the Court were to be elected by the Academic Council, the membership of which was not confined only to Muslims.
Besides there were other bodies like the Executive Council and the Academic Council which were concerned with the admi nistration of the Aligarh University and there was no provision in the constitution of these bodies which confined their members only to Muslims.
It will thus be seen that besides the fact that the members of the Court had to be all Muslims, there was nothing in the Act to suggest that the administration of the Aligarh University was in the Muslim minority as such.
Besides the above, we have already referred to section 13 which showed how the Lord Rector, namely, the Governor General had overriding powers over all matters relating to the administration of the University.
Then there was section 14 which gave certain over riding powers to the Visiting Board.
The Lord Rector was then the Viceroy and the Visiting Board consisted of the Governor of the United Provinces, the members of his Executive Council, the Ministers, one member nominated by the Governor and one member nominated by the Minister in charge of Education.
These people were not necessarily Muslims and they had over riding powers over the administration of the University.
Then reference may be made to section 28(2) (c) which laid down that no new Statute or amendment or repeal of an existing Statute, made by the University, would have any validity until it had been approved by the Governor General in Council who had power to sanction, disallow or remit it for further ' consideration.
Same powers existed in the Governor General in Council with respect to Ordinances.
Lastly reference may be made to section 40, which gave power to the Governor General in Council to remove any difficulty which might arise in the establishment of the University.
These provisions in our opinion clearly show that the administration was also not vested in the Muslim minority; on the other hand it was vested.in the statutory bodies created by the 1920 Act, and only in one of them, namely, the Court, there was a bar to the appointment of any one else except a Muslim, though even there some of the electors for some of the members included non Muslims.
We are therefore of opinion that the Aligarh University was neither established nor administered by the Muslim minority and therefore there is no question of any amendment to the 1920 Act being unconstitutional under article 30(1) for that Article does not apply at all to the Aligarh University.
The next argument is based on article 26 of the Constitution.
that Article Provides that every religious denomination or any 854 section thereof shall have the right (a) to establish and maintain institutions for religious and charitable purposes. (c) to own and acquire movable and immovable property; and (d) to administer such property in accordance with law.
A question was raised Whether article 26 would take in its sweep educational institutions on the ground that such institutions are institutions for charitable purposes.
It was urged that article 26 will not apply to educational institutions for there is specific provision in article 30(1) with respect to educational institutions and therefore institutions for charitable purposes in cl.
(a) of article 26 refer to institutions other than educational ones.
There is much to be said in favour of this contention.
But we do not propose to decide this question for present purposes.
We shall assume that educational institutions would also come within article 26(a) as institutions for charitable purposes.
Even so we fail to see how article 26 helps the petitioners.
Clause (a) of that Article gives the right to every religious denomination and the Muslim minority may for present purposes be assumed to be a religious denomination within the 'meaning of article 26 to establish and maintain institutions for religious and, charitable purposes.
What we have said with respect to article 30(1) which gives right to minorities to establish and administer educational institu tions of their choice applies equally to cl.
(a) of article 26 and therefore we are of opinion that the words, "establish and maintain" must be read conjunctively and it is only institutions which a religious denomination establishes which 'it can claim to maintain. ' It is not necessary to go into all the ' implications of the word "maintain"; it is enough for present purposes to say that the right to maintain institutions for religious 1 and charitable purposes would include the right to administer them.
But the right under el.
(a) of article 26 will only arise where the institution is established by a religious denomination and it is in that event only that it can claim to maintain it.
As we have already held, the Aligarh University was not established by the Muslim minority and therefore no question arises of its right to maintain it within the meaning of cl.
(a) of article 26.
Reference is also, made to article 26 clauses (c) and (d) which give the right to a religious denomination "(c) to own and acquire movable and immovable property, and (d) to administer such property in accordance with law".
So far as that is concerned it is enough to say that Muslim minority does not own the movable and immovable property which was vested in the Aligarh University by virtue of the 1920 Act and therefore cannot claim to administer any such,property.
Clauses (c) and (d) give power to the religious denomination to own and acquire movable and immovable property and if it owns or acquires such movable or immovable property it can administer such property in accordance with law.
But the Muslim minority did not own the property which was vested in, the Aligarh University on the date the Constitution came 855 into force, and it could not lay claim to administer that property by virtue of article 26(d).
For the rest, there is nothing in the impugned amendment Acts which in any way bars the Muslim minority from owning or acquiring and administering movable or immovable property if it so desires for purposes of article 26.
But it cannot lay claim under article 26(d) to administer the property which was vested in the Aligarh University by the 1920 Act, for it did not own that property when the Constitution came into force.
The next attack on the constitutionality of the 1965 Act is under article 25 of the Constitution.
That Article provides that "subject to public order, morality and health and to the other provisions of this Part all persons are equally entitled to freedom of conscience and the right freely to profess, practice and propagate religion.
" We have not been able to understand how the amendment made by the 1965 Act in the 1920 Act in any way affects the tight freely to profess, practice and propagate religion.
It may be added that 'learned counsel for the petitioners did not seriously press the contention that the 1965 Act was ultra vires as it violated article 25 of the Constitution.
The next Article of the Constitution on which reliance is placed is article 29.
That Article provides that "any section of the citizens residing in the territory of India or any part thereof having a distinct language, script or culture of its own shall have the right to conserve the same".
We have not been able to understand how the amendments made by the 1965 Act in the 1920 Act in any way interfere with the right of the Muslim minority to conserve any distinct language, script or culture which they might have.
Here again we may add that no serious argument was raised before us on the basis of article 29.
The next Article of the Constitution on which reliance is ,placed is article 14.
Here again we are not able to appreciate what the discrimination is which has been brought about by the amendments of the 1965 Act.
It seems that the charge of discrimination is based on the provisions of the Benaras Hindu University Act, which University is established ' by an Act of its own.
We do not think that article 14 requires that the provisions in every, University Act must always be the same.
Each University has problems of its own and it seems to us that it is for the legislature to decide ,what kind of constitution should be conferred on a particular university established by it.
There can be no question of discrimination on the ground that some other University Acts provide for some different set up.
Each university must be taken to be a class by itself and the legislature has a right to make such provision for its constitution as it thinks fit subject always to the provisions of the Constitution.
The mere fact that certain provisions in a statute creating one university are different from provisions in another 856 statute creating another university cannot mean that there is discrimination.
It has been urged in this connection that other universities, such as, Delhi, Agra, Allahabad, Patna and Benaras, have certain elective element while the amendment of 1965.
has done away with the elective element so far as the Aligarh University is concerned.
We have already said that we are not, concerned with the policy of the legislature in enacting the 1965, ' Act; nor are we concerned with the merits of the provisions of the '1965 Atc All that we need say is that simply because there is no elective element in one university while there is such element in" another university it cannot be said that there is discrimination, for, as we have said already, each university is a class by itself and may require a different set up according to the requirements and needs of a particular situation.
We therefore.
see no, force in the attack on the constitutionality of the 1965 Act on the ground that it is hit by article 14 of the Constitution.
The next attack oh the constitutionality of the 1965 Act is based on article 19, and the argument seems to be that the statute deprives Muslims of their right to acquire, hold and,dispose of property and to form associations or unions.
The argument has merely to be stated to deserve rejection.
We cannot understand how the 1965 Act deprives the Muslim citizens of this country,, of the right to form associations or unions.
There is nothing in the 1965 Act which takes away that right, nor is there anything in ' the 1 to 1965 Act which takes away the right of the Muslim citizens acquire, hold and dispose of property But it is said that the Muslim minority has been deprived of the right to manage the Aligarh University and the right to hold the property which was vested in the Aligarh University by the 1920 Act.
There is no force in this contention either, for article 19(1)(c) does not give any right to any citizen to manage any particular educational institution.
It only gives the right to a citizen to form associations or unions.
That right has not been touched by the 1965 Act Similarly, article 19 (1)(f) does not give right to any citizen to hold property vested in a corporate body like the university.
All that it provides is that all citizens have the right to acquire, hold and dispose of property of their own.
There is nothing in the 1965Act which in any way takes away the right of the Muslims of this country to acquire, hold and dispose of property of their own Lastly reliance is placed on Art.31(1) which provides that "no person shall be deprived of his property save by authority, of law.
" We may assume that the "Muslim: minority" is a person for purposes of article 31(1) and the petitioners have a right to file these writs on its behalf.
It is urged Oat the Muslim minority has been deprived, of their property, namely.
the property vested in the Aligarh University, by the 1965 Act inasmuch as the Court now is a very different body from the Court as it was, under, the 1920 Act.
It is difficult to understand this argument.
It is clear 857 from the history which we have set out above and from the provisions of the 1920 Act that the two societies which were registered under the , namely, the M.A.O. College and the Muslim University Association, voluntary surrendered whatever property they had including the college buildings etc. to the corporate body created by the 1920 Act, namely, the Aligarh University.
The third body, namely, Muslim University Foundation Committee also surrendered the money it had collected in pursuance of the Government direction that it will only establish a university if rupees thirty lakhs were collected for the purpose.
The same was apparently collected, the major part from Muslims but some contribution was made by non Muslims also.
That fund was also made over to the corporate body, namely, the Aligarh University which was brought into existence by the 1920 Act.
This is clear from the preamble of the.1920 Act and also from the provisions contained in section 4 and section 7 thereof.
Therefore, when the Constitution came into force on January 26, 1950, there was no property which was held by the Muslim mino rity as such, for the property had already vested in the corporate body, namely, the Aligarh University brought into existence by the 1920 Act.
Even assuming that before 1920, the property which was surrendered to the Aligarh University was the property of the Muslim minority, what happened in 1920 put an end to the rights of the Muslim minority to hold the property and all that was done with the consent of those who can be said to have held the proPerty on behalf of the Muslim minority before 1920.
There is no attack on the 1920 Act and it is not urged that any part of that Act was in any way ultra vires the Constitution Act which was then in force.
Therefore, when the present Constitution came into force on January 26, 1950 the Muslim minority did not have any right in the property which was vested in the Aligarh University by the 1920 Act.
The 1965 Act has made no change in the ownership of the property which was vested, in the Aligarh University.
Even after the 1965 Act came into force, the property still continues to be vested in the same corporate body, (namely the Aligarh University).
In the circumstances, it cannot be said that the 1965 Act deprived the Aligarh University of the property vested in it.
As for the Muslim minority they had already given up the property when the Aligarh University was brought into existence by the 1920 Act and that property was vested by the Act in the Aligarh University.
The Muslim minority cannot now after the Constitution came into force on January 26, 1950 lay claim to that property which was vested in the Aligarh University by the 1920 Act and say that the 1965 Act merely because it made some change in the constitution of the Court of the Aligarh University deprived the Muslim minority of the property, for the simple reason that the property was not vested in the Muslim minority at any time after the 1920 Act came into force.
The argument that there has been breach of article 31(1) has therefore no force.
858 We are therefore of opinion that there is no force in any of these petitions.
It is not disputed that the 1951 and 1965 Acts are within the competence of Parliament unless they are hit, by any of the constitutional provisions to which we have referred above.
As, they are not hit by any of these provisions, these Acts are good and are not liable to be struck down as ultra vires the Constitution.
The petitions therefore fail and are hereby dismissed.
In the circumstances we make no order as to costs.
V.P.S. Petitions dismissed.
| IN-Abs | In 1877, the Muhammadan Anglo Oriental College at Aligarh (M.A.0.
College) was started as a teaching institution under the Allahabad University for the educational regeneration of Muslims in India.
Thereafter, the idea of establishing a Muslim University gathered strength and the Muslim University Association was formed.
The Government of India informed the, Association that a sum of rupees thirty lakhs should be collected before the University could be established.
Therefore, a Muslim University Foundation Committee #as started and it collected the necessary funds.
The contributions were made by Muslims as well as non Muslims.
With the M.A.0.
College as a nucleus the Aligarh Muslim University was then established by the .
The preamble land sections 3 and 4 of the Act show that the M.A.0.
College, the Muslim University Association and the Muslim University Foundation Committed legally came to (end, and that the three bodies voluntarily surrendered whatever properties ,they had to the Aligarh University, so that all theit properties movable and immovable were, vested in the Aligarh university ""Section 23 of the Act provided for the constitution of the court of the University.
By the proviso to section 23(1) no person other than a Muslim could be a member of the Court of the University, and by :a. 23(2)" the Court of the University was to be the supreme governIng body of the University.
By sub section
(3) the Court of the University was given the Power of making statutes.
Section 13 provided for the Governor General of India to be the Lord Rector of the University and section 14 provided that the Governor of: the United Provinces, the members of his Executive Council, the Ministers, one member nominated by the Govern and one member nominated by the Minister in charge of Education to be the Visiting Board of the 'University.
These persons were not necessarily Muslims but they had powers over the administration of the University overriding those of the Court of the University.
Further, sections 28(2) and 30(3) laid down that no Statute or Ordinance or amendment or repeal of an existing Statute or Ordinance would have any validity unless it had been approved by the Governor General in Council.
Section 40 gave further powers to the Governor General in Council to remove any difficulty which might arise in the establishment of the University.
834 In 1951, the Aligarh Muslim University (Amendment) Act, 1951 was passed and it made certain changes in the 1920 Act on account of the coming into force of the Constitution.
Sections 13 and 14 are so amended that in the place of the Lord Rector, the University was to have a Visitor and the powers of the Visiting Board were conferred on the Visitor.
The proviso to section 23(1) was deleted, with the result that, non Muslims could also be the members of the Court of the University.
There were further amendments by Ordinance II of 1965 which was replaced by the Aligarh Muslim University (Amendment) Act, 1965.
As a result of those amendments the Court of the University no longer remained the supreme governing body.
Many of its powers were taken away and those of the Executive Council were correspondingly increased.
The Court practically became a body nominated by the Visitor, every person holding office immediately before the date on which the Ordinance was promulgated ceased to hold office from the said date, and, until the Court was reconstituted, the Visitor might by general or special order direct any officer of the University to exercise the powers and perform the duties conferred or imposed on the Court.
The petitioners challenged the constitutional validity of the 1951 and 1965 Acts, on the following !grounds: (1) the Muslim minority had established the University and therefore had a right to administer it under article 30(1) of the Constitution, and that the amendments deprived the Muslim minority, of this right in violation of the, Article; (2) even if the minority had not established the University, they had a right to administer the University as an educational institution and that they were in fact administering it after it was established; (3).
the right of the Muslim minority under article 26(a) to maintain the University as an institution for charitable purposes, was violated; (4) the right of the Muslim minority as a religious denomination, under article 26(c) and (d), to ad minister the movable and immovable property of the University, was violated; (5) the provisions of the Ad as: amended are different from those of other Statutes creating other universities, and therefore, there was a violation of article If (6) the Muslim minority had been deprived of their right under article 19 to manage the University and to hold the property which was vested in the University;,(7) the Muslim minority had been deprived of theirs property, namely, the property vested in the University, in asmuch as the Court of the University after the 1965 Act was a body very different from the Court under the 1920 Act and there was thus a violation of article 31(1); and (8) the right of the Muslim minority to profess, practise and propagate their religion under article 25, and, their right to conserve their language, script or culture under article 29, were violated.
HELD: (1) The Aligarh University, was neither established nor administered by the Muslim minority and therefore there is no question of any amendment to the 1920 Act violating Art, 30(1) for that Article does not at all apply to the University.
[854 H].
The words establish and administer in article 30(1) must be read conjunctively.
that is, article 30(1) postulates that a religious community will have the right to establish and administer educational institutions of their choice, meaning ther by, that where a religious minority establishes an educational institution It will ' have the right to administer it, but not otherwise.
The word establish for the purpose of the Article means bring into existence and educational institutions include universities.
But Muslims, assuming 835 they are a minority based on religion, did not establish the University.
Before the enacting of the University Grants Commission Act of 1966, there was no law in India which prohibited and private individual or body from establishing a University, that is an educational institution which grants its own degrees.
; but the private individual or body could not insist that the degrees must be recognised by the Government.
Such recognition depended upon the will of the Government generally expressed through statute.
Therefore, there was nothing in 1920 preventing the Muslim minority from establishing a University; but if they did so Its degreea were not bound to he recognised by the Government and that was why the Aligarh University was established by legislation namely the 1920 Act, and provided by section 6 that its degrees shall 'be recognised by the Government.
Thus, when the Aligarh University was established in 1920 and by section 6 of the 1920 Act its degrees had to be recognised by Government, an institution was brought into existence which could not be brought into existence by any private individual or body.
The Act may have been passed as a result of the efforts of the Muslim minority, but that does not mean that the University, when it came into being under the 1920 Act was established by the Muslim minority.
The, conversion of the M.A.O. College into the University was not lay the Muslim minority.
The University was brought into being by the 1920 Act and must therefore be held to have been established by the Central legislature.
[847 F H; 848 A; 849 C H; 850 D H; 851 A B, C D; 852 D E].
St. David 's College, Lampeter vs Ministry of Education, , applied.
In re: The Kerala Education Bill 1957, [1959] S.C.R. 995, explained.
Further, the Muslim minority could not claim any rights on the basis that the University was an eleemosynary corporation and that the minority were in the position of undator perficiens, bicause: (i) it is the donors (some of whom were non Muslims) and not the Muslim minority that could be said to be in the position of fundator perficiens; (ii) even the donors could only have visitorial rights under the English Common Law; and (iii) even those rights have been negatived by the 1920 Act for it specifically conferred such rights on the Lord Rector and the Visiting Board.
[851 E H].
(2) The provisions of the 1920 Act do not bear out the contention that it was the Muslim minority that was administering the University after it was brought into existence.
On the other hand, the administration of the University was vested in the Lord Rector, the Visiting Board, and the statutory bodies created by the 1920 Act whose members were not necessarily Muslims.
It was only in one of them namely the Court of :he University that there was a bar to the appointment of any one else except a Muslim.
But even with respect to the Court, paragraph 8 of the Schedule to the Act shows, that even though the members of the Court had to be Muslims.
the electorate which electe the members of the Court were not exclusively Muslims.
[853 P G; 854 F H].
(3) Assuming that educational institutions would come within article 26(a) as institutions for charitable purposes the right under article 26(a) could not be claimed by the Muslim minority, because, the right to maintain (which includes the right to administer) will only arise where the institution is established by the religious denomination.
In this Article also, the words establish and Maintain must be read conjunctively.
[855 B C, E F].
L/P(N)7SCI 14 836 (4)Article 26(c) and (d) give power to a religious denomina tion to own and acquire movable and immovable property, and if it owns or acquires such property it can administer it in accordance with law.
There is nothing in the amending Acts which in any way bars the Muslim minority from owning, acquiring or administering movable or immovable property.
Assuming that before 1920 the property which was vested in the University Was the property of the Muslim minority, it was voluntarily surrendered to the corporate body created by the 1920 Act, namely, the Aligarh University.
Therefore, when the Constitution came into force there was no property held by the Muslim minority.
As the Muslim minority did not own the property which was vested in the Aligarh University on the date of the Constitution, they could not lay any claim to administer that property by virtue of article 26(d).
[855 H; 856 A B].
The Durgah Committee Ajmer vs Syed Hussain Ali, ; , followed.
(5)Article 14 does not require that the provisions in every University Act must always be the same, because, each university must be taken to be a class by itself having its own problems and it is for the Legislature to decide what kind of constitution should be conferred on a particular university established by it.
Therefore, there can be no question of discrimination on the ground that some other University Acts provide for a different set up.
[856 G H; 857 C].
(6)Article 19(1)(c) does not give any right to any citizen to manage any particular educational institution.
It only gives the right to citizens to form associations or unions, and that right has not been touched by the 1965 Act.
Similarly, article 19(1)(f) does not give any citizen any right to hold property vested in a corporate body like the University.
It only provides that all citizens have the right to acquire, hold and dispose of property of their own.
There is nothing in the 1965 Act which in any way takes away the right of the Muslims of this country to acquire, hold and dispose of property of their own.
[857 D G].
(7)There is no breach of article 31(1) for the 1965 Act did not deprivethe Muslim minority of any property, because the property was notvested in the Muslim minority at any time after the 1920 Act came into force.
Assuming 'Muslim minority ' is a person for the purposes of article 31(1) and the petitioners have a right to file the writs on its behalf, the 1965 Act made no change in the ownership of the property which had already vested in the Aligarh University after the 1920 Act came into force.
(857 H; 858 F H].
(8)The amendments made by the 1965 Act in the 1920 Act do not in any way affect the right, under article 25, of the Muslims to profess, practise and propagate their religion; nor do they affect their right under Art, 29, to conserve their language, script or culture which they might have.
[856 C E].
|
Appeal No. 1028 of 1967.
Appeal by special leave from the judgment and order dated May 24, 1967 of the Assam and Nagaland High Court in Civil Rule No. 425 of 1966.
Sarjoo Prasad, Barthakur and R. Gopalakrishnan, for the appellant.
Brief facts necessary for present purposes are these.
It appears that the appellant was expelled from the Medical College, Gauhati on October 26, 1966.
It is said that the appellant tendered unqualified apology on October 27, 1966 and attended, classes up to the end of October 1966.
The Principal, however, does not seem to have accepted the apology and when the appellant went on, November 2, 1966, to deposit the fee for the examination which was to be held from November 4, 1966, he was told that as he had been expelled and as the order of expulsion stood no examination fee would be accepted from him It was thereafter that the 815 appellant filed the writ petition on November 3, 1966, out of which the present appeal has arisen.
It may be mentioned that the High Court was in vacation from September 17, 1966 to November 19, 1966.
Mr. Justice section K. Dutta was nominated as the Vacation Judge for the vacation and certain dates were fixed on which he was to sit and hear urgent civil and criminal appliciations.
One of these dates was October 31, 1966 and another was November 10, 1966.
It was also stated in the order that if there was any matter which was extremely urgent it would be heard on any other day by appointment through the Registrar.
It appears that Mr. Justice Dutta was also working as a Commission of Enquiry during that time.
For that purpose he had to go out of Gauhati, which is the seat of the High Court.
It seems that Mr. Justice Dutta went Away to Sibsagar after the vacation sitting on October 31, 1966.
Therefore on November 2, 1966 he was not available at Gauhati, even though he was the Vacation Judge and even though the order relating to vacation sittings said, that if any matter was extremely urgent it could be heard on any other day by appointment through the Registrar.
As the examination was to be held from November 4, 1966, the filing of the writ petition against the order of expulsion was undoubtedly a very urgent matter, if any order was to be obtained before November 4, 1966.
What the appellant is said to have done was this.
He gave notice to the Gov ernment Advocate on November 2, 1966 at Gauhati as required by the Rules and thereafter went to Sibsagar where Mr. Justice Dutta was holding the Commission of Enquiry and pre sented the writ petition there.
This petition was entertained by Mr. Justice Dutta and be passed interim orders thereon.
A copy of the interim order was prepared at Sibsagar and given to the appellant to be taken to Gauhati where it was to be sealed.
The appellant took the order to Gauhati and after getting it sealed served it on the university.
He was thereupon allowed to sit at the examination subject to the result of the writ petition.
It also appears that thereafter the papers relating to the writ petition were sent to Gauhati and the High Court had occasion to deal with the writ petition and passed miscellaneous orders thereon at Gauhati after the vacation was over.
Eventually, the writ petition came up for hearing in May 1967.
A preliminary objection was raised to the maintainability of the petition on behalf of the respondent.
It was urged that as Mr. Justice, Dutta was holding a Commission of Enquiry he could not act as a Judge of the High Court.
It was also urged in the alternative that even if he had the jurisdiction to.
act as a Judge of the High Court, he could not exercise that jurisdiction while at Sibsagar for the seat of the High Court was at Gauhati.
816 The petition.
was heard by a Bench consisting of the learned Chief Justice and Mr. Justice Goswami.
The learned Chief Justice seems to have held that Mr. Justice Dutta while performing the duties of a Commission of Enquiry could not also perform the duties of a Judge of the High Court.
He further held that in any case as the seat of the High, Court, was at Gauhati, Mr. Justice Dutta could not pass any order as a Judge of the High Court at Sibsagar, which, was not the seat of the High Court.
Finally, the learned Chief Justice made certain remarks as to the "unholy haste and hurry exhibited in dealing with this matter by Dutta J." at Sibsagar and set aside the order of stay granted by Dutta J. on November 3, 1966 and also set aside the order issuing rule nisi, and dismissed the petition.
Goswami J. did not fully agree with the learned Chief Justice, though, he agreed with the order setting aside 'the stay granted ' by Dutta J. and also agreed with.
the order dismissing the writ petition.
He observed that "I shall content ' myself in assuming that Dutta J. had no anxiety other than what prompted him to do in the interest of what his Lordship thought to be justice".
when he passed the order in.
question on November 3, 1966.
But he was of the view.
that a Judge of the High Court could not hold a sitting anywhere in Assam except at the seat of the High Court, namely, Gauhati, and therefore the order passed on November 3, 1966 by Dutta J. was without jurisdiction.
The present appeal has been brought before us by special leave and it is urged on behalf of the appellant that it was not correct to hold that Dutta J. could not act as a Judge of the High Court while he was working as a; Commission of Enquiry and further that Dutta J. had no jurisdiction while at Sibsagar to entertain the petition and to pass the stay order.
We shall deal with the two contentions in that order.
We are of opinion that the learned Chief Justice was not right when he held that Dutta J.; could not act as a Judge of the High Court While he was working as a Commission of Enquiry ' Learned Attorney General appearing for the State of Assam did not support that view It also appears that Goswami J. has said nothing on this aspect of the matter; presumably he did riot agree with the view of the learned Chief justice.
Often times, Judges 6f High Courts are appointed under the Commission 'of Enquiry Act to head Commissions for various purposes.
These Commissions are temporary affairs and many a time their sittings are not continuous.
A Judge of the High Court when he is appointed to head a Commission, of this kind does not demit his office as a Judge and when the Commission is not actually sitting he is entitled to sit as a Judge of the High Court.
It is only where a Judge of the High Court is appointed to another post, which is a whole time post that it may be said that on such appointment he can no longer work as a Judge of the High 817 Court for the time being, though even in such a case, when the work is over, he reverts as a Judge of the High Court without fresh appointment.
Such, for example, was the case of Incometax Investigation Commission where the appointments were whole time and a, Judge.
of the High Court appointed as a member of the Investigation Commission could not at the same time work as a Judge of the High Court.
But Judges appointed to head Commissions under the Commission of Enquiry Act stand in a different position altogether.
As we have said, these.
Commissions are temporary and are not whole time posts and their sittings are not even continuous.
In such a case we, are of opinion that a Judge appointed to ' head a Commission of Enquiry remains as part of the High Court and if the Commission of Enquiry is not working continuously he is entitled to sit and ,act as a Judge of the High Court in the intervals.
It is not disputed that Dutta J. was heading a Commission of Enquiry of this temporary nature, and as such we are of opinion that he was entitled to sit and 'act as a Judge of the High Court when ever he had time to do so.
It is remarkable that Dutta J. was appointed Vacation Judge while he was working as Commis sion of Enquiry and that appointment was in our opinion quite in order.
for by heading the Commission of Enquiry, Dutta J. did not demit his office as a Judge of the High Court.
We cannot therefore agree with the observation of the learned Chief Justice that Dutta J. could not have assumed to himself the ' role and duties of a Judge of the High Court exercising jurisdiction as a Bench 'of the High Court.
We also disagree with the view expressed by the learned Chief Justice that it was highly objectionable on the part of Dutta J. to work as a Judge of the High Court while be was heading the Commission of Enquiry.
We are of opinion that where a Judge heads temporary Commissions of Enquiry under the Commission of Enquiry Act.
he remains a part of the High Court and is entitled to sit and, act as a Judge of the High Court whenever be thinks fit.
The appointment of a Judge as Commission of Enquiry does not deprive him of the rights and privileges of a Judge of the High Court.
Whenever he finds time to attend to his duties as a Judge of the High Court while acting as a. Commission of Enquiry, he can do so.
The next question is whether Dutta J. could act as a Judge of the High Court at Sibsagar when Gauhati is the seat of the High Court under the notification issued under article 10 of.
the Assam High Court Order, 1948.
We do not think it necessary to decide this question in the present appeal.
We shall assume that Dutta J. could not pass orders as a Judge of the High Court anywhere else except at Gauhati which is the seat of the High Court.
Even assuming that, all that can be said is that the presentation of the writ petition before Dutta J. at Sibsagar was irregular.
As we have said already.
he was still a Judge of the High Court while holding a Commission of Enquiry at Sibsagar, 818 and if he received the petition at Sibsagar, all that can be said is that the petition was irregularly presented there when it should have been presented at Gauhati.
But assuming that the presentation of the petition at Sibsagar was irregular, the fact remains that the petition was sent to Gauhati later and was dealt with there.
We do not see why the petition should have been dismissed because the ' presentation was irregular.
There is in out opinion no difficulty in holding that the petition was repre sented when it was sent to Gauhati and was dealt with there in the High Court.
The presentation should have been taken in such circumstances to have been made at Gauhati when the petition reached Gauhati and the petition should have been dealt with as such.
Of course, if the presentation of the petition at Sibsagar was irregular, the order passed by Dutta J. would also be irregular, But when the petition came to the High Court thereafter, the irregularity in presentation must be held to have been cured.
It was open to the High Court to, consider whether the irregular order of stay should be regularised.
Apart from that even if the irregular stay could not be regularised, there was no reason why the petition should have been dismissed merely on the ground that it was irregularly presented, when it finally did reach the High Court at Gauhati.
Whatever therefore may be said a:.bout the order under appeal setting aside the irregular order of stay, we are of opinion that the High Court was not right in dismissing the petition as it did on May 24, 1967.
The petition must be held to have been represented to the High Court when it reached the seat of the High Court at Gauhati and should have been dealt with as such and could not have been thrown out merely on the ground that the original presentation on November 3, 1966 was irregular.
We are therefore of opinion that the order dismissing the petition must be set aside and the High, Court should now go into the question whether the petition should be admitted and whether it should be set down for hearing.
Finally we consider it our duty to refer to certain observations made by the learned Chief Justice with respect to Dutte, J.is handling of the petition.
In this connection reference was made by the learned Cheif Justice to a decision of this Court in Principal, Patna College V. K. section Raman(1).
It is enough to say that the facts of that case are very different from the facts of the present case and the observations on which the learned Chief Justice relies do not apply to the facts of the present case.
In the present case, the petition was presented during vacation when no Judge was actually sitting at Gauhati and in the circumstances the action taken by the appellant in presenting the petition at Sibsagar before Dutta J. who was the Vacation Judge and the only Judge available, after giving notice to the Government Advocate on November 2, 1966 at Gauhati, seen* to have been the only course open to him in the circumstances, for the examination (1) ; 819 was to be held from November 4, 1966 and the appellant came to know on November 2, 1966 when the examination fee was not accepted that he would not be able to sit at the examination.
In the circumstances the observation of the learned Chief Justice that there was "unholy haste and hurry exhibited in dealing with this ' matter by Dutta J." is entirely uncalled for.
Assuming that Dutta J. wrongly took the view that he could entertain the petition and pass the stay order at Sibsagar, he could only act in the way he did in the view that he took, and ' it cannot be said that this was a case of "unholy haste and hurry".
We also cannot agree with learned Chief Justice that the notion of sending a) copy to Gauhati for getting it sealed so that it might be properly authenticated was in any way objectionable.
The situation being what it was, that seems to us to be the only way open, once it is clear that Dutta J. took the view that he could entertain the petition and pass orders thereon even though that view may not be correct.
Nor do we think that the learned Chief Justice was justified in observing that "the whole thing discloses an unnecessary zeal on the part of Dutta J. to assist the appellant".
Once Dutta J. took the view that he had jurisdiction to entertain the petition and pass orders thereon, the order he passed and the steps he took so that the order was served before November 4, 1966 (which was the date of the examination) appear to us to be the only steps that could have been taken, and such steps cannot be said to be opposed to the great traditions that obtain in a High Court; nor can it be said that Dutta J. 's action reflected adversely on the judicial independence and aloofness of that august institution.
There is no reason to hold that any unnecessary zeal was shown by Dutta J. in assisting the appellant when he passed the order which he did, once Dutta J. took the view that he had the jurisdiction to entertain the petition and pass order thereon at Sibsagar.
All that happened thereafter appears to us to be quite proper and cannot in any way reflect on the conduct of Dutta J. in this case.
It is a matter of regret that the learned Chief Justice thought fit to make these remarks in his judgment against a colleague and assumed without any justification or basis that his colleague had acted improperly.
Such observations even about Judges of subordinate courts with the clearest evidence of impropriety are uncalled for in a judgment.
When made against a colleague they are even more open to objections We are glad that Goswami J. did not associate himself with these remarks of the learned Chief Justice and, was fair when he asaumed that Dutta J. acted as he did in his anxiety to do what he thought was required in the interest of justice.
We wish the learned Chief Justice had equally made the same assumption and had I not made these observations castigating Dutta J. for they appear to us to be without any basis.
It is necessary to emphasis that judicial decorum has to be maintained at all times and even where criticism is justified it must be in language of utmost restraint, keeping always in view that the person making the comment is L/P(N)78CI 13 820 also fallible.
Remarks such as these made by the learned Chief Justice make a sorry reading and bring the High Court over which he presides into disrepute.
Even when there is justification for criticism, the language should be dignified and restrained.
But in this case we do not see any justification at an for such remarks.
We therefore allow the appeal and) set aside the order of the High Court dismissing the writ petition and send it back to the High Court with the direction that the High Court should reconsider whether the petition should be admitted, taking it as represented on the day it reached Gauhati, and ' if so it should be set down for hearing in due course.
In the circumstances we make no order as to costs.
V.P.S. Appeal allowed.
| IN-Abs | One of the Judges of the High Court of Assam was nominated to be the Vacation Judge for hearing urgent civil and criminal applications when the High Court was closed for vacation from 17th September 1966 to 19th November 1966.
Certain days were fixed as the vacation court days, and if there was an extremely urgent matter the Vacation Judge could hear it on any other day by appointment.
At that time, the same Judge was heading a Commission of Enquiry under the Commission of Inquiry Act, and in connection with that work, on 2nd November 1966, the Vacation Judge went from Gauhati the seat of the High Court, to Sibsagar.
The appellant was a student of a college at Gauhati.
He was expelled from the college on 26th October 1966.
He tendered an.
unconditional apology the next day and attended classes till the end of the month; but, on 2nd November, when he wanted.
to pay the fee for an examination to be held on 4th November, the fee was not received as the Principal of the College had not accepted the apology.
As the Vacation Judge was not available at Gauhati, the appellant went to Sibsagar and presented a writ petition to the Vacation Judge.
The Judge entertained the petition and passed an interim order.
A copy of the interim order was prepared at Sibsagar and given to the appellant to be taken to Gauhati where it.
was sealed and served on the University.
The appellant was then allowed to sit for the examination subject to the result of the writ petition.
Thereafter, the papers relating to the writ petition were sent to the High Court at Gauhati and after the vacation was over, certain miscellaneous orders were passed on the writ petition.
Eventually, it came up for hearing and was dismissed by a Bench consisting of the Chief Justice of the High Court and another Judge.
The Chief Justice held that: (1) the Vacation Judge, while performing the duties of a Commission of Enquiry, could not also Perform the duties of a Judge of the High Court (2) a Judge of the High Court could not hold a,sitting anywhere else except at the seat of the, High Court ' and (3) the Vacation Judge exhibited 'unholy haste and hurry ' and his I action disclosed 'an unnecessary zeal ' on his part to assist the appellant.
The other Judge agreed with the order of dismissal only on the.
second ground.
In appeal to this Court, HELD: (1) Judges of the High Court are of appointed under the Commission of inquiry act to head commission for various head purposes.
These Commissions are temporary affairs and usually their 814 sittings are not continuous.
A Judge of the High Court when lie is appointed to head such a Commission does not demit his office as a Judge nor does the appointment deprive him of his rights and privileges as a Judge of the High Court.
Therefore, there was nothing objectionable on the part of the Vacation Judge working as a Judge of the High Court while he was heading the Commission, for, when the Commission was not actually sitting; he was entitled to sit and act as a Judge of the High Court.
[817 G H; 818 C].
(2) Assuming that a Judge of the High Court could not pass orders as a Judge anywhere else except at the seat of the High Court, the effect of such an assumption in the present case is,.
that the presentation of the writ petition at Sibsagar was irregular and the interim order passed thereon was also irregular.
But, as the petition was sent to Gauhati later and dealt with by the High Court there, the petition must be deemed to have been represented to the High Court, and the irregularity in presentation must be held to have been cured.
It was open to the High Court to consider whether the irregular interim order should be regularised or to deal with the petition on merits.
But it was not open to the High Court to throw out the petition merely on the ground that the original presentation was irregular.
[818 H; 819 A E].
(3) Assuming that the Vacation Judge wrongly took the view that he could entertain the petition and pass the interim order at Sibsagar, he could only act in the way he did in the view that he took, and, in the circumstances, the observations of the Chief Justice were entirely uncalled for.
There was no justification at all for such justification for criticism, the language should be dignified and rejustification for criticism, the language should be dignified and restrained.
[820 B D, G; 821 A].
Principal, Patna College vs K. section Raman, [1966], 1 S.C.R. 974, distinguished.
|
iminal Appeal No.165 of 1967.
Appeal by special leave from the order dated April 27, 1967 of the Bombay High Court, Nagpur Bench in Criminal Appeal No. 74 of 1967.
W. section Barlingay and A. G. Ranaparkhi, for the appellant.
H. R. Khanna and section P. Nayar, for the respondent.
89 The Judgment of the Court was delivered by Vaidialingam, J.
The appellant, who was the second accused, in Sessions Case No. 9 of 1967, and accused No. 1, were found guilty, under section 195 and section 196 read with section 34, I.P.C. and each of them has been convicted and sentenced to undergo three years ' rigorous imprisonment, for these offences and the sentences have been directed to run concurrently.
The case of the first accused, is not before us, in these proceedings.
The appellant challenged his conviction and sentence, passed against him, before the High Court of Bombay, in Criminal Appeal No. 74 of 1967.
A Division Bench of the High Court has, by its order dated April 27, 1967, summarily dismissed the appeal, in one word 'dismissed '.
The appellant has come up, to this Court, by special leave.
But this Court, by its order dated September 7, 1967, has granted special leave, limited to the question as,to whether the High Court was justified in dismissing the appeal, summarily.
That is the only point, that arises for consideration, in this appeal.
It is necessary, to set out briefly, the circumstances under which the appellant, who was, a police Sub Inspector, along with one Dilawar, who was accused No. 1, came to be charged sheeted and tried, in Sessions Case No. 9 of 1967.
In connection with a dacoity, which is alleged to have taken place, on July 18, 1965, when the Bombay Howrah Mail was stopped, at the outer signal of Nagpur Railway Station, one Ambadas and Deorao, and certain others, were prosecuted before the Additional Sessions Judge, Nagpur, in Sessions Case No. 8 of 1966.
In that trial, the prosecution had to prove certain recoveries made, on the basis of three memos, which have been marked, in the present Sessions Trial, as Exhibits 7, 8 and 14.
Those memos had been attested by two Panch witnesses, Pochanna and Abdul Gani.
Pochanna turned hostile and, therefore, the prosecution tried to establish the recoveries made, under these memos, by the other Panch witness.
Abdul Gani.
The first accused, in the present Sessions trial, gave evidence, on June 10, 1966, in Sessions Case No. 8 of 1966, that he is Abdul Gani and that he has attested the recovery memos.
The appellant, before us, was examined in that trial, on June 11, 1966, and he has stated that the witness, who has spoken to the recovery memos, was Abdul Gani and that he has attested the recovery memos; but, later on, the accused in the dacoity case, appear to have entertained a suspicion that the first accused, in these proceedings, who claim to be Abdul Gani and spoke to having attested the recovery memos, is not the real Abdul Gani, but Dilawar.
This suspicion was brought to the notice of the Sessions Judge, trying the dacoity case, on June 14, 1966.
The Sessions Judge, Sri Waikar, caused the present first accused, to be L10Sup.
CI/68 7 90 brought before him and further examined him, in Sessions Case No. 8 of 1966.
The witness appears to have stated that he was not Abdul Gani, but really Dilwar, and that he had come to the Court, on June 10, 1966, and given evidence, as Abdul Gani, on the compulsion and threat of the present appellant.
On the same day, i.e., June 14, 1966, Mr. Waikar issued a notice to the appellant, to show cause why a complain+ should not be laid against him, for offences under sections 195, 196, and 205, I.P.C. By the said notice, the appellant was directed to appear before the Court, on June 16, 1966.
The appellant appeared and pleaded, on June 16, 1966, that he had not committed any offence and that he bona fide believed that the present 1st accused was Abdul Gani, and that he had never compelled one Dilawar to appear before the Court and give evidence, as Abdul Gani The, appellant was further examined, in the dacoity case, on Juno 17, 1966, and he was also cross examined, by the accused, in the dacoity case, on June 22, 1966, the teamed Sessions Judge, Nagpur, ac quitted all the accused, in the dacoity case.
In the said judgment, the learned Sessions Judge has stated that the present accused No. 1, intentionally gave false evidence, and the appellant intentionally fabricated false evidence with the intent to procure conviction of the accused, in the dacoity case, and that it was highly expedient, in the interest of justice and in the interest of eradication of the evil of perjury and the fabrication of false evidence, that both of them should be prosecuted.
Thereupon, the learned Sessions Judge filed the complaint, against the appellant and Dilawar, on July 8, 19669 in the, Court of the Joint Magistrate, First Class, IV Court, Nagpur.
The Joint Magistrate, by his order dated January 27, 1967, held that a prima facie case, against both the accused, under sections 195 and 196 read with section 34, I.P.C., has been made out; and, accordingly, after framing charges, he committed them to the Sessions Court, to face trial.
The learned Sessions Judge, Nagpur, by his judgment, dated March 31, 1967, has found each of the accused, guilty under section 195 and section 196 read with section 34, I.P.C., and sentenced them, as mentioned earlier.
In view of the, fact that special leave has been limited to the question, as to, whether the, High Court was justified, in dismissing the appeal, summarily, and, as we are satisfied, after hearing arguments, on behalf of the appellant, and the State, that the appeal will have to be remanded, for fresh consideration, by the High Court, we do not propose to deal with the matter very elaborately.
We will only advert to some of the material circumstances, that have been placed, before us, by the learned counsel, 91 for the appellant, to hold that this was certainly not a case in which the, High Court was justified in dismissing the appeal, summarily.
On behalf of the appellant, learned counsel, Dr. Barlingay.
raised two contentions: (i) that the learned Sessions Judge, in convicting the appellant, has relied, mainly, on the evidence, given by Dilawar, on June 14, 1966, in Sessions Trial No. 8 of 1966, and on the statements, made by Dilawar, as first accused, when he was examined, under section 342, Cr.P.C., in the present Sessions Trial; and (ii) that the provisions of section 479A, Cr.
P.C., have not been complied with, when Mr. Waikar filed the complaint, as against the appellant, on July 8, 1966.
Mr. H. R. Khanna, learned counsel, appearing for the State of Maharashtra, on the other hand, submitted that the learned Sessions Judge has considered the question of non compliance with the provisions of section 479A, Cr.
P.C., and he has rejected the appellant 's contention, in that regard.
Counsel also pointed out that, apart from the evidence of Dilawar, in Sessions Case No. 8 of 1966, and his answers, given as co accused, in the present Sessions Case, there is, on record, other evidence, which have also been taken into account, by the learned Sessions Judge, for convicting the appellant.
When the High Court dismissed the appeal, though summarily, it must be presumed that the High Court has agreed with the views, expressed by the learned Sessions Judge, in the present judgment.
Therefore, we understood counsel to urge that the High Court was perfectly justified, in dismissing the appeal, summarily.
There is no controversy, that the appellant, who has been convicted, on trial, by the Sessions Judge, had a right of appeal, to the High Court, under section 410, Cr P.C. The appellant was also entitled, under section 418 Cr.
P.C., to agitate, in his appeal, before the High Court, findings of fact, recorded against him, as also questions of law, available to him.
No doubt, under section 421 Cr.
P.C., the Appellate Court may dismiss an appeal, summarily, if, on a perusal of the petition of appeal, and a copy of the judg ment appealed from, it considers that there is no sufficient ground for interference.
This section, has come up for consideration, before this Court, in Mushtak Hussein vs The State of Bombay(1).
This Court has held, therein, that in a case, which, prima facie, raises no arguable issue, a summary dismissal of the appeal, may be justified, but, in arguable cases, a summary rejection order must give some indication of the views of the High Court, on the point,, raised.
Again, in a case, where the High Court summarily dismissed an appeal, in one word 'dismissed ', this Court, in Shreekantiah Ramayya Munipalli V. The State of Bombay(1) (1) 19.
(2) ; 92 again reiterated the views expressed in the earlier decision, referred to above, and stated that summary rejection of appeals, which raise issues of substance and importance, was not justified.
After adverting to the two decisions, noted above, this Court, again in Chittaranjan Das vs State of West, Bengal(1), laid down that there ,can be no doubt, whatever, that in dealing with criminal appeals, brought before them, the High Courts should not summarily reject them, if they raise arguable and substantial points.
Bearing these principles in view, the question naturally arises as to whether the appeal filed, by the appellant, before the High Court of Bombay, raised any arguable point, or whether the questioned raised were substantial and important.
In support of the first contention, Dr. Barlingay drew our attention to the discussion, contained in the judgment of the learned Sessions Judge, wherein he has placed strong reliance, upon the evidence, given by Dilawar, in Sessions Case No. 8 of 1966.
He has also.
drawn our attention, to the reliance, placed by the learned Sessions Judge, upon the answers given by Dilawar, as co accused, when he was examined, under section 342 Cr.
P.C. The evidence given by Dilawar, in the dacoity case, counsel points out, is inadmissible, in these proceedings.
The answers giver.
by him, as co accused, when examined, under section 342 Cr.
P.C., cannot be taken into account, as against the appellant, whatever the position may be, so far as Dilawar himself, is concerned.
There is no other evidence, counsel points out, on record, which has been taken into account, by the learned Sessions Judge.
In any ;event, counsel urged, after eliminating the evidence, given by Dilawar in the dacoity case, and the answers given by him, in this trial, the High Court had to consider whether there was any other evidence, on record, which would justify the Sessions Court finding the appellant guilty.
By the dismissal of the appeal, sum marily, counsel points out, the High Court has omitted to consider the serious illegality, contained in the judgment of the Sessions Judge, in relying upon the evidence and statement of Dilawar.
The contention of the learned counsel, that a gross illegality has been committed, by the learned Sessions Judge in relying upon the evidence, given by Dilawar, in the dacoity case, and using the answers given by him, as a accused, against the appellant, in our opinion, is well founded.
In paragraph 5 of its judgment, the Session 's Court has referred to the fact that Dilawar, accused No. 1, admits all the facts alleged, by the prosecution, and that he has explained that he gave evidence as Abdul Gani at the instance of the appellant.
In considering, again, the question as to whether the appellant knew accused No. 1 as Dilawar or Abdul Gani, the learned Sessions Judge, in (1) ; 93 paragraph 20, refers to the statement of Dilawar, wherein he.
refers to the circumstances, under which the appellant compelled him to come to, the Court and pose himself as Abdul Gani.
The learned Sessions Judge also refers, in paragraph 21 of his judgment, that Dilawar has made a very clean breast of the whole matter, when he, was examined by Mr. Waikar, on June 14, 1966, in the dacoity case.
The learned Sessions Judge also refers to the fact that Dilawar has given a consistent version throughout, inculpating the appellant, both in his evidence in Sessions Case No,. 8 of 1966, as well as in his statement given, in the present Sessions Trial.
We are not referring to the various other points, adverted to, by the learned Sessions Judge.
We have adverted to the above circumstances, only for the purpose of holding that the learned Sessions Judge, in coming to the conclusion that the appellant is guilty, has placed considerable reliance on the evidence of Dilawar, given in the dacoity case and to his statements, made: under section 342 Cr.
P.C., as co accused, in the present trial.
The legal position is quite clear, viz., that the evidence,, given by Dilawar, in the dacoity case, cannot be used as evidence against the appellant, who, had no opportunity to cross examining Dilawar, in the said case; and the statements of Dilawar, as co accused, made under section 342 Cr.
P.C., in the present trial, cannot be used against the appellant.
We are not certainly inclined to accept the contention of the learned counsel, for the State, that these very serious illegalities, committed by the learned Sessions Judge, must be considered to have been, approved, by the learned Judges of the High Court, when they dismissed the appeal, summarily.
In fact, we are inclined to think, that, by dismissing the appeal summarily, the learned Judges of the High Court have omitted to note these serious illegalities, contained in the judgment of the learned Sessions Judge.
As to whether there is other evidence, on record, which would justify the conclusion that the appellant has been rightly convicted, is not a, matter on which it is necessary for us to embark upon, in this,, appeal.
That is essentially for the High Court, as a Court of appeal, to investigate, and come to a conclusion, one way or the other.
The second contention, urged by the learned counsel, for the appellant, is also, in our opinion, a very substantial one.
According to the learned counsel, after the judgment was delivered, in the dacoity case, on June 22, 1966, and before the complaint was filed, by Mr. Waikar, on July 8, 1966, against the appellant, the appellant was not given an opportunity of being heard, as required under section 479A, Cr.
This contention has been raised,, even before the Committing Magistrate, as a perusal of the order of that Magistrate, will show.
This objection, was again taken.
before the.
learned Sessions Judge.
The learned Sessions Judge 94 has taken the view that the show cause notice, issued.
by Mr. Waikar, to the appellant, on June 14, 1966, is a sufficient compliance with the provisions of that section.
The learned Sessions Judge is also of the view that, under section 479A, Cr.
P.C., it does not matter whether a notice is given before the finding is recorded in the judgment, or whether the notice is given, after the findings are recorded in the judgment.
The question, as to whether the appellant has been given an opportunity, of being heard, under section 479A, is again, not only in our opinion, an arguable point, but also a substantial and important one.
The discussion, contained above, will clearly show that the appeal, filed by the appellant, before the High Court of Bombay was an arguable one, and it also raised substantial and important questions, for consideration at the hands of the High Court.
We are therefore satisfied that the High Court was not justified, in dismissing the appeal, filed by the appellant, summarily.
In view of this conclusion, the order of the High Court, dated April 27, 1967, dismissing Crl.
Appeal No. 74 of 1967, is set aside, and the said appeal is remanded to the High Court, for fresh disposal, in the light of the observations, contained in this judgment.
This appeal is allowed, accordingly.
V.P.S. Appeal allowed and remanded.
| IN-Abs | During the trial for an offence of dacoity one of the witnesses gave false evidence, and stated, on further examination, that he did so at the instance of the Sub inspector who investigated the case.
The Court gave notice to the Sub inspector to show cause why a complaint should not be laid against him for offences under sections 195, 196 and 205 I.P.C. and he appeared and showed cause.
After the trial, and at the time of delivering judgment in the dacoity case the Court found that the witness had intentionally given false evidence and that the Sub inspcctor had intentionally fabricated false evidence, and thereafter filed a complaint against them before the Joint Magistrate.
They were committed to the Sessions Court to take their trial for offences under sections 195, 196 and 34 I.P.C. as first and second accused respectively.
The Sessions Judge found them guilty.
The Sub inspector (second accused) appealed to the High Court and contended that : (1) the Sessions Judge had committed a gross illegality in relying as against the second accused, upon the evidence of the first accused as a witness in the earlier dacoity case, and the statement of the first accused under section 342 Cr.
P.C. before the Sessions Judge; and (2) the show cause notice was not sufficient com pliance with the provisions of section 479A, Cr.
P.C. as the notice should have been given after the judgment in the dacoity case.
The High Court dismissed the appeal summarily in one word 'dismissed ', without discussing the questions of law and without considering whether there was ,.sufficient other evidence to convict the appellant.
In appeal by the Sub inspector to this Court, HELD : The appeal before the High Court, was an arguable one, and it also raised substantial and important questions for consideration by the High Court.
The High Court was therefore not justified in dismissing the appeal summarily.
[94C] Mushtak Hussein vs State of Bombay. ; Shreekantiah Ramyayya Munipalli vs state of Bombay ; and Chittaranjan Das vs State of West Bengal ; followed.
|
Appeal No. 128 of 1965.
Appeal from the judgment and decree dated December 12, 1963 of the Judicial Commissioner 's court, Himachal Pradesh, in Civil Writ Petition No. 19 of 1963.
Vikram Chand Mahajan and R.N. Sachthey, for the appellants.
Rameshwar Nath and Mahinder Narain, for respondents.
The Judgment of the Court was delivered by Sikri, J.
This appeal by certificate granted by the Judicial Commissioner, Himachal Pradesh, is directed against his judgment allowing a petition filed by the respondents and issuing a writ of mandamus directing the Divisional Forest Officer.
Sarahan Forest Division, and the Chief Conservator of Forests, Himachal Pradesh hereinafter referred to as the appellants to issue or get issued the necessary permission for felling the trees and the transit pass.
in respect of certain khasra numbers.
In order to appreciate.
the points raised by the learned counsel for the appellants, it is necessary to set out the relevant facts.
Land measuring 27 bighas and 16 biswas comprised in khasra Nos. 452/1,453, 453/1, 40, 100 and 440 and situated in village Kadiali, Tehsil Theog, District Mahasu, belonged to Government and was under the tenancy of Moti Ram.
He filed an application under section 11 of the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953 hereinafter referred to as the Act and was granted proprietary rights in the land by the Compensation Officer by order dated August 30, 1957.
Provisional compensation was assessed at Rs. 62.56 nP.
The Compensation Officer held that "as the applicant is a cultivating tenant over the aforesaid land he is entitled to acquire right, title and interest of the said land owner on payment of Rs. 62.56 as compensation which should be deposited.
" On September 9, 1957, a certificate of ownership was granted to Moti Ram on his depositing Rs. 62.56.
Moti Ram died and the land was mutated in favour of his wife Smt.
Besroo and his daughter Smt.
The respondents applied for permission to sell the trees on their land, and the Divisional Forest Officer by order dated July 18, 1958, permitted them to sell the trees from their land on certain conditions.
On November 15, 1958, the respondents deposited Rs. 1267.13 nP as government fee, but the Divisional Forest Officer failed to give clear orders for felling the trees and taking out the converted timber from the said ]and.
The Chief Conservator Officer, by letter dated July 12, 1961, informed the respondents that the matter was being inquired from the Conservator of 114 Forests, Simla Circle.
Thereupon, not hearing anything further, the respondents flied a petition under article 226 of the Constitution.
It was urged before the Judicial Commissioner, on behalf of the Divisional Forest Officer that the respondents had No. interest in the trees standing on their land as.
the trees were not 'land ' as defined in section 2(5) of the Act, and that the Compensation Officer was not competent to grant, and, in fact, did not grant proprietary rights in the trees to the deceased Moti Ram.
The learned Judicial Commissioner, following Vijay Kumari Thakur vs H. P. Administration (1) held that the appellants were estopped from contending that the respondents had no interest in the trees.
He further held that the respondents were granted permission to sell the trees standing on their land and they had, in fact, entered into an agreement to sell to a third party, and they had deposited Rs. 1267.13 nP and had 'thus acted to their detriment.
As stated already, the learned Judicial Commissioner allowed the petition and issued a writ of mandamus.
With certificate granted by the Judicial Commissioner the appellants have.
flied this appeal.
The learned counsel for the appellants contends that under section 11 of the Act the trees did not vest in the deceased Moti Ram.
He says that what vested under section 11 of the Act was land, and 'land ' is defined in section 2 ( 5 ) as follows: "section 2(3).
Land means land which is not occupied as the site of any building in a town or village and is occupied or has.
been let for agricultural purposes or for purposes subservient to agriculture, or for pasture, and includes (a) the sites of buildings and other structures on such land;.
(b) orchards; (c) ghasnies;" He relies on a number of decisions of the Punjab Chief Court and the Lahore High Court interpreting a similar definition existing in the Punjab Alienation of Land Act (XIII of 1900).
In our opinion those cases are distinguishable inasmuch as they deal with the question whether trees could be sold or assigned under the Punjab Alienation of Land Act without infringing the prohibitions contained in that Act forbidding sale of land by agriculturists in favour of non agriculturists.
For instance, in Achhru Mal vs Maula Bakhsh(2), under a deed of sale the vendee was entitled to cut and remove the trees within a period of ten years, and the plaintiff brought a suit asking for a perpetual injunction (1) A.I.R. 1961 H. P. 32.
(2) 115 to issue to the defendants respondents to restrain them from preventing him from cutting and removing certain trees from the. land belonging to the defendants respondents The lower courts held that the trees growing on agricultural land were "land" within the ' meaning of the expression as defined in section 2(3) of the Punjab Alienation of Land Act, and, therefore, their sale to the plaintiff was unlawful having regard to the provisions of that Act.
The ' Lahore High Court held that the sale did not infringe the provisions of that Act because the sale of trees was not a sale of land.
The High Court was not concerned with the question whether on a transfer of land trees standing on it passed to the transferee or not.
In Nasib Singh vs Amin Chand(1) it was held that the suit for possession of certain mango, shisham and jaman trees was not a suit between a landlord and his tenant under the Punjab Tenancy Act and consequently the Civil Court was competent to try the suit.
There can.
be no doubt that trees are capable of being transferred apart from land, and if a person transfers trees or gives a right to a person to cut trees and remove them it cannot be said that he has transferred land.
But we are concerned with a different question and the question is whether under section 11 of the Act trees are included within the expression "right, title and interest of the land owner in the land of the tenancy".
It seems to us that this expression "right, title and interest of the land owner in ' the ' land" is wide enough to include trees standing on the land.
It is clear that under section 8 of the Transfer of Property Act, unless a different intention is expressed or implied, transfer of land would include trees standing on it.
It seems to us that we should construe section 11 in the same manner.
The learned counsel for the appellants contends that the trees standing on the land transferred to Moti Ram under section 11 of the Act are worth about Rs. 76,000, and it could not have been the ' intention to transfer Rs. 76,000 worth of trees for Rs. 62/56.
He says.
that the trees are really forest trees and it was never the intention of the legislature to vest forest trees in the tenants acquiring land under section 11 of the Act.
But no such contention seems to have been raised in the written statement filed by the appellants.
It might have been different if it had been proved that the portion of the area transferred to Moti Ram was a natural forest.[see Kaju Mal vs Salig Ram(2)].
The learned counsel referring to section 84 of the Act points out that one of the consequences of vesting of land in the State Government under section 83 is that trees expressly vest in the 'State.
He says that if it was the intention to vest trees in the tenant acquiring land (1) A.I.R. 1942 Lah.
152 (2) (1919) Punj.
Rec. 237.
116 under section 11 of the Act, it would have been similarly so expressed.
We are unable to accede to this contention.
Section 84(a)(i) reads as follows: "84.
When a notification under section 83 has been published in the Gazette notwithstanding anything contained in any contract or document or in any other law for the time being in force and save as otherwise provided in this Act, the consequences as hereinafter setforth shall, from the beginning of the date of vesting ensue in respect of the land to which the notification applies, namely : (a) all rights, title and interest of all the landowners (i) in every such land including cultivable or barren land, ghasnis, charands, trees, wells, tanks, ponds, water channels, ferries, pathways, hats, bazars and melas;. " If the contention of the learned counsel were.
correct, even cultivable land which is expressly mentioned in section 84(a) (i) would not vest in the tenant under section 11 of the Act.
Section 11 is drafted very simply and under sub s.(6) the tenant becomes the owner of the land comprised in the tenancy on and from the date of grant of the certificate, and it is expressly provided that the right, title and interest of the landowner in the said land shall determine.
In the context the word "owner" is very comprehensive indeed, and it implies that all rights, title and interest of the landowner pass to the tenant.
Further, it seems to.
us that it would lead to utter confusion if the contention of the learned counsel is accepted.
There would be interminable disputes as to the rights of the erstwhile landowners to go on the lands of erstwhile tenants and cut trees or take the fruit.
Moreover, under section 15 of the Act we would, following the same reasoning, have to hold that the trees on the land of the landowner did not vest in the State.
This could hardly have been the intention.
For the aforesaid reasons we must uphold the judgment of the Judicial Commissioner, although for different reasons.
In the result the appeal fails and is dismissed with costs.
R.K.P.S. Appeal dismissed.
| IN-Abs | Upon an application filed by a cultivating tenant M under section 11 of the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953, the Compensation Officer held that as such tenant he was entitled to acquire "the right, title and interest" of the owner of the land in question.
After payment by the tenant of a specified amount of compensation, a certificate of ownership was granted to him and, after his death, the land was mutated in favour of his wife and daughter, respondents in this appeal.
The respondents applied to the Divisional Forest Officer for permission to sell the trees of their land and although that Officer granted permission for the sale, he failed to give the necessary orders for felling the trees and taking out the converted timber from the land.
The respondents filed a petition under article 226 of the Constitution for the issue of a writ of mandamus directing the Divisional Forest Officer to issue or get issued the necessary permission for felling the trees and moving the timber.
The Judicial Commissioner, following Vijay Kumari Thakur vs
H.P. Administration.
A.I.R. 1961 H.P. 32, held that the appellants were estopped from contending that the respondents had no interest in the trees and allowed the petition.
In appeal to the Supreme Court it was contended on behalf of the appellants that under section 11 of the Act the trees did not vest in the deceased tenant but only the 'land ' as defend in section 2(5) of the Act, and that the Compensation Officer was not competent to grant and, in fact, did not grant proprietary rights in the trees to the deceased tenant.
HELD : dismissing the appeal: Under sub section
(6) of section 11, the tenant becomes the owner of the land comprised in the tenancy on and from the date of gram of the certificate, and it is expressly provided that the right, title and interest of the landowner in the said land shall determine.
In the context the word 'owner ' is very comprehensive and implies that all rights, title and interest of the land owner passed to the tenant.
[116E F] Furthermore, the expression "right, title and interest of the landowner in the land" is wide enough to include trees standing on the land.
Under section 8 of the Transfer of Property Act, unless a different intention is expressed or implied, transfer of land would include trees standing on it; and section 11 of the Himachal Pradesh Act should be construed in the same manner.
[115 E] Achhru Mal vs Maula Bakhsh, and Nasib Singh vs Amin Chand, A,I.R. , distinguished.
Kaju Mal vs Salig Ram, [1919] Punj.
Rec. 237, referred to. 113
|
135 of 1950.
Application under article 32 of the Constitution for a writ in the nature of a writ of certiorari and prohibition.
Dr. Tek Chand (Hardayal Hardy and Jindra Lal, with him) for the petitioner.
M.C. Setalvad, Attorney.
General for India, (section M. Sikri, with him) for the respondent.
january 12.
This is said to be a test case, for, on its decision, we are told, depend the rights of numerous other persons whose interests are similar to those of the petitioner.
There is no serious controversy as to the facts material for the purposes of this application.
They are shortly as follows: On May 5, 1948, the then Rulers of eight Punjab States including.
Patiala and Nabha with the concurrence and guarantee of the Government of India entered into a covenant agreeing to unite and integrate their territories in one State with a common executive, legislature and judiciary by the name of Patiala and East Punjab States Union, hereinaf ter compendiously referred to as the Pepsu.
By article III (6) of the covenant the then Ruler of Patiala became the first President or Raj Pramukh of the Council of Rulers and he is to hold the office during his lifetime.
Article VI of the covenant is as follows : "(1) The Ruler of each Covenanting State shall, as soon as may be practicable, and in any event not later than the 20th of August, 1948, make over the administration of his State to the Raj Pramukh, and thereupon, (a) all rights, authority and jurisdiction belonging to the Ruler which appertain, or are incidental to the Govern ment of the Covenanting State shall vest in 130 the Union and shall thereafter be exercisable only as pro vided by this Covenant or by the Constitution to be framed thereunder; (b) all duties and obligations of the Ruler pertaining or incidental to the Government of the Covenanting State shall devolve on the Union and shall be discharged by it; (c) all the assets and liabilities of the Covenanting State shall be the assets and liabilities of the Union, and (d) the military forces, if any, of the Covenanting State shall become the military forces of the Union.
" Article X provides for the formation of a Constituent Assembly to frame a constitution of a unitary type for the Union within the framework of the Covenant and the Constitu tion of India.
This Constituent Assembly was also to func tion as the interim Legislalature of the Union until an elected legislature came into being.
The proviso to clause (2) of that Article runs as follows : "Provided that until a Constitution framed by the Con stituent Assembly comes into operation after receiving the assent of the Raj Pramukh, the Raj Pramukh shall have power to make and promulgate Ordinances for the peace and good government of the Union or any part thereof, and any Ordi nance so made shall, for the space of not more than six months from its promulgation have the like force of law as an Act passed by the Constituent Assembly;but any such Ordinance may be controlled or superseded by any such Act.
" This Union was inaugurated on July 15, 1948, and the Raj Pramukh thereafter took over the administration of the different Covenanting States.
The Administration of Nabha State was taken over by the Raj Pramukh on August 20, 1948.
On the same day the Raj Pramukh, in exercise of the powers vested in him, promulgated an Ordinance (No. 1 of 2005) called the Patiala and East Punjab States Union (Administra tion) 131 Ordinance, 2005.
The following provisions of this Ordi nance are relevant for our purpose: "1.
(2) It shall extend to the territories included in the Covenanting States on and from the date on which the administration of any of the said State or States has been or is made over to the Raj Pramukh.
* * 3.
As soon as the administration of any Covenanting State has been taken over by the Raj Pramukh as aforesaid, all laws, Ordinances, Acts, Rules, Regulations, Notifica tions, Hidayats and Firrnans i Shahi having force of law in Patiala State on the date of commencement of this Ordinance shall apply mutatis mutandis to the territories of the said State and with effect from that date all laws in force in such covenanting State immediately before that date shall be repealed: Provided that proceedings of any nature whatsoever pending on such date in the Courts or offices of any such Covenanting State shall, notwithstanding anything contained in this Ordinance or any other Ordinance, be disposed of in accordance with the laws governing such proceedings in force for the time being m any such Covenanting State.
" Section 6 provides for the adaptation of the laws etc.
enforced under section 3 and, amongst other things, any reference in these laws etc.
to the Patiala State and the like was to be construed as a reference to the State of the Union.
A notification (No.35 dated 27 5 05/11 9 1948) was issued over the signature of the Revenue Secretary notifying that the Patiala Income tax Act of 2001 and the Rules there under had come into force in the various Covenanting States from August 20, 1948, thereby repealing the law or laws in force in that behalf in those States before that date, except as to pending proceedings.
It may be mentioned here that prior to that date there was no law in the Nabha State imposing income tax on the subjects of that State.
On November 14, 1948, the Commissioner of Income tax issued a Notification (No. 4, dated 132 29 7 2005) intimating that persons belonging to the Cove nanting States of Nabha and Nalagarh would be assessed to income tax under the Patiala Income Tax Act, 2001.
It was mentioned that persons of those States whose income reached the taxable limit ' 'should henceforward keep regular and proper accounts for purposes of audit by the Income Tax Department" on February 2, 1949, Ordinance 1 of 2005 was repealed and replaced by Ordinance No. XVI of 2005 promul gated by the Raj Pramukh and called the Patiala and East Punjab States Union General Provisions (Administration) Ordinance, 2006.
Section 3 (1) runs as follows: "3.
(1) As from the appointed day, all laws and rules, regulations, bye laws and notifications made thereunder, and all other provisions having the force of law, in Patiala State on the said day shall apply mutatis mutandis to the territories of the Union and all laws in force in the other Covenanting States immediately before that day shall cease to have effect; Provided that all suits, appeals, revisions applica tions, reviews, executions and other proceedings, or any of them, whether Civil or Criminal or Revenue, pending in the Courts and before authorities of any Covenanting States shall, notwithstanding anything contained in this Ordinance, be disposed of in accordance with the laws governing such proceedings in force in any such Covenanting State immedi ately before the appointed day.
" By section 2 (a) the "appointed day" was defined as meaning the 5th day of Bhadon, 2005, corresponding to August 20, 1948.
There was a section providing for adaptation similar to section 6 of the Ordinance 1 of 2005.
There was another Ordinance to which reference has to be made, namely, Ordinance No. 1 of 2006 called the Finance Ordinance promul gated on April 13, 1949, which came into force on that very date.
Section 5 of that Ordinance introduced several amend ments to the Patiala Income Tax Act, 2001.
It recast 133 sections 3 and 34 of that Act and introduced a new section as section 23B. Section 6 of that Ordinance runs thus: "6.
For the assessment year beginning on the 1st day of Baisakh, 2006, that is to say, in respect of the accounting the income, profits and gains of the previous year ending on the last day of Chet, 2005, (a) income tax shall be charged at the rates specified in Part I of the Second Schedule to this Ordinance, and (b) rates of super tax shall, for the purposes of sec tion 55 of the Patiala Income Tax Act, 2001, be specified in Part II of the Second Schedule to this Ordinance.
" It is in this setting that the facts leading to the present petition have to be considered.
The petitioner is a resident of Ateli in the district of Mohindargarh now in Pepsu but which formerly formed part of the Nabha State.
The petitioner has been carrying on his business at Ateli for a number of years under the ' name and style of Raghunath Rai Ram Parshad.
He never paid any income tax as no such tax was imposed by any law in the Nabha State.
On October '20, 1949, the petitioner was served with a notice under sections 22(2) and 88 of the Patiala Income Tax Act, 2001, requiring him to submit a return for the Income Tax year 2006 (13 4 1949 to 12 4 1950) disclosing his income during the previous year (13 4 1948 to 12 4 1949).
The petitioner, on December 4, 1949, filed his return for the year 2006 and on February 14, 1950, he was assessed to income tax.
On May 23, 1950, the petitioner received a notice under section 34 calling upon him to file his return for the year ending the last day of Chet 2005, i.e., for the year 13 4 1948 to 12 4 1949.
In this return he had to specify his income of the previous year, namely, 2004 (i.e., 13 4 1947 to 12 4 1948).
It ap pears that the petitioner along with other assessees of Ateli and Kanina submitted a petition before the Income Tax Officer on July 9, 1950, asking him not to 134 proceed with the assessment for the year 2005 but on July 13, 1950, the Income Tax Officer assessed him to the best of his judgment under section 34(4) read with section 22(4) of the Income Tax Act.
The petitioner along with other asses sees similarly situated moved the Income Tax Commissioner and the Central Board of Revenue, New Delhi, but without any success.
No formal appeal under the Patiala Income Tax Act appears to have been filed by the petitioner against assess ments for either of the two years 2005 and 2006.
On August 10, 1950, the petitioner filed his present petition before this Court under article 32 of the Constitution praying that a writ in the nature of a writ of certiorari be issued for quashing the assessments of the petitioner 's income accrued in the years 2004 and 2005 and other ancillary reliefs.
During the pendency of this petition the income tax authori ties have issued a notice under section 46 intimating that penalty will be imposed if the tax was not paid up.
The contention of the petitioner in the first place is that he has been denied the fundamental right of equality before the law and the equal protection of the laws guaran teed to him by article 14 of the Constitution.
His griev ances are formulated in paragraphs 10 and 11 of his peti tion.
It is said that while the people of Kapurthala which is included in Pepsu have been asked to pay income tax for the period prior to August 20, 1948, at the old rate fixed by the Kapurthala Income Tax Act which was lower than the rate fixed by the Patiala Income Tax Act, 2001, the people of Nabha who had not to pay any income tax prior to August 20, 1948, at all have been made liable to pay at the higher Patiala rate and that such discrimination offends against the provisions of article 14.
This charge is refuted by paragraph 10 of the affidavit of Sardar Gurbax Singh, the Additional Director of Inspection (income Tax), New Delhi, who was formerly the Commissioner of Income Tax, Punjab and Pepsu, which has been filed in opposition to the present petition.
It is there stated that for the assessment year 2005, in Kapurthala the assessees whose cases were pending on 135 August 20, 1948, were assessed under the Kapurthala Income Tax Act at rates fixed thereunder but that for the assess ment year 2006 the provisions of the Patiala Income Tax Act and the rates prescribed thereunder were uniformly applied in all areas of the Pepsu, including Kapurthala This alle gation which is not denied in the affidavit filed by the petitioner in reply must be taken as correct.
The assess ment of Kapurthala assessees for the year 2005 at the old Kapurthala rate was obviously made under the proviso to section 3 of Ordinance No. 1 of 2005, which was reproduced in the proviso to section 3(1)of the Ordinance No. XVI of 2006 and both of which required all pending proceedings to be completed according to the law applicable to those pro ceedings when they were initiated.
No case of assessment was pending as against any Nabha assessee on August 20, 1948, for there was no Income Tax Act in Nabha prior to that date and, therefore, there could be no occasion for completing any pending proceedings against any of such assessees.
In the premises, there can be no grievance by them on the score of discrimination.
The discrimination, if any, was not brought about by the two Ordinances, but by the circumstance that there was no Income Tax Act in Nabha and consequently there was no case of assessment pending against any Nabha assessees.
In any case the provision that pending proceed ings should be concluded according to the law applicable at the time when the rights or liabilities accrued and the proceedings commenced is a reasonable law rounded upon a reasonable classification of the assessees which is permis sible under the equal protection clause and to which no exception can be taken.
In our opinion the grievance of the alleged infringement of fundamental right under Article 14 is not well founded at all.
Dr. Tek Chand appearing in support of the petition next contends that the administration of Nabha State having been taken over by the Raj Pramukh only on August 20, 1948, and the Patiala law including the Patiala Income Tax Act, 2001, having been brought 136 into operation on and from August 20, 1948, the assessment of the tax on the petitioner 's income which accrued prior to August 20, 1948, was wholly illegal and not authorised by the said Ordinances and the State by insisting on collecting the tax so illegally assessed was threatening to invade the petitioner 's fundamental right to property guaranteed by article 31(1) of the Constitution.
Article 31(1) runs as follows: "(1) No person shall be deprived of his property save by authority of law.
" It will be noticed that clause (1) reproduces subsection (1) of section 299 of the Government of India Act, 1935, without the words "in British India.
" Reference has 'next to be made to article 265 which is in Part XII, Chapter I, dealing with "Finance." That article provides that no tax shall be levied or collected except by authority of law.
There 'was no similar provision in the corresponding chapter of the Government of India Act, 1935.
If collection of taxes amounts to deprivation of property within the meaning of article 31(1), then there was no point in making a sepa rate provision again as has been made in article 265.
It, therefore, follows that clause (1) of article 31 must be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax, for otherwise article 265 becomes wholly redundant.
In the United States of America the power of taxation is regarded as distinct from the exercise of police power or eminent domain.
Our Constitution evidently has also treated taxation as distinct from compulsory acquisition of property and has made inde pendent provision giving protection against taxation save by authority of law.
When Dr. Tek Chand was asked if that was not the correct position, he did ,not advance any cogent or convincing answer to refute the conclusion put to him.
In our opinion, the protection against imposition and collec tion of taxes save by authority of law directly comes from article 265, and is not secured by clause (1) of article 31.
Article 265, 137 not being in Chapter IIi of the Constitution, its protection is not a fundamental right which can be enforced by an application to this court under article 32.
It is not our purpose to say that the right secured by article 265 may not be enforced.
It may certainly be enforced by adopting proper proceedings.
All that we wish to state is that this application in so far as it purports to be rounded on arti cle 32 read with article 31(1) to this Court is misconceived and must fail.
The whole of Dr. Tek Chand 's argument was rounded on the basis that protection against imposition and collection of taxes save by authority of law was guaranteed by article 31(1) and his endeavour was to establish that the Pepsu Ordinances could not, in law, and did not, on a correct interpretation of them, impose any income tax retrospective ly; that the Income Tax Officer on an erroneous view of the law had wrongly assessed the tax on income accrued prior to August 20, 1948, and that consequently the petitioner was being threatened with deprivation of property otherwise than by authority of law.
In the view we have taken, namely, that the protection against imposition or collection of taxes save by authority of law is secured by article 265 and not by article 31(1), the questions urged by Dr. Tek Chand do not really arise and it is not necessary to express any opinion on them on this application.
Those questions can only arise in appropriate proceedings and not on an applica tion under article 32.
In our judgment this application fails on the simple ground that no fundamental right of the petitioner has been infringed either under article 14 or under article 31(1) and we accordingly dismiss the petition with costs.
Petition dismissed.
| IN-Abs | Section 3 (1) of the Patiala and East Punjab States Union General Provisions (Administration) Ordinance (No. XVI of 2005) which came into force on February 2, 1949, and re enacted section 3 of an earlier Ordinance which was in force from August 20, 1948, provided that as from the appointed day (i.e., August 20, 1948) all laws in force in the Patiala State shall apply muutatis mutandis to 17 128 the territories of the said Union, provided that all pro ceedings pending before courts and other authorities of any of the Covenanting States shall be disposed of in accordance with the laws governing such proeeedings in force in such Covenanting State immediately before August 20, 1948.
In one of the Covenanting States, viz., Kapurthala, there was a law of income tax in force on the said date, the rate of tax payable under which was lower than that payable under the Patiala Income tax Act, and in another Covenanting State, Nabha, there was no law of income tax at all.
For the ac counting year ending April 12, 1948, assessees of Kapurthala State were assessed at the lower rates fixed by the Kapur thala Income tax Act, in accordance with the proviso in section 3 of the Ordinance relating to pending proceedings, and the assessees of Nabha were assessed at the higher rates fixed by the Patiala Act as there was no income tax law in Nabha on August 20, 1948, and no income tax proceedings were therefore pending in Nabha.
The petitioner who was an asses see residing in Nabha and who was assessed under the Patiala Act applied under article 32 of the Constitution for a writ in the nature of a writ of certiorari quashing the assessment on the ground (i) that he had been denied the fundamental right of equality before the law and equal protection of the laws guaranteed by article 14 of the Constitution inasmuch as he was assessed at a higher rate than that at which asses sees of Kapurthala were assessed, (ii) that, as the Ordi nance bringing the Patiala Income tax Act into force in Nabha was enacted only on August 20, 1948, it cannot operate retrospectively and authorise the levy of tax on income which had accrued in the year ending April 12, 1948, and therefore he was threatened with infringement of the funda mental right guaranteed by article 31 (1) of the Constitution that no one shall be deprived of his property save under authority of law: Held, (i) that the discrimination, if any, between the assessees of Kapurthala and Nabha was not brought about by the Ordinance but by the circumstance that there was no income tax law in Nabha and consequently there was no case of assessment pending against any Nabha assessees; and in any case the provision that pending proceedings should be concluded according to the applicable at the time when the right is or liabilities accrued and the proceedings com menced, was a reasonable law rounded upon reasonable classi fication of the assessees which is permissible under the equal protection clause; (ii) that, as there is a special provision in article 965 of the Constitution that no tax shall be levied or collected except by authority of law, cl.
(1) of article 31 must be regarded as concerned with deprivation of property otherwise than by the imposition or collection of tax, and inasmuch as the right conferred by article 265 not a right conferred by Part III of the Constitution, it could not be enforced under article 129
|
Appeals Nos. 292 and 312 of 1950.
Appeals from the Judgment and Order of the High Court of Judicature at Hyderabad (Ansari, Qamar Hasan and Manohar Pershad JJ.) in Cases Nos. 180 181 of 1954 F. Ved Vyas, (section K. Kapur and Ganpat Rai, with him) for the appellant.
M. C. Setalvad, Attorney General for India (Porus A. Mehta, with him) for the respondent.
April 1.
The Judgment of the Court was delivered by BHAGWATI J.
These are two appeals from the judgment and decision of the High Court of Judicature at Hyderabad answering certain questions referred at the instance of the appellants by the Commissioner of Excess Profits Tax, Hyderabad, and adjudging the liability of the appellants for excess profits tax in regard to the amounts recieved by them as remuneration from the Dewan Bahadur Ramgopal Mills Com pany Ltd. as its Agents.
The Mills Company was registered on the 14th February, 1920, at Hyderabad in the then territories of His Exalted Highness the Nizam.
The appellants were registered as a private limited company at Bombay on 395 agreement was entered into between the Mills Company.
and the appellants appointing the appellants its Agents for a period of 30 years on certain terms and conditions therein recorded.
The appellants throughout worked only as the Agents of the Mills Company and for the Fasli years 1351 and 1352 they received their remuneration under the terms of the Agency agreement.
A notice was issued under section 13 of the Hyderabad Excess Profits Tax Regulation by the Excess Profits Tax Officer calling upon the appellants to pay the, amount of tax appertaining to these chargeable account , ing periods.
The appellants submitted their accounts and contended that the remuneration received by them from the Mills Company was not taxable on the ground that it is was not income, profits or gains from business and was outside the pale of the Excess Profits Tax Regulation.
This contention of the appellants was negatived and on the 24th April, 1944, the Excess Profits Tax Officer made an order assessing the income of the appellants for the accounting periods 1351 and 1352 Fasli at Rs. 8,957 and Rs. 83,768 respectively and assessed the tax accordingly.
An appeal was taken by the appellants to the Deputy Commissioner of Excess Profits Tax who disallowed the same.
An application made by the appellants under section 48(2) for statement of the case to the High Court was rejected by the Commissioner and the appellants filed a petition to the High Court under section 48(3) to compel the Commissioner to state the case to the High Court.
An order was made by the High,Court on this petition directing the Commissioner to state the case and the statement of the case was submitted by the Commis sioner on the 26th February, 1946.
Four questions were referred by the Commissioner to the High Courts as under: (1) Whether the Petitioner Company is a partnership firm or a registered firm ? (2) Whether under the terms of the agreement the petitioner is an employee of the Mills Company or is carrying on business ? 396 (3)Whether the remuneration received from the MILLs is on account of service or is the remuneration for business ? (4)Whether the principle of personal qualification referred to in section 2, clause (4), of the Excess Profits Regulation is applicable to the Petitioner Company ? These questions were of considerable importance and were referred for decision to the Full Bench of the High Court.
The Full Bench of the High Court delivered their judgment the majority deciding the questions (2) and (3) which were the only questions considered determinative of the reference against the appellants.
The appellants appealed to the Judicial Committee.
But before the Judicial Committee heard the appeals there was a merger of the territories of Hyderabad with India.
The appeals finally came for hearing before the Supreme Court Bench at Hyderabad on the 12th December, 1950, when an order was passed transferring the appeals to this Court at Delhi.
These appeals have now come for hearing and final disposal before us.
The questions (1) and (4) which were referred by the Commissioner to the High Court at Hyderabad have not been seriously pressed before us.
Whether the appellants are a partnership firm or a registered company the principle of exclusion of the income from the category of business income by reason of its depending wholly or mainly on the personal qualifications of the assessee would not apply because the income could not be said to be income from profession and neither a partnership firm nor a registered company as such could be said to be possessed of any personal qualifications in the matter of the acquisition of that income.
The principal questions which were therefore argued before the High Court at Hyderabad and before us were the questions (2) and (3) which involved the determination of the position of the appellants whether they were servants or agents of the Mills Company and the determination of the character of their remuneration whether it was wages or salary or income, profits or gains from business.
397 The appellants were registered as a private limited company having their registered office in Bombay and the objects for which they were incorporated were the following: (1)To act as agents for Governments or Authorities or for any bankers, manufacturers, merchants, shippers, Joint Stock Companies and others and carry on all kinds of agency business.
(2)To carry on in India and elsewhere the trade or business of merchants, importers exporters in all ', their branches etc.
etc. .
Under Article 115 of the Articles of Association of the Mills Company the appellants and their assigns were ' appointed the agents of the Company upon the terms, provisions and conditions set out in the Agreement referred to in clause 6 of the Company 's Memorandum of Association.
Article 116 provided that the general management of the business of the Company subject to the control and supervision of the Directors, was to be in the hands of the Agents of the Company, who were to have the power and authority on behalf of the Company, subject to such control and supervision, to enter into all contracts and to do all other things usual, necessary and desirable in the management of the, affairs of the Company or in carrying out its objects and were to have power to appoint and employ in, or.
for the purposes of the transaction and managment of the affairs and business of the Company, or otherwise for the purposes thereof, and from time to time to remove or suspend such managers, agents, clerks and other employees as they thought proper with such powers and duties and upon such terms as to duration of employment, remuneration or otherwise as they thought fit and were also to have powers to exercise all rights and liberties reserved and granted to them by the said agreement referred to in clause 6 of the Company 's Memorandum of Association including the rights and liberties contained in clause 4 of the agreement.
Article 1 18 authorised the agents to sub delegate all or any of the powers, authorities and discretions for the time being vested in them, and in particular 398 from time to time to provide by the appointment of an attorney or attorneys, for the management and transaction of the affairs of the Company in any specified locality, in such manner as they thought fit.
The Agency agreement which was executed in pursuance of the appointment under Article 115, provided that the appellants and their assigns were to be the Agents of the Company for a period of 30 years from the date of registration of the Company and they were to continue to act as such agents until they of their own will resigned.
The remuneration of the appellants as such Agents was to be a commission of per cent on the amount of sale proceeds of all yarn cloth and other produce of the Company (including cotton grown) which commission was to be exclusive of any remuneration or wages payable to the bankers, Solicitors engineers, etc., who may be employed by the appellants for or on behalf of the Company or for carrying on and conducting the business of the Company.
The appellants were to be paid in addition all expenses and charges actually incurred by them in Connection with the.
business of the Company and supervision and management thereof and the appelants were entitled to appoint any person or persons in Bombay to act as their Agents in Bombay and any other places in connection with the business if the Company.
Clauses 3 and 4 of the agency agreement are important and may be set out in extenso : 3.
Subject to the control and supervision of the Directors, the said Lachminaravan Ramgopal and Son Limited shall have the general conduct and management of the business and affairs of the company and shall have on behalf of the company to acquire by purchase lease or otherwise lands tenements and other Buildings and to erect maintain alter and extend factores ware houses, engine house and other buildings in Hyderabad and ' elsewhere in the territories of His Exalted Highness the Nizam and in India and to purchase, pay for, sell, resell, and repurchase machinery, engines, plant, raw cotton, waste, jute, wool and 399 other fibres and produce, stores and other materials and to manufacture yarn cloth and other fabrics and to sell the same either in the said territories as well as elsewhere in India and either on credit or for cash, or for present or future delivery, and to execute become parties to and where necessary to cause to be registered all deeds, agreements, contracts, receipts and other documents and to insure the property of the Company for such purposes and to such extent and in such manner as they may think proper; and to institute, conduct, defend, compromise, refer to arbitration and abandon legal and other proceedings, claims and disputes in which the Company is concerned and to appoint and employ discharge, re employ or replace engineers.
managers, retain commission dealers, muccadums, brokers, clerks, mechanics, workmen and other officers and servants with such powers and duties and upon such terms as to duration of office remuneration or otherwise as they may think fit ; and to draw, accept endorse, negotiate and sell Bills of Exchange and Hundies with or without security and to receive and give receipts for all moneys payable to or to be received by the company and to draw cheques against the moneys of the company and generally to make all such arrangements and do all such acts and things on behalf of the Company, its successors and assignsas may be necessary or expedient and as are not specifically reserved to be done by the Directors.
4.The said Lachminarayan Ramgopal & Son Ltd., shall be at liberty to deal with the Company by way of sale to the Company of cotton all raw materials and articles required for the purpose of the Company and the purchase from the Company of yarn cloth and all other articles manufactured by the Company and otherwise, and to deal with any firm in which any of the shareholders of the said Lachminarayan Ramgopal & Son Ltd., may be directly or indirectly concerned provided always such dealings are sanctioned passed or ratified by the Board of Directors either before or after such dealings.
Clause 8 provided that two of the members for the time being of the appellants were at the option of the 400 appellants to be the ex officio Directors of the Company and clause 9 empowered the appellants to assign the agreement and the rights of the appellants thereunder subject to the approval and sanction of the Board to any person, firm or Company having authority by its constitution to become bound by the obligations undertaken by the appeallants.
No materials other than these 'were placed by the appellants either before the Income tax Authorities or the High Court and the questions that arise before us have to be determined only on these materials.
If on the construction of these documents we arrive at the conclusion that the position of the appellants was not that of servants but the agents of the Company the further question would have to be determined whether the activities of the appellants amounted to the carrying on of business.
If they were not the servants of the Company, the remuneration which they received would certainly not be wages or salary but if they were agents of the Company the question would still survive whether their activities amounted to the carrying on of business in which case only the remuneration which they received from the Company would be income, profits or gains from business.
The distinction between a servant and an agent is thus indicated in Powell 's Law of Agency, at page 16 : (a)Generally a master can tell his servant what to do and how to do it.
(b) Generally a principal cannot tell his agent how to carryout his instructions.
(c) A servant is under more complete control than an agent, and also at page 20: (a)Generally, a servant is a person who not only receives instructions from his master but is subject to his master 's right to control the manner in which he carries out those infructions.
An agent receives his principal 's instructions but is generally free to carry out those instructions according to his own discretion 401 (B) Generally, a servant, qua servant, has no authority to make contracts on behalf of his master ' Generally, the purpose of employing an agent is to authorise him to make contracts on behalf of his principal.
(c) Generally, an agent is paid by commission upon effecting the result which he has been instructed by his principal to achieve.
Generally, a servant is paid by wages or salary.
The statement of the law contained in Halsbury 's Laws of England Hailsham Edition Volume 22, page 113, paragraph 192 may be referred to in this connection : "The difference between the relations of master and servant and of principal and agent may be said to be this: a principal has the right to direct what work the agent has to do: but a master has the further right to direct how the work is to be done.
" The position is further clarified in Halsbury 's Laws of England Hailsham Edition ,Volume 1, at page.
193, article 345 where the positions of an agent, a a servant and independent contractor are thus distinguished : " An agent is to be distinguished on the, one hand from a servant, and on the other from an independent contractor.
A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference, and merely undertakes to produce a specified resulted employing his own means to produce that result.
An ament, though bound to exercise his authority in accordance with all lawful instructiOns which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal.
An agent, as such is not a servant, but a servant is generally for some purposes his master 's implied agent, the extent of the agency depending upon the duties or position of the servant ' "Considering the position of the appellants in the light of the above principles it is no doubt true that the 52 402 appellants were to act as the agents of the Company and carry on the general management of the business of the Company subject to the control and supervision of the Directors.
That does not however mean that they acted under the direct control and supervision of the Directors in regard to the manner or method of their work.
The Directors were entitled to lay down the general policy and also to give such directions in regard to the management as may be considered necessary.
But the day to day management of the business of the Company as detailed in Article I 1 6 of the Articles of Association and clause 3 of the Agency Agreement above set out was within the discretion of the appellants and apart from directing what work the appellants had to do as the agents of the Company the Directors had not conferred upon them the further right to direct how that work of the general management was to be done.
The control and supervision of the directors was a general control and supervision and within the limits of their authority the appellants as the agents of the Company had perfect discretion as to how that work of general management was to be done both in regard to the method and the manner of such work.
The appellants for instance had perfect latitude to enter into agreements and contracts for such purpose and to such extent and in such manner as they thought proper.
They had the power to appoint, employ, discharge, reemploy or replace the officers and servants of the Company with such powers and duties and upon such terms as to duration of office remuneration or otherwise as they thought fit.
They had also the power generally to make all such arrangements and to do all such things and acts on behalf of the Company, as might be necessary or expedient and as were not specifically reserved to be done by the Directors.
These powers did not spell a direct control and supervision of the Directors as of a master over his servant but constituted the appellants the agents of the Company who were to exercise their authority subject to the control and supervision of the Directors but were not subject in such exercise to the direct control or supervision of the principals.
The liberty given to the appellants under clause 4 of the Agency 403 Agreement to deal with the Company by way of sale and purchase of commodities therein mentioned also did not spell a relation as between master and servant but empowered the appellants to deal with the Company as Principals in spite of the fact that under clause 8 of the Agreement two of their members for the time being were to be the ex officio Directors of the Company.
The power to assign the Agreement and the rights of the appellants thereunder reserved to them under clause 9 of the Agency Agreement though subject to the approval and sanction of the Board was hardly a power which could be vested in a servant.
There was further the right to continue in employment.
as the agents, of the Company for a period of 30 years from the date of the registration thereof and thereafter until the appellants of their own will resigned, which also would be hardly consistent with the employment of the appellants as mere servants of the Company.
The remuneration by way of commission of 2 1/2 per cent.
of the amount of sale proceeds of the produce of the Company savoured more of the remuneration given by a principal to his agent in the carrying out of the general management of the business of the principal@ than of wages or salary which would not normally.
be on such a basis.
All these circumstances together with the power of sub delegation reserved under Article 118 in our opinion go to establish that the appellants were the agents of the Company and not merely the servants of the Company remunerated by wages or salary.
Even though the position of the appellants qua the Company was that of agents and not servants as stated above it remains to be determined whether the work which they did under the Agency Agreement amounted to carrying on business so as to constitute the remuneration which they received thereunder income, profits or gains from business.
The contention which was urged before us that the appellants only worked as the agents of the Mills Company and no others and therefore what they did did not constitute a business does not avail the appellants.
The activities in order to constitute a business need not necessarily be concerned with several.
individuals or concerns.
They would constitute 404 business in spite of their being restricted to only one individual or concern.
What is relevant to consider is what is the nature and scope of these activities though either by chance or design these might be restricted to only one individual or concern.
It is the nature and scope of these activities and not the extent of the operations which are relevant for this purpose.
The activities of the appellants certainly did not come within the inclusive definition of business which is given in section 2 clause 4 of the Excess Profits Tax Regulation, Hyderabad.
Business is there defined to include any trade, commerce or manufacture or any adventure in the 'nature of a trade, commerce or manufacture or any profession or vocation but not to include a profession carried on by an individual or by individuals in partnership if the profits of the profession depend wholly or mainly on his or their personal qualifications unless such profession consists wholly or mainly in the making of contracts on behalf of other persons or giving to other persons of advice of a commercial nature in connection with the making of contracts.
The work which the appellants did under the terms of the Agency Agreement constituted neither trade, commerce or manufacture or any adventure: in the nature of trade, commerce or manufacture nor was it a profession or vocation.
, The activities which constitute carrying on business need not necessarily consist of activities by way of trade, commerce or manufacture or activities in the exercise of a profession or vocation.
They may even consist of rendering services to others which services may be of a variegated character.
The considerations which apply in the case of individuals in the matter of determining whether the activities constitute a business within the meaning of the, inclusive definition thereof set out above may not apply in the case of incorporated companies.
Even though the activities if carried on by individuals might constitute business in that sense they might not constitute such business when carried on by incorporated companies and resort must be had to the general position in law in order to determine whether the incorporated company was carrying on business ad 405 as to constitute the income earned by it income ' profits or gains from business.
Reference may be made in this context to William Esplen, Son and Swainston, Limited vs Commissioners of Inland Revenue (1).
In that case a private limited company was incorporated for carrying on business as naval architects and consulting engineers.
: Before the formation of the company, a partnership had existed for many year between three persons who, on incorporation, became the sole shareholders and directors of the company.
The partnership had carried on the profession.
of naval architects and consulting engineers and the work done by the company was identical in character with that formerly done by the partnership which it succeeded.
The work done by the company was identical in all respects with the work of a professional naval architect and consulting engineer, and was performed by the said three shareholders and directors of the company personally.
A question arose whether the company was carrying on a profession within the meaning of section 39 paragraph C of the Finance (No. It was contended that it carried on a profession of naval architects and consulting engineers because the members composing it were three naval architects.
That contention was however negatived and it was held that even though what was to be looked at was the character of the work done by the company, it was not carrying on the profession of the naval architects within the meaning of the section, because for that purpose it was of the essence of a profession that the profits should be dependent mainly upon the personal qualifications of the person by whom it was carried on and that could only bean individual.
A company such as that could only do a naval architect 's work by sending a naval architect to its customers to do what they wanted to be done and it was held that the company was not carrying on a profession but was carrying on a trade or business in the ordinary sense of the term.
When a partnership firm comes into existence it can be predicated of it that it carries on a business, because partnership according to section 4 of the Indian Partner.ship Act is the relation between persons who have (1) (1919] 2 K.B. 731.
406 agreed to share the profits of a business carried on by all or any of then acting for all.
(See Inderchand Hari Ram V. COMMissioner of Income tax, U.P & C.P.(1)).
But when a company is incorporated it may not necessarily come into existence for the purpose of carrying on a business.
According to section 5 of the Indian Companies Act any seven or more persons (or, where the company to be formed will be a private company, any two or more persons) associated for any lawful purpose may by subscribing their names to a memorandum of association. . . . . form an incorporated company, and the lawful purpose for which the persons become associated might not necessarily be the carrying on of business.
When a company is incorporated for carrying out certain activities it would be relevant to enquire what are the objects for which it has been incorporated.
As was observed by Lord Sterndale, M.R., in Commissioners of Inland Revenuev.
The Korean Syndicate Limited(2) : " If you once get the individual and the company spending exactly on the same basis, then there would be no difference between them at all.
But the fact that the limited company comes into existence in a different way is a matter to be considered.
An individual comes into existence for many purposes, or per.
haps sometimes for none, whereas a limited company comes into existence for some particular purpose, and if it comes into existence for the particular purpose of concessions and turning them to account, then that is a matter to be considered when you come to decide whether doing that is carrying on a business or not." Justice Rowlatt followed the above view of Lord Sterndale, M.R., in Commissioners of Inland Revenue vs Birmingham Theatre Royal Estate Co., Limited(1), and held that " when you are considering whether a certain form of enterprise is carrying on business or not, it is material to look and see whether it is a company that it; doing it.
" The objects of an incorporated company as laid down in the Memorandum of Association are (1) (2) at P. 202.
(3) (1923) I2 Tax Cas.
580 at P. 584.
407 certainly not conclusive of the question whether the activities of the company amount to carrying on of business.
(See Indian Law Reports 55 Calcutta 1059 and (1951] But they are relevant for the purpose of determining the nature and scope of such activities.
The objects of the appellants in this case inter alia were to act as agents for Governments or Authorities or for any bankers, manufacturers, merchants, shippers, Joint Stock Companies and others and carry on all kinds of agency business.
This object standing by itself would comprise within its ambit the activities of the appellants as the agents of the Company and constitute the work which they did by way of general management of the business of the company an agency business.
The words " carry on all kinds of agency business " occurring at the end of the object as therein set out were capable of including within their general description the work which the appellants would do as agents for Governments or Authorities or for any bankers, manufacturers, merchants, shippers and others when they acted as agents of the Company which were manufacturers inter alia of cotton piece goods they would be carrying on agency business within the meaning of this object.
Apart however from this there is the further fact that there was a continuity of operations which constituted the activities of the appellants in the general management of the Company a business.
The whole work of management which the appellants did for the Company within the powers conferred upon them under Article 116 of the Articles of Association and clause 3 of the Agency Agreement consisted of numerous and continuous operations and comprised of various services which were rendered by the appellants as the agents of the Company.
The appellants were also entitled though with the sanction or ratification by the Board of Directors either before or after the dealings to enter into dealings with the Company by way of sales and purchases of various commodities.
There was nothing in the Agency Agreement to prevent the appellants from acting as the agents of other manufacturers, Joint Stock Companies etc., and the appel lants could have as well acted as the agents of other 408 concerns besides the Company.
All these factors taken, into consideration alongwith the fixity of tenure, the nature of remuneration and the assignability of their rights, are sufficient to enable us to 'come to the conclusion that the activities of the appellants as the agents of the Company constituted a business and the remuneration which the appellants received from the Company under the terms of the Agency Agreement was income, profits or gain from business.
The appellants were therefore rightly assessed for excess profits tax and these appeals must stand dismissed with costs.
Appeal dismissed.
| IN-Abs | The difference between the relations of master and servant and of principal and agent may be said to be this: a principal has the right to direct what work the agent has to do: but a master has the further right to direct how the work is to be done.
The positions of an agent, a servant and independent contractor are distinguished as under: An agent is to be distinguished on the one hand from a servant, and on the other from an independent contractor.
A servant acts under the direct control and supervision of his master, and is bound to conform to all reasonable orders given to him in the course of his work; an independent contractor, on the other hand, is entirely independent of any control or interference and merely undertakes to produce a specified result, employing his own means to produce that result.
An agent, though bound to exercise his authority in accordance with all lawful instructions which may be given to him from time to time by his principal, is not subject in its exercise to the direct control or supervision of the principal.
An agent, as such is not 9, servant, but a servant is generally for some purposes his master 's implied agent, the extent of the agency depending upon the duties or position of the servant.
Held, that the position of the appellants in the light of the principles stated above and the terms of the Agency Agreement was that of the agents of the Dewan Bahadur Ram Gopal Mills Ltd., and they carried on the general management of the business of the company subject to the control and supervision of the Directors.
394 The control and supervision of the Directors was, however, a general control and supervision and within the limits of their authority the appellants as the agents of the company had perfect discretion as to how that work of general management was to be clone both in regard to the method and the manner of such work and therefore the circumstances of the case together with the of power of sub delegation reserved under the Articles of Association established beyond doubt that the appellants were the agents of the company and not merely the servants of the company remu nerated by wages or salary.
Held further, that various factors along with the fixity of tenure, the nature of remuneration and the assignability of their rights were sufficient to prove that the activities of the appellants as the agents of the company constituted a business and the remuneration which the appellants received from the company under the terms of the Agency Agreement was income, profits or gains from business and the appellants were rightly assessed under the provisions of Hyderabad Excess Profits Tax Regulation.
|
itions Nos. 53, 100, 101, 105 and 106 of 1967.
Petitions under article 32 of the Constitution of India for the enforcement of the fundamental rights.
M. C. Setalvad, A. V. Koteswara Rao, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the petitioners (in W. P. No. 53 of 1967).
N. C. Chatterjee, A. V. Koteswara Rao, K. Rajendra Chau dhuri and K. R. Chaudhuri, for the petitioners (in W.P. No. 100 of 1967).
A. V. Koteswara Rao, K. Rajendra Chaudhuri and, K. R. Chaudhuri, for the petitioners (in W.P. No.101 of 1967).
K. R. Chaudhuri and K. Rajendra Chaudhuri, for the peti tioners (in W.P. Nos. 105 and 106 of 1967).
C. K. Daphtary, Attorney General and A. V. Rangam, for he respondents (in W.P. No. 53 of 1967).
P. Ram Reddy and A. V. Rangam, for the, respondents (in V. Ps.
No. 100, 101, 105 and 106 of 1967).
Sachin Chaudhury, G. L. Sanghi and O. C. Mathur, for the intervener (in W.P. No. 53 of 1967).
The Judgment of the Court was delivered by Bachawat, J.
In all these writ petitions under article 32 of the the petitioners ask for an order declaring that section 21 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961 (Andhra Pradesh Act No. 45 of 1961) is unconstitutional and ultra vires and a direction prohibiting the respondents from levying tax under section 21 and to refund the tax already collected.
Section 21 of the Act is in these terms: "21(1) The Government may, by notification, levy a tax at such rate not exceeding five rupees per metric tonne as may be prescribed on the purchase of cane required for use, consumption or sale in a factory.
(2) The Government may, by notification, remit in whole or in part such tax in respect of cane used, or intended to be used in a factory for any purpose specified in such notification.
(3) The Government may, by notification, exempt from the payment of tax under this section (a) any new factory which, in the opinion of the Government has substantially expanded, to the extent of such expansion, for a period not exceeding two years from the date of completion of the expansion.
P(N)7SCI 6 708 (4) The tax payable under sub section (1) shall be levied and collected from the occupier of the factory in such manner and by such authority as may be prescribed.
(5) Arrears of tax shall carry interest at the rate of nine per cent per annum.
(6) If the tax under this section together with the interest, if any, due thereon, is not paid by the occupier of a factory within the prescribed time, it shall be recoverable from him as an arrear of land revenue." Section 2(1) defines a factory which means "any premises including the precincts thereof, wherein twenty or more workers are working or were working on any day during the preceding twelve months and in any part of which any manufacturing process connected with the production of sugar by means of vacuum pans in being carried on or is ordinarily carried on with the aid of mechanical power.
Section 2(m) defines the occupier of a factory.
B: Ordinance No. 1 of 1967 which was replaced by Act No. 4 on 1967, the following new sub section (I A) was inserted and other consequential amendments were made in section 21 of the principal Act "(1 A) The Government may, by notification, levy a tax at such rate, not exceeding three.
rupees and fifty paise per metric tonne, as may be prescribed on the purchase of cane required for use, consumption or sale in a khandsari unit".
Also the following sub sections (kk) and (kkk) were inserted in section 2 of the principal Act: "(kk) 'khandasari sugar ' means sugar produced by open pan process in a khandasari unit from sugarcane juice, or from rab or gur or both, containing more than eighty per cent sucrose; (kkk) 'khandasari unit ' means a unit engaged or ordinarily engaged in the manufacture of khandasari sugar and includes a bel;" It may be mentioned that sales and purchases of sugarcane a exempt from tax under the Andhra Pradesh General Sales Tax Act, 1957.
The petitioners own sugar factories as defined in 2(1).
Their agents are the occupiers of the factories as defined in section 2(m).
They purchased cane from canegrowers within their respective factory zones.
The State Government had issued notifications levying tax under section 21.
For the last several years the petitioners have paid the tax on their purchases of sugarcane and further demands are being made on them for payment of the tax They challenge the vires and the , constitutionality of section 21 of various grounds.
The principal submissions were made by M. M. C. Setalvad who appeared in Writ Petition No. 53 of 196 709 and his arguments were adopted by counsel appearing in the other petitions.
Mr. N. C. Chatterjee who appeared in Writ Petition No. 100 of 1967 raised a few additional contentions.
The submission of Mr. Setalvad is that section 21 so far as it levies a tax on the purchases of sugarcane by or on behalf of the petitioners from the canegrowers in their respective factory zones is ultra vires the powers of the legislature under Entry No. 54, List 11, Sch.
VII of the Constitution in the light of the decision in State of Madras vs Gannon Dunkerley & Co.(1).
Now, in Gannon Dunkerley 's case(1), the actual decision was that the legislature had no power under List II, Entry 48, Sch.
VII of the Government of India Act, 1935 to impose a tax on the supply of materials under an entire and indivisible contract for construction of buildings.
But the Court also held that the phrase "sale of goods" in the Entry must be interpreted in the legal sense which it had in the Indian Sale of Goods Act, that the Provincial Legislature had no power to tax a transaction which was not a sale of goods in that sense and that in order to constitute a sale there must be an agreement for sale of goods for a price and the passing of property therein pursuant to such an agreement.
Ventakarama Aiyar, J. laid at pp.
397 398: "Thus, according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which of course presupposes capacity to contract, that it must be supported by money consideration, and that as a result of the transaction property must actually pass in the goods.
Unless all these elements are present, there can be no sale.
" in the light of this decision, the expression "sale of goods" in Entry 54, List II, Sch.
VII of the Constitution must be given the ame interpretation.
On a parity of reasoning, to constitute a purchase of goods" within this Entry, there must be an agreement for purchase of goods and the passing of property therein pursuant to such an agreement.
The question, therefore, is whether the purchases by or on behalf of the petitioners from the cane growers in their respective factory zones were made under agreements of purchase and, sale.
It appears that the Cane Commissioner is empowered under s.15 of Act No. 45 of 1961 to declare any area as the factory one for the purpose of supply of cane to a factory during a particular crushing season.
Under section 16(1), on the declaration of the factory zone the occupier of the factory is bound to purchase such quantity of cane grown in that area and offered for sale to the factory (1) ; 710 as may be determined by the Cane Commissioner in accordance with the provisions of the schedule.
Section 16(2) prohibits the the canegrowers in a factory zone from supplying or selling cane to any factory or other person otherwise than in accordance with the provisions of the schedule.
Section 28(2)(1) empowers the Government to make rules providing for the form of agreement to be entered into under the provisions of the Act.
Rule 20 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Rules, 1951 framed under the Act provides that a canegrower or a canegrower 's co operative society may within 14 days of the order declaring an area as the factory zone or such extended time as may be fixed by the Cane Commissioner, offer in Form No. 2 to supply cane grown in that area to the occupier of the factory and such occupier of the factory within 14 days of the receipt of the offer shall enter into an agreement in Form No. 3 or Form No. 4 with the canegrower or the canegrower 's co operative society as the case may be for the purchase of the cane offered.
Form No. 3 is the statutory form of agreement with a canegrower.
By the agreement in Form No. 3 the occupier of the factory agrees to buy and the canegrower agrees to sell during the crushing season certain sugarcane crop grown in the area at the minimum price noticed by the Government from time to time upon the terms and conditions mentioned in the agreement.
The agreement contains an arbitration clause and is signed by or on behalf of the occupier of the factory and the canegrower.
The agreement in Form No. 4 with a canegrower 's co operative society is on the same lines.
All the terms and conditions of the agreements and the mode of their performance are fixed and regulated by the Act, the Rules and orders made under the Act.
Contravention of the provisions of the Act or of any rule or order made under the Act is punishable under section 23.
The minimum price of sugarcane is fixed under the Sugarcane Control Order, 1966.
The learned Attorney and Mr. Ram Reddy attempted to argue that the occupier of the factory has some option of not buying from the canegrower and some freedom of bargaining about the terms and con ditions of the agreements.
But after having read all the relevant provisions of the Act and the Rules, they did not pursue this point.
We are satisfied that under the provisions of Act No. 45 of 1961 And the Rules framed thereunder, a canegrower in a factory zone is free to sell or not to sell his sugarcane to the factory.
He may consume it or may process it into jaggery and then sell the finished product.
But if he offers to sell his cane, the occupier of the factory is bound to enter into an agreement with him on the prescribed terms and conditions and to buy cane pursuant to he agreement in conformity with the instructions issued by the Cane Commissioner.
The submission of the petitioners is that as ,hey or their agents are compelled by law to buy cane from the 711 canegrowers their purchases are not made under agreements and are not taxable under Entry No. 54, List 11 having regard to Gannon Dunkerley 's case(1).
This contention requires close examination.
Under section 4(1) of the Indian , a con tract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price.
By section 3 of this Act, the provisions of the apply to contracts of sale of goods save in so far as they are inconsistent with the express provisions of the later Act.
Section 2 of the provides that when one person signifies to another his willingness to do or to abstain from doing anything with a view to obtaining the assent of the other to such act or abstinence, he is said to make a proposal.
When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted.
A proposal when accepted becomes a promise.
Every promise and every set of promises forming the consideration for each other is an agreement.
There is mutual assent to the proposal when the proposal is accepted and in the result an agreement is formed.
Under section 10, all agreements are contracts if they are made by the free consent of parties competent to contract for a lawful consideration and with a lawful object and are not by the Act expressly declared to be void,.
Sec tion 13 defines consent.
Two or more persons are said to consent when they agree upon the same thing in the same sense.
Section 14 defines free consent.
Consent is said to be free when it is not caused by coercion, undue influence, fraud, misrepresentation or mistake as defined in sections 15 to 22.
Now, under Act No. 45 of 1961 and the Rules framed under it, the canegrower in the factory zone is free to make or not to make an offer of sale of cane to the occupier of the factory.
But if he makes an offer, the occupier of the factory is bound to accept it.
The resulting agreement is recorded in writing and is signed by the parties.
The consent of the occupier of the factory to the agreement is not caused by coercion, undue influence, fraud, mis representation or mistake.
His consent is free as defined in section 14 of the though he is obliged by law to enter into the agreement.
The compulsion of law is not coercion as defined in section 15 of the Act.
In spite of the compulsion, the agreement is neither void nor voidable.
In the eye of the law, the agreement is freely made.
The parties are competent to contract The agreement is made for a lawful consideration and with a lawful object and is not void under any provisions of law.
The agreements are enforceable by law and are contracts of sale of sugarcane as defined in section 4 of the Indian .
The purchases of sugarcane under the agreement can be taxed by the State legislature under Entry 54, List 11.
(1) ; 712 Long ago in 1702, Holt, C.J. said in Lane vs Cotton(1): "When a man takes upon himself a public employment, he is bound to serve the public as far as this employment goes, or an action lies against him for refusing.
" The doctrine that one who takes up a public employment is bound to serve the public was applied to innkeepers and common carriers.
Without lawful excuse, an innkeeper cannot refuse to receive guests at his inn, and a common carrier cannot refuse to accept goods offered to him for carriage.
See Halsbury 's Laws of England, 3rd Edn., Vol. 4, article 375 and Vol.
21, article 938.
A more general application of the doctrine was arrested by the growth of the principle of laissez faire which had its heyday in the.
midnineteenth century.
Thereafter, there has been a gradual erosion of the laissez faire concept.
It is now realised that in the public interest, persons exercising certain callings or having monopoly or near monopoly powers should sometimes be charged with the duty to serve the public, and, if necessary, to enter into contracts.
Thus, section 66 of the Indian Railways Act, 1890 compels the railway administration to supply the public with tickets for travelling on the railway upon payment of the usual fare.
Section 22 of the compels a licensee to supply electrical energy to every person in the area of supply on the usual terms and conditions.
Cheshire and Fifoot in their Law of Contract, 6th Edn., p. 23 observe that for reasons of social security the State may compel persons to make contracts.
One of the objects of Act No. 45 of 1961 is to regulate the purchase of sugarcane by the factory owners from the canegrowers.
The canegrowers scattered in the villages had no real bargaining power.
The factory owners or their combines enjoyed a near monopoly of buying and could dictate their own terms.
In this unequal contest between the canegrowers and, the factory owners, the law stepped in and compelled the factory to enter into contracts of purchase of cane offered by the canegrowers on prescribed terms and conditions.
In The Indian Steel & Wire Products Ltd. vs The State of Madras(2), the Court held that.
sales of steel products authorised by the Controller under cls.
4 and 5 of the Iron and Steel (Control of Production and Distribution) Order, 1941 were eligible to tax under Entry 54, List 11.
The Court found that the parties had entered into contracts of sale though in view of the Order the area of bargaining between the buyer and the seller was greatly reduced.
Hegde, J. speaking for the Court said that as a result of economic compulsions and changes in of the political outlook the freedom to contract was now being confined gradually to narrower and narrower limits.
We have here a case where one party (1); , (2) ; 713 to a contract of sale is compelled to enter into it on rigidly prescribed terms and conditions and has no freedom of bargaining.
But the contract, nonetheless, is a contract of sale.
In Kirkness vs John Hudson & Co. Ltd.,(1) the House of Lords by a majority held that a compulsory vesting of title of the company 's railway wagons in the British Transport Commission under section 29 of the Transport Act, 1947 was not a sale within the meaning of the phrase "is sold" in section 17 of the Income tax Act, 1945.
Under section 29, there was a compulsory taking of property.
The assent of the company to the taking was not required by statute.
By force of law, the property of the company was taken without its assent.
There was no offer, no acceptance and no mutual assent and no contract resulted.
The House of Lords held that mutual assent was an element of a transaction of sale.
In Gannon Dunkerley 's case(1), the Court approved of this principle and rejected the argument of counsel that an involuntary transfer of title as in Kirkness 's case(2) was a sale within the meaning of the legislative Entry.
But the Court did not say that if one party was free to make an offer of sale and the other party was obliged by law to accept it and to enter into an agreement for purchase of the goods, a contract of sale did not result.
In the present case, the seller makes an offer and the buyer accepts it.
The parties then execute and sign an agreement in writing.
There is mutual assent and a valid contract, though the assent of the buyer is given under compulsion of statute.
Setalvad relied on the following passage in the Law of Contract by G.H. Treitel, at p. 5: "Where the legislation leaves no choice at all to one party, the transaction is not a contract.
" But the author does not cite any authority in support of the proposition.
, He adds that even a compulsory disposition of property may be treated as contract for the purpose of a particular statute and cites the case of Ridge Nominees vs I.R.C.(3).
There, the Court distinguishing Kirkness 's case(3) held that the compulsory transfer of shares of a dissenting shareholder by a person "authorised to make the transfer on his behalf under section 209 of the Companies Act, 1948 corresponding to section 395 of our was having regard to the machinery created by the section a conveyance on sale within section 54 of the Stamp Act, 1 91.
The Lord Justices gave separate opinions.
It is worthwhile quoting the opinion of Donovan, L. J. who said: "When the legislature, by section 209 of the Companies Act, 1948, empowers the transferee company to appoint an agent on behalf of a dissenting shareholder for the purpose of executing a transfer of his shares (1) (2) ; (3) 714 against a price to be paid to the transferor company and held in trust for the dissenting shareholder, it is clearly ignoring his dissent and putting him in the same position as if he had assented.
For the purpose of considering whether this results in a sale, one must, I think, bear that situation in mind, and regard, the dissent of the shareholder as overridden by an assent which the statute imposes upon him, fictional though this may be.
in the context of section 209 the transfer becomes in law a conveyance on sale.
This conclusion, in my opinion, does not run counter to what was said in the House of Lords in Kirkness (Inspector of Taxes) vs John Hudson & Co. Ltd.,(1), where, in terms of the statute there under consideration, property belonging to other persons was declared to vest on a specified date in the Transport Commission against payment of compensation.
This may be no more than a difference of machinery, but machinery may make the very difference between a sale and a mere expropriation against compensation. "Lord Simonds, I venture to think, implies as much when he says he gets no assistance from the cases decided under the Stamp Acts.
" In M/s. New India Sugar Mills Ltd., vs Commissioner of Sales Tax, Bihar(2), the Court by a majority held that the supply of sugar by a sugar factory to a Provincial Government in obedience to the directions of the Sugar Controller given under the Sugar and Sugar Products Control Order, 1946 was not a sale taxable under List II, Entry 48, Sch.
VII of the Government of India Act, 1935.
Mr. Setalvad placed strong reliance on the fol lowing passage in the judgment of Shah, J. at pp.
469 470: "A contract of sale between the parties is therefore a pre requisite to a sale.
The transactions of despatches of sugar by the assessees pursuant to the directions of the Controller were not the result of any such contract of sale.
It is common ground that the Province of Madras intimated its requirements of sugar to the Controller, and the Controller called upon the manufacturing units to supply the whole or part of the requirement to the Province.
In calling upon the manufacturing units to supply sugar, the Controller did not act as an agent of the State to purchase goods: he acted in exercise of his statutory authority.
There was mani festly no offer to purchase sugar by the Province, and no acceptance of any offer by the manufacturer.
The manufacturer was under the Control Order left no volition: he could not decline to carry out the order; if he (1) (2) [1963] Supp. 2 S.C.R. 459, 469.
715 did so he was liable to be punished for breach of the order and his goods were liable to be forefeited.
The Government of the Province and the manufacturer had no opportunity to negotiate, and sugar was despatched pursuant to the direction of the Controller and not in acceptance of any offer by the Government." Divorced from the context, this passage gives some support to the contention that there can be no contract if the acceptance of the offer is made under compulsion of a direction given by a statutory authority.
But the passage must be read with the facts of the case.
By cl. 3 of the Sugar and Sugar Products Control Order, 1946, producers of sugar were prohibited from disposing of sugar except to persons specially authorised in that behalf by the Controller to acquire sugar on behalf of certain Governments.
Clause 5 required every producer or dealer to comply with the directions issued by the Controller regarding production, sales, stocks and distribution of sugar.
Clause 6 authorised the Controller to fix the price of sugar.
Clause 7(1) authorised the Controller to allot quotas of sugar for any Province and to issue directions to any producer or dealer for the supply of the sugar specifying the price, quantity and type or grade of the sugar and the time and manner of supply.
Contravention of the directions entailed forfeiture of stocks under cl. 11 of the Order and was punishable under r. 81(4) of the Defence of India Rules, 1939.
The admitted course of dealings between the parties was that the Governments of the consuming States used to intimate to the Sugar Controller their requirement of sugar and the factory owners used to send to him statements of their stocks of sugar.
On a consideration of the requisitions and the statements of stock, the Controller used to make allotments.
The allotment order used to be addressed by the Controller to the factory owner, directing him to supply sugar to the Government in question in accordance with the latter 's despatch instructions.
A copy of the allotment order used simultaneously to be sent to the Government concerned and the latter then used to send to the factory detailed despatching instructions.
In these circumstances, Kapur and Shah, JJ.
(Hidayatullah, J. dissenting) held that by giving intimation of its requirement of sugar to the Controller and applying for allotment of sugar, the Government of Madras did not make any offer to the manufacturer.
The direction of the Controller to the manufacturer to supply sugar to the Government was given in the exercise of his statutory authority and was not the communication of any offer made by the Government.
The despatch of the goods in compliance with the directions of the Controller was not the acceptance by the manufacturer of any offer, nor could it be deemed to be an offer by the manufacturer to supply goods.
On the, special facts of that case, the majority decision was that there was no offer and acceptance and no contract resulted.
That decision should not be 716 treated as an authority for the proposition that there can be no contract of sale under compulsion of a statute.
It depends upon the facts of each case and the terms of the particular statute regulating the dealings whether the parties have entered into a contract of sale of goods.
Under Act No. 45 of 1961, a canegrower makes an offer to the occupier of the factory directly and the latter accepts the offer.
The parties then make and sign an agreement in writing.
There is thus a direct privily of contract between the parties.
The contract is a contract of sale and pur chase of cane, though the buyer is obliged to give his assent under compulsion of a statute.
The State Legislature is competent to tax purchases of canes made under such a contract.
Mr. Setalvad submitted that there can be no levy of a pur chase tax with reference to the tonnage of the cane.
We cannot accept this contention.
Usually the purchase tax is levied with reference to the price of the goods.
But the legislature is competent to levy the tax with reference to the weight of the goods purchased.
The contention of Mr. Chatterjee that a purchase tax must be levied with reference to the turnover only is equally devoid of merit.
Where the purchase tax is levied on a dealer, the levy is usually with reference to his turnover, which normally means the aggregate of the amounts of purchase prices.
But the tax need not necessarily be levied on a dealer or by reference to his turnover.
It may be levied on the occupier of a factory by reference to the weight of the goods purchased by him.
Mr. Chatterjee next submitted that a purchase tax must be levied on goods generally, and there can be no purchase tax with reference to their subsequent use, consumption or sale.
He based his argument on paragraphs 17 to 20.
III, Vol.
III of the Report of the Taxation Enquiry Committee.
There, the Committee while discussing the comparative merits of sales tax in relation to customs, excise and octroi, pointed out that sales tax was a major source of revenue and could be applied to the generality of goods, while customs, excise and octroi could be applied to only a limited portion of the industrial output of the country.
The Committee did not express any opinion on the scope of List II, Entry 54.
Under that Entry, the State legislature is not bound to levy a tax on all purchases of cane.
It may levy a tax on purchases of cane required for use, consumption or sale in a factory.
The legislature is competent to tax and also to exempt from payment of tax sales or purchases of goods required for specific purposes.
Other instances of special treatment of goods required for particular purposes may be given.
Section 6 and Sch.
1, item 23 of the Bombay Sales Tax Act, 1946 levy tax on fabrics and articles for personal wear.
Section 2(j)(a)(ii) of the C.P and Berar Sales Tax Act, 1947 exempts sales of goods intended for use by a registered dealer as raw materials for the manufacture of goods.
717 Mr. Chatterjee submitted that the tax levied under section 21 was a use tax and referred to McLeod vs Dilworth & Co.(1) and C. G. Naidu & Co. The State of Madras(2).
He argued that the State legislature could not levy a use tax which was essentially different from a purchase tax.
The assumption of counsel that section 21 levies a use tax is not well founded.
The taxable event under section 21 is the purchase of goods and not the use or enjoyment of what is purchased.
The constitutional implication of a use tax in American law is entirely irrelevant.
The observation in the Madras case that the Explanation to article 286(1)(a) of the Constitution conferred, a power on the State legislature to levy a use tax is erroneous.
The Explanation fixed the situs of certain sales.
It did not confer upon the legislature any power to levy a use tax.
To appreciate another argument of Mr. Chatterjee, it is necessary to refer to a few facts.
It appears that paragraph 21 of the Bill published in the Gazette on March 3, 1960 preliminary to the passing of Act No. 45 of 1961 provided for a levy of a cess on the entry of cane into the premises of a factory for use, consumption or sale therein.
On December 13, 1960, this Court in Diamond Sugar Mills Ltd. and Another vs The State of Uttar Pradesh and Another(3) struck down a similar provision in the U.P. Sugarcane Cess Act, 1956 on the ground that the State legislature was not competent to enact it under Entry 52, List II as the premises of a factory was not a local area within the meaning of the Entry.
Having regard to this decision, paragraph 21 of the Bill was amended and section 21 in its present form was passed by the State Legislature.
The Act was published in the Gazette on December 30, 1961.
Mr. Chatterjee submitted that in this context the levy under section 21 was really a levy on the entry of goods into a factory for consumption, use or sale therein.
We are unable to accept this contention.
As the proposed tax on the entry of goods into a factory was unconstitutional, paragraph 21 of the original Bill was amended and section 21 in its present form was enacted.
The tax purchase of goods.
The taxable event is the purchase of cane for use, consumption or sale in a factory and not the entry of cane into a factory.
As the tax is not on the entry of the cane into a factory, it is not payable on cane cultivated by the factory and entering the factory premises.
Mr. Setalvad submitted that section 21 impeded free trade, com merce and intercourse and offended article 301 of the Constitu tion and relied on the decision in Firm A. T. Mehtab Majid & (1) ; (2) A.I.R. 1953 Mad.
116, 127 128, (3) ; 718 Co. vs State of Madras(1).
In that case, the Court held that r. 16(2) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939 discriminated against imported hides or skins which had been purchased or tanned outside the State by levying a higher tax on them and contravened article 304(a) of the Constitution.
At p. 442, Raghubar Dayal, J. said: "It is therefore now well settled that taxing laws can be restrictions on trade, commerce and intercourse, if they hamper the flow of trade and if they are not what can be termed to be compensatory taxes or regulatory measures.
Sales tax of the kind under consi deration here, cannot be said to be a measure regulating any trade or a, compensatory tax levied for the use of trading facilities.
Sales tax, which has the effect of discriminating between goods of one State and goods of another, may affect the free flow of trade and it will then offend against article 301 and will be valid only if it comes within the terms of article 304(a).
" That case decides that a sales tax which discriminates against goods imported from other States may impede the free flow of trade and is then invalid unless protected by article 304(a).
But the tax levied under section 21 does not discriminate against any imported cane.
Under section 21, the same rate of tax is levied on purchases of all cane required for use, consumption or sale in a factory.
There is no discrimination between cane grown in the State and cane imported from outside.
As a matter of fact, under the Act the factory can normally buy only cane grown in the factory zone.
A non discriminatory tax on goods does not offend article 301 unless it directly impedes the free movement or transport of the goods.
In Atiabari Tea Co. Ltd., vs The State of Assam and others(2).
Gajendragadkar, J. speaking for the majority said: "We are, therefore, satisfied that in determining the limits of the width and amplitude of the freedom guaranteed by article 301 a rational and workable test to apply would be: Does the impugned restriction ope rate directly or immediately on trade or its movement?.
It is the free movement of the transport of goods from one part of the country to the other that is intended to be saved, and if any Act imposes any direct res trictions on the very movement of such goods it attracts the provisions of article 301, and its validity can be sustained only if it satisfies the requirements of article 302 or article 304 of Part XIII.
" (1) [1963] Supp.
2 S.C.R. 435.
(2) ; , 860 861. 719 This interpretation of article 301 Was not dissented from in Automobile Transport (Rajasthan) Ltd. vs State of Rajasthan(1).
Normally, a tax on sale of goods does not directly impede the free movement or transport of goods.
Section 21 is no exception.
It does not impede the free movement or transport of goods and is not violative of article 301.
Mr. Setalvad next submitted that section 21 offended article 14 of the Constitution in several ways.
It was argued that section 21 read with section 2(e) discriminated between producers of sugar using the vacuum pan and open pan processes.
Under section 2 1, as it stood before its amendment by Act No. 4 of 1967 tax was levied on purchases of cane by factories producing sugar by means of vacuum pans but purchases of cane by khandasari units producing khandasari sugar by the open pan process were entirely exempt from the tax.
Even the amended section 21 levies a lower rate of tax on the purchases of cane by khandsari units.
It was also argued that there was discrimination in favour of producers of jaggery by exempting their purchases of cane from payment of the tax.
But the affidavits filed on behalf of the respondents show that factories producing sugar by means of vacuum pans and khandasari units producing sugar by the open pan processes form distinct and separate classes.
The industry using the vacuum pan process is in existence since 1932 33.
No tax was levied on this industry until 1949.
In 1949 when the industry became well established, tax was levied on it for the first time by section 14 of the Madras Sugar Factories Control Act, 1949.
The khandasari units carry on a small scale industry.
They are of recent origin in the State of Andhra Pradesh.
Until 1967, this industry was exempt from the levy.
When the industry came to be somewhat established by 1967 a smaller rate of tax was levied on it.
In 1965 66, factories adopting the vacuum pan process bought over 32 lakh tonnes of cane while the khandasari sugar units in the State bought about 2.70 lakh tonnes of cane.
The manufacture of jaggery has no resemblance to the manufacture of sugar by the vacuum pan or the open pan system.
It is a cottage industry wherein individual canegrowers process their cane into jaggery and market it as a finished product.
Having regard to the affidavits, we are satisfied that the differential treatment of the factories producing sugar by means of vacuum pans, khandasari units producing sugar by.
the open pan process and cane growers using cane for the manufacture of jaggery is reasonable and has a rational relation to the object of taxation.
There are marked differences between the three classes of users of cane and their capacity to pay the tax.
The legislature could reasonably treat the three sets of users of cane differently for purposes of levy.
(1) [1963] 1 S.C.R. 491, 533. 702 It was next argued that the power under section 21(3) to exempt new factories and factories which in the opinion of the Government have substantially expanded was discriminatory and violative of article 14.
We are unable to accept this contention.
The establishment of new factories and the expansion of the existing factories need encouragement and incentives.
The exemption in favour of new and expanding factories is based on legitimate legislative policy.
The question whether the exemption should be granted to any factory, and if so, for what period and the question whether any factory has substantially expanded and if so, the extent of such expansion have to be decided with reference to the facts of each individual case.
Obviously, it is not possible for the State legislature to examine the merits of individual cases and the function was properly delegated to the State Government.
The legislature was not obliged to prescribe a more rigid standard for the guidance of the Government.
We hold that section 21 does not violate article 14.
The petitioner in Writ Petition No. 101 of 1967 raised the contention that it was a new factory and that the Government of Andhra Pradesh should have exempted it from payment of tax under section 21(3)(a).
The contention was controverted by the respondents.
The affidavits do not give sufficient materials on the point, nor is there any prayer in the petition for the issue of a mandamus directing the State Government to grant the exemption.
In the circumstances, we do not think it fit to express any opinion on the matter.
It will be open to the petitioner in Writ Petition No. 101 of 1967 to raise this contention in other proceedings.
In the result, the petitions are dismissed with costs, one hearing fee.
G.C. Petitions dismissed.
| IN-Abs | Under the Andhra Pradesh (Regulation of Supply and Purchase) Act 1961 the occupier of a sugar factory had to buy sugarcane from canegrowers in conformity with the directions of the Cane Commissioner.
Under section 21 of the Act the State Government had power by notification to tax purchases of sugarcane for use, consumption or sale in a sugar factory.
The tax was leviable subject to a maximum rate per metric tonne.
The maximum rate for khandsari units was less than that for factories; sugarcane purchased for production of jaggery was not taxed at all.
The petitioners were sugar factories in Andhra Pradesh.
They filed writ petitions under article 32 of the Constitution challenging the validity of section 21 mainly on the ground that as the petitioners or their agents were compelled by law to buy cane from the canegrowers, their purchases were not made under agreements and were not taxable under Entry 54 List II having regard to Gannon Dunkerley 's case.
It was further urged that the tax leviable under section 21 was not truly a purchase tax as it was levied with reference to weight of the goods, that it was levied with reference to use and was therefore a use tax, and that it was the entry of the goods into the factory that was sought to be taxed Articles 14 and 301 of the Constitution were also said to be contravened.
Held: (1) There has been a gradual erosion of the laissez faire concept which prevailed in the nineteenth century.
It is now realised that in the public interest persons exercising certain callings or having monopoly or near monopoly Powers should sometimes be charged with the duty to serve the public, and if necessary, to enter into contract& The canegrowers scattered in the villages had no real bargaining power.
In the unequal contest between the canegrowers and the factory owners, the law stepped in and compelled the factory to enter into contracts of purchase of cane offered by the canegrowers on prescribed terms and conditions.
[713 C.F.].
Under Act 45 of 1961 and the Rules framed under it, the canegrower in the factory zone is free to make or not to make an offer of sale of cane to the occupier of the factory.
But if he makes an offer, the occupier of the factory is bound to accept it.
The resulting agreement is recorded in writing and is signed by the parties.
The consent of the occupier of the factory is free as defined in section 14 of the Indian Contract Act.
The compulsion of law is not coercion as 706 defined in section 15 of the Act.
The, agreements are enforceable by law and are contracts of sale as defined in section 4 of the Indian Sale of Goods Act.
The purchases of sugarcane under the agreement can be therefore taxed by the State Legislature under Entry 54 List II.
Section 21 of the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961 is accordingly not ultra vires.
[712 F H].
State of Madras vs Gannon Dunkerley & Co. ; and New India Sugar Mills Ltd., vs Commissioner of Sales Tax, Bihar, [1963] Supp. 2 S.C.R. 459, distinguished and explained.
Lane vs Cotton, ; E.R. 17, Kirkness vs John Hudson & Co. Ltd. and Ridge Nominees vs I.R.C. , referred to.
The Indian Steel & Wire Products Ltd., vs The State of Madras, ; , relied on.
(ii) Purchase tax need not always be levied with reference to price of goods or with reference to turnover.
It may be levied on the occupier of a factory by reference to the weight of the goods purchased by him.
[717 C E].
It cannot he accepted that a purchase tax must be always levied on goods generally and never with reference to their use, consumption or sale.
Under List II Entry 54 the State Legislature is not bound to levy a tax on all purchases of cane.
It may levy a tax on purchases of cane required for use, consumption or sale in a factory.
The tax so levied is not a use tax.
[717 F 718 B].
McLeod vs Dilworth & Co. ; and C. G. Naidu & Co. vs State of Madras, A.I.R. 1953 Mad.
116, referred to.
The tax under section 21 is not a levy on the (entry of goods into the factory.
Cane cultivated by the factory and entering it cannot be taxed under the section.
[718 G].
Diamond Sugar Mills Ltd., and Anr.
vs State of Uttar Pradesh and Anr.
, ; , referred to.
(iii) Section 21 does not impede free trade, commerce and intercourse and therefore does not offend article 301 of the Constitution.
The tax levied under section 21 does not discriminate against any imported cane.
[719 E 720 A].
A. T. Mehtab Majid and Co. vs State of Madras, [1963] Supp.
2 S.C.R. 435, Atiabari Tea Co ' Ltd., vs State of Assam (Rajasthan) Ltd., vs State of Rajasthan, [1963] 1 S.C.R. 491, referred to.
(iv) The differential treatment of factories producing sugar by means of vacuum pans, khandsari units producing sugar by the open pan process and canegrowers using cane for the manufacture of jaggery is reasonable and has a rational relation to the object of the Act.
There is thus no violation of article 14 of the Constitution.
[720 G H].
Nor does discrimination result from the exemption under section 21(3) of factories which are new or which in the opinion of the Government have substantially expanded.
The exemption is based on legitimate legislative policy.
The question whether the exemption should be granted to a factory and if so for what period and the question whether a factory has substantially expanded and if so the extent of such expansion have to be decided with reference to the facts of each individual case.
It is not possible for the State 707 Legislature to examine the merits of individual cases and the function was properly delegated to the State Government.
The legislature was not obliged to prescribe a more rigid standard for the guidance of Government.
[721 A C].
|
Appeal No. 136 of 1965.
Appeal from the judgment and decree dated March 4, 1960 of the Calcutta High Court in Appeal from Appellate Decree No. 1021 of 1957.
S.V. Gupte, and D.N. Mukherjee, for the appellants.
B.K. Bhattacharya, M.K. Ghose and P.K. Ghose, for respondent No. 1.
P.C. Chatterjee, G.S. Chatterlee and P.K. Bose, for respondent No. 2.
The Judgment of the Court was delivered by Shelat, J.
One Arunshashi Dasi, Charu Chandra Sur and Jotish Chandra Sur were the owners of the suit land admeasuring 1.15 acres situate in Rishra Municipality, West Bengal.
On ' November 15, 1920 they leased the land to Srikrishna Goshala.
On September 10, 1924, the said Goshala sold its leasehold interest in the said land to the 1st respondent Society.
On September 5, 1935 the Society sold the said leasehold interest to one Sovaram Sarma.
In 1941, the said Jostish Sur filed a Rent Suit against Sovaram and obtained an ex parte decree against him.
On September 9, 1941 the said Jotish in execution of the said decree and at an auction sale held thereunder purchased Sovaram 's interest and took possession of the land.
Thereafter, Sovaram 's widow and son flied a suit against the said Jotish alleging that as Sovaram had died during the pendency of the said suit the decree passed against him was a nullity and so also the auction sale.
On June 27, 1945 the said suit was decreed against the said Jotish and appeals by him against the said decree both in the District Court and the High Court were dismissed.
While the said suit was pending, Swaika, the first appellant herein, purchased from the said Jotish his interest in the said land for Rs. 6 '000/ and also agreed to carry on the said litigation against Sovaram 's widow and son.
Swaika thereafter tried to obtain possession of the land but was foiled in doing so by an injunction obtained by Sovaram 's widow ' and son, the plaintiffs in the said suit.
Swaika then got the Education Department to move for the acquisition of the said land for a Girls ' High School of which, it appears, he was the prime spirit.
On July 1, 1946 the State Government 'issued the notification under see.
4 of the Land Acquisition Act in respect of the suit land.
An 'inquiry under section 5A was held and thereafter on April 18, 1951 the Government issued the notification under sec.
6 and passed the necessary order under sec.
On December 22, 1951 the 1st respondent Society purchased the leasehold interest in the said land from Sovaram 's widow and 119 son after their suit was finally disposed of but after the said notification under sec.
6 was issued.
The 1st respondent Society then filed the present suit against the State of West Bengal, the said Swaika and other members of the managing committee of the said school for a declaration that the said notifications and the proceedings taken thereunder were mala fide and null and void and for an injunction against the Government taking possession of the said land.
The Trial Court framed five issues but so far as this appeal is concerned the relevant issue is Issue No. 3, viz. "Is the plaintiff entitled to a decree for a declaration that the declaration under section 6 and order under section 7 and, proceedings under the L.A. Act in Preliminary Land Acquisition Case No. 2 of 1945 46 of Howrah Collectorate were mala fide and in fraud of the Government 's powers under the said Act and null and void and not binding on the plaintiffs ?" On this is issue, the Trial Court found that the 1st respondent Society failed to establish the allegations as to mala fides and abuse of power under the said Act and consequently dismissed the suit.
In the appeal by the 1st respondent Society before the, Additional District Judge the only points urged for determination were (1) whether the said acquisition proceedings were mala fide and in fraud of the Act and therefore null and void and (2 ) whether the Society was entitled to.
an injunction against the Government taking possession of the said land.
It appears from the pleadings as also.
the issues framed by the Trial Court that the question as to whether the State Government was satisfied or not as to the purpose and the need for acquiring the said land was not specifically raised.
Therefore, an attempt was made to.
raise the contention at the time of the heating of the appeal that the declaration under sec.
6 did not prove such satisfaction.
The District Judge, however, dismissed the application for amendment of the plaint by the 1st respondent Society.
The contention was sought to be raised because the notification used the words "as it appears to the Governor that the land is required to be taken for a public purpose" instead of the words, viz., "the Governor is satisfied that the land is needed for a public purpose.
" The argument was that the said words used in the notification did not ex facie indicate the satisfaction of the government which is a condition precedent to such a declaration and that therefore sec.
6 notification was no.t in proper form and the acquisition proceedings taken thereafter were bad in law.
It appears that though the amendment was disallowed, the said cOntention was allowed to be urged, for, the District Judge has answered it in the following terms : 120 declaration under sec.
6 the point that requires for consideration is whether the executive authority did actually form an opinion about the requirement of the land for public purpose.
So far as the present declaration (exhibit 10A) is concerned it will go to show that the land was required for public purpose and it is conclusive in view of the provisions of section 6 of the Land Acquisition Act" On this reasoning he dismissed the appeal.
The District Judge also agreed with the findings of the Trial Court that the 1st respondent Society failed to prove mala fides on the part of the Government or the misuse of its power under the Act.
The 1st respondent Society filed a Second Appeal which was heard by a Division Bench of the High Court.
Before the High Court, Counsel for the respondent Society raised two contentions: as to mala fides and abuse of power and (ii) that the notifications under secs.
4 and 6 were not in accordance with law and were therefore invalid.
The High Court took up the second contention first and held as regards sec.
4 notification that it was valid and could not be assailed.
As regards sec.
6 notification however the High Court was impressed with the contention that after the amendment of sec.
6 by Act 38 of 1923, which substituted the words "when the ' Local Government is satisfied ' for the words "whenever it appears to the Local Government", satisfaction that the land is needed for a public purpose or for a Company is a condition precedent for the declaration under sec.
6 and that therefore the Government should make a declaration "to that effect", i.e., of its satisfaction in the notification itself.
The High Court accepted this contention and held that such satisfaction must appear in the declaration.
The High Court also held that as the notification used the words "whereas it appears to the Governor that the land is required" instead of the words, viz, "whereas the Governor is satisfied that the land is required" the declaration did not show such ,satisfaction and therefore it was not in proper form and could not be said "to afford sufficient statutory or legal basis for proceeding in acquisition.
" As regards the contention as to mala fides and fraud on the statute the High Court held that there was no evidence on the record from which it could be inferred that there was collusion between the said Swaika and the Education Department or the officers of the Land Acquisition Department and that therefore it could not be held that the proceedings were in fraud of the statute or mala fide.
The High Court also observed that "prima facie, there is no reason to differ from the findings made by the courts below.
" 121 The question as to mala fides of the Government or the Government having misused 'its powers or having acted in fraud of the statute was entirely a question of fact.
There being a concurrent finding on that question by the Trial Court and the District Court against the 1st respondent Society, the High Court could not have reopened their concurrent finding except on the ground that it was perverse or unreasonable or without evidence.
Such an argument not having been urged, the High Court could not go into that question.
But it was urged that the High Court has merely expressed a prima facie view and has not conclusively accepted the finding of the Trial Court and the District Court.
That argument has no merit.
What the High Court really meant by the expression "prima facie" was that the finding being concurrent was binding on it and that no contention as to that finding being perverse etc., having been urged before it there was not even a prima facie case to justify the reopening of that finding.
Therefore, the allegation as to mala fides or abuse of power by the Government was conclusively negatived and Counsel for the 1st respondent Society was therefore not entitled to canvass that question before us in this appeal.
The only question therefore that we are called upon to decide is whether the High Court was correct in holding that (i) the Government 's satisfaction must be stated in the notification itself and (ii) that because the notification has used the words "it appears to the Governor" etc., and not the words that the Governor was satisfied, sec.
6 notification was not valid.
To appreciate the construction placed by the High Court it is necessary to consider the effect of the change of words made by sec.
4 of Act 38 of 1923 in sec.
As sub section 1 stood prior to 1923 the words were "subject to the provisions of Part VII of the Act, when it appears to the Local Government that any particular :land is needed for a public purpose or for a Company, a declaration shall be made" etc.
The amendment of 1923 dropped these words and substituted the words "when the Local Government is satisfied after considering the report, if any, made under section 5A of sub section 2" etc.
It seems that the amendment was considered necessary because the same Amendment Act inserted section 5A for the first time in the Act which gave a right to persons interested in the land to be acquired to file objections and of being heard thereon by the Collector.
The new section enjoined upon the Collector to consider such objections and make a report to the Government, whose decision on such objections was made final.
One reason why the word "satisfaction" was substituted for the word "appears" ' seems to be that since it was the Government who after considering the objections and the report of the Collector thereon was to arrive at its decision and then make 'the declaration required LI sup.
CI/68 9 122 by sub section 2, the appropriate words would be "when the Local Government is satisfied" rather than the words "when it appears to the Local Government".
The other reason which presumably led to the change 'in the language was to bring the words in sub see.
1 of see.
6 in line with the words used in see.
40 where the Government before granting its consent to the acquisition for a Company has to "be satisfied" on an inquiry held as provided thereinafter.
Since the Amendment Act 38 of 1923 provided an inquiry into the objections of persons interested in the land under section 5A, section 40 also was amended by adding therein the words "either on the report of the Collector under section 5A or".
41 which requires the acquiring Company to enter into an agreement with the Government also required satisfaction of the Government after considering the report on the inquiry held under sec.
The Amendment Act 38 of 1923 now added in section 41 the report of the Collector under section 5A, if any.
These amendments show that even prior to the 1923 Amendment Act, whenever the Government was required by the Act to consider a report, the legislature had used the word satisfaction on the part of the Government.
Since the Amendment Act 1923 introduced section 5A requiring the Collector to hold an inquiry and to make a report and required the Government to consider that report and the objections dealt with in it, the legislature presumably thought it appropriate to use the same expression which it had used in sees.
40 and 41 where also an inquiry was provided for and the Government had to consider the report of the officer making such inquiry before giving its consent.
But Counsel for the 1st respondent Society argued that since the legislature has used different language from the one it had used earlier, it must mean that it did so deliberately and because it considered the new words as more appropriate.
On the other hand, Counsel for the appellant argued that the meaning of both the expressions is synonymous.
It is not necessary for us in this appeal to construe the two expressions as on a construction of the section we have come to the conclusion that it is not necessary that satisfaction of the Government must ex facie appear in declaration made under the section.
Sub section 1 provides that when the Government is satisfied that a particular land is needed for a public purpose or for a Company, a declaration shall be made "to that effect".
Satisfaction of the Government after consideration of the report, if any, made under sec.
5A is undoubtedly a condition precedent to a valid declaration, for, there can be no valid acquisition under the Act unless the Government is satisfied that the land to be acquired is needed for a public purpose or for a Company.
But there is nothing in sub sec. 1 which requires that such satisfaction need be stated in the declaration.
The only declaration 123 as required by sub sec.
1 is that the land to be acquired is needed for a public purpose or for a Company.
Sub section 2 makes this clear, for it clearly provides that the declaration "shall state" where such land is situate, "the purpose for which it is needed", its approximate area and the place.
where its plan, if made, can be inspected.
It is such a declaration made under sub sec.
1 and published under sub see.
2 which becomes conclusive evidence that the particular land is needed for a public purpose or for a Company as the case may be.
The contention therefore that it is imperative that the satisfaction must be expressed in the declaration or that otherwise the notification would not be in accord with sec.
6 is not correct.
The construction which we have put on sec.
6 is supported by the decision in Ezra vs The Secretary of St 'ate (1) where it was held that a notification under sec.
6 need not be in any particular form.
The case went up to the Privy Council but it appears from the report of that case that these observations were not challenged or disputed before the Privy Council.(2) We are also told by Counsel that no statutory forms are prescribed by the West Bengal Government for such a declaration either under the Act or the rules made thereunder though there are model forms framed presumably for the guidance.
only of the officers of the Acquisition Department.
There being thus no statutory forms and see.
6 not requiring the declaration to be made in any particular form, the mere fact that.
the notification does not ex facie show the Government 's satisfaction, assuming that the words "it appears" used in the notification do not mean satisfaction, would.
not render the notification invalid or not in conformity with sec.
Apart from the clear language of sec.
6 it would seem that it is immaterial whether such satisfaction is stated or not in the notification.
For, even if it is so.
stated.
a person interested in the land can always challenge as a matter of fact that the Government was not actually satisfied.
In such a case the Government would have to satisfy the Court by leading evidence that it was satisfied as required by sec.
In the present case No. such evidence was led because the fact that the Government was satisfied was never challenged in the pleadings and no issue on that question was sought to be raised.
Even when the 1 st respondent Society sought to amend its plaint it did so only to say that the notification did not state such satisfaction and therefore did not establish such satisfaction.
The High Court no doubt thought that this question was covered by Issue No. 3 framed by the Trial Court.
But the contention said to be covered by that issue was not that there was no satisfaction on the part of the Government that the land was needed for a public purpose, viz., for he said Girls ' School, but that (1) I. , 81.
(2) 32 I. A. 93.
124 the notification in the absence of words to that effect did not prove that satisfaction.
That being the position and no issue having been raised on the factum of satisfaction, the State Government was never called upon to lead evidence to prove its satisfaction.
The fact that sec.
5A inquiry was held and objections were filed and heard, the fact that the Additional Collector had recommended the acquisition and had sent his report to that effect and the Government thereafter issued sec.
6 notification would, in the absence of any evidence to the contrary, show that the condition precedent as to satisfaction was fulfilled.
We are therefore of the view that the High Court was in error when it held that sec.
6 notification was not in accord with that section and that proceedings taken thereafter were vitiated.
We may mention that Counsel for the 1st respondent Society cited certain authorities and also attempted to canvass the issue as to mala fides on the part of the Government.
As to the authorities cited by him we think that they were neither relevant nor of any assistance to him.
As regards the question of mala fides, we do not think there is any justification for reopening the concurrent finding of the Trial Court and the AdditiOnal District Judge.
In the result, the appeal is allowed, the High Court 's judgment and decree are set aside and the judgment and decree passed by the Trial Court and confirmed by the Addl.
District Judge dismissing the suit of the 1st respondent Society are restored.
The 1st respondent Society will pay to the appellant the costs in this Court as also in the High Court.
V.P.S. Appeal allowed.
| IN-Abs | Under section 6 of the Land Acquisition Act, 1894, the State Government issued a declaration with respect to the land of the 1st respondent after considering the report under section 5A of the Act.
The declaration used the words 'as it appears to the Governor that the land is required to be taken for a.public purpose ' instead of the words 'the Governor is satisfied that the land is needed for a public purpose '.
A suit filed by the 1st respondent against the State Government and others challenging the declaration was decreed in second appeal by the High Court.
on the ground that: (1) the satisfaction of the Government as to the purpose of and the need for acquiring the suit land must appear in the declaration itself; and (2) as the declaration used the words 'it appears to the Governor etc., ' instead of the words 'the Governor is satisfied etc. ' it did not show such satisfaction and therefore was.
not in proper form and could not form the legal basis for the acquisition.
In appeal to this Court, HELD: There being no statutory form and section 6 not requiring the declaration to be made in any particular form.
the mere fact that the declaration does not ex facie show the Government 's satisfaction.
assuming that the words 'it appears ' used in the declaration do not mean satisfaction.
would not make the declaration invalid or not in conformity with section 6.
[123 E] Satisfaction of the Government after consideration of the report, any.
made under section 5A is undoubtedly a condition precedent to a valid declaration.
But there is nothing in section 6(1) which requires that the satisfaction should be stated in the declaration, the only declaration required by the sub section being, that the land to be acquired is needed for a public purpose or for a company.
[122G H] Observations in Ezra ' vs Secretary of State, I.L.R. 30 Cal.
36, at p. 81.
approved Further, it is immaterial whether or not such satisfaction is stated in the declaration.
even if it was so stated a person interested in the land can always challenge.
as a matter of fact, that the Government was not actually satisfied, and in such a case, the Government would ' have to satisfy the court by leading evidence that it was so satisfied.
In the present case, the fact that the Government was satisfied was never challenged, the only contention raised being.
that as the declaration dissatisfied was never not state such satisfaction it did not establish such satisfaction.
Therefore, it was not necessary for the Government to lead any evidence prove its satisfaction.
[123F H].
[Whether the words 'it appears to the Governor that the land is required to be taken for a public purpose ' and the words 'the Governor is satisfied that the land is needed for a public purpose ' are synonymous,.
not decided.
[122F G] 118.
|
s Nos. 49, 60, 61 and 80 of 1967.
Writ Petitions under article 32 of the Constitution of India for the enforcement of fundamental rights.
K. Narayanaswamy and Lily Thomas, for the petitioner (in W.P. No. 49 of 1967).
Sadhu Singh, for the petitioner (in W.P. No. 60 of 1967).
S.K. Dholakia and Sadhu Singh, for the petitioner (in W.P. No. 61 of 1967).
S.T. Desai and Sadhu Singh, for the petitioner (in W.P. No. 80 of 1967).
C.K. Daphtary, Attorney General, B.L. lyengar, R.H. Dhebar for R.N. Sachthey, for the respondents (in W.P. No 49 of 1967).
R.H. Dhebar for R.N. Sachthey, for the respondents (in W.Ps.
Nos. 60, 61 and 80 of 1967).
The Judgment of the Court was delivered by Bachawat, J.
In all these writ petitions, the petitioners challenge the vires of the Taxation Laws (Extension to Union Territories) Regulation No. 3 of 1963.
The contention is that the President had no power to promulgate the Regulation under article 240 of the Constitution.
On August 16, 1962, Pondicherry became a Union Territory.
On December 5, 1962, Parliament enacted the Pondicherry Administration Act, 1962 (Act No. 49 of 1962).
Section 4 (1 ) of this Act provided that all laws in force immediately before August 19, 1962 would continue to be in force in 105 Pondicherry until amended or repealed by a competent legislature or other competent authority.
Section 4(2) empowered the Central Government to make necessary adaptations and modifications for the purpose of facilitating the application of any such law in relation to the administration of Pondicherry and bringing the provisions of any such law into accord with the provisions of the Constitution.
Section 7 provided that all taxes, duties, cesses and fees which immediately before August 19, 1962 were being lawfully levied would continue to be levied in Pondicherry and to be applied for the same purposes, until other provision was made by a competent legislature or other competent authority.
After the passing of this Act, the petitioners continued to be sub.jeer to the existing French laws relating to income tax.
On March 30, 1963, the President in the exercise of the powers conferred on him by article 240 of the Constitution promulgated the impugned Regulation No. 3 of 1963.
The Regulation extended certain Indian Acts relating to taxation to the Union territories mentioned therein.
Section 3 (2) of the Regulation extended the Income tax Act, 1961, subject to the modifications mentioned in Part II of the Schedule, to Pondicherry as from April 1, 1963.
Section 4(1) provided that any law in force in Pondicherry corresponding to the Income tax Act, 1961 would stand repealed on April 1, 1963.
The petitioners carry on business at Pondicherry and are being assessed to income tax under the Income tax Act.
They have filed the present writ petitions asking for a declaration that the Income tax Act, 1961 was not legally extended to Pondicherry and a direction prohibiting the respondents from implementing that Act in relation to Pondicherry.
In the Constitution of India as originally enacted, India was declared to be a Union of States, [article 1 (1)].
The States and their territories were specified in Parts A, B and C of the First schedule [article 1(2)].
The territory of India consisted of the territories of the States, the territories specified in Part D of the First Schedule (Andaman and Nicobar Islands) and such other territories as may be acquired, [article 1 (3)].
As original enacted.
part VI of the Constitution dealt with Part A States, Part VII dealt with Part B States, Part VIII dealt with Part C States and Part IX dealt with the territories specified in Part D of the First Schedule.
The Constitution (Seventh Amendment) Act passed on October 19, 1956 altered the scheme of division of India in to A B and C States and the territories mentioned in Part D of the first Schedule.
Article 1 and the First Schedule were amended so that the territory of India would comprise the territories of the states, the Union territories specified in the First Schedule and such other territories as may be acquired.
By cl. 30 added to article 66. "Union territory" was defined to mean any Union territory specified in the First Schedule and to include any other territory supp.
C.I./68 8 106 comprised within 'the territory of India but not specified in that Schedule.
Consequential amendments were made in Part VI and other Parts of the Constitution.
Parts VII and IX were repealed.
Part VIII was drastically amended.
The title of Part VIII was altered to that of "Union Territories".
The amended article 239 provided for the administration of Union territories by the President acting through an administrator to be appointed by him.
The amended article 240 was in these terms: "240.
Power of President to make regulations for certain Union territories. ( 1 ) The President may make regulations for the peace, progress and good government of the Union territory of (a) the Andaman and Nicobar Islands; (b) the Laccadive, Minicoy and Amindivi Islands.
(2) Any regulation so made may repeal or amend any Act made by Parliament or any existing law which is for the time being applicable to the Union territory and, when promulgated by the President, shall have the same force and effect as an Act of Parliament which applies to that territory.
" The amended article 241 dealt with High Courts for Union territories.
Article 242 relating to Coorg was repealed.
Article 240 (1) and the First Schedule were amended from time to time.
The Constitution (Fourteenth Amendment) Act passed on December 28, 1962 amended the First Schedule and article 240 and added article 239A. Article 239A and the amended article 240 are in these terms: "239A. (1 ) Parliament may by law create for any of the Union territories of Himachal Pradesh, Manipur, Tripura, Goa, Daman and Diu, and Pondicherry (a) a body, whether elected or partly nominated and partly elected, to function as a Legislature for the Union territory, or (b) a Council of Ministers,or both with such constitution, powers and functions, in each case, as may be specified in the law.
(2) Any such law as is referred to in clause (1) shall not be deemed to be an amendment of this Constitution for the purposes of article 368 notwithstanding that it contains any provision which amends or has the effect of amending this Constitution.
107 240.
(1) The President may make regulations for the peace, progress and good government of the Union territory of (a) the Andaman and Nicobar Islands; (b) the Laccudive, Minicoy and Amindivi Islands; (c) Dadra and Nagar Haveli; (d) Gao, Daman and Diu; (e) Pondicherry: Provided that when any body is created under article 239A to function as a Legislature for the Union teriyaki of Goa, Daman and Diu or Pondicherry, the President shall not make any regulation for the peace, progress and good government of that Union territory with effect from the date appointed for the first meeting of the Legislature.
(2) Any regulation so made may repeal or amend any Act made by Parliament or any existing law which is for the time being applicable to the Union territory and, when promulgated by the President, shall have the same force and effect as an Act of Parliament which applies to that territory." Regulation No. 3 of 1963 was made by the President in the exercise of the power conferred on him to make regulations for the peace, progress and good government of the Union territories.
The contention that under article 240 the President can make regulations limited to the subject of law and order only cannot be accepted.
The grant of legislative power to make laws, regulations or ordinances for British dependencies has long been expressed in the common form of that of making laws, regulations or ordinances for "peace and good government" of the territory or similar objects such as "peace, order and good government", "peace, welfare and good government" and "peace, progress and good government" of the territory.
Instances of this common form of grant of legislative power to legislatures and authorities in India are section 42 of the Indian Councils Act, 1861, sections 71, 72, 80A of the Government of India Act, 1915, section 72 of the ninth Schedule and section 92(2) of the Government of India Act,1935.
Such a power was held to authorise the utmost discretion of enactment for the attainment of peace, order and good government of the territory and a Court will not enquire whether any particular enactment made in the exercise of this power, in fact, promotes those objects, Riel vs Queen), Chenard and Co. vs Joachim Arissol(2).
The words "peace, order and good government" and (1) , 678 679.
(2) , 132.
108 similar expressions are words of very wide import giving wide discretion to the authority empowered to pass laws for such purposes, Attorney General for Saskatchewan vs Canadian Pacific Ry.
CO.(1) King Emperor vs Benoari Lal Sarma(2).
In Jogendra Narayan Deb vs Debendra Narayan Roy(3) Sir George Rankin said that the words have reference to the scope and not to the merits of the legislation.
Girindra Nath Banerjee vs Birendra Nath Pal(4), he said that "these words are used because they are words of the widest significance and it is not open to a Court of law to consider with regard to any particular piece of legislation whether in fact it is meritorious in the sense that it will conduce to peace or to good government.
It is sufficient that they are words which are intended to give, subject to the restrictions of the Act, a legislating power to the body which it invests with that authority.
" Article 240 of the Constitution confers on the President a general power of making regulations for the peace, progress and good government of the specified Union territories.
In exercise of this power, the President may make a regulation repealing or amending any Act made by Parliament or any existing law which is for the time being applicable to the Union territory.
The regulation when promulgated by the President has the stone force and effect as an Act of Parliament which applies to that territory.
The President can thus make regulations on all subjects on which Parliament can make laws for the territory.
Parliament has plenary power to legislate for the Union territories with regard to any subject.
With regard to Union territories there is no distribution of legislative power.
Article 246(4) enacts that "Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List.
" In R.K. Sen vs Union(3) it was pointed out that having regard to article 367, the definition of "State" in section 3(58) of the applies for the interpretation of the Constitution unless there is anything repugnant in.
the subject or context.
Under that definition, the expression "State" as respects any period after the commencement of the Constitution (Seventh Amendment) Act, 1956 "shall mean a State specified in the First Schedule to the Constitution and shall include a Union territory. ' But this inclusive definition is repugnant to the subject and con text of article 246.
There, the expression "State" means the State specified in the First Schedule.
There is a distribution of legislative power between Parliament and the legislatures of the States Exclusive power to legislate with respect to the matters enumerated in the State List is assigned to the legislatures of the States esta (1) , 613 614. ' (2) [1914] L.R. 72 I.A. 57, 72.
(3) [1942] L.R. 69 I.A. 76, 90.
(4) Cal.
727, 738, (5) ; , 433. 109 blished by Part V1.
There is no distribution of legislative power with respect to Union territories.
That is why Parliament is given power by article 246(4) to legislate even with respect to matters enumerated in the State List.
If the inclusive definition of "State" in section 3(58) of the were to.
apply to article 246(4), Parliament would have no power to legislate for the Union territories with respect to matters enumerated in the State List and until a legislature empowered to legislate on those matters is created under article 239A for the Union territories, there would be no legislature competent to legislate on those matterS; moreover, for certain territories such as the Andaman and Nicobar Islands no legislature can be created under article 239A, and for such territories there can be no authority competent to legislate with respect to matters,enumerated in the State List.
Such a construction is repugnant to the subject and context of article 246.
It follows that m view of article 246(4), Parliament has plenary powers to make laws for Union territories on all matters.
Parliament can by law extend the Income tax Act, 1961 to a Union territory with such modifications as it thinks fit.
The President in the exercise of his powers under article 240 can make regulations which have the same force and effect as an Act of Parliament which applies to that territory.
The President can therefore by regulation made under article 240 extend the Income tax Act, 1961 to that territory with such modifications as he thinks lit.
The President can thus make regulations under article 240 with respect to a Union territory occupying the same field on which Parliament can also make laws.
We are not impressed by the argument that such overlapping of powers would lead to.
a clash between the President and Parliament.
The Union.
territories.
are centrally administered through the President acting through an administrator.
In the cabinet system of Government the President acts on the advice of the Ministers who are responsible Parliament.
The proviso to article 240(1) lays down the condition for the cesser of power of the President to make regulations under article 240(1).
The power of the President to make regulations for the Union territory of Goa, Daman and Diu or Pondicherry ceases when a legislature for the territory is created with effect from the date appointed for the first meeting of the legislature.
But until such a legislature is created, the President retains his full power to make regulations for those territories.
The proviso does not act as a fetter on the general power of the President to make regulations for the Union territory while no legislature for that territory is brought into.
existence.
The proviso does not enact, as is suggested by the petitioners, that the power of the President is confined 110 to making laws with respect to the matters enumerated in the State List and the Concurrent List.
The argument is that a legislature created under article 239A can be authorised to pass laws with respect to those matters only and having regard to.
the proviso to article 240(1) the President 's power to make regulations under article 240 is similarly circumscribed.
As a matter of fact, the created local legislatures for the Union territories of Himachal Pradesh, Manipur.
Tripura, Goa, Daman and Diu and Pondicherry and section 18 of the Act conferred on those legislatures power to make laws for those territories with respect to the matters enumerated in the State List or the Concurrent List.
Assuming that the local legislature created under article 239A can be authorised to make laws with respect only to the matters enumerated in the State List or the Concurrent List, it does not follow that the power of the President to make regulations under article 240 is so limited.
By the express words of article 240, the President can make regulations for the peace, progress and good government of the specified Union territories.
Any regulation so made may repeal or amend any Act made by Parliament and applicable to that territory.
When promulgated by the President the regulation has the same force and effect as an Act of Parliament applicable to that territory.
This general power of the President to make regulations extends.
to all matters on which Parliament can legislate.
It may be recalled that article 239A and the proviso to article 240(1) were inserted by the Constitution (Fourteenth Amendment) Act.
Under article 240 as it stood after the Constitution (Seventh Amendment) Act and before the enactment of the Constitution (Fourteenth Amendment) Act, it could not be contended that the general power of the President to make regulations under article 240(1) was limited to matters enumerated in the State List and the Concurrent List.
The position was not changed by the insertion of article 239A and the proviso to article 240(1) by the Constitution (Fourteenth Amendment) Act.
Moreover, article 239A does not authorise Parliament to create legislatures for the Union territories of the Andaman and Nicobar Islands, Laccadive, Minicoy and Amindivi Islands and Dadra and Nagar Haveli.
It is clear, therefore, that the power of the President to make regulations with respect to those territories is not limited by the proviso to article 240( 1 ).
We are satisfied.
that the proviso to article 240(1) on its true construction does not fetter the power of the President to make regulations for any of the Union territories specified in article 240(1) including Pondicherry as long as no Legislature is created for the territory.
It was suggested that there is no provision for the distribution of the income tax attributable to Union territories and therefore the President could not extend the Income tax Act, 1961 to the Union territories.
If this argument were sound, even Parliament 111 could not extend the Income tax Act to the Union territories.
Moreover, the argument overlooks article 270 which shows that the income tax attributable to Union territories forms part of the Consolidated Fund of India.
It is not necessary to make any distribution of income tax with respect to Union territories as those territories are centrally administered through the President.
There is no force in the contention that the President cannot make a law with respect to income tax in the absence of an express grant of such a power.
There is distribution of legislative power between the Centre and the States and consequently distinct grants of taxing power are made in the legislative lists.
With respect to Union territories, there is no distribution of legislative power.
For the Union territories, Parliament has plenary powers to make laws and the President has general powers to make regulations.
In the exercise of his powers under article 240, the President could make Regulation No. 3 of 1963 extending the Income tax Act, 1961 and other laws to the Union territories.
The petitions are dismissed with costs, one hearing fee.
Petitions dismissed.
| IN-Abs | Parliament enacted the Pondicherry Administration Act.
which provided that all laws in force immediately before August 19.
1962, when Pondicherry became a Union territory, were to continue to be in force until amended or repealed by a competent legislature or other competent authority.
The President, in exercise of the powers conferred on him by article 240 of the Constitution to make regulations of "peace, progress and good government" of the Union territories promulgated the Tax Laws (Extension to Union Territories) Regulation.
By this Regulation the laws in force in relation to income tax in Union territory of Pond:cherry were repeated and the Indian Income tax Act, 1961 was made applicable.
The petitioners challenged the rites of the Regulation.
HELD: The Regulation is valid.
The power of the President to make regulations under article 240 is not limited to the subject of law and order.
Authority to make regulations for "peace.
progress and good government" is a common form of grant of legislative power and the expression "peace, progress and good government" is of very wide import giving wide discretion to the authority empowered to pass laws for such purposes.
The President can make regulations with respect to a Union territory occupying the same field on which Parliament can also make laws.
Such a regulation may repeal or amend any Act made by Parliament or any existing law which is for the time being applicable to the Union territory and when promulgated has the same force and effect as an Act of Parliament which applies to that territory.
[107E 108D] Riel vs queen.
Chenard and Co. vs Joachim Arissol, , Attorney General for Saskatchewan vs Canadian Pacific Ry.
Co., , King Emperor vs Benoari Lal Sarma, [1914] L.R. 72 I.A. 57.
Jogendra Narayan Deb vs Debendra Narayan Roy, [1942] L.R. 69 I.A. 76 and Girindra Nath Banerjee vs Birendra Nath Pal.
Cal. 727, referred to.
Parliament has, by virtue of article 246(4), power to make laws with respect to any matter including matters enumerated in the State List, for any part of the territory of India not included in a State.
With regard to Union territories there is no distribution of legislative power 104 and Parliament has plenary power to make laws for those territories on any subject.
Though the definition of "State" in section 3(58) of the , taking within it Union territories, applies to the interpretation of the Constitution, this inclusive definition is repugnant to the subject and context of article 246.
There, the expression "State" means the State specified in the FirSt Schedule.
Parliament can by law extend the Income tax Act, 1961, to a Union territory with such modifications as it thinks fit.
The President can, therefore, by regulation do the same.
[108E; 109A D] R.K. Sen vs Union, ; , referred to.
The power of the President to make regulations for any of the Union territories specified in article 240(1) so long as no legislature is created for the territory is not fettered by the.
proviso to article 24 0(2 ) or limited to matters enumerated in the State List and the.
Concurrent list.
[110G] It is not necessary to make any distribution of income tax with respect to Union territories, as those territories are centrally administered through the President.
[111A B]
|
Appeal No. 141 of 1965.
Appeal by special leave from the judgment and order dated December 7, 1963 of 'the Madhya Pradesh High Court, Indore Bench in Second Appeal No. 378 of 1961.
B.P. Jhandharia, P.C. Bhartari, J.B. Dadachanji and O.C. Mathur, for the appellant.
W.S. Barlingay, V.G. Tambvekar and A.G. Ratnaparkhi, for respondents Nos. 1, 2 and 4 to 7.
The Judgment of the Court was delivered by Shelat, J.
This appeal by special leave is directed against the judgment and order of the High Court of Madhya Pradesh in Second Appeal No. 378 of 1961.
The respondents as trustees of a charitable trust are the owners of certain houses situate in Indore City.
Prior to January 26, 1954 the Indore Municipality was governed by the Indore City Municipal Act, 4 of 1909.
By virtue of the power conferred on it by that Act the Municipality used to levy and collect house tax 127 at the rate of 7% of the gross annual letting value of these houses and the trustees duly paid such tax.
After the formation of the State of Madhya Bharat, the legislature of that State passed the Madhya Bharat Municipalities Act, 1954 which came into force on January 26, 1954.
The 1954 Act repealed amongst other Acts the Indore City Municipal Act, 1909.
The Indore Municipality however purported to levy the house tax on the basis of the gross annual letting value at the rate of 7% of such value for the financial years 1953 54 and 1954 55.
This was objected to by the respondents on the ground that under the 1954 Act the tax could be assessed on the basis of gross annual letting value less 10% statutory allowance in.
lieu of costs of repairs or on any other account whatsoever.
The difference came to Rs. 1,461, and of this the trustees claimed refund on the ground that the Municipality had collected the excess from them under pain of distress The Municipality having refused to refund the excess the respondents filed the suit to recover it on the ground that the excess amount was illegally recovered.
The Trial Court decreed the suit and the appeals filed by the Corporation in the District Court and the High Court were dismissed.
To appreciate the stand taken by the appellant Corporation it is necessary to examine some of the provisions of the two Acts Sec.
21 of the Indore City Municipal Act authorised the Municipal Council to impose tax on houses, buildings or lands within the municipal limits at a rate not exceeding 12 1/2% of the gross annual letting value.
As aforesaid, this Act amongst other Acts was repealed by the Madhya Bharat Municipalities Act, 1954.
2 of the 1954 Act which contains both a repealing and saving provisions repealed the several Acts set out therein.
Clause (a) however provides that such repeal shall not affect the validity or invalidity of anything already done under any of the said enactments.
Clause (c) of sec.
2 provides that all rules, orders, byelaws, notifications and notices, taxes and rates, made, passed, framed, issued or imposed or deemed to have been made, passed, framed, issued or imposed, shall so far as they are not inconsistent with this Act, be deemed to have been made, passed, framed, issued or imposed, as the case may be, under this Act.
69 authorises a Municipality to impose the several taxes set out therein including the tax on houses, buildings or lands or both.
70 lays down the procedure which the municipality would have to follow before it imposes any one of those taxes.
73 provides that when a tax on buildings or lands or both is imposed, the Chief Executive Officer shall cause an assessment list of all buildings or lands in the municipality to be prepared containing the particulars therein set out.
Amongst such particulars are the valuation based on capital or annual letting value as the case may be on which the property is assessed.
Sub sec.
2 provides that in 128 assessing the tax on buildings or lands, where the valuation determined under clause (d) of sub section 1 is the annual letting value, a sum equal to 10% of such valuation shall be deducted therefrom in lieu of allowance for costs of repairs or on any account whatsoever.
75 provides for the publication of the assessment list and the.
right of the owner or occupier of properties included in the list to take inspection thereof and to make extracts therefrom.
76 provides for a public notice of time fixed for lodging objections to such assessment list and the hearing of such objections.
Sub sec.
4 of sec.
76 provides for the authentication of the list.
Sub section 6 lays down that subject to such alterations as may be made therein under sec.
77 and to the result of any appeal or revision made under sec.
190 in the case of City Municipality and.
under sec.
90 in the case of other municipalities, the entries in the assessment list so authenticated shall be accepted as conclusive evidence for the purposes of all municipal taxes of the valuation or annual letting value of buildings.
and lands to which such entries respectively refer and for the purposes of the tax for which such assessment list has been prepared of the amount of tax leviable on such buildings or lands "in any official year in which such list is in force.
" Sec.
79(1) provides that it would not be necessary for a Municipality to prepare a new assessment list for every year.
It further provides that subject to the condition that such assessment list shall be completely revised not less than once in every 4 years the Municipality may adopt the valuation and assessment contained in the list for any year with such alterations as may be necessary for the year immediately following.
But sub section 2 lays down that the provisions of section 75 and section 76 shall be applicable every year as if a new assessment list has been completed at the commencement of the official year.
These provisions show that though by sec.
2 the new Act repealed the Indore City Municipal Act, 1909 along with other Acts, the legislature by sec.
2(c) saved certain things done under the repealed Acts, viz., rules bye laws, orders, notifications and notices, taxes and rates made, framed, passed, or imposed or deemed to have been made, framed, passed or imposed under the repealed Acts and added a fiction that so far as they are not inconsistent with the new Act they shall be deemed as if they were made, framed, passed or imposed as the case may be under this Act.
We are informed by Counsel that under the rules made under the repealed Indore City Municipal Act, 1909 the Municipality had imposed the tax on houses at the rate of 7% of their gross annual letting value, that an assessment list on that basis was prepared for the year 1952 53 and that the Municipality has been levying tax at the said rate on the basis of the said assessment list for the two subsequent years.
129 Counsel for the appellant Corporation argued that the Corporation was entitled to levy the house tax at the rate of 7% of the gross annual letting value and that it was not bound to deduct the 10% allowance provided by sec.
73(2) from such gross annual letting value.
The argument was, firstly, that the appellant Corporation could do so because the rules made under the Indore Act are saved by sec.
2(c) and therefore the rate of 7% of the gross annual letting value at which the tax was levied also has been saved and secondly, that under sec.
79(1) of the 1954 Act the Corporation need not prepare a fresh assessment list every year, that it has to prepare a fresh assessment list only once in every 4 years, that the Corporation therefore can and in fact has adopted the said list for the two years in question and that being so, the list so adopted was.
in force during the years in question and has to be accepted under section 76(6) as conclusive evidence of the annual letting value as also for the amount of tax leviable on the buildings or lands or both.
He contended that being ' the position the respondents were debarred from objecting to the annual letting value and the quantum of tax based on it as entered against the respondents ' properties in the said assessment list.
We are not impressed with these contentions as in our view they are not warranted on the true construction of the provisions of the Act.
The Indore Municipal Act being no longer in force as from January 26, 1954, obviously no tax could be levied or imposed thereunder after that date.
The rules made and the taxes imposed under the repealed Act are no doubt amongst other things saved and are deemed to have been made, framed, passed or imposed under the new Act but cl.
(c) of sec.
2, it must not be forgotten, lays down an important qualification that they are to be deemed to have been made, or imposed etc., under the new Act to the extent that they are consistent with the provisions of the Act.
73 read with sec.
69 provides that a tax on houses or buildings shall be levied on the annual letting value and that in assessing such tax a sum equal to 10% of such letting value shall be deducted therefrom.
The tax levied under the old Act and the rules framed thereunder on the basis of the gross annual letting value is obviously inconsistent with the provisions of section 73 of the Act.
The saving and the deeming provisions in section 2(c) can only apply if the tax is assessed in the manner consistent with the provisions of section 73, that is, if it is assessed on the net and not the gross annual letting value after deducting 10% statutory allowance in lieu of the costs of repairs or any other account whatsoever.
If the construction of sec.
2(c) as suggested by Counsel were to.be accepted it would render sec.
73 (2) nugatory, for, the Municipal Corporation in that case can go on imposing the tax on the basis of the gross annual letting value for ever despite the express provision for levying tax on the basis of net annual 130 letting value, i.e., the value arrived at after deducting 10% of the gross annual letting value.
The second part of the contention is equally unacceptable because, if accepted, it will be contrary to the provisions of sections 75,76 and 79 of the Act.
After going through the procedure laid down in sections 70, 71 and 72 sec.
enjoins upon the Chief Executive Officer to have an assessment list made containing inter alia valuation or annual letting value at which the property is assessed and the amount of tax assessed on the basis of such valuation or annual letting value.
Under sections 75 and 76 when the assessment list is prepared in accordance with the provisions of sec.
73 it has to be published and time has to be fixed for lodging objections against the entries therein.
After such objections are heard and disposed of the assessment list has to be authenticated as provided by sec.
76(6).
Sub sec.
6 of sec.
76 lays down that such assessment list when authenticated becomes conclusive evidence for purposes of all taxes.
of the valuation or annual letting value and of the amount of tax leviable on such buildings or lands or both in any official year in which such list is in force.
The Municipal tax is an annual tax leviable for a particular official year and the assessment list on the basis of which the tax is assessed is for each such official year.
This is supported by the words "such assessment list" and "of the amount of tax leviable in any official year in which such list is in force" in sec.
76(6).
Ordinarily therefore the Municipal Corporation has to prepare a fresh assessment list every year.
The legislature however has empowered by sec.
79, as other State legislatures have similarly done in several Municipal Acts, to adopt the valuation and assessment contained in the assessment list prepared in an earlier year provided, however, that it prepares a fresh list once:in every 4 years.
But sub sec.
2 of sec.
79 provides expressly that when such a previous list is adopted for a particular official year it can be done subject to the provisions of sections 75 and 76.
In other words, an assessment list being for a particular official year even when an assessment list prepared in an earlier year is adopted it becomes the list for such subsequent year subject to the procedure laid down in secs.
75 and 76.
The list so adopted has therefore to be published, has to invite objections and has to be authenticated in the manner prescribed by sec.
76 (6) after disposing of the objections if any and it is then only that it becomes conclusive evidence of the valuation and the tax assessed thereon for that particular official year.
If it were otherwise, the annual letting value or the value estimated on a particular building or house would be static for 4 years during which the Corporation can go on adopting the assessment list prepared in an earlier year and the owner or the occupier of the building would 131 be deprived of the right to object to the valuation or the annual letting value or the tax assessed thereon for at least 4 years even though the valuation or the annual letting value thereof may have decreased for one reason or the other.
In order to prevent such a result the legislature has provided by sub section 2 of sec.
79 that where a municipality adopts a previously prepared list for any subsequent year the provisions of sections 75 and 76 shall be applicable as if a new assessment list has been completed at the commencement of that particular official year.
The word, "if" appearing in sub sec. 2 of sec.
79 is obviously a mistake and must be read as "as if" because the word "if" standing by itself makes no sense at all.
79 therefore has to be construed to mean that though a Municipality need not prepare a fresh assessment list every year and need prepare such list once in every 4 years and can adopt an earlier assessment list such an adopted list becomes the assessment list for that particular year as if it was a new list and 'to which sections 75 and 76 apply.
The result of the foregoing discussion is that the appellant Corporation was entitled to adopt the assessment list prepared for the year 1952 53 for the two assessment years, 1953 54 and 1954 55, under sec.
79 and therefore that list became the assessment list for each of the 2 years in question.
That fact however does not entitle the appellant Corporation to impose the house tax on the basis of the gross annual letting value as such imposition is inconsistent with sec.
73 under which the annual letting value would be the gross annual letting value less 10% statutory allowance.
But the contention was that the tax imposed on the basis of ' the gross annual letting value was saved by sec.
2(c) and that saving coupled with the fact that the assessment list prepared for 1952 53 was adopted for the years in question made the entries in the assessment list so adopted conclusive evidence of the annual letting value and the amount of tax assessed thereon and entitled the Corporation to collect the tax assessed on the gross annual letting value.
Therefore, it ' was argued, both the annual letting value and the amount of tax shown in that list were conclusive evidence and could not be assailed.
Counsel however forgets that even on the footing that the resolution passed by the Indore Municipality to levy the tax at 7% of the gross annual letting value and on the strength of which the list for 1952 53 was prepared was saved and was deemed to have been made under the 1954 Act it can be deemed to have been so made in so far as it is consistent with the provisions of the Act.
Therefore, to the extent that it is inconsistent with sec.
73 it is neither saved nor deemed to have been made under the Act and has to be adjusted in the light of the provisions of sec.
73(2).
It follows that the appellant Corporation was not entitled to demand the tax assessed 132 on the gross annual letting value.
The High Court therefore was right in decreeing the suit and to order refund of the.
said excess amount against the appellant Corporation.
The appeal fails and is dismissed with costs.
The costs of this appeal as also those in the next appeal No. 383 of 1965 are to be taxed on the footing of one hearing fee.
G.C. Appeal dismissed.
| IN-Abs | The Madhya Bharat Municipalities Act 1954 came into force January 26, 1954.
The Indore City Municipal Act, 1909 which had till then governed the Indore Municipality was thereby repealed.
Under the repealed Act the Indore Municipality used to levy and collect house tax at the rate of 7% of the gross annual letting value.
Under section 73(2) of the 1954 Act house tax was to be assessed on the basis of the gross annual letting value less 10% statutory allowance for repairs etc.
However, even for the period after the passing of the new Act, the Municipal Corporation, purporting to act under section 79 '(1) of the 1954 Act.
adopted ,the latest assessment list prepared under the old Act and levied house tax at the old rate of 7% of the gross.
annual letting value.
The respondents who were trustees of certain house property filed a suit challenging the levy on the basis of the gross annual letting value when section 73(2) of the 1954 Act required the tax to be assessed on the net value after deduction of the statutory allowance.
The suit was decreed by the 'Trial Court and the appeals filed by the Corporation before the District judge and the High Court were dismissed.
The Corporation by special leave, came to this Court and urged: (i) that the levy at 7% of the gross annual letting value prescribed under the rules of the Indore Act was saved by section 2(c) of the 1954 Act; (ii) that under section 79(1) the Corporation was required to prepare a fresh assessment list only once in four years, that it was therefore entitled to adopt for the years in question the latest assessment list prepared under the old Act.
and the said assessment list having been so adopted was conclusive evidence as to the annual rental value of houses and the house tax imposed thereon.
HELD: (i) While section 2(c) saves the rules and taxes.
imposed under the old Act it saves them only to the extent that they are consistent with the new Act.
The saving and deeming provisions of section 2(c) can only apply if the tax is assessed in the manner consistent with the provisions of section 73, that is, if it is assessed on the net and not the gross annual letting value after deducting 10% statutory allowance.
The Corporation could not be allowed to go on imposing the tax on the basis of the gross annual letting value for ever despite the express provision in section 73.
The tax imposed by the Corporation at the rate of 7% of the gross annual letting value was not therefore saved by section 2(c).
[129E H] (ii) Ordinarily the Municipal Corporation has to prepare a fresh assessment list every year.
The legislature has however by section 79(1) empowered the Corporation to adopt the valuation and assessment contained in the assessment list prepared in an earlier year provided, however, that it prepares a fresh list once in every 4 years.
But sub section
(2) 126 of section 79 provides expressly that when such a previous list is adopted for a particular official year it can be done subject to the provisions sections 75 and 76.
The list so adopted has therefore to be published, has to invite objections and has to be authenticated in the manner prescribed by section 76(6) after disposing of the objections if any and it is then only that it becomes conclusive evidence of the valuation and the tax assessed thereon for that particular official year.
If it were otherwise a house owner would have no opportunity to object to the assessment for four years even though the value of his house may have decreased for some reason or the other.
Section 79 has therefore to be construed to mean that though a Municipality need not prepare a fresh assessment list every year and need prepare such list once in every 4 ),ears and can adopt an earlier assessment list such an adopted list becomes the assessment list for that particular year as if it was a new list and to which sections 75 and 76 apply.
[130E 131C] Accordingly, the Corporation was entitled to adopt for the official years in question the latest list prepared under the old Act, and under section 79 that list would become the assessment list for the said years provided that the provisions of sections 75 and 76 are followed.
Even then the appellant Corporation would not be.
entitled to impose house tax on the basis of the gross annual letting value as such imposition would be inconsistent with section 73 under which the annual letting value would be the gross annual letting value less 10% statutory allowance.
[131D] Even on the footing that the resolution passed by the Indore Municipality to levy the tax at 7% of the gross annual letting value and on the basis of which the last list under the ,old Act was prepared was saved and was deemed to have been made under the 1954 Act it could be deemed to have been so made in so far as it was consistent with the provisions of the Act.
Therefore to the extent that it was inconsistent with section 73 it was neither saved nor deemed to have been made under the Act and had to be adjusted in the light of the provisions of section 73(2).
[131G H]
|
ion No. 1 of 1967.
Election Petition under Presidential and Vice Presidential Elections Act, 1952.
R.V.S. Mani, for the petitioners.
M.C. Setalvad, J.M. Mukhi and A.S. Nambiar, for respondent No. 1.
E. Udayaratnam, for respondent No. 6.
Janardan Sharma, for respondent NO. 10.
O.P. Varma, for respondent No. 12.
C.C. Patel and M.V. Goswami, for respondent No. 14.
Bhimsena Rao and R.A. Gupta, for respondent No. 17.
C.K. Daphtary, Attorney General, R.H. Dhebar and S.P. Nayar, for Election Petition of India and Returning Officer.
Presidential Election, New Delhi.
C.K. Daphtary, Attorney General, N.S. Bindra and R.H. Dhebar, for Attorney General for India.
The Judgment of the Court was delivered by Wanchoo, C.J.
The presidential election in India was held in May 1967.
In that election, 17 candidates were nominated.
The result of the election was declared on May 9, 1967, and Dr. Zakir Husain was declared elected.
The present petition is against 137 The election of Dr. Zakir Husain as President and has been filed under article 71 of the Constitution read with the Presidential and Vice Presidential Elections Act, No. 31, 1952 (hereinafter referred to as the Act) by 13 members of Parliament.
The attack on he validity of the election of Dr. Zakir Husain has been made on two grounds.
The first ground is that no oath was taken by Dr. zakir Husain before his nomination as required by article 84 read with article 58 of the Constitution.
In consequence he was not eligible for election as President and his election is liable to be set aside.
Curiously enough, however, the petitioners pray for a declaration that Sri Subba Rao, who received the second highest number of votes should be declared elected, though he (like Dr. Zakir Husain) also did not take the oath before his nomination.
The second ground on which the election of Dr. Zakir Husain s challenged is that the result of the election has been materially affected by reason of undue influence, thereat and in this connection reliance is placed on four matters to which reference will be made later.
The petition has been opposed on behalf of Dr. Zakir Husain.
It has been urged in reply that no oath was necessary under article 84 read with article 58 of the Constitution, and as such he was eligible to stand.
It has also been said on behalf of Dr. Zakir Husain that in case his nomination is invalid on that ground, Sri Subba Rao 's nomination is equally invalid as he also did not take the oath.
As to undue influence it is urged that no undue influence was exercised, nor was the result of the election materially affected by any exercise of undue influence.
Of the four matters urged in support of the attack on the ground of undue influence, the truth of one of them was not accepted.
But it is urged in the alternative that even accepting all that has been said by the petitioners in support of their case of undue influence, the allegations made by the petitioners do not in law amount to.
undue influence and therefore there could be no question of the result of the election being materially affected by the exercise of any undue influence.
On the pleading of the parties, the following issues were framed : 1.
Whether the acceptance of the nomination papers of respondents Nos. 1 to 17 by the Returning Officer was illegal and contrary to law for the reason that Respondents Nos. 1 to 17 did not subscribe to the oath required under Article 84(a) of the Constitution read with Article 58(1)(c) thereof; 2.
Whether the result of the election has been materially affected; L10Sup.(CI)/168 10 138 3.
Whether the acts and conduct alleged in para 12 of the petition and set out under heads A, B, C and D thereof amount to undue influence within the meaning of section 18(1)(b) of the Act.
Whether the allegations made under heads A, B, C and D in para 12 of the petition in so far as they are not admitted arc true; 5.
Whether the petition is entitled to any relief, and if so, to what relief.
It will be seen that issues Nos. 1 and 3 raise pure questions of law.
We made it clear to learned counsel that we would try this petition in two parts.
We shall first deal with the two issues of law, and then, if necessary, set the petition down for further hearing on evidence.
We also indicated that if issue No. 1 is decided in favour of the petitioners, the election would have to be set aside and then there would be no question of any further hearing on evidence.
We further indicated that if issue No. 3 is decided in favour of 1he petitioners, the petition would have to be set down for further hearing on evidence on matters of fact which were in dispute.
Lastly, we indicated that if both these issues were decided against the petitioners, the petition would fail and it would not be necessary then to set it down for further hearing on evidence.
We propose now to consider the two issues of law.
Issue No. 1.
In order to decide this issue, we have to see what the Constitution provided, before the Constitution (Sixteenth Amendment) Act, 1963 (hereinafter referred to as the Amendment Act).
This Act was passed on October 5.
Before that amendment article 58 (1) with which we are concerned in the present petition was in these terms : "(1) No person shall be eligible for election as President ', unless he (a) is a citizen of India, (b) has completed the age of thirty five years, and (c) is qualified for election as a member of the House of the People.
" Article 84, which is also relevant read thus "A person shall not be qualified to be chosen to fill a seat in Parliament unless he (a) is a citizen of India; (b) is, in/he case of d seat in the Council of States, not less than thirty years of age and, in the ease 139 of the House of the People, not less than twenty five years of age; (c) possesses such other qualifications as may be prescribed in that behalf by or under any law made by Parliament.
" The Representation of the People Act, No. 43 of 1951 provided some qualifications for membership of the House of the People, by section 4.
Besides that article 102 of the Constitution provided for certain disqualifications for membership of either House of Parliament and thus indirectly provided for qualifications necessary for being a member of either House of Parliament, and these were (1) that the person should not hold any office of profit under the Government of India or the Government of any State, other than an office declared by Parliament by law not to disqualify its holders; (2) the person should not be of unsound mind and should not have been so declared by a competent court; (3) the person should not be an undischarged insolvent; (4) the person should not have voluntarily acquired the citizenship of a foreign State, or be under any acknowledgement of allegiance or adherence to a foreign State; and (5) the person should not be disqualified by or trader any law made by Parliament.
A perusal of these provisions show that there was no requirement of taking an oath at the time of nomination by the presidential candidate in article 58.
Nor was there any requirement of taking any oath at the time of nomination by a candidate for election to the House of the People under article 84.
There were however provisions in the Constitution for taking an oath after election.
The oath of the President and its form was provided in article 60 while the oath for a member of the House of the People after 'election was provided in Schedule III to the Constitution.
which a member of Parliament had to take before taking his scat in the House of the People or the Council of States, as the case may be.
It is not disputed on behalf of the petitioners that this was the undoubted position in law before the Amendment Act.
Then came the Amendment Act, which came into force from October 5, 1963.
By that amendment, no change was made in article 58.
which stood as it was: a change was however made in Cl.
(a) of article 84, which after the Amendment Act read thus: "84.
Qualification for membership of Parliament A person shall not be qualified to be chosen to fill a seat in Parliament unless he (a) is a citizen of India, and makes and subscribes before some person authorised in that behalf by the Elec 140 tion Commission an oath or affirmation according to the form set out for the purposes in the Third Schedule;" The Third Schedule was also amended and provided the following form of oath to be taken by a member of Parliament who stands for election to Parliament, namely "I, A. B, having been nominated as a candidate to fill a seat in the Council of States do House of the People swear in the name of God that I will bear true solemnly affirm faith and allegiance to the Constitution of India as by law established and that I will uphold the sovereignty and integrity of India.
" At the same time amendment was made in the form of oath to be taken after election, the change being that the words "I will uphold the sovereignty and integrity of India" were added to the already existing oath to be taken by a member of Parliament after his election before he took his seat in the House of the People or the Council of States.
The contention on behalf of the petitioners is that because of this change in cl.
(a) of article 84 by which it became necessary to take.
oath for a person standing for election to either House of Parliament in the form prescribed in the Third SChedule, a person standing for election as President had also to take a similar oath because article 58(1)(c) requires that a person to be eligible for election as President must be qualified for election as a member of the House of the People.
It is urged that no one is qualified, after the amendment of cl.
(a) of article 84, for election as a member of the House of the People unless he makes and subscribes an oath in the form set out for the purpose in the Third Schedule, and therefore this provision applied to a person standing for election as President, for without such oath he would not be qualified to stand for election to the House of the People.
The argument looks attractive prima facie but must in our opinion be rejected.
The qualifications for eligibility to stand for election as President are to be found in article 58(1).
The main reliance on behalf of the petitioners is placed on cl.
(c) of article 58 (1), which lays down that a candidate standing for election as President has to be qualified for election as member of the House of the People.
A comparison however of article 58 with article 84 as it stood before amendment shows that el.
(a) of article corresponded to cl.
(a) of article 58(1), as both provided that the respective candidates should be citizens of India.
It was therefore not necessary to go to cI. (a) of article 84 for the purpose of finding out whether a person was eligible for election as President for 141 the purpose of citizenship for that part of cl.
(a) of article 84 was specifically provided for in cl.
(a) of article 58 (i).
Similarly, cl.
(b) of article 84 corresponded to cl.
(b) of article 58(1), with this difference that it provided a special qualification as to age and therefore one would not have to go to cl.
(b) of article 84 for the purpose of finding out the qualification as to age Cl.
(c) of article 38 (1) clearly corresponded to cl.
(c) of article 84 and reading them together it would follow that a person standing for election as President would require such qualifications as may be prescribed in that behalf by or under any law made by Parliament.
Further as cl.
(c) of article 58(1) lays down that a person standing for presidential election has to be qualified for membership of the House of the People, article 102 (which lays down disqualifications for members of Parliament) would also be attracted except in so far as there is a special provision contained in article 58(2).
Thus cl.
(c) of article 58(1) would bring in such qualifications for members of the House of the People as may be prescribed by law by Parliament, as required by article 84(c).
It will by its own force bring in article 102 of the Constitution, for that Article lays down certain disqualifications which a presidential candidate must not have for he has to be eligible for election as a member of the House of the People.
But it is clear to us that, what is provided in clause (a) and (b) of article 58(1) must be taken from there and we need not travel to cls.
(a) and (b) of article 84 in the matter of citizenship and of age of the presidential candidate.
Clauses (a) and (b) of article 58(1) having made a specific provision in that behalf in our opinion exclude cls.
(a) and (b) of article 84.
This exclusion was there before the Amendment Act and we are of opinion that there is nothing in the Amendment Act which makes.
any difference to that position.
The Sixteenth Amendment was introduced on the recommendation of the Committee on National Integration and Regionalism, which was greatly concerned over the preservation and maintenance of the integrity and sovereignty of the Union.
It therefore recommended that every candidate for the membership of a State legislature or Parliament, should pledge himself to uphold the Constitution and to preserve the integrity and sovereignty of the Union and for that forms of oath in the Third Schedule to the Constitution should be suitably amended.
It also recommended that every candidate for the membership of Parliament or State Legislature, Union and State Ministers, Members of Parliament and State Legislatures, Judges of the Supreme Court and High Court and the Comptroller and Auditor General of India should take oath to.
uphold the sovereignty and integrity of India.
In consequence of these recommendations, the sixteenth amendment was made and article 84 (a) as well as article 173 which provides for qualifications for membership of State legislature were suitably 142 amended.
Further two new forms were added in the Third Schedule, one relating to oath to be taken by candidates for elector to Parliament and the other relating to oath to be taken by candidates for election to State legislatures.
Further other forms of oath in the Third Schedule were also amended by adding therein the words "I will uphold the sovereignty and integrity of India.
" Now if the intention of Parliament was that an oath similar in form to the oath to be taken by persons standing for election 10 Parliament had to be taken by persons standing for election to the office of the President there is no reason why a similar amendment was not made in article 58(1)(a).
Further if the intention of Parliament was that a presidential candidate should also take an oath before standing for election, the form of oath should also have been prescribed either in the Third Schedule or by amendment of article 60, which provides for oath by a person elected as President before he takes his office.
But we find that no change was made either in article 58(1)(a) or in article 60 or in the Third Schedule prescribing the form of oath to be taken by the presidential candidate before he could stand for election.
This to our mind is the clearest indication that Parliament did not intend, when making the Amendment Act, that an oath similar to the oath taken by a candidate standing for election to Parliament had to be taken by a candidate standing for election to the office of the President.
So there is no reason to import the provision of article 84(a) as it stood after the Amendment Act into article 58(1)(a), which stood unamended.
That is one reason why we are of opinion that so far as the election to the office of the President is concerned, the candidate standing for the same has not to take any oath before becoming eligible for election as President.
Another reason which leads to the same conclusion is this.
We have already indicated that no change was made in article 60 by introducing the form of oath 'to be taken by a person standing for election as President; nor was there any change made m the Third Schedule by the introduction of a form of oath to be taken by a person standing for election as President.
In the absence of such a form, we fail to see how an oath would be necessary before a person could stand for election.
as President.
It is not as if a person standing for election as a member of Parliament can take any oath that he likes or that may be administered to him.
The particular oath which a person standing for election as a member of Parliament has to take has been prescribed in the Third Schedule to the Constitution, and it is only that oath which such a person has to take.
However no form of oath is prescribed for a person standing for election as President anywhere in the Constitution and in the absence of such form, it is impossible to hold that taking of oath before standing for election as President is a 143 necessary ingredient of eligibility for such election.
Further a comparison of the form of oath under article 60 for the President with form III B of the Third Schedule which prescribes the oath for a member of Parliament before he takes his seat shows that even after election the President is not required to swear that he will uphold the sovereignty and integrity of India.
The oath he takes is to preserve, protect and defend the Constitution and that he will devote himself to the service and well being of the people of India.
Clearly therefore the form of oath introduced by the sixteenth amendment for persons standing for election to Parliament and even after election was not considered suitable for a person standing for election as President or elected as President and that is why we find no form prescribed by Parliament.
It has been urged on behalf of the petitioners that, though no form of oath may be prescribed it was open to the Election Commission to prescribe an oath by making changes mutatis mutandis in form III A of the Third Schedule relating to candidates for election to Parliament, and that it was the duty of the Election Commission to appoint somebody to administer the oath in the form to be evolved by him by changing form III A in the Third Schedule mutatis mutandis.
Reliance in this connection has been placed on article 324 of the Constitution.
We are of opinion that there is no force in this contention.
Article 324 inter alia provides for "the superintendence, direction and control of the preparation of the electoral rolls for, and the conduct of, all elections to Parliament and to the Legislature of every State and of elections to the offices of President and Vice President".
These words do not in our opinion give any power to the Election Commission to introduce a form of oath to be taken by a candidate for election whether it be for election as President or as a member of Parliament or of a State legislature.
If an oath has to be taken by any.such person it has to be provided by law and the form thereof has also to be prescribed by law (we are using the word "law" in its broadest sense, including constitutional provisions) and that is what was done by the Sixteenth Amendment so far as election to Parliament and State legislatures was concerned.
But as already observed, Parliament did not think it fit when it brought in the Amendment Act to make any change in article 58 (1) (a) or to introduce a form in article 60 or in, the Third Schedule to the Constitution with reference to candidates standing for election as President.
If Parliament did not choose to do so, the Election,Commission cannot do so under the power it has been given under article 324 to superintendent, direct and control the preparation of the electoral rolls and the conduct of all elections.
That power is very different from the power to prescribe, an oath before a candidate can stand for election.
Such prescription can only be by law as indicated above.
The Amendment Act having not made any such provision with 144 respect to those standing for election to the office of the President, it cannot be open to the Election Commission to prescribe a form of oath for such persons by changing form III A mutatis mutandis.
Such power cannot be spelt out of article 324 on which reliance has been placed on behalf of the petitioners.
It follows therefore that no form whatsoever having been prescribed by Parliament when it made the sixteenth amendment for taking an oath by a presidential candidate, article 84 (a) when it prescribed for taking an oath for candidates for election to the.
House of the People has no application to candidates standing for election to Presidentship.
So far as these candidates are concerned we must look to article 58 (1) (a) only and need not go to article 84(a).
Another reason for coming to the same conclusion is that when article 58 (1) (c) lays down that a person standing for election as President has to be qualified for election as a member of the House of the People it only brings in qualifications other than those= which are specifically mentioned in article 58 (1) itself.
Now specific qualifications provided in article 58 (1) are that a candidate for presidential election has to be a citizen of India and he must have completed the age of 35 years.
So far as these qualifications are concerned, we need not go anywhere else in order to search for eligibility to contest election as President.
For example, the specific qualification in cl.
(b) of article 58.(1) is that the person concerned should have completed the age of 35 years.
On the other Hand, el.
(b) of article 84 lays down the age of 25 years for membership of the House of the People.
Therefore when one has to look for the qualification of age one must only go to article 58 (1) (b) for the purpose of presidential election and need not look elsewhere.
What is specifically provided for by article 58 (1) must be accepted as it stands and no addition can be made to that provision and no subtraction can be made therefrom.
It will be seen therefore that though there may be some qualifications which may be necessary for election to the House of the People, they need not necessarily apply to the election for the office of the President, where there is a specific provision in article 58 (1) itself.
We are therefore clearly of opinion that in view of the specific provision in article 58 (a) and (b) we cannot and should not apply clauses (a) and (b) of article 84, to persons standing for election as President.
This conclusion is reinforced if we look at article 58 (2) and compare it with article 102 (1) (a).
It is clear that when there is a specific provision with respect to an office of profit in article 58 (2); it is that provision which will apply and not article 102 (1) (a).
We therefore hold that the acceptance of the nomination papers of respondents 1 to 17 by the Returning Officer was neither illegal nor contrary to law on the ground that these respondents did not subscribe to an oath under article 84 (a) read with article 58(1)(c).
The issue is decided against the petitioners.
145 ISSUE No. 3.
The petitioners rely on four allegations on the question of undue influence.
Before we deal with those allegations it is necessary to understand what undue influence is in the context of the Act.
Section 18 (1 ) (b) lays down that if the result of the election has been materially affected by reason of undue influence at the election committed by any person other than the returned candidate or a person acting in connivance with the returned candidate, the election will be liable to be declared void.
Sub section (2) of section 18 lays down that undue influence would have the same meaning as in Chapter IX A of the Indian Penal Code.
Section 171 C of the Indian Penal Code defines what "undue influence" is in these terms : "(1) Whoever voluntarily interferes or attempts to interfere with the free exercise of any electoral right commits the offence of undue influence at an election.
(2) Without prejudice to the generality of the provisions of sub section (1), whoever (a) threatens any candidate or voter, or any person in whom a candidate or voter is interested, with injury of any kind, or (b) induces or attempts to induce a candidate or voter to believe that he or any person in whom he is interested will become or will be rendered an object of Divine displeasure or of spiritual censure, shall be deemed to interfere with the free exercise of the electoral right of such candidate or voter, within the meaning of sub section (1).
(3) A declaration of public policy or a promise of public action, or the mere exercise of a legal right without intent to interfere with an electoral right, shall not be deemed to be interference within the meaning of this section.
" It will be seen from the above definition that the gist of undue influence at an election consists in voluntary interference or attempt at interference with the free exercise of any electoral right.
Any voluntary action which interferes with or attempts to interfere with such free exercise of electoral right would amount to undue influence.
But even though the definition in sub section
(1) of section 171 C is wide in terms it cannot take in mere canvassing in favour of a candidate at an election.
If that were so, it would be impossible to run democratic elections.
Further sub section
(2)ors.
171 C shows what the nature of undue influence is though of course it does not cut down the generality of the provisions contained in sub section (1).
Where any threat is.
held out to any candidate or voter or any person in whom a candidate or voter is interested and 146 the threat is of injury of any kind, that would amount to voluntary interference or attempt at interference with the free exercise of electoral right and would be undue influence.
Again where a person induces or attempts to induce a candidate, or voter to believe that he or any person in whom he is interested will become or will be rendered an object of Divine displeasure or of spiritual censure, that would also amount to voluntary interference with the free exercise of the electoral right and would be undue influence.
What is contained in sub section
(2) of section 1771 C is merely illustrative.
It is difficult to lay down in general terms where mere canvassing ends and interference or attempt at interference with the free exercise of any electoral right begins.
That is a matter to be determined in each case; but there can be No. doubt that if what is done is merely canvassing: it would not be undue influence.
As sub section (3) of section 171 C shows, the mere exercise of a legal right without intent to interfere with an electoral right would not be undue influence.
We may in this connection refer to section 123(2) of the Representation of the People Act 1951 which also defines "undue influence".
The definition there is more or less in the same language as in section 171 C of the Indian Penal Code except that the words "direct or indirect" have been added to indicate the nature of interference.
It will be seen that if anything, the definition of "undue influence" in the Representation of the People Act may be wider.
It will therefore be useful to refer to cases under the election law to see how election tribunals have looked at the matter while considering the scope of the words "undue influence".
The earliest case to which reference may be made is R.B. Surendra Narayan Sinha vs Amulyadhone Roy & 43 Others.(1) There the question raised before the Election Tribunal was whether by issuing a whip on the day of election requesting members to cast their preferences in a particular order, the leader of a Party, who was also the Chief Minister, could be said to have exercised undue influence.
The Election Tribunal held that the leader the party was entitled to use his influence as a leader and he could not be deprived of that right because he happened to.
be a minister.
The issue of a whip of that kind was thus held to be no more than canvassing in.
favour of the candidates of the party to which the leader or the Chief Minister belonged.
In Linge Gowda vs Shivananjappa(2), the Election Tribunal held that a leader of a political party was entitled to declare to the public the policy of the party and ask the electorate to vote for his party without interfering with any electoral right and such declarations on his part would not amount to undue influence under (1) 1940 Indian Election Cases by Sen and Poddar, Case No. XXX at p. 188.
(2) (1953) VI E.L.R. 288.
147 the Representation of the People Act.
The fact of that such a leader happened to be a Minister or Chief Minister of the State would make no difference.
It was further observed in that case that "the law cannot strike at the root of due influence and under the law of election, only undue influence is forbidden, and the leaders of ' a party will be deemed to exercise their due influence if they ask the electorate to vote for their party candidate, even if they happen to be Ministers." In Amirchand vs Surendra Lal Jha(1) it was held by the Election Tribunal that Ministers were prominent members.
of their party and in that capacity they were entitled to address meetings and to tell people what their party had done, and what its programme was and to ask them to vote for the candidate set up by their party, and such action of the Ministers could not be held amount to exercising undue influence.
It merely amounted to canvassing by the Ministers in favour of candidates belonging to their party.
In Mast Ram vs
section Iqbal Singh(2) it was held by the Election Tribunal that the legitimate exercise of influence by a political party or an association should not be confused with "undUe influence".
It was further held that "Ministers in their capacity as members of their party are entitled to address meetings and to tell people what their party had done and what its.
programme was and to ask them to vote for the candidate set up by their party.
Such action of the Ministers cannot be held to amount to 'exercising undue influence ' ".
It was further held ' that "if ' a political ' party passes a resolution of support to a candidate and asks its members to vote for him, it will be only a legitimate exercise of influence".
In Radhakrishna Shukla vs Tara Chand Maheshwar.(3) the Election Tribunal held that even where Ministers conducting an electioneering campaign promised people, who put their grievances before them during the campaign, generally to redress their grievances, it could not be held that there was exercise of undue influence and their promise merely amounted to a promise of public action, which would not be for the benefit of merely those who voted for candidates of their party but for the public as a whole.
The next case to which reference may be made is N. Sankara Reddi vs Yashoda Reddi(4).
In that case the Election Tribunal held that "a political party is entitled to issue a manifesto to the ' voters requesting them to vote only for the candidate, set up by the party.
The fact that the leader of the Congress Legislature Party who was also the Chief Minister of the State had written (1)(1954) X E L R 57.
(2) (1955) XII E.L.R.34 (3)(1956) XII E.L.R. 378.
(4) (1957) XIII E.L.R. 34.
148 letters to the members of the Congress Party to support the candidates set up by the party would not amount to undue influence within section 123(2) of the Representation of the People Act.
" It was added that it was only where a Minister abused his position for furthering the prospects of the candidate belonging to his party that undue influence might arise; but where a leader merely used his influence in the form of canvassing for candidates of his party there would be no question of undue influence.
In Dr. Y.S. Parmar vs Hira Singh Pal(1), the Judicial Commissioner of Himachal Pradesh held that "a leader of a political party is entitled to.
declare to the public the policy of the party, and ask the electorate to vote for his party without interfering with any electoral right and such declarations on his part would not amount to undue influence under section 123(2) of the Representation.
of the People Act.
" In Triloki Singh vs Shivrajwati Nehru(2) it was held by the Election Tribunal that "the right to canvass must be conceded to Ministers as leaders of a political party Just as they have a right to vote and to stand as a candidate, they also have a right to canvass for themselves and for the other candidates set up by their party.
" It was further held that though a Minister occupied a high position and commanded great influence, if he only solicited votes and tried to persuade the electors to vote for a candidate of his party and asked them not to vote for any other candidate or to remain neutral and did nothing more, he could not be said to interfere with the free exercise of the electoral right of the voters.
The last case to which reference may be made is Jayalakshmi Devamma vs Janardhan Reddi(3).
In that case the Andhra Pradesh High Court held that in a democratic set up where candidates contested elections on the basis of their affiliation to a particular political party, there was nothing intrinsically wrong in Ministers canvassing support for their party candidates.
It was further held that a Minister merely by reason of his office did not suffer from any disability in this behalf and had the same rights and obligations as any other citizen in the matter of canvassing.
It was also held that in their capacity as leaders of their party.
they had to explain to the electors the policies and programmes which they sought to enforce and one way of doing that was to ask the electors to vote for those who were pledged to support them and their policies.
It will be seen from the above review of the cases relating to undue influence that it has been consistently held in this country that it is open to Ministers to canvass for candidates of their party (1) (1958) 16 E.L.R.4 (2) (1958) XVI.E.L.R 234.
(3) (1959) XVII E.L.R. 302. 149 standing for election.
Such canvassing does not amount to undue influence but is proper use of the Minister 's right to ask the public to support candidates belonging to the Minister 's party.
It is only where a Minister abuses.
his position as such and goes beyond merely asking for support for candidates belonging to his party that a question of undue influence may arise.
But so long as the Minister only asks the electors to vote for a particular candidate belonging to his party and puts forward before the public the merits of his candidate it cannot be said that by merely making such request to the electorate the Minister.
exercises undue influence.
The fact that the Minister 's request was addressed in the form of what *is called a whip, is also.
immaterial so long as it is clear that there ' is no compulsion on the electorate to vote in the manner indicated.
It is in the light of these principles that we have to see whether the four allegations made in this case, assuming them to be correct, make out a case of undue influence.
The first allegation is that Shrimati Indira Gandhi, the Prime Minister, addressed a letter to all the electors in which she commended Dr. Zakir Husain and requested the electors to vote for him.
A copy of that letter has been produced, and we have been taken through it.
In our opinion there is nothing in that letter which may even remotely amount to undue influence.
Most of the letter is concerned with commending the qualities of Dr. Zakir Husain and it ends by saying that Dr, Zakir Husain 's long and meritorious service in the cause of national freedom and national re construction after Independence makes him a candidate richly deserving universal support.
It has been urged that the Prime Minister is a person of great influence and therefore Shrimati Indira Gandhi should not have written this letter because she was Prime Minister and the mere fact that she wrote this letter commending Dr. Zakir Husain 's election amounted to undue influence i.e. interference with the free exercise of the electoral right.
We can not agree with this contention.
Shrimati Indira Gandhi is certainly the Prime Minister, but she is also one of the leaders of the party to which Dr. Zakir Husain belonged.
As a leader of party she was entitled to ask the electors to vote for Dr. Zakir Husain and the fact that she is the Prime Minister makes no difference to her right to make an appeal of this nature.
It is said that the office of the President is a no party office and therefore an appeal of this nature should not have been made and must amount to undue influence.
It is true that the office of the President is not a party office meaning thereby that after his election the President is no longer a party man.
But that cannot take away the fact that in a democratic system, like ours, persons who stand for election are candidates sponsored by parties for without such support no one would have a chance of being elected, for the.
electors are mostly members of one party or other.
We have given 150 our earnest consideration to the letter written by Shrimati Indira Gandhi and have come to the conclusion that there is nothing in that letter which can be said to be improper or which can even remotely amount to interference with the free exercise of the electoral rights.
It cannot therefore be said that Shrimati Indira Gandhi even though she is the Prime Minister exercised any undue influence in this presidential election.
The next allegation is based on two letters written by Sri Ram Subhag Singh.
In these letters.
Sri Ram Subhag Singh signed himself as Chief Whip and they were addressed to all members of the Congress Party in Parliament.
The fact that he signed the letters as Chief Whip is in our opinion of no consequence; even if he had not done so all members of the congress party in Parliament must be knowing that he was the Chief Whip.
Just as a Minister has a right to canvass for support so has in our opinion the Chief Whip.
In the first letter he pointed out that the Presidential and Vice Presidential elections were to be held on May. 6, 1967.
He also pointed out that members of Parliament could vote for the presidential election at New Delhi or at State capitals but they had to come to Delhi in connection with the election of the Vice President.
He therefore added that as the two elections were to be held on the same day and voting for the Vice Presidential election could only be at Delhi, every member of the party must be present in Delhi to participate in the elections.
He finally requested the members of his party to reach New Delhi by May 4, 1967 and contact him on reaching.
New Delhi.
This letter merely explains to members of his party the situation with respect to the two elections which were to be held simultaneously and requested the members to come to Delhi, as otherwise they could not vote in the Vice Presidential election.
The fact that he asked the members to contact him after reaching Delhi could only be to know who had come and who had not and cannot give rise inference of undue influence from that fact alone.
In the second letter, Sri Ram Subhag Singh pointed out that the election to the office of the President would be in accordance with the system of proportional representation by means of single transferable vote.
He also invited the attention of the members of the Congress Party in Parliament to r. 19 of the Election Rules.
He then went on to say that it was their desire, i.e., of the congress party, that Dr. Zakir Husain should be returned with a thumping majority.
He therefore requested the members to place figure '1 ' opposite the name of Dr. Zakir Husain.
He also advised them not to mark the second or any other preference in favour of any other candidate.
As we read this letter we only find in it a request to members of the party to vote for Dr. Zakir Husain There is nothing in that letter to show that undue influence was being exercised thereby.
The two letters read together merely show 151 that Sri Ram Subhag Singh who happened to be the Chief Whip of the congress party was canvassing in favour of Dr. Zakir Husain.
It is however urged that his advice to the members not to mark their second or any other preference in favour of any other candidate amounted to interference with the free exercise of their electoral right.
We cannot agree with this contention.
Sri Ram Subhag Singh asked the members of his party to give the first preference to Dr. Zakir Husain.
He also asked them not to mark their second or any other preference, and that is a method to ensure that the candidate to whom the first preference is given should be in a strong position in case there is not a majority in the first counting.
In the present election there was apparently a majority in the first counting and therefore the marking of the second or any other preference was immaterial.
Apart from it.
we see nothing improper in members of the party being told in the course of canvassing that it would be better if they only marked their first preference and no other preference in a system where voting is by single transferable vote.
Such a request or advice does not in our opinion interfere with the free exercise of their electoral right for the electors still would be free to do what they desired in spite of the advice.
We cannot agree.
after going through the two letters written by Sri Ram Subhag Singh that there was any interference with the exercise of the electoral right by the electors.
The third allegation is that the Prime Minister had deputed certain senior members of her cabinet to the various States to make doubly certain that Dr. Zakir Husain was elected.
In consequence, Shri Fakhruddin Ali Ahmed was sent to Assam, Shri Y. B. Chavan to Bombay, Sri Jagjivan Ram to Bihar, Sri I.K. Gujral to Calcutta and Sri Dinesh Singh to Uttar Pradesh.
It is further urged that sending of the Ministers to various States was to influence the members of the electoral college there to vote for Dr. Zakir Husain or attempt to do so.
Such action it is urged.
would amount to undue influence.
We cannot agree with this contention.
Assuming that these Ministers were asked to go to various States it was obviously to canvass support for Dr. Zakir Husain so that he may be certain to be elected.
Even assuming that these Ministers canvassed support for Dr. Zakir Husain in various State capitals, their action cannot be said to amount to undue influence, for all that they can be said to have done was to canvass support for Dr. Zakir Husain and mere canvassing cannot possibly be; held to be undue influence.
There is nothing 'in the allegation in para 12 C of the petition to show that there was any interference with the free exercise of electoral right by the electors.
even if these Ministers were sent to.
the various State capitals to canvass support for Dr. Zakir Husain ,red did so.
Mere canvassing of support for a candidate can never amount to undue 152 influence, and all that para 12C shows is that there was mere.
canvassing in favour of Dr. Zakir Husain.
No case of undue influence can be made out on the basis of the allegations contained in para 12C of the petition.
The last allegation in support of the case of undue influence is that the Chief Minister of Maharashtra had briefed members of the Legislative Assembly on May 5, 1967 on how to vote and whom to vote for.
It is, urged that even if the leader of the party in the Maharashtra legislature could indicate the manner of voting the members of his party, he could not indicate to them whom they were to vote for, as that interfered with the free exercise of their electoral right.
It is said that such a request amounted to a command from a person in authority, like the Chief Minister, and would be exercise of undue influence.
We are of opinion that there is no substance in this contention either.
There can possibly be no objection if the leader of the party indicates to the members of his party how to vote in order to ensure that votes may not become invalid for want of knowledge of the procedure of voting.
Further if the leader of the party indicates to members of his party for whom to vote he is merely canvassing with his own party men to support the candidate of the party.
The mere fact that the person who, canvasses is a Chief Minister does not mean that he is exercising undue influence in the sense of interfering with the free exercise of the electoral right.
Once canvassing is permissible, and we have no doubt that in a democratic set up where ' parties put up candidates for election it is not only permissible but necessary, it follows that if a leader of the party asks members of his party for whom.
to vote he is merely canvassing.
The voting is after all secret and every elector is free to vote for whomsoever he likes, even though he may have been asked by the leader to vote for a particular candidate.
There is nothing in para 12 (D) of the petition to suggest that anything improper was.
done by the Chief Minister of Maharashtra, which could give rise to an inference that t.he free exercise of the electoral right was being interfered with.
On a careful consideration of paragraphs 12(A) to 12(D) of the petition we have come to the conclusion that there is nothing in those paragraphs which even remotely suggests that there was any undue influence exercised by anybody in connection with the Presidential election of May 6, 1967.
Our finding on the issue in question is that the acts.
and conduct alleged in paragraph 12 of the petition and set out in sub paras A to D thereof do not amount to undue influence within the meaning of section 18(1 )(b) of the Act.
The issue is decided against the petitioners.
As we have indicated already if both these issues of law are decided against the petitioners as we do decide them the petition 153 must fail and it is unnecessary to set it down for hearing on evidence with respect to other issues.
The petition is hereby dismissed but in the circumstances of the case we pass no order as to costs.
Y.P. Petition dismissed.
| IN-Abs | As a result of the Presidential election held in May, 1967, respondent No. 1 was declared elected.
The petitioners challenged the election on the following two grounds, namely (i) article 58(1)(c) required that a person to be eligible for election as President must be qualified for election as a member of the House of People.
After the Sixteenth Amendment, under article 84(a), it was necessary for a person standing for election to either House of Parliament to take an oath in the form prescribed in the Third Schedule.
Therefore, a person standing for election as President had also to take a similar oath; since the respondent had not taken the oath he was not eligible for election.
(ii) As (a) the Prime Minister addressed a letter to all electors commending respondent No. 1 and requesting them to vote for him; '(b) the, Prime.
Minister deputed Ministers 1 various State Capitals to make doubly certain that respondent No. 1 was elected; (c) a Minister who was also the chief whip of the Congress party wrote two letters to all members of his party in Parliament and signed them as Chief Whip, explaining the situation with respect to the election and requesting them to come to Delhi and contact him and also requesting them to give the first preference to respondent No. 1 and not to mark the second or any other preference in favour of the candidates; and (d) the Chief Minister of Maharashtra had briefed members of the Legislative Assembly as to how and for whom to vote, the result of the election has materially been affected by undue influence.
HELD: The petition must be dismissed.
(i) The candidate standing for election to the office of the President had not to take any oath before becoming eligible for election as President.
A comparison of article 58 with article 84 as it stood before the amendment shows that el.
(a) of article 84, corresponded to el.
(a) of article 58(1), as both provided that the respective candidates should be citizens of India.
It was therefore, not necessary to go to cl.
(a) of article 84 for the purpose of finding out whether a person woks eligible for election as President for the purpose of citizenship for that part of el.
(a) of article 84 was specifically provided for in el.
(a) of article 58(1).
Similarly, el.
(b) of article 84 corresponded to el.
(b) of article 58(1).
with this difference that it provided a special qualification as to age and therefore 134 one would not have to go to cl.
(b) of article 84 for the purpose of finding out the qualification as to age.
Clause (c) of article 58(1) clearly corresponded to el.
(c) of article 84 and reading them together it would follow that a person standing for election as President would require such qualifications as may be prescribed in that behalf by or under any law made by Parliament.
Further as el.
(c) of article 58(1) lays down that a person standing for Presidential election has to be qualified for membership of the House of the People, article 102 (which lays down disqualifications for members of Parliament) would also be attracted except in so far as there is a special provision contained in article 58(2), Thus cI. (c) or article 58(1) would bring in such qualifications for members of the House of the People as may as prescribed by law by Parliament, as required by article 84(c).
It will by its own force bring in article 102 of the Constitution, for that Article lays down certain disqualifications which a presidential candidate must not have for he has to be eligible for election as a member of the House of the People.
But it clear that what is provided in cl.
(a) and (b) of article 58(1) must be taken from there and it is not necessary travel to cls.
(a) and (b) of article 84 in the matter of citizenship and of age of the presidential candidate.
Clauses (a)and (b) of article 58(1) having made a specific provision in that behalf exclude cls.
(a) and (b) of article 84.
There is nothing in the Amendment Act which makes any difference to that position, for.
if the intention of Parliament was that an oath similar in form to the oath for membership of Parliament had to be taken by persons standing for election to the office of the President there is no reason why a similar amendment was not made in article 58(1) (a) and why the form: of oath not also prescribed either in the Third Schedule or by amendment of article 60.
which provides for oath by a person elected as President before he takes his office.
[140H 141E; 142B C] The particular oath which a person standing for election as a member of Parliament has to take has been prescribed in the Third Schedule to the Constitution, and it is only that oath which such a person has to take.
However, no form of oath is prescribed for a person standing for election as President anywhere in the Constitution and in the absence of such form.
it is impossible to hold that taking of oath before standing for election as President is a necessary ingredient of eligibility for such election.
The Amendment Act having not made any such provision with respect to those standing for election to the office of the President, it cannot be open to the Election Commission to prescribe a form of oath for such persons by changing form III A mutatis mutandis.
Such power cannot be spelt out of article 324 under which the Election Commission is conferred power to superintend direct, and control the preparation of the Electoral Rolls and the conduct of elections.
[143G 144B] Further.
a comparison of the form of oath under article 60 for the President with form III B of the Third Schedule which prescribes the oath for a member of Parliament before he takes his seat.
shows that even after election the President is not required to swear that he will uphold the sovereignty and integrity of India.
The oath he takes is to preserve.
protect and! defend the Constitution and that he will devote himself to the service and well being of the people of India.
the form of oath introduced by the sixteenth amendment for persons standing for election to Parliament and even after election was not considered suitable for a person standing for election as President or elected as President and that is why no form is prescribed by Parliament.
[143A C] (ii) Any voluntary action which interferes with or attempts to interfere with the free exercise of electoral right would amount to undue 135 influence.
It cannot take in mere canvassing in favour of a candidate at an election.
If that were so, it would be impossible to run democratic elections.
It is difficult to lay down in general terms where mere canvassing ends and interference or attempt at interference to with the tree exercise of any electoral right begins.
That is a matter to be determined in each case; but there can be no doubt that if what is done is merely canvassing it would not be undue influence.
[145G 146C] (a) There was nothing in the fetter of the Prime Minister which even remotely amounted to undue influence.
As a leader of the party she was entitled to ask the electors to vote for respondent No. 1 and the fact that she is the Prime Minister makes no difference to her right make an appeal of this nature.
It is.
said that the office of the President is a no party office and therefore an appeal of this nature should not have been made and must amount to undue influence.
It is true that the office of the President is not a party office meaning thereby that after his election the President is no longer a party man.
But that cannot take away the fact that in a democratic system, persons who stand for election are candidates sponsored by parties for without such support no fine would have a chance of being elected.
for the electors are mostly members of one party or other.
[149G 1SOB] (b) Mere canvassing of support for a candidate can never amount to undue influence.
There was no interference with the free exercise of electoral right by the electors, even if the Ministers were sent to the various Sate capitals to canvass support for respondent, No 1.
[148H] (c) The fact that the Minister signed the letters as Chief Whip was of no consequence; even if he had not done so all members of the Congress party in Parliament must be knowing that he was the Chief Whip.
Just as a Minister has a right to canvass for support, so has the Chief Whip.
The fact that he asked the members to contact him after reaching Delhi could only be to know who had come and who had not and could not give rise to any inference of undue influence from the fact alone.
There was nothing in the second letter also to show that undue influence was being exercised thereby.
The two letters read together merely show that the Chief Whip of the Congress party was canvassing in favour of respondent No. 1.
There was nothing improper in members of the party being told in the course of canvassing that it would be better if they only marked their first preference and no other preference in a system where voting is by single transferable vote.
Such a request of advice does not interfere with the free exercise of their electoral for the electors still would be free to do what they desired inspite of the advice.
[150B 151D] (d) There can be no objection if the leader of the party indicates to the members of his party how to vote in order to ensure that votes may not become invalid for, want of knowledge of the procedure of voting.
Further if the leader of the party indicates to members of his party for whom to vote he is merely canvassing with his own party men to support the candidate of the party.
The mere fact that the person who canvasses is a Chief Minister does not mean that he is exercising undue influence in the sense of interfering with the free exercise of the electoral right.
Once canvassing is permissible, and in a democratic set up where parties put up candidates for election it is not only permissible but necessary.
it follows that if a leader of the party asks members of his party for whom to vote he is merely canvassing.
The voting is after all secret and every elector is free to vote for whomsoever he likes, even though he may have been asked by the leader to vote for a particular candidate.
[152C F] 136 It is open to Ministers to canvass for candidates of their party standing for election.
Such canvassing does not amount to undue influence but is proper use of the Minister 's right to ask the public to support candidates belonging to the Minister 's party.
It is only where a Minister abuses his position as such and goes beyond merely asking for support for candidates belonging to his party that a question of undue influence may arise.
But so long as the Minister only asks the electors to vote for a particular candidate belonging to his party and puts forward before the public the merit of his candidate it cannot be said that by merely making such request to the electorate the Minister exercises undue influence.
The fact that the Minister 's request was addressed in the form of what it called a whip is also immaterial so long as it is clear that there is no compulsion on the electorate to vote in the manner indicated [ 149A C] R.B. Surendra Narayan Sinha vs Amulyadhone Ray & 43 Ors. 1940 Indian Election Cases by Sen and Poddar, Case No. XXX at p. 188.
Linge Gowda vs Shivananjappa.
(1953) VI E.L.R. 288, Amirchand vs Surendra Lal Jha, (1954) X E.L.R. 57, Mast Ram vs
section lqbal Singh, (1955) XII E.L.R. 34, Radhakrishna Shukla vs Tara Chand Maheshwar, (1956) XII E.L.R. 378, N. Sankara Reddi vs Yashoda Reddi (1957) XIII E.L.R. 34, Dr. Y.S. Parmar vs Hira Singh Pal.
(1958) XVI E.L.R. 45.
Triloki Singh vs Shtvrajwati Nehru, (1958) XVI E.L.R. 234 and Jayalakshmi Devamma vs Janardhan Reddi, (1959) XVII E.L.R. 302, referred to
|
Appeals Nos. 356 and 357 of 1966.
Appeals by special leave from the Award of the Industrial Tribunal, Rajasthan in Case No. 9 of 1961.
Niren De, Addl.
Solicitor General, Sobhag Mal fain an( B. P. Maheshwari, for the appellant (in C. A. No. 356 of 1966 and respondent (in C. A. No. 357 of 1966).
782 M. K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for the appellants (in C. A. No. 357 of 1966) and respondents (in C.As.
No. 356 of 1966).
The Judgment of the Court was delivered by, Shelat, J.
These two appeals by special leave, one by the appellant company and the other by, its workmen are directed against the award dated May 4, 1964 of the Industrial Tribunal, Rajasthan to which reference was made under section 10(1)(d) of the .
The dispute referred to the Tribunal related to the workmen 's demand for bonus for the years 1956 57 to 1959 60.
By the said award the Tribunal disallowed the claim for 1956 57 on the ground that it was belated and allowed the demand for the rest of the years 1957 58 to 1959 60.
In working out the available surplus for distribution as bonus the Tribunal in general followed the Full Bench formula evolved by the Labour Appellate Tribunal in Millowners ' Association, Bombay vs Radhtriya Mill Mazdoor Sangh, Bombay(1) and approved by this Court in the Associated Cement Co. Ltd. vs Its Workmen.(2) The Tribunal worked out first the gross profits for the said years and the prior charges deductible therefrom and arrived at the available surplus.
For the year 1957 58 gross profits found were Rs. 28.29 lacs, Rs. 25.36 lacs for 1958 59 and Rs. 34.92 lacs for 1959 60.
There is no dispute about these figures.
The Tribunal then ascertained the prior charges deductible from the gross profits.
There is no dispute with regard to the figures for depreciation, income tax and wealth tax.
As regards interest allowable on paid up capital, the Tribunal allowed 6%.
per annum tax free interest for 1957 58 and the Company remanded interest at the rate of 8.57% by reason of a change in he Income tax law having been made during the year.
The Union, on the other hand, claimed that only 6 % interest should be allowed.
The Tribunal allowed a mean between the two, viz., 7 1/4.
There was no question of interest on working ;capital as it was not the Company 's case that any reserve was utilised as working capital similarly there is no dispute with regard to the rehabilitation charge for buildings allowed by the Tribunal.
Apart from the question.
as to interest allowable on paid up capital for the year 959 60, the main dispute.
in these appeals is with regard to the rehabilitation allowances in respect of plant and machinery for he three years in question and the method followed by the Tribunal in calculating them.
(1) [1950] I.I.J. 1247.
(2) 783 The Company ever since its commencement has been purchasing new and also old reconditioned machinery.
As regards new machinery the Company furnished, (a) cost to the Company, (b) the current price during the year 1963 64 and (c) percentage in the rise in prices.
The Company also furnished in respect of reconditioned machinery (a) cost to the Company and (b) estimated cost which its vendors would have paid if they had purchased it as new in the years in which the Company installed the old machinery.
In respect of the old machinery the cost to the Company and the estimated cost to the sellers according to the Company were as follows: Year Cost to the Estimated cost to Company the sellers (In lacs) (In lacs) Upto 1952 53 13.87 20.05 1953 54 to 1955 56 3.49 5.23 1956 57 1 40 2.10 9157 58 1 77 2.65 Total 20.03 30 03 The difference between the cost to the Company and the estimated cost to the sellers thus come to 150%.
No old machinery was purchased during 1958 59 and 1959 60.
The Company also produced quotations of prices for equivalent machinery current in year 1963 64.
The Union did not dispute (a) the figures of cost to the Company of the new machinery as given in its statement exhibit M2, (b) the figures of cost of old machinery to the Company and its estimated cost to the sellers as given in exhibit M 3 and (c) the quota tions of prices received by the Company in 1963 64 from manufacturers of these machines, both old and new, "except in the case of machinery installed, during the bonus years.
" The Tribunal worked out the rehabilitation requirements for the years 1957 58 to 1959 60 in a Chart which is Annexure A to the award.
Since the controversy in these appeals mainly centers round the figures of rehabilitation requirements allowed by the Tribunal it is expedient to set out that Annexure: 784 784(a) Period Cost Cost as Multi Total Less Balance shown by plier break Co. in down EX.
M. value 5% 1 2 3 4 5 6 7 1050 51 New 16.30 16.30 3.36 54.77 0.81 53.96 Old 13.37 20.05 67.37 Nil 67.37 1951 52 New 1.43 1.43 1.87 2.67 0.07 2.60 1952 53 New 2.18 2.18 1.47 3.21 0.11 3.10 1953 54 New 1.12 1.12 2.28 2.55 0.06 2.49 Old 1.24 1.86 2.28 4.24 .
. 4.24 1954 55 New 3.71 3.71 1.86 6.90 0.19 6.71 Old 1.95 2.93 1.86 5.45 Nil 5.45 1955 56 New 6.93 6.93 2.18 15.11 0.35 14.76 Old 0.30 0.45 2.18 0.98 Nil 0.98 1956 57 New 13.11 13.11 2.35 30.80 0.66 30.14 Old 1.40 2.10 2.35 4.93 Nil 4.93 1957 58 Now 3.39 3.39 1 3.39 0.17 3.22 Old 1.77 2.65 1 2.65 Nil 2.65 1958 59 New 12.95 12.95 1 12.95 0.65 12.30 1959 60 New 30.76 30.76 1 30.76 1.54 29.22 784(b) Minus deprociation Balance Divisor Annual Require ment 8 9 10 11 (Rupees in lakhs) Total cost as new & old Machy30.03 24.35 7 3.48 Depre written off upto 31 3 57 48.83 2.60 8 0.32 3.10 9 0.34 Investment as on 31 3 57 2.49 10 0.25 18.22 4.24 7 0.61 Total 96 98 6.71 11 0.61 . 5.45 7 0.78 14.76 12 1.23 0.98 7 0.14 30.14 1 3 2.32 4.93 7 0.70 3.22 14 0.23 2.65 7 0.38 11.39 12.30 14 0.88 12.27 29.22 14 2.08 14.35 785 It will be observed from Annexure A that the Tribunal accepted as regards new machinery the Company 's figures of cost and quotations as cost of replacement and dividing the cost of replacement by the original cost to the Company I worked out multipliers for each year.
This dispute, however, is with regard to the multipliers arrived at by the Tribunal in respect of old machinery.
In Annexure A, the Tribunal adopted 3.36 multiplier in res pect of old machinery installed in 1950 51, i.e., the same multiplier which it worked out in respect of new machinery installed during that year.
For the years 1953 54 to 1957 58 the Tribunal accepted the Company 's figures which were agreed to by the Union, viz., of cost to the Company and the estimated cost to their vendors if the latter had purchased that machinery as new in the respective years of installation.
The Company also produced quotations from manufacturers of machinery itemwise in its Confi Annex.
I and 2.
These quotations were for some machines for 1959 60, for some for 1960 61 and the rest for 1961 62.
It would be safe to say that the average cost of these machines was the cost prevalent in 1960 61.
Though the average cost of the machinery was thus available, the Tribunal in the case of old machinery worked out multiplier for each of these years and then arrived at the figure of Rs. 85.62 lacs as the total replacement cost of that machinery by multiplying the estimated cost to the seller with the multiplier.
The Company 's contention was that since the Company had fur nished quotations for all machinery including the old machinery, the Tribunal ought to have accepted those quotations as equivalent to replacement cost as it did in the case of new machinery instead of adopting the notional method of working out multipliers and then arriving at replacement cost by multiplying that multiplier with the estimated cost to the sellers.
A multiplier is the ratio between the original cost and the cost of replacement.
It is one of the methods of arriving at the hypothetical cost of replacement at a future date.
But where the cost of replacement is available through quotations and these quotations are not disputed by the Union it would not be necessary to resort to a hypothetical multiplier or if the multiplier must be ascertained it must be the ratio of the cost to the employer and the estimated cost of replacement actually proved through the quotations.
According to the Company in the case of old machinery the multiplier so calculated would be 1950 51 . 3.98 1953 54 . 7.83 1954 55 . 3.49 1955 56 . 2.47 1956 57 . 4.75 1957 58 . 2.29 786 The total cost of replacement of old machinery on the basis of these multipliers or in the alternative on the basis of the quotations would then come to Rs. 121.70 lacs instead Rs. 85.62 lacs, the difference being of Rs. 36.08 lacs.
Therefore, even if the divisor of 7 uniformly_ applied by the Tribunal in Annex.
A were to be accepted, as correct, Rs. 36.08/7=Rs. 5.16 lacs would have to be added for rehabilitation requirement for each of the bonus years.
If that is done the entire available surplus found by the Tribunal would be wiped out.
It will be seen from the Tribunal 's Annex.
A that so far as new machinery is concerned the Tribunal accepted the figures of original cost and the quotations furnished by the Company and worked out multipliers for/all the years from 1950 51 to 1959 60 by simply dividing the quotations by the original cost.
The question is, should not the Tribunal have also followed the same method in the case of old machinery when it had before it the estimated cost to the seller, i.e., the cost of old machinery if purchased as new in the year of installation and the quotations for that machinery.
If that were done there would be no necessity of finding out a notional multiplier.
In that event as seen above there would be a difference of Rs. 36.08 lacs which would have to be added to the figure of Rs. 85.62 lacs worked out by the Tribunal as total rehabilitation cost in respect of old machinery.
Mr. Ramamurti however argued that though the Union had not disputed the quotations those quotations were for the year 1963 64 when the Tribunal was adjudicating the dispute, that it is always necessary to first find out the multiplier and then work out the rehabilitation cost and that the cost of machinery in the bonus year or years must be reflected while working out the rehabilitation cost even if the year of replacement worked out from the average life of machinery is later.
It is now well established that in the case of old machinery the employees cannot insist that such machinery should be replaced by old machinery.
For working out rehabilitation cost of such machinery it is the cost of new machinery that is to replace the old which has to be taken into consideration.
The Company as aforesaid produced two kinds of figures both accepted by the Union and the Tribunal: (1) the estimated cost to the seller if he had purchased the old machinery as new in the respective years of its installation and (2) quotations of prices of machinery which would replace it.
The Tribunal had before it thus the cost of the machinery if it were new in the year of installation and the cost of its replacement by new machinery.
There was therefore no particular reason in distinguishing the old from the new machinery for the figures of costs and replacements in both the cases were on the footing that the old machinery was new machinery.
Therefore since the Tribunal accepted the quotations and worked out the multiplier in the case of new machinery by dividing the quotations by the original 'cost it ought to have 787 followed the same method in the case of old machinery as it had before it the cost of the old machinery as new and the cost or replacement, both unchallenged by the Union.
The question still is whether the quotations can be the sole criterion for working out rehabilitation cost.
The principle accepted in the Full Bench formula and approved by this Court in the case of Associated Cement Co. Ltd (1) was that payment of bonus is in recognition of the contribution of labour in the profits earned by the industry and to assist labour to overcome as far as possible the difference between the actual wage and the living wage.
The Formula at the same time accepted the point of view of the industry that investment made by it must imply a legitimate expectation of securing recurring returns and that could only be ensured by machinery being continuously kept in good working order.
Such maintenance would necessarily be to the advantage of the labour, for, the better the machinery the larger the earnings and the brighter the chance of earning bonus.
It is on this twin consideration that the amount necessary for rehabilitation is recognised as a prior charge on the gross profits when surplus profit for distribution as bonus is being worked out.
It is true that depreciation is allowed by the tax laws but that is only to the extent of a percentage on the written down value.
The depreciation fund set apart on that basis would obviously be insufficient for rehabilitation and therefore an extra amount would have to be annually set apart notionally to make up the deficiency.
That is the reason for the Full Bench formula having accepted the industry 's claim to rehabilitation in addition to the admissible depreciation.
While ascertain in the claim of rehabilitation the Tribunal has first to ascertain the cost of the machinery to the employer and then to estimate its probable future life.
It then becomes possible to anticipate approximately the year when the machinery would need replacement and it is the probable price of such replacement at such future date that ultimately decides the amount to which the industry is entitled by way of replacement cost.
The question is how to estimate the probable price of machinery at such future date? As observed in the Associated Cement Company 's case(1) such probable price can be considered itemwise where the industry does not own too many factories and In itemwise study of machinery is reasonably possible.
It is when the industry owns several factories and the number of plant and machinery is so large that it becomes difficult to make an estimate of replacement cost itemwise that the estimate has to be block wise.
In either case the Tribunal has to estimate the probable cost of replacement at the time when such replacement would become due.
Such in estimate depends obviously on several uncertain factors.
The estimate of the probable life of machinery is itself a matter of anticipation and (1) L/p(N)7SCI 11 788 the estimate of the probable trend of price during the In tervening period is also to a degree a matter of conjecture.
However, the entire process of ascertaining replacement cost is hypothetical depending largely on expert evidence.
It would appear therefore that whenever it is possible.
to estimate itemwise the probable cost of machinery in the year of replacement, such a method is not only permissible but is more desirable.
The block wise estimate has to be resorted to when item wise estimate is not possible.
Where therefore there is clear evidence of the probable price of each piece of machinery itemwise when replacement is to become due, it would be more accurate to proceed on the basis of such price and it would not be necessary to find out multipliers, such multipliers being after all the ratio between the: cost, and the probable cost of replacement, ascertained from the trend of prices during the intervening years.
The multiplier thus is at best an approximation arrived at from the trend of price level during the intervening period.
But where the cost of replacement is ascertained from quotations of prices for the year of replacement such cost is more accurate than a notional one worked out from the multiplier.
It is therefore not always necessary to arrive at a multiplier for estimating the probable cost of replacement.
In the instant case the Tribunal estimated the life for old machinery at 10 years and that for new machinery at 15 years after taking into consideration the fact that the machinery was worked at least since 1955 56 on three shifts a day and the fact that it is being used for manufacturing precision machines.
On this basis the old machinery installed in 1950 51 became due for replacement in 1960 61 and the rest of it installed in succeeding years would become due after 10 years from the respective years of its installation.
It is in evidence that though the average life of the old machinery was exhausted it was still being worked though uneconomically.
It was agreed that the entire machinery needed immediate replacement and this fact was accepted by the Tribunal.
It is well established that an employer cannot be allowed to postpone the date of replacement on the footing that he has operated the machinery in fact beyond its average life and thus boost the cost of replacement taking advantage of the rise in price every year.
In the instant case however 'that cannot be said to be the position.
As stated earlier, the quotations produced by the Company represented an average price as near as possible prevailing during the period for replacement.
Since they were not disputed by the Union they were the best available data.
There was therefore all the more reason for the Tribunal to have worked out the cost of replacement from these undisputed quotations instead of working: out the multipliers and then arriving at the total re. placement cost.
On the basis of these quotations even if the multipliers were to be worked out the multipliers and the cost of replacement of old machinery would be as follows: 789 Old machinery esti Replacement cost Multiplier Year mated cost to the proved byquota seller if he had pur tions disputedby chased as new in the the Union year of its installa tion not disputed by the Union (Rs. in lacs.) (Rs. in lacs) 1950 51 20.05 79.72 3.98 1953 54 1.86 14.57 7.83 1954 55 2.93 10.25 3.49 1955.56 0.45 1.11 2.47 1956 57 2.10 9.97 4.75 1957 58 2.65 6.08 2.29 30.04 121.70 The replacement cost thus arrived at would be Rs. 121.70 lacs as against Rs. 85.62 lacs as worked by the Tribunal.
Indeed, where the cost of replacement is proved itemwise from price quotations and they are undisputed it becomes difficult to appreciate how the total cost of replacement can be less than the cost proved through quotations.
Counsel for the Union, however, urged that while working out the replacement cost it is the cost during the bonus year which is relevant and therefore though the Union had accepted the quotations they would not be the proper criterion and the price prevalent during each of the bonus years would be the relevant price.
He also argued that.
even if the quotations were to be accepted as cost of replacement the prices of only those machines which are required for replacement and not for expansion which can be the basis of estimation.
As regards the first argument, a similar contention was raised in Associated Cement Co. 's case(1) and was rejected.
At p. 967 of the report the Court said: "What the Tribunal has to do in determining such cost (i.e., probable cost of replacements) is to project the price level into the future and this can Be more satisfactorily done.
if the price level which has to be projected in future is determined not only in the light of the prices prevalent during the bonus year but also in the light of subsequent price levels.
" The submission that it is the price level during the bonus year which is the criterion therefore is not correct,.
The test is the probable cost of replacement when rehabilitation becomes due, If the bonus year and the year of rehabilitation coincide the price (1) 790 level during the bonus year would no doubt be the relevant basis.
But where they do not coincide and the due year of rehabilitation is the year beyond the bonus year that which is relevant is the probable cost of replacement during that year and the Tribunal therefore would have to consider all relevant evidence necessary to estimate the cost during that future year.
Where there is tangible evidence through quotations of prices for that year and such quotations are not in dispute the Tribunal does not have to conjecture what the trend of price level would be by taking into consideration the price level during the intervening period which would include the bonus year.
However this does not mean that the Tribunal must mecha nically accept the quotations.
The rehabilitation cost allowed under C the Full Bench formula is the probable cost of rehabilitation which while including modernization does not include expansion.
But the distinction between modernization and expansion may in some cases be subtle and not capable of clear distinction.
The question therefore would always be whether replacement of one machine by a new one is the introduction of modem machinery or one which is an item of expansion.
If it is an item of expansion its cost naturally has to be excluded.
The test is whether by the introduction of the new machinery the production capacity is likely to be significantly augmented, If that is found the Tribunal would have to apportion the cost on the basis that replacement is partly modernization and partly expansion.
On the other hand, E if the increased production is not significantly on the higher side it would be a case of modernization incidental to replacement.
The question is on whom is the burden of proving whether a given replacement amounts to.expansion,or modernization.
It seems to us that since it is the employer who seeks replacement cost, it is for him to satisfy the Tribunal as to what will be the overall cost of replacement and in doing so it is he who must satisfy that the cost is of replacement only and does not include any expansion of machinery.
Counsel for the Union was therefore right in saying that the Tribunal has to satisfy itself that no cost of expansion is injected in the rehabilitation cost.
In the present case, however, it does not appear from the record that any question of expansion Garose as the Union accepted the quotation as equivalent to the replacement cost.
Consequently, the Tribunal proceeded on the footing that the entire machinery had become due for replacement and the prices proved by quotations were of machines to be replaced in the process of replacement and modernisation and not expansion.
According to Rajendra Mills Ltd(1) the employer has to discharge this burden by adducing proper evidence and giving the other party an opportunity to, test the correctness of that evidence by cross examination and merely bringing on record balance sheets, for instance, would not be enough.
(see also the Workmen vs The National Tobacco Co.(2).
(1) (2) [1966] II L.L.J. 200.
791 But in the present case there is no question of the Company not having properly discharged the burden, for, it not only produced balance sheets but also produced statements, quotations and examined two expert witnesses, Jones and Desai.
These witnesses were cross examined on the statements relied on by the Company in regard to the cost to the Company, the estimated cost of replacement, the average life of machinery etc.
The Union also the Confidential Annexs.
1 and 2 which showed itemwise the cost of replacement as proposed by the Company and quotations of prices therefor.
These Annexs.
also indicated that where a machine was to be replaced not by the same kind but by a modern one it was to be substituted for two or more of the old machines.
This was presumably done to avoid expansion.
It is true that in respect of the old machinery installed in 1953 54 and 1956 57 the multiplier calculated on the basis of the quotations comes to 7.83 and 4.75 respectively while it ranges from 2.29 to 3.98 for the rest of the years.
At first sight the multiplier might suggest that there might be an element of expansion in the case of those machines.
But it was pointed out that the prices of those particular machines had gone unusually high and furthermore that in the process of replacement the modern machines which were to replace the old ones were in the approximate proportion of one for two.
It cannot therefore be validly said that the Company had not placed sufficient materials to enable the Union to check up by cross examination whether this was a, case of expansion or not.
Mr. Ramamurti 's contention next was that even though the quotations were not disputed by the Union, taking them as the sole basis for estimating the replacement cost was not satisfactory as the Union had qualified its acceptance by a reservation that it did so except for machinery installed in the bonus 1 years.
This argument does not appear to be tenable.
Exhibit M2 shows that so far as the bonus years are concerned old machinery was installed in 1956 57 and 1957 58 only.
The cost of such machinery for 1956 57 was Rs. 1,39,871 and that for 1957 58 was Rs. 1,76,730.
On the basis of the Union 's reservation the Tribunal did not accept the quotations for machinery installed in those years and fixed the replacement cost on the basis of multipliers calculated by it de hors the quotations.
It is difficult to comprehend such an approach by the Tribunal.
The Tribunal accepted the quotations in regard to the rest of the machinery and worked out the multiplier on the basis of those quotations.
The Union did not challenge those quotations and the multiplier calculated therefrom.
If the quotations for the new machinery for all the years and for old machinery for the years, except the bonus years, were accepted by the Union and the Tribunal also, there is no reason why the quotations for the bonus years could be said to be unacceptable.
, No objection to the replacement cost of the new machinery was taken even in regard to the bonus years.
As regards the old.
machinery the Union accepted the Company 's figures both as to cost to the Company and the estimated cost to the seller if he had 792 purchased it as new.
Even if a multiplier has to be calculated it would be the ratio between the estimated sellers cost and the probable cost of replacement.
So calculated both the old and new machinery stand on the same footing because it is the seller 's estimated price if he had purchased it new in the year of its installation that was taken by the Tribunal for arriving at the multiplier.
That being so, the multiplier in both the cases would he the ratio between the cost in the case of new machinery and the estimated cost to the seller in the case of old machinery and the cost of replacement proved by the Company through quotations.
If the quotations were acceptable to the Union in regard to new machinery and the old machinery installed in the years except the bonus years it is difficult to understand how quotations for the old machinery installed in bonus years could be questioned especially as the Union did not produce any data, to prove them incorrect.
, In these circumstances, we are of the view that the multipliers arrived at by the Tribunal in the case of old machinery ,were not correct.
The Tribunal should have either calculated the replacement cost from the quotations proved by the Company itemwise or if it had to work out the multiplier it should have done so by finding out the ratio between the estimated cost to the seller accepted by the Union and the quotations proved by the Company.
The deficiency in following this method comes to Rs. 36 lacs and odd as stated earlier.
Regarding the new machinery purchased during the bonus years the Tribunal held that the price rise for such machinery cannot be taken to be more than zero.
In exhibit M2 the Company has given the quotations for this machinery and has worked out therefrom the multiplier for each of the bonus years, viz., 2.35 for 1956 57, 3.37 for 1957 58, 1.48 for 1958 59 and 1.66 for 1959 60.
Presumably the Tribunal thought that though the prices for this machinery in 1963 64 were available, considering that its life was 15 years it was too early to find out with any precision the trend of prices during the intervening years.
With the gradual growth of indigenous production and corresponding availability of these machines it would be difficult to say whether the same trend would continue or not by the time the year for its replacement was reached.
It is not possible to say therefore that the Tribunal 's view that the price rise of such machinery should be taken as zero was unreasonable.
In the case of machinery purchased in 1950 51 and onward its period of replacement would commence from 1965 and onwards.
It was possible from the quotations produced by the Company to predicate for such machinery the trend of price but not so in the case of machinery purchased in very recent years.
In their case the quotations may not be taken for granted as showing any definite trend in price level.
As stated earlier, the Tribunal has given in Annex.
A a uniform remainder life of 7 years to old machinery irrespective of the year of its installation.
in our view, is not correct.
Taking 793 the life of old machinery to be 10 years, the old, machinery purchased in 1950 51 would require replacement in 1960 61 and so on. 'In.
that case the remainder life in the bonus year 1957 58 of old machinery installed in 1950 51 would clearly be 3 years, of old machinery installed in 1953 54, 6 years, of old machinery installed, in 1955 56 8 years, of machinery installed in 1956 57 9 years and that installed in 1957 58 10 years.
The divisor therefore could not be the uniform 7 for all these years but a graduated one on the basis that the estimated life of old machinery was 10 In estimating the rehabilitation requirement of each year the graduated divisor should have been used.
The question which raises a serious controversy is with regard to the figure of Rs. 24.35 lacs found, by the Tribunal as the total cost of rehabilitation in respect of machinery both old and new installed in 1950 51.
Dividing this figure by 7 as the remainder life for both the types of machinery the Tribunal allowed Rs. 3.48 lacs as the rehabilitation requirement for that year.
Counsel for the Company objected to the Tribunal 's calculations on various grounds.
It will be seen from column 7 of Annex.
A that whereas the Tribunal accepted the Company 's quotations for new machinery it did not do so in the case of old machinery and calculated instead the replacement cost by means of a multiplier.
It is difficult to say on what principle the multiplier 3.36 for old machinery was adopted except that the Tribunal adopted the same multiplier which it calculated in the case of new machinery by working out the ratio between the cost to the Company and the price of replacement as appearing from the quotations.
Since the Tribunal adopted that principle for new machinery it would be logical that it should similarly do so in the case of old machinery also as the basic cost adopted was the cost price to the seller if he had bought that machinery as new in 1950 51.
The total cost of machinery old and new would in that case be Rs. 54.77 lacs plus Rs. 75 lacs, i.e. Rs. 133.77 lacs instead of Rs. 54.77 lacs less 5 % break down i.e., Rs. 53.96 lacs for new and Rs. 67.37 lacs for old machinery as calculated by the Tribunal.
The figure of Rs. 67.37 lacs was arrived at by multiplying Rs. 20.05, the estimated cost to the seller by the multiplier 3.36.
According to the Tribunal the gross replacement cost would be Rs. 121.33 lacs instead Rs. 133.77 lacs.
The figure of Rs. 121.33 lacs arrived at by the Tribunal cannot be sustained as it was not justified in calculating replacement cost for the new machinery in one way and that for the old machinery in another way.
The next miscalculation said to have been committed by the Tribunal was in deducting the depreciation for the entire old machinery installed during 1950 51 to 1957 58, i.e., Rs. 30 lacs from the total replacement cost for 1950 51.
The Tribunal took the whole of the cost of old machinery to the seller, i.e., Rs. 30 lacs, as depreciation.
For that the Tribunal derived support from the 794 decision in South India Millowners ' Association and Ors.
vs Coimbatore District Textile Workers ', Union and Ors.(1) where while dealing with old machinery.
this Court has said that where purchase price is determined but it is difficult to ascertain the depreciation amount thereafter then at the highest the whole of the purchase money would be taken as depreciation amount.
Assuming that the Tribunal was entitled to treat the price of the old machinery, viz., Rs. 30 lacs as depreciation it was not correct on its part to deduct it from the replacement cost.
The reason is that it also deducted Rs. 48.8 3 lacs (to which we.
shall presently refer to) which amount includes depreciation of Rs. 30 lacs.
The Tribunal thus deducted Rs. 30 lacs as depreciation twice over.
The deduction of Rs. 30 lacs was thus clearly an error.
Counsel for the Company next objected to the sum of Rs. 48.83 lacs having been deducted from rehabilitation cost in respect of machinery, old and new, installed in 1950 51.
The objection was two fold: (1) that the Tribunal erred in deducting the whole of this amount from the rehabilitation cost in respect of 1950 51 machinery, and (2) that the said amount represents total deprecation, i.e., the notional Written down value of all machinery up to the year 1956 57 and is shown as such in the balance sheet for 1956 57.
It was urged that, since this amount represents depreciation on various kinds of assets, viz., bungalows, plants and machinery, cars and trucks, furniture and tools and implements, the whole of this amount should not be deducted when calculating rehabilitation provision for the machinery of 1950 51 and should be deducted only when calculating rehabilitation provision for each item in respect of which this depreciation has been included in the accounts.
We do not think that this submission can be accepted.
No doubt, the sum of Rs. 48.83 lacs represents depreciation up to 31 3 1957 in respect of plant, machinery, buildings, as well as other items of property, but there is no principle which requires that depreciation fund in respect of a particular item must only be utilised in rehabilitating the same item.
The Tribunal held that the entire depreciation fund must be utilised for rehabilitation of those items of property which require rehabilitation at the earliest point of time, that is the machinery of 1950 51 which needed replacement earlier than the other items of property.
We do not think that this decision of the Tribunal was in any way unreasonable as would justify interference.
As regards the second objection the principle is that while arriving at the rehabilitation cost deduction should be made of all available funds.
It was argued that an amount which is a notional depreciation mentioned in the accounts for the purpose only of showing the true Value of fixed assets would not be a reserve which in point of fact can be said to be available for replacement, and that it is on account of this that the decisions mention reserves including (1) 765 depreciation reserve which, if available, are liable to be deducted from rehabilitation cost.
The contention is that this amount being merely a notional depreciation is a mere paper entry and does not represent any available reserve.
Reliance was placed on G. F. Mills vs Its Workmen(1) where the Court set aside deduction of Rs. 30 lacs; the Company had raised a debenture loan of Rs. 50 lacs on credits on the ground that that amount was locked up in Pakistan and could not be brought to India for the Company 's use.
it was argued that the principle thus is that the amount to be deducted must in reality be available to the employer for replacement.
As found by the Tribunal the Company 's fixed assets were of the value of about Rs. 110 lacs.
The Union 's contention was that as against this amount the Company 's subscribed capital was Rs. 60 lacs; the Company had raised a debenture loan of Rs. 50 lacs on the security of its fixed assets and thus the subscribed capital and the debenture loan were sufficient to meet the whole cost of the fixed assets.
On this basis the Tribunal upheld the Union 's contention that Rs. 48.83 lacs shown as depreciation were available towards replacement cost as no part of it could have gone in the investment of fixed assets.
Counsel for the Company, however, pointed out that the debenture loan was raised in ' 1958 59 and therfore that amount cannot be said to be available at any rate during the year 1956 57.
But this fact taken in isolation does not furnish a correct picture of the fund available to the Company during the bonus years.
The balance sheets show that besides the said loan of Rs. 50 lacs the Company had obtained 'a, secured loan of Rs. 6.50 lacs in 1956 57 and another loan of Rs. 24.68 lacs in 1957 58.
Except producing the balance sheets the Company led no evidence to show as to how these loans had been utilised, whether as working capital, or in acquiring fixed assets.
Apart from this fact, we do not see how the fact that the debenture loan was raised in 1958 59 makes any difference.
Though the life of a large part of the machinery had run out the Company had not replaced any of it and was carrying on its work with the worn out machinery even though its working was uneconomical.
The Tribunal has found and the parties also were agreed that the entire machinery required immediate replacement.
Therefore, the question was how much rehabilitation cost the Company would require.
In calculating such cost the Tribunal was entitled to take note of the fact of Rs. 50 lacs having been raised as debenture loan on the security of its fixed assets presumably because that loan was required for rehabilitating the fixed assets.
Even so, Counsel argued, the question would still be whether Rs. 48.83 lacs represented an available fund for rehabilitation or whether they represented a mere paper entry for showing the true value of machinery in 1956 57.
In our view. it is not necessary for us to go into the question whether a sum shown as notional depreciation without its being shown as reserve can be treated or (1) A.I.R. 1958 S.C. 382.
796 not as a fund available for rehabilitation nor whether such depreciation is or is not deductible even if it is not available as a fund.
The Company produced, exhibit M 4 showing the, amount which according to it was required for rehabilitation for the bonus years.
According to that statement the Company would require Rs. 110.20 lacs, Rs. 127.06 lacs, Rs. 149.87 lacs and Rs. 155.91 lacs for the four bonus years respectively.
In working out these amounts the Company itself deducted Rs. 48.25 lacs from the rehabilitation requirement for the year 1956 57 and pointed out in a footnote that that amount was comprised of an investment of Rs. 18.22 lacs in stocks and shares and Rs. 30.03 lacs as depreciation, taking the entire estimated cost to the seller of old machinery if such seller had purchased it as new.
In face of this admission it is difficult to appreciate how the Tribunal can be said to have erred in treating Rs. 48.83 lacs as available fund.
We may also mention that before the Tribunal the argument was not that the amount of Rs. 30.03 lacs was merely a notional depreciation and not a fund actually available to the Company.
The Company 's contention on the contrary was that the whole of Rs. 48.83 lacs was utilised in fixed assets and therefore was not available for replacement.
The Tribu nal rejected that contention on the ground that except for the balance sheet which did not give precise information as to how that amount was deployed by it.
the Company had not produced.
its accounts to show that that amount was utilised towards acquiring fixed assets.
Counsel argued that if that was the view of the Tribunal the Company ought to have been given an opportunity of showing its sources of fixed assets.
There is no merit in this contention.
It was the Company who had the necessary information.
The onus was on the Company to explain from its accounts and other data that the amount of Rs. 30 lacs and odd was not available.
As regards Rs. 18.22 lacs the amount being an investment in liquid assets it is difficult to say why the Tribunal was not justified in treating it as available for rehabilitation.
But the Company 's contention was that the investment of Rs. 18.22 lacs in shares can either be treated as a, trading transaction carried out in the ordinary course of business or as a capital asset.
If it was treated as a trading transaction the Tribunal ought to have allowed Rs. 1.72 lacs which was the loss in 1957 58 in these shares as trading expenditure and the Tribunal ought not have added that amount to the gross profits for that year.
In doing so, the Tribunal treated the investment as capital asset and it could not therefore deduct Rs. 18.22 lacs as a fund available for rehabilitation cost.
We fail to see any contradiction on the part of the Tribunal.
The balance sheet for the year 1956 57 contains two Schedules , Sche dule A shows fixed assets and Schedule B shows trade investments of the value of Rs. 18,21,571 / .
The Company not being an investment Company the investment of Rs. 18.22 lacs in shares of other joint stock Companies prima facie represents extra capital not required as working capital for otherwise the Company could not have spared this amount for investment in the stocks of other 797 companies.
The Tribunal was right in treating this investment as a capital asset and in refusing to treat the loss therefrom as trading expenditure.
The Tribunal at the same time could deduct this amount from the rehabilitation cost because that amount was available to meet the rehabilitation cost.
The investment in shares could easily, if the Company was so minded, be converted into cash and utilised for replacement of its worn out machinery.
But it was said that even if the amount of Rs. 18.22 lacs could be held deductible that figure was not correct, for the value of investment was ,Rs. 11.23 lacs at the close of the year 1957 58 as shown in the balance sheet for that year.
This contention is not correct.
What appears to have been done in 1957 58 was that instead of showing the entire investment of Rs. 18.22 lacs as trade investments as in the previous year, the investments, were classified into investments and current assets.
The value of investments at the beginning of the year is shown at, Rs. 18.22 lacs but at the close of the year the shares of companies other than the National Bearing Company (Jaipur) Ltd., a subsidiary of the appellant company, were regrouped and shown as current assets and their cost was shown at Rs. 6.57 lacs instead of Rs. 13.71 lacs as shown at the close of the preceding year.
Except producing the balance sheet for 1957 58 the Company gave no explanation before the Tribunal as to why these investments were re grouped and on what footing they were revalued.
Besides, the figure of Rs. 18.22 lacs does not appear to have been disputed before the Tribunal and the Tribunal was never told that the investments during that year were reduced to 'Rs. 11.23 lacs.
It would not therefore be, right to say that the Tribunal erred in taking Rs. 18.22 lacs as a, fund available for rehabilitation.
The next contention was as to 7 1/4 % interest allowed by the Tribunal on paid up capital instead of 8.57% claimed by the company.
By the Finance Act of 1959 the provision in the Income tax Act that the Income tax paid on dividend distributed to the shareholders was deemed to have been paid on behalf of the shareholders was abrogated.
The contention was that though the corporation tax was reduced in that year from 51.5% to 45% the Company since 1959 had on the whole to bear at larger burden of tax and therefore the Company would not get a net tax free 6 % interest unless interest at 8.75% was granted.
It is true that the Full Bench formula, provided for payment of net interest at 6% per annum on paid up capital, but as pointed out in the Associated Cement Co. 's cave(1) and subsequent decisions of the Tribunals the rate of 6 % interest is not to be regarded as something inflexible.
In awarding interest on paid up capital and also on working capital the proper approach is that the industry is entitled to a reasonable return on investments made in establishing and running concerns it its risk.
At the same time the claim for bonus is no longer treated as an ex gratia payment.
It is recognised on the consideration that (1) 798 labour is entitled to claim a share in the trading profits of the industry as it partially contributes to the same.
Since the industry and labour both contribute to the ultimate trading profits both are entitled to a reasonable share.
While awarding interest if the Tribunal were to find that if it were to grant 6 % interest on paid up capital, nothing or no appreciable amount would be left for bonus, it can adjust the rate of interest so as to accommodate reason ably the claim for bonus and thus meet the demands of both as reasonably as possible.
If the Tribunal were to award interest at a rate lower than 6% after considering all the relevant facts we do not think that the employer can legitimately claim that it has erred in doing so.
If the Tribunal has exercised its discretion after consideration of all the relevant facts this Court would not ordinarily interfere with such exercise of its discretion.
These were all the contentions raised by Counsel for the Company in the Company 's appeal To the extent that we Accept as hereinabove the Company 's contentions, Annexure A to the award will have to be modified.
These modifications are shown in the charts thereto annexed and collectively "A".
We now proceed to consider the Workmen 's appeal.
Counsel for the Union argued that the Tribunal ought to have fixed the life of the Dew machinery at 25 years as is usually done and not at 15 years.
In some cases, it is true that Tribunals have fixed 25 years as the machinery 's average life.
There can however no rigidity in fixing the life of machinery, since it differs from industry to industry.
Consequently, there can be no hard and, fast rule applicable to all sorts of machinery.
The Millowners ' Association, Bombay(1) and South India Millowners ' Association(2).
In the present case the Tribunal had before it evidence showing that the industry required machinery of special precision and was therefore not comparable with machinery such as that in textile mills for which 25 years ' life was fixed.
In suggesting the life of 25 years for this machinery Counsel for the Union did not give any specific reason except that 25 years of life has been fixed in some cases.
He could not also show any instance where in a similar industry life of machinery was fixed for more than 15 years.
The principle that the Tribunal has to bear in mind is that the life of machinery is the period during which it is estimated to work with reasonable efficiency and not the period during which it has actually been operated, that is, till it becomes too deteriorated for use.
(Pierce Leslie & Co. vs Its Workmen.)(3) Since the Tribunal fixed the period of 15 years after considering the evidence and the nature of industry there is no reason why its determination need be interfered with.
(1) (2) [1962] Suppl, 2 S.C.R. 926.
(3) ; at 200.
799 Counsel 's next contention was that the Tribunal ought not to have accepted the quotations which were for 1963 64 as the basis for calculating the total rehabilitation cost.
But the quotations were never disputed by the Union.
Even so. argued Mr. Ramamurti, they contained the cost of spares which at any rate ought to have been excluded.
We confess it is difficult to appreciate this part of the argument.
The machinery in question is in a large way imported machinery.
It is common knowledge that when such machinery is purchased spares are generally included in such purchase and their cost must be included in the purchase price, the reason being that in case of breakdown the Company would not have to wait for an indefinite period for ordering and obtaining, the spares.
It was then said that the new machinery which would replace the old might well contain items of expansion which the Tribunal ought to have reckoned and excluded.
While dealing with the Company 's appeal we have already dealt with this aspect and for the reasons stated there this argument must be rejected We must also reject the argument that the Tribunal had disregarded the increasing trend of indigenous manufacture of machinery.
In fact; Confidential Annexs.
1 and 2 produced by the Company contain quotations wherever possible of a number of machines of indigenous manufacture.
The next contention related to old machinery and the argu ment was that the Company had discarded machinery worth about Rs. 18 lacs in respect of which the Company ought not to get any rehabilitation cost.
The argument appears at first sight attractive but loses its force when the actual position is ascertained.
The balance sheet for the year 1959 60 shows that machinery worth Rs. 17.62 lacs was discarded during that year.
Similarly tools and implements of the value of Rs. 8.57 lacs were also discarded.
To that extent deductions were made in the total value of fixed assets.
In showing depreciation of plant and machinery Rs. 10.91 lacs.
being the depreciation of these machines were also deducted from the total depreciation so far shown in the previous balance sheets.
The result was that the total depreciation including depreciation for machinery added during the year was brought down from Rs ' 48.37 lacs to Rs. 44.20 lacs.
The evidence of Desai shows that the machines ' Ledger maintained by the Company shows only the list of machines in actual operation , which means that the discar ded ones are 'not shown in that list.
The machinery discarded during this year was thus taken out from the fixed assets as if it did not exist.
The depreciation in respect of it was also deducted from the total depreciation and therefore no rehabilitation was in fact claimed for such machinery.
Mr. Ramamurti next urged that the Tribunal ought to have allowed only 30% of rehabilitation cost for old machinery as was done in South India Millowners ' Associations 's Case(1).
That case (1) [1962] Spp.
2 S.C.R. 926. 800 does not lay down any such rule.
30% only was allowed in that case as an ad hoc figure because the Association there had failed to produce materials showing the original price and subsequent depreciation and this Court refused to interfere with that figure as the Tribunal had no other alternative except to adopt an ad hoc basis.
The Court however made it clear that in the case of old machinery the cost price of such machinery must be ascertained and this can be done by enquiring for how much the machinery could be originally purchased when new.
There is therefore no warrant for saying that only 30% of the rehabilitation cost can be allowed in the case of old machinery.
We cannot also agree with Mr. Ramamurti 's contention that the Tribunal in calculating the rehabilitation requirement for the bonus years was wrong in taking only the notional normal depreciation and not the statutory depreciation including development rebate permissible under the Income tax Act.
In Associated Cement Co. 's Case(1) at p. 994, in the Chart prepared by this Court only.
the notional normal depreciation was deducted while the rehabilitation requirement.
It was when the Court calculated the Income tax payable by the Company that it deducted the statutory depreciation from the gross profits (see also Bengal Kagazkal Mazdoor Union & Ors.
vs Titagarh Paper Mills Co. Ltd. & Ors.(2) The last contention was that the Tribunal should not have rejected the bonus claim for 1956 57.
The balance sheet for the year 1956 57 was published in December 1957, the Company 's accounts were closed and appropriations of profits for that year were made latest by the end of 1957.
The claim for bonus was raised for the first time by the Union 's resolution of July 24, 1959, that is, more than 18 months after the closure of accounts.
The claim for 1956 57 was thus clearly belated and the Tribunal was right in refusing to compel the Company to reopen its accounts and to readjust appropriations made long before the demand was raised.
It has to be remembered that a claim, for bonus is not one for deferred wages.
Its recognition in industrial adjudication is based on the desirability of a balance of adjustments of the different interests concerned in the industrial structure of a country in order to promote harmony amongst them on an ethical and economic foundation.
Industrial adjudication therefore is bound to take into consideration delay and laches before it calls upon the other side to reopen its accounts closed long ago.
We do not think that the Tribunal was in any error in rejecting the claim on the ground of laches.
The principle that aches are fatal to such a claim has long been accepted in a series of decisions both by the Tribunals and by this Court.
(1) (2) [1963] II L.L.J. 358 801 Calculation of annual requirement for rehabilitation of old machinery 801(a) Period Cost Cost as Multi Total Less Balance shown by plier Break Co. in down exhibit M. Value 5% 1 2 3 4 5 6 7 1950 51 13.37 20.05 3.97 79.72 1.00 78.72 1953 54 1.24 1.86 7.85 11.57 0.0914.48 1954 55 1.95 2.93 3.50 10.25 0.15 10.10 1955 56 0.30 .45 2.47 1.11 0.02 1.09 1956 57 1.40 2.10 4.75 9.97 .11 9.96 1957 58 1.77 2.65 2.29 6.08 .13 5.95 801(b) Deductions Balance Divisor Annual Require ment 8 9 10 11 (i) 48.83 Depreciation 11.67 3 3.89 (ii)18.22 Available Resourcess 67.05 14.48 6 2.41 10.10 7 1.44 1.09 8 0.14 9.86 9 1.10 0.95 10 0.59 Total 9.57 802 (a) Period Cost cost as Multi Total Less Balance shown by plier Break Co.in down exhibit
M. value 5% 1 2 3 4 5 6 7 1950 51 16.30 16.30 3.36 54.77 0.81 53.96 1951 52 1.43 1.43 1.87 2.67 0.07 2.60 1952 53 2.18 2.18 1.47 3.21 0.11 3.10 1953 54 1.12 1.12 2.28 2.55 0.06 2.49 1954 55 3.71 3.71 1.96 6.90 0.19 6.71 1955.56 6.93 6.93 2.18 15.11 0.35 14.76 1956.57 13.11 13.11 2.35 30.80 0.66 30.14 1957 58 3.39 3.39 1 3.39 0.17 3.22 1958 59 12.95 12.95 1 12.95 0.65 12.30 1959 60 30.76 30.76 1 30.76 1.54 29.22 802(b) Deductions Balance Divisor Annual Require ment 8 9 10 11 53.96 8 6.75 2.60 9 0.29 3.10 10 0.31 2.49 11 0.23 6.71 12 0.56 14.76 13 1.14 30.14 14 2.15 3.22 15 0.21 12.30 15 0.82 29.22 15 1.95 802(c) TOTAL ANNUAL, REQUIREMENT FOR OLD) AND NEW MACHINERY Old New Total 1957 58. 9.57 11.64 21.21 1958 59. (additional) 0.82 22.03 1959 60. . (additional) 1.95 23.98 803(a) Years Machinery Building Total 1957 58 21.21 0.72 21.93 1958 59 22.03 0.77 22.80 1959 60 23.98 0.82 24.80 803(b) (Figures in lacs) National Normal Depre Balance to be provided ciation allowed during out of profits the year to be deducted 9.10 12.83 9.00 13.80 10.83 13.97 803(c) Detailed Calculations of available surplus for the three bonus years (Figures in lacs) 1957 58 1958 59 1959 60 Gross Profits 28.34 25.36 34.92 Less Notional Normlal Depreciation 9.10 9.00 10.83 19.24 16.36 24.09 Less Income tax 8.18 7.48 7.31 11.06 8.88 16.78 Less Wealth Tax 0.28 0.29 . 10.78 8.59 16.78 Less return on paid up capital 3.60 3.60 4.35 7.18 4.99 12.43 Less additional provision for rehabilitation for plant, machinery and buildings 12.8313 8013.97 vailable Surplus Nil Nil Nil 804 The, Chartst showing calculations of available surplus for the A three bonus years show that in all these years no surplus remains available for distribution of bonus after making provision for rehabilitation.
As a result, the appeal by the Company must be allowed and the direction made by the Tribunal for payment of bonus for these three years has to be set aside.
In the circumstances of this case, the parties will bear their own costs.
The appeal by the Union is dismissed.
There will be no order as to costs.
G.C. Appeal dismissed.
| IN-Abs | The workmen of the appellant company demanded bonus for the years 1956 57 to 1959 60.
The Tribunal disallowed the claim for 1956 57 on the ground that it was belated and allowed the demand for the rest of the years 1957 58 to 1959 60.
In working out the available surplus for distribution as bonus the Tribunal in general followed the Full Bench formula evolved by the Labour Appellate Tribunal.
Against the Tribunal 's award the company as well as the workmen appealed to the Supreme Court by special leave under article 136 of the Constitution.
Both sides raised contentions with regard to the rehabilitation allowances in respect of plant and machinery for the three years in question and the method followed by the Tribunal in calculating them.
The main question for decision arose out of the company 's contention that since it furnished quotations for all machinery including the old machinery, the Tribunal ought to have accepted those quotations as equivalent to replacement cost as it did in the case of new machinery instead of adopting the notional method of working out multipliers and then arriving at replacement cost by multiplying that multiplier with the estimated cost to the sellers.
HELD: (i) The multiplier is at best an approximation arrived at from the trend of price level during the ascertained intervening period.
But when the cost of replacement is ascertained from quotations of prices for the year of replacement such cost s more accurate than a notional one worked out from the multiplier.
It is therefore not always necessary to arrive at a multiplier for estimating the probable cost of replacement.
[789 C D].
In the present case since the Tribunal accepted the quotations ' and worked out the multiplier in the case of new machinery by dividing the quotations by the original cost it ought to have followed the same method in the case of old machinery as it had before it the cost of the old machinery as new and the cost of replacement, both unchallenged by the union.
If the rehabilitation cost was calculated in this manner there would be no available surplus with the company and hence no bonus would be payable. ' [787 H 788A; 787 A B].
(ii) It is well established that in the case of old machinery the employees cannot insist that such machinery should be replaced by old machinery.
For working out the rehabilitation cost of such.
machinery it ' is the cost of new machinery that is to replace the old which has to be taken into consideration.
[787 F G].
(iii).
Whenever it is possible to estimate itemwise the probable cost of machinery in the year of replacement such a method is not only permissible but is more desirable.
The blockwise estimate has.
780 to be resorted to when itemwise estimate is not possible as when the industry owns several factories and the number of plant and machinery is so large that it becomes difficult to make an estimate of replacement cost itemwise.
[789 B C; 788 G H].
(iv) The contention on behalf of the workmen that the replacement cost should be worked out on the basis of the price level during the bonus year could not be accepted.
The test is the probable cost of replacement when rehabilitation becomes due.
If the bonus year and the year of rehabilitation coincide, the price level during the bonus year would no doubt be the relevant basis.
But when they do not coincide and the due year of rehabilitation is the year beyond the bonus year that which is relevant is the probable cost of replacement during that year.
[790 H; 791 A B].
(v) Ordinarily, the Tribunal has to satisfy itself that no cost of expansion is injected in the rehabilitation cost.
In the present case, however, it did not appear from the record that any question of expansion arose as the Union accepted the quotations as equivalent to the replacement cost, [791 F G].
(vi) The Tribunal was justified in taking the price rise in respect of the machinery installed in the bonus, years as zero.
Though the prices for such machinery in 1963 64 were available, considering that its life was 15 years, it was too early to find out with any precision the probable trend of prices during the intervening years.
[793 EG].
(vii) The Tribunal was wrong in giving a uniform remainder life of 7 years to old machinery irrespective of the year of its installation.
Taking the life of old machinery to be 10 years, the old machinery purchased in 1950 51 would require replacement in 1960 61 and so on.
In that case the remainder life in the bonus year 1957 58 of old machinery installed in 1950 51 would clearly be 3 years, of old machinery installed in 1955 56 8 years, of machinery installed in 1956 57 9 years and that installed in 1957 58 10 years.
The divisor therefore could not be the uniform 7 for all the three years but a graduated one on the basis that the estimated life of the old machinery was 10 years.
[793 H; 794 B.] (viii) The Tribunal was justified, in view of the decision of this Court in the South India Millowners ' Association 's case, in taking the whole cost of the old machinery as depreciation, but it made a mistake in deducting it twice over.
[795 B C].
(ix) The company not being an investment company, its investments in shares of other joint state companies prima facie represented extra capital not required as working ' capital, for otherwise the company could not have spared this amount for investment in the stocks of other companies.
The Tribunal was right in treating this Investment as a capital asset and in refusing to treat the loss therefrom as trading expenditure.
The Tribunal at the same time could deduct this amount from the rehabilitation cost because that amount was avilable to meet the rehabilitation cost.
[797 H; 798 A].
(x) Though the Full Bench formula provided for payment of net interest at 6 per cent annum on paid up capital.
that rate is not to be regarded as something inflexible.
While awarding interest if 781 the Tribunal were to find that if it were to grant 6 per cent interest on paid up capital.
nothing or no appreciable amount would be left for bonus, it can adjust the rate of interest so as to accommodate reasonably the claim for bonus and thus must meet the demands of both as reasonably as possible.
[798 G; 799 B].
(xi) In fixing the life of machinery the principle that the Tribunal has to bear in mind is that the life of machinery is the period during which it is estimated to work with reasonable efficiency and not the period during which it has actually been operated, that is, till it becomes too deteriorated for use.
In the present case the Tribunal fixed the period of 15 years after considering the evidence and the nature of the industry.
There was no reason why its determination should be interfered with.
[799 G H].
(xii) The Tribunal was right in not excluding the cost of spares from the price of machinery for the purpose of calculating rehabilitation cost.
In the case of imported machinery spares are generally included in the purchase and their cost must be included in the purchase price, the reason being that in case of breakdown the company would not have to wait for an indefinite period for ordering and obtaining the spares.
[800 B].
(xiii) The statutory depreciation and development rebate allowable under the Income tax Act are not relevant for the purpose of calculating rehabilitation requirement.
Only the notional normal depreciation need be deducted.
[801 C D].
(xiv) The claim for bonus in respect of 1956 57 was made more than 18 months after the closure of accounts.
Industrial adjudication.
;Is bound to take into consideration delay and laches before it calls, upon the other side to reopen its accounts closed long ago.
The Tribunal was therefore right in rejecting the claim on the ground of laches.
[801 F G].
Millowners ' Association.
Bombay vs Rashtriya Mill Mazdoor, Sangh, Bombay , Associated Cement Co: Ltd. vs Its Workmen , Management of Rajendra Mills Ltd. vs Their Workmen , The Workmen vs The National Tobacco Co. , South India Millowners ' Association & Ors.
vs Coimbatore District Textile Workers ' Union and Others [1962] 1 L.L.L. 223, G. F. Mills vs Its Workmen., A.I.R. 1958 S.C. 382.
South India Millowners ' Association and Ors.
vs Coimbatore District Textile Workers ' Union and Or,,;.,, [1962] Supp. 2 S.C.R. 926, Pierce Leslie & Co. vs Its Workmen, ; and Bengai.
Kagazkar Mazdoor Union & Ors.
vs Titagarh Paper Mills Co. and Ors. , referred to;
|
Appeals Nos. 165 and 166 01 1965.
Appeals from the judgment and decree dated May 7, 1960 of the Madras High Court in O.S.A. Nos. 25 and 52 of 1956.
S.V. Gupte, Naunit Lal and R. Thiagarajan, for the appellants (in both the appeals).
N.C. Chatterjee, section Balakrishnan for R. Ganapathy lyer, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Bachawat, J.
The dispute arises out of a contract between the appellants and the respondent entered into on November 13, 1951.
The terms of this contract were recorded in writing in the form of a letter written by the respondent to appellant No. 1 and set out below: "Messrs. P.S.N.S. Ambalavana Chettiar and Company Ltd., 260, Angappa Naicken Street, Madras.
Dear Sirs, We confirm having purchased from you and the Madras Paper Marketing Company, Madras, 500 tons of Russian Newsprint as per the following description : About.70 per cent in reels of 34 inches width. " 15 per cent in reels of 22 inches width.
" 15 per cent in reels of 36 inches width.
at annas 9 per lb.
Ex Wharf Bombay duty, etc., paid.
The buyers are to take delivery within four days of the offer of delivery.
Any wharfage, etc., up to the fourth day of the offer of delivery will be on seller 's account and thereafter on buyer 's account.
We have also sold you about 415 tons of Russian newsprint in sheets in size of about 30"X 42" (760 mm X 1085 mm) ex godown, Madras at Re. 0 9 6 per lb.
We will keep the stock of sheets in our godown on your account free of rent.
We shall advance you moneys against this newsprint at annas 8 per lb.
This advance will carry interest at 5 per cent per annum.
We will also charge you the exact amount of insurance which we pay to our Insurance Company against the goods.
241 We shall pay Rs. 5,60,000 to your Bankers in Bombay and take delivery of the 500 tons of newsprint from the harbour in Bombay.
Accounts wilt be made on the basis of the above arrangement and whatever one party is liable to pay to the other will be adjusted subsequently.
Thanking you, Yours faithfully, For Express Newspapers Limited Director.
" The document shows that the respondent agreed to buy from the appellants 500 tons of Russian newsprint in reels at 9 annas per lb., ex wharf Bombay, and to take delivery of the goods on payment of Rs. 5,60,000.
At the same time, the appellants agreed to buy from the respondent 415 tons of Russian newsprint in sheets then lying in a godown in Madras at 9 annas 6 pies per lb.
upon the term that the appellants would pay the insurance charge and also interest at 5 per cent per annum on an amount equivalent to the price of the goods calculated at 8 annas per lb.
The understanding was that the appellants would within a reasonable time take delivery of the goods bought by them in instalments and the accounts would be finally adjusted on the completion the deliveries.
It may be mentioned that appellant No. 2 carried on business under the name and style of Madras Paper Marketing Company.
On November 26, 1951, the parties orally agreed that instead of 500 tons the respondent would buy 300 tons of newsprint in reels and that instead of 415 'tons the appellants would buy 300 tons of newsprint in sheets and the terms of the contract dated November 13, 1951 would stand varied accordingly.
On December 5, 1951, the respondent took delivery of 300 tons of newsprint in reels on payment of Rs. 3,18,706 9 10 and a sum of Rs. 57,816 13 2 remained due to the appellants on account of the price of these goods.
From November 29, 1951 up to February 27, 1952, the appellants took delivery of 122324 lbs.
of newsprint in sheets on payment of.
63,032 15 9 to the respondent.
Subsequently, the appellants refused to take 'delivery of the balance 547501 lbs.
of newsprint in sheets.
Counsel for the parties agreed before us that March 29, 1952 was the date when the appellants repudiated the contract.
On April 21, 1952 after giving notice to the appellants the respondent resold the balance goods to one G.R. Lala at 61/2 annas per lb.
On April 18, 1952, the appellants filed in the High Court of Madras C.S. No. 175 of 1952 claiming from the respondent 242 Rs. 57,816 13 2 on account of the balance price of 300 tons of newsprint in reels and interest thereon.
The respondent admitted the claim for the balance price.
On July 30, 1952, the respondent filed in the High Court of Madras C.S. No. 262 of 1952 claiming a decree for Rs. 62,266 13 2 on account of the balance price of 122324 lbs.
, the deficiency 'on resale of 547501 lbs.
of the newsprint in sheets, interest and insurance charges after setting off the sum of Rs. 57,816 13 2 due to the appellants.
The principal defence of the appellants was that the contract with regard to 415 tons of newsprint in sheets was cancelled in November, 1951 and that appellant No. 2 was not a party to this contract.
The appellants also denied the factum and validity of the resale.
The two suits were tried.
by Rajagopala Ayyangar, J. He dismissed C.S. No. 175 of 1952 and decreed C.S. No. 262 of 1952.
From these two decrees, the appellants filed two appeals in the High Court of Madras.
A Division Bench of the High Court dismissed the two appeals.
The present appeals have been filed on certificates granted by the High Court.
The two Courts concurrently found that (1 ) appellant No. was a party to the contract of purchase of 415 tons of newsprint in sheets, (2) on November 26, 1951 the parties orally agreed that instead of 415 tons the appellants would buy 300 tons of the newsprint and (3) there was no cancellation of the contract as alleged by the appellants.
These findings are not challenged.
The two Courts concurrently found that the resale held on April 21, 1952 was genuine and was effected at a proper price on due notice and after proper advertisement.
Mr. Gupte attempted to challenge these findings, but we see no reason to interfere with them.
The principal argument advanced by Mr. Gupte was that the property in the goods resold on April 21, 1952 had not passed to the appellants and the resale was consequently invalid.
We are inclined to accept this argument.
It is to be noticed that the contract did not envisage any loan of money by ,the respondent to the appellants on the security of the newsprint in sheets.
The payment of Rs. 3,18,706 9 10 was made by the respondent towards part discharge of its liability for the price of the newsprint in reels.
No. doubt, the contract stated: "We shall advance you moneys against this newsprint at annas 8 per lb.
This advance will carry interest at 5 per cent per annum.
" But the real import of this clause was that the appellants would pay interest at 5 per cent per annum on an amount equivalent to the price of the newsprint in sheets calculated at 8 annas per lb.
The respondent was not a pledge of the newsprint in sheets and had no right to sell the goods under section 176 of the .
The real question is whether the respondent had the right to resell the goods under section 54(2) of the .
243 The seller can claim as damages the difference between the contract price and the amount realised on resale of the goods where he has the right of resale under section 54(2) of the .
The statutory power of resale under section 54(2) arises if the property in the goods has passed to the buyer subject to the lien of the unpaid seller.
Where the property in the goods has not passed to the buyer, the seller has no right of resale under section 54(2).
The question is whether the property in the 300 tons of newsprint in sheets had passed to the appellants before the resale.
On November 13, 1951, the respondent agreed to sell to the appellants tile stock of 415 tons of newsprint in sheets then lying in the respondent 's godown in Madras.
There was an unconditional contract for the sale of specific goods in a deliverable state and the property in the goods then passed to the appellants.
But on November 26, 1951, the contract was varied in a material particular.
The parties, agreed that the appellants would buy only 300 tons of the stock of 415 tons of newsprint then lying in the respondent 's godown.
The result was that in place of the original contract for sale of specific goods a contract for sale of unascertained goods was substituted.
Rajagopala Ayyangar, J. held that the effect of the variation of the contract on November 26, 1951 was that the appellants and the respondent became joint owners of the stock 45 tons.
In our opinion, this was not the correct legal position.
The parties did not intend that the appellants would buy undivided share in 415 tons of newsprint.
On November 26, 1951 the bargain between the parties was that the appellants would buy and the respondent would sell 300 tons out of the larger stock of 415 tons.
The appellate Court held that the property in the entire 415 tons passed to the appellants who were subsequently reviewed from their liability to take 115 tons and that the respondent could resell any 300 tons out of the larger stock of 415 tons.
We are unable to accept 'this line of reasoning.
It is true that originally the property in the entire 415 tons had passed to the appellants.
But the result of the variation of the contract was to annul the passing of property in the goods.
The effect of the bargain on November 26, 1951 was that the respondent would sell and deliver to the appellants any 300 tons out of the larger stock of 415 tons.
As from November 26, 1951, the property in the entire stock of 415 tons belonged to the respondent.
The parties did not intend that as from November 26, 1951 the property in any individual portion of the stock of 415 tons would remain vested in the appellants.
244 Section 18 of the provides that where there is a contract for the sale of unascertained goods no property the goods is transferred to the buyer unless and until the goods are ascertained.
It is a condition precedent to the passing property under a contract of sale that the goods are ascertained.
The condition is not fulfilled where there is a contract for sale of a portion of a specified larger stock.
Till the portion is identified and appropriated to the contract, no property passes to the buyer.
In Gillett vs Hill(1), Bayley, B. said: "Where there is a bargain for a certain quantity extra greater quantity, and there is h power of selection in the vendor to deliver which he thinks fit, then the right to them does not pass to the vendee until the vendor has made his selection, and trover is not maintain able before that is done.
If I agree to deliver a certain quantity of oil as ten out of eighteen tons, on one can say Which part of the whole quantity I have agreed to deliver until a selection is made.
There is no individuality until it has been divided.
" No portion of 415 tons of the newsprint lying in the respondent 's godown was appropriated to the contract by the respondent with the appellants 's consent before the resale.
On the date of the resale, property in the goods had not passed to.
the buyer Consequently, the respondent had no right to resell the goods under section 54(2).
The claim to recover the deficiency on resale is not suitable.
The respondent to claim as damages the difference between the contract price and the market price on the date of the breach.
Where no time is fixed under the contract of sale for acceptance of the goods, the measure of damages is prima facie the difference between the contract price and the market price on the date of the refusal by the buyer to accept the goods, see Illustration (c) to section 73 of the .
In the present case, no time was fixed in the contract for acceptance of the goods.
On March 29, 1952, the appellants refused to accept the goods.
The respondent is entitled to the difference between the contract price and the market price on March 29, 1952.
Counsel for both parties requested us that instead of remanding the matter we should assess the damages on this basis and finally dispose of the matter.
We have gone through the materials on the record and with the assistance of counsel, we assess the market price of the Russian newsprint in sheets on March 29, 1952 at 8 annas per lb.
Counsel on both sides agreed to this assessment.
The claim of the respondent for Rs. 6,7)8 5 1 on account of interest and Rs. 1,119 6 0 for insurance charges is admitted (1) ; , ,873.
245 before us by Mr. Gupte.
On this basis, the final position is as follows: (Rupees) Price of 122324 lbs.
at 91 1/2 annas per lb.
less Rs. 63,032 15 9 9,596 14 3 Difference on 547051 lbs.at 11/2 annas per lb.
51,286 0 6 Interest 6,795 5 1 Insurance charges .
1,119 6 0 Total amount due to the respondent . 68,797 9 10 Deduct amount due to the appellants . 57,816 13 2 Balance due to the.respondent . . 10,980 12 8 In the result, Civil Appeal No. 165 of 1965 is allowed in part, the decrees passed by the Courts below are varied by substituting therefore a decree in favour of the respondent against the appellants for a sum of Rs. 10,980 12 8 with interest thereon at 6 per cent per annum from July 30, 1952.
The decrees for 'costs passed by the Courts below are affirmed.
There will be no order as to costs in this Court.
Civil Appeal No. 166 of 1965 is dismissed.
No order as to cost thereof.
V.P.S. C.A. 165 of 1965 allowed in part.
C.A. 166 of 1965 dismissed.
| IN-Abs | On 13th November 1951, the respondent agreed to sell to the appellants a stock of 415 tons of newsprint in sheets then lying in the respondent 's godown.
On 26th November, the parties varied the contract by agreeing that the appellants would buy only 300 tons out of the.
stock of 415 tons.
After taking delivery of a part of the newsprint, the appellants refused to take delivery of the balance and repudiated the contract on 29th March 1952.
On 21st April the respondent, after notice to the appellants.
resold the balance at a lesser rate.
The suit flied by the respondent claiming from the appellants the deficiency on resale was decreed.
In appeal to this Court, Held: (1) The claim was unsustainable.
(a) As the respondent was not a pledge of the newsprint, the respondent had no right to sell the goods under section 176 of the .
[242H] (b) A seller can claim as damages the difference between the contract price and the amount realised on resale of the goods where he has the right of resale under section 54 (2) of the Indian .
But this statutory power of resale arises only if the property in the goods has passed to the buyer subject to the lien of the unpaid seller.
Under section 18 of the Sale of Goods Act.
it is a condition precedent to the passing of property under a contract of sale that the goods are ascertained.
In the present case, when the contract was originally entered into for the sale of 415 tons there was an unconditional contract for the sale of specific goods in a deliverable state and the property in those goods then passed to the appellants.
But the effect of the variation was not to make the appellants and respondent joint owners of the stock of 415 tons.
Nor was it merely to relieve the appellants from their liability to take 115 tons.
The effect was to annul the passing of the property.
so that.
as from 26th November the property in the entire stock of 415 tons belonged to the respondent.
The result was that in place of the original contract for sale of specific goods a contract for sale of unascertained goods was substituted.
No portion of the stock of 415 tons was appropriated to the contract by the respondent with the appellants ' consent before the resale.
Therefore, on the date of resale.
the property in the goods had not passed to the buyer (appellants) and the respondent had no right to resell.1243A. E. F H; 244A B] Gillett vs
Hill; ,, ; , applied.
(2) As no time was fixed under the contract of sale for acceptance of the goods, under section 73 of the Indian Contract Act, the respondent was entitled to the difference between the contract price and the market price on 29th March 1952, the date of repudiation, as damages.
[244E C] 240
|
Appeals Nos. 2014, 2565 and 2567 of 1966.
Appeals from the judgment and order dated July 6, 7, 1965 of the Bombay High Court in Special Civil Applications Nos. 635, 517, 518 and 1816 of 1964 respectively.
S.V. Gupte, Solicitor General, S.A. Shroff, P.C. Bhartari, Ravinder Narain and O.C. Mathur, for the appellant (in C.A. No. 2014 of 1966).
213 S.T. Desai, A. B. Diwan, Ravinder Narain and O.C. Mathur, for the appellant (in C.A. No. 2565 of 1966).
A. B. Diwan, Ravinder Narain and O.C. Mathur, for the appellants (in C.As.
2566 and 2567 of 1966).
A. K. Sen, N.H. Gurshoni, Prahlad H. Advani and N.N. Keswani for the respondents Nos. 1 5 (in C.A. No. 2014 of 1966) and the respondents (in C.As.
2565 2567 of 1966).
S.P. Nayar for R.H. Dhebar for respondent No. 6 (in C.A. No. 2014 of 1966.
The Judgment of the Court was delivered by Shelat, J.
These four appeals by certificate from the High Court at Bombay raise common questions of law and are therefore disposed of by a common judgment.
As the facts in all these appeals are similar it is not necessary to.
narrate the facts of each appeal.
However, for appreciating the contentions raised in these appeals we propose to set out only the relevant facts in Civil Appeal No. 2014 of 1966 as typical.
By a notification dated October 30, 1959 the Government of Bombay proposed to set up a local area comprising.
of parts of Shahad, Ambernath and other villages into a municipal district under the name of the Municipal District of Ulhasnagar, the limits of which were set out in a Schedule thereto.
After considering the objections to the said proposal the Government by another notification dated September 20, 1960 issued under secs.
4 and 7 of the Bombay District Municipal Act, III of 1901 declared the said local area as the Municipal District with effect from April 1, 1960.
By the said notification the Government also set up an interim Municipality for Ulhasnagar, consisting of 18 Councillors with effect from November 1, 1960 for one year in the first instance or till an elected body took over, whichever was earlier.
Under sec.
46 of the Act the first respondent Municipality became entitled to frame rules and bye laws in relation to taxes it proposed to impose.
Accordingly, it framed Rules and in particular the House Tax Rules, with which these appeals are concerned.
On November 8, 1963 the Municipality served a notice under section 65(1 ) of the Act informing the appellant Company that it proposed to assess its buildings at Rs. 1,97,609/52.
On November 28, 1963 the appellant Company submitted its objections to the said assessment and the said bill.
On February 22, 1964 the assessing officer requested the appellant Company to furnish to him the cost of construction of its factories and buildings and on the appellant Company failing to do so he passed his order dated March 6, 1964 assessing the appellant Company t0 house tax at Rs. 1,13,647/ for the period from April 1, 1963 to March 31, 1964.
On March 20, 1964 the Municipality served a house tax bill for the said amount. 214 Similar house 'tax bills were 'served on the other appellant companies.
Thereupon the appellant Company in Civil Appeal No. 2014 of 1966 and the appellant companies in other appeals filed writ petitions in the High Court under articles 226 and 227 of the Constitution alleging that the said notifications, the said assessment and the said bills were invalid and should be quashed.
On April 20, 1964 the High Court issued a rule nisi against the respondent municipality in all the said petitions, but summarily dismissed the said petitions so far as respondents 2, 4 and 6 were concerned and also restricted the rule only to certain grounds in the petitions.
The petitions were resisted by the municipality on several grounds, viz., that they were not maintainable, that the proper remedy for the appellants was by way of appeal in the ,court of the first class judicial magistrate, as provided by the Act, that ,the municipality was competent to levy the said tax under section 59, that the said notifications were valid, that the tax was properly levied, that the assessing officer under sec.
67A was authorised to prepare, finalise and authenticate the assessment list and that the same was properly done.
The appellant Company, ,on the other hand, urged before the High Court (1 ) that the said rules were ultra vires as they did not provide for the basis for the fixation of valuation; (2) that the valuation was arrived at a flat rate on the carpet area, a method which was not permissible in law; (3) that, in any event, the Municipality was not entitled to tax the open lands; (4) that the assessment was bad on account of discrimination between the appellant companies inter se inasmuch as whereas assessment was made in the case of the Century Mills on the basis of cost of construction the assessment in respect of other appellant companies was made at a flat rate on the carpet area occupied by them; (5) that the register prepared under sec.
65 became operative after the date of the authentication of the said list and that therefore the tax for the period prior to the said date was illegal; (6) that the tax was 'imposed by the Municipality which had no legal existence as the tenure of one year of its councillors was over by September 30, 1961 and that therefore the said rules were ineffective and lastly that the appointment of the President and the Vice President of 'the respondent Municipality was illegal.
The High Court dismissed the petitions holding (1) that the said Rules were valid; (2) that.
the principles of valuation were not modes of valuation 'and therefore it was not necessary to lay down in the said Rules methods by which the valuation should be arrived at; (3) that 'the assessment list was proper; (4) that though under the said Rules only houses and buildings and not open lands could be 'taxed it was impossible to say in a writ petition without a detailed 'inquiry as to whether the tax in fact was 'levied on open lands or as adjuncts to their factories merely 'because their valuation was separately made and that therefore such a question should 215 be more properly raised in the appeals filed by the Companies;(5) (a) that the Municipality was entitled to levy tax for the Official year 1963 64, (b)that the appointment of the said President and Vice President was valid and lastly that the respondent Municipality though an interim municipality was competent to levy the said tax.
Mr. Gupte for the Century Mills raised the Following contentions which were adopted by Counsel for the other companies: (1) that the said notifications were invalid having regard secs.
4 and 7 of the Act; (2) that the House Tax Rules were not in conformity with secs.
59 to 63; (3) that the bill served on the Mills was not in accordance with the Rules; (a) to the extent that the said bill sought to assess open lands , (b) that the flat rate method on carpet area was not permissible as it was not a recognised method of determining the annual letting value and (c) that the assessing officer had arrived at the annual letting value on the basis of construction cost without giving an opportunity, to the Company to be heard on such cost; (4) that as the authentication was made to the assessment list on March 6, 1964 it could not operate under the said Rules for assessment for the period prior thereto, viz., April 1, 1963 to 'March 31, 1964 and lastly; (5) that the assessment suffered from discrimination inasmuch as the assessing officer assessed the Century Mills on the basis of construction cost while he did so in the case of the other companies at a flat rate on the carpet area occupied by them.
As regards the first contention, the argument was that sees.
4,7 and 8 do not permit the Government to constitute a local area by including in it not villages but only portions thereof and that when it is proposed to amalgamate different units such as villages or suburbs situate adjacent to each other to form one municipal district it can do so by bringing them into such a district as whole, units and not breaking them up and having a part or parts of such unit and not the rest.
The contention was rounded on the fact that the notification dated October 30, 1959 stated that the Government proposed to constitute the local area comprising of parts of Shahad, Ambernath,.
and other villages into a permanent municipal district, the limits of which were specified in the Schedule thereto.
The said Schedule set out the boundaries of the proposed municipal district by showing Ulhas river as its boundary in the north and certain survey numbers of 216 the.
said villages as boundaries in the east, south and west.
After considering the objections as required by the Act the Government by a further notification dated September 20, 1960 declared the said local area of which the same boundaries were set.
cut in the Schedule thereto to be a permanent municipal district.
It is true that in constituting the municipal district of Ulhasnagar the Government included parts of villages enumerated in the said Schedule.
But the question is, was the Government competent to do so or not.
Section 4 provides that subject to secs.
6, 7 and 8 the Government may declare by a notification any local urea to be a municipal district and may, by a like notification, extend, contract or otherwise after the limits of any municipal district, that every such notification constituting a new municipal district or altering the limits.
of an existing municipal district shall clearly set forth the local limits of the area to be included in or excluded from such municipal district as the case may be and when so done it is the duty of the municipality already existing or of every municipality newly constituted or whose limits are altered to set up as required by the Collector boundary marks defining its limits or the altered limits of the municipal district subject to its authority.
Section 7 provides that any local area which comprises of (a) a city, town, or station or two or more neighbouring cities, towns or stations with or without any village, suburb or land adjoining thereto or (b) a village or suburb or two or more neighbouring villages or suburbs, may be declared a permanent municipal district.
It will be seen that while the Government can declare a municipal district comprising of two or more neighbouring cities, towns or stations or a village or suburb or two or more neighbouring villages or suburbs, sec. 7 expressly provides that such a local area may comprise not only of two.
neighbouring villages or suburbs but also land adjoining to a village or suburb.
Therefore while constituting a municipal district the Government, when it is expedient so to do, can join to an existing village or suburb the land adjoining thereto.
Similarly sec.
4 empowers the Government to extend, contract or otherwise alter from time to time the existing limits of a municipal district or declare any local area to be a municipal district.
There is nothing either in sec.
4 or sec.
7 to limit the power of the Government in constituting a municipal district to include therein the whole of the village or suburb as contended.
The Act, on the other hand, permits the Government to include "land adjoining there to" which shows that a part of the land adjoining to an existing village or a suburb can also be added if it is thought expedient so to do.
Likewise, while altering the limits of an existing municipal district it can exclude from or include in it part of the land where it becomes necessary or expedient to do.
That being so, it is impossible to say that by taking parts of the villages set out in the Schedules to the two notifications the Government 217 formed a municipal district contrary to the provisions of secs.
4 or 7 or that the constitution by it of the municipal district of Ulhasnagar was in any way contrary to or ultra vires the two sections.
The next contention was that the House Tax Rules framed by the municipality were not in conformity with sec.
60 inasmuch as they failed to prescribe the basis of valuation of each class of property on which it imposed the house tax, that what these Rules provided was merely to impose the house tax at the rate 15% or Rs. 12/ whichever was more on the valuation arrived at after deducting 10% from the annual letting value without specifying the method by which such annual letting value was to be arrived at.
The argument was that it was incumbent on the Municipality to lay down specifically in the Rules, the method or methods by which such annual letting value had to be calculated and not having done so the Rules were not in accord with the. express provisions of sec.
Mr. Gupte argued that the High Court was in error in holding that this was not necessary on the.
mere ground that.
sub clause (iv a) of 'sec.
60(a) was inappropriate or that the legislature had inserted that sub clause without properly understanding its implications.
Dealing with this contention the High Court observed as follows : "Inasmuch as in 1901 Act in sec.
60 there was no ' provision corresponding to the Explanation to sec.
75 of the 1925 Act, the addition of sub clause (iv a) of sec.
60 was most inappropriate and has no meaning.
In the Act of 1925 it had to be provided because both the land and the building could be taxed on the basis of the annual letting value, or, if the Municipality so chose, the land could be taxed on the basis of capital value and it is for this reason that it became necessary to provide that a rule shall be framed by the municipality laying down the basis on which valuation has to be made." "In fact.
there is nothing, either in the provisions of the Municipal Boroughs Act or in the provisions of the present Act, to suggest that what was intended by clause 3 in sec.
75 of the 1925 Act and by sub clause ( 'iv a) of cl.
(a) of sec.
60 of the= 1901 Act, was that the Municipality was required to frame rules prescribing the modes by which the annual letting value was to be determined.
" Sec ' 3 (11) defines "annual letting value" as the annual rent for which.
any building or land might reasonably be expected 'to let 10Sup.
CI/67 15 218 from year to year.
59(1) provides.
that a municipality, after observing the procedure required by sec.
60 and with the sanction of the State Government in the case of city municipalities and in other cases of the Commissioner, may impose any of the following taxes, that is to say, (i) a rate on buildings, or lands or both, situate within the municipal district; (ii) a tax on all or "any vehicles, boats" etc.
Sub clauses (iii) to (ix) describe various other imposts which the municipality can impose such as toll, octroi, cess and a general or special water rate or tax.
It will be seen that though sub sec.
1 authorises the municipality to impose "the following taxes", when it comes to imposing a tax on buildings or lands or both it describes the tax as "rate", in distinction of the other imposts described variously as toll, cess, octroi and tax.
The distinction as pointed out in Patel Goverdhandas Hargovindas vs Municipal Commissioner, Ahmedabad(1) is a deliberate one.
As laid down there the word "rate" in sec.
59(1) must be understood to mean a tax for local purposes imposed by local authorities the basis of which is the annual value of the lands or buildings arrived at in one of the three ways, viz.
,(1) actual rent fetched by such land or building where it is actually let; (2) where it is not let rent based on hypothetical tenancy particularly in the case of buildings and (3 ) where either of these two modes is not available by valuation based on capital value from which annual value has to be found by applying a suitable percentage ,which may not be the same for lands and buildings.
It is therefore legitimate to infer that the legislature intended this meaning of the word "rate" in section 59(1) by using the word "rate" as distinct from other imposts specified in that very sub section and designated as toil, cess, tax etc.
Section 60 provides that before imposing any one of these taxes the Municipality shall by a resolution select one or other of those taxes, prepare rules therefore, specify by such resolution and in such.rules.
the class or classes of persons or of property or of both which the municipality desires to make liable, the amount for which or the rate at which it is desired to make such classes liable and by sub clause (iv a) in the case of a rate on buildings or lands or both the basis, for each class, of the valuation on which the rate is to be imposed.
Section 60 therefore requires the municipality both in the said resolution and the said rules to specify (a) the class or classes of persons or property which it desires to make liable; (b) the amount or rate at which it wants such classes to be liable and (c ) in the case of buildings or lands or both the basis of valuation for each class of property, that is, buildings or lands or both.
As aforesaid, in the case of buildings or lands or both the Municipality can impose a "rate" and not a "tax".
The rate is as understood in such statutes, viz., on the basis not of capital but on the annual (1) 219 letting value as observed in Patel Govardhandas Hargovindas vs Municipal Commissioner, Ahmedabad(1) ascertained by any of the said recognised methods.
The words "the basis, for each class, of the valuation" on which such rate is to be imposed indicate that the municipality can adopt any one of those basis for different classes of property, viz., buildings or lands for arriving at the annual value for each such class.
Section 60 thus leaves it to the option of the municipality for arriving at the annual value for assessment of the rate to choose any one of the aforesaid recognised methods, the only restriction being that it must specify in the rules which basis of valuation; capital or annual letting value or any other basis, it proposes to adopt.
Section 75 of the Bombay Municipal Boroughs Act, XVIII of 1925 contains provisions similar to those in sec.
60 of the present Act except that in addition it contains an Explanation which provides that "in the case of lands the basis of valuation may be either capital or annual letting value".
But under sec.
75 the Borough Municipality also as the District Municipality trader sec.
60 of the present Act is authorised to impose a "rate" and not a "tax" on buildings or lands or both.
The effect of adding the Explanation to sec.
75 therefore is simply that whereas sec.
60 of the District Municipal Act leaves it to the discretion of the municipality to assess the annual value upon any basis of valuation of its choice, the Explanation to sec.
75 in Act XVIII of 1925 restricts the choice to either the capital or the annual letting value.
In both the cases, however, the Municipality can impose a rate and not a tax as understood in local Acts, i.e., a rate on the annual letting value of the building or the land.
That was why in Lokmanya Mills vs Barsi Borough Municipality(2) it was held that a rate may be levied by a municipality under the Bombay Municipal Boroughs Act 1925 on the valuation made on the basis of capital or on the annual letting value of a building and not on a valuation computed merely on the floor area of the structures, that such a rate was clearly not a tax based either on the capital value or on the annual letting value, for, annual letting value postulates rent which a hypothetical tenant may reasonably be expected to pay for the building if let.
Therefore, the municipality had no power under that Act to ignore the basis of valuation prescribed by the Act and to adopt a basis not sanctioned by the Act.
There is therefore nothing inappropriate in adding sub cl.
(iv a) in sec.
60 (a) by sec.
10 of Bombay Act XXXV of 1954 as observed by the High Court.
The effect of both sec.
60 in the present Act and sec.
75 in the 1925 Act is the same.
Both the classes of municipalities are authorised to impose rate on buildings or lands or both.
The rate as consistently understood is a certain percentage on the annual value, such value being arrived (1) ; (2) ; 220 at on a basis specified by it.
The only difference is that whereas under the Bombay Act of 1925 where a rate is imposed on buildings or lands, the Borough Municipality can arrive at the annual value on either of the basis mentioned in the Explanation to sec.
75, that is either the capital value or the annual letting value only, no such restriction in the absence of such an explanation as in section 75 as to the basis of valuation is placed by sec.
60 of the 1901 Act.
As required by sec.
60, the Municipality has framed Rules under sec.
46 and selected the tax, viz., the house tax.
Subclause (iv a) of sec.
60(a) no doubt requires the Municipality in the case of the rate on buildings or lands or both to specify the basis, for each class, of the valuation on which such rate is to be imposed.
That is done in the present case by the Rules.
Rule 3 of the House Tax Rules provides that in respect of every building or house the house tax shall be payable to the Secretary or any other person appointed by the Municipality for that purpose in each year by the owner or occupier thereof at the rates calculated in accordance with Schedule 1.
The Rule thus requires the assessing authority to assess the house tax calculated in accordance with Schedule 1.
provides that the tax is to be assessed on the net annual letting value, that is, after deducting from the gross annual letting value 10% allowance in lieu of the cost of repairs or on any other account whatsoever.
It also.
provides that the house tax is to be 15% of such annual letting value or Rs. 12/ per year whichever is more.
Rule 3 and Sch.
I thus specify as required by sec.
60(a) the rate, the class of property to be made liable and in the case of houses or buildings the basis of valuation, viz., the annual letting value.
The effect of Rule 3 and Sch.
1 is that the assessing authority ' can assess the rate on buildings only on the annual letting value and no other value such as the capital value.
The Municipality therefore has complied with the procedure required by the Act before a tax is imposed by selecting the tax, by laying down the class of property which it desires to make liable, the amount of the rate at which such property would be liable and lastly the basis of valuation for purposes of the rate on buildings and houses.
We are unable therefore to accept the contention that the basis of valuation is the method of valuation of annual value or with the contention of Mr. Desai for the companies in other appeals that the Rules not only have to specify the classification of ' properties which are sought to be taxed but also the method of valuation for each class, viz., the rental basis, cost or capital value or the profits basis.
The fallacy in the contention lies in mixing up the method with the basis of valuation.
The basis as provided in the Rules is the annual value which can be ascertained or arrived at by any one or more of the recognised methods.
221 Though we are not able to accede to these contentions we think the appellants are on a surer ground in their third contention, viz. that the said house tax bills were not in accordance with the Rules to the extent that they sought to assess the open lands.
In the case of the Century Mills the assessment first made as aforesaid was for Rs. 1,97,609/52 nP assessed at flat rate on the carpet area occupied by the Mills.
The same was also the basis in respect of other appellant companies in the rest of the appeals.
When the assessment was objected to by the Century Mi11s the assessing officer changed the method of assessment from the flat rate on the carpet area to the construction cost taken from the Company 's balance sheet for ' 1962.
Taking the figure of Rs. 1,46,05,920 as the cost of construction of the buildings he assessed at 5% on the said cost after deducting 10% allowance in lieu of cost of repairs.
He fixed the rate on buildings at Rs. 98,590 and Rs. 15,057 on the open land at the rate of Rs. 2 per 1000 sq.
The total assessment arrived at by him thus came to Rs. 1,13,647.
In the case of the other companies he retained the method of valuation adopted by him, i.e., a flat rate on the carpet area but reduced the rate to a certain extent.
The objection raised by the appellant companies is two fold; (i) that the assessing officer can assess the buildings on their annual letting value and not at a flat rate on the carpet area and (ii) that in assessing the rate he cannot include the rate on open lands.
As regards the first part of the objection, Sch. 1 to the said Rules expressly provides that the house tax is to be assessed on the basis of the annual letting value.
The annual letting value can be arrived at by any one of the recognised methods.
Neither the Rules no.r Sch. 1 constrict the Municipality.
to adopt any one particular method of arriving at the annual letting value.
It may well be that a flat rate on the carpet area may correspond to the annual letting value of a building in which case it would be the annual letting value as provided by Sch. 1 which would be the basis of assessment.
If it is not, the owner or occupier of the building can legitimately challenge the assessment on the ground that such assessment on the basis of a flat rate on the carpet area does not reflect the annual value so calculated.
The question is at best one of calculation, viz., whether considering other similar buildings in the locality, their hypothetical rents and other data calculation of the house tax on the basis of carpet area at a flat rate, corresponds to their annual letting value.
Since such a question would be one of fact and can properly be decided in the appeals before the Judicial Magistrate we do not propose to go into this question.
It will be for the appellant companies to establish in those appeals that such a valuation at a flat rate on the carpet area is not equivalent to.
the annual letting value of their factories and other buildings.
10 Sup CI 67,16 222 The second part of the objection unlike the first part however touches upon the validity of the assessment.
The question is whether the bill includes assessment on open lands as such and if so whether the Rules permit their assessment.
The bill served on the Century Mills clearly shows that Rs. 15,057 out of the total assessment of Rs. 1,13,647 are assessed on the open lands calculated at the flat rate of Rs. 2 per 1000 sq.
The bills similarly served on the other appellants are all calculated at varying flat rates on different areas of their properties.
But the basis of the assessment though varying rates have been applied the carpet area and the carpet area does include open lands in the case of each of the appellant companies.
Is the assessing officer authorised by the Rules to include the open lands while assessing the rates ? Under sec.
59 (1) (b) (i) the municipality, subject to observing the procedure laid down in sec.
60, can impose a rate on buildings or lands or both.
As already observed the municipality, however, has by its resolution to select the tax, and in the Rules prescribing the tax so selected specify the class or classes of property which it desires to make liable as also the rate at which it wishes to subject such class or classes of property.
Sub clause (iv a) of sec.
60(a) requires that in the case of buildings or lands or both the basis of valuation for each such class has also to be specified by the said resolution and in the said Rules.
We must therefore turn to the Rules to see if they specify therein the open 'lands, the rate at which they are to be subjected to the tax and the basis of valuation of such open lands.
Rule 1 (ii) of the House Tax Rules provides that these Rules shall extend to "all buildings or houses or shops or huts (jhupras) whatsoever form any property" within the Ulhasnagar District Municipal limits except the tenements lying vacant etc.
Rule 3 (7 ) defines a building or a house to which these Rules apply by virtue of Rule 1 (iii).
A building or a house according to the definition given by Rule 3(7) means "any building, house, shop, hut (jhupras) and with a roof thereof constructed for human habitation or otherwise".
Section 3 (7 ) of the Act contains no doubt a wider definition of the word "building" and includes within that word any hut, shed or other enclosure whether used as human dwelling or otherwise and shall include also the Walls (including compound wall and fencing) 'verandahs, fixed platforms, plinths, door steps and the like.
But that definition cannot be available to the respondent municipality as Rule 3(9) provides in express terms that only the words and expressions other than those defined in Rule 3 shall be deemed to be used in the Rules in the same sense in which they are used in the Act.
Rule 3(7) therefore expressly excludes the definition of the building given in the Act by providing a special definition of a building or a house in Rule 223 3(7).
It is clear therefore that the word "building" or "house" must bear the meaning given to it by this Rule and not the meaning given to it by the Act.
It follows that as by virtue of Rule 1 (ii) these rules extend to buildings or houses or shops or huts (jhupras) only and a building or a house under Rule 3(7) means a building, house, shop, hut (jhupras) etc., with a roof thereon constructed for human habitation or otherwise, open lands obviously are not only not included in the term "building" or "house" but the Rules do not extend to such open lands.
In his assessment order dated March 6, 1964 passed against the Century Mills the assessing officer justified the inclusion of the open lands in the assessment by observing as follows: "The Superintendent (of the appellant Company) states that the Municipality has decided to levy tax on the buildings or shops only and that there is no resolution, rule or bye law for the levy of house tax on land.
Apparently the Superintendent 's contention seems to be correct.
But on deeper consideration it will be seen that the words "whatsoever form the property" have a significance and the same can include lands also.
According to the District Municipal Act of 1901, building includes, "any hut, shed or other enclosure whether used as human dwelling or otherwise" and also "walls, verandahs, fixed platforms, plinths, door steps and the like".
Now the Century Rayon Factory is bounded 'by a compound wall in which all the open space lies.
Whole enclosure can therefore be held as enclosure and is therefore liable for rating.
On the whole, the Act and the Rules have empowered the Municipality for the assessment on the open space." In our view, the assessing officer was clearly wrong, for, what he did was to apply the definition of a building as given in sec.
3 of the Act instead of the definition in R. 3(7).
That he was not fight in doing as Rule 3 (9) excludes the application of that definition.
He was bound by the definition of building in Rule 3(7) and in view of Rule 1 (ii) he could base his assessment only on the annual letting value of a building as provided by Sch. 1 and not the open lands.
He was also not entitled to rely upon the words "whatsoever form any property" in Rule 1 (ii) as those words go with the previous words "buildings or houses or shops or huts" and do not include open lands to means buildings or houses.
The reasoning of the High Court regarding the objection to the conclusion of the open lands in the assessment also does not appear to be correct.
Though the High Court on a consideration of the 'Rules held that the Municipality was not authorised to levy the 224 rate o.n open lands.
it observed that if an open ' land formed an adjunct of the factory building it would constitute an amenity, that in that event a hypothetical tenant would pay a higher rent taking such an amenity into consideration, that the assessing authority would be entitled in such a case to take into account such an additional amenity, that there could be no objection, if he did so and that to decide whether the assessing officer had valued the open land as an adjunct to the factory building or separately as open land evidence would have to be led and scrutinised and therefore it would not be possible to decide such a question in a writ petition.
With respect, it is not possible to agree with the High Court on this part of ifs judgment, firstly, because the open lands have been separately valued and secondly because the assessing officer in his said order has in clear terms repelled the appellants ' objection to his taxing the open lands by relying on the definition of building in sec.
3 of the Act as including open lands when bounded by compound walls and not on the ground that they formed an adjunct of the factory buildings and were an amenity or additional advantage which a hypothetical tenant would take into account when offering rent.
In our view the assessing officer was not entitled to include the open lands while rating the factory buildings of the appellant companies as such inclusion was ultra vires the Rules and therefore invalid.
So far as the rest of the contentions are concerned they can be dealt with, in our view, more properly by the appellate tribunal before whom the appeals by the appellant companies are at present pending rather than in these appeals.
We therefore do not propose to go into those questions, especially as it is agreed by Counsel for the Municipality (1 ) that the Municipality will not take any objection to these questions being canvassed in those appeals on the ground that any one or more of them were not taken by the 'appellants in their objections to the assessment list and (2) that it will not also take any objection to the appeal by the Century Mills having been filed beyond the time prescribed therefore.
Before the High Court the Municipality had in fact undertaken that it will not insist that the appellants should confine their objections in their appeals only to the grounds urged in their objections to the assessment list under sec.
65 ' of the Act.
The appellant Companies would therefore be entitled to urge that the valuation made by the assessing officer is erroneous or bad on any ground available to them under the Act.
The appeals are pertly allowed and the judgment and order passed by the High Court are set aside to the extent that the assessment on open lands in each of these appeals is declared ultra vires the Rules and therefore invalid.
We also set aside the order of costs passed by the High Court against the Century Mills.
225 far as these appeals are concerned the parties will bear their own costs.
Before parting with these appeals, we may mention that the appellant companies have filed a statement regarding the various amounts deposited by them either in the High Court or in this Court.
For 1963 64, the Century Mills.
deposited in the High Court Rs. 1,13,647, and the Municipality has withdrawn that amount.
Out of this amount Rs. 15,057 was, as held by us, wrongly included in the house tax bill and therefore that sum should be refunded to the Mills within one month from today.
The balance should be treated as deposit under sec.
86 of the Act in the appeal filed by the Company.
For 1964 65 also the Century Mills deposited Rs. 1,13,647 in this Court.
Out of this amount the Company will be at liberty to withdraw Rs. 15,057 and the balance may be withdrawn by the Municipality but it will be treated as deposit in the Company 's appeal for the year the Company has deposited Rs. 1,13,647 against the total assessment of Rs. 1,27,147, the difference being the tax on open lands.
The Municipality will be at liberty to withdraw the amount but it will be treated as deposit in the Company 's appeal pending before the said Magistrate.
For 1967 68 the Company has deposited Rs. 2,78,829/78 in this Court.
The Municipality will be at liberty to withdraw the amount but the said amount shall, be treated as deposit in the appeal pending before the said Magistrate.
The Indian Dye Stuff Industries Ltd., has deposited Rs. 49,282.92/ for the year 1963 64.
of this amount Rs. 14,722/92 nP is referable to assessment on open lands.
The Municipality will refund the sum of Rs. 14,722/92 nP to the Company within one month from today and treat the balance as deposit in the appeal filed by the Company.
For 1967 68 the Company has deposited Rs. 2,96,724.33 in this Court.
The Municipality is at liberty to withdraw this amount but shall treat the amount as deposit in the appeal filed by the Company as required by the Maharashtra Municipalities Act, 1965.
Amar Dye Chemical Co., has deposited with the Municipality Rs. 42,819.12 nP for 1963 64.
The Municipality will refund to the Company such amount out of this sum as is referable to tax on open lands within one month from today and retain the rest but shall treat such balance as deposit in the appeal filed by the Company before the Magistrate.
For the year 1967 68 the Company has deposited Rs. 1,07,553.92 nP. in this Court.
The Municipality will be at liberty to.
withdraw this amount but will treat the amount as deposit in the Company 's appeal pending before the Magistrate.
226 Power Cable (P) Ltd., has deposited Rs. 18,084.40 nP with the Municipality. 'The Municipality will refund to the Company such amount, if any, out of this amount as is referable to the tax on open lands and treat the balance as deposit in the appeal flied by the Company before the Magistrate.
| IN-Abs | By notifications issued under the Bombay District Municipal Act 1901, the State of Bombay set up.
the respondent Municipality comprising portions of certain villages.
The Municipality framed House Tax Rules under section 46 of the Act and served notice to the appellant company that it proposed to assess its buildings at a certain amount.
On, the appellants ' objections, it was asked to furnish the cost.
of constructions, which it failed to furnish.
The appellant was served a house tax bill.
Thereupon the.
appellant unsuccessfully filed petitions in the High Court under articles 226 and 227 of the Constitution for quashing the notifications, assessment.
and bills.
In appeal to this Court, the appellant, inter alia, contended: (i) that ' the notifications were invalid as sections 4 and 7 of the Act do not permit the Government to constitute a local area by including in it not villages but only portions thereof; (ii) that the House Tax Rules were not in conformity with sections 59 to 63 of the Act.
as they failed to prescribe the basis of valuation of each class of property on which it imposed the house tax; what these Rules provided was merely to impose the house tax at the rate of 15% or Rs. 12/ whichever was more on the valuation arrived at after deducting 10% from the annual letting value without specifying the method by which such annual letting value was to be arrived at: and (iii) that the bill served on the appellant was not in conformity with the Rules, as (a) the buildings could be assessed on their annual letting value and not at a flat rate on the carpet area.
and (b) in assessing the rate it could not include the rate on open lands.
Held: (i) The notifications were not in any way contrary to or ultra vires sections 4 or 7 of the Act.
There is nothing either in sections 4 or 7 to limit the power of the Government in constituting a municipal district to include therein the whole of the village or suburb.
The Act, on the other hand.
permits the Government to include "land adjoining thereto" which shows that a part of land adjoining an existing village or a suburb can, also be added if it is thought expedient so to do.
Likewise, while altering the limits of an existing municipal district it can exclude from or include in it part of the land where it becomes necessary or expedient so to do.
[216G, H] (ii) The word "rate" in section 59(1) means a tax for local purposes imposed by local authorities, the basis of which is the annual value of the lands or buildings arrived at in one of the three ways, viz. (1) the actual rent fetched by such land or building where it is actually let; (2) where it is not let rent based on hypothetical tenancy particularly in the case of buildings and (3) where either of these two modes is not available, by valuation based on capital value from which annual value has to be found 212 by applying a suitable percentage which may not be the same for lands and buildings.
It is legitimate to.
infer that the legislature intended this meaning of the word "rate" in section 59(1) by using the word "rate" as distinct from other imposts specified in that very sub section and designated as toll, cess, tax etc.
[218 C E] In case of buildings or lands or both the municipality cloud impose a "rate" and not a "tax" The rate is as understood in such statutes.
viz., on the basis not of capital but on the annual letting value ascertained by any of the said recognised methods.
Section 60 leaves it to the option of the municipality for arriving at the annual value for assessment of the rate to choose any one of the aforesaid recognised methods, the only restriction being that it must specify in the rules which basis of valuation.
capital or annual letting value or any other basis, it proposes to adopt.[218H; 219B] The Municipality had complied with the procedure required by the Act before a tax was imposed by selecting the tax, by laying down the class of property which it desired to make liable, the amount of the rate at which such property would be liable and lastly the basis of valuation for purposes of the rate on buildings and houses.
[220F G] (iii) (a) Schedule 1 to the Rules expressly provides that the house tax is to be assessed on the basis of the annual letting value.
The annual letting value can be arrived at by any one of the recognised methods.
Neither the Rules nor Sch.
1 constrict the Municipality to adopt any one particular method of arriving at the annual letting value.
It may well be that a flat rate on the carpet area may correspond to the annual letting value of a building in which case it would be the annual letting value as provided by Sch. 1 which would be the basis of assessment.
if it is not, the owner or occupier of the building can legitimately challenge the assessment on the ground that such assessment on the basis of a 11at rate on the carpet area does not reflect the annual value so calculated.
[221E G] Patel Goverdhandas Hargovindas vs Municipal Commissioner, Ahmedabad, and Lokmanya Mills vs Barsi Borough Municipality.v, ; referred to.
(b) The open lands could not be included while rating the factory buildings of the appellant companies as such inclusion was ultra vires the Rules and therefore invalid.
Rule 3(7) expressly excludes the definition of a building or a house in sec.
The word "building" or "house" must therefore bear the meaning given to it by the Rule and not the meaning given to it by the Act.
By virtue of r. 1 (ii) these rules extend to buildings or houses or shops or huts (jhupras) only and a building or a house under r. 3(7) means a building, house, shop, hut (jhupras) etc.
with a roof thereon constructed for human habitation or otherwise.
Open lands obviously are not only not included in the term "building" or "house" but the Rules do not extend to such open lands.
[222H 223B]
|
Appeals Nos. 114 and 115 of 1965.
Appeals from the judgment and decree dated May 7, 1958 of the Allahabad High Court in Special Appeals Nos. 46 and 48 of 1952.
N.D. Karkhanis and J.P. Aggarwal, for the appellants (in both the appealS).
Shanti Bhushan and B.P. Maheshwari, for the respondents (in both the appeals).
The Judgment of the Court was delivered by Shah, J.
The Grain Chamber Ltd,, Muzaffarnagar, a Company registered under the Indian Companies Act, 1913 with a share capital of Rs. 1,00,000 divided into 1,000 shares of Rs. 100 each, was formed for the purpose of carrying on business of an exchange in grains, cotton, sugar, gut, pulses and other commodities.
By article 5 of its Articles of Association nO person or firm could remain a member of the Company who was found not to be doing any transaction or business through the Company for a continuous period of six months.
By article 46 it was provided that a member of the Company who owned 10 shares of the Company in his own name or in the name of the firm of which he was a proprietor or partner may be elected a director of the Company.
By article 51, until otherwise fixed, the quorum in the meetings of directors was to be four.
In the years 1949 and 1950 the Company was carrying on business principally in "futures" in gut.
The method of carrying on business in "futures" was explained as follows by the parties to the dispute in an agreed statement submitted before the Company Judge.
The transactions for sale and purchase of gut have to be in the units called 'Bijaks ' of 100 maunds.
The buyer and the seller who are members of the Company negotiate transactions of sale and purchase in gut through their respective brokers and then approach the Company.
The Company enters into.
two independent contracts whereby the Company is the purchaser from one and is the seller to the other at rates agreed upon between the seller and the buyer.
The seller has therefore to sell to the Company a specified quantity and the buyer agrees to purchase the same quantity from the Company under an independent contract.
For the due performance of their contracts, the buyer and the seller deposit with the Company rupee one per maund as Sai and annas eight per maund as Chook 'margin '.
If there is a rise in the price, the Company calls upon the seller to pay the difference, and if he fails to deposit the difference demanded.
the Company enters into a reverse transaction with a purchaser 255 at the current rate of the day and squares up the transaction of sale.
purchaser is also entitled to withdraw from the Company the profits he has made consequent On the rise in price.
If the seller is adjudged an insolvent or for any other reason is incapable of performing his obligations, the buyer remains unaffected, Even if the Company is unable to recover anything from the seller, it has still to pay to the buyer the profits earned by him.
Similarly if there is a fall in the price, the buyer has to make good the difference.
If on the day fixed for delivery of goods the parties intend to settle the transaction by paying and receiving the difference, the Company fixes the rate at which the transaction is to be settled and the transaction is settled at the rate fixed by the Company.
Both the buyer and the seller send bills known as "Dailies" setting out the amounts paid and received according to the rates fixed.
On March 14, 1949, the Board of Directors of the Company passed a resolution sanctioning transaction of business in "futures" in gur for Phagun Sudi 15 Samvat 2006 (March 4, 1950) settlement.
On August 9, 1949, Seth Mohan Lal and Company purchased one share of the Company and qualified for membership.
They commenced dealing with the Company in "futures" in gur.
By December 1949 Seth Mohan Lal and Company who will hereinafter be called 'the appellants ' had entered into transactions with the Company which aggregated to 1136 Bijaks of sale of gur for the Paush Sudi 15, 2006 delivery.
The appellants also claimed that they had entered into sale transactions in 2137 Bijaks in the benami names of five other members.
In January 1950 there were large fluctuations in the prices of gur ', and in order to stabilise the prices, the directors of the Company passed a resolution in a meeting held on January 7, 1950, declaring that the Company will not accept any settlement of transaction in excess of Rs. 17/8/ per maund.
The sellers were required to deposit margin money between the prices prevailing on that date and the maximum rate fixed by the Company.
The appellants deposited in respect of their transactions Rs. 5,26,996/ '14/ as margin money.
They claimed also to have deposited amounts totaling Rs. 7 lakhs odd in respect of their benami transactions.
In exercise of the powers conferred by section 3 of the Essential Supplies (Temporary Powers) Act 24 of 1946, the Government of India issued a notification on February 15, 1950, amending the sugar (Futures & Options) Prohibition Order, 1949, and made it applicable to "futures" and options in gur.
By that Order entry into transactions in "futures" after the appointed day was prohibited.
On the same day the Board of Directors of the Company held a meeting and resolved that the rates of gur which prevailed at the close of the market on February 14, 1950, viz., 256 Rs. 17/6/ per maund be fixed for settlement of the contracts of Phagun delivery.
It was recited in the resolution that five persons including Lala Mohan Lal, partner of the appellants, were present at the meeting on special invitation.
In cl. 2 of the resolution it was recited that as the Government had banned all forward contracts in gur it was resolved to take the prevailing market rate on the closing day of.
February 14, 1950, which was.
Rs. 17/6/per maund for Phagun delivery and to have all Outstanding transactions of Phagun delivery settled at that rate '.
Entries were posted in the books of account of the Company on the footing that a11 outstanding transactions in futures in gur were settled on February 15, 1950.
In the account of Mohan Lal & Company an amount of Rs 5,26,996/14/ stood to the credit of the appellants.
Against that amount Rs. 5,15,769/.5/were debited as "loss adjusted", and on February 15, 1950, an amount of Rs. 11,227/9/ stood to their credit.
Similar entries were posted in the.
accounts of other persons who had outstanding transactions in gur.
On February 22, 1950, the appellants and their partner Mohan Lal filed a petition in the High Court of Judicature at Allahabad for an order winding up the Company.
Diverse grounds were set up in the petition.
The principal grounds were that the Company was unable to pay its debts, that it was just and equitable to wind up the Company, because the directors and the officers of the Company were guilty of fraudulent acts resulting in misappropriation of large 'funds, and that the substratum of the Company had disappeared, the business of the Company having been completely destroyed.
On February 23, 1951, another petition was filed by the appellants and their partner Mohan Lal for an order winding up the Company.
It purported to raise certain grounds which it was, submitted had not been raised in the first petition and which had arisen since the first petition was instituted.
In the second petition it was averted that by virtue of the notification issued by the Government, the forward contracts in gur had become void and the appellants were entitled to be repaid all the amounts deposited by them, that the outstanding ' contracts.
stood.
rescinded, and the Company having paid out large sums to its directors and other shareholders was not in a position to meet its liability to the appellants.
Brij Mohan Lal, J., held that the Company was not unable to pay its debts and that it was not just and equitable to wind ' up the Company on the grounds set out in the petition.
Orders passed by Brij Mohan.
Lal, J. ', dismissing. the petitions were confirmed by the ' High ' Court 'of Allahabad in its appellate jurisdic 257 tion.
With certificates granted by the High Court, these two appeals have been preferred by the appellant 's and their partner Mohan Lal.
The High Court held that by the notification dated February 15, 1950, the outstanding transactions of "futures" in gur did not become void; that in.
fixing the rate of settlement by resolution dated February 15, 1950, and settling the transactions with the other contracting parties at that rate the directors acted prudently and in the interests of the Company and of the shareholders, and in making payments to the parties on the basis of a settlement at that rate the directors did not commit any fraudulent act or misapply the funds.of the Company; that the case of the appellants that apart from the transactions entered into by them in their firm name, they had entered into other transactions benami in the names of other firms, and that the Company had mala fide settled those transactions with those other firms was not proved; and that the Board of Directors was and remained properly constituted at all material times and no provision of the Companies Act was violated by the directors trading with the Company.
Counsel for the appellants contended (a) that by virtue of the Notification issued by the Central Government on February 15, 1950, all outstanding "futures" in gur became void; (b) that the resolution dated March 14, 1949, was void because there was no quorum at the meeting of the Company; (c ) that their solution dated February 15, 1950 by the Board of Directors was not passed in the interests of the Company but to serve private interests of the directors; (d) that the Company having.
repudiated the outstanding contracts, it was bound to refund the deposits received from the members; and (e) that in any event, the substratum of the Company ceased to exist, and the Company could not after the Government Notification carry on business in gur.
In support of his contention that by the order isued by the Central Government on, February 15,1950, the outstanding transactions in futures in gut became void, counsel for the appellants relied ' upon a press note issued by the Government of India relating to the amendments made in the Sugar (Futures and Options) Prohibition Order, 1949.
In the press note apparently it was stated that all transactions in ,futures" in sugar, gur, gur shakkar, and rab made before the commencement of the order or remaining to be fulfilled ' shall be void and not enforceable by law.
The interpretation of the order depends not upon how the draftsman of the press note understood the notification, but upon the words used therein.
The relevant clauses of the Order, after the amendment, ,read as follows: " 2 ' (d) Futures in sugar and gur mean any agreement relating to the purchase or sale of sugar or gur on 258 a forward basis and providing for delivery at some future date and payment of margin on such date or dates, as may be expressly or impliedly agreed upon by the parties.
2(e) 'margin ' means the difference between the price specified in an agreement relating to the purchase of or sale of sugar and gur and the prevailing market price for the same quality and quantity of sugar or gut on a particular day.
2(f) 'Option in sugar or gur ' means an agreement for the purchase or sale of a right to buy or a right to sell or a right to buy and sell, any sugar or gut in future and includes a teji mandi and teji mandi in any sugar.
On or after the appointed day no person shall (a) save with the permission of the Central Government in this behalf or of an officer authorised by the Central Government in this behalf, enter into any futures in sugar or gur, or pay or receive or agree to pay or receive any margin in connection with any such futures.
(b) enter into any option in sugar or gur.
Any option in sugar or gur entered into before, the appointed day and remaining to be performed.
whether wholly or in part shall be void within the meaning of the,Indian Contract Act, 1872, and shall not be enforceable by law.
" By cl. 3(a) all persons are prohibited, save with the permission of the Central Government in that behalf from entering into "futures" in sugar or gut: the clause also prohibits receipt or payment of, or agreement to pay or receive any margin in connection with any such futures.
The clause in terms operates prospectively.
Clause 3(b) prohibits options in gut and sugar, and el. 4 expressly invalidates options in sugar and gut entered into before the appointed day and remaining to be performed whether wholly or in part.
The contrast between the provisions relating to "futures" and "options" is striking.
While imposing a prohibition on options, the Central Government has also expressly provided that all outstanding options shall be void.
No such provision is made in respect of outstanding "futures".
Counsel for the appellants however commended that when the Central Government imposed a prohibition against payment or receipt or agreement to pay or receive, any margin in connection with the outstanding "futures," the "futures" were also prohibited.
But the prohibition imposed against payment or receipt, or ' agreement to 259 or receive margin is made in connection with such futures,pay and the expression such futures means "futures" of the like or similar kind previously mentioned,i e transactions in "futures" to be entered into on or after February 15, 1950.
If it was intended by the Central Government to declare void outstanding transactions in "futures", the Central Government would.
specifically have imposed a prohibition against payment or receipt of,or agreement to pay or receive, margin in connection with.
all"futures".
A transaction in "future" in gur may be settled by payment of margin or by actual delivery, and the Order does not prohibit the settlement of the transaction by specific delivery of goods.
If the plea for the appellants be accepted, the Central Government may be attributed a somewhat singular intention of permitting outstanding futures in gur to be carried out by giving and taking actual delivery of goods contracted for, but not by payment and receipt of margin.if it was intended to invalidate transactions in futures which were outstanding on February 15,1950, an express provision to that effect could have been made.
No such provision has been made, and there are clear indications in the terms of the notification which show a contrary intention.
Prohibition against payment or receipt of margin money under, transactions entered into after February 15,1950 is not redundant: it was enacted presumably with a view to maintain control over the transactions made with the sanction of the Central Government.
But, said counsel for the appellants, the resolution dated March 14, 1949, which permitted the Company to enter into transactions in "futures" in gut was invalid, because the directors who took part in the meeting were disqualified under sections 861(1) (h) and 9lB of the Indian Companies Act, 1913, and the Company could not retain money paid in pursuance of unauthorised transactions, It was resolved unanimously in the meeting of the Board of Directors convened on March 14, 1949, that forward transactions in gut for Phagun Sudi 15, Samvat 2006, i.e., March 4, 1950 "may be started according to the rules" laid down therein.
It was said that the resolution which authorised transactions of "futures" in gur in the manner in which the Company was carrying on its business entailed disqualification of the Directors and as the Directors were disqualified there was no quorum and no proper resolution and therefore all transactions entered into and any payment made pursuant to that resolution were invalid and the Company was bound to refund the amounts paid by the appellants from time to time.
The Company had 11 directors: out of these 9 directors were carrying on business with the Company.
It appears that at the meeting dated March 14, 1949 all the directors present were those who carried on business in "futures" in gur with the Company, and did after March 14, 1949, 260 carry on that business.
Under the Indian Companies Act, 1913, as originally enacted, there was no prohibition against a director entering into transactions with the Company, and on that footing the scheme of the Company 's business was devised.
Under the Articles. of Association no person could remain a member of the Company who was found not to ' be doing any transaction or business :through the Company continuously for six months, and a person could be elected a director if he held 10 shares in his own name or in the name of the firm of which he was a proprietor or a partner.
A director of the Company had therefore to hold ten shares and had to carry on business with the Company.
If he ceased to do business for a period of six months he ceased to be a member of the Company, and on that account ceased also to be a director of the Company.
The Articles of Association prescribed diverse contingencies in which a director was to vacate his office, but carrying on business with the Company was not made a ground of disqualification The Company had started business in the year 1931.
In 1936, several important amendments were made in the Indian Companies Act 1913.
By section 86F which was incorporated by Act 22 of 1936, it was provided: "Except with the consent of the directors, a director of the company, or the firm of which.
he is a partner or any partner of such firm, or the private company of which he is a member or director, shall not enter into any contracts for the sale, purchase or supply of goods and 'materials with the company, Section 861 enumerated the Conditions or situations in which the office of ' director was vacated.
Insofar as the section is material it provides: "(1) The office of a director 'shall be vacated if__ (h) he acts in contravention of section 86F.
Section 91B which was inserted by Act 11 of 1914 as modified by Act 22 of 1936 by the first sub section provided: "No director shall, as a director, vote on any contract or arrangement in which he is either directly or 'indirectly concerned or interested nor shall his presence 'count for the purpose of forming a quorum at the time of any such vote;and if he does so vote his vote shall not be counted :" 261 After the amendment of the Indian Companies Act by Act 22 of 936, the Rules of the Company were not modified and the Company apparently carried on business in the same manner in which it was originally carrying on its business.
It appears that the directors were oblivious of the requirements of section 86F and of the provisions of section 861 and section 91B, and the modus operandi of the business continued to remain the same as it was previously.
On the terms of section 86F(1) all directors of the Company were prohibited, unless the directors consented thereto, from entering into contracts for the sale, purchase or supply of goods and materials with the Company.
On behalf of the Company it was urged that by the resolution dated March 14, 1949, the directors resolved generally to sanction all transactions of the directors for the sale and purchase in commodities in which the Company carried on business, and on that account notwithstanding the prohibition contained in section 86F, the directors did not vacate their office.
Counsel for the appellants urged that the consent of the directors contemPlated by section 86F is consent in respect of each specific contract to be entered into and no general consent can be given by the directors authorising a director or directors of the Company to sell, purchase or supply goods and materials to the Company.
Such a general resolution without considering the merits of each individual contract would, it was urged, amount to repealing the provisions of section 86F.
Strong reliance was placed upon the judgment of the Bombay High Court in Walchandnagar Industries Ltd. and others vs Ratanchand Khimchand Motishaw(1).
It is not necessary for the purpose of this case to decide whether in any given set of circumstances a general consent may be given by the Board of Directors, to a director or directors to enter into contracts for sale or purchase or supply of goods and materials with the Company so as to avoid the prohibition contained in section 86F of the Indian Companies Act, for, in our view, the resolution dated March 14, 1949, cannot be challenged in view of Regulation 94 of Table A which, for reasons to be presently mentioned must be deemed to be incorporated in the Articles of Association of the Company.
Regulation 94 of Table A in the First Schedule is not one of the obligatory regulations which is to be deemed by section 17(2) of the Indian Companies Act 1913 to be incorporated in the Articles of Association.
Section 18 provides: "In the case of a company limited by shares and registered after the commencement of this Act, if articles are not registered, or, if articles are registered, insofar as the articles do not exclude or modify the regulations (1) I.I.R. , 262 in Table A in the First Schedule those regulations shall, so far as applicable, be the regulations of the company in the same manner and to the same extent as if they were contained in duly registered articles.
" The respondent Company is limited by shares and was registered after the commencement of the Indian Companies Act, 1913: the Company has adopted special Articles of Association, but there is no Article which excludes or modifies Regulation 94 of Table A, and by the operation of section 18 of the Act that Regulation must be deemed to apply in the same manner and to the same extent as if it was contained in the registered articles of the Company.
We are unable to hold that because the Company has not incorporated regulation 94 of Table A in its Articles of Association, an intention to exclude the applicability of the regulation to the Company may be inferred.
Regulation 94 of Table A is not expressly excluded by the Articles of the Company that is common ground.
It is not excluded by implication for it is not inconsistent with any other express provision in the Memorandum of the Articles of Association.
It, therefore.
follows that Regulation 94 must be deemed to be incorporated in the Articles of Association of the Company.
That Regulation provided: "All acts done by any meeting of the directors or of a committee of directors, or by any person acting as a director shall, notwithstanding that it be afterwards discovered that there was some defect in the appointment of any such directors or persons acting as aforesaid.
or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director.
" There is no evidence that the directors were aware of the disqualification which would be incurred by entering into contracts of sale or purchase or supply of goods with the Company without the express sanction of the directors.
By the subsequent discovery that they had incurred disqualification, because they had entered into contracts with the Company for sale or purchase or supply of goods,the resolution passed by them is not rendered invalid.
It is in the view we have taken, unnecessary to decide whether section 86 of the Indian Companies Act 1913 also grants protection to acts done by directors who are subsequently discovered to be disqualified.
Section 91B imposes a prohibition against a director voting on any contract or arrangement in which he is either directly or indirectly concerned or interested.
But the directors of the Company are not shown to have voted on any existing contract or 263 arrangement.
At the meeting dated March 14, 1949, they resolved that the Company shall commence business in "futures" in gur according to the rules set forth in the resolution.
Thereby the directors were not voting on a contract or arrangement in which they were directly or indirectly concerned or interested.
It must then be considered whether the resolution of February 15, 1950, was passed by the Board of Directors with a view dishonestly to make profit for themselves and for others who were purchasers, and to cause loss to the appellants.
In the light of the situation prevailing on February 15, 1950, in our judgment, the Board of Directors acted, in passing the resolution, as prudent businessmen for the protection of the interests of, the Company and the members.
Since the promulgation of the sugar and Gur (Futures and Options) Prohibition Order, 1950, if any member of the Company failed to pay the margin, the Company could not enter into a reverse transaction.
That was prohibited.
Whereas the outstanding transactions were valid, a very important sanction which the Company could impose against the member who failed to pay the margin became ineffective.
It was therefore necessary in the interest of the Company to devise an effective scheme for settlement of those transactions.
Again in view of the imposition of severe restrictions by the Government on transport of gut by rail or by mechanised transport, it was well nigh impossible for the members to give or take delivery of gut.
It was therefore resolved that all outstanding contracts shall be settled at the rate prevailing on the evening of February 14, 1950.
It may be recalled that on January 7, 1950, the Board of Directors had resolved, because the prices of gur were spiraling that all outstanding transactions in gut will be settled at the rate of Rs. 17/8/ ' per maund whatever may be the price ruling at the date of settlement.
The appellants had sold 1,123 Bijaks of gut at an average rate of Rs. 12/13/9 per maund, and those transactions in "futures" were not invalidated by the notification issued by the Government.
But since No. reverse transaction to protect the Company against loss, if a member failed to pay margin, was possible, the only practical way out was to provide for settling the outstanding transactions.
This the Board of Directors did by taking the rate which was prevailing in the evening of February 14, 1950, as the rate of settlement of all the outstanding transactions.
The resolution, however, did not put an end to the outstanding contracts as on February 15, 1950: the resolution merely fixed the rate at which the transactions were to be settled on the due date, the possibility of any fresh transactions in futures so long as the Order remained in force being completely ruled out.
It may, be noticed that the appellants ' representative, was present at the meeting, and he was apparently heard.
Whether or not he agreed to the passing of the resolution iS immaterial.
But we are unable to hold that the resolution was passed with a view 264 to benefit the directors: it appears that the resolution was passed with a view to protect the interests of the Company and its members.
But it was urged that simultaneously large amounts were tended to be paid to the members who had purchase contracts outstanding, and for that purpose it was resolved to borrow money from the Allahahad Bank and the Central Bank of India Ltd. This, it was urged, disclosed anxiety on the pan of the directors to appropriate to themselves the liquid funds and to deprive the appellants of the benefit of any fall in the prices after February 15, 1950.
It is true that in the books of account of the Company the transactions were shown to have been settled as on February 14, 1950.
But we agree with the High Court that the entries in the books of account of the Company were not in accordance with the resolution, and no intimation was given to any of the members of the Company 'that the transactions were so closed.
There is no clear evidence about the dates on which payments were made to the purchasers in respect of their out.
standing transactions.
But that in our judgment is not material.
It appears from the agreed statement flied before the Company Judge that if the seller made a deposit to cover the rise in prices, the purchaser was entitled to withdraw from the Company the profit which he had made under his cross transaction.
even before the date of settlement.
It was clearly contemplated that when a seller deposited the difference between the price at which he had agreed to sell gut, for future delivery the ruling rate being higher than the rate at which he had agreed to sell, it was open to the purchaser to approach the Company and to call upon it to pay him the profit.
Whether or not this right was strictly enforced is irrelevant.
It appears from Ext.
D 10 that as many as 133 persons having sale transactions had made deposits of diverse amounts with the Company aggregating to Rs. 36,38,932/2/9.
The purchasers under the corresponding transactions were entitled to withdraw the profits.
earned by them out of the deposits so made.
By allowing the purchasers to withdraw the amounts which they were entitled to under the business rules of the Company after the contracts were frozen, the directors of the Company acted according to the rules and not contrary thereto.
The attitude of the appellants in respect of the outstanding contracts since February 15, 1950, has also an important bearing.
On February 23, 1950, the management of the Company addressed a letter informing the appellants that in the interests and for the benefit of the trade, the Board of Directors had passed a resolution on February 15, 1950, to settle the outstanding, transactions at the rate prevailing in the market on February 14, 1950; That resolution, it was stated, was for the benefit of the appellants, 265 but if the appellants wanted to deliver the goods, they should intimate the date and place on which they were prepared to give delivery of goods according to the outstanding contracts on Phagun Sudi 15, Sam vat 2006 in terms of the rules and bye laws of the Company.
The appellants denied having received this letter. ' But we are unable to accept that denial.
On March 1, 1950, the appellants wrote a letter stating that because of the notification issued by the ' Central Government the performance of the contracts had become impossible, and that the Company was liable to refund all the amounts deposited with interest thereon, and that the illegal settlement dated February 15, 1950, amounted to repudiation of the contracts by the Company and those contracts stood rescinded.
The appellants apparently insisted that the transactions became impossible of performance in view of the prohibition contained in the notification published by the Central Government, and contended that the resolution amounted to repudiation of the contracts by the Company.
But by the resolution, in our judgment, there was no repudiation of the contracts by the Company.
The contracts, if they were to be settled by payment of differences, could be settled on the due date at the rates fixed: it was however open to the appellants to deliver goods under the contracts if they desired to do so.
The plea that there was frustration of the contracts, and on that account the Company was liable to refund all the amounts which it had received, has no substance.
As we have already held, the outstanding contracts were not at all affected by the Government Order.
Imposition by the Central Government of a prohibition by its notification dated March 1, 1950 restraining persons from offering and the Railway Administration from accepting for transportation by rail any g.r, except with the permit of the Central Government from any station outside the State of Uttar Pradesh which was situated within a radius of thirty miles from the border of Uttar Pradesh does not lead to frustration ' of the contracts.
Fresh contracts were prohibited but settlement of the outstanding contracts by payment of differences was not prohibited, nor was delivery of gut in pursuance of the contract and acceptance thereof at the due date by the Company prohibited.
The difficulty arising by the Government orders in transporting the goods needed to meet the contract was not an impossibility contemplated by section 56 of the Contract Act leading to frustration of the contracts.
Finally, it was urged that by reason of the notification issued by the Central Government, the substratum of the Company was destroyed and no business could be carried on by the Company thereafter.
11 was said that all the liquid assets of the Company were disposed of and there was no reasonable prospect of the Company commencing or carrying on business thereafter.
266 The Company was carrying on extensive business in "futures" in gut, but the Company was formed not with the object of carrying on business in "futures ' in gut alone, but in several other commodities as well.
The Company had immovable property and liquid assets of the total value of Rs. 2,54,000.
There is no ' evidence that the Company was unable to pay its debts.
Under section 162 of the Indian Companies Act, the Court may make an order for winding up a Company if the Court is of the opinion that it is just and equitable that the Company be wound up.
In making an order for winding up on the ground that it is just and equitable that a Company should be wound up, the Court will consider the interests of the shareholders as well as of the creditors.
Substratum of the Company is said to have disappeared when the object for which it was incorporated has substantially failed, or when it is impossible to carry on the business of the Company except at a loss, or the existing and possible assets are insufficient to meet the existing liabilities.
In the present case the object for which the Company was incorporated has not substantially failed, and it cannot be said that the Company could not carry on its 'business except at a loss, nor that its assets were insufficient to meet its liabilities.
On the view we have taken, there were no creditors to whom debts were payable by the Company.
The appellants had, it is true, filed suits against the Company in respect of certain gur transactions on the footing that they had entered into transactions in the names.
of other persons.
But those suits were dismissed.
The business organisation of the Company cannot be said to have been destroyed, merely because the brokers who were acting as mediators in carrying out the business between the members had been discharged and their accounts settled.
The services of the brokers could again be secured.
The Company could always restart the business with the assets it possessed, and prosecute the objects for which it was incorporated.
It is true that because of this long drawn out litigation, the Company 's business has come to a stand still.
But we cannot on that ground direct that the Company be wound up.
Primarily, the circumstances existing as at the date of the petition must be taken into consideration for determining whether a case is made out for holding that it is just and equitable that the Company should be wound up, and we agree with the High Court that no such case is made out.
The appeals fail and are dismissed with costs.
One hearing fee.
| IN-Abs | The respondent company, registered under the Indian Companies Act 1913, was formed for the purpose of carrying on the business of an exchange in various commodities including gur and started its business in 1931.
The Articles of Association of the Company provided that no person could remain a member of the company who was found not to be doing any transaction or business through the company.
The Board of Directors of the company on March 14, 1949, passed a resolution sanctioning transactions in 'futures ' in gut.
All the directors present at the meeting were, those who carried on business in 'futures ' in gut with the company and did after March 14, 1949 carry on that business.
The company 's business was devised on the basis of the Companies Act, 1913, as Originally enacted, when there was no prohibition against a director entering into transactions with the company.
Even after the Amendments to the Company 's Act by Act 22 of 1936 which imposed disqualification on directors entering into transactions with their companies, the modus operandi of the business of the company continued to remain the same as it was previously.
The appellant company qualified for membership of the respondent company and entered into dealing with it in 'futures ' in gut and deposited large amounts with the respondent in respect of their transactions.
On February 15, 1950 the Government of India issued a notification amending the Sugar (Futures & Options) Prohibition Order and made it applicable to 'futures ' and Options in Gur.
By that order no person could, after the appointed day, enter into 'future ' in gur or "pay or receive or agree to pay or receive any margin in connection with any such futures.
" The Board of Directors of the respondent on February 15, 1950 resolved to settle outstanding transactions at the prevailing rate on the closing day of February 14. 1950.
The appellants then filed a petition for winding up of the Company.
The High Court dismissed the petition.
In appeal to this Court it was contended that: (i) by virtue of the notification dated February 15, 1950, all outstanding transactions in 'futures ' in gut became void (ii) the resolution dated March 14, 1949, which permitted the company to enter into transactions in 'futures ' in gut was invalid since the directors who took part in the meeting were disqualified under sections 861(1)(h) and 91 B of the Indian Companies.
Act, 1913, as amended by Act 22 of 1936 and the company had not incorporated in its Articles Regulation 94 of Table A, which validated acts done by directors when disqualifications attaching to them were subsequently discovered; (iii) the resolution dated February 15, 1950 was not passed in the interests of the company and the resolution amounted to repudiation 253 of the contracts by the company; and (iv) by reason of the notification by the Government the substratum of the company was destroyed and no business could be carried on by the company thereafter.
HELD: No Case was made out for winding up of the company.
(i) The notification prohibiting transactions in 'futures ' in gut operates only prospectively.
The prohibition imposed against payment or agreement to pay or receive margin is made in connection receipt or agreement and the expression 'such ' futures ' means transactions in futures to be entered.
into on or after the date if the notification.
No express provision has been made to invalidate outstanding transactions in 'futures ' and there are clear indications in the terms of the notification which show a contrary intention.
[259 A D] (ii) The resolution dated March 14, 1949 cannot be challenged in view of Regulation 94 of Table A.
By the operation of section 18 of the Companies Act the Regulation must be deemed to be incorporated in the Articles of Association of the CompanY.The Regulation was not expressly excluded by the Articles; it was not excluded by implication,because, it was not inconsistent with any other express provision in the Angeles.
There is no evidence that the directors were aware of the disqualification which would be incurred by entering into transactions with the company without the express sanction of the directors and by the subsequent discovery of such a disqualification the resolution was not rendered invalid.
[262 C G] Section 91 B imposes a prohibition against a director voting on any contract or arrangement in which he is "directly or indirectly concerned interested".
By passing a resolution that the company shall commence or ".
By passing a in gur the directors were not voting on a contract or business in futures.
in gur the directors were not voting on a contract or arrangement in which they were directly concerned.
[262 H 263 B] (iii) In passing the resolution dated February 15, 1950, the Board of Directors acted, in the light of the situation prevailing then, as prudent businessmen for the protection of the interests of the company and its members.
Since, after the notification.
no reverse transaction to protect the company against loss, if a member failed to pay margin, was possible, the company had to devise effective means to settle the outstanding transactions.
The resolution did not put an end to outstanding contracts; it merely fixed the rate at which transactions were to be settled on the due date, the possibility of any fresh transactions in futures so long as the notification remained in force being completely ruled out.
The contracts, if they were to be settled by payment of differences, could still be settled on the due date at the rates fixed and it was open to the appellants 10 deliver goods ' under the contract if they desired to do so.
Imposition by the Central Government of a prohibition by its notification dated March 1, 1950, restraining persons from offering and the Railway administration from accepting for transportation by rail any gur except with the permit of the Central Government does not lead to frustration of the contracts.
[263 C H; 265 C D] (iv) In the present case the object for which the company was incorporated has not substantially failed and it cannot be said that the company could not carry on its business except at a loss nor that its assets ' were insufficient to meet its liabilities.
Primarily the circumstances existing ' at ' the date of the petition must be taken into consideration for determining whether a case is made out for holding that it is lust and equitable that the company should be wound up [266 C, D] LISup.
C1/68 2 254
|
Appeal No. 164 of 1952.
Appeal from the Judgment and Decree dated the 12th August, 1949, of the High Court of Judicature at Bombay in Appeals Nos. 63 and 148 of 1947, from Original Decree, arising out of the Decree dated the 31st July, 1946, of the Court of the Civil Judge, Senior Division, Bijapur, at Bijapur in Special Civil Suit No. 28 of 1945.
J. B. Dadachanjiand Naunit Lal for the appellant.
section B. Jathar and Ratnaparkhi Anant Govind for the respondents.
March 23.
The Judgment of the Court was delivered by VENICATARAMA AYYAR J.
3 VENKATARAMA AYYAR J.
This appeal arises out of a suit for partition instituted by the appellant in the Court of the Civil Judge Senior Division, Bijapur.
The relationship of the parties will appear from the following genealogical table: Ramchandra : : : : : : Siddopant Krishnarao alias Sadashiv (d. 1897) (d.1899) m. Rukmini : (D 6) : : Gundo m. Laxmibai (D 5) : : : : : I Shrinivas Devji m. Akkubai (D 4) (adopted son) (adopted) plaintiff d. 6 9 1935.
: : : : : Narayan Raghavendra Gundo D 1 D 2 D 3 Siddopant and Krishnarao were members of a joint undivided family.
Krishnarao died in 1897 leaving behind a widow, Rukminibai, who is the sixth defendant in the suit.
Siddopant died in 1899 leaving him surviving his son, Gundo, who died in 1901 leaving behind a widow, Lakahmibai, who is the fifth defendant.
On 16th December, 1901, Lakshmibai adopted Devji, who died on 6th May, 1935, leaving three sons, defendants Nos. 1 to 3, and a widow, Akkubai, the fourth defendant.
On 26th April, 1944, Rukminibai adopted the plaintiff, and on 29th June, 1944, he instituted the present suit for partition claiming a half share in the family properties.
Siddopant and Krishnarao represented one branch of a Kulkarni family and were entitled for their share of the Watan lands, to the whole of section No. 138 and a half share in section Nos. 133 and 136 in the village of Ukamnal and a half share in section Nos. 163, 164 and 168 in the village of Katakanhalli.
The other branch was represented by Swamirao, who was entitled for his half share 4 of the Watan lands, to the whole of section No. 137 and to a half share in S.Nos. 133 and 136 in the village of Ukamnal and to a half share in section Nos. 163, 164 and 168 in the village of Katakanhalli.
Siddopint purchased a house under Exhibit D 36 and lands under Exhibits D 61 and D 64, and constructed two substantial houses.
His grandson, Devji, also built a house.
All these properties are set out in Schedules A and B to the plaint, A Schedule consisting of houses and house sites and B Schedule of lands.
It is the plaintiff 's case that these properties were either ancestral, or were acquired with the aid of joint family funds.
He accordingly claims a half share in them as representing Krishnarao.
Swainirao died about 1903 issueless, and on the death of his widow shortly thereafter, his properties devolved on Devji as his nearest agnate, and they are set out in Schedule C to the plaint.
The plaintiff claims that by reason of his adoption he has become a preferential heir entitled to divest Devji of those properties, and sues to recover them from his sons.
In the alternative, he claims a half share in them on the ground that they had been blended with the admitted Joint family properties.
The defendants denied the truth and validity of the plaintiff 's adoption.
They further contended that the only ancestral properties belonging to the family were the Watan lands in the villages of Ukamnal and Katakanhalli, that the purchases made by Siddopant were his self acquisitions, that the suit houses were also built with his separate funds, and that the plaintiff was not entitled to a share therein.
With reference to the properties in Schedule C, they pleaded that the.
plaintiff could not by reason of his adoption divest Devji of the properties which had devolved on him as heir.
They denied that those properties had been blended with the joint family properties.
Both the Courts below have held that the adoption of the plaintiff is true and valid, and that question is no longer in dispute before us.
They have also held that the purchases made by Siddopant and the houses built by him were his self acquisitions, as was also the house built by Devji.
The trial Court held that the 5 plaintiff was entitled to a half share in section Nos. 639 and 640 in Schedule A on the ground that they belonged to the family as ancestral properties; but the High Court held that that had not been established.
As regards the properties set out in Schedule C, while the trial Court decided that the appellant was entitled to them exclusively under the decision of the Privy Council in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil(1), the High Court held following a Full Bench decision of that Court in Jivaji Annaji vs Hanmant Ramchandra(2), that they belonged exclusively to Devji, and that the plaintiff could lay no claim to them.
Both the Courts a reed in negativing the contention of the plaintiff that there had been a blending of these properties with the joint family properties.
In the result, the High Court granted a decree in favour of the plaintiff for partition of the admitted Watan ,lands, and otherwise dismissed the suit.
The present appeal is preferred against this decision.
The first contention that has been urged on behalf of the appellant is that the finding of the Courts below that the properties purchased by Siddopant and the houses constructed by him and Devji were self acquisitions, is erroneous, firstly because the burden was wrongly cast on the plaintiff of proving that they were made with the aid of joint family funds, and secondly because certain documents which had been tendered in evidence by the plaintiff had been wrongly rejected as inadmissible.
On the first question, the argument of the appellant is that as the family admittedly possessed income producing nucleus in the ancestral Watan lands of the extent of 56 acres, it must be presumed that the acquisitions standing in the name of Siddopant were made with the aid of joint family funds, that the burden lay on the defendants who claimed that they were self acquisitions to establish that they were made without the aid of joint family funds, that the evidence adduced by them fell far short of it, and that the presumption in favour of the plaintiff stood unrebutted.
For deciding whether this contention is well founded, it is necessary to see (1)70 I.A. 232.
(2) I.L.R. 6 what the findings of the Courts below are regarding the extent of the ancestral properties, the income they were yielding, the amounts that were invested by Siddopant in the purchases and house constructions, and the other resources that were available to him.
On the question of the nucleus, the only properties which were proved to belong to the joint family were the Watan lands of the extent of about 56 acres, bearing an annual assessment of Rs. 49.
There is no satisfactory evidence about the income which these lands were yielding at the material period.
Rukminibai, P.W. 6, and Akkubai, D.W. 1, gave conflicting evidence on the point.
But neither of them could have had much of first hand knowledge, as both of them came into the family by marriage long after the nineties, and were then very young.
The lessee who cultivated the lands of Swamirao, who owned, a share in the Watan lands equal to ' that of Siddopant and Krishnarao, deposed that the net income was Rs. 30 per annum.
On a consideration of the entire evidence, the trial Court put the annual income at Rs. 150.
On appeal, the learned Judges of the High Court were also of the opinion that the income from the lands could not have been considerable.
They characterised the oral evidence of P.W. 6 and D.W. I on the point as worthless.
They observed that the assessment of less than a rupee per acre was an indication that the lands were of poor quality.
They referred to the fact that both the brothers were obliged to go to the State of Hyderabad for earning their livelihood, and that Krishnarao had been obliged to borrow under Exhibits D 89 and D 90 even petty amounts like Rs. 26 and Rs. 10 on onerous terms, and they accordingly concluded that the income from the lands could not have beep sufficient even for maintenance.
Coming next to the acquisitions, on 21st May, 1871, Siddopant purchased under Exhibit D 36 a house for Rs.200 from his mother in law.
On 11th May,1885, he purchased under Exhibit D 61 section No. 23 Ukamnal village for a sum of Rs. 475.
On 23rd July, 1890, he purchased under Exhibit D 64 lands bearing section Nos. 2025 and 2140 for Rs. 2,400.
In this suit, we are concerned 7 only with section No. 2025.
Apart from these purchases, he constructed two houses, one on section Nos. 639, 640 and 641, and another on S.Nos. 634 and 635.
2 and 3 have deposed that these constructions would have cost between Rs. 20,000 and Rs. 25,000, and both the Courts have accepted this evidence.
It was argued for the appellant that these witnesses had no first hand knowledge of the constructions, and that their evidence could not be accepted as accurate.
But making all allowances for inexactitude, there cannot be any doubt that the buildings are of a substantial character.
After 1901, Devji built a house on section Nos. 642, 644 and 645 at a cost estimated between Rs. 2,000 and 4,000.
Thus, sums amounting to about Rs. 30,000 had been invested in the acquisition of these properties and construction of the houses.
Where did this money come from ? The evidence is that Siddopant was a Tahsildar in the State of Hyderabad, and was in service for a period of 40 years before he retired on pension.
Though there is no precise evidence as to what salary he was drawing, it could not have been negligible, and salary is the least of the income which Tahsildars generally make.
The lower Courts came to the conclusion that having regard to the smallness of the income from the ancestral lands and the magnitude of the acquisitions made, the former could not be held to be the Foundation for the latter, and on the authority of the decision of the Privy Council in Appalaswami vs Suryanarayanamurti (1) held that the initial burden which lay on the plaintiff of establishing that the properties of which a division was claimed were joint family properties had not been discharged.
The law was thus stated in that case: " The Hindu law upon this aspect of the case is well settled.
Proof of the existence of a joint family does not lead to the presumption that property held by any member of the family is joint, and the burden rests upon anyone asserting that any item of property was joint to establish the fact.
But where it is established that the family possessed some joint property which from its nature and relative value may have formed the nucleus from which the property in question may (1) I.L.R. at 447, 448 8 have been acquired, the burden shifts to the party alleging self acquisition to establish affirmatively that the property was acquired without the aid of the joint family property: See Babubhai Girdharlal vs Ujamlal Hargovandas (1), Venkataramayya vs Seshamma(2) Vythianatha vs Vdradaraja (3).
" It is argued for the appellant that in that case the father had obtained under the partition deed, Exhibit A, properties of the value of Rs. 7,220, that he acquired properties of the value of Rs. 55,000, and that never theless, it was observed by the Privy Council that " the acquisition by the appellant of the property under Exhibit A, which as between him and his sons was joint family property, cast upon the appellant (the father) the burden of proving that the property which he possessed at the time of the plaint was his self acquired property "; and that therefore on proof that there existed ancestral lands of the extent of 56 acres, the burden was shifted on to the defendants to establish self acquisition.
Whether the evidence adduced by the p plaintiff was sufficient to shift the burden which initially rested on ,him of establishing that there was adequate nucleus out of which the acquisitions could have been made is one of fact depending on the nature and the extent of the nucleus.
The important thing to consider is the income which the nucleus yields.
A building in the occupation of the members of a family and yielding no income could not be a nucleus out of which acquisitions ' could be made, even though it might be of considerable value.
On the other hand, a running business in which the capital invested is comparatively small might conceivably product substantial income, which may well form the foundation of the subsequent acquisitions.
These are not abstract questions of law, but questions of fact to be determined on the evidence in the case.
In Appalaswami vs Suryanarayanamurti (4), the nucleus of Rs. 7,220 included 6/16th share in a rice mill and outstandings of the value of Rs. 3,500, and as the acquisitions in question were made during a period of (1) I.L.R. (2) I.L.R. , (3) I.L.R. (4) I.L.R. 9 16 years it was possible that the joint family income might have contributed therefor.
But in the present case, the finding of the Courts is that the income from the lands was not sufficient even for the maintenance of the members, and on that they were right in holding that the plaintiff had not discharged the initial burden which lay on 'him.
But even if we are to accept the contention of the appellant that on proof of the existence of the Watan lands the burden had shifted on to the defendants to prove that the acquisitions were made without the aid of joint family funds, we must hold on the facts that that burden had been discharged.
In Appalaswami vs Suryanarayanamurti (1), in holding that the father had discharged the burden of proving that the acquisitions were his own, the Privy Council observed: "The evidence establishes that the property acquired by the appellant under Exhibit A is substantially intact, and has been kept distinct.
The income derived from the property and the small sum derived from the sale of part of it have been properly applied towards the expenses of the family, and there is no evidence from which it can be held that the nucleus of joint family property assisted the appellant in the acquisition of the properties specified in the schedule, to the written statement.
" Likewise, in the present case all the ancestral Watan lands are intact, and are available for partition, and the small income derived from them must have been utilised for the maintenance of the members of the family.
Whether we hold, as did the learned Judges of the High Court, that the plaintiff had failed to discharge the burden which lay on him of establishing sufficient nucleus, or that the defendants had discharged the burden of establishing that the acquisitions were made without the aid of joint family funds, the result is the same.
The contention of the appellant that the findings of the Courts below are based on a mistaken view as to burden of proof and are in consequence erroneous, must fail.
(1) I.L.R. 10 It was, next contended that certain documents which were tendered in evidence had been wrongly rejected by the Courts below, and that the finding of self acquisition reached without reference to those documents should not be accepted.
These documents are judgments in two suits for maintenance instituted by Rukminibai in the Sub Court, Bijapur, C.S. No. 445 of 1903 and C.S. No. 177 of 1941 and in appeals therefrom, C.A. No. 5 of 1905 and C.A. No. 39 of 1942 respectively in the District Court, Bijapur.
These documents, were produced before the, trial Court on 17th July, 1946, along with 28 other documents when the hearing was about to commence and were rejected.
On appeal, dealing with the complaint of the plaintiff that these documents had been wrongly rejected, the High, Court observed : " Apart from the fact that these documents were produced at a very late stage of the case. . these judgments could have been admitted in evidence only if they could be shown to be relevant under any of the sections 40 to 44 of the Indian Evidence Act.
None of these sections applied in this case.
The trial Judge was, therefore, right in not admitting them in evidence." The argument of the appellant is that these judgments are admissible under section 13 of the Evidence Act as instances in which there was an assertion that the suit properties belonged to the joint family.
For the respondents, it is contended that the dispute between the parties in those litigations was only about the quantum of maintenance to be awarded, that no question of title to the properties was directly involved, and that section 13 was inapplicable.
We are unable to accept this contention.
The amount of maintenance to be a warded would depend on the extent of the joint family properties, and an issue was actually frame d on that question.
Moreover, there was a prayer that the maintenance should be charged on the family properties, and the same was granted.
We are of opinion that the judgments are admissible under section 13 of the Evidence Act as assertions of Rukminibai that the properties now in.
dispute belonged to the joint family.
11 But there is another difficulty in the way of the reception of this evidence.
It was contended by the respondents on the basis of the observations in the judgment of the High Court already extracted that the real ground of rejection was that the documents were produced late.
The order of the trial Court rejecting the document has not been produced before us.
But there, is on the record a petition filed by the plaintiff on 25th July, 1946, after the evidence was closed and before arguments were addressed, for the admission of the 32 documents rejected on 17th July, 1946, and therein it is stated that "they have been rejected on the ground of late production." The defendants endorsed on this petition that if the documents were to be admitted at that stage, an opportunity would have to be given to them to adduce evidence and the trial would have to be re commenced; and the prayer for admission of these documents was accordingly opposed.
The Court dismissed the petition.
The rejection of the documents was therefore clearly made under Order XIII, rule 2, and there are no grounds for now setting aside that order and reopening the whole case.
This ground of objection must therefore fail.
Apart from the Watan lands which are admittedly ancestral, and apart from the purchases made under Exhibits.
D 36, D 61 and D 64 and the houses which we have held to be self acquisitions, there are certain plots mentioned in Schedule A in which the plaintiff claims a half share.
These are the sites on which the houses have been constructed. ' The contention of the plaintiff is that they are ancestral properties.
The trial Court held that in the absence of a title deed showing that the sites were acquired by members of the family they must be held to be ancestral, and on that ground, decreed to the plaintiff a half share in section Nos. 639 and 640.
The High Court reversed this decision observing generally that the evidence relating to the house sites was not clear, "when they were acquired or by whom", and that in the absence of evidence showing that they formed part of the joint family properties, they must be held to be self acquisitions.
With respect, we are unable to agree with this view.
While it is not 12 unusual for a family to hold properties for generations without a title deed, an acquisition by a member would ordinarily be evidenced by a deed.
When, therefore, a property is found to have been in the possession of a family from time immemorial, it is not unreasonable to presume that it is ancestral and to throw the burden on the party pleading self acquisition to establish it.
It is necessary in this view to examine the evidence relating to the several plots for which no title deeds have been produced.
section Nos. 634 and 635 form one block, on which one of the houses has been constructed.
The sanads relating to them are Exhibits D 45 and D 46, and they merely recite that the grantee was in occupation of the plots, and that was confirmed.
There is reference in them to a previous patta granted by the Government.
Exhibits 52 to 55 are pattas showing that the properties comprised therein had been acquired from the Government.
If the identity of section Nos. 634 and 635 with the properties comprised in these documents had been established, the plea that they are not ancestral would have been made out.
But that has not been done, and the presumption in favour of their being ancestral property stands unrebutted.
The claim of the plaintiff to a half share therein must be allowed.
section Nos.
639, 640 and 641 form one block, on which there is another house standing.
There is no title deed for section No. 639.
Exhibit D 47 is the sanad for section No. 640, and it merely recognises the previous occupation by the grantee, and that is consistent with its character as ancestray property.
Exhibit D 48 is the sanad for section No. 641 and is in the same terms as Exhibits D 45 and D 46.
The claim of the plaintiff with reference to all these items must be upheld.
We have next section Nos. 642, 644 and 645, on which Devji constructed a house.
The relative sanads are respectively Exhibits D 49, D 50 and D 51.
Their contents are similar to those of Exhibits D 45 and D 46, and for the same reasons, these plots must be held to belong to the joint family.
We have next section No. 622 on which there stands a house.
It is clear from Exhibit D 43 that this was purchased by Devji at a Government auction in the year 1909.
The plaintiff can lay no claim to it.
Then there is 13 section No. 643.
The oral evidence relating to this is that a family temple stands on it.
It cannot be partitioned.
In the result, it must be held that the plots, section Nos. 634 and 635, section Nos. 639, 640 and 641 and section Nos. 642, 644 and 645 are ancestral properties, and that the plaintiff is entitled to a half share therein.
As substantial superstructures have been put thereon, the appropriate relief to be granted to the plaintiff is that he be given half the value of those plots as on the date of the suit.
It remains to deal with the claim of the plaintiff for possession of C Schedule properties on the ground that by adoption he became the preferential heir of Swamirao and is consequently entitled to divest Devji and his successors of these properties.
The contention of the appellant based on the decision of the Privy Council in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil (1) is that on adoption the adopted son acquires all the rights of an aurasa son, that these rights relate back to the date of the death of the adoptive father, and that in consequence his right to share in the joint family properties and to inherit from the collaterals should both be worked out as from that date.
The contention of the respondents based on Jivaji Annaji vs Hanmant Ramchandra (2) is that the doctrine of relation back does not extend to properties which are inherited from a collateral.
The question thus raised is one of considerable importance, and involves a decision as to the correctness of the law as laid down in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil (1).
Considering the question on principle, the ground on which an adopted son is held entitled to take in defeasance of the rights acquired prior to his adoption is that in the eye of law his adoption relates back, by a legal fiction, to the date of the death of his adoptive father, he being put in the position of a posthumous son.
As observed by Ameer Ali J. in Pratapsing Shivsing vs Agarsingji Raisingji (3), (1) 70 I.A. 232.
(2) I.L.R. (3) 46 I.A. 97 at 107.
14 Again it is to be remembered that an adopted son is the continuator of his adoptive father 's line exactly as an aurasa son, and that an adoption, so far as the continuity of the line is concerned, has a retrospective effect; whenever the adoption may be made there is no hiatus in the continuity of the line.
In fact, as West and Buhler point out in their learned treatise on Hindu Law, the Hindu lawyers do not regard the male line to be extinct or a Hindu to have died without male issue until the death of the widow renders the continuation of the line by adoption impossible.
" It is on this principle that when a widow succeeds to her husband 's estate as heir and then makes an adoption, the adopted son is held entitled, as preferential heir, to divest her of the estate.
It is on the same principle that when a son dies unmarried and his mother succeeds to his estate as his heir, and then makes an adoption to h er husband, that adopted son is held entitled to divest her of the estate.
(Vide Vellanki Venkata vs Venkatarama(1) and Verabhai vs Bhai Hiraba(2).
The application of this principle when the adoption was made to a deceased coparcener raised questions of some difficulty.
If a joint family consisted of two brothers A and B, and A died leaving a widow and the properties were taken by survivorship by B, and then W took a boy X in adoption, the question was whether the adopted son could claim a half share in the estate to which A was entitled.
It was answered in the affirmative on the ground that his adoption related back to the date of the death of A. But suppose before W makes an adoption, B dies leaving no son but a widow C and the estate devolves on her, can W thereafter make an adoption so as to confer any rights on X to the estate in the hands of C ? It was held in Chandra vs Gojarabai(3) that the power to make an adoption so as to confer a right on the adopted son could be exercised only so long as the coparcenary of which the adoptive father was a member subsisted, and that when the last of the coparceners died and the properties thereafter devolved on his (1) 4 I.A. Bom.
(2) 30 I.A. 234.
15 heir, the coparcenary had ceased to exist, and that therefore W could not adopt so as to divest the estate which had vested in the heir of the last coparcener.
In view of the pronouncements of the Judicial Committee in Pratapsing Shivsing vs Agarsingji Raisingji(1) and Amarendra Mansingh vs Sanatan Singh(2) that the validity of an adoption did not depend on whether the adopted son could divest an estate which had devolved by inheritance or not, a Fall Bench of the Bombay High Court held in Balu Sakharam vs Lahoo Sambhaji(3) that in such cases the adoption would be valid, but that the estate which had devolved upon the heir could not be divested.
In Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil(4), the Privy Council dissented from this view, and held that the coparcenary must be held to subsist so long as there was in existence a widow of a coparcerier capable of bringing a son into existence by adoption, and if she made an adoption, the rights of the adopted son would be the same as if he had been in existence at the time when his adoptive father died, and that his title as coparcener would prevail as against the title of any person claiming as heir of the last coparcener.
In substance, the estate in the hands of such heir was treated as impressed with the character of coparcenary property so long as there was a widow alive who could make an adoption.
This principle was re affirmed in Neelangouda Limbangouda vs Ujjan Gouda(5).
Thus far, the scope of the principle of relation back is clear.
It applies only when the claim made by the adopted son relates to the estate of his adoptive father.
This estate may be definite and ascertained as when he is the 'sole and absolute owner of the properties, or it may be fluctuating as when he is a member of a joint Hindu family, in which the interest of the coparceners is liable to increase by death or decrease by birth.
In either case, it is the interest of the adoptive father which the adopted son is declared entitled to take as on the date of his death.
The point for (1) 46 I.A. 97.
(4) 70 I.A. 232.
(2) 6o I.A. 242.
(5) (3) I.L.R. 16 determination now is whether this doctrine of relation back can be applied when the claim made by the adopted son relates not to the estate of his adoptive father but of a collateral.
The theory on which this doctrine is based is that there should be no hiatus in, the continuity of the line of the adoptive father.
That, by its very nature, can apply only to him and not to his collaterals.
In the Oxford Dictionary the word "collateral" is defined as meaning "descended from the same stock but not in the same line.
" The reason behind the rule that there should be continuity in line does not warrant its extension to collaterals.
Nor is there any authority until we come to the decision in Anant Bhikappa Patil (Minor) vs
Shankar Ramchandra Patil(1), which applied the theory of relation back to the properties inherited from collaterals.
With reference to them, the governing principle was that inheritance can never be in abeyance, and that once it devolves on a person who is the nearest heir under the law, it is thereafter not liable to be divested.
The law is thus stated in Mulla 's Hindu Law, 11th Edition, at pages 20 and 21 : "On the death of a Hindu, the person who is then his nearest heir becomes entitled at once to the property left by him.
The right of succession vests in him immediately on the death of the owner of the property.
It cannot under any circumstances remain in abeyance in expectation of the birth of a preferential heir where such heir was not conceived at the time of the owner 's death.
"Where the estate of a Hindu has vested in a person who is his nearest heir at the time of his death, it cannot be divested except either by the birth of a preferable heir such as a son or a daughter, who was conceived at the time of his death, or by adoption in certain cases of a son to the deceased." ' In Bhubaneswari Debi vs Nilkomul Lahiri(2), the facts were that Chandmoni, the widow of one Rammohun, died on 15th June, 1867, and the estate ,devolved on his nephew, Nilkomul as reversioner.
Subsequently, Bhubaneswari Debi, the widow of a (1) 70 I.A. 232.
(2) 12 I.A.137.
17 brother of Rammohun called Sibnath, took a boy, Jotindra, in adoption, and the suit was by him for half a share in the estate.
If his adoption could relate back to the date of death of Sibnath, which was on 28th May, 1861, Jotindra would be entitled to share the inheritance equally with Nilkomul.
That was the argument put forward in support of his claim.
(Vide page 139).
, In negativing this contention, Sir Barnes Peacock observed: "According to the law as laid down in the decided cases, an adoption after the death of a collateral does not entitle the adopted son to come in as heir of the collateral.
It is true that reference is also made to the fact that the boy adopted was not actually in existence on the date of the death of Chandmoni ; but that, however, would make no difference in the legal position, if the principle of relation back was applicable.
One of the cases which the Privy Council had in mind was Kally Prosonno Ghose vs Gocool Chunder Mitter(1), which was relied on in the High Court.
Vide Nilkomul Lahuri vs Jotendro Mohan Lahuri(2).
There, it was hold that an adopted son could not claim the estate of his adoptive father 's paternal uncle, which had devolved by inheritance prior to his adoption.
In 1888 Golapchandra Sarkar Sastri observed in his Tagore Law Lectures on the Law of Adoption: "As regards collateral succession opening before, adoption, it has been held that an adoption cannot relate back to the death of the adoptive father so as to entitle the adopted son to claim the estate of a collateral relation, succession to which opened before his adoption." (Vide pages 413 and 414).
The law was thus well settled that when succession to the properties of a person other than an adoptive father was involved, ,the principle applicable was not the rule of relation back but the rule that inheritance once vested could not be divested.
Before examining the decision in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil(3), it is (1) I.I. R. (2) I.L.R. (3) 70 I.A. 232.
3 18 necessary, to refer to the earlier pronouncements of the PrivY Council on the question, which formed the basis of that decision.
In Pratap Sing Shivsing vs Agarsinqit Raisingji(1) the question related to a jivai grant of the village of Piperia which had been made by the Ruler of Gamph to a junior member on condition, that in default of male descendants it should revert to the thakur.
The last incumbent, Kaliansing, died issueless in October, 1903, leaving him surviving his widow, Bai Devla.
On 12th March, 1904, she adopted Pratapsing Shivsing.
The thakur then sued to recover possession of the village on the ground that the adopted son was not a descendant contemplated by the grant, and that the adoption was invalid, as it would divest him of the village which had vested in him in October, 1903.
With reference to the first contention, the Judicial Committee observed that under the Hindu Law an adopted son was as much a descendant as an aurasa son.
On the second contention, they held that the principles laid down in Raghunandha vs Brozo Kishoro(2) and Bachoo Hurkisondas.
Mankorebai(3) as to divesting of joint family properties which had vested in other persons were applicable, and that having regard to the interval between the date of the death of Kaliansing and the date of the adoption Pratapsing could be treated as a posthumous son.
It will be noticed that the thakur did not claim to succeed to the village on the death of Kaliansing as his heir but on the ground of reverter under the terms of the grant, and no question of relation back of title with reference to the succession of a collateral 's estate was involved.
In Amarendra Mansingh vs Sanalan Singh(1), the question arose with reference to an impartible zamindari known as Dompara Rai in Orissa.
The last of its holder, Raja Bibhudendra, died on 10th December, 1922, unmarried, and by reason of a family custom which excluded females from succeeding to the Raj, a collateral Banamalai succeeded to it.
On 18th December, 1922, Indumati, the mother of Bibhudendra, adopted Amarendra to her husband, Brajendra.
The question (1) 46 I.A. 97.
(3) 34 I.A. 107.
(2) 3 I.A. 154.
(4) 60 1,A, 242, 19 was whether by his adoption Amarendra could divest BanamaIai of the estate.
It was held by the Privy Council that the validity of an adoption did not depend on whether an estate could be divested or not, and that the point to be considered was whether the power to adopt had come to an end by there having come into existence a son, who had attained the full legal capacity to continue the line.
Applying these principles, the Judicial Committee decided that the adoption was valid, and that Amarendra took the estate as the preferential heir.
It will be seen that in this case no claim of the adopted son to succeed to a collateral was involved, and no question arose as to how far the theory of relation back could be invoked in support of such a claim.
The estate claimed was that of his adoptive father, Brajendra, and if the adoption was at all valid, it related back to the date of Brajendra 's death, and enabled Amarendra to divest Banamalai.
The point for determination actually was whether by reason of Bibhudendra having lived for about 20 years, the power of his mother to adopt to her husband had come to an end.
It may be noted that but for the special custom which excluded women from inheriting, Indumati would have succeeded Bibhudendra as mother, and an adoption by her would divest her of the estate and vest it in Amarendra, and the case would be governed by the decisions in Vellanki Venkata vs Venkatarama(1) and Verabhai vs Bhai Hiraba(2).
The only difference between these cases and Amarendra Mansingh vs Sanatan Singh(3) was that on the death of Bibhudendra his heir was not Indumati but Banamalai.
This decision might be taken at the most to be an authority for the position that when an adoption is made to A, the adopted son is entitled to recover the estate of A not merely when it has vested in his widow who makes the adoption but also in any other heir of his.
It is no authority for the contention that he is entitled to recover the estate of B which had vested in his heir prior to his adoption to A. Vijaysingji Chhatrasingji vs Shipsangji Bhim,,sangji(4) is a case similar to the one in Amarendra Mansingh vs Sanatan Singh(3).
The property concerned was (1) 4 I. A. T. (3) 60 I.A. 242.
(2) 30 I.A. 234.
(4) 62 I.A. 161, 20 an impartible estate.
Chandrasangji who was one of the holders of the estate died, and was succeeded by his son, Chhatrasingji.
Chhatrasingji was then given away in adoption, and thereafter Bhimsa@gji, the.
brother of Chhatrasingji, succeed ed to the estate.
Then the widow of Chhatrasingji made an adoption, and the question was whether the adopted son could divest the estate in the bands of Bhimsangji.
It was held that he could.
Here again, there was no question of collateral succession, the point for decision being precisely the same as in Amarendra Mansingh vs Sanatan Singh(1).
We next come to the decision in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil(2).
The facts of that case were that one Bhikappa died in 1905, leaving him surviving his widow, Gangabai, and an undivided son Keshav.
In 1908 Narayan, the divided brother of Bhikappa died, and Keshav succeeded to his properties as heir.
In 1917 Keshav died unmarried, and as the properties were Watan lands, they devolved on a collateral, Shankar.
In 1930 Gangabai adopted Anant, and he sued Shankar to recover possession of the properties as the adopted son of Bhikappa.
The High Court had held that as the joint family ceased to exist in 1917 when Keshav died, and as the properties had devolved on Shankar as his heir, the adoption, though valid, could not divest him of those properties.
The Privy Council held that the coparcenary must be taken to continue so long as there was alive a widow of the deceased coparcener, and that GaDgabai 's adoption had the effect of vesting the family estate in Anant, even though it had descended on Shankar as the heir of Keshav.
The decision so far as it relates to joint family properties calls for no comment.
When once it is held that the coparcenary subsists so long as there is a widow of a coparcener alive, the conclusion must follow that the adoption of Anant by Gangabai was valid and operated to vest in him the joint family properties which had devolved on Shankar.
Then, there were the properties 'which Keshav had inherited from Narayan , which had also devolved on Shankar as his (1) 60 I A, 242.
(2) 701 I.A. 232, 21 heir.
With reference to them, the Privy Council observed : " If the effect of an adoption by the mother of the last male owner is to take his estate out of the hands of a collateral of his who is more remote than a natural brother would have been, and to constitute the adopted person the next heir of the last male owner, no distinction can in this respect be drawn between pro perty which had come to the last male owner from his father and any other property which he may have acquired." On this reasoning, it was held that Anant was entitled also to the properties inherited by Keshav from Narayan.
Anant Bhikappa Patil (Minor) vs Shankar Ram Chandra Patil(1) must, in our opinion, be taken to decide that the doctrine of relation back will apply not only as regards what was joint family estate but also properties which had devolved by inheritance from a collateral.
Otherwise, it is impossible to justify the conclusion that the personal properties of Keshav which had vested in Shankar in 1917 would re vest in Anant even though he was adopted only in 1930.
The question arise how this decision is to be reconciled with the principle laid down in Bhubaneswari Debi vs Nilkomul Lahiri (2) that an adoption made subsequent to the death of a collateral do es not divest the inheritance which had vested prior to that date.
That that principle was not intended to be departed from is clear from the following observations of Sir George Raiikin: " Neither the present case nor Amarendra 's case(3) brings into 'question the rule of law considered in Bhuba neswari Debi vs Nilkomul Lahiri(3) (of Kalidas Das vs Krishnachandra Das(4)). .
Their Lordships say nothing as to these decisions which appear to apply only to cases of inheritance ' " Nor does the discussion in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil(1) throw much light on this matter.
Considerable emphasis is laid on the fact that a ooparcener has only a fluctuating interest in the joint family properties, that it may increase by death and decrease by birth, and that such a qualified (1) 70 I.A.232.
(3) 60 I. A. 242.
(2) 12 I.A. 137.
(4) 2 B.L.R. 103 F.B. 22 interest as that must carry with it the liability to be divested by the introduction of a new coparcener by adoption.
This reasoning, however, is wholly inapplicable to property which is not held in coparcenary, such as the estate of a collateral devolving by inheritance.
The judgment then refers to the decisions of the Board in Amarendra Mansingh vs Sanatan Singh(1) and Vijaysingji Chhatrasingji vs Shivsangji Bhimsangji(2), and it is observed that the impartible estates which were concerned therein were treated as separate property and not as joint family property, a conclusion which does not settle the question, because even on the footing that the estates were separate properties, no question of collateral succession was involved in them, the claim under litigation being ' in respect of the estate of the adoptive father and covered by the principle already established in Vellanki Venkata vs Venkatarama (3) and Verabhai vs Bhai Hiraba (4).
Then follows the conclusion already quoted that no distinction can be drawn between properties which come from the father and properties which come from others.
This is to ignore the principle that the doctrine of relation back based on the notion of continuity of line can apply and had been applied, only to the estate of the adoptive father and not of collaterals.
We may now turn to Jivaji Annaji vs Hanmant Ram.
Chandra (5) wherein the scope of the decision in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil (6) came up for consideration.
There, the material facts were that Keshav and Annappa who were members of a joint family effected a partition, and thereafter, Annappa died in 1901, leaving behind a widow, Tungabai.
Keshav died leaving behind a son, Vishnu, who died in 1918 without male issue, and the property being Watan lands devolved on a collateral called Hanmant as his heir.
In 1922 Tungabai adopted Jivaji.
The question was whether he was entitled to divest the properties which had become vested in Hanmant as the preferential heir of Vishnu, and the decision was that he was not.
It will be noticed that (1)60 I.A. 242.
(4) 30 I.A. 234.
(2) 62 I.A. Bom.
(3) 4 I.A. 1.
(6) 70 I.A. 232.
23 Annappa to whom the adoption was made had at the time of his death become divided from his brother, and the principles applicable to adoption by a widow of a deceased coparcener had therefore no application.
It was a case in which the adopted son laid a claim to properties, not on the ground that they belonged to the joint family into which he had been adopted but that they belonged to a collateral to whom he was entitled to succeed as a preferential heir, and it was sought to divest Hanmant of the properties which had vested in him in 1918 on the strength of the decision in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil (1) The contention was that if Anant could as adopted son divest the personal properties of Keshav which had devolved on Shankar as his preferential heir, Jivaji could also divest the properties which had devolved on Hanmant as the preferential heir of Vishnu.
The learned Judges made no secret of the fact that this contention received support from the decision in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil (1); but they were impressed by the fact that the statement of the law in Bhubaneswari Debi vs Nilkomul Lahiri (2) as to the rights of an adopted son quoad the estate of a collateral had been reaffirmed, and they accordingly held that the decision in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil (1) did not intend to alter the previous law that an adopted son could not divest properties which had been inherited from a collateral prior to the date of adoption.
They distinguished the actual decision on the ground that as Keshav had vested in him both the ancestral properties as well as the properties inherited from Narayan, and as admittedly there was a relation back of the rights of Anant in respect of the ancestral properties, there should likewise be a relation back in respect of the separate properties.
But it is difficult to follow this distinction.
If under the law the rights of an adopted son differ according as they relate to the estate of his adoptive father or to property inherited from collaterals, the fact that both classes of properties are held by the same person can make no difference in the quality of those rights.
The position will (1) 70 I.A. 232.
(2) 12 1 A. 137.
24 be analogous to that of a coparcener who has also self acquisitions, in which case, the devolution by survivorship of joint family properties does not affect the devolution by inheritance of the separate properties.
The fact is, as frankly conceded by the learned Judges, they were puzzled by the decision in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil (1), and as it was an authority binding on the Indian Courts, they could not refuse to follow it, and were obliged to discover a distinction.
This Court, however, is not hampered by any such limitation, and is free to consider the question on its own merits.
In deciding that an adopted son is entitled to divest the estate of a collateral, which had devolved by inheritance prior to his adoption, Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil (1) went far beyond what had been previously understood to be the law.
It is not in consonance with the principle well established in Indian jurisprudence that an inheritance could not be in abeyance, and that the relation back of the right of an adopted son is only quoad the estate of the adoptive father.
Moreover, the law as laid down therein leads to results which are highly inconvenient.
When an adoption is made by a widow of either a coparcener or a separated member, then the right of the adopted son to claim properties as on the date of the death of the adoptive father by reason of the theory of relation back is subject to the limitation that alienations made prior to the date of adoption are binding on him, if they were for purposes binding on the estate.
Thus, transferees from limited owners, whether they be widows or coparceners in a joint family, are amply protected.
But no such safeguard exists in respect of property inherited from a collateral, because if the adopted son is entitled on the theory of relation back to divest that property, the position of the mesne holder would be that of an owner possessing a title defeasible on adoption, and the result of such adoption must be to extinguish that title and that of all persons claiming under him.
The alienees from him would have no protection, as there could be no question of supporting the alienations on the ground of necessity (1) 70 I.A. 232. 25 or benefit.
And if the adoption takes place long after the succession to the collateral had opened in this case it was 41 years thereafter and the property might have meanwhile changed hands several times, the title of the purchasers would be liable to be disturbed quite a long time after the alienations.
We must hesitate to subscribe to a view of the law which leads to consequences so inconvenient.
The claim of the appellant to divest a vested estate rests on a legal fiction, and legal fictions should not be extended so as to lead to unjust results.
We are of opinion that the decision in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil(1) in so far as it relates to properties inherited from collaterals is not sound, and that in respect of such properties the adopted son can lay no claim on the ground of relation back.
The decision of the High Court in respect of C, Schedule properties must therefore be affirmed.
It was I finally contended that the defendants had blended C Schedule properties along with the admitted ancestral properties so as to impress them with the character of joint family properties.
The burden of proving blending is heavily on the plaintiff.
He has to establish that the defendants had so dealt with the properties.
as to show an intention I to abandon their separate claim over it.
This is a question of fact on which the Courts below have concurrently found against the appellant, and there are no grounds for differing from them.
In the result, the decree of the lower Court will be modified by granting the plaintiff a decree for half the value of the plots, section Nos. 634 and 635, section Nos. 639, 640 and 641 'and section Nos. 642, 644 and 645 as on the date of the suit.
Subject to this modification, the decree of the lower Court is confirmed, and; the appeal is dismissed.
In the circumstances, the parties will bear their own costs in this appeal.
Appeal dismissed.
(1) 70 I.A. 232.
| IN-Abs | It is well settled that proof of the existence of a Hindu joint family does not lead to the presumption that property held by any member of the family is joint and the burden rests upon any one asserting that any item of property was joint to establish the fact.
But where it is established that the family possessed some joint property which from its nature and relative value may have formed the nucleus from which the property in question may have been acquired the burden shifts to the party alleging self acquisition to establish affirmatively that the property was acquired without.
the aid of the joint family property.
Held, that on the facts the nucleus was not sufficient to discharge the initial burden which lay on the plaintiff of proving that the acquisitions were made with the aid of joint family properties.
Held, further, that even if the burden shifted on the defendants of establishing self acquisitions that had been discharged by proof and the ancestral lands were intact and the income derived therefrom must have been utilized for the maintenance of the members of the family.
While it is not unusual for a family to hold properties for generations without a title deed, an acquisition by a member would ordinarily be evidenced by a dead.
When, therefore, a property is found to have been in the possession of a family from time immemorial, it is not unreasonable to presume that it is ancestral and to throw the burden on the party pleading self acquisition to establish it.
On adoption by the Hindu widow, the adopted son acquires all the rights of an aurasa son and those rights relate back to the date of the death of the adoptive father.
The ground on which an adopted son is held entitled to take in defeasance of the rights acquired prior to his adoption is that in 2 the eye of law his adoption relates back, by a legal fiction, to the date of the death of his adoptive father, he being put in the position of a posthumous son.
These principles, however, apply only when the claim of the adopted son relates to the estate of the adoptive father.
But where succession to the properties of a person other than an adoptive father is involved the principle applicable is not the rule of relation back but the rule that inheritance once vested could not be divested.
The decision to the contrary in Anant Bhikappa Patil (Minor) vs Shankar Ramchandra Patil (70 I.A. 232) dissented from.
Appalaswami vs Suryanarayanamurti (I.L.R. at 447, 448); Babubhai Girdharal vs Ujamlal Hargovandas (I.L.R. ; Venka taramayya vs Seshamma (I.L.R. 1937 Madras 1012); Vythianatha vs Varadaraja (I.L.R 1938 Madras 696); Pratapsing Shivsing vs Agarsingii Raisingji (46 I.A. 97 at 107); Vellanki Venkata vs Venkatarama (4 I.A. 1); Verabhai vs Bhai Hiraba (30 I.A. 234) Chandra vs Goiarbai (I.L.R. ; Amarendra Mansingh vs Sanatan Singh (60 I.A. 242) ; Balu Sakharam vs Lehoo Sambhaji (I.L. R. ; Neelangouda Limbangouda vs Ujjan Gowda (A.I.R. 1948 P.C. 165; ; Bhubaneswari Debi vs Nilkomul Lahiri (12 I.A. 137): Kally Prosonno Ghose vs Gocool Chunder Mitter (I.L.R. ; Nilkomul Lahuri vs Jotendro Mohan Lahuri (I.L.R. ; Raghunandha vs Brozo Kishoro.
(3 I. A. 154); Bachoo Hurkisondas vs Mankorebai (34 I.A. 107); Vijaysingji Chhatrasingji vs Shivasangji Bhimasangji (62 I.A. 161); Kalidas vs Krishnachandra Das (2 B.L.R. 103 F.B.) referred to.
Tivaji Annaji vs Hanmant Ramchandra (I.L.R. 1950 Bombay 510) approved.
|
Criminal Appeal No. 21 of 1965.
Appeal by special leave from the judgment and order dated May 19, 1964 of the Punjab High Court, Circuit Bench at Delhi in Criminal Appeal No. 7 D of 1963.
A.S.R. Chari, C.L. Sareen and R.L. Kohli, for the appellant.
B.R.L. lyenger, S.P. Nayar for R.N. Sachthey, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave was limited to the question whether the case comes under section 302 of the Indian Penal Code.
The case of the prosecution which has been accepted by 247 the learned Sessions JUdge and the High Court was,.
in brie as follows: On January 31, 1962, at about 2.30 p.m., a fight took place ' between Dalip Kumar, P.W. 12, and Harjinder Singh, appellant, near the water tap in front of a tin factory in Zamirwali lane, Delhi.
Harjinder was apparently worsted in the fight and he then left the place holding out a threat that he would teach a lesson to Dalip Kumar.
The appellant.
returned with his brother Amarjit Singh to the house of Dalip Kumar and shouted to Dalip Kumar to come out.
Tejibai opened the door of the house and asked the appellant and Amarjit Singh to go away, but either these two or the appellant pulled Dalip Kumar out of the house into the lane and gave him beating near a lamp post in the comer of Zamirwali lane.
that time the deceased Kewal Kumar, who was the brother of Dalip Kumar, came and tried to intervene and rescue his brother.
It is at this stage that the evidence conflicting as to what exactly happened, According to one version, Amarjit Singh accused caught hold of Kewal Kumar and the appellant took out the knife and stabbed the deceased.
According to the other version, given by Mohd. Ali, P.W. 5, this is what happened: "Dalip Kumar 's brother holding Jinda accused asked him not to fight.
Jinda at that time took out the knife from his pocket and opened it with both his hands and then gave a blow with it under the belly and the upper portion of the left thigh.
Amarjit Singh accused did not do.
anything.
" In cross examination he stated: "Jinda accused was holding Dalip Kumar from the collar of his shirt by his left hand.
At that time Kewal Kumar was on right hand side of Jinda accused.
When Jinda took out the knife and opened it with both his hands, Dalip Kumar and his brother Kewal were grappling with Jinda accused Jinda accused gave only one knife blow to Kewal Kumar.
Kewal Kumar was m bent condition when he was stabbed only once." After inflicting this injury the appellant ran away.
Dr. G. section ,Mittal, P.W. 8, noted the following injuries on the person of the deceased: 1.
A stab wound 1"x1/4"x? On left thigh upper and below the inguinal ligament.
Abrasion l" x linear on back of left fore arm middle.
He described the other features of the injuries as follows: 248 "The direction of the stab wound was Oblique and was going medially.
Sartorius muscle was cut underneath along with femoral artery and vein.
Cut over major part of their diameter.
There was effusion of blood in the muscles and around the track over left thigh upper end. " He deposed that death was due to shock and hemorrhage from injury to femoral vessels by stab wound of the thigh.
He further stated: "It is correct that femoral artery and vein are important main vessels of.
the body.
The cutting of these vessels would result in great loss of blood.
The cutting injuries of these vessels could result in immediate death or after short duration.
" It was urged before the Sessions Judge 0n behalf of the appellant that, in the circumstances of the case; the offence, if at all committed, Would fall under section 326, I.P.C. The learned Sessions Judge, relying on Virsa Singh vs State of Punjab (1), he/d: "In this case, the prosecution has proved that the bodily injury, the nature of which has been described above was present.
This injury was caused with the pen knife deliberately.
It was not accidental or unintentional.
Injury of any other kind.
was not intended.
This injury in the opinion of this doctor was sufficient in the ordinary course of nature to cause death.
This being so the case ; would apply and the offence which the accused Jinda has committed falls u/s 302 Indian Penal Code." The High Court, on appeal, over ruled a similar contention in the following words: "Lastly, the counsel has attempted to take the case out of the purview of the offence of murder.
It has been contended that it was.
just a small knife with which a blow was given and that it was not on the vital part of the body and, therefore, the appellant should not be held guilty of murder.
In my opinion, the contention is wholly unsustainable.
The deceased, a boy of about 16 years of age had merely come to help his brother, when the appellant, who had deliberately come armed with knife from his house, stabbed the deceased with that knife on vulnerable part.
1 do not see how the (1) ; 249 offence can be considered not to fall within the purview of murder.
" Later, the High Court observed: "It is futile to contend that he did not intend to kill the deceased.
The injury and the weapon are quite eloquent in this respect.
" The learned counsel for the appellant, Mr. Chari, contends on the facts established in this case no offence under section 302 s been committed and the appellant should have been connected under section 326 or at the most under section 304, part two.
The learned counsel for the respondent strongly relies.
on the decision this Court in Virsa Singh vs Slate of Punjab(1) and he says at all the ingredients laid down in that case by this Court are ascent in this case and, therefore, the High Court was correct in firming the conviction of the appellant under section 302, I.P.C. It seems to us.
that all the ingredients which were laid down this Court in that case have not been established in this case.
Bose, J., speaking for the.
Court observed: "To put it shortly, the prosecution must prove the following facts before it can bring a case under section 300, "3rdly"; First, it must establish, quite objectively, that a bodily injury is present; Secondly, the nature of the injury must be proved.
These are purely objective investigations.
Thirdly, it must be proved that there was an intention to inflict that particular bodily injury, that is to say, that it was not accidental or unintentional, or that some other kind of injury was intended.
Once these three elements are proved to be present, the enquiry proceeds further and,.
Fourthly, it must be proved that the injury of the type just described made up of the three elements set out above is sufficient to cause death in the ordinary course of nature.
This part of the enquiry is purely objective and inferential and has nothing to do with the intention of the offender.
" The learned Judge further explained the third ingredient at p. 1503 in the following words: "The question is not whether the prisoner intended to inflict a serious injury or a trivial one but whether he (1) ; 250 intended to inflict 'the injury ' that is proved tO be present.
If he can show that he did not, or if the totality of ' the circumstances justify such an inference, then, of 'course, the intent that the section requires is not proved.
But if there is nothing beyond the injury and the fact that the appellant inflicted it, the only possible inference is that he intended to inflict it.
Whether he knew of its seriousness, or intended serious consequences, is neither here nor ,there.
The question, so far as the intention is concerned, is not whether he intended to kill, or to inflict an injury of a particular degree of seriousness, but whether he intended to inflict the injury in question; and once the existence of the injury is proved the intention to cause it will be presumed unless the evidence or the circumstances warrant an opposite conclusion.
In Rajwant singh vs
State of Kerala(1), Hidayatullah, J. referring to Virsa Singh vs state of Punjab(2), observed: "As was laid down in Virsa Singh vs State of Punjab. for the application of this clause it must be first established that an injury is caused, next it must be established objectively what the nature of that injury in the ordinary course of nature is.
If the.
injury is found to be sufficient to cause death one test is satisfied.
Then it must be proved that there was an intention to inflict that very injury and not so.me other injury and that it was not accidental or unintentional.
If this is also held against the offender the offence of murder is satisfied.
" It seems to us that the.
High Court has not considered whether the third ingredient laid down by Bose, J. in Virsa Singh vs State Punjab(2) has been proved in this case or not.
In our opinion the circumstances justify the inference that the accused did not intend to cause an injury on this particular portion of the thigh.
The evidence indicates that while the appellant was trying to assault Dalip Kumar and the deceased intervened, the appellant timing 'himself one against two took out the knife and stabbed 1he deceased, It also indicates that the deceased at that stage was in a crouching position presumably to intervene and separate the two.
It cannot, therefore, be said With any definiteness that the appellant aimed the blow tat this particular part of the thigh knowing that it would cut the artery.
It may be observed that the appellant had not used the knife While he was engaged in the fight with Dalip Kumar.
It was only when he felt that the deceased also came up against him that he whipped out the knife.
(1) A.I.R. 1965 S.C.1874, 1878 (2) ; 251 in these circumstances it cannot be said that it has been proved that it was.
the intention of the appellant to inflict this particular injury on tiffs particular place.
It is, therefore, not possible to apply cl. 3 of section 300 to the act of the accused.
Nevertheless, the deceased was in a crouching position when the appellant struck him with the knife.
Though the knife was " 5 to. 6" in length including the handle it was nonetheless a dangerous weapon.
When the appellant struck the deceased with the knife, he must have known that the deceased then being in a bent position the blow would land in the abdomen or near it a vulnerable part of the human body and that such a blow was likely to result in his death.
In these circumstances it would be quite legitimate to hold that he struck the deceased with the knife with the intention to cause an injury likely to cause death.
We are, therefore, of the opinion that the offence falls under section 304 Part 1.
The appeal is allowed and the conviction is altered from one under section 302 to section 304 Part 1 and the appellant is sentenced to seven years rigorous imprisonment.
G.C. Appeal allowed.
| IN-Abs | The appellant was convicted by the Sessions Judge under section 302 of the Indian Penal Code and the conviction was upheld by the High Court.
According to the prosecution evidence the appellant was trying to assault one D when the latter 's brother K intervened.
The appellant took out a knife and caused an injury on K 's thigh which cut an artery and resulted in his death.
In appeal, by special leave, before this Court it was urged that in the circumstances of the case the intention and knowledge requisite for an offence under section 302 I.P.C., had not been established.
HELD: (i) The appellant had not used the knife while he was engaged in the fight with D.
It was only when he felt that the deceased also came up against him that . he whipped out the ' knife.
The deceased was at that time in a crouching position.
In these circumstances it could not be said that the appellant intended to cause the injury in the thigh knowing that it would cut the artery.
It was, therefore, not possible to apply cl. 3 of section 300 to the act of the accused, and he was not guilty of murder.
[250 G H] Virsa Singh vs State of Punjab. ; , applied.
(ii) However, when the appellant struck the deceased with the knife, he must have known that the deceased then being in a bent position, the blow would land in the abdomen or near it a vulnerable ' part of the human body and that such a blow was likely to result in his death.
In these circumstances it would be quite legitimate to hold that he struck the deceased with the knife with the intention to cause an injury likely to cause death.
The offence, therefore.
clearly fell under section 304 Part 1.
[251 B C]
|
iminal Appeal No. 23 of 1965.
Appeal by special leave from the judgment and order dated July 17, 1964 of the Patna High Court in Criminal Revision No. 597 of 1963.
Nur ud din Ahmed and D. Goburdhan, for the appellant.
R.C. Prasad.
for respondent No. 1.
The Judgment of the Court was delivered by Hidayatullah, J.
This is an appeal against the judgment.
July 17, 1963.
of a learned single Judge of the High Court at Patna setting aside the acquittal of the appellant ordered by the 1 st Additional Sessions Judge.
Gaya and directing his retrial.
The only question in this appeal is whether the High Court in exercising its revisional powers under section 439 of the Code of Criminal Procedure acted in accordance with the principles settled by this Court for interference with acquittal by way of revision filed 288 by a private party.
To apply those principles, certain facts first be stated.
The appellant was tried on three charges levelled against him First was under section 302 of the Indian Penal Code for intentionally causing the death of one Kuldip Singh with a fire arm on December 18, 1961 in village Gajra Chatar; the second was attempt murder Kuldip Shigh 's companion Sarju Singh by shooting at him with the same weapon; and the third was the unlawful possession of the weapon (a revolver) which is an offence under the Arms Act.
It appears that there was some iII feeling between the appellant and Kuldip Singh, not directly, but because the appellant, who is a lawyer, was conducting cases on behalf of his sister in prolonged litigation started by Kuldip Singh and his party.
The litigation concerned the possession of land and it is admitted before us that all the cases had in fact ended in favour of the appellant 's sister.
The occurrence is stated to have taken place when an inquiry into a case under section 107 of the Code of Criminal Procedure was taking place.
A notice had been issued to Kuldip Singh 's party to show cause why they should not be proceeded against and asked to furnish interim bail.
The prosecution story is that the deceased Kuldip Singh accompanied by Sarju Singh the injured man, and one Musafir Singh (P. W. 12) were proceeding towards village Nawadah via Tilaiya Railway Station. ' They had started early in the morning and had taken an hour and a half to reach village Gajra Chatar where the incident is said to have taken place.
When they reached near a garden.
they found two persons sitting under a tree and approaching them they recognised the appellant but the other was unknown.
These persons began to shadow Kuldip Singh and his companions, and after they had proceeded a little further towards the garden, one of them fired at Kuldip on his back.
The prosecution case is that Sarju immediately turned round and attempted to catch hold of the appellant who had fired with a revolver, but 'the appellant shot Sarju on his leg behind the knee.
Thereafter.
the appellant and his companion ran away.
The report of the incident was made by Kuldip Singh himself who seems not to have lost his consciousness and in that report he named the appellant.
Subsequently, Kuldip made two dying declarations in which he again named the appellant as the assailant.
describing the weapon of attack as a revolver.
Kuldip died and the case was started against the appellant as stated already.
The, learned Sessions Judge on an appraisal of the evidence found it unsatisfactory.
He began by stating that the medical evidence as also the evidence of 'the ballistic expert (P.W. 17) clearly disclosed that the assault was not committed with a revol vet but with a shot gun.
He also could not believe the evidence.
289 that Sarju could be shot from behind when he was grappling with the appellant.
He felt that this created doubt as to whether the injured persons and Musafir who all consistently described the weapon as a revolver had in fact been able to see the weapon or to identify the assailant.
Having found this unworthy of credit, the learned Sessions Judge went into a number of other circumstances which in his opinion tended to show that the prosecution case was not free from concoction and hence not free from doubt.
He felt that the attack was from an ambush and the deceased and 1he witnesses had named the appellant with whom they had deep enmity but they had not seen the real assailant.
He accordingly gave the benefit of doubt to the appellant and ordered his acquittal.
In revision, the learned Judge in 'the High Court went into the evidence very minutely.
He questioned every single finding of the learned Sessions Judge and gave his own interpretation of the evidence and the inferences to be drawn from it.
He discounted the theory that the weapon of attack was a revolver and suggested that it might have been a shot gun or country made pistol which the villagers in the position of Kuldip and Sarju could not distinguish from a revolver.
He then took up each single circumstance on which the learned Sessions Judge had found some doubt and interpreting the evidence de novo held, contrary to the opinion of the Sessions Judge that they were acceptable: All the time he appeared to give the benefit of the doubt to the prosecution.
The only error of law which the learned Judge found in the Sessions Judge 's judgment was a remark by the Sessions Judge that the defence witnesses who were examined by the police before they were brought as defence witnesses ought to have been cross examined with reference to their previous statements recorded by the police, which obviously is against the provisions of the ' Code.
Except for this error, no defect of procedure or of law was discovered by the learned Judge of the High Court in his appraisal of the judgment of the Sessions Judge.
As stated already by us,he seems to have gone into the matter as if an appeal against acquittal was before him making no distinction between the appellate and the revisional powers exercisable by the High Court in matters of acquittal except to the extent that instead of convicting the appellant he only ordered his retrial.
In our opinion the learned Judge was clearly in error in proceeding as he did in a revision filed by a private party.
against the acquittal reached in 1he Court of Session.
The practice on the subject has been stated by this Court on more than one occasion.
In D. Stephens vs Nosibolla(1), only two grounds are mentioned by this Court as entitling the High Court set aside an acquittal in a revision and to order a retrial.
They 290 are that there must exist a manifest illegality in the judgment of the Court of Session ordering the acquittal or there must be a gross miscarriage of justice.
In explaining these two propositions, this Court further states that the High Court is not entitled to interfere even if a wrong view of law is taken by the Court of Session or if even there is misapprehensions of evidence.
Again, in Logendranath Jha and others vs Shri Polailal Biswas(1), this Court points out that the High Court is entitled in revision to set aside an acquittal if there is an error on a point of law or no appraisal of the evidence at all.
This Court observes that it is not sufficient to say that the judgment under revision is "perverse" or "lacking in true correct perspective".
It is pointed out further that by ordering a retrial, the dice is loaded against the accused, because however much the High Court may caution the Subordinate Court, it is always difficult to reweigh the evidence ignoring the opinion of the High Court.
Again in K. Chinnaswamy Reddy vs State of Andhra Pradesh(2), it is pointed out that an interference in revision with an order of acquittal can only take place if there is a glaring defect of procedure such as that the Court had no jurisdiction to try the case or the Court had shut out some material evidence which was admissible or attempted to take into account evidence which was not admissible or had overlooked some evidence.
Although the list given by this Court is not exhaustive of all the circumstances in which the High Court may interfere with an acquittal in revision it is obvious that the defect in the judgment under revision must be analogous to those actually indicated by this Court.
As stated ', ' not one of these points which have been laid down by this Court was covered in the present case.
In fact on reading the judgment of the High Court it is apparent to us that the learned Judge has reweighed the evidence from his own point of view and reached inferences contrary to those of the Sessions Judge on almost every point.
This we do not conceive to be his duty in dealing in revision with an acquittal when Government has not chosen to file an appeal against it.
In other words, the learned Judge in the High Court has not attended to the rules laid down by this Court and has acted in breach of them.
We have had the two judgments read out to us and we are of opinion that there is much that can be said in favour of the judgment of the Sessions Judge who probably felt that the identity of the real assailant not having been found, the persons chose to name the most likely persons or one who was responsible for their discomfiture in the litigation which was going on for years.
That the appellant might have hired some assassins or might even have himself been present at the occurrence may be true but the question (1) ; (2) ; 291 was whether the Sessions Judge was not within his rights in rejecting the prosecution case on a proper appraisal of the evidence which he found to be unsatisfactory.
Looking to all the circumstances that have been brought to our notice, we are satisfied that the Sessions Judge acted within his rights in deciding the case which to us appears also to be somewhat doubtful in many respects and the High Court was therefore in error in taking upon itself the l duty of hearing a revision application as if it was an appeal and setting aside the acquittal not by convicting the accused but reaching the same result indirectly by ordering a retrial.
In our opinion, the judgment of the High Court cannot be allowed to stand.
The appeal succeeds and the order of retrial is therefore revoked and the acquittal is restored.
Y.P. Appeal allowed.
| IN-Abs | In a revision filed by a private party, the High Court in its powers under section 439, Code of Criminal Procedure directed the retrial of the appellant, who had been acquitted by the Sessions Judge.
In doing so.
the High Court, went into the evidence very minutely, questioned every finding of the Sessions Judge, gave its own interpretation of the evidence de novo.
HELD: In setting aside an acquittal in a revision and ordering a retrial, there must exist a manifest illegality in the judgment of acquittal or a gross miscarriage of justice.
An interference in revision with an order of acquittal can only take place, if there is a glaring defect of procedure such as that the Court has no jurisdiction to court had shut out some material evidence which was admissible or attempt to take into account evidence which was not admissible or had overlooked some evidence.
Although the list given is not exhaustive of all the circumstances in which the High Court may interfere with an an, acuital in revision it is obvious that the defect in the judgment under revision must be analogous to those actually indicated by this Court.
[290 A,D E] D. Stephens vs Nosibolla, ; , Logendranath ]ha and others vs Shri Polailal Biswas; , and K. Chinnaswamy Reddy vs State of Andhra Pradesh, ; , followed.
|
Criminal Appeal No. 250 of 1964.
Appeal from the judgment, and order dated March 14, 1963 of the Gujarat High Court in Criminal Revision Application No. 124 of 1961.
R. Ganapathy Iyer and S.P. Nayar, for the appellant.
M.V. Goswami and C.C. Patel, for the respondent.
The Judgment of the Court was delivered by Hidayatullah, J.
In this appeal by certificate under article 134( 1 ) (c) of the Constitution the State of Gujarat appeals against 178 the judgment, March 14, 1963, of the High Court of the State acquitting the respondents of diverse offences under the Forward Contracts (Regulation) Act, 1952.
Originally 31 persons were charged before the Judicial Magistrate, Ahmedabad, who acquitted 14 and convicted the rest.
The present respondents, who are 11 in number (accused 1 to 9, 11 and 12), were convicted under section 20(1)(c) of the Act and fined Rs. 51/ (15 days ' S.1.
in default).
They were also convicted under section 21(b) of the Act but no separate sentence was imposed.
Nine of them (accused 1 to 9) were further convicted under section 21(c) of the Act and fined Rs. 25/ (one week 's S.1.
in default).
The remaining accused were convicted under section 21 (b).
All appealed to the Court of Sessions Judge.
The conviction of accused 1 to 9, 11 and 12 was maintained but conviction under section 20(1)(b) was substituted for that under section 20(1)(c).
The other accused ' were convicted of all the charges.
The High Court was then moved in revision.
All the accused were acquitted of all the charges.
The State Government now appeals.
All respondents are members of the Ghee and Tel Brokers Association Ltd., Ahmedabad.
Nine of them are Directors and two of these are President and Secretary of the Association.
The accused, who are not before us, were brokers and servants of the Association or of the brokers.
The prosecution case is this: The Association has an office where the members and brokers used to enter into contracts for the sale and purchase of groundnut oil.
These contracts were largely speculative.
A large number of contracts used to be entered into but were not performed by actual delivery and payment of price.
They were adjusted on a due date after the expiry of a fixed period.
This period was generally from the 5th of one calendar month to the 25th of the following month and the latter was the due date.
On each Saturday during the period the Association exhibited the prevailing rate and according to that rate cross transactions entered earlier were adjusted and the persons in loss deposited money representing their particular losses with the Association.
On the due date all outstanding.transactions were finally adjusted by cancelling sales against purchases and delivery used to be ordered in respect of the balance which had to be completed by the end of the month of the due date.
During the stated period extensive trading through sales and purchases took place without any delivery.
Each member could enter into as many transactions of either kind as he liked provided that each transaction was in multiple of 50 Bengali Maunds.
Between March 5 and April 25, 1957 the total transactions put through totalled 4,33,600 Bengali Maunds but the actual delivery on the due date was about 5,500 Bengali Maunds only, that is to say, just over 11/4 per cent.
The share of the several operators in these deliveries was insignificant and the deals were really forward 180 any such member, becomes illegal, and the contract itself becomes void, except in the case of a person who has no knowledge that the transaction is prohibited.
We are not concerned with sections 16 and 17 and may omit them from consideration.
Then comes section 18, sub section (1) whereof provides: "18.
Special provisions respecting certain kinds of forward contracts. (1) Nothing contained in Chapter III or Chapter IV shall apply to non transferable specific delivery contracts for the sale or purchase of any goods: Provided that no person shall organise or assist in organising or be a member of any association in any area to which the provisions of section 15 have been made applicable (other than a recognised association) which provides facilities.
for the performance of any non transferable specific delivery contracts by any party thereto without having to make or to receive actual delivery to or from the other party to the contract or to or from any other party named in the contract.
" This sub section read with sections 20 and 21 is at the foundation of :the charge and as section 19 is irrelevant here, we may proceed to read them at once.
We are concerned only with cls.
(b) and (c) of sub section
(1) of section 20 and (b) and (c) of section 21 and will, therefore.
omit the other clauses: "20.
Penalty for contravention of certain provisions of Chapter IV. (1) Any person who (a) (b) organises, or assists in organising, or is a member of, any association in contravention of the provisions contained in the proviso to sub section (1) of section 18; or (c) enters into any forward contract or any option in goods in contravention of any of the provisions contained in sub section (1) of section 15, section 17 or section 19, shall, on conviction, be punishable with imprisonment for a term which may extend to one 'year, or with fine, or with both.
179 transactions in which there was no intention to take or give delivery.
The prosecution, therefore, submitted that these were forward contracts prohibited under the Act and as the Association was not recognised the offences charged were committed.
The High Court having acquitted all the accused the State ' contends now that the acquittal recorded by.
the High Court is wrong and proceeds on a misapprehension of the provisions of the Act and of the facts on which the charges rested.
To consider the submissions of the parties the relevant provisions of 'the Act, which has been passed, among other things, to regulate forward contracts, will have to be seen.
Before we do so we may first glance at some definitions leaving out those attributes of the terms defined in which we are not interested.
"Forward contract" under the Act means a contract which is not a ready delivery contract but a contract for future delivery (section 2(c) ).
A "ready delivery contract" is one in which there is delivery and payment of price either immediately or within a period which is not to exceed 11 days even by consent of parties or otherwise (section 2(1) ).
The expressions "transferable specific delivery contract" and "non transferable specific delivery contract" are defined ' with reference to the latter expression which means a specific delivery contract, the rights or liabilities under which are not transferable (section 2 (f)) and "specific delivery contract ' means a forward delivery contract which provides for actual delivery of specific qualities or types of goods either immediately or during a period not exceeding 11 days at a price fixed thereby or to be fixed in the manner thereby agreed and in which the names of both the buyers 'and sellers are mentioned (section 2(m) ).
The effect of these definitions is clearly to distinguish, firstly, forward contracts from ready delivery contracts by limiting the time in which ready delivery contracts must be completed by delivery and payment of price; secondly, to distinguish between transferable and non transferable specific delivery contracts; and finally to distinguish forward contracts in which there is either no provision for actual delivery or the parties are not named, from a specific delivery contract.
The Act then proceeds to lay down in Chapter III the conditions of recognition of Associations.
Since this Association was admittedly not recognised it is unnecessary to review the provisions of that Chapter.
Chapter IV then makes certain provisions regarding forward contracts and option in goods.
Chapter V then provides for penalties.
The relevant provisions of these two Chapters need to be carefully considered.
Section 15(1) declares illegal forward contracts in notified goods and on the notification so issuing every forward contract in notified goods otherwise than between members of a recognised association or through or with 181 "21.
Penalty for owning or keeping place used for entering into forward contracts in goods.
Any person who (b) without the permission of the Central Government, organises, or assists in organising, or becomes a member of, any association, other than a recognised association, for the purpose of assisting in, entering into or making or performing, whether wholly or in part, any forward contracts in contravention of any of the provisions of this Act, or (c) manages, controls or assists in keeping any place other than that of a recognised association, which is used for the purpose of entering into or making or performing, whether wholly or in part, any forward contracts in contravention of any of the provisions of this Act or at which such forward contracts are recorded or adjusted, or rights or liabilities arising out of such forward ' contracts are adjusted, regulated or enforced in any manner whatsoever, or shall, on contravention, be punishable with imprisonment which may extend to two years, with fine, or with both.
" The respondents were charged under sections 20 (1) (b).
, 20 (1) (c) and 21(a), (b), (c) and (f).
As the State does not press its case under section 21 (a) and (f) they have been left out.
Before we analyse the penalty sections it is necessary to see whether the case fails within section 18 (1) of the Act.
It is established in the case that the Association was unregistered.
It is also clear that the contracts, although they appeared to be non transferable specific delivery contracts were not intended to be completed by delivery immediately or within a period of 11 days from the date of the. contract.
In fact week after week contracts were cancelled by cross transactions and there was no delivery.
Instead of payment of price losses resulting from the cross transactions were deposited by the operators in loss with the Association.
Further, on the due date also, there was no delivery but adjustment of all contracts of sales against all contracts of purchase between the same parties and delivery was of the outstanding balance.
Even this delivery was often avoided by entering into fresh contract at the 182 rate prevailing on the due date, as part of the transactions in the next period.
There is evidence also to establish this.
In other words, the transactions on paper did seem to comply with the regulations but in point of fact they did not and the Association arranged for settlement of the entire transactions (barring an insignificant portion if at all) without delivery.
Turning now to the provisions of sub section
(1) of the 18th section it is clear that the provisions of Chapters III and IV would not have applied to the respondents if their transactions were true non transferable specific delivery contracts.
They would have been so if the nature of the transaction, not on paper, but in actuality was such as the Act contemplates.
This is why the proviso to section 18 has been added to prohibit certain things.
The proviso enacts that no person shall organise or assist in organising or be a member of an association (except a recognised association) which provides facilities for the performance of any specific delivery contract without having to make or to receive actual delivery.
The Legislature contemplates that the first sub section of section 18 might be complied with in the documents evidencing the contract but in actuality the contract might be differently performed and has, therefore, provided for 'the. identical situation which, arises in this case.
Now the difference between the Magistrate and the Sessions Judge arose on the application of the first sub section of section 18 with its proviso.
The Magistrate felt that the transactions were not non transferable specific delivery contracts and the matter fell within the proviso.
Having found this, it is not a little surprising that he did not apply section 20(1)(b), which was clearly attracted.
His reasoning on this point is difficult to appreciate.
He seems to think that as the first sub section of the eighteenth section dealt with non transferable specific delivery contracts, it had no application here.
Therefore, the charge of being members of an association in contravention of the proviso thereto did not survive and hence no offence under section 20(1)(b) was disclosed.
In this the Magistrate was clearly in error.
Section 18( 1 ) speaks of true non transferable specific delivery contracts but the proviso at the same time makes it illegal for an unrecognised association to so arrange matters that non transferable specific delivery contracts will be worked out without actual delivery.
The Magistrate should have seen that the conduct of the members of this unrecognised association was precisely this and was, therefore, prohibited by the proviso and directly punishable under section 20(1 )(b).
An offence under that clause of section 20(1) and also under el.
(c) of that section read with section 15 was made out.
There was no question of considering the matter first under the main part of the first subsection and 'then to put the proviso out of the way because the first sub section did not apply.
The Magistrate, however, con 183 victed the members under section 21 (b) for organising an unrecognised association for the purpose of assisting in or entering into or making or performing, whether wholly or in part, any forward contracts in contravention of the provisions of the Act and further under section 21 (c) for managing, controlling or assisting in keeping a place other than that of a recognised association where forward contracts in contravention of the Act or at which forward contracts are recorded or adjusted or rights or liabilities arising out of such forward contracts are adjusted, regulated or enforced in any manner whatsoever.
When the respondents.
appealed to the Sessions Judge, the conviction under section 21 (b) and (c) was confirmed and the other conviction was altered from section 20(1)(c) to section 20(1)(b).
The Sessions Judge rightly pointed out that the so called non transferable specific delivery contracts were so arranged that they could be resolved after the period of eleven days and without actual delivery.
The Sessions Judge was of the opinion that the respondents had acted in breach of the proviso to section 18 (1 ) and were clearly guilty of the offence.
In a precise and clear judgment the Additional Sessions Judge explained the pertinent sections and rightly held the proviso to section 18(1) and section 20(1)(b) applicable.
The High Court then in revision held that it was not open to the Sessions Judge to alter the conviction from section 20(1)(c) to section 20( 1 )(b) as the acquittal under the latter section by the Magistrate was not appealed against and in an appeal from a conviction there could be no change of finding to convert art acquittal into conviction.
The High Court also held that no offence under section 21 (b) or (c) was made out.
In a fairly long judgment the High Court pointed out that the decision of this Court in The State of Andhra Pradesh vs Thadi Narayana(1) prohibited the alteration of the finding.
The High Court then went further to hold that there could not be a conviction under section 20( 1 ) (c) as the Sessions Judge had acquitted the appellants and there was again no appeal against that acquittal.
The High Court also set aside the conviction under section 21 (b) and (c).
The High Court reached its conclusion on the 'basis of the finding of the Sessions Judge that the contracts entered into were non transferable specific delivery contracts and the appellants were, therefore, not guilty of the offence under section 20(1)(c) of the Act.
The High Court then proceeded to reason that as no part of the Act prohibited performance of non transferable specific delivery contracts otherwise than by making or receiving actual delivery, the acts of the appellants were not offences under the Act.
The learned Judge while dealing with section 18 ( 1 ) proviso observed: (1) 184 "The performance of a non transferable specific delivery contract by a mode other than giving and taking of actual delivery would be contrary to law only if there is some provision of law which prohibits it.
But unfortunately for the prosecution, the Legislature has not chosen to enact any such provision.
The only nearest approximation I could find was the proviso to sub section(1) of section 18 but that proviso does not prescribe that a non transferable specific delivery contract shall be performed by making and receiving actual delivery and that the parties to such a contract shall not perform it otherwise than 'by making and receiving actual delivery.
All that it enacts is that no person shall organise or assist in organising or be a member of any association in any area to which the provisions of section 15 have been made applicable (other than a recognised association) which provides facilities for the performance of any non transferable specific delivery contract by any party thereto without having to make or receive actual delivery to or from the other party to the contract or to or from any other party named in the contract.
What this proviso seeks to achieve is to secure that no Association other than a recognized Association shall provide facilities for performance of a non transferable specific delivery contract by the parties thereto without having to make or receive actual delivery.
But it is a long step in the argument to conclude from the proviso that performance of a non transferable specific delivery contract otherwise than by making and receiving actual delivery is prohibited.
The language of the proviso cannot bear any such extended artificial construction. . " The learned Judge was clearly in error and misunderstood the connection between the first sub section and its proviso.
Distinction is made in the proviso between recognised and unrecognised associations.
Persons can organise and assist in organising or be member of an association which is recognised even if the association provides for performance of non transferable specific delivery contracts without actual delivery.
The prohibition is against persons arranging for avoidance of delivery through an unrecognised association and read with the penalty sections, it is clear that such.
acts are rendered illegal.
If the acts are illegal then non transferable specific delivery contracts by members of unrecognised associations become illegal also.
They are forward contracts and being entered into otherwise than between members of a recognised association or through or with any such member are rendered illegal by section 15. 185 Thus there is no doubt whatever in the case that offences under section 21(b) and (c) were committed.
It is enough to read these clauses to see that they fit the acts of nine respondents (accused 1 9) and their position vis a vis the unrecognised association of which they were directors makes them liable to penalty under section 21 ( 'b) and (c) but the remaining two respondents (accused 11 and 12) being only members are liable to penalty under section 21 (b) only.
As regards the other offences under section 20(1)(b) and (c) we are clear that these offences were also committed.
But as the Sessions Judge acquitted them under cl.
(c) and there was no appeal to the High Court we say nothing about it.
As regards the offence under section 20(1)(b) the Magistrate did not clearly record a finding of acquittal.
However, his reasoning seems to be in favour of holding that the clause did not cover the case as the contracts were not non transferable specific delivery contracts.
His finding was the reverse of the finding of the Sessions Judge.
The question thus remains whether the Sessions Judge could alter the finding in an appeal from a conviction (and the High Court too if it so chose) when it was a question of choosing between two clauses of a penalty section depending on whether the true nature of the contracts was as held by the Magistrate.
The ruling of this Court cited earlier was invoked to suggest that such a course was not possible for the Sessions Judge or the High Court.
We do not pause to consider whether the ruling prohibits such a course and if it does whether it does not seek to go beyond the words and intendment of section 423(1)(b) of the Code of Criminal Procedure.
This is hardly a case in which to consider such an important point.
We, therefore, express no opinion upon it.
It is sufficient to express our dissent from the High Court on the interpretation of the Act and hold the respondents guilty of infractions where the ruling does not stand in the way.
We accordingly set aside the acquittal of the respondent under cls.
(b) and (c) of section 21 and restore their conviction under those clauses as confirmed by the Sessions Judge.
We sentence all the respondents to a fine of Rs. 25 (or one week 's simple imprisonment in default) under section 21(b).
No separate sentence under section 21 (c) is imposed on the respondents who were original accused Nos.
The appeal shall be allowed to the extent indicated.
in this paragraph.
Y.P. Appeal allowed in part.
| IN-Abs | The members of a Ghee and Tel Brokers Association, used to enter into contracts for the sale and purchase of groundnut oil.
Week after week contracts were cancelled by cross transactions and there was no delivery.
Instead of payment of price losses resulting from the cross transactions were deposited by the operators in loss with the Association.
On the due date also there was no delivery but adjustment of all contracts of sales against all contracts of purchase between the same parties and delivery was of the outstanding balance.
Even this delivery was often avoided by entering into fresh contract at the rate prevailing on the due date, as part of the. transactions in the next period.
The Sessions Judge convicted the respondents the Association 's President, Secretary and Directors.
holding that these were forward contracts prohibited under the Forward Contracts (Regulation) Act and the Association was not recognised.
The High Court set aside the convictions.
In appeal, this Court: HELD: Section 18(1) of the Act speaks of true non transferable 'specific delivery contracts but the proviso at the same time makes it illegal for an unrecognised association to so arrange matters that non transferable specific delivery contracts will be worked out without actual delivery.
Such conduct is prohibited by the proviso and directly punishable under section 20(1)(b).
An offence under that clause of section 20(1) and also under el.
(c3 of that section read with section 15 was made out.
There was no question of considering the matter first under the main part of the first sub section and then to put the proviso out of the way because the first sub section did not apply.
The Legislature contemplates that the first sub section of section 18 might be complied with in the documents evidencing the contract but in actuality the contract might be differently performed and has.
therefore, provided for the identical situation which arose in this case.
[182F H, D]
|
iminal Appeal No. 19 of 1965.
Appeal by special leave from the judgment and order dated E January 11, 1965 of the Calcutta High Court in Criminal Revision No. 46 of 1965.
A.K. Sen and S.C. Majumdar, for the appellants.
P.K. Chakravarti, G.S. Chatterjee for P.K. Bose, for respondent No. 1.
K.B. Mehta and Indu Soni, for respondent No. 2.
The Judgment of the Court was delivered by Hidayatullah, J.
This is an appeal on behalf of ten appellants who were charged for deserting their ship "S.S. Nilgiri" on or G about April 22, 1964.
They were convicted under sections 191(1)(a) and (b) and 194(b) and (e) read with section 436 of the .
Each of them was sentenced to suffer rigorous imprisonment for one month under section 191(1)(a) read with section 436 of the Act and also to forfeiture of 1/25 of the wages due.
Under section 194(e) they were fined Rs. 20/ each but no separate sentences were passed against them under section 191(1)(b) H and section 194(b) of the Act.
Their application for revision in the High Court of Calcutta was summarily rejected.
They now appeal by special leave granted by this Court.
308 The facts of the case are that the appellants had entered into a half yearly agreement with the Eastern Steamship Ltd. to navigate "S.S. Nilgiri" (Captain Hunter) between December 11, 1963 and June 10, 1964.
The terms of their agreement are exhibited as exhibit 1 in the case.
It appears that they had performed some voyages on board "S.S. Nilgiri" and on the day on which they are alleged to have deserted the ship, it had berthed in the Calcutta Port.
According to the custom obtaining in merchant shipping the ratings were allowed some bazar money (victualling charges).
The appellants claim that they should have, been paid Re. 1/ per day (the Company was paying only 62 paise per day).
When the ship was in dock, the appellants put in this demand on 21/22 4 1964, and the matter was referred to.
the Shipping Master Calcutta .
Meetings between the representatives of the Shipping Company and the seamen took place before the Shipping Master.
Minutes are available in the case.
Although oral testimony on behalf of the Company seems to give a lie to some parts of the minutes, it is obvious that some sort of an agreement took place under which the Company promised to pay these men the amount though it is.
not clear whether the amount was to be paid before the commencement of the next voyage or on the termination of the agreement.
Oral testimony on behalf of the company inclines to the latter.
But there is also the evidence that the Company had undertaken to pay the seamen the additional amount of 38 paise per person per day before the voyage was resumed.
Be that as it may, it appears that labour leaders at this stage began to take a hand in the dispute and prompted the appellants to leave the vessel in a body.
As a result the ship could not leave the port because ' the ratings had abandoned it and were not available at the appointed time of sailing.
The Presidency Magistrate before whom the appellants were tried for the offences already mentioned, held that their conduct amounted to.
desertion and that as they had no reasonable excuse for leaving their ship, they were guilty of the offences charged.
He accordingly sentenced them as already stated.
The High Court summarily rejected their revision.
In this appeal it is contended (a) that there was no desertion on the part of the appellants, and (b ) even if they be held to have left the ship they were protected by the fact that there was reasonable cause for absenting themselves at the time of the sailing of the ship.
The matter is governed by the Merchant Shipping Act, 1958.It does not define what is meant by desertion; but in Moore vs Canadian Pacific Steamship Co.(1) Mr. Justice Lynskey gave a (1) 309 definition of 'desertion ' from an early case (The West morland) as follows : "I think a deserter is a man who leaves his ship and does not return to.
it with no other purpose than to break his agreement.
" The gist of desertion therefore is the existence of an animus not to return to the ship or, in other words, to go against the agreements under which the employment of seamen for sea voyages generally takes place.
In our opinion, this definition may be taken as a workable proposition for application to the present case; There is nothing in this case to show that after the seamen left the vessel, they intended to return to it.
In fact they went and later took their baggage, because under the law penalty includes forfeiture of the effects left on board.
The whole tenor of their conduct, particularly the intervention of labour leaders is indicative of the fact that they left the ship with no intention to return to it unless their demands were met forthwith even though before the, Master the Company had stated that the matter would be finally considered at the end of the voyage and the termination of the agreement.
There are provisions in the Act under which the seamen have got rights to enforce payment against their employers by taking recourse to a Magistrate who in summary proceedings may decide what amount is due to them and order its payment.
It is true that this action could only be taken at Cochin where the registered office of the Company is situate, but in any event the crew were required under the agreement to take back the vessel to Cochin and could well have waited till they returned to the home port and then made the demand before the appropriate authority.
The way they have acted clearly shows that they were using the weapon of strike with a view to force the issue with their employers and were not intending to return to the vessel unless their demands were acceded to immediately.
In these circumstances, it is legitimate to infer that they were breaking the agreement with the company which was to keep the ship in voyage up to June 10, 1964 which could not take place if all the crew remained on shore and the vessel could not weigh anchor and leave the port without ratings.
We are, therefore, satisfied that this was a case of desertion and that it fell within the definition of the term as stated by us Section 191 ( 1 ) is in two parts.
The first part deals with only desertion and therefore, if desertion was proved, the penalty which the law provides under the Act was duly incurred.
There is no excuse against desertion because reasonable cause which is indicated in the same section is included in el.
(b) and not in el.
(1) ; 310 But even if one were to view their conduct as failing under (b) and not (a) as the courts have held, we see no excuse on their part.
The operation of shipping requires constant attention from its crew and it is not possible for a shipping company or a vessel to ply the ship if the crew at every port make demands and leave the ship in a body.
Such conduct would be subversive of all discipline on board.
It is not so long ago that seamen were put in stocks and chains and the leaders were made to walk the plank or hung from the yard arm Or at the least were flogged.
The law has made the life of seamen a little more liberal but has chosen to regard their duties as of paramount importance and has therefore, in addition to the ordinary liabilities which arise under the general law, added a penalty of imprisonment for absence from duty without reasonable cause and has also provided for forfeiture of wages and the effects left on board.
This indicates that the policy of the law is that the crew must perform their duties under such agreements as they execute with the shipping company on pain of being found guilty and punished if they cannot make out that they had sufficient and reasonable cause for what may otherwise be regarded as dereliction of duty.
In our opinion in the present case there was not that sufficient cause even for purpose of el.
(b) of section 191 (1).
After all the dispute was before the Shipping Master, meetings had taken place and minutes had been recorded.
The log book of the Shipping Company would show the different voyages and their duration and the muster roll would show the attendance of the crew.
It was a matter of mere arithmetical calculation between Re. 1/ per day and 62 paise per day to find out how much money was due to each of the ratings.
This would not amount to more than Rs. 30/ or Rs. 40/ per person and this claim might well have waited till the completion of the voyage, because the record of the entire proceedings was kept in the Shipping Master 's office and there was machinery in law for the enforcement of a demand.
In our opinion, the ratings were overweighed by their leaders and were induced to leave the ship in a body in a manner which can only be described as desertion and therefore their offence was fully established.
We see no reason therefore to interfere in this appeal which fails and will be dismissed.
R.K.P.S. Appeal dismissed.
| IN-Abs | The ten appellants were ratings who had entered into an agreement with a shipping company in Cochin to navigate one of its ships between December 11, 1963 and June 10, 1964.
During this period, after they had performed some voyages and while the ship was berthed in Calcutta port, a dispute arose between the appellants and the Company as to the payment of bazar money (victualling charges) which the ratings were allowed according to a custom obtaining in merchant shipping.
The appellants claimed Re. 1 per day while the Company normally paid only 0.62 P. per day.
The dispute was referred to the Shipping Master, Calcutta, whereupon meetings took place between representatives of the Company and the appellants before the Shipping Master and an agreement was reached according to which the Company promised to pay the amount claimed.
However, it was not clear whether this payment was to be made before the commencement of the next voyage or on the termination of the agreement.
As the appellants were in fact not paid before commencement of the voyage, upon the instigation of certain labour leaders they left the vessel in a body and, as a result, the ship could not leave port at the appointed time of sailing.
The appellants were thereafter prosecuted for deserting the ship and were convicted under section 191 and (b) and section 194(b) and (e) read with section 436 of the .
Their revision applications to the High Court were summarily rejected.
In the appeal to this Court by special leave, it was contended on behalf of the appellants (a) that there was no desertion on their part, and (b) that even if they be held to have left the ship, they were protected by the fact that there was reasonable cause for absenting themselves at the time.
of the sailing of the ship.
HELD: dismissing the appeal: (i) The gist of desertion is the existence of animus not to return to the ship or, in other words, to, go against the agreements under which the employment of seamen for sea voyages generally take place.
The way the appellants had acted clearly showed that they were using the weapon of strike with a view to force the issue ,with their employers and were not intending to, return to the vessel unless their demands were acceded to immediately.
It was therefore legitimate to infer that they were breaking the agreement with the company which was to keep the ship in voyage up to June 10, 1964 .
and this was rendered impossible by all the appellants absenting themselves.
Their action therefore amounted to desertion.
[309 B, F G] 307 Moore vs Canadian Pacific Steamship Co., ; The West morland; , ; referred to.
(ii), Section 191(1) is in two parts.
The first part deals with only desertion and therefore, if desertion was proved, the penalty which the law provides under the Act was duly incurred.
There is no excuse against desertion became reasonable cause which is indicated in the same section is included in cl.
(b) and not in el.
In the present case there was not that sufficient cause even for the purpose of el.
(b) of section 191(1).
The dispute was already before the Shipping Master, meetings had taken place and minutes had been recorded.
the log book of the shipping Company and other records would clearly show the mount of money due to the appellants.
The settlement of the claim could well have waited till the completion of the voyage and there was machinery in law for the enforcement of a demand.
[309 H; 310 D F] The law has chosen to regard the duties of seamen as of paramount importance and has therefore, in addition to the ordinary liabilities which arise under the general law, added a penalty of imprisonment for absence from duty without reasonable cause and has also provided for forfeiture of wages and the effects left on board.
This indicates that the policy of the law is that the crew must perform their duties under such agreements as they execute with the shipping company on pain of being found guilty and punished if they cannot make out that they had sufficient and reasonable cause for what may otherwise be regarded as dereliction of duty.
[310 C D]
|
Appeals Nos. 883, 915 to 967 and 1042 to 1044 of 1967.
Appeals from the judgment and order dated December 2, 5, 12 and 13, 1966 of the Gujarat High Court in Special Civil Applications Nos 1003, 1177, 1178, 1183, 1186, 1195, 1197 to 1202, 1205 to 1210, 1220 to 1222, 1244, 1275, 1374, 1377, 1380, 1387, 1389 of 1965, 68 to 70, 72 to 74, 76, 77, 80, 83, 84, 166, 183, 393, 399, 547, 554, 790 of 1966, 1187, 1188, 1233 of 1965, 75, 154, 202, 402, 403 of 1966, and 1179, 1184 and 1185 of 1965.
B. Sen, S.K. Dholakia and Vineet Kumar, for the appellant (in C.A. No. 883/1967).
S, K. Dholakia and Vineet Kumar, for the appellants (in C. As.
Nos. 915 to 967 and 1042 to 1044 of 1967).
S.V. Gupte, A.K. Kazi, O.P. Malhotra and S.P. Nayar, for the respondents (in C. As.
Nos. 883 and 915 to 967 of 1967).
A.K. Kazi, O.P. Malhotra and S.P. Nayar, for the respondents (in C. As.
1042 to 1044 of 1967).
The Judgment of the Court was delivered by Hidayatullah, J.
On March 10, 1965, the Government of Gujarat notified under section 4 of the Land Acquisition Act that certain lands were needed for a public purpose, namely, the construction of the capital of the State at Gandhinagar and that Government was satisfied that they were 'arable lands '.
Government further directed under section 17(4) of the Act that as the acquisition of the said lands was urgently necessary the provisions of section 5A of the Act shall not apply in respect of the lands.
A list of the lands was appended to the notification.
This notification was followed by another on JuLy 31, 1965 under section 6 of the ' Land Acquisition Act and it contained a direction under section 17 (1) of the Act, enabling the Collector, on the expiration of 15 days from the publication of the notice under section 9 (1) of the Act, to take possession of all arable lands specified in the earlier notification.
Both notifications were signed by L.P. Raval, Under Secretary to Government and were shown to be by order and in the name of the Governor of Gujarat.
Numerous petitions were filed in the High Court of Gujarat under article 226 of the Constitution by the owners of the lands Sup, C. I,/68 3 270 affected by the notifications to challenge the validity of the acquisition.
One such petition was numbered Petition No. 1003 of 1965 and it was typical of all the others.
The facts in all the petitions were the same, save the details of the lands, and as the contentions were also the same, the High Court pronounced a common judgment applicable to all, on December 2/5, 1966 and dismissed them.
The High Court, however, granted a certificate under article 133(1)(c) of the Constitution and the present appeals have been brought.
Civil Appeal No. 883 of 1967 arises from the Special Civil Application No. 1003/65 and the other appeals are in the other petitions.
This judgment will accordingly dispose of all the appeals.
Before we consider the arguments we may see the relevant provisions of the Land Acquisition Act.
The scheme of the Act, which entered into force almost seventy five years ago, is by now familiar to lawyers and courts and it is not necessary to refer in detail to it.
The High Court has painstakingly analysed the provisions already.
We shall refer in passing to what is material to the discussion, Acquisition of land under the Act originarily begins with a preliminary inquiry.
Government notifies first under section 4 that 'land in any locality is needed or is likely to be needed ' for a public purpose.
Public notices are also given.
This enables the officers of Government to enter upon lands to survey them and also enables persons interested to object to the acquisition generally and also particularly in accordance with the provisions of section 5A of the Act.
After the objections have been considered and Government has satisfied itself on the report or reports of the Collector that a particular land is needed, a second notification is issued under section 6 that a particular land is needed for the public purpose.
This declaration is conclusive evidence that the land is so needed and Government then proceeds to acquire the land.
The procedure is detailed in the sections that follow.
Under section 9 (1 ) the Collector causes public notices to be given that Government intends to take possession of the lands and that claim to compensation for all interests in lands shall be made to him.
Then commence proceedings for the fixation of compensation with the details of which procedure we are not presently concerned.
When these proceedings are completed the Collector makes his award about the true area, the compensation to be allowed and the apportionment of that compensation among persons known or believed to be interested.
When the Collector has made his award (which is made conclusive for certain purposes) section 16 enables him to take possession of the lands and the lands vest absolutely in Government free from all encumbrances.
The is provided in section 17.
Under this procedure Government in cases award.
There is a shorter procedure for cases of urgency and it is provided in section 17.
Under this procedure Government in cases 271 of urgency, is enabled inter alia to omit the application of section 5A and to notify the lands under section 6 at any time after the publication of the notification under section 4(1).
Under sub section
(1) of section 17, Government can direct the Collector, though no award has been made, to take possession of any waste or arable lands needed for the public purpose, on the expiration of fifteen days from the publication of the notice under section 9.
Under Sub s.(4) of the same section Government may direct that in the case of any land to which in its opinion the proviSiOns of the first sub section are applicable, the provisions of section 5A shall not apply and if it so directs a declaration may be made under section 6 in respect of that land at any time after the notification under section 4 (1) has been published.
It will therefore, be noticed that the shorter procedure has been followed here.
Before we refer to the grounds on which the action of Government is challenged we may read sections 4(1) 6(1) omitting the proviso, and s.17.
Although we are principally concerned with the first and fourth sub section of the last section we shall be required to refer to the remaining sub sections, and we shall read the section as a whole: "4(1) Whenever it appears to appropriate Government that land in any locality is needed or is likely to be needed for any public purpose, a notification to that effect shall be published in the Official Gazette, and the Collector shall cause public notice of the substance of such notification to be given at convenient places in the said locality.
6(1) Subject to the provisions of Part V/I of this Act, when the appropriate Government is satisfied, after considering the report, if any, made under section 5A, sub section (2), that any particular land is needed for a public purpose, or for a Company, a declaration shall be made to that effect under the signature of a Secretary to such Government or of some officer duly authorized to certify its orders and different declarations may be made from time to time in respect of different parcels of any land covered by the same notification under section 4, sub section ' ( 1 ), irrespective of whether one report or different reports has or have been made (whenever required) under section 5A, sub section (2).
17(1) In cases of urgency, whenever the appropriate Government so directs, the Collector, though no such award has been made, may, on the expiration of fifteen days from the publication of the notice mentioned in section 9, sub section (1), 272 take possession of any waste Or arable land needed for public purposes or for a Company.
Such land shall thereupon vest absolutely in the Government, free from all encumbrances.
(2) Whenever, owing to any sudden change in the channel of any navigable river or other unforeseen emergency, it becomes necessary for any Railway Administration to acquire the immediate possession of any land for the maintenance of their traffic or for the purpose of making thereon a river side or that station, or of providing convenient connection with or access to any such station, the Collector may, immediately after the publication of the notice mentioned in sub section (1) and with the previous sanction of the appropriate Government, enter upon and take possession of such land, which shall thereupon vest absolutely in the Government free from all encumbrances: Provided that the Collector shall not take possession of any building or part of a building under this sub section without giving to the occupier thereof at least forty eight hours ' notice of his intention so to do or such longer notice as may be reasonably sufficient to enable such occupier to remove his movable property from such building without unnecessary inconvenience.
(3) In every case under either of the preceding sub sections the Collector shall at the time of taking possession offer to the persons interested compensation for the standing crops and trees (if any) on such land and for any other damage sustained by them caused by such sudden dispossession and not excepted in section 24; and, in case s uch offer is not accepted, the value of such crops and trees and the amount of such other damage shall be allowed for in awarding compensation for the land under the provisions herein contained.
(4) In the case of any land to which, in the opinion of the appropriate Government, the provisions of sub section (1) or sub section (2) are applicable, the appropriate Government may direct that the provisions of section 5A shall not apply, and, if it does so direct, a declaration may be made under section 6 in respect of the land at 273 any time after the publication of the notification under section 4, sub section (1) In the High Court sub sections
(1 ) and (4) of section 17 of the Act were assailed under articles 14 and 19(1)(f) of the Constitution.
This argument was placed at the forefront.
In this Court this submission was relegated to the end.
Apparently not much faith was reposed in its potency.
The other arguments urged before the High Court and found against the appellants, were pressed with vigour upon us.
These arguments concern the issue of notifications invoking the shorter procedure and those notifications are questioned.
These arguments involve the validity of the notifications as (a) unauthorised by Government, (b) without formation of the necessary opinion on relevant matters, and (c) on erroneous assumption of facts.
The first ground, when amplified, is that D.P. Raval, Under Secretary, who signed the notifications under section 6 was not duly authorised to do so under the Act and the notifications were, therefore, invalid and of no effect.
The second ground is based on the assertion that there was no formation of opinion by the Government as regards urgency or that the lands were arable, and on both the points the Act requires Government to reach a decision, which fact has not been established if not disproved.
The third ground proceeds on the meaning of the expression 'arable land ' which, it is claimed, denotes land capable of cultivation or village but not land already under the plough.
We shall now proceed to consider each point in turn.
Raval 's authority to issue the notification under section 6 is questioned on the wording of the latter portion of that section where it is mentioned that "the declaration shah be made under the signature of a Secretary to such Government or some officer duly authorised to certify its orders.
" The argument is without substance The word 'Secretary ' is not defined either in the Land Acquisition Act or the General Clauses Act so as to exclude Additional, Joint, Deputy, Under or Assistant Secretaries.
If this were established, then it might be said that the word was intended to designate only the head of the secretarial department concerned with land acquisition.
No such indication is available from any source.
Nor was it necessary to invest any particular Secretary specially under the Act for no such requirement can be spelled out from the words relied upon.
On the other hand, the business of Government is regulated by the Rules of Business made under article 166 of the Constitution.
How those Rules operate will be more fully considered presently when we deal with the second point.
For the present it is sufficient to point out a few provisions of the Rules, Rule 7 provides: "7.
Each Department of the Secretariat shall consist of the Secretary to the Government, who shall be the 274 official head of that Department and of such other officers and servants subordinate to him as the State Government may determine : Provided that (a) more than one Department may be placed in charge of the same Secretary; (b) the work of a Department may be divided between two or more Secretaries.
" If this Rule stood by itself, it might have been necessary to place on record evidence to establish that the work of this Department was divided among the Secretaries and how, but Rules 13 and 15 additionally provide: "13.Every order or instrument of the Government of the State shall be signed either by a Secretary, an Additional Secretary, a joint Secretary, a Deputy Secretary, an Under Secretary or an AssiStant Secretary or such other officer as may be specially empowered in that behalf and such signature shall be deemed to be the proper authentication of such order or instrument." "15.These rules may to such extent as necessary be supplemented by instructions to be issued by the Governor on the advice of the Chief Minister," Rule 13 specifically places all Secretaries on equality for authentication of orders and instruments of Government and Rule 15 further authorises supplemental instructions which as we shall presently see were in fact issued.
Thus Raval was competent to sign the declaration as a Secretary.
It is not necessary to consider whether he can be treated as an officer 'duly authorised ' because he already had authority by virtue of his office and rule 13 of the Rules of Business contemplates officers other than Secretaries.
But if he did not possess the power as a Secretary he would undoubtedly have been competent as an officer duly authorised by virtue of rule 13 of the Rules of Business and that is all that section 6 requires.
No further special authorisation under the Act was necessary.
To overcome these rather obvious difficulties Mr. B. Sen raised the second point which was that the provisions of the Act require Government to form an opinion and this function cannot be delegated to the Secretaries and even if it could be delegated, strict compliance with Rules of Business and the instructions issued under Rule 15 was necessary.
He submits that there was no formation of the necessary opinion in the case before action under section 17(1) or (4) was taken.
To understand this argument 275 provision on the subject.
To begin with Art.166 of the Constitution provides.
Conduct of business of the Government of a State.
(1) All executive action of the Government of a State shall be expressed to be taken in the name of the Governor.
(2) Orders and other instruments made and executed in the name of the Governor shall be authenticated in such manner as may be specified in rules to be made by the Governor, and the validity of an order or instrument which is so authenticated shall not be called in question on the ground that it is not an order or instrument made or executed by the Governor.
(3) The Governor shall make rules for the more convenient transaction of the business of the Government of the State, and for the allocation among Ministers of the said business in so far as it is not business with respect to which the Governor is by or under this Constitution required to act in his discretion.
" It is obvious that the executive action of the Government was in fact expressed to be taken in the name of the Governor, and that the orders were authenticated in the manner required by rule 13 of the Rules of Business already quoted.
The validity of the order could not, of course, be called in question that it was not an order made by the Governor.
Had the Government sheltered itself behind the constitutional curtain, it is a little doubtful the appellants could have successfully pierced this barrier by merely stating that the Government had not passed the orders or made the necessary determination without alleging definite facts.
In addition to the constitutional provision there is also the presumption of regularity of official acts.
Orders of Government, whether at ministerial or gubernatorial level, are all issued in the same form and the constitutional protection as well as the presumption both cover the case.
But, as it happens frequently, Government tried to establish that everything was regular.
A batch of counter affidavits was filed on behalf of Government to show how the matter was dealt with from stage to stage and the appellant filed affidavits in rejoinder and were not slow to point out infractions or supposed infractions.
As they sought to do this on facts furnished by the 276 affidavits on behalf of Government we may say a word about those affidavits.
No less than eight affidavits were filed by Government and five affidavits including one supporting the petition were filed by the petitioner in Special Civil Application No. 1003 of 1965.
Other affidavits on behalf of the other petitioners repeated the allegations.
The affidavits filed with the petitions had averted only that Government had not 'made up its mind regarding acquired lands ', that the satisfaction was 'mala fide ' and 'colourable ' and that the gap of time between the two notifications itself showed that there was no urgency.
The affidavits also raised the issue that the lands were not 'arable lands '.
Government apparently took up the challenge and flied affidavit after affidavit.
The first affidavit was filed by L. P. Raval, Under Secretary (Oct. l, 1965) that the lands were arable lands ' and Government had formed the opinion about urgency, and further that the determination of these two matters by Government was not justiciable.
This was followed by an affidavit by the Executive Engineer (Oct. 8, 1965) who stated that the master plan was ready which involved 12 villages including Pethapur where these lands are situated.
The lands were involved in the construction of main roads and the laying out of sectors.
He explained the delay between the two notices on the ground that survey had to be done and that took time but reaffirmed that the matter was urgent.
The appellants promptly questioned the formation of opinion by alleging 'that Government had not formed the opinion and that the affidavit of Raval did not establish this.
In reply another Under Secretary (Nimbalkar) filed an affidavit (Nov. 8 1965) that Jayaraman, Deputy Secretary was 'subjectively satisfied ' that the lands were 'arable lands ' and that there was urgency and asserted that both matters were for the subjective determination of Government and thus not open to question in a court of law.
This was followed by another affidavit in rejoinder from the appellants (November 24, 1965) 'that Jayaraman had not personally filed any affidavit and therefore it was not clear who had made the subjective determination regarding the matters disputed and the public purpose.
Raval 'then swore another affidaVit (August, 1966) giving details of the urgency and stated that he had considered the need for issuing the notification under section 4 and that 'it was decided ' to apply section 17(4).
He also stated that the notification under section 6 and the application of section 17(1 ) was considered first by him and then by Jayaraman and they had agreed to issue the notification and apply section 17(1).
Another affidavit ill rejoinder was filed during the hearing (December 2, 1966) that neither Raval nor Jayaraman had stated that they had satisfied themselves about section 17(4) nor had Raval or Jayaraman stated that they were authorised by the State Government 277 or by the Rules of Business or by any special order to form the said opinion.
A number of affidavits were then fled.
The Minister in Charge filed an affidavit in which he said: ". .for the purpose of urgently acquiring the lands for the Capital Project, I had given instructions initially to Shri S.M. Dudam and subsequently to Shri A.S. Gill after he became the Secretary of the Revenue Department, and had made arrangements with them, during their respective tenures as Secretaries of the Revenue Department, to take necessary action for urgent acquisition of lands for the Capital Project and had also instructed them that they or the concerned Deputy Secretaries or Under Secretaries in the Revenue Department may, without bringing the cases to my personal notice and without referring such cases to me, issue notifications under sections 4 and 6 o/the Land Acquisition Act and may apply urgency clause under section 17(1) and (4) of the said Act as the case may be wherever it was possible to invoke the urgency clause according to law." S.M. Dudani who was Secretary 'till April 2, 1965 and A.S. Gill who followed him swore two affidavits.
Their purport was almost the same A.S. Gill said: ". .Shri
Utsavbhai section Parikh, the Hon 'ble Minister for the Revenue Department for the purpose acquiring lands urgently for the Capital Project had given instructions to me and had made arrangements with me to take necessary action for urgent acquisition of lands for the Capital Project and had also instructed me that myself or the concerned Deputy Secretaries or the Under Secretaries in the Revenue Department may, without bringing the cases to his personal notice and without referring such cases to him, issue notifications under sections 4 and 6 of the said Act and may apply urgency clause under sections 17(1) and (4) of the said Act, as the case may be, wherever it was possible to invoke the urgency clause according to law.
I had given instruction to the concerned Deputy secretaries and the under Secretaries of the Revenue Department to take necessary actions under sections 4 and 6 of the said Act and to apply the urgency clause wherever it was possible according to law.
" The appellants then filed a last affidavit in rejoinder denying the power of the Minister to delegate by oral instructions his own 278 power to the Secretary and questioned the sub delegation to the Deputy and Under Secretaries.
It would thus appear that the controversy got enlarged as time passed and Government undertook more and more burden although there was hardly any attempt by the appellants to support their assertions by mentioning any facts.
The High Court noticed in its judgment that there was really nothing in the original affidavit supporting the petition which Government need have answered and yet it allowed affidavits to be filed during the hearing and even in the midst of the pronouncement of the judgment.
Each affidavit on the side of Government itself enabled the appellants to enlarge their allegations and to take up new stands.
This unusual course appears to have been permitted from a desire to be just and fair but was hardly proper and the High Court ought really to have stemmed the flow of affidavits, keeping the appellants to their burden and the Government to its burden, if any.
The Government also did not leave the appellants to their burden which would have been heavy in view of the presumption and the provisions of article 166(2) already mentioned.
The High Court having before it allegations, counter allegations and denials dealt first with the legal side of the matter.
Then it readily accepted the affidavits on the side of Government.
If it had reversed its approach it need not have embarked upon (what was perhaps unnecessary) an analysis of the many principles on which onus is distributed between rival parties and the tests on which subjective opinion as distinguished from an opinion aS to the existence of a fact, is held open to review in a court of law.
As stated already there is a strong presumption of regularity of official acts and added thereto is the prohibition contained in article 166(2).
Government was not called upon to answer the kind of affidavit which was filed with the petition because bare denial that Government had not formed an opinion could not raise an issue.
Even if Government under advice offered to disclose how the matter was dealt with, the issue did not change and it was only this.
Whether any one at all formed an opinion and if he did whether he had the necessary authority to do so.
The High Court having accepted the affidavits that Raval and Jayaraman had formed the necessary opinion was only required to see if they had the competence.
The High Court after dealing with many matters held that they had.
Mr. B. Sen has, therefore, very rightly confined himself to this aspect of the case.
and has questioned the competence of Raval and Jayaraman to act for the Government.
His contention is that the procedure followed by the Minister in Charge offended the Rules of Business and therefore the necessary satis 279 faction or the opinion of Government was wanting in the case.
In support he has relied upon Emperor vs Shibnath Banerji(1).
Mr. Sen 's argument proceeds like this: Under the Rules of Business (Rule 4) the business of Government is to be transacted in the Department specified in the First Schedule and item No. 15 covers the topic of acquisition of property and the principles on which compensation is to be determined and it is assigned to the Revenue Department.
Each Department of the Secretariat consists of a Secretary to the Government (Rule 7) but the work may be divided between two or more Secretaries.
The Minister in Charge is primarily responsible for the disposal of the business appertaining to the Department (Rule 10).
Therefore only 'the Minister for Revenue could decide questions.
Referring to the oral instructions said to have been given by the Minister, Mr. Sen refers to the instructions issued by the Governor under Rule 15 and draws attention to paragraph 3 of the instructions which reads: "3.
Except as otherwise provided in these Instructions, cases shall ordinarily be disposed of by, or under the authority of the Minister in Charge, who may by means of standing orders, give such directions as he thinks fit for the disposal of cases in the Department.
Copies of such standin g orders shall be sent to the Governor and the Chief Minister.
" He contends that a general instruction of the type mentioned by the Minister in his affidavit could only be given as a standing order of which a copy had to be sent to the Governor and the Chief Minister and, therefore, the oral instructions had no validity in law.
He submits in the alternative that at least an order in writing ought to have been passed.
Mr. S.V. Gupta in reply contends that this overlooks the opening words of Rule 10 which are "without prejudice to the provisions of rule 7," indicating that the business of land acquisition is to be transacted in the Revenue Department (Rule 4) by the Secretary to the Department (Rule 7 read with Rule 10) although the Minister is primarily responsible for the disposal of the business.
He then draws attention to the provisions of Rule 13 where a Secretary is equated to Additional, Joint, Deputy, Under and Assistant Secretaries for certain purposes and the definition of Secretary in paragraph (1 )(vii) which includes these other functionaries for 'the purpose of the Instructions.
Mr. Gupte next reads with paragraph 3 the provisions of paragraphs 4 and 5 which provide: (1) L.R. 72 I.A. 241.
280 "4.
Each Minister shall arrange with the Secretary of the Department what matters or classes of matters are to be brought to his personal notice." "5.Except as otherwise provided in these Instructions cases shall be submitted by the Secretary in the Department to which the case belongs to the Minister in charge." Mr. Gupta contends that there is nothing in the Rules or Instructions that oral instructions, if clearly issued, cannot confer on the Secretaries the power to make determinations and submits that Standing Orders refer to all cases generally and oral instructions ,can be issued in certain particular contingencies and this was done as stated in the affidavits of the Minister, A.S. Gill and S.M. Dudani which have been accepted.
He contends that there is no sub delegation because Rule 7(b) covers this case.
In our judgment the argument of Mr. Gupte is valid.
There is nothing in the Rules or Instructions which prescribes that the authority must be in writing or by Standing Orders.
Standing 'Orders are necessary for the disposal of cases in the Department (paragraph 3) and this applies to cases generally.
Paragraph 4, on the other hand, refers to "matters or classes of matters" and that is not a "case" but a "matter" in a case.
The definition of case in the Instructions is: "Case includes the papers under consideration and all previous papers and notes put in connection therewith to enable the question raised to be disposed of", but this definition is excluded by the context.
Although the case belongs to a Department [paragraph 2(i)],the word case in paragraph 3 obviously refers to the disposal of cases and not to matters arising in a case regarding which the Minister may arrange with the Secretary whether they are to be brought to his personal notice or not.
The matters here were application of section 17(1) and (4) to the acquisition of waste and arable lands and the Minister could leave this matter to his Secretaries as he did.
For this purpose Standing Orders were not only not necessary but would be inappropriate.
Reliance was placed upon the decision of the Orissa High Court in Shayamaghana Ray vs State(1) that Rules 15 must prevail over the instructions.
But 'that Rule itself provides that the Rule may be supplemented by instructions and the power so conferred was available in paragraph 4 to provide that the 'Minister may arrange with the Secretary of his Department what ,(1) A.I.R. 1952 Orissa 230.
281 matters or classes of matters are to be brought to Iris personal notice.
This dispenses with the taking of orders of the Minister each time.
Sen then refers to the words of ss.4, 6 and 17(1) and (4) which are different.
In s.4 the words are whenever it appears to the appropriate Government that land in any locality is needed or is likely to be needed ' while in s.6 the words are 'when the appropriate Government is satisfied ' and in section 17(4) the words are 'in the opinion of the appropriate Government '.
He contends that some difference must be made between them and when sub sections
(1 ) and (4) of s.17 require, a direction from the appropriate Government the determination must be by the Minister himself.
If the sections stood by themselves this argument would be unanswerable but we have the Rules of Business which specifically allow conferral of powers on Secretaries and the determination of the Secretary becomes the determination of Government.
Sen 's reference to Emperor vs
Shibnath Banerji 's case(1) is not apposite because the circumstances there were different.
That case arose from petitions under section 491 of the Code of Criminal Procedure seeking directions in the nature of habeas corpus on behalf of certain pensons detained in pursuance of orders made under Rule 26 of the Defence of India Rules 1939.
It appears that detentions were dealt with in Bengal in the Home Department and the Home Minister Bengal, in the Bengal Legislative Assembly in answer to interpellations, slated that he had directed that on receipt of the report of arrest under Rule 129 (Defence of India Rules 1939) together with a recommendation by the police for detention under Rule 26, orders of detention under Rule 26(1) (b) should at once be issued as a matter of course subject to review by Government on receipt of further details.
As Lord Thankerton pointed out tthat clearly meant the substitution of the recommendation by the police in place of the recommendation of the Governor prescribed by Rule 26 and equally rendered any order under r. 26 in conformity with the Home Minister direction, to which their Lordships referred as the routine order, ab initio void and invalid as not being in conformity with the requirements of r. 26.
Further Mr. Porter, the Additional Home Secretary, in an affidavit regarding Shibnath Banerji stated: "10.
Shibnath Banerji: He was arrested by the Police under r. 129, Defence of India Rules on 20th October 1942.
On 27th October 1942, I considered the materials before me and in accordance with the general order of Government directed the issue of an order of detention under r.26(1)(b) Defence of India Rules.
On receipt of fuller materials the case was later submitted for consideration of the Honourable 282 Home Minister, Bengal, from whom no order directing withdrawal or modification of the order of detention was received." "Their Lordships are unable to read Mr. Porter 's state ment that he had considered the materials before him as involving anything more than he has considered the report of the arrest and the recommendation of the police to see if there was material sufficient to justify the issue of an rder under the routine order.
It cannot mean that, in spite of the direction of the Home Minister in the routine order, he considered the materials before so as to satisfy himself, independently of the police recommendation that an order under r.26 should be issued.
That would not be in accordance with the requirement of the routine order that the police having recommended it the order of detention should be issued as a matter of course.
The position in the present case is different.
If Mr. Porter had sworn the affidavit that he had considered the need for detention, quite apart from the routine order, the result might have been different because of the orders being in the name of the Governor and by his order.
In any case Mr. Porter admitted that he had not considered the matter.
In our case the Secretaries concerned were given the jurisdiction to take action on behalf of Government and satisfied themselves about the need for acquisition under section 6, the urgency of the matter and the existence of waste and arable lands for the application of sub sections
(1) and (4) of section 17.
In view of the Rules of Business and the Instructions their determination became the determination of Government and no exception could be taken.
Of course, if Government had relied upon the provisions of article 166(2) and the presumption of regularity of official acts, all this enquiry would have become unnecessary since the appellants had not originally pleaded any fact.s leading to any enquiry.
However, on a review of the affidavits the provisions of the Act and the Business Rules and instructions we are satisfied that the directions under sub sections
(1) and (4) of section 17 were not invalid.
This brings us to the contention that since the lands in question were under cultivation, they did not constitute 'waste or arable lands ' because by arable land is meant land capable of being ploughed or fit for village and not land actually Cultivated.
The High Court has rejected this contention disagreeing with a decision of the Bombay High Court reported in Sadruddin Sideman vs 283 J.H. Patwardhan(1).
Mr. Sen has adopted the judgment of the Bombay High.
Court as part of his argument.
Mr. Gupte in his reply has ruled upon Guntur Ramalakhsmana and Others vs Government of Andhra.
Pradesh and another(2), Baldeo Singh and others vs State of Uttar Pradesh and others(3) and Smt.
Lakshmi Devi & others vs The State of Bihar and others(4) and the reasons given in the judgment under appeal.
We shall first deal with the three rulings from Andhra Pradesh, Allahabad and Patna High Courts.
The first contains no discussion and may not be referred to here.
In the case from Allahabad reference is made to section 17 ( 3 ) of the Act (already quoted) in which there is a provision that standing crops must be compensated for and it is inferred that by 'arable lands ' must be meant not only land fit for cultivation but also land actually under cultivation.
In the case from Patna reference is made to Halsbury 's Laws of England (II Edn.) Vol.
14 p. 633 paragraph 1187, where arable land is shown as including untilled land.
In the case from Bombay relied upon by Mr. Sen three different reasons were given.
First several dictionaries were referred to and reliance was placed upon the Oxford Dictionary in preference to Webster 's particularly because the Oxford Dictionary did not mention land under actual cultivation as one of the meanings although Webster 's Dictionary did.
The learned Judges next referred to the etymology of the word 'arable ' and finally to the dicta of Judges in Palmer vs McCormick(5) and 'Simmons vs Norton(6).
Support was then found for the view in section 17(3) of the Act, the mention of compensation for standing crops notwithstanding.
There is no definition of the word 'arable ' in the original Land Acquisition Act.
A local amendment includes garden lands in the expression.
Now lands are of different kinds: there is waste land desert land, pasture land, meadow land, grass land wood land, marshy land, hilly land, etc.
and arable land.
The Oxford Dictionary gives the meaning of 'arable ' as.
capable of being ploughed; fit for village; opposed to pasture land or wood land and gives the root as arablis in Latin.
The learned Judges have unfortunately not given sufficient attention to the kinds of land and the contrast mentioned with the meaning.
Waste land comes from the Latin vastitas or vastus (empty, desolate, without trees or grass or buildings).
It was always usual to contrast vastus with incultus (uncultivated) as in the phrase 'to lay waste ' (agrivastate).
A meadow or pasture land is pratum and arable is arvum and Cicero spoke 'of prata et arva (meadow and arable (1) A.I.R. 1965 Bom.
(2) A.I.R. 1967 A.P. 280.
(3) A.I.R. 1965 All.
(4) A.I.R. 1965 Pat.
(5) [1890] 25 Ir.
Rep.110.
(6)[1831] ; E.R. 249.
284 lands).
Grass land is not meadow or pasture land and in Latin is known as campus as for example the well known Campus Marflus at Rome, where the comitia (assembly of the Roman people ) used to meet.
Woodlands is silvae, nemora or saltus.
We have given these roots became a great deal depends on the distinctions thus visible in understanding the judicial decisions of English and Irish Courts.
Lands described in different combinations of words such as waste and arable or arable and pasture or pasture and woodland emphasise different aspects of land.
In many cases the change from one kind of use to another was held to be waste.
It is in this sense that Coke on Littleton 53b (quoted in Oxford Dictionary) said that the conversion of meadow into arable or arable into wood is waste but 2 Roll.
815 said that 'if meadows be sometimes arable, and sometimes meadow, and sometimes pasture, then the ploughing of them is not waste. ' In Lord Darey vs Askwith (Heb. 234) it is laid down as "generally true that the lessee hath no power to change the nature of the thing demised: he cannot turn meadow into arable, nor stub a wood to make it pasture, nor dry up an ancient pool or piscary, nor suffer ground to be surrounded, nor decay the pale of a park "It was thus in Simons vs Norton(1) which was an action of waste for ploughing ancient meadow that Tindal C.J. made the observations which are relied upon in the Bombay case.
He observed: "It is clearly established by several authorities, that ploughing meadow land is waste. .In grants,land often passes specifically, as meadow, pasture, arable, or by other descriptions.
Ploughing meadowland is also esteemed waste on another account; namely, that in ancient meadow, years, perhaps ages, must elapse before the sod can be restored to the state in which it was before ploughing.
The law, therefore, considers the conversion of pasture into arable as prima facie injurious to the landlord on those two grounds at least.
" Similarly, the observations of Chatterton V.C. in Palmer vs McCormick(2) and of Fitzgibbon J. in the same case cannot lead to any conclusion that 'arable land ' means only land capable of cultivation and not land actually cultivated.
Tiffs was also a case of ' alleged waste.
Chatterton V.C. observed: "arable ' does not mean land actually ploughed up or in tillage but land capable or fit to be so: for ought I know this land, though properly designated arable in 1821, may even then have been in process of acquiring (1) (2) 1890 25 Ir.
Rep, 110.
285 the character of ancient pasture, which process have commenced, and been going on for sometime." Mr. Justice Fitzgibbon observed that because the laud was not .in grass for 20 years the defendant could treat it as arable. 'that is.
cultivable by him.
The contrast between grass land and arable is thus established but it does not rule out that arable land does not include land actually cultivated.
As a matter of fact the passage from Chatterton V.C. is correctly understood in Stroude 's not only land actually ploughed upon in tillage but also I and capable or fit to be so.
In tiffs connects it is useful to see that in the Agricultural Holdings Act, 1923 (13 and 14 Geo. 5 c.9) 'arable land ' is defined as not including land in grass, and in the second schedule to the Agriculture Act, 1947 (10 and 11 Geo.
6 c. 48) special direction may be given by the Minister requiring the ploughing up of any land consisting of permanent pasture, and the land is deemed 'to be arable land and to have been arable land at all material times.
It is thus clear that by arable land is meant not only laud capable of cultivation but also actually cultivated.
It is not arable not because it is cultivated demonstrates its nature as arable land.
All this discussion by us was necessary to dispel the inferences drawn from dictionaries and repons of cases from England and Ireland, but 'the safest guide, as always, is the statute itself which is being considered.
In this connection we may first turn to the Land Acquisition Act of stood: "17.
Power to take possession in cases of urgency.
In cases of urgency, whenever the Local Government so directs.
the Collector (though no such reference has been directed or award made) may, on the expiration of fifteen days from the publication of the notice mentioned in the first paragraph of section nine, take possession of any waste or arable land needed for public purposes or for a Company.
Such land shall thereupon vest absolutely in the Government free from all encumbrances.
The Collector shall offer to the persons interested compensation for the standing crops and trees (if any) on such land; and in case such offer is not accepted, the, value of such crops and trees shall be allowed for in awarding compensation for the land under the provisions herein contained.
" LISup.
CI./68 4 286 It will be noticed that compensation was then payable for standing crops and trees (if any).
There can be no question of crops on waste land for the crops can only be on arable lands became if crops could grow or were actually grown the land would hardly be waste.
The words in parenthesis obviously indicate that land may have crops or be fallow and compensation was payable crops if there were crops.
Turning now to the section as it is today it will be noticed that the first sub section corresponds to the first and second paragraphs of section 17 of the Act of 1870 taken together.
The third paragraph of the former Act corresponds to the third sub section of 'the present.
The difference in language in the third sub section necessary because the provisions of sub section (3) are now intended to apply also to the second sub section of the present Act 'which is new.
Hence the opening words 'in every case under either of the preceding sub sections ' which means all cases arising either under sub section
(1) or sub section
The words in parenthes is (if any) in relation to the first sub section continue to have the same force and no other, as they had previously.
The learned Judges of the High Court of Bombay did not give sufficient consideration to the fact that the opening words "in every case under either of the preceding sub sections" do not play and more part than to indicate that what follows applies equally to cases under sub s.(1) and sub section
They ought to have read the words that follow the opening words in relation to sub section
(1) and if they had so read them, there would have been no difficulty in seeing the force of the words in parenthesis (if any) or why crops are mentioned when the words of the sub section are waste and arable.
The quotation from Roger 's Agriculture and Prices quoted in the Oxford Dictionary "half the arable estate, as a rule, lay in fallow",gives a clue to the meaning of the words 'if any '.
In our judgment, therefore, the conclusion of the Bombay High Court was erroneous and the judgment under appeal is right on this point.
Finally there remains the question of the constitutionality of sub sections
(1) and (4) of section 17.
On this point very little was said and it is sufficient to say that the High Court judgment under appeal adequately answers all objections.
In the result the appeals fail and are dismissed.
We, however,think that this is a proper case in which there should be no order about costs and direct accordingly.
V.P.S. Appeals dismissed.
| IN-Abs | By a notification under section 4 of the Land Acquisition Act issued on March 10, 1965 the respondent State Government notified that certain lands were needed for a public purpose, namely, the construction of the State capital, that the Government was satisfied that they were 'arable lands ' and further directed, under section 17(4) of the Act, that as the acquisition of the lands was urgently necessary, the provisions of section 5A would not apply.
Thereafter, a notification was issued under section 6 containing a direction under section 17(1) of the Act enabling the Collector to take possession of all the arable lands on the expiry of 15 days from the publication of the notice under section 9(1) of the Act.
Both Notifications were signed by an Under Secretary of the respondent Government.
The petitioners challenged the notifications in writ petitions under article 226.
In the original affidavits, the petitioners merely asserted that the Government had not made up its mind regarding the acquired lands as to urgency and that the lands were not arable.
The parties filed a number of affidavits at various stages of the bearing, the Government in order to establish that everything was regularly done, while the petitioners alleged infractions.
In one of the affidavits on behalf of the Government it was stated that file Minister in charge gave oral instructions to the Secretary that he or his under secretaries may take action under section 17(1) and (4) of the Act according to law, that the Secretary was satisfied regarding urgency and gave instructions to the Under Secretary to take the necessary action.
The High Court after considering the affidavits, dismissed the petitions.
In appeal to this Court it was contended that: (i) only a Secretary could sign the notifications and that the Under Secretary who signed the notification under section 6 was not duly authorised to do so; (ii) that there was no formation of opinion by the Government as regards urgency or that the lands were arable; (iii) that this function could not be delegated to the Secretary and even if it could be delegated, a general oral instruction given by the Minister was not according to the procedure prescribed by the Rules of Business; (iv) that since the lands in question were under cultivation, they were not waste or arable lands; and (v) that sub sections
(1) and (4) of section 17 of the Act were violative of articles 14 and 19(1)(f) of the Constitution.
HELD: Dismissing the petitions.
(1) The word 'Secretary ' is not defined in the Land Acquisition Act or the General Clauses Act so as to exclude Additional, Joint, Deputy, Under or Assistant Secretaries.
On the other hand r.13 of the Rules of Business framed under article 166 of the Constitution specifically places a 268 Secretary, Joint Secretary, Deputy Secretary, Under Secretary and Assistant Secretary on equality for authentication of orders and instruments of Government.
The Under Secretary was, therefore, competent to sign the notifications.
[273F; 274E] Even if he did not possess the power as a Secretary he would have been competent as an officer 'duly authorised ', within the meaning of section 6 of the Act, by virtue of r. 13 of the Rules of Business.
[274F] (ii) Under article 166 of the Constitution the validity of the notification could not be called in question on the ground that it was not an order made by the Governor, because, as required by the Article the executive action of the Government was expressed to be taken in the name of the Governor and the order was authenticated in the manner required by r. 13 of the Rules of Business.
In addition, there is also the presumption of regularity of official acts.
Therefore, the bare assertion that Government had not formed an opinion could not raise an issue.
The Government was not called upon to answer the affidavit of the petitioners and the Government need not have undertaken the burden of showing the regularity of their action.[275 E G; 278 D, F] (iii) Rules 7, 10, 13 and 15 of the Rules of Business specifically allow conferral of powers on Secretaries and the determination of the Secretary becomes the determination of the Government.
There is nothing in the Rules or instructions which prescribes that the authority must be in writing or by Standing Orders.
Under Paragraph 3 of the instructions issued by the Governor under r. 15 of the Rules of Business, Standing Orders are necessary for the disposal of cases in the department, and a case is defined as 'the papers under consideration and all previous papers and notes put in connection therewith to enable the question raised to be disposed of '.
Paragraph 4, on the other hand refers to "matters or classes of matters".
Therefore, paragraph 3 only refers to the disposal of cases and not to matters arising In a case, regarding which under paragraph 4, the Minister may arrange with the Secretary whether they are to be brought to his personal notice or not.
The matters in the present case were the application of section 17(1) and (4), to the acquisition of waste and Arabic lands and the Minister could leave this matter to his Secretary as he did.
For this purpose, Standing Orders were not necessary and oral instructions would be sufficient.
The Secretaries concerned were given the jurisdiction to take action on behalf of Government and they satisfied themselves about the need for acquisition under section 6, the urgency of the matter and the existence of waste and arable lands for the application of sub sections
(1) and (4) of section 17.Therefore, on a review of the affidavits, the provisions of the Act and the Business Rules and Instructions, the directions under sub sections
(1) and (4) of section 17 were not invalid.
[280 D G; 281 C D; 282 E G] Shayamaghana Ray vs State, A.I.R. 1952 Orissa 200, referred to.
Emperor vs
Shlbnath Banerji, L.R. 72 I.A. 241, distinguished.
(iv) Arable land under the Act is not only land capable of cultivation but also land actually under cultivation.
The words 'compensation for the standing crops and trees (if any) on such land ' in section 17(3), show that the land may have crops or he fallow and the crops can only be on arable land.
because.
if crops could grow or were actually grown the land Would hardly he waste land [286 A B, E] Baldeo Singh & Ors.
vs State of U.P. A.I.R. 1965 All Smt.
Lakshmi Devi Ors.
vs State of Bihar ' & Ors.
A.I.R. 1965 Pat, 400 269 and Guntur Ramalakshmamma vs Govt.
of Andhra Pradesh, A.I.R. , approved.
Sadruddin Suleman vs
J.H.Patwardhan, A.I.R.1965 Born.224.
over ruled.
(v) The High Court had rightly held that sub as.
(1) and (4) and 17 were not unconstitutional.
[286 F G]
|
iminal Appeal No. 40 of 1965.
Appeal by special leave from the judgment and order dated August 4, 1964 of the Andhra Pradesh High Court in Criminal Revision Case No 479 of 1964.
P. Ram Reddy and B. Parthasarathy, for the appellant.
A.S.R. Chari, K. Rajendra Chaudhuri and K.R. Chaudhuri, for the respondents.
The Judgment of the Court was delivered by Hidayatullah, J.
The State of Andhra Pradesh appeals by special leave against the judgment of the High Court of Andhra Pradesh in which, accepting a reference by the Sessions Judge, the conviction of the respondents under sections 4 and 5 of the Hyderabad Gambling Act (2 of 1305F) ordered by the 5th City Magistrate at Secunderabad has been set aside.
The short question in this case is whether the premises of a Club known as the "Crescent Recreation Club" situated in Secunderabad were being used as a common gambling house and whether the several respondents who were present at the time of the raid by the police could be said to be gambling therein.
The facts of the case are as follows : On May 4, 1963, the police headed by Circle Inspector Krishnaswami raided the premises of the club.
They found respondents 1 5 playing a card game known as "Rummy" for stakes.
At the time of the raid, there were some counters on the table as also money and of course the playing cards with the players.
Respondent No. 6, the Treasurer of the Club, was also present and was holding the stake money which is popularly known as "kitty".
The 7th respondent is the Secretary of the Club and he has been joined as an accused, because he was in charge of the management of the club.
The kitty which the sixth respondent held was Rs. 74.62nP and a further sum of Rs. 218/ was recovered from the table of the 6th respondent.
66 counters were on the table and some more money was found with the persons who were indulging in the game.
The evidence of the Circle Inspector is that he had received credible information that the premises of the club were being used as a common gambling house and he raided it and found evidence, because instruments of gambling were found and the persons present were actually gambling.
The Magistrate convicted all the seven respondents and sentenced them to various fines, with imprisonment in default.
The respondents 389 then filed an.
application for revision before the Sessions Judge, Secunderabad who made a reference to the High Court under section 438 of the Code of Criminal Procedure, recommending the quashing of the conviction and the setting aside of the sentences.
This recommendation was accepted by the learned single Judge in the High Court and the present appeal is brought against his judgment by special leave granted by this Court.
The Hyderabad Act follows in outline the provisions of the Public Gambling Act, 1867 in force in India.
Section 3 of the Act defines a "common gambling house".
The translation of the Urdu text placed before us was found to be inaccurate but we have compared the Urdu definition with the definition of "common gaming house" in the Public Gambling Act, and we are of opinion that represents a truer translation than the one included in the official publication.
We accordingly quote.
the definition from the Indian Act, adding thereto the explanation which is not to be found in the Indian Act. "Common gambling house" according to the definition means: "any house, walled enclosure, room or place in which cards, dice, tables or other instruments of gaming are kept or used for the profit or gain of the person owning, occupying, using or keeping such house, enclosure; room or place, whether by way of charge for the use of the instruments of gaming, or of the house enclosure, room or place, or otherwise howsoever? ' Explanation :"The word 'house ' includes a tent and all enclosed space." The contention in regard to this definition is that the evidence clearly disclosed that the club was being used as a common gambling house and therefore the penal provisions of the Act were clearly attracted.
We are concerned additionally with several sections from the Gambling Act which need to be seen.
Section 4, which follows in outline the corresponding section in the Public Gambling Act, provides for penalty for an owner, occupier or person using common gambling house and includes within the reach of the section persons who have the care or the management of or in any manner assist in conducting, the business of.
any such house, enclosure or open space.
The members of the club which is a ("Members ' Club") would prima facie be liable but as they are not before us, we need not consider the question whether they should also have been arraigned in the case or not.
The Secretary and the Treasurer, who were respectively accused Nos. 7 and 6 were so arraigned as it was thought they came within the reach of section 4 because they were in the care and management of the club itself.
Then there is section 6 which again is similar 390 but not entirely similar to section 5 of the Public Gambling Act.
This provides for entry for search and entry by police.
It lays down as follows : "If the District Magistrate or the Magistrate of the First Class or the District Superintendent of Police or the Inspector of Police in the city and the suburbs of Hyderabad, on credible information and after such enquiries as he may deem necessary, has reason to believe that any house or premises or enclosure or an open space is used as a common gambling house he shall be empowered to enter or authorise any police officer, not below the rank of a Sub Inspector to enter with such assistance as may be found necessary, by night or by day, and by force, if necessary, any such house or premises or enclosure or open space, and it shall be proper to arrest all persons whom the said Magistrate or the Superintendent or Inspector of Police finds therein or to allow the Police Officer so authorised to arrest such persons whether or not they are actually gambling.
and Seize or authorise the said Officer to seize all instruments of gambling and all moneys and securities for money and valuable articles, reasonably suspected to have been used or intended to be used for the purpose of gambling and which are found therein, and search or authorise such Police Officers to search all parts of the house or premises or enclosure or open space, which he or such officer shall have so entered when he or such officer has reason to believe that any instruments of gambling are concealed therein and also the persons whom he or such officer had so arrested and seize and keep in his possession all such instruments of gambling as are found in the search.
Explanation: . ." Here the Circle Inspector was an officer authorised to enter upon and search the premises of the club and therefore his action was fully covered by the section.
He effected the arrest of all the persons who were present(respondents 1 6) and added to the number the Secretary who although not present on the premises at the time was, according to him, responsible for the offence under section 4 of the Oct. Session 7 of the Act then provides for a presumption which the law allows to be drawn from the finding of cards, etc.
in a house in which a search according to the terms of section 6 of the Act as taken place.
That section reads as follows : 391 "When any cards or dice or table or other instruments or means of gambling have been found in any house or premises or enclosure or open space entered or searched, in accordance with the provision of section 6 or have been found with any of the persons therein, it shall be evidence, until the country is proved, that such house, premises or enclosure or open space is used as a common gambling house and the persons found therein were present for the purpose of gambling although no play was actually witnessed by the Magistrate or the police officer or an3 ' of his assistants.
" This section gives rise to a presumption from the fact of a search under section 6 after credible information that persons present in the house are there for the purpose of gambling even though no play may be actually witnessed by the raiding party.
In the present case on the appearance of the police, it is admitted, the players stopped their play and the arrests were promptly made of all the persons present round the table who had cards, counters and the money with them.
The learned Magistrate who tried the case was of the opinion that the offence was proved, 'because of the presumption since it was not successfully repelled on behalf of the present respondents.
In the order making the reference the learned Sessions Judge made two points: He first referred to section 14 of the Act which provides that nothing done under the Act shall apply to any game of mere skill wherever played and he was of opinion on the authority of two cases decided by the Madras High Court and one of the Andhra High Court that the, game of Rummy was a name of skill and therefore the Act did not apply to the case.
He also held that there was no profit made by the members of the club from the charge for the use of cards and the, furniture and the room in the club by the players and therefore the definition of common gambling house ' did not apply to the case.
In accepting the reference, the learned single Judge in the High Court did not express any opinion upon the question whether the game of Rummy can be described as a game of skill.
_ He relied upon 'the second part of the proposition which the Sessions Judge had suggested as the ground for acquitting the accused.
namely, that the club was not making a profit but was only charging something as a service charge and to this we shall now refer.
Mr. Ram Reddy relies, firstly, upon the definition of 'common gambling house ' in the Hyderabad Act and contends that in this case there is ample evidence to prove that the club was making a profit or gain from the persons who play Rummy on its premises, pointing out at the same time that the charge was But upon strangers to 'the club as well as members.
He also submits 392 that the presumption which arises under section 7 of the Gambling Act has not been successfully repelled and on the other hand it has been confirmed by the making of this charge by the club.
In support of his case that the club was making a profit or gain from the game of Rummy he draws attention to four matters which in his opinion bring this club within the said definition.
The first was a charge of 5 points per game which according to him was being levied on each game of Rummy.
He next points out that playing cards were supplied to the players by the club at an extra charge of Rs. 3/ and there was a sitting fee of Re. 1/ per person from those who joined the game.
He points out further that if the game continued beyond a certain time in the night, a late fee was also levied.
In addition, he says, that non members were also required to pay and, therefore, this club must fall within the definition of a common gambling house.
In support he relies upon a decision of the Madras High Court 1n re Somasundaratn Chettiar(1) In our opinion the points made by Mr. Ram Reddy do not prove this club to be a common gambling house.
The presumption under section 7, even if it arises in this case, is successfully repelled by the evidence which has been led, even on the side of the prosecution.
To begin with, there is nothing to show that a fee of 5 points per game was being charged.
Only the Sub Inspector (P.W. 6) deposes to it but there is nothing to show what his source of information was.
At the time the game was going on, he was not present and when he arrived on the scene, the game had stopped.
The account books of the club do not show any such levy from the persons and in the absence of any entry, we cannot hold this fact to be sufficiently proved.
As regards the extra.charge for playing cards we may say that clubs usually make an extra charge for anything they Supply to their members because it is with the extra payments that the management of the club is carried on and other amenities are provided.
It is commonly known that accounts have to be kept, stocks have to be purchased and maintained for the use of the members and service is given.
Money is thus collected and there is expenditure for running of each section of the establishment.
Just as some fee is charged for the games of billiards, ping pong, tennis, etc, an extra charge for playing cards (unless it is extravagant) would not show that the club was making a profit or gain so as to render the club into a common gambling house.
Similarly, a late fee is generally charged from members who use the club premises beyond the scheduled time.
This is necessary, because the servants of the (1) A I R. 393 club who attend on the members have to be paid extra remuneration by way of overtime and expenditure on light and other amenities has to be incurred beyond the club hours.
Such a charge is usual in most of the clubs and we can take judicial notice of the fact.
This leaves over for consideration only the sitting fee as it is called.
In this connection, the account books of the club have been produced before us and they show that a fee of 50 paise is charged per person playing in the card room.
This to our opinion is not such a heavy charge in a Members ' Club as to be described as an attempt to make a profit or gain for the club.
Of course, if it had been proved that 5 points per game were charged, that might have been considered as an illegal charge sufficient to bring the club within the definition.
As we have already pointed out, the levy of that charge has not been proved.
The other charges which the club made do not establish that this was a common gambling house within the definition.
It is submitted by Mr. Ram Reddy that non members also play and further that the club provides no other amenities besides making it possible for members and non members to play the game of Rummy on the premises.
We think that the evidence on this part is not quite satisfactory.
No doubt one witness has stated that chess is also played, but that does not prove that amenities other than card games are catered for by the club.
But on the other side also there is no definite evidence that there is no other amenity in this club but the playing of card games.
In these circumstances, to hold that the club does not provide other amenities is tantamount to making a conjecture which is not permissible in a criminal case.
We are also not satisfied that the protection of section 14 is not available in this case.
The game of Rummy is not a game entirely of chance like the 'three card ' game mentioned in the Madras case to which we were referred.
The 'three card ' game which goes under different names such as 'flush ', 'brag ' etc.
is a game of pure chance.
Rummy, on the other hand, requires certain amount of skill because the fall of the cards has to be memorised and the building up of Rummy requires considerable skill in holding and discarding cards.
We cannot, therefore, say that the game of Rummy is a game of entire chance.
It is mainly and preponderantly a game of skill.
The chance in Rummy is of the same character as the chance in a deal at a game of bridge.
In fact in all games in which cards are shuffled and dealt out, there is an element of chance, because the distribution of the I cards is not according to any set pattern but is dependent upon how the cards find their place in the shuffled pack.
From this alone it cannot be said that Rummy is a game of chance and there 394 is, no skill involved in it.
Of course, if there is evidence of gambling in some other way or that the owner of the house or the club is making a profit or gain from the game of Rummy or any other game played for stakes, the offence may be brought home.
In this case, these elements are missing and therefore we think that the High Court was right in accepting the reference it did.
The appeal fails and is dismissed.
Y.P. Appeal dismissed.
| IN-Abs | The police raided the premises of a club and found respondents 1 5 playing "Rummy" for stakes, counters and money on the table and playing cards with the players.
Respondent 6 the Treasurer of the Club, was holding the stake money.
Respondent 7 the Secretary of the club was not present then.
All the respondents were convicted by the Trial Court, but the conviction was set aside by the High Court.
In appeal to this Court, the appellant State contended that this club was a common gambling house as.
a fee of 5 points per game was charged by the club, the playing cards.
were supplied at an extra charge of Rs. 3.
there was a sitting fee of Re. 1 per person who joined the game, and if the game continued beyond a certain time a late fee was levied; and further that.
the presumption under section 7 of the Gambling Act had not been repelled;but on the other hand it had been confirmed by the making of this charge by the club.
Dismissing the appeal HELD: This club was not a common gambling house.
The presumption under section 7 even if it arises in this case, was successfully repelled by the evidence which had been led.
[392 D] Just as some fee is charged for the games of billiards, ping pong, tennis etc.
an extra charge for playing cards (unless it is extravagant) would not show that the club was making profit or gain so as to render the club into a common gambling house.
Similarly, a late fee is generally charged from members who use the club premises beyond the scheduled time This is necessary because the servants of the club who attend on the members have to be paid extra remuneration by way of overtime, and expenditure on light and other amenities has to be incurred beyond club house.
The accounts showed that the sitting fee of 50 raise was charged per person.
This was not such a heavy charge in a Members ' Club as to be described as an attempt to make a profit or gain for club.
Of course, if it had been proved that 5 points per game was charged, that might have been considered as an illegal charge sufficient to bring the club within the definition.
[392 G 393 C] The protection of section 14 was not available in this case.
Rummy is not a game entirely of chance like the 'three card ' game.
It requires certain amount of skill because the fall of the cards has to be memories and the building up of Rummy requires considerable skill in holding and discarding cards.
It is mainly and preponderantly a game of skill.
The chance in Rummy is of the same character as the chance in a deal at a game of bridge.
In fact in all games in which cards are shuffled and dealt out, there is an element of chance, because the distribution of the cards is not according to any set pattern but is dependent upon how the cards find their place in the shuffled pack.
From this alone it cannot be said that Rummy is a game of chance and there is No. skill involved in it of course, if there is evidence of gambling in some other way or 387 388 the owner of the house or club is making a prOfit or gain from the game of Rummy or any other game played for stakes, the offence may be brought home.
[393 F 394 B]
|
s Nos. 109 to 114, 117, 118, 120, 121, 128 to 133, 142, 143, 186, 190 and 191 of 1967.
Petitions under article 32 of the Constitution of India for the enforcement of the fundamental rights.
M.K. Ramamurthi, for the petitioners (in W. Ps.
109, 142 and 143 of 1967).
section Shaukat Hussain, for the petitioners (in W. Ps.
Nos. 110114 and 118 of 1967).
Janardan Sharma, for the petitioners (in W. Ps.
Nos. 117, 120, and 121 of 1967).
R.C. Prasad, for the petitioners (in W. Ps.
128 133 of 1967) M.K. Ramamurthi and Vineet Kumar, for the petitioners (in W. Ps.
Nos. 186, 190 and 191 of 1967).
C.K. Daphtary, Attorney General, R.H. Dhebar and S.P. Nayar, for the respondent (in W. Ps.
109, 142 and 143 of 1967).
G.R. Rajagopal, R.H. Dhebar and section P. Nayar, for the respondent (in W.P. No. 110 of 1967).
R. Gopalakrishnan and section P. Nayar, for the respondent (in W. Ps.
111 to 114, 117, 118, 120, 121.
128 to 133, 186, 190 and 191 of 1967).
The Judgment of WANCHOO, C.J., SHAH, BACHAWAT, MITTER and HEGDE, JJ. was delivered by WANCHOO, C.J., HIDAYATULLAH, J. delivered a separate Opinion.
Wanchoo, C.J.
These twenty one petitions under article 32 of the Constitution for a writ of habeas corpus raise common questions of law and will be dealt with together.
It is enough to set out the facts in one of the petitions (No. 142 of 1967), for the facts in other petitions are almost similar.
The petitioner was arrested on November 11, 1966 and detained under an order passed under r. 30(1)(b) of the Defence of India Rules, 1962 (hereinafter referred to as the Rules).
It appears that though the order was reviewed after the period of six months, no opportunity was given to the petitioner to represent his case before the reviewing authority.
In consequence the detention of the petitioner be came illegal after the first period of six months in view of the judgment of this Court in P.L. Lakhanpal vs Union of India(1).
The State Government realising this defect, cancelled the order dated November 11, 1966 on August 3, 196 '7, and on the same day a fresh order of detention was passed and it is this order which (1) ; L 1O Sup CI/67 17 230 is being challenged before us.
It is not in dispute that in view of the judgment of this Court in Jadev Singh vs State of Jammu and Kashmir(1), it was open to the State Government, in view of the formal defect in making the review, to pass a fresh order of detention after revoking the earlier order, which in any case became ineffective after the first six months, if the circumstances which led to the detention originally still continued.
The main attack of the petitioners is on the order of the President passed on November 3, 1962, as amended on November 11, 1962, under article 359(1) of the Constitution.
By this order the President declared that the right to move any court for 'the enforcement of the fundamental rights conferred by articles 14, 21 and 22 of the Constitution would remain suspended for the period during which the Proclamation of Emergency issued under article 352(1), was in force, if any person was deprived of such right under the Defence of India Ordinance (No. 4 of 1962) or any rule or order made thereunder.
The argument in support is put this way.
The President is an "authority" within the meaning of article 12 and therefore is comprised within the definition of the word "State" and the order passed under article 359 is a law within the meaning of article 13(2) of the Constitution.
Consequently an order passed by the President under article 359 is liable to be tested on the anvil of the fundamental rights enshrined in Part Ill of the Constitution: Secondly, it is urged that an order passed under article 359 is made in the context of the Emergency and therefore enforcement of only such fundamental rights can be suspended which have nexus with the reasons which led to the Proclamation of Emergency.
In consequence, the President can only suspend the enforcement of fundamental rights under article 22 and article 31 (2) under an order passed under article 359 and no others.
Thirdly, it is urged that even if the President can suspend the enforcement of any fundamental right, the order passed can still be tested under the very fundamental right enforcement of which has been suspended.
Fourthly, it is urged that an order passed under article 359 can in any case be challenged under article 14, and if so the order passed in the present case is violative of article 14 because some persons can be detained under the Defence of India Act, 51 of 1962 (hereinafter referred to as the Act) and the Rules while others can be detained under the Preventive Detention Act.
As the Act and the Rules give more drastic powers for detention as compared to the powers conferred by the Preventive Detention Act, there is discrimination, for there is no indication as to when detention should be made under the Act and the Rules and when under the prevention law, and the matter is left to the arbitrary discretion of the executive.
Fifthly, it is urged that in view of the language of the order under article 359, there should have been an ; 231 express provision in the Act and the Rules to the effect that enforcement of fundamental rights under articles 14, 21 and 22 was suspended and in the absence of such an express provision, the Presidential order under article 359 cannot stand in the way of the detention order being tested under Part III of the Constitution.
Sixthly, it is urged that article 22 (5 ) provides that grounds of detention should be furnished to a detenu and the order of the President did not do away with the necessity of furnishing the grounds.
Besides these main contentions, three subsidiary contentions have also been raised in one petition or another and they are (1) that the fresh order had not been communicated to the detenues and was therefore of no avail; (ii) that the order was not in the form as required by article 166 of the Constitution and it is therefore for the State Government to prove that it was passed by the authority which had the power to do so; and (iii) that the fresh order was mala fide.
The petitions have been opposed on behalf of the State Government.
It is unnecessary to set out in detail the contentions in reply to the main points raised on behalf of the petitioners.
It is enough to say that the contention on behalf of the State is that once the President has passed an order under article 359 suspending the enforcement of any fundamental right, it is not open to rely on that fundamental right for any purpose, so long as the order under article 359 stands and such an order cannot be tested in any manner by the very fundamental right the enforcement of which it has suspended.
Further as to the subsidiary points, the State contends that the fresh order of detention was communicated to each detenu and that the order was in the form required by the Constitution of Jammu and Kashmir and that article 166 has no application to the State of Jammu and Kashmir.
It was finally denied that the order was mala fide in any of the cases.
Part XVIII deals with Emergency Provisions and begins with article 352 which provides for making a declaration that "a grave emergency exists whereby the security of India or of any part of the territory thereof is threatened, whether by war or external aggression or internal disturbance", if the President is so satisfied.
articles 353 and 354 provide for the effect of the Proclamation of Emergency; but it is unnecessary to refer to them for present purposes.
Article 358 lays down that during the period that a Proclamation of Emergency is in operation, Article 19 shall remain suspended, Article 359 with which we are particularly concerned lays down that where a Proclamation of Emergency is in operation, the President may by order declare that the right to move any court for the enforcement of such of the rights conferred by Part III as may be mentioned in the order and all proceedings pending in any court for the enforcement of the rights so mentioned shall remain L10Sup.
C1/67 18 232 suspended for the period during which the Proclamation is in force or for such shorter period as may be specified in the order.
" The order made under article 359 may extend to whole or any part of the territory of India and has to be laid, as soon as may be after it is made, before each House of Parliament.
It will be seen from the terms or article 359 that it gives categorical powers to the President during the period when a Proclamation of Emergency is in operation to suspend the enforcement of any of the fundamental rights conferred by Part III.
It is for the President to decide the enforcement of which of the fundamental rights should be suspended during the operation of the Proclamation of Emergency.
There is nothing in article 359 which in any way limits the power of the President to suspend.
the enforcement of any of the fundamental rights conferred by Part III.It is to our mind quite clear that the President has the power to suspend the enforcement of.
any of the fundamental rights conferred by Part III and there is nothing thereunder which makes any distinction between one fundamental right or another.
As article 359 stands, it seems to us, it clearly envisages that once a Proclamation of Emergency has been issued, the security of India or any part of the territory thereof may require that the President should suspend the enforcement of any of the fundamental rights conferred by Part III.
There is in our opinion no scope for inquiry into the question whether the fundamental right the enforcement of which the President has suspended under article 359 has anything to do with the security of India which is threatened whether by war or external aggression or internal disturbance, for article 359 posits that it may be necessary for the President to suspend any of the fundamental rights in Part HI for the sake of the security of India.
There is thus a basic assumption in article 359 that it may be necessary for the President to suspend the enforcement of any of the fundamental rights conferred by Part III in the interest of the security of India.
If he considers that necessary, it is unnecessary in the face of that basic assumption to inquire whether enforcement of a particular fundamental right suspended by the President has anything to do with the security of India, for that is implicit in article 359.
It follows therefore that it is open to the President to suspend the enforcement of any of the fundamental rights conferred by Part III by an order under article 359 and this Article shows that wherever such suspension is made it is in the interest of the security of India and no further proof of it is necessary.
This brings us to the main ground ' raised on behalf of the petitioner that an order under article 359 is a law made by the State within the meaning of article 13(2) and has therefore to be 233 tested under Part III of the Constitution.
We may assume for present purposes that the President is comprised within the word "State" in article 12.
We may also assume that the order made by the President under article 359 is a law in its widest sense.
The question however is whether such an order can be considered to be a law for the purpose of article 13(2) and tested thereunder.
Article 13(2) and article 359 being parts of the same Constitution stand on an equal footing and the two provisions have to be read harmoniously in order that the intention behind article 359 is carried out and it is not destroyed altogether by article 13(2).
It follows that though an order under article 359 may be assumed to be law in its widest sense, it cannot be law within the meaning of article 13(2), for if that were so, article 359 would be made nugatory.
The Constitution through article 359 says that the President may suspend the enforcement of any of the fundamental rights in Part III where a Proclamation of Emergency is in force and that means that during the period of Emergency the fundamental rights, enforcement of which is suspended, cannot be enforced.
If the order is a law within the meaning of article 13(2), the result would be that though the order says that the enforcement of a particular fundamental right is suspended during the period of Emergency the order can still be tested with the aid of article 13(2) on the anvil of the same fundamental right, the enforcement of which it suspends.
That would in our opinion result in making article '359 completely nugatory, for then a declaration made there under that the enforcement of certain fundamental rights is suspended during the period of Emergency would have no meaning whatsoever. ' Therefore, applying the principle of harmonious construction we are of opinion that an order passed under article 359.
cannot be law for the purpose of article 13(2), assuming it to be law in its widest sense.
It follows therefore that an order under article 359 derives its force from article 359 itself and takes effect in accordance with its tenor and cannot be affected by article 13 (2), and cannot be tested under any of the provisions of Part III of the Constitution which it suspends.
Reliance in this connection is placed on the judgment of this Court in Ghulam Sarwar vs Union of India(1), where the majority made a distinction between the President 's order itself under article 359 and the effect of that order.
In that case it was observed that "there is a clear distinction between deprivation of fundamental rights by force of a constitutional provision itself and such deprivation by an order made by the President in exercise of a power conferred on him under a constitutional provision.
" It was further observed.
that "Article 359(1) does not operate by its own force.
The President has to make an order declaring that the right to move a court in respect of a fundamental right (1) ; 234 or rights in Part III is suspended.
He can only make an order which is a valid one.
" It was further observed that an order making an unjustified discrimination in suspending the right to move a court under article 14, would be void at its inception and would be a still born order.
We must say with greatest respect that it is rather difficult to understand how an order under article 359 which suspends the enforcement of a fundamental right can be tested under that very fundamental right.
It is true that there is a distinction between article 358 and Art 359(1).
Article 358 by its own force suspends the fundamental rights guaranteed by article 19; article 359(1) on the other hand does not suspend any fundamental right of its own force but it gives power to the President to suspend the enforcement of any fundamental right during the period of Emergency.
But that cannot mean that an order passed under article 359(1 ) suspending the enforcement of a particular fundamental right has still to be tested under the very fundamental right which it suspends.
That would in our opinion be arguing in a circle and make Art 359 completely nugatory.
It seems that the majority in Ghulam Sarwar 's(1) case was also conscious of the fact that the reasoning on which it came to the conclusion that an order made under article 359 could be tested under article 14.
though it suspended that Article, was open to the criticism that it was an argument in a circle.
The argument was however met by making a distinction between the order and the effect of that order and it was observed that if the order did not violate article 14 it could validly 'take away ,the right to enforce the fundamental right under article 14.
With greatest respect it is difficult to appreciate this reasoning and the distinction on which it is based.
It seems to us that if article 359 is to have any meaning at all and is not to be wiped out from the Constitution an order passed thereunder suspending a fundamental right cannot possibly be tested under ' that very fundamental right which it suspends.
If that were permissible no order under article 359 could really be passed.
If article 359 is not to be rendered nugatory, it must be held that an order passed thereunder cannot be tested under the very fundamental right the enforcement of which it suspends.
We must therefore respectfully differ from the view taken in Ghulam Sarwar 's case(1) and hold that an order passed under article 359(1) cannot be tested with the aid of article 13(2) under that very fundamental right the enforcement of which it suspends.
There is therefore no force in the first point raised on behalf of the petitioners.
We ,also see no force in the second point raised by the petitioners.
As we have already indicated article 359 envisages that an (1) ; 235 order passed thereunder for suspension of the enforcement of particular fundamental right is for the sake of security of India It is therefore not necessary to enquire whether there is any nexus between a particular fundamental right suspended and the security of India.
Article 359 itself posits that it may be necessary in the interest of the security of India to pass an order suspending the enforcement of any fundamental right thereunder.
This is clear from the fact that article 359(1), provides for the suspension of the enforcement of the fundamental rights in Part III of the Constitution only during the period of Emergency meaning thereby that suspension of the enforcement of any of the fundamental rights which the President considers necessary is for the security of India.
We fail to see why only fundamental rights under article 22 or under article 31(2) can be suspended under article 359; Article 359 clearly shows that any fundamental right in Part Ill can be suspended during an Emergency and we cannot limit Article 359 in the face of the unambiguous and express words thereof and say that only the enforcement of fundamental right under Articles 22 and 31(2) can be suspended.
It may be that prima facie these two fundamental rights appear to have a clearer nexus with security of India; but it does not follow that other fundamental fights may not in an Emergency have such a nexus.
In any case article 359 itself proceeds on the basis that the suspension of the enforcement of all or any of the fundamental rights is for the sake of security of India and so gives the power to the President to suspend such enforcement if he considers it necessary for that purpose.
The second contention raised on behalf of the petitioners must also be rejected.
As to the third contention, we have already indicated that an order passed under article 359(1) suspending the enforcement of a particular fundamental right cannot be tested under that very fundamental right.
We cannot see how if the order under Art 359 suspends article 14 its validity can still be tested under that very Article.
We have already expressed our respectful dissent from the view taken in Ghulam Sarwar 's case(1) and must reject this contention.
As the enforcement of the fundamental right under article 14 was suspended by the President 's order under article 359, no question of that order being bad under that Article can arise even if we assume that the provisions for detention under the Act and the Rules are more stringent than the provisions for detention under the Preventive Detention Act.
The fourth contention also fails.
As to the fifth contention it is urged that on.
the words of the order passed by the President suspending the enforcement of fundamental rights under articles 14, 21 and 22, there had to be a 236 provision in the Act and the Rules expressly to the effect that these fundamental rights would not be enforceable.
We cannot understand how any provision could have been made in the Act and Rules to this effect.
Such a provision in the Act 43r the Rules would be clearly unconstitutional.
It is only because article 359(1)provides that the President may suspend the enforcement of a particular fundamental right that it is possible for the enforcement of any fundamental right to be suspended during the Emergency.
What the President has provided in the present case is that the enforcement of fundamental rights under articles 14, 21 and 22 would be suspended if any person has been deprived of such right under the Defence ' of India Ordinance (later replaced by the Act) or the Rules or orders made thereunder.
It is necessary to emphasis that the President 's order speaks of suspension under the Ordinance (later replaced by the Act) or the Rules or orders made thereunder.
It does not say that the enforcement of such right is suspended if any person is deprived of it by the Ordinance the Rules or orders made thereunder.
Therefore it was not necessary that there should be any express provision in the Act or the Rules suspending the enforcement of fundamental rights under articles 14,21 and 22.
The clear intendment of the President 's order is that if any fundamental right of any person under articles 14, 21 and 22 was invaded by any action taken under the Ordinance (later replaced by the Act), or any rule or order thereunder, that action could not be tested on the anvil of those fundamental rights.
It was therefore not necessary to make any express provision in the Act or the Rules for the suspension of the enforcement of the fundamental rights under articles 14, 21 and 22.
The fifth contention must also fail.
The sixth contention is that article 22(5) which lays down that grounds of detention must be communicated to the person detained must still be applicable.
We have not been able to understand this argument at all.
If the President 's order is validly made as we hold it to be and if it suspends article 22 as it does we fail to see how clause (5 ) continues, for it is only a part of article 22 which has been suspended.
There is no question therefore of furnishing any ground under article 22(5) to the detenu if the detention is under the Act on the Rules, for the entire article 22 has been suspended.
The argument under this head is also rejected.
This brings us to the subsidiary points raised on behalf of the petitioners.
It is first said that the fresh order was not communicated to the detenues.
This has been denied on behalf of the State.
We see no reason why the fresh order which was passed on the same day on which the earlier order was cancelled would not have been communicated.
Nothing has been shown to us to disbelieve the statement on behalf of the State that the fresh order was 237 communicated in each case and.
therefore any argument based on its not being communicated must fail.
Then it is argued that the order is not in the form as required by article 166.
It is enough to say that article 166 does not apply to the State of Jammu and Kashmir.
We have to look to the Constitution of Jammu and Kashmir to see whether the form of the order is in accordance therewith.
It is clear that the order is in the form required by section 45 of the Constitution of Jammu and Kashmir.
The presumption must therefore be made that it was passed validly unless the petitioners can show that it was not passed as required by law.
No attempt has been made on behalf of the petitioners to show that.
The contention on this head must therefore also be rejected.
Lastly, it is urged that the orders in these cases were mala fide.
This has been denied on behalf of the State.
No grounds have been shown which may lead us to the conclusion that the fresh orders which were passed were mala fide.
The necessity for fresh orders arose because the review was not made in accordance with the manner indicated by this Court in Lakhanpal 's case(1).
The fresh order that was made was on the same facts and must in the circumstances be held to be valid in view of the judgment of this Court in Jagdev Singh 's case(2).
The petitions therefore fail and are hereby dismissed.
Hidayatullah, J. I agree that the petitions be dismissed.
As I was a member of the Constitution Bench which decided Ghulam Sarwar 's(2) case I wish to say a few words in explanation.
The judgment of Subba Rao, C.J. to which I was a party has expressed itself somewhat unhappily on ,the point on which it has been overruled in the judgment just delivered.
The former Chief Justice upheld the extension of G.S.R. 1418/30 10 62 (which suspended the benefits of articles 21 and 22 to a foreigner) by G.S.R. 1275/27 8 3965.
The latter order suspended article 14 in addition to the two articles already suspended.
This 'suspension was upheld on the ground that there was a clear classification between citizens and foreigners and in a state of war and emergency foreigners could be treated as a class.
In other words, the order was tested on the ground of article 14 itself which the order of the President sought to suspend.
In the judgment just delivered it has been said that the reasoning in Ghulam Sarwar 's(3) case is difficult to understand and that the suspension of article 14 precludes examination of the order under that article.
I should have thought that I had sufficiently explained my position during the discussion of the draft judgment (1) ; (2) ; (3) ; 238 in Ghulam Sarwar 's(1) case but it appears that in spite of my doubts about the width of language in that judgment, the decision to which I became a party continued to bear the meaning now attributed to it.
If I may say with, great respect, the judgment just delivered also suffers from a width of language in the other direction.
The truth lies midway.
Although a suspension of a fundamental right under article 359(1) may be made either for the whole of India or any part of the territory of India, Ghulam Sarwar 's(1) case points out that there is nothing to prevent the President from restricting the scope of the order to a class of persons provided the operation of the order is confined to an area and to a period.
As the order was applicable to the whole of India and for the duration of the emergency although it affected a class, namely, foreigners, it was upheld.
This was not the application of article 14.
This was said because the argument was that the order could only be with reference to the whole or a part of the territory of India and not with respect to a class such as foreigners.
That meant that the Order was considered in relation to the words of article 359(1).
Room was, however, to be left for the play of article 14 for those theoretically possible (and fortunately 'only theoretically possible) cases in which the exercise of the power itself may be a cloak for discrimination, in other words, cases of mala fide action and clear abuse of the power for some collateral purpose.
This strict reservation only was intended to go into the judgment in Ghulam Sarwar 's(1) case but if a wider meaning can be spelled out from that judgment I dissent from it and say that I never intended to 'be a party to such a wide statement.
The examination under article 14 of the suspension of the article itself, as expressed in the judgment of Subba Rao C.J. gives a very different impression.
For the same reason I cannot subscribe to the width of language in the judgment just delivered which apparently 'does not make any reservation at all.
Therefore I agree to the order proposed but reserve my reasons.
R.K.P.S. Petitions dismissed.
| IN-Abs | By a petition under Art.32 of the Constitution,the petitioner challenged an order of detention passed against him under r. 30(1)(b) of the Defence of India Rules, 1962.
It was contended on his behalf, inter alia, (i) that the order of the President passed on November 3. 1962 as amended on November 11, 1962 under article 359(1) of the Constitution, suspending the right to move any court for the enforcement of the fundamental rights conferred by articles 14, 21 and 22 if any person was deprived of such right during the period of the Emergency under the Defence of India Ordinance No. 4 of 1962 or any rule or order made thereunder, was a law within the meaning of article 13(2) of the Constitution and could therefore be tested against the fundamental rights in Part III of the Constitution including the very fundamental right the enforcement of which is suspended; that only such fundamental rights can be suspended which have nexus with the reasons which led to the Proclamation of Emergency, i.e., the President can only suspend enforcement of fundamental rights under articles 22 and 31(2) by an order under article 359; that the order under article 359 in the present case was violative of article 14 as it enabled the executive to decide.
in exercise of an arbitrary discretion, whether to detain a person under the more drastic provisions of the Defence of India Act 51 of 1962 or the Preventive Detention Act; (ii) that in view of the language of article 359 there should have been an express provision in the Defence of India Act and the Rules that the enforcement of fundamental rights under articles 14, 21 and 22 was suspended and in the absence of such a provision the order passed under article 359 cannot stand in the way of the detention order being tested under Part III of the Constitution; (iii) that article 22(5) requires that grounds of detention should be furnished to the detenu and the President 's order of November 1962 does not do away with this requirement which was not satisfied in the present case; and (iv) that the order of detention was not in the form required by article 166 of the Constitution and the State Government therefore had to prove that it was passed by the authority empowered to do so.
Held: (by the Court) :The petitions must be dismissed.
Per majority: (i) An order passed under article 359(1) cannot be tested with the aid of article 13(2) under that very fundamental right the enforcement of which it suspends.
Even if an order under article 359 is assumed to be law in its widest sense, it cannot be a law within the mean 228 ing of article 13(2), for if that were so, the Article would be made nugatory.
article 359 gives categorical powers to.
the President during the period when a Proclamation of Emergency is in operation to suspend the enforcement of any of the fundamental rights conferred by Part III.
There is nothing in it which in any way limits the power of the President and it is for him to decide the enforcement of which of the fundamental rights should be suspended during the Emergency.
[234D G; 232B D] There is a basic assumption in article 359 that it may be necessary for the President to suspend the enforcement of any of the fundamental rights in the interest of the security of India and in the face of that basic assumption, there is no scope for enquiry into the question whether the fundamental right the enforcement of which the President has suspended under article 359 has anything to do with the security of India which is threatened whether by war or external aggression or internal disturbance.
It cannot be said that only fundamental rights under article 22 or article 31 (2) can be suspended under article 359.
[232 F, G; 235C D] Even if the provisions for detention under the Defence of India Act and the Rules are more stringent, after the suspension of article 14 under article 359, no question of the order under article 359 being bad under article 14 can arise.
[235H] Ghulam Sarwar vs Union of India ; ; dissented from.
(ii) The clear intendment of the President 's order is that if any fundamental right of any person under articles 14, 21 and 22 was invaded by any action taken under the Ordinance (later replaced by the Act), or any rule or order thereunder, that action could not be tested on the anvil of those fundamental rights.
It was therefore not necessary to make any express provision in the Act or the Rules for the suspension of the enforcement of the fundamental rights under articles 14, 21 and 22.
[236E] (iii) As the President 's order suspending article 22 was validly made, there was no question of furnishing any ground under article 22(5) to the detenu if the detention was under the Defence of India Act or the Rules, for the entire article 22 was suspended.
[236G] (iv) Article 166 has no application to the State of Jammu & Kashmir and as the detention order was made in the form required by section 45 of the Constitution of Jammu & Kashmir, it must be presumed to have been validly made.
[237B] Per Hidayatullah, J.
Although a suspension of a fundamental right under article 359(1) may be made either for the whole of India or any part of the territory of India, Ghulam Sarwar 's case points out that there is nothing to prevent the President from restricting the scope of the order to a class of persons provided the operation of the order is confined to an area and to a period.
As the order was applicable to the whole of India and for the duration of the emergency although it affected a class, namely, foreigners, it was upheld.
This was not the application of article 14.
This was said because the argument was that the order could only be with reference to the whole or a part of the territory of India and not with respect to a class such as foreigners.
That meant that the order was considered in relation to the words of article 359(1).
The meaning now attributed to the decision in Ghulam Sarwar 's case is in view of the width of language used in that case and the decision of the majority in the present also suffers from a width of language in the other direction whereas the truth ties midway.
[238A F] 229
|
Appeals Nos.
581 to 584 of 1966.
Appeals by special leave from the judgment and order dated March 26.
1964 of the Calcutta High Court in Income tax Reference No. 6 of 1961.
K. Sen, Bishan Narain, R.K. Chaudhuri and B.P. Maheshwari, for the appellant (in all the appeals).
Niren De, Solicitor General, T.A. Ramachandran, R. N. Sachthey and S.P. Nayar, for the respondent (in all the appeals) 354 The Judgment of the Court was delivered by Bhargava, J.
These appeals came up before this Court on the 17th April, 1967, when an order of remand was made by this Court, asking the Income tax Appellate Tribunal to submit a further statement of the case.
The question that has come up.
for consideration is : "Whether on the facts and circumstances of the case, the surplus derived by the assessee in the sale of its shares and securities in the relevant previous years was a revenue receipt and as such taxable under the Income Tax Act.
" The facts and circumstances under which the question was referred by the Tribunal for the opinion of the High Court are mentioned in that order of remand and need not be repeated.
In the order of remand, it was pointed out that it was not possible to find out from the statement of the case whether the Tribunal accepted the explanation of the assessee that, in the previous year relevant to the assessment year 1953 54, the control of McLeod & Co. Ltd. went out of the hands of the Directors of the assessee and it was for this reason that the assessee sold the shares of McLeod & Co. It was also pointed out further that the Tribunal had not stated what was the object of the assessee in buying 6,900 ordinary shares of McLeod & Co. It appeared from the order of the Income tax Officer that these shares were purchased in a number of lots from the year 1948 to 1950, and it was also not stated as to what was the object in buying other securities, and why did the assessee confine its activities mostly to the shares of McLeod & Co. Ltd. and the companies managed by McLeod & Co. Ltd. It was in the light of these omissions that the Tribunal was asked to send a supplementary statement.
That supplementary statement has now been received and the answer to the question has to be given on the basis of the facts contained in the original statement of the case as well as this supplementary statement.
The relevant facts which emerge out of these statements of the case are that the principal activity of the assessee was investment of its capital in shares and stocks.
It changed its investments by sale of its shares and stocks from time to time.
The income of the Company was primarily derived from dividends on shares and interest received by it on the investments.
These activities were covered by Clauses (1), (3) and (4) of the Memorandum of Association.
The activity mentioned as the object in Clause (2) is: "to acquire,hold, sell and transfer shares, stocks, Debentures, 'Debenture Stocks, Bond, obligations and 355 securities issued or guaranteed by any company constituted or carrying on business in British India and in the United Kingdom or in any colony, or dependency or possession thereof or in any foreign country and Debenture Stocks, Bonds, obligations and securities, issued or guaranteed by any Government, Sovereign, Ruler, Commissioners, public body or authority supreme, Municipal ' Local or otherwise whether at home or abroad." In the supplementary statement, the Tribunal has recorded the finding that, in its opinion, the purchases and sales of the shares in question were in pursuit of this clause (2) in the Memorandum of Association.
The Tribunal has further stated that the assessee had not placed any evidence as to the object behind the acquisition of the shares of McLeod & Co. Ltd and the shares of companies managed by McLeod & Co. Ltd., nor had the Income tax Officer ascertained the object behind such acquisitions.
The Tribunal was also unable to find out why the assessee had more or less confined its activities mostly to the shares of McLeod & Co. Ltd. and the companies managed by McLeod & Co. Ltd. The facts proved showed that, in the account year relevant to the assessment year in question, 21,046 shares were held by the Kanoria group, including 6,977 shares in McLeod & Co. Ltd. held by the assessee.
Mr. C.L. Kanoria resigned his office as Director of McLeod & Co. Ltd. on 17th March, 1952, and the approval of the Government to his resignation was given by the Central Government on 16th October, 1952.
Thereafter, Sri C.L. Bajoria joined the Directorate of McLeod & Co. Ltd. 6,900 shares.
were sold by the assessee to Sri C.L. Bajoria or his nominees on 27th May, 1952, at a time when Sri C.L. Kanoria had already sent in his resignation from the office of Director, but the resignation had not yet been accepted by the Government.
It has also, been found that Sri C.L. Bajoria acquired 12,440 shares in all.
including 6,900 shares purchased from the assessee; but there was no material on the record to prove that his group obtained a controlling interest in McLeod & Co. Ltd. as a result of acquisition of ' these shares.
As a fact, it was held that after the resignation of Sri C.L. Kanoria, Messrs C.L. Bajoria and Baijnath Jalan, both ; of M/s. Soorajmull Nagarmull, became Directors of McLeod & Co. Ltd. These are the principal facts on the basis of which it has to be determined whether the sale of these shares by the assessee resulted in a revenue receipt or in a capital gain.
It appears to us that the facts and circumstances in this case can lead to.
no other conclusion, except that these shares were purchased and sold by the assessee with the motive of earning a profit by such purchases and sales and not with the object of investing its capital in these shares in order to derive 356 income from that investment.
It is true that the principal business of the assessee was to invest capital and to derive income from dividends on shares and interest on other investments; but at the same time, the object contained in the Memorandum of Association of the assessee Company clearly showed that one of the objects was also to deal in shares, stocks, debentures, etc., by acquiring, holding, selling and transferring them.
In the years prior to the assessment year, the case put forward by the assessee that the various acquisitions and sales of shares were in the nature of investments was accepted by The Department but such a decision given in the earlier years is not binding in the proceedings for assessment during subsequent years.
The particular shares no,in question.
it appears, were purchased between 31st March,1948 and 31st March, 1952.
The earliest purchases in March.1948 were at an average price of Rs. 267 13 0 per share.
In the next two years ended 31st March, 1949 and 31st March, 1950.the average purchase price was Rs. 201 8 0 and Rs. 182 10 0.and the last purchase in the year ended 31st March, 1952 was at the rate of Rs. 128 14 0.
On 1st April.
1952, the assessee 's total holding of shares in McLeod & Co. Ltd. was 6,977 at a total cost of Rs./4,29,587 4 0 out of the total holding of shareS, including shares in other companies, of the value of Rs. 17,58,741 4 0.Thus, on that date, the holdings in McLeod & Co. Ltd. formed the major part of the share holdings of the assessee.
It is significant that the shares were purchased during a period when their market price was continuously falling.
The earliest purchases in the year ended 31st March, 1948 were at an average price Rs. 267 13 0, while in the last of these three years ended 31st March 1952, the average price was Rs. 128 14 0.
The largest block of 4,757 shares was purchased in the year ended 31st March, 1950, when the average price was Rs. 182 10 0.
The assessment order of the Income tax Officer also shows that the shares were not only purchased in a rapidly falling market, but, in order to make these purchases the assessee had taken loans amounting to about Rs. 8 lacs at interest varying from 31/2% to 5 %.
The dividend being declared was at a very low rate, so that the return on this investment, after taking into account the interest paid and super tax to be paid, came to a very small percentage.
being less than 1%.
This circumstance that the shares were purchased at a time when their prices were falling and the return on investments was not at all substantial while loans had been taken to purchase these shares strongly points to a conclusion that the shares could not have been purchased as an investment to earn income from dividends and that the purchases of these shares were with the object of selling them subsequently at a profit.
The shares were in fact, sold at considerable profit subsequently and that is how the question of charging that profit to tax as revenue receipt has arisen.
The explanation sought to be given by the 357 assessee that the shares were, in fact, being held as investment and were sold simply because the control of McLeod & Co. Ltd. went out of the hands of the Directors of the assessee has not been proved, according to the supplementary statement of the case submitted by the Tribunal.
In fact, the Tribunal was not satisfied that even the purchasers, viz., the Bajoria group on buying these shares from the assessee acquired a controlling interest in McLeod & Co. Ltd. or in the companies managed by that Company.
The object of the sale as given by the assessee has therefore, remained unproved, whereas the fact that the purchases of the shares were made at a time when they were not expected to give a good return as investment and were actually sold at a very good profit leads to the reverse inference that the purchases and sales of these shares were an adventure in the nature of trade.
Even the sequence of events does not bear out the contention of the assessee.
Sri C.L. Kanoria first resigned on 17th March, 1952 and he sold his shares while his resignation was still pending for approval by the Government.
The sale took place on 27th May 1952, at a time when the resignation not having received the approval of the Government, the control of McLeod & Co. Ltd. group of companies was still with the Kanoria group.
The resignation was accepted on 16th October, 1952, about five months after the sale of the shares.
There is no evidence.
to show that, as a result this sale.
the control in the McLeod & Co. group of companies passed to the Bajoria group though M/s. C.L. Bajoria and Baijnath Jalan did subsequently loin the Directorate of McLeod & Co. Ltd. On these facts, it is not possible to hold that the Tribunal was incorrect in recording it5 conclusion that the sale of these shares by the assessee was not the result of control of the McLeod & Co. Ltd. passing from the. hands of Kanoria group to the Bajoria group.
In fact the Kanoria group was holding a majority 21,046 shares out of 40,000 shares in McLeod & Co. Ltd. even at the time when these shares were sold on 27th May, 1952.
The assessee thus having failed to prove the object of the sale of these shares, the inference that the shares were sold with the sole object of earning profit is justified.
This conclusion is further strengthened by the conduct of the assessee as found by the Tribunal in subsequent years.
In the year ended 31st March, 1955, the assessee again purchased a large number of shares of McLeod & Co. Ltd. These purchases were made between 23rd August, 1954 and 29th September, 1954.
The first purchases were made at a rate of Rs. 150/ per share.
and the purchases were continued even in the month of September when the rate rose to nearly Rs. 250/ per share.
This purchase of shares of McLeod & Co. Ltd. in the account year 1954 55.
when there was a rising market and when the control was no longer with the Kanoria group and having already passed to the 358 Bajoria group, clearly shows that the Tribunal was not wrong in inferring that the purchases of shares of McLeod & Co. Ltd. were not for the purpose of keeping controlling interest in that Company or for investment, but that the shares were being purchased and sold for earning profit, so that the transactions were an adventure in the nature of trade in these shares of McLeod & Co. Ltd. In this connection, Mr. A.K. Sen, learned counsel for the appellant drew our attention to the following view expressed in the remand order : "We are unable to answer the question referred because the mere fact that an investment company periodically varies its investments does not necessarily mean that the profits resulting from such variation is taxable under the Income tax Act.
Variation of its investments must amount to dealing in investments before such profits can be taxed as income under the Income tax Act.
" Reliance was also.
placed on the observations of this Court in Bengal and Assam Investors Ltd. vs Commissioner of Income tax, West Bengal(1), which were quoted in the remand order and are as follows : "It seems to us that, on principle before dividends on shares can be assessed under section 10, the assessee, be it an individual or a company or any other entity, must carry on business in respect of shares; that is to say, the assessee must deal in those shares.
It is evident that if an individual person invests in shares for the purpose of earning dividend, he is not carrying on a business.
The only way he can come under section 10 is by converting the shares into stock in trade, i.e., by carrying on the business of dealing in stocks and shares as did the assessee in Commissioner of Income Tax vs Bai Shirinbai K. Kooka(2) ' '.
It was urged that, in this case, the Tribunal has recorded no finding at all that the shares in McLeod & Co. Ltd. which were sold by the assessee were converted by it into stock in trade, nor has it been held that the variation of its investments by the assessee amounted to dealings in investments.
The facts that we found above show that, so far as the shares of McLeod & Co. Ltd. and the allied companies which were sold by the assessee and the income from which has been taxed as revenue income are concerned, the assessee, in fact, dealt with them as stock in trade.
It (1) (2) 359 is true that in the account books they were never shown as such; but we have indicated how the evidence and the material in this case lead to the conclusion that the shares were in fact purchased even initially not as investments, but for the purpose of sale at profit and that they were actually sold with the purpose of earning profit, so that the transactions amounted to an adventure in the nature of trade.
Learned counsel also referred ,to the decision of this Court in Ram Narain Sons (Pr.) Ltd. v Commissioner of Income tax, Bombay(1) to urge that the principal consideration in determining whether income from sale of shares is revenue income or capital gain, is to find out what was the purpose of purchase of those shares, and, if the purpose was investment, the fact that.
in varying the investment, the sale of those shares resulted in a profit will not.
make that profit revenue income.
The principle is perfectly ' correct, but is not applicable to.
the case before us on the finding mentioned by us above that even the initial purchase of these shares by the assessee was not for the purpose of investment for earning income from dividends, but was with a view to earn profit by resale of those shares.
In these circumstances we hold that the High Court was right in arriving at the conclusion that, on the facts and circumstances of the present case, the income derived by the assessee from the sale of its shares and securities in the relevant previous years was revenue receipt and as such taxable under the Income tax Act.
The appeals fail and are dismissed with costs.
One hearing fee.
Y.P. Appeals dismissed.
| IN-Abs | The principal activity of the assessee was investment of its capitals in shares and stocks.
It changed its investments by sale of its shares and stocks from time to time.
The assessee 's income was primarily derived from dividends on shares and interest derived by it on the investments.
The assessee purchased the shares of a company when their prices were falling by taking loan at interest and the return on investment was not at all substantial.
The assessee 's explanation that the shares were, in fact, being held as investment and were sold simply because the control of the company went out of the hands of the Directors of the assessee.
was not accepted by the Tribunal.
HELD: The income derived by the assessee.
from the sale of these shares was revenue receipt and as such taxable under the, Income tax Act.
From the evidence about the course of dealings and conduct of the assessee the conclusion followed that the purchases of the shares were not for the purpose of keeping controlling interest in that company, or for investment, but shares were being purchased and sold for earning profit, so that the transactions were an adventure in the nature of trade in these shares.
[359 A B] The acceptance by the Revenue, in the earlier years, that the acquisitions and sales of shares were in the nature of investments, was not binding in the proceeding for assessment during subsequent years.
[356 B C] Bengal and Assam Investors Ltd. vs Commissioner of income tax,West Bengal, and Commissioner of Income tax vs
Bai Shrinbai K. Kooka, , referred to.
Ram Narain Sons (P) Ltd. vs Commissioner of Income tax, Bombay. , held inapplicable.
|
Appeals Nos. 885893 of 1967.
Appeals from the judgment and order dated February 2, 1967 of the Punjab and Haryana High Court in Civil Writs Nos.
1947, 1921 to 1927 and 1949 of 1965.
AND Civil Appeals Nos. 973 to 975 of 1967.
Appeals from the judgment and order dated April 26, 1967 of the Punjab High Court in Letters Patent Appeal Nos.
127 to 129 of 1967.
369 B.R.L. lyengar, R.N. Sachthey and S.P. Nayar, for the appellants (in all the appeals).
Bhagirath Dass, Sobhag Mal Jain and B.P. Maheshwari, for the respondents (in C.As.
Nos. 885 and 893 of/967).
O.P. Varma, for the respondents (in C.As.
Nos. 886 to 890 and 892 of 1967).
A.K. Sen and O.P. Varma, for the respondent (in C.A. No. 891 of 1967).
K.L. Arora and H.K. Puri, for the respondents (in C.As.
973 and 974 of 1967).
A.K. Sen, H.L. Anand and K.B. Mehta, for the respondent (in C.A. No. 975 of 1967).
The Judgment of the Court was delivered by Shah, J.
The facts which give rise to Appeal No. 885 of are these: The Textile Commissioner published on October 10, 1962, a scheme called the Export Promotion Scheme providing incentives to exporters of woollen goods.
The scheme was extended by a Trade Notice dated January 1, 1963, to exports of wooden goods to Afghanistan.
Messrs. Indo Afghan Agencies hereinafter called the respondents a firm dealing in woollen goods at Amritsar exported to Afghanistan in September, 1963, woollen goods of the f.o.b. value of Rs. 5,03,471 73 nP. The Deputy Director in the office of the Textile Commissioner, Bombay issued to the respondents an Import Entitlement Certificate for Rs. 1,99,459 only/ .
Representations made by the respondents to the Deputy Director and to the Union Government that they be granted Import Entitlement Certificate for the full f.o.b value of the goods exported failed to produce any response.
But in a petition under article 226 of the Constitution moved before the High Court of Punjab by the respondents for a writ or an order directing the Union of India, the Textile Commissioner and the Joint Chief Controller of Imports and Exports, Bombay, to issue a licence "permitting import of wool tops, raw wool, waste and rags of the value of Rs. 3,04,012 73 nP", the orders of the Textile Commissioner and the Central Government were set aside.
The High Court held that the Export Promotion Scheme specifically provided for granting certificates to import materials of the "value equal to 100% of the f.o.b. value of the goods exported", and the respondents were entitled to obtain import licences for an amount equal to 100% of the f.o.b. value, unless it was found on enquiry duly made under el.
10 of the Scheme that the respondents had by "over invoicing" the goods disentitled themselves to the import licences 370 of the full value; that no such enquiry was made by the Textile Commissioner and that officer merely proceeded upon his "subjective satisfaction" that the respondents had 'over invoiced" the goods exported; and that the Union Government acted on irrelevant grounds.
The Union of India, the Textile Commissioner and the Joint Chief Controller of Imports and Exports have appealed to this Court with certificate granted by the High Court.
The genesis of the export control scheme may first be noticed.
The Imports and Exports (Control) Act 18 of 1947 was enacted on March 24, 1947 with the object of enabling the Central Government to continue to exercise the power to prohibit, restrict or otherwise control imports and exports which had till then been controlled by orders issued in exercise of the powers conferred by r. 84 of the Defence of India Rules, 1939, as extended by the Emergency Provisions (Continuance) Ordinance 20 of 1946.
By section 3 of that Act it was provided: "(1) The Central Government may by order published in the Official Gazette, make provisions for prohibiting, restricting or otherwise controlling in all cases or in specified classes of cases, and subject to such exceptions if any, as may be made by or under the order : (a) the import, export, carriage coastwise or shipment as ships stores of goods of any specified description; (b) the bringing into any port or place in India of goods of any specified description intended to be taken out of India without being removed from the ship or conveyance in which they are being carried.
(2). . . . (3). . . .
By section 4 the orders made under r. 84 of the Defence of India Rules, 1939, or under that rule as continued in force by the Emergency Provisions (Continuance) Ordinance, 1946, and in force immediately before the commencement of the Act were, insofar as they were not inconsistent with the provisions of the Act, to continue to remain in force and to be deemed to have been made under the Act.
In exercise of the powers conferred on the Central Government by section 3, the Central Government issued the Imports (Control) Order, 1955.
By paragraph 3 of the Order it was enacted that: 371 "(1) Save as otherwise provided in this Order, no person shall import any goods of the description specified in Schedule I, except under, and in accordance with, a licence or a customs clearance permit granted by the Central Government or by any officer specified in (2) If, in any case, it is found that the goods imported under a licence do not conform to the description given in the licence or were shipped prior to the date of issue of the licence under which they are claimed to have been imported, then, without prejudice to any action that may be taken against the licence under the (52 of 1962), in respect of the said importation, the licence may be treated as having been utilised for importing the said goods.
" The Central Government also issued periodical orders which were published in biannual official publications setting out the policy governing the grant of import and export licences.
By paragraph 52 of the notification published in the Gazette Extraordinary dated December 29, 1954, it was declared that in certain items there was "direct and intimate" inter relationship between imports and exports, and since the ability to export some of those manufactured goods depended largely on the facility with which the exporter or the manufacturer could procure the basic raw materials required in the manufacture, a scheme had been devised with a view to promote export of such goods for the grant of special import licences to replace the imported raw material content of the exported product, and to provide an inducement for larger exports.
The details of the Scheme were set out in Appendix 23 to the Notification.
The Scheme covered a number of commodities of which export was permitted.
From time to time this Appendix was modified and fresh schemes were issued in respect of new commodities.
On October 10, 1962, the Government of India promulgated the Export Promotion Scheme for woollen textiles and woollen goods.
Clause 2 of that Scheme provided, insofar as it is material: "It has been decided that manufacturers exporters and merchants exporters of the above woollen textiles and woollen goods will be entitled to import raw materials, namely, raw wool, wool tops, shoddy, man made fibres and tops, permissible types of dyes and chemicals and machinery and machinery parts and spare parts for woollen industry for a total amount equal to 100% of the f.o.b. value of the exports.
" 372 Clause 4 provided: "Only such exporters who satisfy the Textile Commissioner that they are interested in export (either by past performance or by showing proof of action taken to obtain firm order etc.) will be registered by the Textile Commissioner.
" Clause 6 imposed certain obligations upon the registered exporters, such as adherence to the code of conduct as and when evolved; adoption of the standard contract form with suitable clauses for arbitration and settlement of disputes; abiding by the decision of the Textile Commissioner in the matter of dispute between the exporter and his foreign customers; forwarding figures of exports of woollen goods made by him every month to the Textile Commissioner and abiding by such quality control and pre shipment inspection procedures as may be evolved Clause 7 provided for the application for grant of import licences against actual exports effected on a monthly or on a quarterly basis.
Clause 9 provided: "After scrutiny of the applications, the Textile Commissioner shall issue an entitlement certificate indicating the items and value for which licence should i ssued to the applicant.
On receipt of the application and entitlement certificate, the Joint Chief Controller of Imports and Exports, Bombay, shall issue the license.
" Clause 10 provided: "In case where the Textile Commissioner considers that the declared value of the goods exported is higher than the real value of the goods, the matter may be investigated further by calling for further evidence, e.g. purchase vouchers and any other corroborative evidence to facilitate scrutiny.
It shall be the duty of the registered exporter to furnish such evidence as is called for in this connection.
On the basis of his enquiry, the Textile Commissioner may assess the correct value of the goods exported and issue an entitlement certificate on the basis of such assessed value." By notification dated January 1, 1963, the Scheme was extended to exports of woollen textiles and woollen goods to Afghanistan with effect from October 1, 1962.
It was urged on behalf of the Union of India that the Export Promotion Scheme was administrative in character and the recital therein that the exporters will be entitled to import certificates equal to 100% of the f.o.b. value of the exports was a 373 mere instruction issued by the Union Government to the Textile.
Commissioner: it created no rights in the public generally or in the exporters who exported their goods in pursuance of the Scheme and imposed no obligations upon the Government to issue the import certificates.
On behalf of the respondents it was contended that the Scheme was statutory in character and obliged the Textile Commissioner, unless the exporter was after due investigation under cl. 10 of the Scheme, shown to have "overinvoiced" the goods exported, to issue import certificates of the full value of the exports, and a person exporting goods in pursuance of the Scheme who was denied an import certificate of the full f.o.b. value could seek the assistance of the High Court by a petition for the issue of a writ under article 226 of the Constitution, for an order compelling the Textile Commissioner to carry out the obligations imposed upon him by the Scheme.
The Textile Commissioner in the present case made his order without informing the respondents and giving them an opportunity to explain the materials on the basis of which the "import entitlement" of the respondents was proposed to be reduced.
It was stated in the affidavit of the Union of India that it was not a necessary requirement of the Scheme to set out the reasons for reducing the import entitlement: that under paragraph 20(d) to Appendix 23 of the Import Trade Control Policy for the year April 1962 to March 1963 the licensing authority was authorised to refuse the issue of a licence or "to reduce the value of the licence to such amount as he deemed fit" in cases where he considered the value of the goods exported was over invoiced, and the Trade Notice having been issued in exercise of the executive power of the State, attack by the respondents on the ground set up was "completely misplaced and without any.foundation in law".
In passing the orders impugned by the respondents, the Textile Commissioner did not hold an enquiry consistent with the rules of natural justice.
Counsel for the Union of India submitted that for good reasons of which the Textile Commissioner was the sole judge, it was open to that Officer to reduce the import entitlement below the f.o.b. value of the goods exported, and exercise of the power conferred upon him is not limited by the terms of cl. 10 of the Scheme, and is not, except on proof of mala fide exercise open to judicial review.
This exalted claim about the nature of the authority conferred upon the Textile Commissioner as representative of the Government may first be examined.
Counsel for the Union said that the import and export policy of the Government is based on availability of foreign exchange.requirement of goods of foreign origin for internal consumption, 374 economic climate in the country, and other related matters, and has in its very nature to be flexible, and on that account the power of the Government to modify or adjust it as the altered circumstances necessitate, cannot be restricted on the ground that promises made by the Government in different situations are not carried out, however amoral that claim may appear to be According to Counsel the Government is the sole judge of the validity of its actions in matters relating to Import and Export Policy, and the citizens who have acted on the representations of the Government have only such rights as the Government in its wisdom chooses to recognise or accept at any given time.
He relied in support of his submission upon the doctrine of "executive necessity" on which Rowlatt J, relied in Rederiaktiebolaget Amphitrite vs The King.(1) In that case during the First World War certain neutral shipowners obtained an undertaking from the British Government that if the shipowners sent a particular ship to the United Kingdom with a specified cargo, she shall not be detained.
On the faith of that undertaking, the owners sent the ship to a British port with that specified cargo.
The British Government withdrew their undertaking and refused her clearance.
On a petition of right for damages for breach of contract it was held that the Government 's undertaking was not enforceable in a Court of law, it not being within the competence of the Crown to make a contract which would have the effect of limiting its power of executive action in the future.
Rowlatt, J., observed at p. 503: " . what I have to consider is whether this was a contract at all.
I have not to consider whether there was anything of which complaint might be made outside a Court, whether that is to say what the Government did was morally wrong or arbitrary that would be altogether outside my province.
" He then proceeded to state: "No doubt the Government can bind itself through its officers by a commercial contract, and if it does so it must perform it like anybody else or pay damages for the breach.
But this was not a commercial contract, it was an arrangement whereby the Government purported to give an assurance as to what its executive action would be in the future in relation to a particular ship in the event of her coming to this country with a particular kind of cargo.
And that is, to my mind, not a contract for the breach of which damages can be sued for in a Court of law.
It was merely an expression of intention to act in a particular way m a (1) 375 certain event.
My main reason for so thinking is that it is not competent for the Government to fetter its future executive action, which must necessarily be determined by the needs of the community when the question arises.
It cannot by contract hamper its freedom of action in matters which concern the welfare of the State.
" This observation is, "clearly very wide and it is difficult to determine its proper scope": Anson 's "English Law of Contract", 22nd Ed., p. 174.
It may also be noticed that before Rowlatt, J., the applicants Claimed enforcement of a contract against the Crown, and the learned Judge came to the conclusion that there was no contract and no damages could be awarded.
In Robertson vs Minister of Pensions(1), Denning, J. observed at p. 231: "The Crown cannot escape by saying that estoppels 'do not bind the Crown for that doctrine has long been exploded.
Nor can the Crown escape by praying in aid the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so.
as to fetter its future executive action.
That doctrine was propounded by Rowlatt J., in Rederiaktiebolaget Amphitrite vs The King but it was unnecessary for the decision because the statement there was not a promise which was intended to be binding but only an expression of intention.
Rowlatt, J., seems to have been influenced by the cases on the right of the Crown to dismiss its servants at pleasure, but those cases must now all be read in the light of the judgment of Lord Atkin in Reilly vs The King (1954) A.C. 176, 179).
In my opinion the defence of executive necessity is of limited scope.
It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract.
" Denning, I was dealing with a case of a serving army officer, who wrote to the War Office regarding a disability and received a reply that his disability had been accepted as attributable to "military service".
Relying on that assurance he forbore to obtain an independent medical opinion.
The Minister of Pensions later decided that the appellant 's disability could not be attributed to war service.
It was held that as between subjects such an assurance would be enforceable because it was intended to be binding intended to be acted upon, and was in fact acted upon; and the assurance was also binding on the Crown because no term could be implied that the Crown was at liberty to revoke it.
(1) [1949] 1 K,B 227.
376 The defence of executive necessity was not relied upon in the present case in the affidavit filed on behalf of the Union of India.
It was also not pleaded that the representation in the Scheme was subject to an implied term that the Union of India will not be bound to grant the import certificate for the full value of the goods exported if they deem it inexpedient to grant the certificate.
We are unable to accede to the contention that the executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment.
Under our constitutional set up no person may be deprived of his fight or liberty except in due course of and by authority of law: if a member of the executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law common or statute the Courts will be competent to and indeed would be bound to, protect the rights of the aggrieved citizen.
The orders which the Central Government may issue in exercise of the power conferred by section 3 of the Imports and Exports Control Act may be executive or legislative.
In exercise of that power, the Order was issued on December 7, 1955, that was clearly legislative in character.
It appears 'that prior to the issuance of this notification several orders had been issued under the Defence of India Rules and under the Imports and Exports Act dealing with the grant of licences to import certain classes of goods.
Those orders which are set out in the IVth Schedule to the Order were repealed by cl. 12 of the Order of 1955, and.
machinery for granting licences was set up by the Order dated December 7, 1955.
Counsel for the respondents submitted that the Export Promotion Schemes published by the Government under paragraph 52 of the Government Notification dated December 29, 1954, must be deemed to be issued under section 3 of the Imports and Exports Control Act, 1947, since the Schemes have been published in the Gazette of India, and contain general provisions relating to the grant of licences and impose restrictions upon the rights of citizens to carry on business in certain commodities.
Being general provisions, restricting the rights of citizens to carry on business in certain commodities, the Schemes were, it was said, legislative in character, and the obligations imposed or the sanctions prescribed thereby must on that account be deemed to be enforceable by command of the Court.
cannot be assumed merely because the Import Trade Policy is general in terms and deals with the grant of licences for import of goods and related matters, it is statutory in character.
The Imports and Exports (Control) Act, 1947, authorises the Central Government to make provisions prohibiting, restricting or otherwise controlling import, export, carriage etc.
of the goods and by the Imports (Control) Order, 1955, dated December 7, 1955, 377 and by the provisions which were sought W, be repealed restrictions were already imposed.
The order was clearly legislative in character.
The Import Trade Policy was evolved to facilitate the mechanism of the Act and the orders issued thereunder.
Even granting that the Import Trade Policy notifications were issued in exercise of the power under section 3 of the Imports and Exports (Control) Act, 1947, the Order as already observed authorised the making of executive or administrative instructions as well as legislative directions.
It is not the form of the order, the method of its publication or the source of its authority, but its substance, which determines its true character.
A large majority of the paragraphs of the Import & Export Schemes are in the form of instructions to departmental officers and advice to persons engaged in the export and import business with their foreign counterparts.
It may be possible to pick out paragraphs from the Scheme which appear in isolation to be addressed generally and have direct impact upon the rights and liberties of the citizens.
But a large number of paragraphs of the Scheme refer to matters of procedure.
of departmental officers and heterogeneous material: it sets out forms of applications, the designations of licensing authorities, amounts of application and licensing fees, last dates for applications, intermixed with definitions of 'Established/reporters ', 'Actual users ', 'New comers ', and others and details of different schemes such as Quota Registration Schemes, Export Promotion Schemes etc.
There is no pattern of order or logical sequence in the policy statement: it is a jumble of executive instructions and matters which impose several restrictions upon the rights of citizens.
Some of the provisions which impose restrictions upon citizens in the exercise of their right to carry on trade without statutory limits may be open to serious objection, but we do not find it necessary to embark upon an enquiry whether the provision which authorises the issue of import entitlement certificate for the full f.o.b. value of the goods exported is legislative in character.
Granting that it is executive in character, this Court has held that Courts have the power in appropriate cases to compel performance of the obligations imposed by the Schemes upon the departmental authorities.
The question whether the Import Trade Policy is legislative in character has not been expressly dealt with in any decision of this Court.
It appears to have 'been assumed in certain eases, that it is.
executive in character, but even so it has been held that when it is declared under an export policy that a citizen exporting goods shall be entitled to certain import facilities, in appropriate cases the Courts have the power to direct the concerned authority to make that facility available to the citizen who has acted to his prejudice acting upon the representation in the policy, and has been denied that facility.
In M/s Ramchand Jagadish Chand vs 378 Union of India and Ors.(1) this Court was called upon to decide whether a person who had, pursuant to a representation in the Export Promotion Scheme that exporters will be awarded import licences upto a certain percentage of the export value of the goods was entitled to call upon the Union to issue in his favour import entitlement of the value of the goods exported.
Under the 'Export Promotion Scheme" relating to artificial silk fabrics it was represented that with a view to stimulate exports of Indian "artsilk fabrics" etc.
it was decided to grant import licences for the import of permissible varieties.
of artsilk yarn upto the percentages specilied.
The Scheme empowered the Controller of Imports and Exports to issue a licence upto 66 2/3 per cent.
of the export value in the case of Indian "artsilk sarees" and upto 100 per cent in the case of other Indian "artsilk fabrics".
M/s Ramchand Jagadish Chand, a firm of exporters relying upon the Scheme exported Indian "artsilk" goods and earned foreign exchange and applied for an import licence equivalent to the value of the goods it had exported.
They were, however, not given an import licence for the value of the goods exported.
They thereafter filed a writ petition in this Court for an order that the import certificate had been arbitrarily reduced and thereby the fundamental right of the exporter to carry on trade in artsilk was infringed.
The Court held in that case that the State had the right to impose control in the larger interest of the general public on imports and to make orders in exercise of the powers conferred by the Imports and Exports (Control) Act providing for imposition of restrictions by permitting import of certain goods only in accordance with the licences or customs permits granted by the Central Government.
Since in that case the power granted to the licensing authority was to grant licences only upto the maximum specified in cl. 2 of Appendix.
42, the restriction imposed was held not to be unreasonable.
It was also observed that it did not impose an obligation upon the controller enforceable at the instance of the exporter, to issue a licence for the amount (subject to the maximum prescribed) claimed by the exporter, and since the order of the Controller granting a licence only for 45% of the value of goods exported did not infringe the fundamental right of the exporter under article 19(1)(g) of the Constitution, the petition filed by the exporter was liable to be dismissed.
But the Court observed: "The licensing authority would normally issue an import licence for 100% of the value of the goods exported, but having regard to special considerations such as difficult foreign exchange position or other matters which have a bearing on the general interest of the State, import licences for a smaller percentage may be granted to the exporters.
But by the use of the expression 'up (1) ; 379 to the following percentage of the rupee equivalent ' power to fix arbitrarily a percentage of the value of the goods exported for awarding an import licence is not granted.
" Opinion was therefore expressed that if the power granted to the Controller was arbitrarily exercised, it was open to judicial review.
In Ramchand Jagadish Chand 's case(1) a Committee was appointed to determine the value of the goods exported by the exporter and the Committee scrutinised the claim of the exporter and found that the rates of some of the items could not be accepted as reasonable, and recommended an import licence approximately of the value of 45 per cent.
of the goods exported.
The exporter was given a right to make a representation and to be heard before the order was passed to his prejudice.
In Probhudas Morarjee Rajkotia and others vs Union of India and others(2), a Special Exports Promotion Scheme for Engineering goods was promulgated by the Government of India.
To give incentives to the manufacturers of engineering goods in India to export their products outside India, it was declared by the Scheme that import licences will be granted to exporters for materials upto the specified percentage of the f.o.b. value of the goods exported.
An exporter claimed that he had exported goods of the f.o.b. value exceeding Rs. 9.44 lakhs and demanded import licence of the value of Rs. 4.39 lakhs odd.
The licensing authorities issued to the firm import licences for Rs. 3.77 lakhs odd.
The exporter then moved this Court by a petition under article 32 of the Constitution for the issue of a writ against the Union of India granting an import licence for the balance of Rs. 62,337/ in accordance with the provisions of the Special Exports Promotion Scheme, and this Court held that even though there was no absolute right to the grant of an import licence for the maximum amount prescribed, the Controller could impose restrictions if special considerations such as 'difficult foreign exchange position or other matters which have a bearing on the general interest of the State warranted, but the discretion to be exercised by him was to be reasonable and not arbitrary.
On a consideration of the affidavit filed, and the power given to the Controller to grant licences upto and not of the value of the goods exported, it was held that no case of arbitrary exercise of the power to reduce the import entitlement was made out.
In these cases it was clearly ruled that where a person has acted upon representations made in an Export Promotion Scheme that import licences upto the value of the goods exported will be issued, and had exported goods, his claim for import licence for the maximum value permissible by the Scheme could not be arbit(1) ; (2) A.I.R. 1966 S.C. 1044.
380 rarily rejected.
Reduction in the amount of import certificate may be justified on the ground of misconduct of the exporter in relation to the goods exported, or on special considerations such as difficult foreign exchange position, or other matters which have a bearing on the general interests of the State.
In the present case, the Scheme provides for grant of import entitlement of.
the value, and not upto the value, of the goods exported.
The Textile Commissioner was, therefore, in the ordinary course required to grant import certificate for the full value of the goods exported: he could only reduce that amount after enquiry contemplated by el. 10 of the Scheme.
The judgment of this Court in Joint Chief Controller of Ira,ports and Exports, Madras vs M/s Amin Chand Mutha etc.(1) may also be usefully referred to.
In that case, after the dissolution of a firm which was the holder of quota fight as an established importer, one of the partners applied to the Chief Controller to make a division of the quota rights between the partners.
He also applied to the Joint Chief Controller who was the licensing authority for grant of a licence for the period January to June 1957 but in the application he could not mention his share in the quota right because the Chief Controller had not before the date of the application approved of the division of the quota right.
After expiry of the period for which the licence was to be issued, the Chief Controller informed the applicant that instructions had been issued to the Joint Chief Controller about the division of the quota right.
But the Joint Chief Controller declined to grant a licence to the applicant on the ground that the order of the Chief Controller had no retrospective operation.
The applicant succeeded in obtaining an order from the High Court of Madras directing the Joint Chief Controller to grant a licence.
This Court confirmed the order of the High Court.
It was held that the licensing authority had to deal with the application for a licence on the footing that the approved quota was given to the partners of the dissolved firm from the date of dissolution and the agreement divide, and could not refuse the licence solely on the ground that the approval of the Chief Controller was granted after the expiry of the import period.
The Court observed that the Chief Controller had no power to refuse division of the quota right if he was satisfied about the dissolution of the inn, and it followed that when he gave his approval it must take effect from the date of the agreement, and on that interpretation of the order of the Chief Controller, the application for the issue of the licence should have been granted by the licensing authority.
The Court proceeded to observe that as no order of the Central Government prohibiting the import of the articles for which the licence was. :applied for was published in the Gazette, it was open.
the (1) ; 381 licensing authority to issue a licence for the period January to June 1857, even if there was a change in the import policy of the Government of India with respect to those articles.
In Amin Chand Mutha 's case(1) the Court enforced compliance with the provisions relating to the grant of a licence under the licensing instructions issued by the Central Government.
In each of the three cases, the Court observed that the Court was competent to grant relief in appropriate cases, if, contrary to the Scheme, the authority declined to grant a licence or import certificate or the authority acted arbitrarily.
Therefore even assuming that the provisions relating to the issue of Trade Notices offering inducement to.
the prospective exporters are in character executive, the Union Government and its officers are, on the authorities of tiffs Court, not entitled at their mere whim to ignore the promises made by the Government.
We cannot therefore accept the plea that the Textile Commissioner is the sole judge of the quantum of import licence to be granted to an exporter, and that the Courts are powerless to grant relief, if the promised import licence is not given to an exporter who has acted to his prejudice relying upon the representation.
concede to the Departmental authorities that power would be to.
strike at the very root of the rule of law.
By the Export Promotion Scheme for woolen textiles as extended to exports to Afghanistan, the exporters were invited to get themselves registered with the Textile Commissioner for exporting woolen goods, and it was represented that the exporters will be entitled to import raw materials, of the total amount equal 100% of the f.o.b. Value of the exports.
Machinery for scrutiny of the applications and the issue of import entitlement was provided by section 9 of the Scheme, and the Textile Commissioner was invested with the authority to determine whether in any given case the declared value of the goods exported was higher than the real value of the goods and to, assess the correct value of the goods exported and to issue import certificates on the basis of such assessed value.
Undoubtedly the Textile Commissioner had authority, if it was found that a fraudulent attempt was made to secure an import certificate in excess of the true value of the goods exported, to reduce the import certificate.
But the authority vested in the Textile Commissioner by the rules even though executive in character was from its nature an authority to deal with the matter in manner consonant with the basic concept of ' justice and fair play: if he made an order which was not consonant with the basic concept.s of justice and fair play his proceeding was open to scrutiny and rectification by the Courts.
The Textile Commissioner acted upon a report of the Committee appointed by him, and before that Committee the respondents had no oppor (1) ; up.
C.I/68 10 Sup.
C.I/68 10 382 tunity to present their case.
He collected evidence ex parte and did not disclose it to the respondents and without giving an opportunity to them to represent their case reduced the import certificate.
In dealing with a representation made by the respondent, the Government of India also acted similarly and declined either to make available the evidence on which the Textile Commissioner had acted or to give a hearing to the respondents.
The Textile Commissioner and the Union of India did not purport to act in exercise of the power under cl. 10 of the Scheme: they have sought to support the order on the plea that the subjective satisfaction of the Textile Commissioner is determinative of the extent of the import certificate which may be granted to the respondents.
It was somewhat faintly urged that if the Government is held bound by every representation made by it regarding its intention.
when the exporters have acted in the manner they were invited to act, the Government would be held bound by a contractual obligation eve.n though no formal contract in the manner required by article 299 of the Constitution was executed, and the exporter would be entitled to claim damages contrary to that provision for breach of the contract even though no formal written contract had been executed in the manner provided by that Article.
But the respondents are not seeking to enforce any contractual fight: they are seeking to enforce compliance with the obligation which is laid upon the Textile Commissioner by the terms of the Scheme, and we are of the view that even if the Scheme is executive in character, the respondents who were aggrieved because of the failure to carry out the terms of the Scheme were entitled to seek resort to the Court and claim that the obligation imposed upon the Textile Commissioner by the Scheme be ordered to be carried out.
We hold that the claim of the respondents is appropriately rounded upon the equity which arises in their favour as a result of the representation made on behalf of the Union of India in the Export Promotion Scheme, and the action taken by the respondents acting upon that representation under the belief that the Government would carry out the representation made by it.
On the facts proved in this case, no ground has been suggested before the Court for exempting the Government from the equity arising out of the acts done by the exporters to their prejudice relying upon the representation.
This principle has been recognised by the Courts in India and by the Judical Committee of the Privy Council in several cases.
In The Municipal Corporation of the City of Bombay vs The Secretary of State for India in Council(1), it was held by the Bombay High Court that even though there is no formal (1) I.L.R. 383 contract as required by the statute.
the Government may be bound by a representation made by it. ' In that case in answer to a requisition by the Government of Bombay addressed to the Municipal Commissioner to remove certain fish and vegetable markets to facilitate the construction of an arterial road, the Municipal Commissioner offered to remove the structures if the Government would agree to rent to the Municipality other land mentioned in his letter at a nominal rent.
The Government accepted the suggestion and sanctioned the application of the Municipal Commissioner for a site for tabling and establishing the new markets.
The Municipal Commissioner then took possession of the land so made available and constructed stables, workshops and chawls thereon.
Twenty four years thereafter the Government of Bombay served notices on the Municipal Commissioner determining the tenancy and requesting the Commissioner to.
deliver possession of the land occupied by the markets, and to pay in the meantime rent at the rate of Rs. 12,000/ per annum.
The Municipality declined to pay the rent, and the Secretary of State for India filed a suit against the Municipal Commissioner for a declaration that the tenancy of the Municipality created by Government Resolution of December 9. 1865, stood determined and for an order to pay rent at the rate of Rs. 12,000/ per annum.
It was urged before the High Court of Bombay that the events which had transpired had created an equity in favour of the Municipality which afforded an answer to the claim of the Government to eject the Municipality.
Jenkins, C.J. delivering the judgment of the Court observed: "The doctrine, involved in this phase of the case is often treated as one of estopped, but I doubt whether this is a correct, though it may be a convenient name to apply.
It differs essentially from the doctrine embodied in section 115 of the Evidence Act, which is not a rule of equity, but is a rule of evidence that was formulated and applied in Courts of law; while the doctrine.
with which I am now dealing, takes its origin from the jurisdiction assumed by Courts of Equity to intervene in the case of, or to prevent fraud." After referring to Ramsclen vs Dyson(1), the learned Chief Justice observed that the Crown comes within the range of equity and proceeded to examine whether the facts of the case invited the application of that principle.
This case is, in our judgment a clear authority that even though the case, does not fall within the terms of section 115 of the Evidence Act, it is still open to, a party who has acted on a representation made by the Government to claim that the Government 384 shall be bound to.
carry out the promise made by it, even though the promise is not recorded in the form of a formal contract as required by the Constitution.
In Ahmad Yar Khan and others vs Secretary of State for India in Council and another(3), the plaintiffs claimed title to a canal supplied with water from the Sutlej having been constructed at great expense by their predecessors for purposes of irrigation, with the sanction and encouragement of the Government, partly on Government lands and partly on the lands of private owners under arrangements with them.
It was held that the plaintiffs became proprietors of the canal and entitled to ' have the waters of the Sutlej admitted into it so long as it was used for the purpose for which it was originally designed.
Similarly in The Ganges Manufacturing Co. vs Surujmull(2), Garth C.J., observed that a man may be estopped not only from giving particular evidence.
but from doing any act or relying upon any particular argument or contention, which the rules of equity and good conscience prevent him from using as against his opponent.
Counsel for the Union invited our attention to the observations made by Patanjali Sastri J., in Collector of Bombay vs Municipal Corporation of the City of Bombay and others(3).
The learned Judge observed that equity cannot be enforced so as to violate an express statutory provision, and he was therefore unable to share the view expressed by Jenkins C.J. in The Municipal Corporation of the City of Bombay vs The Secretary of State for India in Council(1).
In Collector of Bombay vs Municipal Corporation of the City of Bombay and others(a) the facts were these: Acting upon a representation made by the Government of Bombay, the Municipal Commissioner of Bombay had given up certain old markets and had constructed new markers on a site made available to the Municipality by the Government at considerable expense.
The Resolution under which the Government had granted the land stated expressly that no rent should be charged to the Municipality as the markets will be like other buildings for the benefit of the whole community.
When the Collector of Bombay sought to enhance the land revenue, the Corporation sued for a declaration that the order of assessment was ultra vires and that it was entitled to hold the land for ever without payment of any assessment.
The High Court of Bombay held that the Government had lost its right to assess the land in question because of the equity arising on the facts of the case in favour of the Municipality and a limitation on the right of the Government to assess under section 8 of the Bombay City Land Revenue Act arose.
A majority of the Judges of this Court held that (1) L.R. 28 I.A. Cal.
(3) ; (4) I.L.R. 29 Bom.
385 the Government was not, under the circumstances of the case, entitled to assess land revenue on the land in question, because the Corporation had taken possession of the land in terms of the Government resolution and had continued in such possession openly, uninterruptedly and as of right for over 70 years, and had thereby acquired the limited title it had been prescribing for during the period, the right to hold the land in perpetuity free of rent.
Chandrasekhara Aiyar J., observed that even if it be assumed that there was no representation in fact that the land was rent free at the time when it was given to the Municipality, if there was a holding out of a promise that no rent will 'be charged in the future, the Government must be deemed in the circumstances of the case to have bound themselves to fulfill it, and a Court of Enquiry must prevent the perpetration of a legal fraud.
Chandrasekhara Aiyar J., observed at p. 63: "Whether it is the equity recognised in Ramsden 's case, or it is some other form of equity, is not of much importance, Courts must do justice by the promotion of honesty and good faith, as far as it lies in their power." Patanjali Sastri J., expressed a contrary view holding that the express provisions of the statute could not be over ridden by considerations of equity.
Under our jurisprudence the Government is not exempt from liability to, carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise, solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances.
in which the obligation has arisen.
We agree with the High Court that the impugned order passed by the Textile Commissioner and confirmed by the Central Government imposing cut in the import entitlement by the respondents should be set aside and quashed and that the Textile Commissioner and the Joint Chief Controller of Imports and Exports be directed to issue to the respondents import certificates for the total amount equal to 100% of the f.o.b. value of the goods exported by them, unless there is some decision which fails within cl. 10 of the Scheme in question.
The facts which give rise to.
the other appeals are substantially the same as the facts in Civil Appeal No. 885 of 1967, except that in four out of those appeals the exporters had appeared before the Committee appointed by the Textile Commissioner and had explained the circumstances in which the exports were made by them.
But it is common ground that the report of the 386 Committee was not made available to them and the Textile Commissioner, before he passed the orders, did not call for their explanations.
It must therefore be held that enquiry in a manner consonant with the rules of justice was not made in the case of those four exporters also.
The appeals therefore fail and are dismissed with costs.
One heating fee.
V.P.S. Appeals dismissed.
| IN-Abs | Section 3 of the Imports and Exports (Control) Act, 1947, authorises the Central Government to make, by order, provisions for prohibiting, restricting or otherwise controlling import, export, carriage etc.
of goods of specified description.
In exercise of this power, the Central Government issued the Imports (Control) Order, 1955, and other orders setting out the policy governing the grant of import and export licences.
The Central Government also evolved an Import Trade Policy to facilitate the mechanism of the Act and the orders issued thereunder.
and it was modified from time to time by issuing fresh Schemes in respect of new commodities.
In 1962, the Central Government promulgated the Export Promotion Scheme providing incentives to exporters of woolen textiles and goods.
It provided for the grant to an exporter, certificates to import raw materials of a total amount equal to 100% of the F.O.B. value of his exports.
Clause 10 of the Scheme provided that the Textile Commissioner could grant an import certificate for a lesser amount if he is satisfied, after holding an enquiry, that the declared value of the goods exported is higher than the real value of the goods.
The Scheme was ex.tended to exports of woolen textiles and goods to Afghanistan.
The respondents exported woolen goods to Afghanistan and were issued an Import Entitlement Certificate by the Textile Commissioner not for the full F.O.B. value of t,he goods exported, but for a reduced amount.
In doing so, the Textile Commissioner collected evidence ex parte and acting upon the report of a Committee appointed by him passed orders without informing the respondents or giving them an opportunity to explain the materials on the basis of which the 'import entitlement ' of the respondents was reduced.
Some of the exporters had appeared before the Committee and explained the circumstances in which they made the exports, but the report of the Committee was not made available to them.
The respondents made representations to the Central Government but the Government confirmed the orders.
The respondents then filed writ petitions in the High Court.
The High Court set aside the orders of the Textile Commissioner and Government, and held that the respondents were entitled under the Scheme to obtain import licences for an amount equal to 100% of the F.O.B. value of their exports, unless it was found on enquiry duly made under el.
10 of the Scheme that the respondents had by 'over invoicing ' the goods disentitled themselves to the import licences of the full value; and that the Textile Commissioner without making any such enquiry.
proceeded upon his subjective satisfaction ' that the respondents had 'over invoiced ' the goods exported; and that Government also acted in a similar manner in dealing with the representation of the respondents.
367 In appeal to this Court, it was contended: (1 ) that the Export Promotion Scheme was administrative in character, that it contained mere executive instructions issued by the Central Government to the Textile Commissioner.
and created no enforceable rights in the exporters who exported their goods in pursuance of the Scheme and that it imposed no obligations upon the Government to issue import certificates, (2) that the textile Commissioner was the sole judge of the reasons for reducing the import entitlement, that the Scheme did not require him to set out the reasons for reducing the import entitlement, or to give an opportunity to the respondents because, the exercise of the power to reduce, conferred upon the Textile Commissioner, was not limited by the terms of el.
10 of the Scheme, and was not, except on proof of mala fide exercise, open to judicial review; (3) that the Government on grounds of 'executive necessity ' was the sole judge of the validity of its action in matters relating to import and export policy, because the policy depended upon the economic climate and other related matters and had to be in its very nature flexible with power in the Government to modify or adjust it as the altered circumstances necessitate; and (4) that if the Government is held bound by every representation made by it regarding its intentions, the Government would be held bound by a contractual obligation even though no formal contract in the manner required by article 299 of the Constitution was executed.
HELD: The Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation had arisen.
[385 E F] (1) Whether the Schemes for implementing the Import Trade Policy are merely executive or administrative instructions, or are legislative directions as well, depends not on their form, or the method of publication or the source of their authority.
but it is their substance that determines their true character.
It cannot be assumed merely because the policy is general in terms and deals with the grant of licences for import of goods and related matters, that it is statutory in character.
But even if it is only executive or administrative in character, courts have power in appropriate cases to compel performance of the obligations imposed by the Schemes upon the departmental authorities.
[376 H; 377 B C, F G] (2) The Textile Commissioner was not the sole judge of the quantum of import licence to be granted to an exporter and courts are competent in appropriate cases to grant relief, if, contrary to the Scheme, the Government and its officers at their mere whim ignore the promises made by the Government and arbitrarily decline to grant the promised import licence to an exporter who has acted to his prejudice relying upon the representation r381 C D] Where a person has acted upon representations made in an Export Promotion Scheme that import licence upto the value of the goods exported will be issued, and had exported goods, his claim for the import licence for the maximum value permissible by the Scheme cannot be arbitrarily rejected.
In such a case reduction in the amount of import certificate may be justified on the ground of misconduct of the exporter in relation to the goods exported or on special considerations such as difficult foreign exchange position, or other matters having a bearing on the general interests of the State.
But, where, as in the present case, the Scheme provided for the rant of import entitlement of the value and not 368 up to the value, of the goods exported, the Textile Commissioner should in the ordinary course, grant import certificate for the full value of the goods exported: he may reduce that mount only after the enquiry contemplated by cl. 10 of the Scheme, that is, enquiry made after giving an opportunity to the respondents and held in a manner consistent with the rules of natural justice and the basic concepts of justice and fair play.
[379 H: 380 A C] Ramchand Jagadish Chand vs Union of India & Ors. ; , Probhudas Morarjee Rajkotia & Ors.
vs Union of India & Ors.
A.I.R. 1966 S.C. 1044 and Joint Cheil Controller of Imports and Exports, Madras vs M/s.
Amin Chand Mutha, ; , followed.
(3) Executive necessity, if any, does not release the Government from honoring its solemn promises relying on which citizens have acted to their detriment especially when the representation in the Scheme was not ' subject to any implied term that the Government will not be bound to grant the import certificate for the full value of the goods exported if they deem it inexpedient [376 A C] Rederiaktiebolaget Amphitrite vs The King, [1921] 3 K.B. 500 and Robertson vs Minister of Pensions, [1949] 1 K.B. 227, referred to.
(4) The respondents were not seeking to enforce any contractual right: they are seeking to enforce compliance with the obligation which is laid upon the Textile Commissioner by the terms of the Scheme.
The claim of the respondents was rounded upon the equity which arose in their favour as a result of the representation made on behalf of the Government in the Export Promotion Scheme, and the action taken by the respondents acting upon the representation.
Even though the case did not fall within the terms of section 115 of the Evidence Act, it was still open to a party who had acted on a representation made by the Government to claim that the Government should be hound to carry out the promise made by it, though not recorded in the form of a formal contract as required by the Constitution.
[382 D G, 383 H] Ahmad Far Khan & Ors.
vs Secretary of State for India in Council and Anr.
L.R. 28 I.A. 211, The Municipal Corporation of the City of Bombay, vs The Secretary of State for India in Council, I.L.R. 29 Born.
580 and The Ganges Manufacturing Co. vs Surujmull, I.L.R. , applied.
Collector of Bombay vs Municipal Corporation of the City of Bombay & Ors. ; referred to.
|
Appeal No. 635 of 1965.
Appeal by special leave from the Award dated January 8.
1963 of the First Industrial Tribunal, West Bengal in Case No. VIH 354 of 1961.
B. Sen, Janardan Sharma, P.K. Ghosh and S.K. Nandy, for the appellants.
Niren De, Solicitor General, M. Mukherjee and Sardar Bahadur.
for respondent No. 1.
The JUdgment of the Court was delivered by Bhargava, J.
This appeal by special leave has been filed by ' the workmen of Messrs Hindustan Motors Ltd. against the decision of the First Industrial Tribunal, West Bengal in a dispute relating to payment of bonus for the year 1960 61.
The respondent, M/s Hindustan Motors Ltd., (hereinafter referred to as 315 "the Company") was established in the year 1942 and, initially, the work taken up by the Company was that of assembling of motor cars from components imported from foreign countries.
Later on, manufacture of components of motor cars was started and gradually the Company developed this work of manufacture of components by increasing the number of components manufactured by it until, at the present time, the Company is manufacturing more than 70% of the components utilised in the cars put on the market by the Company.
The work of manufacturing components was taken in hand for the first time in the year 1949, according to the reply of the Company filed on 10th January, 1962, to the statement filed on behalf of the workmen.
before the Tribunal.
At the initial stages of its existence, the Company was running at a loss and even, as late as the year 1956.
the Tariff Commission 's Report on the Automobile Industry mentioned that this Company was making a loss of Rs. 833 per car on the Hindustan Landmaster which was the car put on the market by the Company at that time.
Even Subsequently, for several years.
no profit was shown in the profit and loss account and, consequently, no bonus was paid to the workmen until the dispute about it was raised for the first time in respect of the year 1959 60.
We were informed that the dispute relating to the payment of bonus for the year l 959 60 is still pending before the Industrial Tribunal, while the dispute with respect to bonus for the next year 1960 61 has been decided and is now before us in this appeal.
In this year 1960 61, the profit and loss account of the Company showed a net profit of Rs. 249.71 lacs.
Out of this, a sum of Rs. 59.53 lacs was allocated for payment of dividend on ordinary shares @ 12% and a sum of Rs. 27.55 lacs for dividend on preference shares @8.57%.
The total amount allocated for payment of dividends was thus Rs. 87.08 lacs.
In view of the fact that, in this year, the Company had earned a net profit of over Rs. 249 lacs.
the workmen demanded bonus equivalent to six months ' wages.
The monthly wage bill of the workmen is about Rs. 4 lacs, so that the total amount claimed towards bonus by the workmen came to Rs. 24 lacs.
It was also stated on behalf of the workmen that, if this bonus to the extent of Rs. 24 lacs is awarded, the actual amount which the Company would have to pay will only be 55% of this amount, because 45% representing income tax on this amount would be refundable to the Company from the Government.
Before the Tribunal, there was no dispute between the parties that, in order to find out whether any surplus was available for distribution of bonus, calculations must be made on the basis of the Full Bench Formula approved by this Court in The Associated Cement Companies Ltd., Dwarka Cement Works, Dwarka vs Its 316 Workmen & Another(1).
The Tribunal, after making all other deductions from the surplus which have to be made in accordance with the Full Bench Formula and without taking into account provision for rehabilitation, arrived at a figure of Rs. 87.80 lacs as the amount of surplus available.
Thereafter, the Tribunal held that a sum of Rs. 373.62 lacs every year was needed for rehabilitation purposes and, since this amount very much exceeded the surplus otherwise available, there was no scope for granting, any bonus at all.
Consequently, the Tribunal decided the reference against the workmen and held that no bonus was payable for this year.
The workmen have come up to this Court against this decision of the Tribunal.
In this appeal also, there is no dispute that the principles to be applied for working out the surplus available for distribution of bonus must be those approved by this Court in the case of Associated Cement Companies Ltd.(1).
On behalf of the workmen, however, it was urged that the Tribunal committed an error in applying the Formula in respect of five different items involved in the calculation.
These are: (1) Rehabilitation, (2) Return on reserves used as working capital, (3) Return on paid up capital, (4) Interest on fixed deposits, and (5) Home delivery commission.
Of these items, the most controversial is the first item of rehabilitation and that is also the most material one, because, if the figure of annual rehabilitation arrived at by the Tribunal is accepted, it is clear that no surplus can possibly remain out of the profits earned during the year for distribution of bonus.
In the calculation of rehabilitation, various factors are involved which have been indicated by this Court in the case of Associated Cement Companies(1).
The factors in calculation of rehabilitation accepted by the Tribunal which have been challenged by the workmen are: (i) the divisor, which depends upon the life of the plant, machinery and buildings, the year of their installation or erection, and the residuary life which must be taken into account when working out the divisor, (ii) the calculation of the multiplier for arriving at the replacement cost of the old machinery which requires rehabilitation.
and (1) 317 WORKMEN V. HINDUSTAN MOTORS LTD.
(Bhargava, 1.) 317 (iii) the deductions which should be made when working out the annual rehabilitation.
We shall now proceed to deal with these points.
When the dispute was taken up for adjudication by the Tribunal, the Company, on 3 l st May, 1962 filed statements showing calculations of rehabilitation provision required for rehabilitating the plant, machinery and buildings.
Amongst these statements was a statement described as Schedule IA (hereinafter referred to as "the first Schedule IA") and in that statement it was claimed on behalf of the Company that the average total life of its machinery was 6 years.
On behalf of the workmen, it was urged that the life of the machinery should be taken to be 30 years and on this basis, ,after the arguments were over a rehabilitation cost calculation was filed on 21st November, 1962.
Thereafter, in the course of arguments on 22nd November, 1962, some fresh statements were filed by the Company.
These statements in respect of the machinery had two new Schedules, both marked as Schedule IA.
In one of these Schedules IA filed on 22nd November.
1962, the multiplier taken for replacement of the machines installed in various years was higher than the multiplier in the first Schedule 1A.
This Schedule shall be referred to.
as "the second Schedule 1A".
At the same time, as mentioned earlier, another Schedule IA was filed and, in this Schedule IA, the multipliers were the same as in the first Schedule 1A. This shall be referred to hereinafter as "the third Schedule 1A".
In none of these Schedules filed, either on behalf of the Company or on behalf of the workmen, was there any classification of plant and machinery into precision or non precision machinery.
Some statements for the purpose of calculation of rehabilitation were again filed on behalf of the Company on 28th December, 1962 under the directions of the Tribunal and it appears that, taking into account the evidence which had been led before the Tribunal, the Tribunal at this stage asked the Company to give separate Charts for precision machinery and non precision machinery.
Consequently, the statements flied on 28th December.
1962 classified the machinery into precision and non preCision machinery.
It seems that the Tribunal, in making this direction was also influenced by the circumstance that, under the Income tax Law, the depreciation allowed in respect of precision and non precision machinery is different, from which the Tribunal.
inferred that precision machinery will have a shorter life than non precision machinery.
In fact, the Tribunal was of the view that the proportion between the life of precision and non precision machinery can be safely taken to be the same as the proportion between the depreciation allowed in respect of the two.
Proceeding on this basis, the Tribunal, in the statements prepared for and annexed as.
part of the LISup.
C.I./68 6 318 Award, classified the machinery into precision and non precision machinery and worked out different life for the two kinds of machinery.
In the course of arguments before us, it was urged on behalf of the workmen that the Company not having claimed that machinery classified as precision had a shorter life than machinery classified as non precision either in the written statements or at the stage of filing the first Schedule 1A or even the second or third Schedule IA, there was no justification for the Tribunal to.
accept this.
classification and work out different periods of life for different classes.
of machinery.
Mr. Niren De, counsel appearing on behalf o.f the Company, in his argument before us also urged that the Company at No. stage put forward the Case that the machinery should be classified into precision and non precision machinery and different life should be attributed to the two classes of machinery.
According to him, the Company 'section case throughout has been that all machinery installed m the.
factory of the Company has an economic life of 6 years only, so that the Company is not prepared to justify the decision given by the Tribunal on the basis of this classification.
Since both parties before us challenge the adoption of this classification by the Tribunal, we consider that it will be right to ignore this.
classification and to proceed on the basis that the total life of the machinery must be worked out on an average for all the machines installed in the factory of the Company, without making any distinction between precision machinery and non precision machinery.
As we have mentioned earlier, the contention on behalf of the workmen was that the life of the whole machinery should be taken to be 30 years.
Mr. B. Sen, counsel appearing on behalf of the workmen, drew our attention to a number of cases, in which the life of the machinery came up for consideration either before the Labour Appellate Tribunal or before this Court in connection with calculation of rehabilitation provision.
first case brought to our notice was Saxby & Farmer Mazdoor Union, Calcutta vs M/s. Saxby & Farmer (India) Ltd., Calcutta(1), in which, for purposes.
of calculation of rehabilitation, the life of machinery was taken to be 30 years.
Another case between the Workmen of M/s. Saxby & Farmer (India) Pvt. Ltd. vs M/s. Saxby & Farmer (India) Private Ltd.(2) in respect of a subsequent year came up before this Court.
In that case, the Tribunal, in its Award, fixed the life of the machinery at 20 years and on behalf of the, workmen it was urged that it should have been 30 years as accepted by the Labour.
Appellate Tribunal in respect of the earlier year in the of Saxby & Farmer Mazdoor Union, Calcutta(1).
This Court held that the life of 30 years.
had been taken at a time when (1) (2) Civil Appeal No. 152 of 1964 decided on 12 4 1965.
319 the machinery was.
being worked in two, shifts, while, in the subsequent case, it was shown that the machinery was working in three shifts, so that it could not be said that the Tribunal was wrong in fixing the life in this subsequent case at 20 years.
Relying on these cases, Mr. Sen urged that, in the present case also, we should take the life of the machinery to be 30 years.
In The Millowners Association, Bombay vs The Rashtriya Mill Mazdoor Sangh,Bombay(1), the Full Bench of the Labour Appellate Tribunal, when laying down the formula that was later approved by this Court, appears to.
have accepted the life of textile machinery as 25 years, while this Court, in the case of the Associated Cement Companies Ltd. (2), proceeded on the basis that the life of the machinery was 30 years.
In the Honorary Secretary, South India Millowners Association and Others vs The Secretary, Coimbatore District Textile Workers ' Union(1), this Court confirmed the finding of the Tribunal that the estimated life of the textile machinery of the Company concerned in that case should be taken.
to be 25 years.
It is on the basis of these decisions that the claim was put forward that the life of the machinery in the present case should also.
be taken to be 30 years or at least 25 years.
In our opinion.this argument proceeds on an entirely incorrect basis.
The life of a machinery of one particular factory need not necessarily be the same as that of another factory.
Various factors come in that affect the useful life of a machinery.
There is, first, the consideration of the quality of machinery installed.
If the machinery is purchased from a country producing higher quality of machines,it will naturally have longer life, than the machinery purchased from another country where the quality of production is lower.
Again, the articles on which the machinery operate.s may very markedly vary the life of a machine.
If, for example, a machine is utilised for grinding of cement, the strain on the machine will necessarily not be the same as on a machine which operates on steel o.r iron.
We are, therefore, unable to accept the suggestion that the: life of the machinery in the present case should have been fixed on the basis of the life accepted in other cases in which decisions were given on bonus disputes either by the Labour Appellate Tribunal or by this Court.
The Tribunal, in its decision, worked.
out the life of the machinery on 'the basis of the percentage of depreciation allowed under the Income tax Act.
The application of this principle has been attacked before us by both the parties.
It is urged that the artificial rule laid down in the Income tax Act for calculation of notional depreciation can provide no criterion at all for determining the life of the machinery.
We think that the parties are (1) (2) (3) [1962] 2 Supp.
S.C.R. 926.
320 correct and that the Tribunal committed an error in proceeding on this basis.
Though, in the case of the Honorary Secretary, South India Millowners ' Association(1), this Court, on the facts of that case, accepted the life of the textile machinery as 25 years; the Court also laid down the principle for.finding out the life of machinery in the following words : "We are not prepared to accept either argument because, in our opinion, the life of the machinery in every case has to be.
determined in the light of evidence adduced by the parties." (p. 933) Obviously, this is the correct principle, because it is only when the life of machinery is determined in the light of evidence adduced by the parties in a particular case that the authority determining the life can take into account all the factors applicable to the particular machinery in question.
As we have indicated earlier, when determining the life of a machinery, factors, such as the quality of the material used in the machines and the nature of the material on which the machines are to operate, very materially affect their life.
Further, the life of a machine will also depend on the. manner in which it is handled in a particular factory.
We, consequently, in this case proceed to examine the evidence given by the parties.
in this behalf.
In order to prove the life of machinery, one method usually adopted by the Companies is to tender evidence of experts.
In the.
present case, the Company tendered in evidence the statement of an expert, Gerald Waplington, which was recorded earlier on 5th November, 1961 by the Fifth Industrial Tribunal in a dispute pending before it.
That dispute was also between this very Company and its workmen.
In giving the life of machinery, Waplington first classified the machines into two classes general purpose machine tools and special or single purpose machine tools and expressed the opinion that a general purpose machine tool used for one single operation is likely to have a shorter economic life than special or single purpose machine tool.
According to him, a general purpose machine carrying on work of high accuracy will have an economic life of the: order of 2 to 3 years only, while a special purpose machine doing similar work of high accuracy working 400 hours a month will have an economic life of 5 to 6 years.
If the work taken.
from the machines is of less accuracy.
then, in his opinion, a general purpose machine may have an,economic life up to 5 years, and a special purpose machine an econoevidence available in this case.
It may however, be noted that (1) [1962] 2 Supp.
S.C.R. 926.
321 tinction between economic life and useful life.
He twice stated that economic life of a machine would be only 1/3rd of the useful life of the machine, so that if, on the basis of his evidence, the useful life of various classes of machines mentioned by him is to be worked out, the member of years given for each class by him above will have to be multiplied by 3.
Thus, according to his evidence, the economic life of a machine will vary from 2 to 3 years as a minimum to 7 to 10 years at the maximum, and working out the useful life on the basis of his statement that economic life is only 1/3rd of the useful life, the machines would have a minimum of 6 to 9 years and a maximum of 21 to 30 years useful life.
We shall consider what inferences can be drawn from his statement at a later stage when we have discussed the other evidence available in tiffs case.
It may, however, be noted that Waplington is the only expert who can be held to.
be entirely disinterested, because the other two experts examined are employed as Engineers by the Company itself.
This independent witness, Waplington, was not asked whether he had seen the various machines in the factory of the Company, nor was he at any tune requested to indicate how many different machines in the factory of the Company would fail in the various classifications mentioned by him for which he has given different periods in respect of economic life.
The Other two witnesses examined are Joseph Joyce, General Master Mechanic, and Girish Chandra Bansal, Master Mechanic, employed by the Company.
Both of them have, in their statements given out their qualifications and experience which they.
have in dealing with automobile manufacturing machinery.
According to Joyce, the economic life of the machinery of the Company cannot go beyond 6 years, and this statement was.
made on the basis of the machines working 16 hours a. day in two shifts of 8 hours each.
Later on, he added that, applying American standard, the life of the machines can only be 6 to 10 years.
In giving the life, he qualified that word with "economic" or "economic useful", so that he equated economic life with economic useful life and gave the figures on this basis.
In cross examination, he, however, admitted that useful life of a machine is longer than its economic life.
Thus, if various, statements of his are taken into account and it is kept in view that he is.
an employee.
of the Company, it may be accepted that, according to him, the maximum ,economic life of the machinery of the Company will be between 6 to 10 years and the useful life will be longer how much longer, he has not indicated.
If we were to assume that he is using the expressions "economic life" and "useful life" in the same: sense in which they were used by Waplington, economic life would be 1/3rd of the useful life, with the result that, on his evidence, useful life of the machinery of the Company would work out to be 322 anywhere between 18 to 30 years.
The third witness, Girish Chandra Bansal, estimated the efficient economic life, based on 16 hours per day working, at 6 to 10 years, which Coincides with the ' estimate by Joyce.
In his case, however, no questions were put to.
elicit from him whether he would make any distinction between efficient economic life and useful life, so.
that his evidence does not appear to carry us any farther than the evidence of Joyce.
It may be added that both these witnesses in their evidence stated that the workmen employed by the Company were not very skilled workers and this was a factor that had to be taken into account in considering the life of ' the machines in this company.
It is obvious that, if a machine is handled by a more skilful worker, it will last longer and have a longer life.
A Statement was also made by Joyce that machine.s running at high speed will have shorter life than those running at lower speeds; but this general statement made by him offers no assistance to us in this case, because he has not indicated in his evidence how many and which of the machines of the Company run at high speed and which at lower speed.
Apart from this evidence of experts, the Company has attempted to provide some other data which can be of assistance in assessing the life ' of the machinery.
In this connection, Mr. Niren De, arguing the case on behalf of the Company; drew our attention to the history of this Company which showed that, initially, this Company started the work of assembly of cars from parts imported from foreign countries.
some time in the year 1942 43, but, later, the policy was.
altered and manufacture of components was taken up and progressively increased so as to minimise foreign.
import.
He also pointed out that this policy of progressive production of indigenous parts was pressed Upon the Company by the Government and, for this purpose, drew our attention to the: first and the Second reports of the Tariff Commission in the years 1953 and 1956, as well as the report of the lid Hoc Committee on Automobile Industry known as the Report of the Jha Committee, because Sri L.K. Jha was its Chairman.
This report came out in the year 1960.
It was Urged by Mr. De that, due to.
this policy of progressive increase in manufacture of new components, it was not possible for the Company to find money to rehabilitate old machinery and, consequently, the fact that the Company continued to use old machinery for a number of years should not be taken as indicating that machinery 'still had economic or useful life.
It was argued.
that the Company per force had to continue use of these 'old machines, because it was under pressure to expand its activities.
by taking up manufacture of components and the Company was running at a loss.
It has already been mentioned earlier ' that in the second report of the Tariff Commission in 1956 it was clearly stated that this Company was selling cars at a loss of 323 Rs. 833 per car.
It is in this background that the evidence given by the Company should be judged to find out what is the life of the machinery possessed by the Company.
He also drew our attention to the principles laid down in this connection by the Full Bench of the Labour Appellate Tribunal in the Millowners ' Association 's case (1), and by this Court in the Associated Cement Companies ' case(2).
In the former case, when laying down the principle that provision should be ' made for rehabilitation replacement and modernization of the machinery, the Tribunal held that: "It is essential that the plant and machinery should be kept continuously in good working Order for the purpose of ensuring good return.
and such maintenance of plant and machinery would also be to the advantage of labour, for.
the better the machinery the larger the earnings, and the better the chance of securing a good bonus.
" In the latter case, this Court, when examining the scope of claim for rehabilitation.
held that: "this claim covers not only cases of replacement pure and Simple but of rehabilitation and modernisation.
In the context, rehabilitation is distinguished from ordinary repairs which go into the working expenses of the industry.
It is also distinguished from replacement.
It is quite/conceivable that certain parts of machines which constitute a block may need rehabilitation though the block itself can carry on for a number of years; and this process of rehabilitation is in a sense a continual process.
Unlike replacement, its date cannot always be fixed or anticipated.
So with modernisation and all these three items are included in the claim for rehabilitation.
That is why we think it is necessary that the Tribunals should exercise their discretion in admitting all relevant evidence which would enable them to ' determine this vexed question satisfactorily." Proceeding further to.
distinguish between cases of replacement.
modernisation and expansion, the Court held: "If it appears fairly 'on the evidence that the introduction of the modern plant or machine is in substance an item of expansion of the industry, expenses incurred in that behalf have to be excluded.
On the other hand, if the employer had to introduce the.
new plant essentially because the use of the old plant.
though capable (1) (2) 324 of giving service was uneconomic and otherwise wholly inexpedient, it may be a case of modernisation.
Similarly; if by the introduction of a modern plant or machine the production capacity of the industry has.
appreciably increased, it would be relevant for the Tribunal to consider in an appropriate case whether it would be possible to apportion expenses on the basis that it is a case of partial modernisation and partial expansion.
" It will thus.
be seen that, when considering the question of rehabilitation, what is essentially to be taken into.
account is that the old plant, though capable of giving service, was uneconomic and otherwise wholly inexpedient when provision for its replacement and rehabilitation, even though it will include modernisation would be fully justified.
In this context, it may be worthwhile examining at this stage the difference between economic life and useful life on which emphasis has been laid by Mr. Sen on behalf of the workmen.
We have already indicated earlier that even the expert examined behalf of the Company, Gerald Waplington, made a distinction between economic life of machinery and its useful life, Further, in giving the life, he applied American standards which may not be applicable in India.
Court, in various cases where the question of rehabilitation has been discussed, has laid emphasis on useful life rather than on economic life and, oven in the Associated Cement Companies ' case(1) in the extract quoted above, the Court held that modernisation is justified when the use of the old plant becomes uneconomic and otherwise wholly inexpedient.
Thus, two tests were laid down, first, that it should be uneconomic and, second, that it should be also otherwise wholly inexpedient.
The economic life, as envisaged by Waplington, was not, therefore, considered the appropriate.
test for determining when rehabilitation of the plant and machinery would be justified.
In fact, one of the very major considerations, that should be taken into account is the actual practice of the manufacturers using the machinery and if evidence be available, to find out how long the manufacturers continue to use the machinery as a rule.
It may be that, during the last few years of use, the machinery may.be continued to.
be utilised because of want of resources and compulsion to retain the machinery, because replacement is not possible at all.
It is in the light of this.
situation that we proceed to examine the evidence given by the Company about the behaviour of its machinery and the steps taken by the Company to have the old machinery rehabilitated.
(1) 325 In this connection, two statements filed on behalf of the Company are of significance.
One of these is a list of obsolete and/or discarded machines prepared on 26th October, 1962 and marked as Ext.
It is to be.
noticed that, though 40 different machines were discarded by 26th October, 1962 when this statement was prepared, none of the machinery discarded was that installed up to.
the year 1947 48.
In fact, this situation is also borne out by the three Schedules IA which have been referred to earlier by us.
In those Schedules 1 A, the machinery discarded and written off from books is shown as being worth Rs. 35,000/ out of machinery of the value of Rs. 89.75 lacs installed in the year 1947 48.
Thus, the machinery of that year discarded was nominal in value.
None of the machinery installed between 'the years 1948 49 to 1951 52 was discarded.
Again, the machinery installed in 1952 53 was discarded to the extent of the nominal value of Rs. 39,000/ out of Rs. 11.06 lacs, and no machinery installed in 1953 54 was discarded.
The machinery discarded was primarily that installed in the years 1954 55 to 1957 58, and its value was in the region of Rs. 46 lacs.
Thus, right up to 1962, the old machinery purchased up to the year 1954 was almost all continued in use and was not discarded, even though machinery installed in the next four years was considered unfit for further use and.
was discarded or written off, The second statement is Ext.
21 which bears the heading "replacement programme condition of machine tools" and which was prepared in March, 1960 in order to claim foreign exchange from the Government for replacement of machinery.
That list contains more than 200 machines, but, again, the machines installed during the year 1947 48 or earlier included in it are only 5 in number, whereas the majority of machines.
included in that list are those installed in later years,.
Significance attaches to this factor, because the machines ins.tailed in the year 1947 48 were of very large value, their cost being.
in excess of Rs. 89 lakhs.
In fact, that is the year in which the investment on installation of machinery was highest, barring the year of bonus and the year immediately preceding it.
This statement thus shows that, even though the Company wanted replacement of a number of machines which had been installed even in the year 1949 50 and some machines installed in later years, the replacement of those machines was given preference over the replacement of machines installed earlier in the year 1947 48.
In this statement, in the remarks column,.
it was mentioned that these machines are to be scrapped.
but there was no statement that machines which had been installed in the year 1947 48 were also in such a condition that they required scrapping.
Thus, these statements provide some indication of the life of machinery which point both ways.
The fact that old machinery of 1947 48, though of large value, was not 326 considered to be in such a condition as to require immediate replacement in preference to machinery installed later would point towards that machinery having a fairly long life.
On the other hand, there is the factor that machinery installed in later years was actually scrapped or was sought to be scrapped, and this necessarily means that later machinery was considered as having shorter life.
In this connection, another statement of which notice may be taken is Ext.
29 which shows prices of certain machines originally purchased by.
the Company which is to be rehabilitated, and the prices of the same machines, which were purchased in the two years preceding the time when Girish Chandra Bansal was examined before the Tribunal.
Girish Chandra Bansal 's ,evidence was recorded on 14th November, 1962 'and in his statement before the Tribunal he stated that Ext.
29 was prepared to compare the prices of same machines in earlier years when they were purchased originally and again when similar machines were purchased a second time in the past two years.
This statement has the significance that, though in the past two years the Company took the step of purchasing machines which would perform the identical functions which the old machines were performing, the Company chose to add these machines as new ones, as a part of its scheme of expansion rather than replace those old machines.
In the year 1961 62, therefore, the Company was still of the opinion that it was preferable to add a new machine of the same type rather than replace an old machine doing the same work, and an inference would necessarily follow that old machine must have been considered to be sufficiently serviceable.
This is the view that the Company appears to have held in respect of machinery which was installed 14 or 15 years earlier.
On behalf of the Company, some statements were also.
filed to show that there were very frequent break downs in the machinery of the Company and.
as an illustration, our attention was drawn to the statement for the period January, 1960 to September, 1960.
It is true that, if there are very frequent break downs in machinery, this would give an indication of the condition of the machinery and lead to the inference that their useful life is coming to an end.
There is, however, one great difficulty in drawing any conclusion from the statistics of number of break downs of the machinery put forward on behalf of the Company.
The Company has.
no doubt, shown us statements that a number of machines had break downs during the last few years preceding the year of bonus.
but no material was brought to our notice from which it might have been possible to compare how the same machinery was behaving in earlier years or within the first few years after it was installed.
Unless it be possible to compare the number of 327 break downs.
when their life is claimed to be over with the number of break downs when the machine was almost new ' or 'was running its economic or Useful life, no assistance is available for assessing the.
life of the machinery from a mere table showing the number of break downs.
Further, it was not possible from these statements ' to find out which of the machines installed in which year were subject to the break downs, nor did these statements give us any picture about the percentage of machines installed in different years which ' were included in these 'statements.
Consequently, we have felt handicapped in drawing any inference from these statements.
Reliance was also placed on some statements showing that, for purposes of granting incentive bonus, a rated time was prescribed for various machines and progressively this rated time in respect of a large number of machines has had to be increased in order to enable the workmen to earn bonus, because the machines themselves are not working efficiently and.
if the rated time is not increased, the workmen would fail to qualify for incentive bonus for no fault of their own and simply because the machines on which they were required to work had deteriorated in condition.
It is true that the statement given of increase of rated time gives some indication that the condition of the machinery in this factory has been going down and though this.
factor is relevant in determining the useful life of machinery, it cannot carry us very far, because there is no evidence ' which would enable us to lay down a correlation between the increase in the rated time and the expiry of the useful life of the machinery.
It is not possible on the evidence to discover how much the rated time is expected to increase before it can be said that the machinery has completely run out its useful life.
Mr. De also drew our attention to the statements of some of the witnesses who.
deposed that machinery running at high speed has a shorter life than that running at low speed.
This general statement, however, is of no assistance, because the Company did not attempt to classify its machines between high speed and low speed ones and ' to give evidence in that behalf.
Lastly, it was urged by Mr. Sen on behalf of the workmen that another factor which should be taken into account is that, according to the Full Bench Formula, for calculation of rehabilitation the machinery is treated as scrapped when its value is reduced to 5%, because the break down value of 5% is all that is deducted when calculating the requirements for rehabilitation.
The argument was that the fact that the.
break down value is taken at 5% indicates that the machinery 'for purposes of rehabilitation is treated as still useful unless its value is reduced to that low figure.
328 This is, no doubt, another aspect that must be taken into.
account, though we are unable to accept the submission that a machinery should be deemed to have useful life until it reaches the stage of having a break down value of 5%.
No such absolute rule can be inferred.
In this case, the Tribunal, in fixing the life of the machinery, as we have mentioned earlier, proceeded to calculate it on the basis of the depreciation rate permitted under the Income tax Act.
That basis was not acceptable to either of the parties before us.
On behalf of the workmen, it was urged that it was an entirely wrong principle of calculating the life, and even o.n behalf of the Company no attempt was made to support this method adopted by the Tribunal.
In the Honorary Secretary, South India Millowners, Association 's case(1), this Court also rejected the argument that the calculation of the life may be based on the depreciation rate permitted by the income tax Act.
In these circumstances, we have to consider the cumulative effect of the various pieces of evidence and circumstances which we have discussed above and, on its basis, to estimate what should be considered to be the useful life of the machinery of this Company.
Reference may briefly be made to the various conclusions arrived at.
The evidence of the independent expert and of the engineer employees of the Company gives a figure.
for useful life.
of machinery which may be anywhere between 6 years to.
30 years.
The lower figures given by them cannot be, accepted as they relate to economic life in the strict sense of that expression and are based on American standards.
At the same time, the maximum life worked out from their evidence is on the hypothesis that the useful life stated by Waplington to be three times that of economic life is also the useful life in the same proportion to economic life as given in the evidence of Joyce.
Then, there is the evidence that this Company itself has been running its old machinery for quite a large number of years and even after 13 or 14 years of use, the Company in quite a large number of cases preferred, when buying similar machines, to utilise them for expansion rather than for rehabilitation.
On the face of it, replacement of old machinery would have been preferred to expansion, if the old machinery had really completed its useful life.
In some cases, however, machinery purchased in later years had to be rehabilitated after much shorter periods, but no detailed information is available.
why such early replacement became necessary.
No. ' material was provided to show the comparative quality of machines which have been run for a long time and machines which were replaced or sought to be replaced after shorter periods of us.
After tak (1) [1962] 2 supp.
S.C.R. 926. 329 ing into consideration the various factors mentioned by us above, and on the evidence before us, we think that in this case, it would.
be appropriate to hold that the average life of the machinery of this.
Company in respect of different kinds of machines obtained from different sources may be appropriately taken as 15 years.
This life of 15 years arrived at by us, it may be mentioned is on the basis that the machines of the Company have been running during most of the. period, to which the evidence relates, in two shifts only.
Girish Chandra Bansal, one of the Engineers of the Company, examined as a witness, stated that the machines in this Company were working in two shifts only, until, for the first time in 1959 60, the factory started to run round the clock, i.e., in three shifts.
He added that the factory had been working in two shifts from the time it was founded.
It is also clear that; if the. factory had been working in only one shift, the life of the machinery would have been longer, and we think that in that case lit.
would have been appropriate to take the life of the machinery as 25 years.
On the other hand, after the machines are being worked in three shifts, the Life of the machinery is bound to be lower and, consequently, if the machines be worked in three shifts, it would be appropriate to take the life of the machinery at 10 years.
In the present case, however, we are accepting the; average life as 15 years for all the machines requiring rehabilitation, because the evidence, as mentioned above, shows that the machines have been.
working in two shifts only from the time when the factory started functioning, with the exception that, in the first few years, they were worked in only one shift while, from the year preceding the year of bonus, they have been worked in three shifts.
Consequently, it may be taken that, up to the year of bonus, the machines have been worked on the average, in two shifts.
In working out the divisor, however, it will have to be kept in view that future life of the machinery will have to be calculated on the basis of three shifts and, consequently, on the basis of the figure of 10 years as the useful life of the machinery.
We may also incidentally mention that this Court, in the case of National Engineering 'Industries Ltd. vs The Workmen & Vice Versa(1), accepted the life of the precision machinery of the Company concerned in that case as 15 years, so that the conclusion arrived at by us on the evidence in the present case happens to coincide with the figure of life accepted in that case.
In this connection, we may also take notice of one point urged by Mr. De on behalf of the Company.
It appears that, when working out the divisor and finding out what machinery required rehabilitation, the Tribunal did not take into account machinery installed during the bonus year itself for making provision for mic life of 7 to 10 years.
In his evidence, further, he made a dis (1) Civil Appeals Nos.
356 357 of 1966 decided on 6 10 1967.
330 any machinery is installed in bonus1 year, the Company would be justified in claiming that it must immediately start making provision for its rehabilitation, though the period for rehabilitation of that machinery would only start at the end of the bonus year.
Once machinery has been installed and is in existence.
in the bonus year, the Company is entitled.
to say that it will require= rehabilitation in future and that provision should be made for rehabilitation of that machinery also and the Company should start keeping reserves.
for that purpose from the year of bonus itself.
Thus, in the present case, the machinery installed in the year 1960 61 should have been included in the rehabilitation statement, though the divisor in respect of that machinery will, on our decision given above, be 15 on the basis of two shifts and 10 on the basis.
of three shifts, as the machines will still have a residuary life of 15 or 10 years, computing the period from the bonus year which is also the year of installation.
The second factor entering the calculation of rehabilitation requirement about which there was controversy between the parties is the multiplier.
We have already mentioned the fact that, in the first and the third Schedules 1A, the Company gave one set of multipliers, while in ' the second Schedule 1A higher multipliers were given.
The Tribunal took both sets of multipliers into.
account and worked out the average and accepted that as the correct multiplier, representing the rise in the price: rate of the machinery requiring rehabilitation.
Thereafter, the Tribunal held that the machinery which was to replace the old one would have a larger production and proceeded to work out figures for reducing the multipliers on that account.
The Tribunal held that it would be justified to reduce the average multipliers arrived at by 75 for machinery installed up to ' 1951 52, by 55 for machinery installed during the years 1952 53 to 1955 56, and by 35 for that installed during the years 1956 57 to 1960 61.
Before us, this method adopted by the Tribunal was criticised by counsel ' for both parties.
On behalf of the workmen, it was contended that there was no justification for the Tribunal to take the average of the multipliers in the first and the second Schedules IA and that the Tribunal should only have proceeded on the basis that the multipliers given in the first Schedule IA were proved and were correct ones.
On behalf of the Company, it was urged that the Tribunal should have accepted the multipliers given in the second Schedule IA and should not have reduced them by taking into account those given in the first Schedule 1A, and, further, that there was no justification at all for the Tribunal to reduce the figures of the multipliers for the various blocks of machinery by 75, 55 or 35 on the ground that the machinery to be installed in replacement would have a higher production.
331 We were taken by learned counsel for parties into the evidence tendered on behalf of the Company to prove the multipliers.
We nave found that the correctness of the multipliers shown in the first Schedule 1A has been very satisfactorily proved.
It appears that those figures were arrived at by comparing the prices of the old machinery installed in various years with similar machinery purchased in subsequent years.
That comparison was contained m statement Ext.
The Company 's witness Bansal not only proved this statement, but also clearly stated that the machines originally purchased and those purchased later shown in, that statement Ext.
29 were the same machines.
In cross examination, he further specifically arrested that the production capacity of these new machines mentioned in Ext.
29 was very much the same as that of the original machines which were to be replaced when they were new.
It is also, significant that these figures of multipliers included in the first Schedule IA.
were not challenged on behalf of the workmen before the Tribunal.
So far as the figures contained in the second Schedule 1 A are concerned, it was suggested on behalf of the Company that they were ' based on subsequent quotations received for replacement machinery which formed part of a series Ext.
Learned counsel for the Company was, however, unable to point out any statement in the evidence of any witness which would show that the figures for multipliers incorporated in the second Schedule IA were actually calculated from the quotations contained in Ext.
In fact, no such evidence was possible, because the second Schedule IA was filed on behalf of the Company after the evidence of parties was over and that second Schedule IA not being a part of the record before the Tribunal when evidence was recorded, it was not possible for any witness to give evidence proving those figures for multipliers.
In these circumstances, we must hold that the.
Tribunal committed an error in taking into account the multipliers given in the second Schedule IA and that the only figures for multipliers that could have been and should be accepted are those in the first Schedule 1A.
At the same time, we must also accept 'the contention on behalf of the Company that the Tribunal had No. justification fox reducing the multipliers by deducting 75, 55, and 35 in respect of the three blocks of machinery sought to be replaced.
As we have indicated earlier, the Tribunal proceeded to hold that this deduction was justified on the ground that the new machines which had been purchased and which were being compared with the original machines sought to be replaced must necessarily have more productive capacity.
We have not been able to find any evidence on the record of any witness which would support this conclusion.
It is true that the statements.
made by Company witnesses, particularly Bansal show that the new machines were 332 more efficient and were likely to produce better quality goods.
no stage, however, in the cross;examination of Bansal was any statement made admitting that ' these new machines, whose.
prices.
were being compared with those of the old machines for rehabilitation, had a larger productive capacity than those original machines.
In fact, as we have pointed out earlier, in his cross examination Bansal made a definite statement that these new machines will produce exactly the same number of pieces as the original machines when they were new.
This Court in the case of the Associated Cement Companies Ltd.(1) had indicated that it is only if, by the introduction of a modern plant or machine, the production capacity of the industry has appreciably increased that it would be relevant for the Tribunal to consider in an appropriate case whether it would be possible to apportion expenses on the basis that it is a case of partial modernisation and partial expansion.
If, however, the increased production is not of a significant order.
it may be regarded as incidental to replacement or modernisation and the question of apportionment may not arise (p. 969).
It is, of course, possible that Bansal, in stating that the new machines, the prices of which formed the basis of calculation of multipliers, have exactly the same capacity as the original machines to be replaced, may not be quite correct; but there was no material at all from which 'the Tribunal could have justifiably inferred that the increase in production would be so material as to attract the principle 'for apportionment laid down by this Court in the case cited above and, consequently, the Tribunal fell into an error in reducing the multipliers merely on the assumption that the new machines must necessarily have a larger production capacity than the original machines.
In these circumstances, we hold that the rehabilitation, provision should have been calculated by the Tribunal on the basis of the.
multipliers given by the Company in the first Schedule 1A, without taking an average of those multipliers and the multipliers given in the second Schedule IA and without decreasing the multipliers by 75, 55 and 35 in respect of various blocks.
The third contested question with regard to rehabilitation relates to the deductions which have to.
be made out of the total rehabilitation requirement to arrive at the annual provision for that purpose which must be allowed in working out the available surplus for distribution of bonus.
In the Associated Cement Companies Ltd. case (1), when approving the Full Bench Formula this Court indicated how the calculations should be made.
It was held : "Before actually awarding an appropriate amount in respect of rehabilitation for the bonus year certain (1) 333 deductions have to be made.
The first deduction is made on account of the break down value of the plant and machinery which is usually calculated at the rate of 5 % of the cost price of the block in question.
Then the depreciation and general liquid reserves available to the employer are deducted.
The reserves which have already been reasonably earmarked for specific purposes of the industry are, however, not taken into account in this connection.
Last of all the rehabilitation amount which may have been allowed to the employer in previous years would also have to be deducted if it appears that the amount was available at the time when it was awarded in the past and that it had not been used for rehabilitation purposes in the meanwhile.
These are the broad features of the steps which have to be taken in deciding the employer 's claim for rehabilitation under the working of the formula.
"(p.970).
The dispute in the present case relates to the deduction of the depreciation and general liquid reserves.
One aspect in controversy in this behalf raised on behalf of the Company is that even depreciation should not be deducted unless it is available to the employer for purposes of rehabilitation.
The argument was that in the sentence "Then the depreciation and general liquid reserves available to the employer are deducted" the word "depreciation" should be read with the words "reserves available to the employer" and, consequently, the deduction should only be made of.
depreciation reserves available to the employer.
We are unable.
to accept this submission, because the very principle on which rehabilitation provision is allowed when making calculations for awarding.
bonus militates against this interpretation.
This Court, in the:same case, in explaining why rehabilitation is granted, held: "We have already noticed that the object of providing depreciation of wasting assets in commercial "accounting is to recoup the original capital invested in the purchase of such assets; but the amount of depreciation which is allowed under the formula can hardly cover the probable cost of replacement.
That is why ' the formula has recognised the industry 's claim for rehabilitation in addition to the admissible depreciation." (p. 966) It will thus be seen that the purpose of providing for rehabilitation charges is to enable the industry to cover the difference between the amount of depreciation which is recouped by making provision for it in accordance with the principles of commercial accounting and the amount that would be required to purchase the new machinery for replacement.
Once the price of the new machinery sup.
C.1./68 7 334 is known, the rehabilitation amount would, be the difference between that price and the amount provided as depreciation of wasting assets in accordance with the principles of commercial accounting.
The deduction of depreciation provision made in ,the accounts is not, therefore, on the basis that amount must be available for purchasing the replacement machinery even in the year when provision for rehabilitation is being made.
That amount is deducted from the price of the machinery Which will be required to be purchased in order to determine what amount the industry is going to require for rehabilitation in spite of having been allowed depreciation.
In our view, therefore, this Court, when it later held that the depreciation and general liquid reserves available are to be deducted in calculating the rehabilitation amount, did not intend to lay down that the depreciation must also be available in the year of bonus.
The words "available to the employer" were intended to qualify the expression "general liquid reserves" only and not the word "depreciation".
General liquid reserves are to be deducted on the principle that if such reserves are in the hands of the industry and are not earmarked for binding purposes, the industry must utilise those reserves for rehabilitating the old machinery instead of asking for provision to be made out of profits in the year of bone and in future years.
The principle adopted is that provision for rehabilitation is to be made only to the extent of the difference between the price of the machinery which will have to be paid for replacing the old machinery and the amount of depreciation provision shown in the accounts according to the commercial system of accounting and even that rehabilitation requirement must first be met by the industry out of available liquid reserves rather than by asking for provision to be made out of profits.
In the present case, the Tribunal, when calculating the provision for rehabilitation, took the entire price of the replacement machinery as required to be provided out of profits and did not take into account that price should have been reduced to the extent of the depreciation provided for in the accounts.
The annual report of this Company for the year of bonus 1960 61 was produced before us and at page 24 it showed that at the beginning of the year 1960 61 depreciation to the extent of Rs. 325.48 lacs had been provided in the balance sheet of the Company.
This amount has, therefore, to be deducted from the price of the machinery which is to replace the original machinery when rehabilitation is resorted to.
The second question on this aspect that arises is whether there were any liquid reserves available which should also have been deducted.
In the balance sheet of the Company contained in the Annual Report, various kinds of reserves have been shown.
There.
was a reserve for contingencies to the extent of Rs. 10.00 lacs on 31 3 1960 and a development rebate reserve of Rs. 39.51 lacs on 335 the same date.
On behalf of the workmen, it was urged that this amount of Rs. 39.51 lacs should at least be deducted when calculating the requirement for rehabilitation.
From the balance sheet itself an inference was sought to be drawn that this reserve existed in the form of a liquid reserve available for rehabilitation.
For this purpose reference was made to the entries on the assets side of the balance sheet which shows a sum of Rs. 220 lacs as lying in fixed deposit account.
The argument was that if the Company had such a large sum as Rs. 220 lacs in the fixed deposit account, it could not possibly urge that the sum of Rs. 39.51 lacs in respect of development rebate reserve was not a part of it and was not available as a liquid reserve.
It is but natural that in the balance sheet the Company could not show any correlation.
between the amounts entered on the two sides, liabilities and ' assets, as that is not required by any principle of commercial accounting.
The argument of learned counsel for the company was ,that this development rebate reserve had been used ' as a part of the working capital of the Company represented by various items shown on 'the assets side and this fact was proved by the affidavit of Satya Narayan Murarka, Commercial Manager of the Company, who categorically stated that all the reserves had been utilised as part of the working capital.
It seems to us that a mere statement by the Commercial Manager that the reserves have been utilised in the working capital cannot be accepted as conclusive evidence of that fact.
When the balance sheet itself shows that cash amounts in the form of fixed deposits were available which were far in excess of the development rebate reserve in question there would be no justification for holding that this development rebate reserve was not available as a liquid asset and had been included by the Company in its working capital.
At the stage it is not necessary, therefore, to go into any further details to arrive at the conclusion that this development rebate reserve was a liquid asset available for rehabilitation and, consequently, liable to ' be deducted when calculating the rehabilitation requirement We shall deal in greater detail with the question of what items were included in the working capital at a later stage when dealing with the controversy relating to the claim of the Company for return on working capital which is allowed under the Full Bench Formula, when calculating the surplus available for distribution of bonus.
On the question of calculation for provision for rehabilitation, the only point raised on behalf of the workmen with regard to buildings was that the Tribunal, in taking the life of the factory buildings at 25 years and non factory buildings at 40 years, was not correct and that the life of the two types of buildings should have been taken at 40 years and 50 years respectively.
At the 336 time of the hearing before the Tribunal, the Company had claimed that factory buildings have a normal life of 25 years only and non factory buildings 30 years, while the claim of the workmen was that the factory buildings had a life of 40 years and the non factory buildings 50 years.
In arriving at its decision, the Tribunal primarily took into account the provisions of Rule 9 of the Rules framed under the Income tax Act, 1922 which lays down the principle for calculation of depreciation in respect of buildings.
That principle, no doubt, cannot be taken as giving any correct indication of the life of buildings for purposes of calculation of rehabilitation provision, but, in this case, there was the difficulty that the Tribunal did not accept the evidence given by the Company to prove the age of the buildings as claimed by it, while no evidence was given on behalf of the workmen in support of their claim that the life of the buildings should be taken at the figures contended on their behalf.
In the course of arguments before us.
all that learned counsel did was to refer to the decision of this Court in the Associated Cement Companies Ltd. case(1) at p. 993 where the calculations made in the Chart show that the life of the various buildings concerned in that case were taken to be between 30 and 35 years.
We do not think that, in the absence of evidence showing that the buildings of the Company were similar to those buildings whose life came up for consideration in the case cited above, it is possible to derive any assistance from the figures accepted in that case.
In these circumstances, the position before us is that neither on behalf of the Company, nor on behalf of the workmen is there any reliable evidence brought to our notice on the basis of which we can arrive at a correct estimate of the life of the buildings of the Company and, consequently, we do not think that there will be any justification for us to vary the decision given by the Tribunal in this behalf.
The last controversy in the calculations for rehabilitation provision is on the question whether the depreciation and the liquid reserves available should be deducted from the total amount of rehabilitation requirement or whether it should be taken into account at the very first stage when the machinery or the buildings requiring earliest rehabilitation are taken into consideration and the annual requirement in respect of them is worked out.
On behalf of the workmen, we think, it was rightly urged that, if depreciation and liquid reserves available are to be deducted, they must be incorporated in the accounts against the replacement cost of those items which required replacement earliest in time.
It is obvious that if funds in the form of depreciation provision and other liquid reserves are available, the Company claiming provision for rehabilitation must utilise them in rehabilitating those (1) 337 machines and buildings which require rehabilitation at the earliest point of time.
There is no principle at all that the depreciation in respect of a particular machinery must be deducted when calculating the rehabilitation requirement in respect of that machinery itself.
The Full Bench Formula approved by this Court only recognises the industry 's claim to make provision out of profits for rehabilitation of machinery which might require replacement even in future only on the ground that the industry may not be able to meet those replacement cost out of funds available in its hands.
The provision for future requirement of rehabilitation must at any time depend upon what is immediately available and what is going to be required in future.
If some machines have fully run out their lives, they fast necessarily be replaced out of resources available immediately and there would be no justification for keeping the available resources in reserves for future rehabilitation, while not providing out of those available resources for immediate replacement of the machinery.
Then, there is the second aspect that an employer in order to claim more and more rehabilitation provision, will have a tendency to keep old blocks of machinery running and to avoid adoption of such a device it would be fair that he is required to utilise available resources at the very first opportunity when the old blocks of machinery require replacement and claim annual provision for future only in respect of that machinery which will require replacement later on.
It appears that this Court in The Associated Cement Companies Ltd. case(1) proceeded on this very basis when calculating the rehabilitation requirement, though without discussing this question in detail.
In that case, reserves to the extent of Rs. 311 lacs were found to be available.
The machinery which required to be rehabilitated was divided into four blocks, the earliest block consisting of machinery installed up to 1939 in respect of which the rehabilitation requirement was Rs. 1172.76 lacs.
In respect of three later blocks, the rehabilitation requirement was Rs. 70.40 lacs, 270.37 lacs and Rs. 768.50 lacs.
The total requirements for rehabilitation in respect of all the four blocks was thus Rs. 2282.03 lacs.
When calculating the annual requirement the Court did not deduct the sum of Rs. 311 lacs in respect of available reserves 'out of this total of Rs. 2282.03 lacs, but instead deducted this amount from the cost of the machinery required to replace the pre 1939 block for which the amount arrived at was Rs. 1172.76 lacs.
After deducting this amount of reserves from the replacement cost of that block, the balance was divided by the divisor 7 which was treated as the remainder life of the machinery falling within that block.
This calculation adopted in that case, therefore, fully bears out our view that the depreciation and available reserves must be taken into account when calculating the annual (1) 338 provision in respect of that machinery which requires earliest replacement and should not be deducted out of the total rehabilitation cost as urged by learned counsel for the.
Company.
Mr. De in this connection drew our attention to a decision of the kabour Appellate Tribunal in Saxby & Farmer Mazdoor Union, Calcutta(1) at pp.
711 712.
In that case, the Tribunal first worked out the total rehabilitation and replacement cost of 'the machinery at Rs. 43.81 lacs.
From this amount were deducted a sum of Rs. 14.75 lacs in respect of available reserve, a sum of Rs 9, 03 lacs as the total depreciation on the plants and machinery and a sum of Rs. 0.737 lac in respect of the break down value of the machinery at 5 % of the cost price, leaving a balance of Rs. 19.364 lacs as the rehabilitation requirement.
Then the Tribunal noticed that, on the basis of total requirement of Rs. 43.81 lacs over the several periods during which rehabilitation and replacement was to take place, the annual requirement was worked out at Rs. 8.04 lacs.
Applying the simple arithmetic of ratio, the Tribunal held that the proportionate annual requirement would be Rs. 3.54 lacs, if the total requirements are reduced to Rs. 19.364 lacs.
In that case, thus, the Tribunal proceeded on the basis which has been canvassed on behalf of the Company before us.
The total rehabilitation requirement was first worked out, while the annual requirement was also worked out on the basis of that requirement,.
without taking into account the depreciation, available liquid reserves and the break down value of the machinery to be replaced.
Thereafter, the total rehabilitation requirement was reduced.
by the amount of depreciation, liquid reserves available and break down value of the machinery, and the annual requirement was reduced in respect of each block of machinery in the same proportion as the proportion between the total requirement and the net amount available arrived at, after deducting depreciation, ,available liquid reserves and break down value.
We do not think that the principle adopted by the labour Appellate Tribunal was correct and should be accepted.
On the face of it, it introduces a very anomalous position.
In a case where some machinery may require immediate replacement in the year of bonus in question and resources may be available for meeting the cost of the entire machinery required to replace it, the principle adopted by the Tribunal would still permit the industry not to replace that machinery, but claim future provision for its replacement on the basis that the available resources are to be proportionately allocated to machinery which may require replacement in much later years.
We hold that in approving this course, the Tribunal did not adopt the correct principle according to which calculation should be made, when applying the, Full Bench (1) 339 Formula for calculation of bonus.
Learned counsel also referred us.
to the decision of this Court in M/s. Titaghur Paper Mills Co. Ltd. vs Its Workmen(1) to show that, in that case, this Court also, when calculating the rehabilitation provision, deducted the entire depreciation and reserves available from the total rehabilitation requirement and did not adopt the course of deducting it from different blocks of machinery requiring rehabilitation.
That case, however, does not support the view taken by the Labour Appellate Tribunal, because in that case this Court had accepted the decision of the Tribunal that all the machinery in whichever year it may have been installed had a uniform residuary life of 10 years, so that all the machinery was to be rehabilitated simultaneously during the next 10 years.
There was, therefore, no distinction between machinery installed in one year and that installed in other years insofar as the year in which it was to be replaced was concerned.
It is true that, in some cases while describing the Full Bench Formula,this Court has mentioned that the total depreciation and liquid reserves available are to be deducted from the total rehabilitation requirement,but we do not think that it was intended to lay down in those cases that the method of deduction to be adopted is that laid down by the Labour Appellate Tribunal in Saxby and Farmer Mazdoor Union, Calcutta(2).
On the other hand as we have already indicated this Court, in The Associated Cement Companies Ltd. case(a), very clearly proceeded to apply the principle which we are accepting in this case.
Consequently, we hold that the depreciation provision of Rs. 325.48 lacs and available development rebate reserve of Rs. 39.51 lacs must be taken in to account when calculating the annual provision for rehabilitation required for replacement of the earliest installed machinery until it is exhausted, whereafter the annual requirement for the remaining blocks of machinery will have to be calculated, ignoring these available resources.
The next contest between the parties in this appeal relates to the claim of the Company to return on reserves and other funds used as working capital during the bonus year when calculating the surplus available for distribution of bonus.
That a Company is entitled to return on reserves used as working capital was recognised by the Full Bench of the Labour Appellate Tribunal in The Millowners ' Association 's(4) case, when laying down the formula for calculation of available surplus which was approved by this Court in the case of The Associated Cement Companies Ltd.(a).
In the latter case in dealing with this aspect of the matter, the Court pointed out that no distinction has been made by Tribunals between reserves used as working capital and depre (13 [1959] Supp. 2 S.C.R. 1012 at p. 1042.
(2) (3) (4) 340 ciation fund similarly used.
The Court approved the decision of the Labour Appellate Tribunal in The Millowners ' Association Bombay vs The Rashtriya Mill Mazdoor Sangh(1), where the objection of the labour to depreciation fund earning any return, even if it was utilised for or about the business of the year, was ovre ruled and the Tribunal observed that "no essential difference could be made between the depreciation fund and any other fund belonging to the Company which could be invested so as to earn return. ' The Court further held: "It is thus clear that what is material is not the origin of the fund.
It is the fact that the fund in the hands of the concern has been used as working capital that justifies the claim for an adequate return on it.
We think it is common sense that if the concern utilises liquid funds available in its hands for the purpose of meeting its working expenses rather than borrow the necessary amounts, it is entitled to claim some reasonable return on the funds thus used." (pp. 964 65).
In this appeal, it is not disputed that the Company is entitled to claim a return on reserves which were actually utilised as working capital during the year of bonus, but Mr. Sen on behalf of the workmen urged that this return must be allowed only on reserves used as working capital and not on any other funds used at such, ,On the face of it, this argument cannot be accepted in view of the decision of this Court in the case of The Associated Cement Companies Ltd.,(2) where it has been clearly held that the origin of the fund is immaterial, though with the qualification that the fund should be one which is available for investment before a claim can be made by the employer for a return on it.
This principle has been affirmed or followed in a number of cases subsequently decided by this Court, but we do not consider it necessary to refer to them in view of the fact that Mr. De on behalf of the employer conceded that this is the settled law and only contended that, in this case, the Company has in fact discharged the burden of proving that all the reserves shown in the balance sheet for the year of bonus were actually utilised as working capital.
Consequently, we proceed to examine this submission made on behalf of the Company.
Mr. De, in support of this submission, drew our attention to the affidavit of Satya Narayan Murarka who is the Commercial 'Manager of the Company.
In this affidavit, Murarka stated.
that all the sums shown as reserves and surpluses in the balance sheet 'were available for being utilised as working capital and were, in (1) [1952] 1.L.L.J. 518, 522.
(2) 341 fact, so utilised.
Murarka was also tendered for cross examination, so that the workmen hand an opportunity of testing the correctness of his evidence by cross examining him.
It was urged by Mr. De that there was nothing in the cross examination of Murarka which would justify rejection of the statements made by him in his affidavit that all the reserves and surpluses available had been employed as part of the working capital of the Company, and, in this connection, drew our attention to some decisions of this Court where the evidence given on behalf of the employer on affidavit has been accepted by this Court as sufficient proof.
The first case cited by him is The Tara Oil Mills Co., Ltd. vs IIts Workmen and Others(1).
In that case, a question arose whether the Company concerned was entitled to claim return on the amount of depreciation reserves used as working capital.
Dealing with this claim, the Court held: "An affidavit was made on behalf of the Company that it had used its reserve funds comprising premium on ordinary shares, general reserve, depreciation reserve, workmen 's compensation reserve, employees ' gratuity reserve, bad and doubtful debt reserves and sales promotion reserve as working capital.
The Tribunal, however, allowed return at 4 per centum on a working capital of Rs. 31.88 lacs.
This excluded the depreciation reserve but included all other reserves which were claimed by the company and having been used for working capital.
" Proceeding further, the Court held : "It is enough to say that the affidavit of the Chief Accountant filed on behalf of the company was not challenged before the Industrial Tribunal on behalf of the respondents.
It would, therefore, be impossible for us now to overlook that affidavit, particularly when the Tribunal gave no reason why it treated the working capital as Rs. 31.88 lacs only.
" The Court, thus, accepted the evidence of the affidavit, though it was added that it will be open to the workmen in future to show by proper cross examination of the Company 's witnesses or by proper evidence that the amount shown as the depreciation reserve was not available in whole or in part to be used as working capital and that whatever may be available was not in fact so used in the sense explained above.
In Anil Starch Products Ltd. vs Ahmedabad Chemical Worker 's Union and Others(2) this Court, dealing with the ques (1) ; at p. 10.
(2) A.I.R. 1963 S.C, 1346 at p. 1348.
342 tion of proof that depreciation reserve had been used as working capital, held: "It is enough to say in that connection that an affidavit was filed by the manager of the company to the effect that all its reserves including the depreciation fund had been used as working capital.
The manager appeared as a witness for the company before the Tribunal and swore that the affidavit made by him was correct.
He was cross examined as to the amount required for rehabilitation, which was also given by him in that affidavit; but No. question was put to him to challenge his statement that the entire depreciation reserve had been used as working capital.
The Tribunal also did not go into the question whether any money was available in the depreciation reserve fund and had been actually used as working capital.
It dismissed the claim for return on the depreciation reserve on entirely different grounds.
In the circumstances, we must accept the affidavit so far as.
the present year is concerned and hold that the working capital was Rs. 34 lacs.
It will, however, be open to the workmen in future to show by proper cross examination of the company 's witnesses.
or by proper evidence that the amount shown as depreciation reserve was not available in whole or in part as explained above to be used as working capital and that whatever was available was not in fact so used." In Khandesh Spg. & Wvg.
Mills Co. Ltd. vs The Rashtriya Girni Kamgar Sangh, Jalgaon,(1) this Court, again dealing with the question of proof of working capital, referred to the earlier cases and held: "This judgment again reinforces the view of this Court that proper opportunity should be given to the labour to.
test the correctness of the evidence given on affidavit on behalf of the management in regard to the user of the reserves as working capital.
" On the basis of these views expressed by this Court, it was urged that, in the present case, the affidavit of Murarka should be accepted as sufficient evidence in proof of the company 's claim that all the reserves and funds mentioned in the affidavit were in fact used as working capital, so that the company is entitled claim a return on them.
It appears to us that the affidavit of Murarka in the present case is not such that it can be held to have discharged the burden (1) ; at p. 850. 343 which lay upon the Company to prove that all the reserves and other funds had, in fact, been utilised as working capital.
In the affidavit, Murarka referred to the balance sheet and stated that the various funds claimed as having been used as working capital were shown at the beginning of the bonus year as in existence and the further entries indicated that those amounts were still intact at the end of the bonus year and were carried forward to the next year.
Such a statement was made by him in respect of reserve for contingencies amounting to Rs. 10 lacs, forfeited dividends amounting to Rs. 450 lacs, profit and loss account balance amount to Rs. 3.63 lacs, provision for depreciation amounting to Rs. 325.48 lacs, and development rebate reserve amounting to Rs. 39.51 lacs.
It is to be noticed that the fact that these amounts were shown as in existence at the beginning of the bonus.
year as well as at the end of that year can certainly lead to a reasonable inference that these funds were all available to the company for being utilised in its business during the year; but the mere fact of these entries showing the existence of these funds at.
the beginning and at the end of the year cannot be the basis for a conclusion that these funds must have been utilised as part of the working capital of the Company.
In order to claim a return, it is not enough for a Company to show that the amounts were available during the year for being utilised as working capital.
The Company has further to discharge the burden of proving that those funds were in fact so utilised.
This principle was clearly indicated by this Court in Bengal Kagazkal Mazdoor Union and Others vs Titagarh Paper Mills Company, Ltd. and Others(1).
It was in that case that this Court gave an indication of how the availability of reserves and other funds for use as working capital can be inferred from the balance sheet.
It was said: "What is usually done is to take into account the ' liquid assets of various kinds available at the beginning of the relevant year and the total of such assets available at the beginning of the year is considered as working capital for that year, if there is evidence that it has.
been actually used during the year.
But when we come to the end of the year and look at the balance sheet, we have to find out the liquid assets available at the end of the year from which the amount available as working capital for the next year may be arrived at.
But the liquid assets available at the end of the year will usually be of two kinds firstly, there will be cash assets in the various reserves and secondly, there will be assets in the shape of raw materials, etc., and both together become the available working capital for the next year subject (1) at p. 364. 344 to necessary adjustments and also subject to the evidence that they were actually used as working capital.
" Proceeding further, the Court, while dealing with the bonus year 1955 56, held : "Now the working capital is generally arrived at by finding the liquid reserves available on 1st April, 1955.
These liquid reserves may be in the form of reserves of various kinds, i.e., depreciation reserves, general reserve, renewal reserve, and so on, and also in the form of investments, advances and raw materials, etc.
in stock.
All these have to be taken into account in arriving at the working capital after necessary adjustments.
As we have already pointed out, the amount of working capital thus arrived at, if there is evidence that it was actually used as working capital for the year, may be allowed interest in accordance with the Full Bench Formula." In that case, thus, the two steps necessary for proving the claim were separately indicated.
The first step in proving that reserves and other funds have been used as working capital is to show that they were available by proving the balance sheet in which those reserves and funds are shown in existence at the beginning of the year.
The second step indicated is that evidence must be given to prove that these reserves and funds were actually utilised as working capital during the year.
Obviously, this proof is needed, because, even though the reserves and funds may be available, they may not be utilised as part of the working capital and may form part of cash amounts kept by the Company or may be utilised for purposes other than that of working capital.
The mere existence of the reserves and funds at the beginning of the year, even taken together with their existence at the end of the year, cannot lead to.
any inference that these reserves and funds must have formed part of the working capital during the year and could not form part of other items such as fixed deposits, investments, etc.
Murarka in his affidavit, as we have indicated above, gave his conclusion that the various reserves were used as part of the working capital only on the basis that these reserves and funds were in existence both at the beginning and at the end of the year.
The conclusion drawn by Murarka had, therefore, no basis at all.
The facts on which he relied could only justify an inference that these reserves and funds were available, but they could not exclude the possibility that they were utilised for purposes other than that of working capital.
The affidavit of Murarka in this case cannot thus be held to be sufficient proof of this second ingredient that the reserves and 345 funds were in fact utilised as working capital.
So far as the cases referred to by learned counsel are concerned, which we have discussed earlier, they do not, in our opinion, lay down the principle that, if in an affidavit filed on behalf of the employer a broad statement is 'made that all reserves and other funds were used as part of the working capital, that statement must be accepted as.
sufficient proof, even when the statement is coupled with an admission that it is based on an inference from the balance sheet only and no other proof is furnished to show that these available reserves and funds were in fact brought in as working capital by the employer during the year in question.
In these circumstances, even though in the cross examination of Murarka on behalf ' of the workmen nothing very material was elicited on this question, we have to hold that the affidavit given by Murarka is not sufficient discharge the burden which lay on the Company to prove that all the reserves and other funds shown in the balance sheet as in existence at the beginning and at the end of the bonus year in question were utilised as working capital.
The balance sheet, it appears to us, itself gives an indication.
that this claim made on behalf of the Company cannot be fully justified.
In the balance sheet, the assets of the Company are shown under various heads and it seems to us that items falling under certain heads only can be treated as working capital of the Company during the year, while others have to be excluded.
The items which cannot be treated as part of the working capital are: fixed assets of the value of Rs. 411.08 lacs, investments of the value of Rs. 14.48 lacs, fixed deposit amount of Rs. 220 lacs, loans and advances recoverable in cash or in kind or for value to be received or pending adjustment amounting to Rs. 11.74 lacs, and loans and advances from Trust and other authorities amounting to Rs. 8.09 lacs.
On the other hand, the working capital would consist of current assets of the value of Rs. 31.34 lacs, Stock in Trade of the value of Rs. 337 lacs, sundry debts of the value of Rs. 69.82 lacs, bank and cash balances of the value of Rs. 37.98 lacs, loans and advances of the value of Rs. 14.27 laes, and insurance and other claims of the value of Rs. 7.61 lacs.
Thus, in the present case, the balance sheet gives an 'indication that a sum of Rs. 498.02 lacs was the amount shown at the beginning of the year against items of assets which can be classified as part of the working capital, whereas the remaining sum of Rs. 665.38 lacs represent fixed assets, fixed deposits, investments and other loans and advances which cannot be classified as part of working capital.
Similarly, an examination of the items entered on the side of liabilities in the balance sheet shows what were the sources from which moneys became available for acquisition of these assets.
346 Amongst these, the reserves shown are only Rs. 10 lacs for contingencies and Rs. 39.51 lacs as development rebate reserve.
Though the balance sheet does not itself show the depreciation fund, it is also clear from the Schedule attached to the balance sheet that, up to the beginning of the year, a depreciation provision had been made to the extent of Rs. 325.48 lacs.
In order not to show it as available development reserve or fund in the balance sheet, what the Company did was to show the depreciated value of the capital assets at Rs. 411.07 Iacs instead of the actual value of Rs. 736.56 lacs which was the amount paid in cash for acquiring those fixed assets.
For purposes of dealing with the question whether any reserve was used as working capital, we must, therefore, proceed on the basis that there was a depreciation reserve of Rs. 325.48 lacs, while the investment on the fixed assets was Rs. 736.56 lacs and not merely Rs. 411.07 lacs.
Taking this depreciation reserve also into account, it would thus appear that the reserves available at the beginning of the year Were of the amount of Rs. 374.99 lacs.
The subscribed capital and capital available from forfeited shares was Rs. 819.57 lacs.
Funds available from other resources, such as profit and loss account balance, unsecured loans, current liabilities and provisions, provision for taxation, proposed dividends and contingent liabilities not provided for, amounted to Rs. 294.33 lacs.
The question that arises.
is how much money from each of these ' sources had gone into the working capital and how much into fixed assets or other items of assets indicated by us above.
In examining this position, the value of the fixed assets has to be taken as Rs. 736.56 lacs which was the actual amount spent in acquiring 'those assets and not at the written down value of those assets at Rs. 411.08 lacs.
It seems to us that this being the position, there was no justification for Murarka to claim that all the amounts available in reserve had gone towards the working capital and did not represent other assets, such as the fixed deposit of Rs. 220 lacs and similar other items.
In these circumstances, we have.
to hold that no reliance can be placed on the affidavit of Murarka that all the reserves, including the depreciation reserve and the contingent anti development rebate reserve were actually used as part of the working capital during this year.
The question that next arises on this conclusion of ours is whether any return at all should be allowed to the Company on reserves or other funds claimed as having been utilised as working capital during this year.
The exact figure on which the Company could claim return has not been proved by it, but it seems to us that at least some part of the reserves must necessarily have been utilised in the working capital.
The Company had a paid up capital of Rs. 819.57 lacs and it can safely be assumed that 'this money:was utilised for acquiring the fixed assets, as that will 347 be the primary purpose of obtaining capital from the share holders.
A sum of Rs. 736.56 lacs must, therefore, have gone in cash into the fixed assets out of this sum of Rs. 819.57 lacs, leaving a balance of Rs. 83.01 lacs.
The sum available from other resources was Rs. 294.33 lacs which, together with the balance of the subscribed capital left over, gives a figure of Rs. 377.34 lacs.
Consequently, for purposes of the working capital, a maximum amount of Rs. 377.34 lacs could have been available from the subscribed capital or other resources and the balance of the amount must necessarily come out of the reserves.
The items of assets classified as representing the working capital, as we have indicated above, have a total value of Rs. 498.02 lacs.
Deducting from this amount the sum of Rs. 377.34 lacs available from subscribed capital or other resources, there remains a balance of Rs. 120.68 lacs which must have necessarily come out of the various reserves, including the depreciation reserve, and this amount at least must be held to represent reserves acually used as working capital during the year by the Company.
We think that,since the information available from the balance sheet itself shows that at least Rs. 120.68 lacs out of the reserves did form part of the working capital of the Company, it would be fair to allow the Company 4% return on this amount, even though we are not inclined to accept the evidence of Murarka and have to hold that the Company on its part failed to prove that this amount or the whole of the amount of reserves had been utilised as part of them working capital during this year.
Consequently, the amount which the Company has to be allowed as return on reserves utilised as working capital comes to Rs. 4.83 lacs.
In this connection, we may also take notice of the claim made by the Company that return should also be allowed on certain other sums.
used as working capital which have been described as working income.
The Company claimed that it had money available from four different sources.
The details given were Rs. 249.71 lacs from profit as worked out in the Profit and Loss Account at the end of the year, Rs. 63.07 lacs as reserve for depreciation for the year.
Rs. 36.00 lacs as development rebate for this year and Rs. 4.71 lacs as value of discarded fixed assets written off.
The claim was that at least half the amount represented by these figures should be treated as a fund which was available during the bonus year for being utilised as working capital.
This submission, in our opinion, cannot be accepted.
There is nothing to show whether any of these amounts became available to the Company during the year and if so, when they became available.
In fact, the profit as worked out in the Profit and Loss.
Account can be held to have accrued to the Company only when the Profit and Loss Account was worked out at the end of the year.
We have already referred to the decision of this Court in 348 Bengal Kagazkal Mazdoor Union and Others(1) where it was held that amounts shown as liquid assets at the beginning of the year are the only amounts which can be held to be available for utilisation as working capital in that year.
Amounts which accrue during the year or at the end of the year cannot be held to be available, unless evidence is led on the basis of which a positive finding can 'be recorded that those amounts became available on a particular date during the year and were thereafter actually utilised as part of the working capital.
Profit for the year and reserve or development rebate for the year in question cannot be proved to have accrued on any particular date during the year and, therefore, it is also not possible to hold that they were utilised as part of the working capital during that very year.
This claim which is a novel one put forward on behalf of the Company for the first time in applying the Full Bench Formula for calculation of available surplus for distribution of bonus, must, therefore, be rejected.
A point that was raised on behalf of the workmen, but which was not seriously argued before us, was that the return on paid up capital should not be allowed at least to the extent to which money had been invested in the subsidiary or other companies.
The amount in question is Rs. 14.48 lacs already noticed by us earlier when dealing with the question of proof of utilisation of reserves as working capital.
In dealing with that question, we have already proceeded on the basis that the paid up capital was either invested in fixed assets, or must have been utilised as part of the working capital, and have not accepted the plea that this sum of Rs. 14.48 lacs of investment came out of the paid up capital.
Consequently, no question can arise of reducing this amount from the paid up capital when allowing 6% return on it in accordance with the Full Bench Formula.
Another deduction, while calculating the surplus out of the profits available for distribution of bonus, which has been challenged on behalf of the workmen relates to the income from home delivery commission.
From the facts, it appears that this Company was manufacturing cars in collaboration with a foreign concern and the arrangement was that,if that foreign concern sold any of its goods in India, the Company would be entitled to its commission on those sales, even though the Company may not be a party to the transactions of those sales.
This arrangement thus recognised the exclusive right of the Company in respect of sale of its cars and to reimbursement in case the foreign collaborator entered into transactions infringing that right.
It seems to us that the income thus accruing to the Company has to be treated as extraneous income which was earned by the Company without (1) 349 any activities in which the workmen participated or contributed their labour.
Learned counsel for the workmen referred us to the decisions of this Court in the Tata Oil Mills Co. Lid.
Q) and Voltas Limited vs Its workmen(1).
The situations that were discussed in those cases were different.
In those cases, the principle laid down was that, if any income was earned in the course of the normal business of the Company in which the workmen were also engaged, that income must be included in the profits for calculation of surplus available for distribution of bonus.
None of the instances that came up for consideration were similar to the one before us.
The home delivery commission earned in the present case did not require any contribution of work or labour on the part of the workmen, and accrued to the Company simply because of its agreement with the foreign collaborator ' which entitled the Company to claim the commission without going through any process of manufacturing or selling the cars or their components.
In the circumstances, the deduction of the home delivery commission from the profits was fully justified.
The last point urged related to the interest on fixed deposits earned by the Company during the bonus year.
We have already indicated earlier that a sum of Rs. 220 lacs was in fixed deposit account and the profit and loss account shows that a sum of Rs. 5.17 lacs was received as interest on it by the Company.
This has also to be excluded when calculating the available surplus, because this income also accrued to the Company without any contribution on the part of the workmen.
It was not the regular business of the Company to keep money in fixed deposits and earn interest thereon. ' At the same time, however, we feel that on equitable grounds, the Company should not be entitled to claim the sum of Rs. 2.16 lacs as an expenditure of the business of the Company in respect of interest paid to bank and others.
When the Company was receiving interest on fixed deposits, it would be proper to hold that at least the interest paid by the.
Company should come out of the interest earned by it.
There seems to be no justification for permitting a Company to keep money in a fixed deposit and treat the interest accruing on it as extraneous income, while, at the same time permitting the Company to take loans, pay interest and treat that interest as business expenditure.
Consequently, in this case, when calculating the available surplus, a sum of Rs. 5.17 lacs minus Rs. 2.16 lacs Rs. 3.01 lacs only will be deducted as extraneous income which was earned without any contribution from the workmen and which cannot therefore, be taken into account when calculating available surplus.
On the basis of these decisions, we have worked out Charts bowing the amount of annual rehabilitation provision which (1) ; (2) ; LISupCl/688 350(a) CHART Year Original Cost Discarded Price Replace and Factor ment Cost written or Multi off from plier books 1 2 3 4 5 1942 43 to 1946 47 2.17 . 2.80 6.08 1947 48 89.75 0.35 2.80 250.32 1948 49 44.77 . 2.50 111.93 1949 50 37.60 . 2.30 86.48 1950 51 5.29 . 2.40 12.70 1951 52 14.63 . 2.70 39.50 1952 53 11.06 0.39 2.50 26.68 1953 54 9.09 . 1.50 13.64 1954 55 38.65 24.33 1.90 27.23 1955 56 30.05 8 01 1.80 39.69 1956 57 34.47 5.95 1.60 45 63 1957 58 75.32 7.79 2.00 135.06 ]958 59 53.74 . 1.25 67.17 1959 60 140.15 . 1.15 161.17 1960 61 98.52 . 1.10 108.37 350(b) (All figures in lacs of rupees) Less 5 % Balance Deduct Balance Resi Annual Cost deprecia require duary Rehabili tion & other ment Age tation reserve require available ment 6 7 8 9 10 11 0.
11 5.97 364.99 Nil Immaterial . 4.47 245.85 359.02 Nil " . 2.24 169.69 113.17 Nil " . 1.88 84 60 3.48 81.12 3 27.04 0.27 12.43 12.43 3 4.14 0 45 13.19 . 13.19 5 2.64 0 72 26.51 26.51 6 4.42 1.43 44.20 44.20 7 6.31 3.37 131.69 . 131.69 8 16.46 2.69 64.48 64 48 9 7.16 7.01 154.16 154.16 9 17.13 4.93 103.44 103.44 10 10.34 116.70 351 CHART II (All figures in lacs of rupees) Annual Requirement for Rehabilitation for all the Machinery 116.07 Less Depreciation Provision for the Year of Bonus 1960 61 63.07 Net Requirement for Rehabilitation of Machinery in the Year 1960 61 53.00 Requirement for Rehabilitation of Buildings 11.97 Total Rehabilitation Requirement 64,97 CHART III (All figures in lacs of rupees) Profit as per Profit&Loss Account 249 '71 Add : Provision for Depreciation 63.07 Reserve for Development Rebate 36.00 Charity and Donation 0.35 Expenses pertaining to previous years (Sales tax) 0,01 99 43 99,43 349,14 Less: Income pertaining to previous years and Provisions no longer required 5.70 Surplus on Sale of Fixed Assets 0,09 Home Delivery Commission 1.03 Interest on Fixed Deposits 3,01 Normal Notional Depreciation 69,26 Income tax Liability for the year 112,37* 6% Return on Ordinary Share Capital 29,77* 8.57% Return on Preference Share Capital 27,55 4%Return on Working Capital 4,83 Provision for Rehabilitation 64,97 318.58 318,58 Net Surplus Available for Payment of Bonus 30.56 *These figures have been corrected by us.
In the statement filed by the Company they were wrongly entered as 12.18 lacs and 129 ' 89 lacs respectively.
359. must be allowed to the Company and, taking that into account, the amount of surplus available out of the profits for distribution as bonus.
Chart 1 shows the annual rehabilitation requirement for machinery which works out at Rs. 116.07 lacs.
Chart II gives the calculation, on the basis of this figure, of the net amount required for rehabilitation during the year of bonus for the machinery and buildings, after taking into account the depreciation provision for the year of bonus.
This net amount is Rs. 64.97 lacs.
Chart 111, based on these figures and on other figures arrived at by us in our judgment, shows that a net amount of Rs. 30.56, lacs would be available as surplus for payment of bonus during this year.
The Tribunal was, therefore, not right in arriving at its decision that this Company was not in a position to pay bonus at all.
As we have indicated earlier, the workmen have claimed bonus equivalent to 6 months ' wages which would amount to a sum of Rs. 24 lacs.
We do not find any justification for granting bonus at such a high rate.
Though the Company has earned a large amount of profit during the year of bonus, it is to be noticed that, for quite a large number of years, the Company has been running at a loss.
The Company has an expanding business and the total amount of surplus available for allocation between the capital and the labour is Rs. 30.56 lacs.
In all these circumstances, we consider it just and proper that bonus should be paid to the workmen.
20% of their annual wages, so that a total sum of Rs. 9.60 lacs out of this surplus will be paid out as bonus, leaving the balance of Rs. 21.03 lacs with the Company for being utilised for other purposes.
The appeal is, consequently, allowed, the decision of the Tribunal is set aside and it is hereby ordered that the Company shall pay to the workmen a total amount of Rs. 9.60 lacs as bonus, representing 20% of the annual wage of the workmen.
In the circumstances of this case, we direct parties to bear their own costs of this appeal.
G.C. Appeal allowed.
| IN-Abs | The workmen of the respondent company raised an industrial dispute about bonus claimed by them for the year 1960 61.
The Industrial Tribunal applying the Full Bench Formula held that the sum needed for rehabilitation of machinery exceeded the surplus otherwise available and therefore no bonus was payable.
Against this decision of the Tribunal the workmen appealed to this Court and raised various objections as to the manner in which the available surplus was calculated by the Tribunal.
HELD: (i) On the facts and the evidence produced in the case the life of the respondent company 's machinery should be taken at an average of 15 years if the machinery is worked in two shifts.
and 10 years if it is worked in three shifts.
The artificial rule laid down in the Income tax Act for calculation of notional depreciation can provide no criterion at all for determining the life of the machinery, and the Tribunal committed an error in proceeding on that basis.
[319 H] The life of machinery taken in other cases is also not a correct basis for fixing the life of machinery in a particular case.
Various factory come in that affect the useful life of a machinery.
Factors such as the quality of the material used in the machines, and the nature of the material on which the machines are to operate, very materially affect their life.
Further the life of a machine will also depend on the manner in which it is handled in a particular factory.
Consequently the correct principle is to determine the life of machinery in each case on the evidence adduced by the parties.
[319 E F; 320 D] Further what has to be determined is the useful life of the machinery rather than its economic life.
In fact one of the very major considerations which should be taken into account is the actual practice of the manufacturers using the machinery and, if the evidence be available, to find out how long the manufacturers continue to use the machinery as a rule.
[324 D H] The fact that in the Full Bench Formula the breakdown value of machinery is taken at 5% is certainly an aspect to be taken into account.
but it cannot be accepted that a machinery should be deemed to have useful life until it reaches the stage of having a breakdown value of 5% No such absolute rule can be inferred.
[328 A] The Tribunal was wrong in not taking into account machinery installed during the bonus year itself for making provision for rehabilitation.
If any machinery is installed in.
the bonus year, the company would be 312 justified in claiming that it must immediately Start making provision for its rehabilitation, though the period for rehabilitation of that machinery would only start at the end of the bonus year.
[330 A C] ' (ii) The multipliers given by the company in the schedule originally submitted by the company which were not objected to by the workers were the correct basis for Calculation of the rehabilitation cost and the Tribunal should not have departed from them.
There was no justification for taking an average of the multipliers submitted at first and those submitted thereafter in a second schedule.
The Tribunal also was not justified in reducing the multipliers on the ground that the new machines which would be purchased to replace the original ones would necessarily have more ' productive capacity.
There was no material at all from which the Tribunal could justifiably have inferred that the increase in production would be so.
material as to, attract the principle of apportionment laid down by this Court in the case of the Associated Cement Companies Ltd. 1331 A F; 332 (iii) In calculating the rehabilitation requirement for the machinery the depreciation provision made in accordance with the principles of commercial accounting has to be deducted from the amount that would be required to purchase the new machinery for replacement.
The contention that deduction should be made only of depreciation reserves available to the employer cannot be accepted.
SUch an interpretation militates against the very purpose for which rehabilitation provision is allowed, namely, to enable the industry to cover the difference between the amount of depreciation which is recouped by making provision for it in accoromance with the, principles of commercial accounting and the amount that would be required to purchase the new machinery for replacement.
Therefore, in the present case, the Tribunal erred when in calculating the provision for rehabilitation it took the entire price of the replacement machinery as required to be provided, entirely out of profits without reducing the price to the extent of the depreciation provided for in the accounts.
[333 E 334 B F] (iv) The claim of the workmen that the sum shown in the balance sheet of the company as development rebate reserve should be deducted from the available surplus must be allowed.
The mere statement of the General Manager on affidavit to.
the effect that the reserves had been utilised as part of the working capital could not be aceepted as evidence of the fact.
When the balance sheet itself showed that cash amounts in the form of fixed deposits were available which were far in excess of the development rebate reserve in question, there would be No. justification for holding that this development.
rebate reserve was not available as a liquid asset and had been included by the company in the working capital.
This development rebate reserve was a liquid asset available for rehabilitation and consequently liable to be deducted when calculating the rehabilitation requirement.
[335 A G] (v) If some.
machines have fully run out their lives, they must necessarily be replaced out of resources available immediately and there would be no justification for keeping the available resources in reserve for future rehabilitation while not providing out of those available resources for immediate.
replacement of machinery.
There is also the aspect that an employer in order to claim more and, more rehabilitation provision will have a tendency to keep old blocks of machinery running and to avoid adoption of such a device it would be fair that he is required to utilise available resources at the very first opportunity when the old blocks of machinery require replacement and claim annual provision for future only in respect of that machinery which will require replacement later 313 on.
Consequently, in the present case the depreciation provision and the available development rebate reserve must be taken into account when calculating the annual provision for rehabilitation required for replacement of the earliest installed machinery until it was exhausted, whereafter 'the annual requirement for the remaining blocks of machinery would have to be calculated, ignoring these available resources.
[336 G H; 337 C D] (vi) For the purpose of working 'out return on working capital in the year of bonus the origin of the fund used as working capital is immaterial and it cannot be said that the return must be allowed only on reserves used as working capital and not on any other funds used as such.
However the fund must be available for investment before a claim can be made by the employer for a return on it.
[340 E F] But, the mere existence of reserves and funds at the beginning of the year, even taken together with their existence at the end of the year cannot lead to any inference that these reserves and funds must have formed part of the working capital during the year and could not form part of other items such as fixed deposits, investments etc.
The affidavit filed by the company in this connection did not exclude the possibility that they were utilised for purposes other than that of working capital.
in the balance sheet the amounts which represented fixed assets, fixed deposits, investments and other loans and.
advances could not be classified as part of the working capital.
The items representing working capital were current assets, stock in trade, sundry debts, bank and cash.
balances, certain loans and advances and insurance and other claims.
The items representing working capital had a total value of Rs. 498.02 lacs.
Deducting from this the sum of Rs. 377.34 lacs available from subscribed capital or other sources.
there remained a balance of Rs. 120.68 lacs which must have necessarily come out of the various reserves including the depreciation, and this amount at least must be held to represent resources actually used as working capital during the year by the company.
On this amount it would be fair to allow a 4% return to the company.
[344 F H; 347 D E] (vii) The company 's claim that half the amount from the following sources, namely, (1) the profit in the profit and loss account worked out at the end of the year, (2) depreciation reserve for the year, (3) development rebate for the year, (4) value of discarded fixed.
assets written off should be treated as 'a fund which was available during the bonus year for being available for being utilised as working capital, could not be accepted.
There was nothing to show whether any of these amounts became available to the company during the year and if so when they came available.
[347 F] (viii) In allowing 6% return on paid up capital in accordance with the Full Bench Formula no question could arise of deducting the amounts invested in subsidiary companies from the paid up capital because the said investment had not been held to have come out of paid up capital [348 [348 F] (ix) The income of the company from interest on fixed deposits was its extraneous income which accrued to the company without any contribution by the workmen.
this income had therefore to be excluded in calculating the available surplus.
At the same time the company could not on equitable grounds be permitted to claim the interest paid by it on its borrowings as business expenditure.
Therefore the interest on fixed deposits was to be treated as extraneous income only after deducting from it the interest paid on the borrowings.
[349 D F] 314 (x) The income received by the company from its foreign collaborators as commission on sales effected by the said collaborators of their own cars in India was extraneous income to which the company 's wOrkmen made no contribution.
It was not therefore to be taken into account in calculating the available surplus.
[349 C] (xi) Calculated in the above manner the available surplus came 10 Rs. 30.56 lacs.
The Tribunal was not right in its decision that the company was not in a position to pay bonus at all.
However, though the company had earned a large amount of profit in the year of bonus it had for quite a large number of years been running at a loss.
The available surplus being only Rs. 30.56 lacs, the workmen 's demand of bonus equivalent to six months ' wages amounting to Rs. 24 lacs was too high.
It would be just and proper to allow bonus at 20% of their annual wages which would come to Rs. 8.60 lacs.
[352 A E] Associated Cement Companies Ltd. Dwarka Cement Works, Dwarka vs Its Workmen & Anr. , Saxby & Farmer Mazdoor Union, Calcutta vs M/s. Saxby & Farmer (India) Ltd. , Workmen M/s. Saxby & Farmer (India) Pvt. Ltd. vs M/s. Saxby & Farmer (India) Private Ltd. C.A. 152/64 dr. 12 4 1965, The Millowners ' Association, Bombay vs The Rashuriya Mill Mazdoor Sangh, Bombay, The Honorary Secretary South India Millowners ' Association & Ors.
vs The Secretary, Coimbatore District Textile Workers ' Union.
[1962] 2 Supp.
S.C.R. 926, National Engineering Industries Ltd. vs The Workmen & Vice Versa, [1968] 1 S.C.R. M/s. Titaghar Paper Mills Co. Ltd. vs Its Workmen, [1959] Supp.
2 S.C.R. 1012, Millowners, Association, Bombay vs The Rashtriya Mill Mazdoor Sangh, , Tata Oil Mills Co. Ltd. vs It 's Workmen & Ors.
; , Anil Starch Products Ltd. vs Ahmedabad Chemical Workers ' Union & Ors., , Khandesh Spg & Wvg.
Mills Co. Ltd. vs The Rashtriya Girni Karogat Sangh, Jalgaon, ; , Bengal Kagazkal Mazdoor Union & Ors.
vs Titagarh Paper Mills Company, Ltd., [1963] II L.L.J. 358 and Voltas Limited vs Its Workmen, ; , considered.
|
il Appeal No. 129 of 1965.
Appeal by special leave from the judgment and decree dated August 24, 1962 of the Andhra Pradesh High Court in Appeal No. 419 of 1958.
S.T. Desai, M.S.K. Sastri and M.S. Narasimhan, for the appellants.
H.R.Gokhale and R. Ganapathy lyer, for respondents Nos.
The Judgment of the Court was delivered by Shelat, J.
This appeal by special leave is directed against the judgment and decree of the High Court of Andhra Pradesh confirming the dismissal by the trial Court of the suit filed by appellants 1 and 2.
The pedigree set out below clarifies the relationship between the parties : 295 Chintalapati Venkatapatiraju Somaraj Sitharamaraju (Plaintiff in O.S. 21/23) Pullamraju (died 19 12 1913)widow Surayamma (died 22 10 50) Daughter Subbay Venkay Somaraju Son (said Radhyamma died in yamma yamma died to have been (died 6 4 27) infancy) (died) (died 29 3 21) born and died ' 11 8 56) in infancy).
Kalidindi Venkata Kali Pinnamaraju Subbaraju(1st dindi Gopala Prabhakara Plaintiff) Raju (2nd Lakshmipatiraju Plaintiff) 6th Defendant) Venkatapati Venkayamma Rajayamma Suryamma Raju Subbaraju (1 st Defendant) Rangamma Sitaramaraju Venkatapatiraju Vijayasubbaraju (2nd Defendant) (3rd Defendant) (4th Defendant) Pullamraju died leaving him surviving his undivided Somaraju, his widow Surayamma and three daughters.
Somaraju died on March 29, 1921 whereupon the said Surayamma claimed that he had left a will dated March 26, 1921 whereunder all the properties had been bequeathed to her absolutely.
Sitaramaraju the uncle of Pullamraju filed Suit No. 21 of 1923 for a declaration that Somaraju 's will was not valid as he had executed it when he was a minor and was not in a sound disposing state of mind.
296 Surayamma in her written statement filed in that Suit contended that Somaraju was a major having been born on January 7. 1903 and was in a sound disposing state of mind when he executed the said will.
The suit ended in a compromise decree by which Sitartmaraju admitted that Somaraju was a major when he died, that he was in a sound disposing state of mind and that the will therefore was genuine and valid.
Under the compromise decree he received 26 out of about 57 acres of land and the rest of the property was retained by Surayamma.
Thereafter Surayamma conducted herself as the absolute owner of the properties which came to her under the said decree.
By two deeds, dated March 30, 1925 she settled part of the land received by her under the said decree in favour of her two daughters the mothers of plaintiffs 1 and 2 and defendant 6 respectively.
The said properties have since been possessed of and enjoyed first by the said two daughters and later by plaintiffs 1 and 2 and defendant 6.
On November 3 1947 Surayamma gifted another portion of the said property to defendant No. 6. Surayamma died on October 22, 1950.
Plaintiffs and 2 and defendant 6 (the present appellants) thereafter obtained a deed of surrender from their mothers and filed the suit out of which this appeal arises, contending that they were the nearest reversioners of Somaraju, being the sons of his sisters; that the said compromise decree was collusive that the said Somaraju did not execute the said will that even if he did he was not a major nor of sound disposing state of mind when he executed it and that therefore the said will was not valid.
By a subsequent amendment of the plaint they also contended that some of/he lands left by Somaraju were not disposed of under the said will that there was consequently intestacy in respect thereof which in any event they as reversioners were entitled to claim.
The respondents resisted the suit contending that the said will was valid, that the said compromise decree was binding on the appellants and that they having accepted and enjoyed the said properties settled upon their mothers by Surayamma, they were estopped from challenging the will or the said decree.
They also denied that any of the properties left by Somaraju remained undisposed of by the said will or that there resulted any intestacy regarding them or that on such intestacy the appellants became entitled thereto.
The trial Court held that Somaraju did execute the will that the original will was with the appellants and was suppressed by them, that therefore its certified copy produced from the records of the court was admissible, that the ' said will was valid as Somaraju was a major and in a sound disposing state of mind when he executed it, that the said decree was by way of a family arrangement in settlement of bona fide disputes that it was binding upon the appellants and that the appellants were estopped from disputing the will or the said decree.
The trial Court also repelled the contention that Somaraju left any property undisposed of under the said will or 297 that the appellants became entitled thereto upon an intestacy.
In appeal against the said judgment the High Court confirmed the dismissal of the suit by the trial Court.
The High Court also confirmed the trial Court 's conclusion that the certified copy of the said will was admissible as secondary evidence thereof and that Somaraju was a major and in a sound disposing state of mind when he executed the said will.
The High Court also confirmed the trial Court 's conclusion that the said decree was binding on the appellants and that 'the appellants and their respective mothers having accepted and enjoyed the properties settled upon them by Surayamma were estopped from disputing either the will or the said decree.
Mr. S.T. Desai for the appellants raised the following contentions : (1) that the burden of proof that the will was validly executed by Somaraju and that he was a major at the time of executing it was upon the respondents and that they failed to discharge that burden; (2) that the conclusion of the High Court and the trial Court that he was 19 years of age at the time he executed the will was not justified; (3) that the High Court erred in holding that extracts from the birth and death Registers produced by the appellants were not public documents within the meaning of section 35 of the Evidence Act and therefore not admissible; (4) that the High Court erred in holding that even if the will was not proved to have been validly executed, the said compromise decree was binding on the appellants and estopped them from challenging the validity of the will or the said decree; (5) that the appellants did not claim through the said Venkamma but under the Hindu Law of Inheritance (Amendment) Act 2 of 1929 and therefore there was no question of the compromise decree being binding on them or their being estopped from disputing 'the will or the said decree; and (6) that in any event, Somaraju did not dispose of land admeasuring about A 15.14.that there was therefore intestacy in regard to it and the appellants as reversioners ought to have been held entitled to it.
As aforesaid, the respondents did not produce the original will but produced only its certified copy, exhibit B. 9; which they obtained from the record of Suit No. 21 of 1923 wherein Surayamma had filed the original will along with her written statement.
The respondents, however, had given notice to the appellants to produce the original will alleging that it was in their possession but the appellants denied the allegation and failed to produce the will.
Both the trial Court and the High Court were of the view that the said will along with other papers of Somaraju were in the appellants ' custody that they had deliberately withheld it as it was in their interest not to produce it.
The trial Court therefore was in these circumstances justified in admitting the certified copy of the will as secondary evidence of the contents of the will.
Since the will was executed in 1921 and the testator had died soon after its execution it was not possible to produce either its writer or the witnesses who attested it.
It was undisputed that its scribe and the attesting witnesses were all dead except Dalapati Venkatapathi Raju, D.W. 4.
But the appellants ' contention as regards D.W.4 was that he was not the same person who attested the will.
The High Court appears to have relied upon section 90 of the Evidence Act and to have drawn the presumption that the will being more than 30 years old it was duly executed and attested by the persons by whom it purported to have been executed and attested.
Such a presumption, however, under that section arises in respect of an original document.
Where a certified copy of a document is produced the correct position is as stated in Bassant Singh vs Brij Rai(2) where the Privy Council laid down that if the document produced is a copy admitted under section 65 as secondary evidence and it is produced from proper custody and is over 30 years old only the signatures authenticating the copy can be presumed to be genuine.
The production of a copy therefore does not warrant the presumption of due execution of the original document.
The Privy Council repelled the argument that where a copy of a will has been admitted the Court is entitled to presume the genuineness of such will which purports to be 30 years old.
Relying on the words "where any document purporting or proved to be 30 years old" in section 90, the Privy Council held that the production which entitles the Court to draw the presumption as to execution and attestation is of the original and not its copy and that the decisions of the High Courts of Calcutta and Allahabad on which the argument was based were not correctly decided.
This view has since then been approved of by this Court in Harihar Prasad vs Must of Munshi Nath Prasad(3).
The High Court therefore was not entitled to presume from the production of the copy either the execution or the attestation of the said will.
But, apart from such presumption there was evidence from which the High Court could conclude that 'the will was duly executed by Somaraju and attested by the witnesses who appear to have affixed their signatures thereto.
There was, firstly, the fact of Surayamma having produced the will soon after its execution in Suit No. 21 of 1923.
Secondly, there was evidence of her having based her claim to Somaraju 's property in the said suit by virtue of and under 'the said will.
Thirdly, there was the evidence of conduct of Surayamma in ' dealing with the property as an absolute owner basing her claim under the said wilt.
Fourthly.there were the three settlement deeds executed by her in favour of her daughters and lastly the fact of the terms of the said will being natural and rational, consistent with Somaraju 's anxiety that in the absence of any male heir to him the properties should go to his mother to enable her 'to make due provision for his three sisters instead of dying intestate and the properties thereon going to the said Sitaramaraju and his heirs under the law as it then stood.
There was next the evidence of D.W. 4 testifying to the execution of the wilt by Somaraju and to his having attested the original will along with other witnesses.
His evidence also was that Somaraju was then in a sound disposing state of mind.
Both the trial Court and the High Court accepted the evidence of D.W. 4 as of the person who along with others had attested the will.
There was thus ample evidence from which the High Court could conclude and in our view rightly that Somaraju executed the said will and was at the time in a sound disposing state of mind.
The effect of the certified copy of the will having been thus rightly admitted was as if the contents of the will were before the Court and the Court could proceed to construe those contents.
We are supported in this conclusion by authority.
In Setthaya vs Somayalulu(1) the original grant which was 250 years old was lost but a copy of it was produced from the respondents ' custody.
It bore the following endorsement of the predecessors of the respondents: 'Originals have been retained by us and copies have been filed, 1858 '.
The Privy Council held that the copy was properly admitted under section 65 and 90 of the Evidence Act as secondary evidence of the terms of the grant and that the statement and the said endorsement authenticating the copy were evidence as a statement by a deceased person in a document relating to a relevant fact and also as an admission of the respondents ' predecessors.
The Privy Council also held that the copy being admissible as secondary evidence of the terms of the original grant the Court could proceed upon the footing that the terms of the said grant were before it and could therefore consider them.
The High Court was therefore quite competent in construing the contents of the said will and in holding that the terms of the said will were 'natural and rational and proved that Somaraju was fin a sound disposing state of mind.
The question, however, still remains whether Somaraju was a major at that time.
The onus of proof that he was then a major and could competently execute it was on the respondents who relied on the will (See Ganaprakasam vs Paraskthy)(2).
The appellants ' case was that Somaraju was born in 1905 and not in 1903 as alleged by the respondents.
The admitted position was that all the children of Pullamraju were born in the village Isukapalli.
The parties in support of their rival contentions produced both oral and documentary evidence.
Apart from the certified copy of the will and Suryamma 's written statement in Suit No. 21 of 1923, 4 other documents Exs.A4, A5, A9 and B24 were filed in the trial Court.
B24 produced by the respondents was an extract from the 'birth register of Isukapalli.
A4 and A5 produced by the appellants were respectively an extract from the birth register of Isukapalli and an extract from the death register relating to Somaraju 's death.
exhibit A9 also produced by the appellants was a reply to them from the department concerned that there was no entry in regard to Somaraju 's birth in the birth register of 1903 of Isukapalli.
Curiously the registers of births and deaths of IsUkapalli village for 1903 and 1905 were available in 1955 but in 1957 when the trial Court called for these registers it was informed that those registers could not be traced.
The result was that the only evidence before the Court consisted of certified copies of extracts, Exs. A4 and A5, from those registers and the said letter exhibit A9.
exhibit B24, it appears, was motheaten overwritten and tampered with at some places with ink different from the original ink in which the rest of the document was written.
Both the trial Court and the High Court were agreed that it could not therefore be considered as furnishing evidence of Sornaraju 's date of birth.
exhibit A4 was an extract of birth register for the year 1905.
The appellants ' contention was that this extract furnished evidence that Somaraju was born in 1905.
It was said to have been obtained by Surayamma in 1941 as she intended to file some suit which she ultimately did not.
Assuming that Ex A. 4 was admissible under section 35 of the Evidence Act, it could not assist the appellants as it only indicated at best that a son was born of Pullamraju in 1905.
The case of the respondents however was that another son besides Somaraju was born of Pullamraju after Somaraju 's birth.
In the absence of any evidence led by the appellants that A.4 related to Somaraju and no one else, the extract obviously could not establish that Somaraiu was born in 1905 and therefore was a minor in 1921.
exhibit A. 5 showed that Somaraju died on March 29 1921 but there was dispute as to the date of his death.
There was no doubt reference in that extract that he died at the age of 16.
But the High Court found that the figure '16 ' for his age was written in an ink different from that used for the others entries in the extract and that that figure was an interpolation made by someone subsequently.
Both the trial Court and the High Court were in fact of the opinion that Exs.A4 and A.5 were not genuine.
The High Court was further of the view that exhibit A.5 had been tampered with and therefore could not be relied upon.
Exhibits B.24, A.4 and A.5 thus having been found to have been tampered with and therefore unreliable documents, it is not necessary for us to go, as the High Court did, into the question whether such extracts were admissible under section 35 of the Evidence Act or not.
Besides these extracts, the appellants also produced Exs.A.8 and A.9 a memo issued by the Taluk office, Kakinada and an endorsement dated September 17, 1955 issued by the Head Clerk of the Taluk Office, Pithapuram respectively.
The memo stated that there were no entries in the birth register of 1903 for Tanuwalla village relating to the birth of any of the children of Pullamraju.
The endorsement stayed that an application for extract from the birth register for 1903 in respect of the birth of any of the children of Pullamraju was fried but as there were no such entries in the birth register for/sukapalli for 1903 the stamps sent by the applicants for the copy were returned.
Neither the writer of exhibit A.8 nor of A.9 was examined to testify to the contents of 'the said memo and the said endorsement and to establish that notwithstanding their diligent efforts the original registers were not traceable.
A.8 and A.9 could not be admitted in evidence without the formal proof of the entries and were rightly held inadmissible.
We need not consider the rest of the documentary evidence viz. Exs.A. 3 and A.7 produced by the appellants as neither of them was relied upon before us.
Both the parties, as aforesaid, led considerable oral evidence.
However, except for the evidence of D.W. 4 both the trial Court as well as the High Court found that the oral evidence of these witnesses was speculative in character and therefore could not be said to have established either of the rival contentions as to Somaraju 's age.
No reason has been shown that their assessment of this evidence was wrong.
This being the position regarding the evidence led by the parties there remains only three pieces of evidence requiring consideration, viz., (1 ) the statement of Somaraju as to his age in the said will; (2) the statement of Surayamma in the said written statement and (3) the subsequent conduct of Surayamma, the mothers of the appellants and the appellants themselves.
The question canvassed both before the High Court and us was whether the statements made by Somaraju and Surayamma in the said will and in the said written statement respectively were admissible and could be used to establish that Somaraju was 19 years of age at the time when he executed the said will.
Section 32(5) of the Evidence Act provides that : "When the statement relates to the existence of any relationship by blood, marriage or adoption between persons as to whose relationship by blood, marriage or adoption the person making the statement had special means of knowledge" Section 32(6) provides that "When the statement relates to the existence of any relationship by blood, marriage or adoption between 1 Sup.CI/68 5 302 persons deceased, and is made in any will or deed relating to the affairs of the family to which any such deceased person belonged, or in any family pedigree or upon any tombstone, family portrait or other thing on which such statements are usually made".
Both the sub sections require that such a statement can be admissible only if it was made before the question in dispute was raised.
It is clear from sub section 5 that if construed literally it is possible to contend that a statement regarding the age of the person concerned is not one relating to the existence of any relationship by blood or marriage or adoption.
But such a literal construction is not a proper one as has been ruled in more than one decision.
In Oriental Govt.Security Life Assurance Co. Ltd. vs Narasimha Chari(1).Bhashyam Ayyangar J. Following Rama Chandra Dutt vs Yogeshwar Narain Deo(2) held that statement as to the age of a member of a family made by his deceased sister is admissible under section 32(5), the principle being that the time of one 's birth relates to the commencement of one 's relationship by blood and therefore a statement as to his age made by a person having special knowledge relates to the existence of such relationship.
This observation was approved in Mohammed Syedol Ariffin vs Yeohooi Gark(3) where the Privy Council held that the question of age in such a case falls within section 32(5) as it indicates the commencement of such relationship.
In Gulab Thakur vs Fadali(4) a statement by a person made when he was 36 years of age that he was adopted when he was 4 years old was held admissible after his death prove the fact of his adoption as he possessed special knowledge about the relationship required by the section.
It was also held that the fact that the person making the adoption died while 'the adopted was too young to remember him would not be material as the latter would be able to declare that he had been adopted from that acquaintance with the history of his family which he would necessarily possess.
Similarly, in Mst.Naima Khatun vs Basant Singh(5) the High Court of Allahabad following the decision in Ariffin vs Yeohooi Gatk(3) held that a statement as regards age is tantamount to a statement as to the existence of relationship.
Therefore a statement by an adoptive mother as regards the age of the adopted boy, although it would not show her own relationship with him was admissible.
In Pralhad Chandra vs Ramsaran(6), the Calcutta High Court held that a statement in the Guardianship application as to the date of birth is admissible if the person who had made it is dead and had special means of knowledge of the relationship.
This being the position under section 32(5) the statement made by Somaraju in his will that he was 19 years of age at the time of its execution was admissible and was rightly relied upon by both the trial Court and the High Court as establishing that Somaraju was a major and was competent to make the said will.
As regards the written statement of Surayamma the position of her declaration therein is somewhat different.
Both sub sections 5 and 6 of section 32, as aforesaid, declare that in order to be admissible the statement relied on must be made ante litem motam by persons who are dead, i.e., before the commencement of any controversy actual or legal upon the same point.
The words "before the question in issue was raised" do not necessarily mean before it was raised in the particular litigation in which such a statement is sought to be adduced in evidence.
The principle on which this restriction is based is succinctly stated in Halsbury 's Laws of England, 3rd Ed.15, p. 308 in these words: "To obviate bias the declarations are required to have been made ante litem motam which means not merely before the commencement of legal proceedings but before even the existence of any actual controversy concerning the subject matter of the declarations".
In Kalka Prasad vs Mathura Prasad(1) a dispute arose in 1896 on the death of one Parbati.
In 1898 in a suit brought by one Sheo Sahai a pedigree was filed.
After this, the suit from which the appeal went up to the Privy Council was instituted in 1901.
It was held there that the pedigree filed in 1898 was not admissible having been made post litem motam.
As a contrast there is the decision in Bahadur Singh vs Mohan Singh(2), where the Privy Council held certain statements made in 1847 to be admissible as the heirship of the then claimants was not then really in dispute.
(See also Field on the Law of Evidence, 9th Ed.III, p. 1847).
There can be no controversy that when Surayamma filed her written statement a dispute had arisen as to the age of Somaraju inasmuch as Sitaramaraju the plaintiff in the said suit had alleged that Somaraju was a minor at the time he executed his will and Surayamma had in denial of that averment asserted that Somaraju was a major at the relevant time.
The controversy therefore having existed at the time when the said statement was made it was inadmissible both under sub section 5 and sub section 6 and could not be availed of by the respondents.
As regards the subsequent conduct of the parties it is clear that both Sitaramaraju who was then the only reversioner under the law as it stood prior to 1929 and the said Surayamma (1) 35 I.A.166.(2) 29 I.A.1.304 conducted themselves on the footing that the said will was competently made and by virtue of that will Surayamma had become the absolute owner of the properties left by him.
Similarly, the three daughters of Surayamma, the mothers of the appellants, and the appellants themselves accepted the statements made by Surayamma in favour of her daughters and took possession of and enjoyed the lands in suit.
Neither the said daughters nor the appellants until the present suit was filed ever raised any contention regarding the validity of the said will.
The authority of Surayamma to settle the said properties treating herself as the absolute owner of those properties was never challenged by the appellants.
Such a conduct iS only consistent with the fact that it was understood amongst the members of the family that Somaraju was a major at the time of the execution of the will and the will was validly made.
In our view there being the statement of Somaraju admissible under section 32(5) coupled with 'the evidence of D.W. 4 as also the evidence as to the conduct of the parties before the Court there was ample evidence on which the trial Court and the High Court could rightly found their conclusion that the will was made at the time when Somaraju was a major.
Such a conclusion was obviously fatal to the appellants ' claim in the suit.
In view of our conclusion that the said will was competently made it is not necessary to go into Mr. Desai 's contentions Nos. 4 and 5.
There remains therefore his contention No. 6 only for consideration.
The argument that Somaraju did not dispose of land admeasuring about 15 acres 14 cents by the said will and that there was a resultant intestacy is rounded upon the fact that in the Schedule to the said will out of Survey No. 5/1 which measured 18 acres 67 cents a portion only is set out and the Schedule does not set out Survey Nos. 5/5 and 5/12.
The said will, however, in para 1 expressly states that the testator thereby was disposing of his entire property, movable and immovable, in favour of his mother.
It also states that the total area of land possessed of by him was 60 acres 9 cents and that he was bequeathing to his mother the said entire area.
The fact that the total area comprised of the several survey numbers mentioned in the Schedule do not aggregate 60 acres 9 cents appears to be the result of some mistake.
It appears from the record that the survey numbers in vogue in 1902 were altered in/912.
It is not possible to say what record was with Somaraju when he described the said land by its survey numbers in the said Schedule and whether he had at that time the old or the ,new record of the revised survey numbers.
It is possible that if the revised record was not before him at that time a mistake in describing the land by its survey numbers might occur and that would explain the discrepancy between the total measurement mentioned in the body of the will and that in the Schedule.
In face, however, of the expressly declared intention in the body of the will that he was disposing of the entire property including the land measuring 60 acres 9 cents it is impossible to hold that he desired to hold back a portion thereof from his mother and intended to leave it intestate.
We do not therefore find any justification for interfering with the conclusion of the trial Court and the High Court that Somaraju disposed of the entire property.
Consequently we must reject Mr. Desai 's contention.
The appeal is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | A Hindu died bequeathing all his properties to his mother absolutely by a will executed three days before his death.
In the will he stated his age to he 19 years, and that he was thereby disposing of his entire properly, movable and immovable, in favour of his mother.
After his death, the nearest reversioner under the law as it then stood, filed a suit for a declaration that the will was not valid because it was executed by the testator when he was a minor and when he was not in a sound disposing state of mind.
The mother of the testator (legatee) contened the suit and asserted in her written statement that when he executed the will the testator was a major and was in a sound disposing state of mind.
The suit was compromised By the compromise, the reversioner admitted that testator when he executed the will was a major and was in a sound disposing state of mind, that the will was valid and genuine, and the testalor 's properties were divided between the reversioner and the legatee There was a decree in terms of the compromise.
Thereafter, the reversioner and the legatee conducted themselves as the absolute owners of their respective shares of the property.
The legatee executed settlement deeds in favour of her daughters with respect to part of the land received by her under the decree.
The daughters took passion of the properties accepting their mother as their absolute owner.
After the death of the legatee, the appellants.
who were the sons of those daughters obtained a deed of surrender from their mothers accepting the legatee as the absolute owner of the properties.
They then filed a suit against the respondents.
who were the descendants of the reversioner who filed the first suit contending that the compromise decree in the first suit was collusive.
that the testator was not a major nor of sound disposing state of mind when he executed the will, that the will did not.
cover all the properties of the testator and that the appellants were in any event entitled to those properties with respect to which there was an intestacy.
as the sisters sons of the last male holder under the Hindu Law of Inheritance (Amendment) Act of 1929.
The respondents contested the suit and case notice to the appellants to produce the original will alleging that it was in the posses 293 sion of the appellants, but the appellants denied the allegation, and the respondents, thereupon, relied upon a certified copy of the wilt produced from the records of the court filed in the first suit.
The trial court dismissed the suit and the High Court confirmed the dismissal in appeal.
In appeal to this Court, it was contended inter alia: (1) that the burden of proof that the will was validly executed by the testator and that he was a major at the time of executing it was upon the respondents ,red that they failed to discharge that burden; and (2) that there was an intestacy with respect to a portion of the land and that the appellants were entitled to it.
HELD:(1) (a) As the lower Courts held that the appellants deliberately withheld the original will, its certified copy could be admitted as secondary evidence of its contents under 8. 65 of the Evidence Act, 1872.
But the High Court was not justified in presuming under section 90 of the Evidence Act, that the will itself was duly executed and attested.
merely because the copy was more than thirty years old and was produced from proper custody.
Such a presumption arises only in respect of the original document and not with respect to a copy.
[297 H; 298 A, C. D, F] Harihar Prasad vs Must.
of Mttnshi Nath Prasad, [1956] S.C.R.1. followed.
Munnalal vs Krishobai, A.I.R. 1947 P.C. 15 and Basant Singh vs Bnj Pad, 62 I.A. 180, referred to.
But, apart from the presumption.
on the oral evidence adduced and from the conduct of the legatee, the High Court was justified, in concluding that the testator executed the will and was at that time in a sound disposing state of mind and in construing the contents of the will as disclosed by the certified copy and holding that it was natural and rational.
[298 G; 299 C, F G] Setthava vs Somayajulu, 56 I.A. 146, applied.
(b) The respondents who relied on the will had discharged the onus which lay on them, namely, of proving that the testator was a major at the time he executed the will.
[299 G H] The statement of the mother of the testator in the written statement of the earlier suit that the testator was a major was not relevant either under section 32(5) or 32(6) of the Evidence Act, because, it was made post litm motam.
The words in the sub ,section, namely, 'before The question in issue was raised ' do not mean before it was raised in the particular litigation in which such a statement is sought to be adduced in evidence.
They mean before the existence of any actual controversy.
When the legatee flied her written statement in the first suit a dispute had arisen as to the age of the testator, and the controversy having existed time when the statement was made; the statement was inadmissible.
1303 B D, F H] Bahadur Singh v, Mohan Singh, 29 I.A. 1 and Kalka Prasad vs Mathura Prasad, 35 I.A. 166, referred to.
But, the statement of the testator in the will that he was a major at the time he was executing it was relevant under the sub sections because.
294 the question of age fails within the sub sections as it indicates the commencement of relationship.
[303 A] Md. Syedol Arffin vs Yeohooi Gark, 43 I.A. 256, Rama Chandra Dutt vs Yogeshwar Narain Dec, I.L.R. , Oriental Govt.
Security Life Assurance Co. Ltd. vs Narisimha Chari, I.L.R. , Gulab Tharkur vs Fadali , Prolhad Chandra vs Ramsaran, A.I.R. 1924 Cal.
420, and Mst.
Naima Khatun vs Basant Singh, A.I.R. 1934 All. 406 referred.
Further the conduct of the appellants and their mothers was consistent only with the fact that it was understood amongst the members of the family that the testator was a major at the time of the execution of the will and that the will was validly made.
[303 H; 304 A D] The documents relied upon by the appellants, namely, a memorandum and an endorsement received from the Taluk Office showing that there were no entires relating to the birth of any children in the testators family in the birth register for the year in which the testator stated he was born, were not admissible in evidence as the writers of the documents were not examined to testify to the contents of those documents and to establish that notwithstanding their diligent efforts the original register was not traceable.
[301 B D] (2) In face of the expressly declared intention in the body of the will that he was disposing of the entire property it is impossible to hold that the testator desired to hold back a portion thereof from his mother and leave it intestate.
merely became, there was discrepancy between the total measurement mentioned in the body of the will and that in the schedule to the will.
[304 H; 305 A]
|
ivil Appeal No. 618 of 1966.
188 Appeal by special leave from the judgment and order dated April 29, 1964 of the Madhya Pradesh High Court in Misc.
Petition No. 371 of 2962.
Niren De, Solicitor General, V.A. Seyid Muhamad, R.N. Sachthey, for R.H. Dhebar, for the appellants.
A. K. Sen, Rameshwar Nath and Mahinder Narain, for respondents Nos. 1, 3, 6, 10, 12 and 13.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought, by special leave, from the judgment of the Madhya Pradesh High Court dated April 29, 1964 in Miscellaneous Petition No. 371 of 1962.
By its judgment the High Court held that the preparation of provisional gradation lists by the State of Madhya Pradesh under the relevant provisions of the (Act 37 of 1956), hereinafter referred to as the "said Act", was unwarranted in law and the final list published on April 6, 1962 prepared by the State Government under instructions from the Central Government with regard to the integration of officers of the Engineering Department was illegal and ultra vires and must be quashed by the grant of a writ.
The said Act was enacted to provide for the reorganisation of the States of India and for matters connected therewith and came into force with effect from November 1, 1956.
By section 9 (1) of the said Act there was formed a "new State" to be known as the State of Madhya Pradesh comprising the following territories: "(a) the territories of the existing State of Madhya Pradesh, except the districts mentioned in clause (e) of sub section (1) of section 8; (b) the territories of the existing State of Madhya Bharat, except Sunel tappa of Bhanpura tahsil of Mandsaur district; (c) Sironj sub division of Kotah district in the existing State of Rajasthan; (d) the territories of the existing State of Bhopal, and (e) the territories of the existing State of Vindhya Pradesh;".
Respondents 1 to 13 were Assistant Engineers in the erstwhile State of Madhya Pradesh.
The first four of them were, appointed as such on probation from October 27, 1956 and the others had been appointed as temporary Engineers.
The respondents continued to serve in the new State and a new "Buildings, Roads and 189 Irrigation Branch of the Public Works Department" was constituted with the officers taken over from the absorbed States and regions.
The integration of the services became therefore necessary and a principle had to be evolved for integration of the services and fixing inter se seniority as several officers had been taken over into the reconstituted branch.
Section 115 of the said Act provided as follows: "115.
Provisions relating to other services: (1) Every person who immediately before the appointed day is serving in connection with the affairs of the Union under the administrative control of the Lieutenant Governor or Chief Commissioner in any of the existing States of Ajmer, Bhopal, Coorg, Kutch and Vindhya Pradesh, or is serving in connection with the affairs of any of the existing States of Mysore, Punjab, Patiala and East Punjab States Union and Saurashtra shall, as from that day, be deemed to have been allotted to serve in connection with the affairs of the successor State to that existing State.
(2) Every person who immediately before the appointed day is serving in connection with the affairs of an existing State part of whose territories is transferred to another State by the provisions of Part H shall, as from that day, provisionally continue to serve in connection with the affairs of the principal successor State to that existing State, unless he is required by general or special order of the Central Government to serve provisionally in connection with the affairs of any other successor State.
(3) As soon as may be after the appointed day, the Central Government shall, by general or special order, determine the successor State to which every person referred to in sub section (2) shall be finally allotted for service and the date with effect from which such allotment shall take effect or be deemed to have taken effect.
(4) Every person who is finally allotted under the provisions of sub section ( 3 ) to a successor State shall, if he is not already serving therein be made available for serving in that successor State from such date as may be agreed upon between the Governments concerned, and in 190 default of such agreement, as may be determined by the Central Government.
( 5 ) The Central Government may by order establish one or more Advisory Committees for the purpose of assisting it in regard to (a) the division and integration of the services among the new States and the States of Andhra Pradesh and Madras; and (b) the ensuring of fair and equitable treatment to all persons affected by the provisions of this section and the proper consideration of any representations made by such persons.
Section 116 provided for the continuance of officers in the posts they previously held and section 117 empowered the Central Government to give directions to the State Government in respect of their integration.
Section 117 enacts: "The Central Government may at any time before or after the appointed day give such directions to.
any State Government as may appear to it to be necessary for the purpose of giving effect to the foregoing provisions of this Part and the State Government shall comply with such directions.
" Subsequent to the passing of the said Act a meeting of the Chief Secretaries of the various States that were to.
be affected by the reorganisation was held at Delhi on May 18 and 19, 1956 at the invitation of the Central Government.
In this meeting certain decisions were taken as to the general principles that should be observed with regard to the integration work.
By their letter No. 62/22/56 SR 11 dated April 3, 1957 (Annexure R I of the counter affidavit) the Government of India informed the State Governments that they had decided that the work of integration of services should be dealt with by the State Governments in the light of general principles already decided in the meeting of the Chief Secretaries.
The State Governments were also informed that the Central Government was constituting Advisory Committees for assisting them in dealing with the representations from the officers affected by reorganisation.
With regard to the principle for determining equation of posts and relative seniority the following conclusions were reached at the conference of the Chief Secretaries: 191 "It was agreed that in determining the equation of posts, the following factors should be borne in mind : (i) the nature and duties of a post; (ii) the responsibilities and powers exercised by the officer holding a post; the extent of territorial or other charge held or responsibilities discharged; (iii) the minimum qualifications, if any, prescribed for recruitment to the post; (iv) the salary of the post; It was agreed that in determining relative seniority as between two persons holding posts declared equivalent to each other, and drawn from different States, the following points should be taken into account : (i) Length of continuous service, whether temporary or permanent, in a particular grade; this should exclude periods for which an appointment is held in a purely stop gap or fortuitous arrangement; (ii) age of the person; other factors being equal, for instance, seniority may be determined on the basis of age.
Note: It was also agreed that as far as possible, the inter se seniority of officers drawn from the same State should not be disturbed.
" By a notification dated May 20, 1958 (Annexure R 2 of the counter affidavit) the Government of India constituted a Central Advisory Committee under section 115(5) of the said Act for the purpose: of assisting the Central Government in dealing with the problems arising out of the allocation and integration of the services.
The. functions of the Committee.
were: "(i) To advise the Central Government in regard to the division and integration of members of the gazetted cadres of the State Services among the new States and the States of Andhra Pradesh and Madras, and (ii) To make recommendations to the Central Government with a view to ensure that fair and equitable treatment is given to the service personnel belonging to the Gazetted cadres of the State Services who are affected by the State Reorganisation and to consider representations submitted by them." 192 As directed by the Central Government, the State Government also appointed the necessary committees to undertake the preliminary work of integration.
On September 12, 1959 a provisional gradation list of the department to which the respondents belonged was published by the State Government by notification No. 3175 Integ.
dated September 12, 1959.
In the preamble attached to.
the provisional list the principles (which were already approved by the Central Government) on the basis of which the lists were prepared, were set out.
But there was a proviso to cl.
(2) of the preamble which said that "where a service or cadre consists of compartments/grades and where the normal method of recruitment to a higher compartment/grade is by promotion from a lower compartment/grade, continuous service will ordinarily be reckoned from the date of commencement of service in the lowest compartment/grade, on a salary not below such limit as may be specified in this behalf".
Representations were received from several officers including respondents 1 to 4, 6 & 7.
These representations were sent by the State Government to the Central Government for being dealt with in consultation with the Advisory Committee it had constituted.
Thereafter a reference was made by the State Government to the Central Government seeking its directions regarding publication of the final lists.
In reply thereto the Central Government conveyed its decision by a letter dated November 11, 1959 to the following effect: "1.
The State Government should publish the final common gradation list in its official gazette following the prescribed procedure; 2.
The State Government will prefix to the notification publishing a common gradation list, a preamble on the lines drafted by the Central Government; 3.
The State Government was to be satisfied: (a) that the provisional gradation list was prepared after following the principles laid down by the Central Government; (b) that it was published in the official gazette; (c) that an opportunity was afforded to the service personnel to make representations; (d) that the representations, if any, had been decided by the Central Government in consultation with the Central Advisory Committee; (e) that the decisions of the Central Government were correctly incorporated in the final common gradation list.
" 193 In their letter dated August 29, 1960 the Central Government pointed out that the State Government had prepared the provisional gradation list not on the basis of continuous service in the equated grade but on the basis of length of total service including service in the lower grades.
The State Government was therefore directed to prepare an alternative gradation list on the basis of the conventional formula of continuous service in the equated grade subject to maintenance of inter se seniority.
The State Government complied with this direction.
In their letter dated September 16, 1961 the Central Government said that the procedure adopted by the State Government for determining inter se seniority on the basis of length of total service in gazetted posts could not be approved.
On the contrary, the decision of the Central Government was that inter se seniority should be determined on the basis of continuous length of service, whether in a temporary or permanent capacity in the equated grade, and the second list prepared by the State Government on that basis was approved subject to two modifications, (i) The ranking of the officers from Bhopal region (Serial Nos.
60 to 70) should be rearranged as per rankings given by the Union Public Service Commission.
(ii) In the case of officers from Mahakoshal region (Serial Nos. 59 onwards) it was pointed out that the then State of Madhya Pradesh had not passed orders fixing the ranking of the said officers and hence the ranking should be done by the State Government keeping in view the normal rule of fixing ranks with reference to date of appointment on a substantive vacancy, whether on probation or as confirmed officer.
It was further directed that as the rearrangement as per modifications suggested was likely to affect the ranks of officers of other regions the entire list should be reviewed in the light of directions given by the Central Government.
On this direction of the Central Government, the inter se seniority of the officers of Mahakoshal region was refixed by the State Government by its 1otter No. 1086/6216/XIX/E dated February 20. 1962.
In the light of this list the provisional gradation list was also revised.
As already directed by the Central Government in its letter dated November 11, 1959, the State Government published the final gradation list with the preamble attached to it stating that the final list was being published by the Governor in exercise of powers conferred by the proviso to article 309 of the Constitution and in accordance with the decisions of the Government of India under the provisions of section 115(5) of the said Act.
The final gradation list was published by the State Government on April 6, 1962.
The respondents thereafter moved the High Court of Madhya Pradesh for grant of a writ under article 226 of the Constitution.
The validity of the final gradation list was challenged on the ground that it was not made in accordance with the provisions of section 115 (5 ) 194 of the said Act but in contravention of that provision.
It was also alleged that in so far as the State Government, in drawing up the final gradation list, followed a principle different from the one followed in preparing the provisional gradation list on the: basis of which representations were invited, the State Government had in effect denied the right of representation to the persons affected thereby.
The writ petition was allowed by the High Court which quashed the notification dated April 6, 1962 (Annexure 1 to the writ petition) publishing the final gradation list of the establishment of "Buildings, Roads and Irrigation" in the Public Works Department and further directed the Central Government "to complete the work of the integration of the services in the aforesaid Department in conformity with the provisions of sub section
(5) of section 115 of the ".
The first question to be considered in this appeal is whether the High Court was right in taking the view ' that the work of integration was exclusively entrusted to the Central Government by section 1 l 5 (5) of the said Act and that the final gradation list published on April 6, 1962 was illegal and ultra rites as the delegation of 'its powers and duties by the.
Central Government to the State Government in regard to integration was not in accordance with law.
Under article 162 of the Constitution it is provided as follows: "162.
Subject to the provisions of this Constitution, the executive power of a State shall extend to the matters with respect to.
which the Legislature of the State has power to make laws: Provided that in any matter with respect to which the Legislature of a State and Parliament have power to make laws, the executive power of the State shaft be subject to, and limited by, the executive power expressly conferred by this Constitution or by any law made by Parliament upon the Union or authorities thereof.
" As regards the matters in respect of which the Legislature of a State has the power to make laws, item 42 in List II of the Seventh Schedule to the Constitution specifies "State Public Services", and under the provisions of article 162, the executive power of the State extends to State Public Services.
This power is, however, subject to the other provisions of the Constitution.
Article 309 states: "Subject to the provisions of this Constitution Acts of the appropriate Legislature may regulate the recruitment, and conditions of service of persons appointed, to public services and posts in connection with the affairs of the Union or of any State: 195 Provided that it shall be competent for the.
President or such person as he may direct in the case of services and posts in connection with the affairs of the Union, and for the Governor of a State or such person as he may direct in the case of services and posts in connection with the affairs of the.
State, to make rules regulating the recruitment, and the conditions of service of persons appointed, to such services and posts until provision in that behalf is made by or under an Act of the appropriate Legislature under this article, and any rules so made shall have effect subject to the provisions of any such Act.
" Under this Article, the Governor of a State is empowered in the case of services and posts in connection with the affairs of the State, to make.
rules regulating the recruitment and conditions of service of persons appointed to such services and posts until provision in that behalf is made.
by or under an Act of an appropriate Legislature.
Article 2 of the Constitution enacts that Parliament may by law admit into the Union or establish, new States on such terms and conditions as it thinks fit.
Article 3 of the Constitution states that Parliament may by law (a) form a new State by separation.n of territory from any State or by uniting two or more States or parts.
of States or by uniting.
any territory to.
a part of any State; (b) increase the area of any State; (c) diminish the area of any State; (d) alter the boundaries of any State; (e) alter the name of any State.
Article 4 provides as follows: "(1) Any law referred to in article 2 or article 3 shall contain such provisions for the amendment of the First Schedule and the Fourth Schedule as may be necessary to give effect to the provisions of the law and may also contain such supplemental, incidental and consequential provisions (including provisions as to representation in Parliament and in the Legislature or Legislatures of the State or States affected by such law) as Parliament may deem necessary. . . . . . . . . " By virtue of the power under article 4 the said Act was.
enacted.
On behalf of the appellants the Solicitor General put forward the argument that the Dower of integration is not exclusively conferred upon the Central Government under section 115 (5) of the said Act but the power of the State Government in the matter of integration under article 162 read with Entry 42, List 11 remains unaffected except to the extent that the State Government must carry out the directions of Central Government in the matter of integration.
The opposite view point was presented by Mr. Asoke Sen on behalf of the respondents.
It was contended that under section 115(5) of the 196 said Act the Central Government was given, by necessary implication, the exclusive power to integrate and the word "allotment" in section 115(3) & (4) carries with it the necessary power of fusion and integration.
We do not propose, for the purpose of the present case, to decide which of these view points as to the interpretation of section 115(3), section 115(4) and section 115(5) of the said Act is correct.
We shall assume in favour of the respondents that section 115 ( 3 ), section 115(4) and section 115(5) read together confer exclusive power on the Central Government in regard to integration.
Even on that assumption we do not agree with the finding of the High Court that there was improper delegation of its statutory powers and duties by the Central Government, that there has been a violation of the provisions of section 115(5) of the said Act or that the final gradation list published by the notification dated April 6, 1962 is illegal and ultra vires.
Generally speaking, the work of integration requires the formulation of principles on which the work has to be carried out, the actual preparation of preliminary gradation lists in accordance with the principles so settled, the publication of the lists together with the principles upon which they have been compiled, the invitation of representations by the persons affected thereby, the consideration of representations and decisions upon those representations, and the publication of the final gradation list incorporating the decisions of the Central Government on the representations submitted.
In the present case, there is no dispute that the Central Government laid down in their letter dated April 3, 1957 the principles with regard to the equation of posts and determination of relative seniority as between two persons holding posts declared equivalent to each other and drawn from different States.
It also appears that the Central Government appointed two advisory committees for dealing with representations from the service personnel affected by the reorganisation.
As directed by the Central Government in their letter dated April 3, 1957, the State Government also appointed two committees for the purpose connected with integration.
Thereafter, the State Government prepared a provisional list fixing the inter se seniority of officers who had come into the cadre from different regions.
The list was published and it was notified that any Government servant feeling aggrieved by the provisional list was entitled to send his representation to the Central Government.
The principle upon which the list was prepared was published and it was notified that the principle was subject to any subsequent modification at the direction of the Central Government.
Representations were thereafter received from officers including respondents 1 to 4, 6 & 7.
The representations were sent to the Central Government to be dealt with in consultation with the advisory committees that were constituted.
On a consideration of these representations the Central Government directed the State Gov 197 ernment to forward the alternative list prepared on the basis of the conventional formula laid down by the Central Government As already observed, the State Government had proposed that seniority should be fixed on the basis of continuous service including that in the lower grade, but the Central Government had directed that continuous service in the equated grade alone should be taken into account for fixing the seniority subject only to the maintenance of inter se seniority of the officers coming from several integrating regions.
The Government of India therefore directed that revised list should be prepared on the basis of this formula.
Accordingly, the State Government sent a second list prepared on the basis of the conventional formula, viz., continuous service in the equated grade subject to maintenance of inter se seniority.
The Central Government thereafter in consultation with the advisory committee examined both the lists and after taking into account the representations made, conveyed to the State Government its decision by its memorandum dated September 16,1961 with regard to the preparation of the final gradation list.
The decision thus communicated may be summarised as follows:(1) Inter se seniority should be determined only on the basis of continuous length of service, whether in a temporary or permanent capacity in the equated grade, (2) the second gradation list prepared according to this principle and forwarded to the Central Government was approved subject to certain modifications in the equations and the changes proposed in accordance with the decisions on the individual representations.
As regards inter se seniority of the Mahakoshal officers, the Central Government stated in paras 9 & 10 of the letter: "9.
In ' respect of the Mahakoshal officers shown from serial No. 59 onwards it is seen that no formal orders were issued by the Madhya Pradesh Government prior to 31st October, 1956 fixing the rank of each officers.
While approving the notification confirming an officer, it was customary in old Madhya Pradesh to issue order regarding the rank which he would obtain in the seniority list.
In respect of the confirmation orders issued during October, 1956, it appears that no such orders were issued.
If the present ranks in the Combined Gradation List were to be accepted, it would mean that some of the officers who were not selected by the Public Service Commission of the old Madhya Pradesh for permanent posts would be senior to those selected and placed on probation as early as 1953.
The normal practice adopted in such cases would appear to be to arrange the names of the officers in the order of appointment to a substantive vacancy whether on probation or as a confirmed officer.
198 appointed to substantive vacancies with effect from the same date, the normal practice was to arrange the names on the basis of length of continuous service.
Where a departure from this principle was intended, specific orders were issued or the names arranged in the desired sequence in the confirmation orders itself.
A rearrangement of the names of the Bhopal and Mahakaushal officers in the manner indicated above is a matter concerning the respective parent State seniority lists.
However, a rearrangement of the names of these officers would have repercussions on the ranks of officers from other regions.
It is, therefore suggested that the entire matter may be reviewed by the State Government in the light of the position stated in the two preceding paragraphs and the necessary changes carried out in the Combined Gradation List." In accordance with this direction the State Government prepared the inter se seniority list of Mahakoshal officers (Annexure R 14) dated February 20, 1962.
On the basis of this list the final gradation list was prepared by the State Government and published on April 6, 1962.
In our opinion, the procedure adopted in this case does not contravene the provisions of section 115(5) of the said Act, because it was the Central Government which laid down the principles for integration, it was the Central Government which considered the representations and passed final orders, and both the preliminary and final gradation lists were prepared and published by the State Government under the direction and with the sanction of the Central Government.
It is manifest that there has been no delegation by the Central Government of ,my of its essential functions entrusted to it under the statute.
It was pointed out by Mr. Asoke Sen that in its letter dated April 3, 1957 the Central Government had intimated that the work of integration should be left to the State Government.
But what was meant by that letter was that only the preliminary work of preparation of the gradation lists on the principles decided upon by the Central Government should be left to the State Governments concerned.
It is clear that such work cannot be done by the Central Government itself since the necessary information regarding the officers can be obtained and tabulated only by the States concerned.
It was also pointed out by Mr. Asoke Sen that the preparation of the provisional and the final gradation lists by State Government constituted a delegation by the Central Government.
We do not think there is any substance in this argument.
It is not disputed that the provisional and the final gradation lists were prepared by the State Government on the principles laid down by the Central 199 Government itself subject to one change in the matter of determining seniority and the provisional gradation list was sent for approval of the Central Government together with representations made by the officers concerned for being dealt with and decided upon by the Central Government.
The principle of the maxim "delegates non protest delegare" has therefore no application to the present case.
The maxim deals with the extent to which a statutory authority may permit another to exercise a discretion entrusted by the statute to itself.
It is true that delegation in its general sense does not imply a parting with statutory powers by the authority which grants the delegation, but points rather to the conferring of an authority to do things which otherwise that administrative authority would have to do for itself.
If, however, the administrative authority named in the statute has and retains in its hands general control over the activities of the person to whom it has entrusted in part the exercise of its statutory power and the control exercised by the administrative authority is of a substantial degree, there is in the eye of law no "delegation" at all and the maxim "delegatus non potest delegare" does not apply [See Fowler (John) & Co. (Leeds) vs Duncan](1).
In other words, if a statutory authority empowers a delegate to undertake preparatory work and to take an initial decision in matters entrusted to it but retains in its own hands the power to approve or disapprove the decision after it has been taken, the decision will be held to have been validly made if the degree of control maintained by the authority is close enough for the decision to be regarded as the authority 's own.
In the context of the facts found in the present case.
we are of opinion that the High ' Court was in error in holding that there has been an improper delegation of its statutory powers and duties by the Central Government and that the final gradation list dated April 6, 1962 was therefore ultra rites and illegal.
Even on the assumption that the task of integration was exclusively entrusted to the Central Government, we are of the opinion that the steps taken by the Central Government in the present case in the ' matter of integration did not amount to any delegation of its essential statutory functions.
There is nothing in sections 115 or 117 of the said Act which prohibits the Central Government in any way from taking the aid and assistance of the State Government in the matter of effecting the integration of the services.
So long as the act of ultimate integration is done with the sanction and approval of the Central Government and so long as the Central Government exercises general control over the activities of the State Government in the matter.
it cannot be head that there has been any violation of the principle "delegatus non potest delegare".
For instance, it was observed by this Court in Pradvat Kumar Bose vs The Hon 'ble The Chief Justice of Calcutta High Court(2): (1) (2) ; 1345. 200 "It is well recognised that a statutory functionary exercising such a power cannot be said to have, delegated his functions merely by deputing a responsible and competent official to enquire and report.
That is the ordinary mode of exercise of any administrative power.
What cannot be delegated except where the law specifically so.
provides is the ultimate responsibility for the exercise of such power.
" As pointed out by the House of Lords in Board of Education vs Rice(1), a functionary who has to decide an administrative matter, of the nature involved in this case, can obtain the material on which he is to act in such manner as may be feasible and convenient, provided only the affected party "has a fair opportunity to correct or contradict any relevant and prejudicial material".
The same principle was reiterated by Lord Chancellor in Local Government Board vs
Arlidge(2) in the following passage: "My Lords, I concur in this view of the position of an administrative body to which the decision of a question in dispute between parties has been entrusted.
The result of its enquiry must, as I have said, be taken, in the absence of directions in the statute to the contrary, to be intended to be reached by its ordinary procedure.
In the case of the Local Government Board it is not doubtful what this procedure is.
The Minister at the head of the Board is directly respOnsible to Parliament like other Ministers.
He is respOnsible not only for what he him:self does but for all that is done in his department.
The volume of work entrusted to him is very great and he cannot do the great bulk of it himself.
He is expected to obtain his materials vicariously through his officials, and he has discharged his duty if he sees that they obtain these materials for him properly.
To try to extend his duty beyond this and to insist that he and other members of the Board should do everything personally would be to impair his efficiency.
Unlike a Judge in a Court he is not only at liberty but is compelled to rely on the assistance of his staff.
" We accordingly reject the argument of Mr. Asoke Sen on this aspect of the case and hold that the High Court was in error in holding that there was an improper delegation of its ' statutory power by the Central Government under section 115(5) of the said Act.
We proceed to consider the next contention raised on behalf the respondents that in any event they should have been given (1) , 182.
(2) , 133.
201 a second opportunity to make a representation regarding: (1) inter se seniority list of the Assistant Engineers of the former Mahakoshal region prepared on February 20, 1962, Annexure R 14, and (2) the final inter se seniority list published on April 6, 1962.
With regard to the inter se seniority list it was pointed out by Mr. Asoke Sen that in paragraphs 9 and 10 of its letter dated September 16, 1961, Annexure R 7, the Central Government noticed that no formal orders were issued by the State of Madhya Pradesh prior to October 31, 1956 fixing the rank of the Mahakoshal officers from serial No. 59 onwards.
It was customary in the old State of Madhya Pradesh that the Government issued orders regarding the rank of the officers while making a notification confirming the officers.
It was pointed out that if the present rank in the combined gradation list was to be accepted it would mean that some of the officers who were not selected by the Public Service Commission of the old Madhya Pradesh for permanent posts would be senior to those selected and placed on probation as early as 1953.
The normal practice adopted in such cases would appear to be to arrange the names of the officers in the order of appointment to substantive vacancy, whether on probation or as confirmed officer.
It was suggested by the Central Government that the entire, matter should be reviewed by the State Government in the light of the procedure stated in paragraphs 9 and 10 of the letter and necessary changes should be carried out in the combined gradation list.
In view of the directions contained in this letter the State Government prepared an inter se seniority list of the Assistant Engineers of the Mahakoshal region in their letter dated February 20, 1962.
It is not disputed on behalf of the respondents that this order of seniority was reflected in the final gradation list published on April 6, 1962; but the contention of the respondents is that no opportunity was given to them to make a representation against the inter se seniority list dated February 20, 1962, though Mr. Asoke Sen conceded that he had no quarrel with the principles upon which the list was prepared.
Learned Counsel, however, said that the principles were wrongly applied in particular cases and the respondents should have been given an opportunity of making a representation with regard to the inter se seniority list dated February 20, 1962.
With regard to the final gradation list published on April 6, 1962 the contention of Mr. Asoke Sen was that the basis upon which the "assumed date" was given in column No. 6 was not set out either in that notification or in the principle specified in the preliminary gradation list.
On this point the Solicitor General said that the final gradation list was prepared and the "assumed date" in column No. 6 was inserted on the principle of "kicking down".
It was also pointed out by the Solicitor General that in the Conference of the Chief Secretaries it had been agreed that in determining inter State seniority the principle to be taken into account was length of 10 Sup.
C.I./67 14 202 continuous service, whether temporary or permanent in a particular grade.
The argument was stressed that the principle could be ,applied only on the basis of "kicking down" and that principle was implicit in the preparation of the final gradation list.
We are, however, not quite sure whether the Solicitor General is right in his contention on this point.
We think that the final gradation list could have been prepared on the basis of the principle agreed upon in the conference of the Chief Secretaries both on the method of " 'kicking down" and the 'alternative method of "kicking up".
It iS nowhere stated either in the preliminary gradation list or in the final gradation list that the principle of "kicking down" was adopt in preference to the alternative principle.
It was argued by Mr. Asoke Sen that in regard to both these matters the respondents have a right of representation and the final gradation list should have been published after giving them further opportunity to make a representation.
Normally speaking, we should have thought that one opportunity for making a representation against the preliminary list published would have been sufficient to satisfy the requirements of law.
But the extent and application of the doctrine of natural justice cannot be imprisoned within the straitjacket of a rigid formula.
The application of the doctrine depends upon the nature of the jurisdiction conferred on the administrative authority, upon the character of the rights of the persons affected, the scheme and policy of the statute and other relevant circumstances disclosed in the particular case (See the decision of this Court in Shri Bhagwan and Anr.
vs Ram Chand and Anr.(1).
In view of the special circumstances of the present case we think that the respondents were entitled to an opportunity to make a representation with regard to the two points urged by Mr. Asoke Sen before the final gradation list was published.
As No. such opportunity was furnished to the respondents with regard to these two matters we hold that the combined final ' gradation list dated April 6, 1962, so far as category 6 is concerned, is ultra vires and illegal and that part of the notification alone must be quashed by grant of a writ in the nature of certiorari.
The rest of the notification of the State Government dated April 6, 1962 with regard to other categories will stand unaffected.
So far as category No. 6 is concerned, the Central Government is directed to give an opportunity to the respondents to make a representation in regard to the two points mentioned in this paragraph and thereafter take steps to finalise and publish the list in accordance with law.
We accordingly modify the order of the High Court and allow this appeal to the extent indicated above.
There will be no order with regard to costs in this Court.
V.P.S. Appeal allowed in part.
| IN-Abs | Respondents 1 to 13 were Assistant Engineers in the State of Madhya Pradesh before it was reorganised under the .
After the formation of the new State of Madhya Pradesh, they continued to serve in the new State along with officers taken over from the absorbed States and regions, and, it became necessary to integrate the service and to fix the inter se seniority of the officers of the: integrated service.
The Chief Secretaries of the various States that were to be affected by the reorganisation had evolved certain general principles that should be observed with regard to.
the integration work and the Government of India informed the State Governments that the work of integration of services should be dealt with by the State Governments in the light of those principles.
Thereafter, the State Government published a provisional gradation list of the department to which the respondents belonged and notified, that any government servant feeling aggrieved was entitled to send his representation to the Central Government.
Representations were received from respondents 1 to 4, 6 and 7 and some other officers.
and those representations were sent by the State Government to the Central Government for being dealt with in consultation with the Advisory Committee it had constituted for dealing with the representations from officers affected by the reorganisation.
Since the State Government had prepared the list on a basis different from that suggested by the Central Government the latter directed that a revised list should be prepared on the basis of the formula laid down by the Central Government.
Accordingly, the State Government sent a second list prepared on the basis of that formula, and the Central Government, in consultation with the Advisory Committee, examined both the lists and the representations of officers already received and decided that the second gradation list should be approved subject to certain modifications, and certain directions in the ease of officers from the Mahakoshal region.
It was further directed that as the rearrangement as per modifications suggested was likely to affect the ranks of officers of other regions.
the entire list should be reviewed in the light of directions given by the Central Government.
On this direction, the State Government refixed the inter se seniority of officers from the Mahakoshal region, and thereafter, prepared the final gradation list and published it.
The respondents thereupon filed a writ petition in the High Court challenging the validity of the final gradation list on two grounds: (1) the work of integration was exclusively entrusted to the Central Government by section 115(5) of the States Reorganisation Act and that the gradation list as published was illegal and ultra virex because, there improper delegation of its powers and duties by the Central Govern 187 ment to the State Government, and; (2) in the circumstances of the present case the respondents should have been given another opportunity of making a representation before drawing up the final gradation list.
The High Court allowed the petition.
In appeal to this Court.
Held: (1) Even on the assumption that the task of integration was exclusively entrusted to the Central Government, the High Court was in error in holding that there was improper delegation of its statutory power by the Central Government.
[200G] In the present case the steps taken by the Central Government in the matter of integration did not amount to any delegation of its essential statutory functions, because it was the Central Government which laid down the principles for integration.
it was the Central Government which considered the representations and passed final orders, and both the preliminary and final gradation lists were prepared and published by the State Government under the direction and with the sanction of the Central Government.
When the Central Government intimated that the work of integration should be left to the State Government what was meant was that only the preliminary work of preparation of the gradation ' list on the principles decided upon by the Central Government should be left to the State Government concerned.
Such work cannot be done by the Central Government itself as the necessary information regarding the officers can be obtained and tabulated only by the States concerned, and there is nothing in sections 115 or 117 of the Act prohibiting the Central Government in any way, from taking the, aid and assistance of the State Government in the matter of effecting the integration of the services.
The principle delegates non protest delegate, cannot be held ' to have been violated.
if a statutory authority empowers a delegate to undertake preparatory work and to take an initial decision in matters entrusted to it but retains in its own hands the power to approve or disapprove the decision after has been taken.
In such a case the decision will be held to have been validly made if the degree of control maintained by the authority is close enough for the decision to be regarded as the authority 's own.
[198E H; [99D G] Pradyat Kumar Bose vs The Hon 'ble The Chief Justice of the Calcutta High Court, ; followed.
Board of Education vs Rice, , Local Government Board vs Arlidge and Fowler (John) & Co. (Leeds) vs Duncan referred to.
(2) The doctrine of natural justice cannot be imprisoned within the strait jacket of a rigid formula and its application depends upon the nature of the jurisdiction conferred on the administrative authority, upon the character of the rights of the persons affected, the scheme and policy of the statute and other relevant circumstances disclosed in a particular case.
In view of the special circumstances of the present case the respondents were entitled to a second opportunity to make a representation with regard to (a) the inter se seniority list of the assistant engineers of the Mahakoshal region prepared as per the directions of the Central Government, and (b) the combined final gradation list.
As no such opportunity was furnished, the final list, so far as the category affected by the directions given by the Central Government was ultra vires and illegal and that part of the notification must be quashed.
[202D G]
|
Appeal No. 1299 of 1967.
Appeal by special leave from the judgment and order dated November 16, 1966 of the Mysore High Court in Writ Petition No. 1464 of 1964.
Shyamala Pappu and Vineet Kumar, for the appellant.
R. D. Datar and section N. Prasad, for the respondent.
In October 1961, he was temporarily promoted to act as statistical superintendent at Hassan.
On July 21, 1964, the General Manager of the Corporation issued a notice inviting applications for appointments to class 11 junior posts of (a) assistant/divisional statisticians and (b) labour welfare officers on a pay of Rs. 220 per month in the pay scale of Rs. 220 15 400 EB 20 500 plus the usual dearness and other allowances admissible under the Rules.
On August 11, 1964, the respondent tiled a writ petition in the High Court at Mysore claiming that the Corporation had no power to issue the notice and praying for an order quashing it.
The High Court allowed the petition and quashed the notice.
The Corporation has filed this appeal by special leave.
For the proper appreciation of the point in issue, it is necessary to read sections 14 19(1)(a), 19(1)(b), 19(1)(c), 34.
45(1) and 45(2)(c) of the Road Transport Corporation Act, 1950 (Act No. 64 of 1950): "14(1).
Every Corporation shall have a Chief Executive Officer or General Manager and a Chief Accounts Officer appointed by the State Government.
(2) A Corporation may appoint such other officers and servants as it considers necessary for the efficient performance of its functions.
(3)The conditions of appointment and service and the scales of pay of the officers and servants of a Corporation shall (a) as respects the Chief Executive Officer or General Manager and the Chief Accounts Officer be such as may be prescribed, and (b) as respects the other officers and servants be such as may, subject to the provisions of section 34, be determined by regulations made under this Act.
19(1).
Subject to the provisions of this Act, a Corporation shall have power.
(a) to operate road transport services in the State and in any extended area; (b) to provide for any ancillary service , (c) to provide for its employees suitable conditions of service including fair wages, establishment of provident fund, living accommodation, places for rest and recreation and other amenities.
34(1).
The State Government may, after consultation with a Corporation established by such Government give to the Corporation general instructions to be followed by the Corporation, and such instructions may include directions relating to the recruitment, conditions of service and training of its employees, wages to be paid to the 769 employees, reserves to be maintained by it and disposal of its profits or stocks.
(2) In the exercise of its powers and performance of its duties under this Act, the Corporation shall not depart from any general instructions issued under sub section (1) except with the previous permission of the State Government.
45(1).
A Corporation may, with the previous sanction of the State Government.
make regulations, not inconsistent with this Act and the rules made "thereunder, for the administration of the affairs of the Corporation.
(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely: (c) the conditions of appointment and service and the scales of pay of officers and servants of the Corporation other than the Chief, Executive Officer or General Manager and the Chief Accounts Officer;" Admittedly, no regulations were framed by the Corporation under section 45(2)(c) prescribing the conditions of appointment and service and the scales of pay of its officers and servants.
In the affidavit filed on behalf of the Corporation, it was stated that the Corporation was taking necessary steps for the framing of the regulations.
The High Court following its earlier decision in Karnakar Mangesha Desai vs State of Mysore and others(1) held that until regulations were framed by the Corporation under section 45(2)(c) with the previous sanction of the State Government, the Corporation could not appoint officers and servants and lay down their conditions of service.
We think that the judgment of the High Court is erroneous and should be set aside.
In Dundee Harbour Trustees vs D. & J. Nicol(1), Viscount Haldane L. C. said: "The answer to the question whether a cor:)oration created by a statute has a particular power depends exclusively on whether that power has been expressly given to it by the statute regulating it, or can be implied from the language used.
The question is simply one of construction of language, and lot of presumption.
" Bearing in mind this statement of law, let is consider whether the appellant had the power to appoint officers and servants and to lay down their conditions of service in the absence of regulations framed under section 45(2)(c) of the Road Transport Corporation Act, 1950.
The appellant is an autonomous Cor poration incorporated under the Act for the purpose of operating road transport services in the State and extended areas.
For the proper discharge of its functions, it is necessary for the Corporation to appoint officers and servants.
Section 14(2) expressly coners upon the Corporation the incidental power to appoint such officers and servants as it considers necessary for the efficient per (1) (2) ; , 556.
670 formance of its functions.
Section 19(1)(c) empowers it to provide for its employees suitable conditions of service.
Section 14(3) provides that the conditions of appointment and service and the scales of pay of its officers and servants shall be such as may subject to the provisions of section 34 be determined by regulations made under the Act.
Section 45(2)(c) 'empowers the Corporation to frame regulations with the previous sanction of the State Government prescribing the conditions of appointment, service and scales of pay of the officers and servants.
If the State Government issues any directions under section 34 relating to the recruitment and conditions of service of the employees, the Corporation must obey those directions.
The conjoint effect of ss.14(3)(b),34 and 45(2)(c) is that the appointment of officers and servants and their conditions of service must conform to the directions, if any, given by the State Government under s.34 and the regulations, if any, framed under s.45(2)(c).
But until such regulations are framed or directions are given.
the Corporation may appoint such officers or servants as may be necessary for the efficient performance of its duties on such terms and conditions as it thinks fit.
There is necessarily a time lag between the formation of the Corporation and the framing of regulations under section 45(2)(c).
During the intervening period, the Corporation must carry on the administration of its affairs with the help of officers and servants.
In the absence of clear words, it is difficult to impute to the legislature the intention that the Corporation would have no power to appoint officers and servants and fix the conditions of service unless the regulations under s.45(2)(c) are framed.
There is no merit in the further contention that the General Manager had no power to issue the notice dated July 21, 1964 in the absence of any resolution by the Corporation under s.12(c) expressly authorising him to issue it.
In the exercise of his general powers of management the General Manager had clearly the power to issue a notice inviting applications from intending candidates, It is not alleged that he made any appointment pursuant to the notice.
The respondent also contended that he had the right to be promoted to a class II junior post.
But there is nothing on the record to show that he has any vested right of promotion to the post.
Civil Miscellaneous Petition No. 3032 of 1967 filed by the respondent asking for liberty to adduce additional evidence and to raise new contentions is dismissed.
In the order dated August 17, 1967 granting special leave to the appellant, the Court directed that the appellant must pay the costs of the respondent in any event.
In the result, the appeal is allowed, the order of the High Court is set aside and the writ petition is dismissed.
The appellant shall pay the costs of the appeal to the respondent pursuant to the order dated August 17, 1967.
R.K.P.S. Appeal allowed.
| IN-Abs | The General Manager of the appellant Corporation issued a notice on July 21, 1964 inviting applications for appointments, to two junior posts in the Corporation.
The respondent, who was an employee of the Corporation and claimed that he had a right to be promoted to one of the posts, filed a writ petition under article 226 of the Constitution challenging the notice on the ground that the Corporation had no power to issue it.
The High Court, following its earlier decision in Karnakar Mangesha Desai vs State of Mysore and other [1960](1) Mysore Law Journal 72), held that until regulations had been framed by the Corporation under section 45(2) (c) with the previous sanction of the State Government and this has admittedly not been done the Corporation could not appoint officers and servants and lay down their conditions of service.
On appeal to this Court by special leave.
HELD: Allowing the Appeal: section 14(2) expressly confers upon the Corporation the incidental power to appoint such officers and servants as it considers necessary for the efficient performance of its functions and Section 19(1)(c) empowers it to provide for its employees suitable conditions of service.
Although the conjoint effect of ss 14(3)(b), 34 and 45(2)(c) is that the appointment of officers and servants and their conditions of service must conform to the directions, if any, given by the State Government under section 34 and the regulations, if any, framed under section 45(2)(c).
until such regulations are framed or directions are given, the Corporation may appoint such officers or servants as may be necessary for the efficient performance of its duties on such terms and conditions as it thinks fit.
[770 H: 771 A, B D].
There was no merit in the contention that the General Manager had no power to issue the notice dated July 21, 1964 in the absence of any resolution by the Corporation under section 12(c) expressly authorising him to issue it.
[771 F].
Dundee Harbour Trustees vs D. & J. Nicol, ; , 556, referred to.
|
Appeal No. 245 of 1965.
396 Appeal by special leave from the judgment and order dated October 31, 1962 of the Andhra Pradesh High Court in Appeal No. 563 of 1959.
K.R. Chaudhuri, for the appellants.
K. Sen and T. Satyanarayana, for respondents Nos. 1 to 3.
The Judgment of the Court was delivered by Mitter, J.
This is an appeal by special leave from a judgment and decree of the High Court of Andhra Pradesh confirming the decree passed by the Subordinate Judge at Eluru in O.S. No. 112 of 1955.
The only question involved in this appeal is, whether, under the terms of the will of one Boddu Adilakshmi, defendants 4 and 5 took her properties as joint tenants or tenants in common.
The facts leading to the litigation may be stated as follows.
The testatrix, Adilakshmi, who was childless herself brought up defendants 4 and 5, Boddu Ramarao and Kosury Lakshmamma, from their infancy.
At the date of the will executed on June 28, 1913 the girl (defendant 5) had been with her for 15 years and the boy (defendant 4) for 10 years and both were minors at the time.
In order to provide for them after her death she executed a will covering all her properties, movable and immovable.
The translation of the relevant portion of the will which was in vernacular is as follows : " . . my entire property should hereafter my lifetime pass to.
both these minors, Lakshmamma and Ramarao, that until their minority period is over, Banda Ramaswamy Garu should act as their guardian and deal with all the affairs, that after their minority period is over the entire property should be in possession of both of them, that both of them should enjoy throughout their lifetime the said property without powers of gift transfer and sale and that after their death the children that may be born to them should enjoy the same with powers of gift, transfer and sale.
" The testatrix died within a few days after the execution of the will.
Defendants 4 and 5 divided the properties left by the testatrix by a registered partition deed dated December 27, 1929 ' by which those mentioned in Schedule A to the plaint fell to the share of the 4th defendant while the others mentioned in Schedule B fell to the share of the 5th defendant.
The 4th defendant married the 1st defendant, Boddu Satyavathi who is the 'daughter of the 5th defendant.
The 2nd defendant is the daughter born out of this wedlock.
Some years thereafter, the 4th defendant married one Boddu Manikyam.
the plaintiffs 1 to 4 being the issues of the marriage of the 4th defendant with her.
The 5th defendant 397 and the 1st defendant mortgaged the B schedule properties with the 3rd defendant who brought a suit on the mortgage and obtained a decree.
The plaintiffs filed the suit against all the defendants in 1955.
for a declaration that after the death praying of defendants 4 and 5, the 1st defendant and the children of the 4th defendant or such of them as may be alive at the time would be entitled to share the properties in suit equally between them and that any alienation made by defendants 4 and 5 or their assignees or alienees would not bind the interests of 'the ultimate feversloners beyond their lifetime and further that the mortgage decree mentioned above was not binding on the plaintiffs or the ultimate reversioners.
In the trial court a 'number of issues were framed but the only question canvassed before the High Court on appeal related to the effect of the will of Adilakshmi.
The trial court came to the conclusion that defendants 4 and 5 were only the holders of life estate and that they had succeeded to the estate of Adilakshmi as tenants in common.
The High Court held that "the right of 'the children of defendants 4 and 5 to step into the shoes of the parents has been expressly mentioned in the instrument.
The residuary estate has been given to the children.
that may be bor n to the legatees who.
it is provided, should enjoy the properties with powers of gift.
transfer and sale.
A life estate has been given to defendants 4 and 5 and an absolute estate to their children.
On a fair construction of the language.
it is difficult to accede to the contention of the appellants that the children of defendants 4 and 5 who may be actually alive at the time of the death of defendants 4 and 5, would take the properties per capita." The High Court further held that the conduct of the defendants in partitioning the properties went to fortify the above conclusion.
The ultimate conclusion of the High Court was "the bequest in favour of defendants 4 and 5 was that of a life estate with a vested remainder in favour of their children and that the children should take the vested remainder per stripes and not per capita." In our view.
the High Court came to the correct conclusion.
Before examining the principles of law involved, we may consider the intention of the testatrix in giving her properties to defendants 4 ,red 5.
She brought them up like her own children but she did not want them to have the power of sale or alienation and desired that the properties be preserved for the benefit of their children.
would be reasonable therefore for her to make provision in such way that the 'foster children would enjoy the income of the properties for their lives and that their children should inherit the Ip.
C. l68 111 398 properties as full owners on the death of their parents.
The donees of the life estate were minors at the date of the will and there was no knowing when they would get married and how many children each would have.
It would therefore be reason able to expect that the testatrix would so arrange her affairs that each of the foster children should get half of the income of the property for life and that their children should succeed to the respective interest of their parents.
It is hardly likely that the testatrix would know the difference between joint tenants and tenants in common and she would naturally be eager to treat the foster children as her own children so that the heirs of the foster children would take share and share alike the properties be in divided per stirpes among them.
Let us now consider the position in law.
The law has bee n summarised in Mulla 's Transfer of Property Act (Fifth Edition at page 226.
As early as 1896 it was held by the Judicial Committee of the Privy Council in Jogeswar Narain Deo vs Ram Chand Dutt & others(1) that "The principle of joint tenancy appears to be unknown to Hindu law.
except in the case of coparcenary between the members of an undivided family." and that it was not right to import into the construction of a Hindu will an extremely technical rule of English conveyancing.
Many years later the principle was reiterated in the case of Babu Rani vs Rajendra Baksh Singh(2).
It was argued before us that there were indications in the will that the intention of the testatrix was that the foster children should take as joint tenants and that this was apparent from the clause in the will which provided that "the entire property should be in possession of both of them and that both of them should enjoy throughout their lifetime the said property and that after their death the children that may be born to them should enjoy the same . " We do not think that from this one can spell out a joint tenancy which is unknown to Hindu law except as above stated.
The testatrix did not expressly mention that on the death of one all the properties would pass to the other by right of survivorship.
We have no doubt on a construction of the will that 'the testatrix never intended the foster children to take the property as joint tenants.
The foster children who became tenants in common partitioned the property in exercise of their right.
(1) 23 I.A. 37 at 44.
(2) 60 l.
A.95 at 10 399 As by the will the foster children were to have a life interest with a vested remainder to their children, the latter could only take per stirpes and not per capita.
As Halsbury points out (Volume 39 Third Edition) at page 1106, article 1638 that a stirpital distribution would be adopted "where the gift was to a number of parents and their children in such a manner that the children were substituted for, or took on the death of, their respective parents; and gifts to several parents and at, or after, their deaths to their children, or to their issue, have received this construction as meaning at or after their respective deaths.
" It is not necessary to cite many instances where this construction has been adopted.
In re Hutchinson 's Trusts(1) the testatrix bequeathed personality in trust for A.B. for life and after his decease for his issue, and on failure of his issue to F.H.S. and R.S. share and share alike, and after the decease of the said F.H.S. and R.S. to their children share and share alike, and to their heirs for ever.
Kay, J. felt that he was bound by authority to say that the words "after the decease of the said Francis Hutchinson Synge and his brother Robert Synge mean after their respective deaths, or after the decease of each of them, and that there is a disposition of the share of each which was an absolute interest in the first instance upon his death." (see at page 816).
This rule was further amplified by Romer.
J. in Errington, In re.
Gibbs vs Lassam(1) where he said (at p. 425) "The rule, stated in its simplest way is this: Where a testator gives the income of his estate to two people, A. and B., for their lives and follows that gift by a direction that at their death, or at their deaths, or at or after the death or deaths of A. and B. the property is to go to their issue, the Court does not construe the gift as a gift only to take effect on the death of both in favour of the issue of both, but construes it as a gift, to take effect on the death of each, of the share to the income of which the deceased was entitled, to the issue of the deceased." (1) (2) 400 In Mcdonnell vs Neil(1) the Judicial Committee referred to the dictum of Kay, J. in re Hutchinson 's Trusts(2) and observed that the construction was borne out by a long line of authority.
In the result, the appeal will stand dismissed with costs.
appellant must pay the court fees.
G.C. Appeal dismissed.
| IN-Abs | A childless Hindu lady brought up a boy B and a girl K as foster children.
She made a will whereby after her death B and K were to get a life estate in her property and 'after their death the children that may be born to them should enjoy the same with powers of gift transfer and sale '.
After the lady 's death B and K divided the property in equal shares by a partition deed.
B married K 's daughter and had a child by her.
He then took another wife and had four children by her.
The said four children filed a suit for a declaration, inter alia, that after the death of B and K, their children namely, K 's daughter and B 's children would be entitled to take the property in equal shares.
The trial court as well as the High Court held that B and K had inherited a life estate as tenants in common and their descendants would inherit per stirpes and not per capita.
The plaintiffs appellants came to this Court.
It was urged on their behalf that B and K had inherited as joint tenants and not as tenants in common.
HELD: A joint tenancy is unknown to Hindu law except in the case of a coparcenary between members of an undivided family.
The terms of the will also did not in the present case spell out a joint tenancy.
As by the will the foster children were to have a life interest with a vested remainder to their children, the latter could only take per stirpes and not per capita.
[398 G 399 A] Jogeswar Narain Deo vs Ram Chund Dutt & Ors.
23 I.A. 37 and Babu Rani vs Rajendra Baksh Singh, 60 I.A. 95, relied on.
In re Hutchinson 's Trusts, , Errington, In re: Gibbs vs Lassam.
and Mcdonnel vs Neil. , referred to.
The donees of the life estate were minors at the date of the will and there was no knowing when they would get married and how many children each would have.
It would therefore be reasonable to expect that the testarix would so arrange her affairs that each of the foster children should get half of the income of the property for life and that their children should succeed to the respective interests of their parents.
It is hardly likely that the testatrix would know the difference between joint tenants and tenants in common and she would naturally be eager to treat the foster children as her own children so that the heirs of the foster children would take share and share alike the properties being divided per stirpes between them.
1398 A B]
|
Appeals Nos.
708 to 710 of 1966.
Appeals by special leave from the judgment and order dated July 23, 1964 of the Andhra Pradesh High Court in Case Referred No. 42 of 1962.
Sukumar Mitra, Y. V. Anjaneyulu, Bhuvnesh Kumari, J. B. Dadachanji and O. C. Mathur, for the appellant (in all the appeals).
Niren De, Solicitor General, section K. Aiyar, R. N. Sachthey and section P. Naya; , for the respondent (in all the appeals), The Judgment of the Court was delivered by Ramaswami, J.
These appeals are brought by special leave from the judgment of the High Court of Andhra Pradesh dated 23rd July, 1964 in referred case No. 42 of 1962.
The assessment years involved in these appeals are and 1954 55, the relevant accounting periods being the years ending 30 9 1948, 30 9 1952 and 30 9 1953, respectively.
The assessee firm Khan Bahadur Ahmed Alladin & Sons (hereinafter referred to as the 'assessee firm ') consists of three partners, Khan Bahadur Ahmed Alladin, and his two sons, Khan Saheb Dost Mohammed Alladin and Noor Mohammed Alladin.
The assessee firm purchased the Brengun Factory and the properties attached to it consisting of 403 acres of land, 14 factory buildings, about on, hundred residential quarters, and railway sidings, furnitures etc., in addition to the stores, from the Government of India.
The price of the Brengun Factory and the properties together with the furniture etc.
was fixed at Rs. 27 lakhs while the price of the stores was fixed at Rs. 8 lakhs.
During the relevant accounting years, the assessee firm sold a part of the stores for Rs. 9,53,918 O.S. and 46 acres of land, 14 factory buildings, furniture, railway siding, etc.
for Rs. 26,48,215 O.S.
It was not disputed that the excess over the price realised for the re, sale of 441 stores was Rs. 2,26,484 O.S. and for the re sale of part of the factory land, building etc.
was Rs. 10,46,834 O.S.
It was admitted by the assessee firm before the Appellate Tribunal that the surplus realised by the resale of stores was not a capital accretion but an adventure in the, nature of trade.
With regard to the factory it was argued that it was an investment, and not an adventure in the nature of trade and as such the excess amount realised represented a realisation of capital asset.
The contention of ,he assessee firm was rejected by the Income tax Officer, by the Appellate Assistant Commissioner and by the Appellate Tribunal in appeal.
The view taken by the Appellate Tribunal was that the assessee firm had planned a well calculated scheme of profit making, that it had the intention of exploiting the properties which it had purchased to its advantage, that the transactions in question constitute an adventure in the nature of trade, and any surplus which it got by sale of the portions of the properties was liable to tax.
At the instance of the assessee firm, the Appellate Tribunal stated a case to the High Court on the following question of law : "Whether the purchase of the site and buildings known as "Brengun Factory" was in the course of a profit making scheme or an adventure in the nature of trade By its judgment dated 23rd July, 1964 the High Court, answered the question against the assessee firm.
On behalf of the appellant Mr. Sukumar Mitra argued that the assessee firm along with Abdullah Alladin, brother of Khan Bahadur Ahmed Alladdin had been carrying on business as a partnership firm under the name of Khan Bahadur Ahmed Alladdin and Company (hereinafter referred to Alladdin & Co.).
It had substantial interest in various joint stock companies, and was the managing agent of several joint stock companies, and possessed considerable financial resources.
The assessee firm acquired the Brengun Factory with the intention of starting a bicycle factory or some other industry as an investment, but not with the intention of resale.
The argument was stressed that the purchase and sale of land and buildings was not in the line of business of the assessee firm.
It was stated that the purchase was an isolated transaction and even after the sales, a major portion of the factory remained with the assessee firm.
It was contended that the, assessee firm had not developed the land or parcelled it out with the view to sell it to purchasers as a residential area, and make a profit.
The submission made on behalf of the appellant was that the transaction of purchase was in the nature of investment and was not an adventure in the nature of trade and the sales represented the realisations of capital asset.
442 The provision of law under which assessment was made for the assessment year 1358 F. was section 31(3) of the Hyderabad Income Tax Act (hereinafter referred to as the 'Hyderabad Act ') which corresponds to section 23 (3) of the Indian Income Tax Act, 1922 (hereinafter referred to as the 'Indian Act).
The mnents for the subsequent years were made under the Indian Act.
The charging section under the Hyderabad Act is section 3, which corresponds to section 4 of the Indian article The word "business is defined in section 3(1) of the Hyderabad Act which is identical with the language of section 2(4) of the Indian Act.
Section 8 of the Hyderabad Act states : "Save as otherwise provided by this Act, the following beads of income, profits.
and gains shall be chargeable to income tax in the manner hereinafter appearing, namely (iv) Profits and gains of business, profession or vocation".
It corresponds to section 6 of the Indian Act.
The question whether profit in a transaction is a capital accretion or has arisen out of an adventure in the nature of trade is a mixed question of law and fact.
In Venkataswami Naidu & Co. vs Commissioner of Income tax(1) it was pointed out by this Court that the expression 'in the nature of trade in sub section (4) of section 2 of the Indian Act postulates the existence of certain elements in the adventure which in law would invest it with the character of trade or business : and that a Tribunal while considering the question whether a transaction is or is not an adventure in the nature of trade before arriving at its conclusion on the facts, has.
to address itself to the legal requirements associated with the concept of trade and business.
In other words, in reaching the conclusion that the transaction is an adventure in the nature of trade, the Appellate Tribunal has to find the primary evidentiary facts and then apply the legal principle involved in the statutory expression "adventure in the nature of trade" used by section 2(4) of the Indian Act.
A question of this description is a mixed question of law and fact and the decision of the Appellate Tribunal thereon is open to challenge under section 66 (1 ) of the Indian Act.
The question whether the transaction is an adventure in the nature of trade must be decided on a consideration of all the relevant facts and circumstances which are proved in the particular case.
The answer to the question does not depend upon the application of any abstract rule, principle or formula but must (1) 443 depend upon the, total impression and effect of all the relevant facts and circumstances established in the particular case.
In Californian I Copper Syndicate vs Harris(1), Lord Justice Clerk observed, "It is quite a well settled principle in dealing with questions of assessment of income tax that where the owner of an ordinary investment chooses to realise it, and obtains a greater price for it than he originally acquired it at, the enhanced price is not profit. . assessable to income tax.
But it is equally well established that enhanced values.
obtained from realisation or conversion of securities may be so assessable where what is done is not merely a realisation or change of investment, but an act done, in what is truly the carrying on, or carrying out, of a business.
What is the line which separates the two classes of cases may be difficult to define, and each case must be considered according to, its facts; the question to be determined being Is the sum of gain that has been made a mere enhancement of value by realising a security or is it a gain made in the operation of business in carrying out a scheme for profit making ?" But in judging the character of such transactions several factors have been treated as significant in decided cases.
For instance, if a transaction is related to the business which is normally carried on by the assessee, though not directly part of it, an intention to launch upon an adventure in the nature of trade may readily be inferred.
A similar inference would arise where a commodity is purchased and sub divided, altered, treated or repaired and sold or is converted into a different commodity and then sold.
The magnitude of the transaction of purchase, the nature of the commodity, the subsequent dealings of the assessee the nature, of the organisation employed by the assessee and the manner of disposal may be, such that the transaction may be stamped with the character of a trading venture In Martin ' vs Lowry(2) the assessee purchased a large quantity of aeroplane linen and sold it in different lots, and for the purpose of selling it started an advertising campaign rented offices, engaged an advertising manager, a linen expert and a staff of clerks, maintained account books normally used by a trader, and passed receipts and payment in connection with the linen through a separate banking account.
It was held that the assessee carried an adventure in the nature of trade and so the profit was liable to be taxed.
The same view was taken in Rutledge vs Commissioners of Inland Revenue(3) in regard to an assessee who purchased very cheaply a vast quantity of toilet paper and within a short time thereafter sold the whole consignment at a considerable profit.
Similarly, in Commissioners of Inland Revenue vs Fraser, the assessee (4) a woodcutter bought for resale, whisky in bond, in three lots.
He (1) T.C. 159,165 6.
(2) 11 Tax Cases 297.
(3) 14 Tax Cases 490.
(4) 24 Tax Cases 498.
444 sold it later on at considerable profit.
The assessee had never dealt in whisky before, he had no special knowledge of the trade, he did not take delivery of the whisky nor did he have it blended and advertised.
Even so it was held that the transaction was not an adventure in the nature of trade.
Lord President Normend observed in the course of the judgment : "It is in general.
more easy to hold that a single transaction entered into by an individual in the line of his own trade (although not part and parcel of his ordinary business) is an adventure in the nature of trade than to hold that a transaction entered into by an individual outside the line of his own trade or occupation is an adventure in the nature of trade.
But what is a good deal more important is the nature of the transaction with reference to the commodity dealt in.
The individual who enters into a purchase of an article or commodity may have in view the resale of it at a profit, and yet it may be that that is not the only purpose for which he purchased the article or the commodity, nor the only purpose. to which he might turn it if favourable opportunity of sale does not occur.
In some of, the cases the purchase of a picture has been given as an illustration.
An amateur may purchase a picture with a view to its resale at a profit, and yet he may recognise at the time or afterwards that the possession of the picture will give him aesthetic enjoyment if lie is unable ultimately, or at his chosen time, to realise it at a profit.
A man may purchase stocks and shares with a view to selling them at an early date at a profit but, if he does so, he is _purchasing something which is itself an investment, a potential source of revenue to him while he holds it.
A man may purchase land with a view to realising it at a profit, but it also may yield him an income while he continues to hold it.
If be continues to hold it, there may be also a certain pride of possession.
But the purchaser of a large quantity of commodity like whisky, greatly in excess of what could be used by himself, his family and friends a commodity which yields no pride of possession, which cannot be turned to account except by a process of realisation, I can scarcely consider to be other than an adventurer in a transaction in the nature of a trade; and I can find no single fact among those stated by the Commissioners which in any way traverses that view.
In my opinion, the fact that the transaction was not in the way of business (whatever it was) of the respondent in no way alters the character which almost necessarily belongs to a transaction like this".
These are cases of commercial commodities but a transaction of purchase of land cannot be assumed without more to be an adventure in the nature of trade.
In Leeming vs Jones(", syndicate was formed to acquire an option over a rubber estate with a view to resell it at a profit, and finding the estate too small the (1) 15 Tax Cases 333.
445 syndicate acquired ' another estate and sold the two estates on profit.
It was held that the transaction was not in the nature of trade and the profit was not liable to be assessed to tax.
The same view was expressed in Saroj Kumar Mazumdar vs Commissioner of Income tax West Bengal(1), in which the assessee who carried on business of engineering works purchased land which was tinder requisition by the Government, negotiated a sale before the land was de requisitioned and sold it after the land was released.
Again in Commissioners of Inland Revenue vs Reinhold(2) the respondent who carried on business of wharehousemen bought four houses in January, 1945, and sold them at a profit in December, 1947.
He admitted that he had bought the property with a view to resale and had instructed his agents to sell whenever a suitable opportunity arose.
On behalf of the Crown it was contended that the purchase and sale constituted an adventure in the nature of trade and the profits, arising therefrom were chargeable to income tax.
It was, held by the Court of Sessions that the initial intention of the respondent to purchase the property with a view to resell did not per se establish that the transaction was an adventure in the nature of trade and the Com missioners were justified in treating the profit as not assessable to income tax.
But the circumstance of a particular case may lead to the conclusion that the purchase or resale of land is in the nature of trade.
In Venkataswami Naidu 's (3 ) case the appellant firm which acted as managing agents purchased, for a total consideration of Rs. 8,713 four contiguous plots of land adjacent to the place where, the mills of the company managed by it were situated.
The first purchase was made in October, 1941 and the second and subsequent purchases were made in November, 1941, June, 1942 and November.
1.942.
As long as the appellant was in possession of the land it made no effort, to cultivate it or erect any superstructure on it but allowed the land to remain unutilised except for the rent received from the house which existed on one of the plots.
The appellant sold the land to the company managed by it in two lots in September and November, 1947, for a total consideration of Rs. 52,600.
The question was whether the sum of Rs. 43,887 being the excess realised by the appellant by the two sales over its purchase price was assessable to income tax.
The Appellate Tribunal rejected the contention of the appellant that the properties were bought as an investment and that the plots were acquired for building tenements for the labourers of the mills but came to the conclusion that the transaction was an adventure in the nature of trade.
On a reference, the High Court expressed the same view.
It was held by this Court in appeal that the Appellate Tribunal was right in inferring that the appellant knew that it would be able (1) 37 Tax Cases 242.
(3) sup.c.1/68 14 (2) 34 Tax Cases 189.
446 to sell the lands to the managed company whenever it thought it profitable so to do, that the appellant purchased the four plots of land with the sole intention of selling them to the mills at a profit and that the High Court was right in holding that the transaction was an adventure in the nature of trade.
As we have already said it is not possible to evolve any legal test or formula which can be applied in determining whether a transaction is an adventure in the nature of trade or not.
The answer to the question must necessarily depend in each case on the total impression and effect of all the relevant factors and circumstances proved therein and which determine the character of the transaction.
What then are the material facts found in the present case ? Alladin & Co. was the managing agent of several joint stock companies viz., Hyderabad Asbestos Cement Products Limited (hereinafter referred to as the Asbestos Co.), Hyderabad Laminated Products Limited (hereinafter referred to as the Laminated Products), Hyderabad Allwyn Metal Works Limited (hereinafter referred to as the Allwyn Co.) and others.
Alladdin & Co. started Asbestos Co. in 1946 and the Laminated Products in 1947.
The Government of Hyderabad had 50% share holding in both these companies.
Negotiations for the purchase of Brengun Factory situate in the out skirts of Hyderabad commenced in December, 1946.
On 18th December, 1946, there took place a meeting between Khan Saheb Dost Mohammed Alladin and Noor Mohammed Alladin on behalf of Alladin & Co. and Khan Bahadur Obaidullah, the then Additional Financial Adviser to the Government of India.
The latter informed the two Alladin brothers that the Government of India had decided to sell the Brengun Factory as the war had ended and it was going cheap.
It was agreed that the price of the factory building should be fixed at Rs. 27 lakhs, and of the stores at Rs. 9 lakhs.
Alladdin & Co. asked for six months ' time for making the payment but finally it was agreed that the price should be paid in four equal monthly installments commencing from 1st January, 1947.
The contract of sale was made subject to the condition that the Hyderabad Government was no longer interested in the factory and also subject to the confirmation by the Board of Directors.
By its letter dated December 24, 1946, Alladdin & Co. accepted the proposal and informed the Additional Financial Adviser that the Board had agreed to purchase the Brengun Factory and the first payment would be made on 1st or 2nd January, 1947.
Not having ready cash to pay the first instalment the firm borrowed the sum from the State Bank and the Central Bank pledging the shares of the partners valued at about Rs. 20 lakhs for Rs. 9 lakhs.
It is significant that the assessee firm invested very little of its own money in the purchase of the factory and the stores.
It got six months 447 time from the Government of India to pay the price in instalments, and paid it by pledging its shares with the Banks, by obtaining further loan from the Banks on over drafts, and by selling portions of the factory to the Asbestos Co. and Laminated Products, and the Allwyn Co. The balance sheet of the assessee firm as on 31 9 1948 disclosed that the assessee firm owed about Rs. 7 lakhs to Government of India, though by that time it had sold properties valued over Rs. 30 lakhs.
It is a significant circumstance that on 23rd December, 1946 a meeting of the Board of Directors of the Asbestos Co. was held and in that meeting a resolution was passed that the Government should be approached in the matter of the valuation of the site and building in tile establishment of the "Asbestos Works" in the premises of the Brengun Factory purchased by the assessee firm and that the managing agents be authorised to address Nawab Medhi Nawaz Jung Bahadur in that behalf.
The notice convening the meeting was issued on the 23rd December, 1946, on which date, the assessee .firm had not even intimated their acceptance of offer made by the Government of India for the sale of Brengun Factory.
Pursuant to the resolution of 28th December, 1946, the Asbestos Co. resolved to purchase 14 acres of land, buildings etc.
for Rs. 5 lakhs.
It should be noticed that the valuation by the P.W.D. which was considered necessary on the 28th December, 1946 was given up and the price of Rs. 5 lakhs was accepted by the Board of Directors.
In the circumstances, the inference that that resolution was passed at the instance of the assessee firm is not unreasonable.
Pursuant to the resolution a sale deed appears to have been executed in favour of the Asbestos Company on 31st March, 1947.
It is apparent that the interval of time between the purchase of the factory and the sale was about 3 months, and this is hardly consistent with the contention of the assessee firm, that it had purchased the property as an investment.
It is also admitted that the sale deed in favour of the Asbestos Co. as well as the Laminated Products and Allwyn Co. were executed by the Government of India in their favour direct.
The sale was in favour of the Laminated Products pursuant to a resolution passed on 17th September, 1947.
On that day the company resolved that in view of the special facilities for power, water and railway siding at the Alladin Industrial Estate, Sanathnagar, sanction should be accorded for the acquisition of the, proposed area of 8 acres of land for the location of the company 's factory as per the rate offered to the company i.e., at O.S. Rs. 5,000 per acre and a sum of Rs. 40,000 was agreed to be paid towards the price.
A sale deed was executed pursuant to the resolution in June, 1948.
The next transaction relates to the purchase by the Allwyn Co.
The Board of Directors at its meeting on October 29, 1947, resolved to sell away their existing factory buildings at Azamabad to the Nizam 's State Railway, and purchase the new factory, 448 land and buildings as Sanathagar, for Rs. 25 lakhs.
The property purchased consisted of 24 acres, of land, factory buildings ,,Ind furniture, and the sale deed was executed on February 11, 1948.
It is manifest that within one year of the purchase of the Brengun Factory, the assessee firm realised Rs. 13,99,753 by the sale of stores and Rs. 33,90,908 by the sale of 46 acres of land and buildings, in all making a profit of Rs. 11,90,661.
It appears from the balance sheet as on September 30, 1948 that even after the extended date, it still owed Rs. 7 lakhs to the Government though by that time it had sold over Rs. 30 lakhs worth of property.
The assessee firm was thus paying off the dues to the Government and also discharging its debts by selling fractions of the property.
In other words, the assessee firm was purchasing, selling and liquidating the loans, which would all show the commercial nature of the transaction.
These facts establish that the assessee firm had not enough financial resources to invest Rs. 36 lakhs on the.
Bren Gun Factory and that the transaction was launched upon with a view to make profit and not as a permanent investment.
There is another aspect of the matter to be taken into account.
The property income from Bren Gun fac :tory during the year 1953 54 as would appear from the Assessment Orders of the years, 1953 54, 1954 55 was about Rs. 22,000 I.G.
The interest on loans on over drafts is paid to be 41 per cent.
on 27 lakhs the balance of price payable to the Government, the :annual interest would be about Rs. 1,21,500.
It is manifest that the assessee firm could not have borrowed the money to purchase the property as an investment when the income was about 1/6 of the interest payable on the amount borrowed.
Mr. Sukumar Mitra suggested that the assessee firm intended to develop the Bren Gun Factory as an Industrial Estate and referred to certain correspondence in this connection.
But the correspondence does not establish that any of the foreign companies agreed to start a cycle factory of their own or in collaboration with the assessee firm.
The correspondence between the parties admittedly ended in February 1946.
Mr. Sukumar Mitra also referred to the correspondence between January 8, 1947 to March 10, 1947 but this also does not show that there was any prospect of the assessee firm starting a cycle industry or any other industry either solely .or in collaboration with a foreign company.
Having regard to total effect of all the relevant facts and circumstances established in this case we are of the opinion that the High Court was right in its conclusion that the purchase of the site and the buildings of the Bren Gun Factory was an adventure in.
the nature of trade and was in the course of a profit making scheme and the question was rightly answered by the High Court .against the assessee firm.
449 We consider it necessary to add that the statement of the case made by the Appellate Tribunal is unsatisfactory and gives no information whatever about the arguments respectively advanced by the parties or the findings recorded by the Appellate Tribunal.
The statement of the case is not intended to be mere copy of the order sheet in a litigation but it must set out the points raised by the aggrieved party, the reply thereto, if any and the authorities or statutory provisions relied upon for the view taken by the Appellate Tribunal together with an intelligible summary of the facts found by the Appellate Tribunal.
A statement of the case should fully, clearly and precisely set out all the relevant facts, or if the facts have been fully set out in the judgment of the Tribunal they may be incorporated in the statement of the case by a reference to particular paragraphs of the judgment in which the facts are so set out.
In any event, it is important that the Appellate Tribunal should state clearly its conclusions and findings of fact and should not leave it to the High Court or this Court to deduce the findings or to collect the facts from a large number of documents which are part of the record of the case.
A statement of the case which does not set out precisely the findings of the Appellate Tribunal on the questions of law and fact serves no 'useful purpose.
It merely gives an opportunity to the parties to put forward arguments at the stage of reference which are often untenable, For the reasons already expressed we hold that these appeals must be dismissed with costs.
There will be one hearing fee.
G.C. Appeals dismissed.
| IN-Abs | The assessee firm purchased a Brengun factory from the Government of India and sold the stores and part of the lands and buildings shortly afterwards At a higher price.
It admitted before the Income tax authorities that the purchase and sale in respect of the stores constituted an adventure in the nature of trade, but in respect of the land and buildings sold it contended that they had been purchased by way of investment, and the sale of a part of them did not result in assessable profit.
The claim was rejected by the Income tax Officer, by the Appellate Commissioner, and by the Appellate Tribunal.
The High Court in a reference under a. 66(1) also rejected it.
The firm appealed to this Court by special leave.
HELD : (i) In reaching the conclusion that a transaction is an adventure in the nature of trade, the Appellate Tribunal has to find the primary evidentiary facts and then apply the legal principle involved in the statutory expression "adventure in the nature of trade,, used in section 2(4) of the Indian Income tax Act.
A question of this description is a mixed question of law and fact and the decision of the Appellate Tribunal thereon is open to challenge under section 66(1) of the Act.
[442 F G] (ii) The question whether the transaction is an adventure in the nature of trade must be decided on a consideration of all the relevant facts and circumstances which are proved in the particular case.
The answer to the question does not depend on the application of any abstract rule, principle or formula but must depend upon the total impression and effect of all the relevant facts and circumstances established in the particular case.
[442 H] (iii) In the present case the appellant firm purchased the Brengun factory from borrowed money.
The income from the property was only about 1/6 of the interest payable by the company on the money borrowed.
The first sale was effected by the firm within three months of the purchase.
and the sums received from sale were utilised for paying off the debts as also the dues to the Government.
The firm had not enough financial resources to invest the money required to purchase the factory and the transaction could not therefore be with a view to making a permanent investment, but only for making profit.
It had not been established by evidence that the appellant firm purchased the Brengun factory for purpose of establishing a cycle factory.
Having regard to the total effect of all the relevant facts and circumstances established in the case it was rightly held by the High Court that the transaction was an adventure in the nature of trade and part of a profit making scheme.
[448 B H] (iv) The statement of case is not intended to be a mere copy of the order sheet in a litigation but it must set out the points raised by the .aggrieved party, the reply thereto, if any, and the authorities or statutory 440 provisions relied upon for the view taken by the Appellate Tribunal together with an intelligible summary of the facts found by the Appellate Tribunal.
The Tribunal should clearly state its conclusions and findings of fact and should not leave it to the High Court or this Court to deduce the findings or to collect facts from a large number of documents which are part of the record of the case.
[449 A D] Vankataswami Naidu & Co. vs Commissioner of Income tax, , Californian Copper Syndicate vs Harris, 5 T.C. 159, Martin vs Lowry, I I T.C. 297, Rutledge vs Commissioners of Inland Revenue, 14 Tax Cases 490, Commissioners of Inland Revenue vs Fraser, the assessee.
24 Tax Cases 498, Leeming vs Jones, 15 Tax Cases 333, Saroj Kumar Mazumdar vs Commissioner Income tax, West Bengal, and Commissioners of Inland Revenue vs Reinhold, 34 Tax Cases 389, referred to.
|
vil Appeal No. 2457 of 1966.
Appeal from the judgment and order dated September 13, 1963 of the Calcutta High Court in Income tax Reference No. 29 of 1959.
section T. Desai, B. R. L. Iyengar and R. N. Sachthey, for the appellant.
A. K. Sen, R. M. Hazarnavis, and K. L. Hathi, for the respon dent.
The Judgment of the Court was delivered by Shah, J.
One Amritlal died on October 18, 1944.
For the assessment year 1945 46 his estate was assessed to tax on a total income of Rs. 22,160/ from salary and other sources.
In January 1946, Anusuya Devi widow of Amritlal encashed high denomination notes of the value of Rs. 5,84,000/ , and made a declaration as required by the High Denomination Bank Notes (Demonetisation) Ordinance, 1946 that: "A sum of Rs. 5,84,000/ in notes were made over and/or directed to be made over by the declarant 's deceased husband Amritlal Ojha at Rajkot in April, 1944, sometime before his death for the benefit of declarant and her 8 minor sons.
" In a proceeding for reassessment of the income of Amritlal for the assessment year 1945 46 the attorney who appeared on behalf of Anusuya Devi stated that "Amritlal was from time to time, during the last 30.
years of his life, giving gifts to his wife and also setting apart money exclusively for his wife and children and that the fund so accumulated which remained in a cupboard" was found after his death.
The Income tax Officer disbelieved the explanation furnished and brought the amount of Rs. 5,84,000/ to tax as income of Amritlal in the year of account 1944 45 from an undisclosed source, and with his decision the Appellate Assistant Commissioner agreed.
At the hearing of the appeal before the Income tax Appellate Tribunal, Anusuya Devi widow of Amritlal filed an affidavit in which it was stated, inter alia 469 5. "From time to, time during our married life, late Sri Amritlal Ojha used to make presents of cash moneys to me on occasion of birthday of myself and of my sons and daughter by him and also on the occasion of his own birthday and on the anniversary of our marriage.
" 6. "My husband late Sri Amritlal Ojha used to tell me that these presents of cash money that he made was to make provisions for me and my minor sons and daughter and also to meet the expenses of their education and marriage in the event of his death.
" 8. "The total amount of the money so paid by late Sri Amritlal Ojha was Rs. 5 84,600/ .
This amount was my stridhan property and was all along in my possession." This affidavit was admitted in evidence by the Tribunal, but the Tribunal declined to admit an affidavit of Gunvantray one of the sons of Amritlal, because in their view an attempt was made to bring on record a large number of new facts which were not disclosed before the departmental authorities.
The Tribunal declined to accept the case set up by Anusuya Devi.
Beside pointing out the discrepancies in the statements made from time to time, which rendered her case unreliable, the Tribunal expressed the view that gifts made during a long period of "20 to 30 years" could not all have been made only in thousand rupee notes.
The Tribunal accordingly upheld that order bringing to tax Rs. 5,84,000/ as income from an undisclosed source in the account year 1944 45.
In her application for stating a case to the High Court on eleven questions set out therein Anusuya Devi asserted that in her declaration under section 6 of the High Denomination Bank Notes (Demonetisation) Ordinance, 1946, she had given information pursuant to the queries as follows : Reasons for keeping above in No bank account.
The high denomination notes rather amount is held in trust than in current account, fixed for minors and as prices deposit or securities.
of securities very so for greater safety the amount is held in cash for the benifit of the defandent and in trust for the minors.
When and from what source did A sum of Rs. 5,84,000 in declarant come into possession notes were made over and or of bank notes now tendered.
directed to be made over by the declarant 's deceased husband Amritlal Ojha at Rajkot in April 1944 sometime before his death for benefit of the declarant and her eight minor sons.
in the latter part of August and beginning 470 of September 1945, Rs.4,94,000/was deposited with the Bank of India Ltd. at its Bombay Branch and transferred by T.T. to their Calcutta Branch in the account of the declarant 's major son Bhupatray Ojha who drew a self cheque for Rs. 4,94,000/ received payment by 494 pieces of 1,0001 notes (included in the list) and made them over to the declarant.
The Tribunal rejected the application.
The High Court of Judicature at Calcutta however directed the Income tax Appellate Tribunal to state a case on the following question : "Whether the Tribunal erred in law by basing their decision on part of the evidence ignoring the statement made as regards the withdrawal of Rs. 4,94,000/ by 494 pieces of Rs. 1,000/ notes from the bank?" In compliance with the order, the Tribunal observed that the extract from the statement incorporated in the petition under section 66(1) was materially different from the statement reproduced in the order of the Income tax Officer and that the Tribunal was not invited to consider at the hearing of the appeal the truth or otherwise of the alleged copy of the declaration incorporated in the petition under section 66(1) and that at the hearing of the appeal the original declaration had not been produced.
The learned Judges of the High Court who heard the reference were apparently of the view that the question referred did not arise out of the order of the Tribunal, but they felt bound by the view expressed in Chainrup Sampatram vs Commissioner of Income tax, West Bengal(1) that it is not open to the Court hearing a reference under section 66(2) to hold, contrary to the decision recorded at the time when the Tribunal was directed to state the case on a question, that the question did not arise out of the order of the Tribunal.
Bijayesh Mukherji, J., who delivered the principal judgment of the Court observed that the Tribunal had apparently ignored a part of the declaration made by Anusuya Devi that 494 high denomination notes out of those encashed in January 1946 were received from a Bank in Calcutta in realization of a cheque for Rs. 4,94,000/ drawn in September 1945 by Bhupatray her eldest son; that there was reason to doubt that statements referred to in his order by the Appellate Assistant Commissioner were made by Anusuya Devi or her attorney; and that in any event opportunity to "clear up the discrepancies" between the statement made at the time of the disclosure of the high denomination notes and the statements said to have been made before the Income tax Officer or before the Appellate Assistant Commissioner ought to have been given to her.
Holding that the (1) 471 order of the Tribunal suffered from those infirmities the learned Judges of the High Court answered the question in the affirmative.
In our, judgment the order of the High Court cannot be sus tained.
The statement that out of 584 high denomination notes disclosed by Anusuya Devi 494 notes were received in realization of a cheque drawn by Bhupatray at Rajkot was made for the first time in a petition under section 66(1): it did not find place in the statement before the Income tax Officer, nor in the grounds of objection raised before the Appellate Assistant Commissioner, and.
not even in the affidavit filed before the Tribunal.
The Tribunal was never apprised of that part of the case, and had no opportunity to test the correctness of that statement.
On the statements made before the Income tax Officer and in the affidavit there can be no doubt that it was the case of Anusuya Devi that she had encashed high denomination notes which she had received from her husband.
No fault can therefore be found with the observations of the Tribunal that it was "a peculiar fact that all the money stated to have been received and found in the cupboard was all in high denomination notes and the entire amount had to be exchanged under the High Denomination Bank Notes (Demonetisation) Ordinance".
In the question which was referred under the direction of the High Court, it was assumed that the Tribunal had before it the statement about the receipt of 494 currency notes of Rs. 1,000/each from a Bank at Calcutta in realization of a cheque.
But that evidence was not before the Tribunal, and the order of the Tribunal was not open to the objection that it had decided the appeal before it on a partial review of the evidence.
Even in the application made to the Tribunal under section 66(1) in the large number of, questions which it was claimed arose out of the order of the Tribunal it was not suggested that the finding of the Tribunal was vitiated because some relevant evidence was ignored.
If the Tribunal refuses to state a case under sub section
(1) of section 66 on the ground that no question of law arises, and the High Court is not satisfied with the correctness of that decision, the High Court nay in exercise of the power under section 66(2) require the Tribunal to state a case, and refer it.
When the Tribunal is not invited to state a case on a question of law alleged to arise out of its order, the High Court cannot direct the Tribunal to state it on that ques tion: see Commissioner of Income tax vs Scindia Steam Navigation Co. Ltd. (1).
The reason of the rule is clear: the High Court cannot hold that the decision of the Tribunal refusing to state a case on a particular question is incorrect if the Tribunal was not asked to consider whether the question arose out of its order, and whether it was a question of law.
(1) ; 472 We find it difficult to uphold the view of the Calcutta High Court that if an order is passed by the High Court calling upon the Tribunal to state a, case on a question which does not arise out of the order of the Tribunal, the High Court is bound to advise the Tribunal on that question even if the question does not arise out of the order of the Tribunal.
The High Court may only answer a question referred to it by the Tribunal : the High Court is however not bound to answer a question merely because it is raised and referred.
It is well settled that the High Court may decline to answer a question of fact or a question of law which is purely academic, or has no bearing on the dispute between the parties or though referred by the Tribunal does not arise out of its order.
The High Court may also decline to answer a question arising out of the order of the Tribunal, if it is unnecessary or irrelevant or is not calculated to dispose of the real issue between the tax payer and the department.
If the power of the High Court to refuse to answer questions other than those which are questions of law directly related to the dispute between the tax payer and the department, and which when answered would determine qua that question the dispute, be granted, we fail to see any ground for restricting that power when by, an erroneous order the High Court has directed the Tribunal to state a case on a question which did not arise out of the order of the Tribunal.
We are unable therefore to hold that at the hearing of a reference pursuant to an order calling upon the Tribunal to state a case, the High Court must proceed to answer the question without considering whether it arises out of the order of the Tribunal, whether it is a question of law, or whether it is academic, unnecessary or irrelevant.
We are of the opinion that the very basis of the question on which the Tribunal was called upon to submit a statement of the case did not exist.
The Tribunal cannot in this case be charged with recording its decision without considering all the evidence on the record : the decision of the Tribunal was clearly based on appreciation of evidence on the record before it, and the High Court was, in our view, incompetent to direct the Tribunal to state the case on the question which was directed to be, referred and dealt with by the High Court.
We are also unable, to agree with the observation of the High Court that the explanation which the Assistant Commissioner says was made by Anusuya Devi was not made by her or by her attorney.
No such plea was apparently raised before the Tribunal.
There is also no ground for believing that Anusuya Devi was not given an opportunity to " clear up the discrepancies" between the statements made by her or on her behalf from time to time in connection with the encashment of the high denomination notes.
That plea was not raised before the Tribunal, and the validity of the conclusion of the Tribunal on appreciation of evidence cannot be assailed before 473 the High Court on the ground that departmental authorities had violated the basic rules of natural justice without raising that question before the Tribunal.
Counsel for Anusuya Devi requested that in any event the question which has been referred by the Tribunal in pursuance of the order of the High Court may be reframed and a supplementary statement may be ordered to be submitted by the Tribunal.
But power to reframe a question may be exercised to clarify some obscurity in the question referred, or to pinpoint the real issue between the tax payer and the department or for similar other reasons : it cannot be exercised for reopening an enquiry on questions of fact which is closed by the order of the Tribunal.
Again, a supplementary statement may be ordered only on the question arising out of the order of the Tribunal, and if the Court is satisfied that the statements are not sufficient to enable the Court to determine the question raised thereby, and when directed may be only on such material and evidence as may already be on the record but which has not been included in the statement initially made: Keshav Mills Ltd. vs Commissioner of Income tax, Bombay North, Ahmedabad(1).
We do not think that the judgment of this Court in Narain Swedeshi Weaving Mills vs Commissioner of Excess Profits Tax(2) lays down any general proposition that the High Court hearing a reference is entitled to amend or reframe a question and call for a supplementary statement so as to enable a party to lead evidence which has not been led before the Tribunal or the departmental authorities.
In Narain Swadeshi Weaving Mills ' case(2) this Court merely reframed the question so as to bring out the real issue between the parties.
Finally counsel for Anusuya Devi submitted that the Tribunal was bound to state a case on the following question which was.
set out in the application under section 66 (1) : 6.
"Whether there is any material before the Tribunal to hold that the said sum of Rs. 5,84,000/representing the value of the encashed high denomination notes was the income of the deceased Amritlal Ojha of the period of the year 1944 45 prior to his death ?" Counsel submitted that since the Tribunal had failed to raise and state a case on that question, and the High Court had also in directing that a statement of case be submitted, ignored that question, in the interest of justice and for a final and satisfactory disposal of the case this Court may order a statement on that question.
Counsel said that merely because on the findings of (1) (2) 474 the Tribunal Amritlal was on April 30, 1944, possessed of a large sum of money it could not be assumed that the whole amount was earned after April 1, 1944, and was on that account taxable in its entirely in the year of assessment 1945 46.
The question whether the amount of Rs.
5,84,000/ was taxable in the proceeding for assessment for the year 1945 46 was considered by the Income tax Officer and by the Appellate Assistant Commissioner.
The Income tax Officer observed that by the explanation submitted on behalf of Anusuya Devi before him, contrary to what was stated at the time of encashment of the high denomination notes, it was attempted "as an afterthought, to spread over the amount over a number of years".
The contention that the amount of Rs. 5,84,000/ was not taxable in the .year of assessment 1945 46 was rejected.
The Appellate Assistant Commissioner observed that on the statement made by Anusuya Devi that she had received the amount from her husband in the year of account 1944 45 and that it was unfortunate that there was ' no complete record of the "earnings and withdrawals" .,of
Amritlal from the various businesses in which he was interested, and that in the absence of such a record all that was to be done was to examine whether the explanation was credible.
He observed that "the accounting year was very favourable for all types . of business, and in all probability the sum represented some income earned by the deceased in some ventures which were not known to the Department and therefore the sum could be treated as income of Amritlal from undisclosed sources".
The Tribunal observed that they were unable to believe the version of Anusuya Devi that the amount was accumulated by her husband during a long period, and since the assessee and his legal representatives had failed to prove the source of the fund, it "must be considered as of income character".
Apparently, no argument was raised before the Tribunal that the amount though taxable was not income of the year of account 1944 45 and could obviously not he referred.
The High Court may answer only those questions which are ,actually referred to it.
New questions which have not been referred cannot be raised and answered by the High Court.
If the Tribunal refuses to refer a case under section 66(1) which arises out of its order, the proper course is for the aggrieved party to move the High Court to require the Tribunal under section 66(2) to refer the same.
The question whether Rs. 5,84,000/ represented income of the year of account 1944 45 was not submitted by the, Tribunal to the High Court.
Even if it be assumed that the High Court was moved to direct the Tribunal to state a case on the sixth question which was set out in the, application filed 'before the Tribunal under section 66(1), the application must be 475 deemed to have been rejected, and the order of rejection has become final.
We have no power, without an appeal by the assessee, to set aside that order of the High Court and to direct the Tribunal to state a case on that question.
The appeal must therefore be allowed, and the order passed by the High Court set aside.
The answer to the question will be in the negative.
This case discloses a very disturbing state of affairs prevailing in the Income tax Department.
It is a startling revelation that the entire record of an assessee 's case both before the Income tax Officer and the Appellate Assistant Commissioner was found missing, and has not been traced thereafter.
Even if collusion be ruled out, the persons concerned in looking after the safety of the important record of proceedings of assessment cannot escape a charge of gross negligence.
In the circumstances of the case.
we think there shall be no order as to costs in the High Court and in this Court.
Appeal allowed.
| IN-Abs | The husband of the respondent died in October 1944.
For the assessment year 1945 46, his estate was assessed to income tax on a total income of Rs. 22,160.
In January 1946, the respondent encashed 584 high denomination notes of the value of Rs. 5,84,000.
There were proceedings for re assessment of the total income of the assessee, wherein it was stated before the Income tax Officer, on behalf of the respondent, that during the previous 30 years, her husband was giving gifts to the respondent and was also setting apart money exclusively for her and their children and, that the fund so accumulated amounting to Rs. 5,84,000 remained in a cupboard and was found after his death, and therefore, the amount was not liable to tax as the income of her husband in the previous year.
The Income tax Officer disbelieved her explanation and brought the amount of Rs. 5,84,000 to tax as tre income of the respondents ' husband from an undisclosed source in the year of account 1944 45.
The order was con firmed by the Appellate Assistant Commissioner who also referred to the respondent 's declaration under the High Denomination Bank Notes (Demonetisation) Ordinance that the amount was made over by the de,ceased, some time before his death, to her for her benefit and that of her 8 minor sons.
The Appellate Tribunal also upheld the order of the Income tax Officer.
The respondent then filed an application under section 66 (1) to state a case to the High Court.
In that application she asserted that 494 out of the 584 notes were received from a Bank in Calcutta in realisation of a cheque drawn for Rs. 4,94,000 in September 1945 by her eldest son.
The Tribunal rejected the application.
The High Court, under section 66(2) directed the Tribunal to state a case on the question6n: Whether the Tribunal erred in law by basing its decision on a part of the evidence ignoring the 'statement made as regards the withdrawal of Rs. 4,94,000 by 494 pieces of Rs. 1,000 notes from the bank.
The Tribunal, while submitting the statement of case, pointed out that the statement in the petition under section 66(1) was materially different from that made before the Income tax Officer and that the Tribunal was not invited to consider, at the hearing of the appeal, the truth of that statement.
The High Court, thereafter, heard the reference and decided in favour of the assessee, holding that: (1) the Tribunal ignored a part of the declaration made by the respondent that 494 high denomination notes were received from the bank in Calcutta in September 1945; (2) no opportunity was given by the Tribunal to the respondent to clear up the discrepancies in her statements made at the time of the disclosure of the high denomination notes and before the Income tax Officer; and (3) it was not open to the Court hearing a reference under section 66(2) to hold, contrary to the decision recorded at the time when the Tribunal was directed to state the case on a question, that the question did not arise out of the order of the Tribunal.
467 In appeal to this Court, HELD : (1) In the question which was directed to be referred it was assumed that the Tribunal had before it the statement about the receipt of 494 currency notes from the bank at Calcutta.
But that evidence was not before the Tribunal.
No such statement was made either before the Income tax Officer, or before the Appellate Assistant Commissioner or in the appeal before the Tribunal.
The statement was made for the first time in the petition under section 66(1).
Even in the application it was not suggested that the finding of the Tribunal was vitiated because some relevant evidence was ignored.
The order of the Tribunal was not therefore open to the objection that the appeal before it was decided on a partial review of the evidence.
[471 B, D F] (2) The plea of want of opportunity was not raised before the Tribunal, and therefore, the validity of the conclusion of the Tribunal on the evidence could not be assailed before the High Court on the ground that the departmental authorities had violated the basic rules of natural justice, without raising that question before the Tribunal.
[472 H] (3) The High Court was in error in holding that at the hearing of a reference pursuant to an order calling upon the Tribunal to state a case, the High Court must proceed to answer the question without considering whether it arises out of the order of the Tribunal or whether it is a question of law, or whether it is academic, unnecessary or irrelevant especially when by an erroneous order the High Court directed the Tribunal to state a case on a question which did not arise out of the order of the Tribunal.
[472 D E] Observations contra in Chainrup Sampatram vs Commissioner of Income tax, West Bengal, overruled.
(4) When the Tribunal was not invited to state a case on a question of law alleged to arise out of its order, the High Court could not direct the Tribunal to state it on that question.
[471 G H] Commissioner of Income tax vs Scindia Steam Navigation Co. Ltd., followed.
(5) The irregularities in the judgment of the High Court could not be cured by reframing the question referred to the High Court and calling for a supplementary statement from the Tribunal The power to reframe a question may be exercised only to clarify some obscurity in the question referred or to pinpoint the real issue between the tax payer and the department or for similar other reasons.
It cannot be exercised for reopening an enquiry on questions of fact, which was closed by the order of the Tribunal.
Similarly, a supplementary statement could be ordered only on a question arising out of the order of the Tribunal if the court is satisfied that the original statement is not sufficient to enable it to determine the question raised thereby, and, when directed the supplementary statement may be only on such material and evidence as may already 1 on record, but not included in the statement initially made.
[473 B D] Keshav Mills Ltd. vs Commissioner of Income tax, Bombay North, Ahmedabad, and Narain Swadeshi Weaving Mills Y. Commissioner of Excess Profits Tax, , referred to.
(6) The Tribunal was not in error in failing to raise and state a case on the question whether the amount of Rs. 5,84,000 was taxable in the accounting year 1944 45.
That question was considered by the Incometax Officer and by the Appellate Assistant Commissioner and the explana 468 tion of the respondent was rejected by them, and no argument was raised before the tribunal that the amount, though taxable, was not the income of the year of account 1944 45.
Further, when the High Court did not direct the Tribunal to state a case on the question, it must be deemed to have, rejected the application to refer that question, and the order of rejection having become final, this Court cannot set it aside without an appeal by the respondent.
[474 B, E, H; 475 A]
|
Appeal No. 637 of 1967.
Appeal from the judgment and order dated January 27, 1966 of the Bombay High Court in Misc.
Application No. 112 of 1963.
section T. Desai, G. L. Sanghi, B. Datta and O. C. Mathur, for the appellant.
R. M. Hazarnavis, section P. Nayar, and R. H. Dhebar, for the respondents.
The Judgment of the Court was delivered by Bhargava, J.
The Swastik Oil Mills Ltd., appellant, carries on business of manufacturing vegetable oils, soaps and other products and selling them in India as well as exporting them outside India.
It was registered as a dealer under the various Sales Tax Acts in force in Bombay.
The first of these Acts was the Bombay Sales Tax Act 5 of 1946, which was replaced by th Bombay Sales Tax Act 3 of 1953.
The third and the latest Act now in force in Bombay is the Bombay Sales Tax Act 51 of 1959.
, 'The appellant was assessed to sales tax on its turnover for the periods from 1st April, 1948 to 31st March, 1950, and from 1st April, 1950 to 31st March, 1951 on the basis of Returns of turnover submitted by it.
In these Returns, the appellant claimed exemption from tax in respect of the turnover representing the despatches or transfer of goods from its Head Office Bombay, to its various Depots or Branches in other States in India, and also exemption in respect of sales which were alleged to have taken place in the course of inter State trade after 26th January, 1950.
The Sales Tax Officer in his order of assessment dated 2nd January, 1954 rejected both these claims.
The appellant went up in appeal before the Assistant Collector of Sales Tax, who, in his appellate order dated 29th October, 1956, accepted the claim of the appellant in respect of the despatches to its various Depots or Branches in other States in India, but disallowed the claim in respect of the alleged inter State sales.
As a result of partially allowing the claim of the appellant, the Assistant Collector reduced the tax imposed by a sum of Rs. 19,240 15 6 for the period between 1st April, 1948 to 31st March, 1950, and Rs. 97,208/for the second period between 1st April, 1950 to 31st March, 1951, and directed refund of these amounts to the appellant.
The revisions filed by the appellant against the rejection of its claim in respect of inter State sales were still pending, when, on 7th January, 1963, a notice was issued by the Deputy Commissioner of Sales Tax, Bombay City Division, in Form XXIV under 495 section 31 of the Bombay Sales Tax Act, 1953, intimating the appellant that he proposed to revise suo motu the appellate orders passed by the Assistant Collector of Sales Tax insofar as he had allowed deduction, in respect of the entire goods despatched to its Branches in other States outside Maharashtra, because, in so doing, he had overlooked the provisions contained in proviso (b) to sub clause (ii) of Rule 1 under sub section (3) of section 6 of the Bombay Sales Tax Act, 1946 as amended by the Bombay Sales Tax Amendment Act 48 of 1949.
On receipt of this notice, the appellant put in appearance before the Deputy Commissioner, who is the respondent in this appeal, and raised several objections against the proposed revisional proceedings, making a request that the proceedings be dropped.
Since the respondent did not accept this request, the appellant filed a petition under Article 226 of the Constitution in the High Court of Bombay challenging the notice dated 7th January, 1963, with the prayer that the notice be quashed and the respondent be restrained from taking any action against the appellant in pursuance thereof.
The petition was dismissed by the High Court and, now, on certificate granted by that Court, the appellant has come up in this appeal to this Court.
In this appeal, Mr. section T. Desai, appearing on behalf of the appellant, urged the same objections against the notice which were the basis of the prayer for writ in the High Court, and we proceed to deal with them in the order in which he has put them forward before us in his submissions.
The first point urged by learned counsel was that, in exercise of the revisional powers, the Deputy Commissioner of Sales Tax, whether acting under the Sales Tax Act of 1946, or of 1953, or of 1959, could only proceed to take action on the basis of the material already present on the record and was not entitled to act on conjecture or to institute any enquiry so as to include additional material in order to judge the correctness of the order sought to be revised.
In support of this proposition, learned counsel referred us to a decision of the Andhra Pradesh High Court in State of Andhra Pradesh vs T. G. Lakshmaiah Setty & Sons.(1).
In that case, the Deputy Commissioner, in exercising the revisional jurisdiction, was found by the High Court to have based his assessment on guess work, and the Court held that "this conjecture could not be a _justification for seeking to revise the order of the assessing authority.
If the Deputy Commissioner could, on the material before him, find data for revising the assessment, it was open to him to do so.
It must be made clear that he has no jurisdiction to travel beyond the record that is available to the assessing authority and the basis should be found on the record already in existence.
" We are unable to accept this principle laid down, by that High Court as (1) 12 S.T.C. 663.
496 correct.
Whenever a power is conferred on an authority to revise an order, the authority is entitled to examine the correctness, legality and propriety of the order and to pass such suitable orders as the authority may think fit in the circumstances of the particular case before it.
When exercising such powers, there is no reason why the authority should not be entitled to hold an enquiry or direct an enquiry to be held and, for that purpose, admit additional material.
The proceedings for revision, if started suo motu, must not, of course, be based on a mere conjecture and there should be some ground for invoking the revisional powers.
Once those powers are invoked, the actual interference must be based on sufficient grounds and, if it is considered necessary that some additional enquiry should be made to arrive at a proper and just decision, there can be no bar to the revising authority holding a further enquiry or directing such an enquiry to be held by some other appropriate authority.
This principle has been clearly recognised by this Court in The State of Kerala vs K. M. Cheria Abdulla and Company(1).
In that case, sub section (2) of section 12 of the Madras General Sales Tax Act, 1939, which came up for interpretation, empowered the Deputy Commissioner, suo motu or under certain circumstances on an application, to call for and examine the record of any order passed or proceeding recorded under the provisions of that Act by any officer subordinate to him, for the purpose of satisfying himself as to the legality or propriety of such order, or as to the regularity of such proceeding, and to pass such order with respect thereto as he thought fit.
This Court held : "There is no doubt that the revising authority may only call for the record of the order or the proceeding, and the record alone may be scrutinised for ascertaining the legality or propriety of an order or regularity of the proceeding.
But there is nothing in the Act that for passing an order in exercise of his revisional jurisdiction, if the revising authority is satisfied that the subordinate officer has committed an illegality or impropriety in the order or irregularity in the proceeding, be cannot make or direct any further enquiry.
" It was further held "It is, therefore, not right baldly to propound that, in passing an order in the exercise of his revisional jurisdiction, the ' Deputy Commissioner must, in all cases, be restricted to the record maintained by the officer subordinate to him, and can never make enquiry outside that record." (1) ; 497 While thus explaining the scope of the revisional power, the Court also indicated the limitations within which such power can be exercised, holding : " It would not invest the revising authority with power to launch upon enquiries at large so as either to trench upon the powers which are expressly reserved by the Act or by the Rules to other authorities or to ignore the limitations inherent in the exercise of those powers.
For instance, the power to reassess escaped turnover is primarily vested by rule 17 in the assessing officer and is to be exercised subject to certain limitations, and the revising authority will not be competent to make an enquiry for reassessing a taxpayer.
Similarly, the power to make a best judgment assessment is vested by section 9 (2) (b) in the assessing authority and has to be exercised in the manner provided.
It would not be open to the revising authority to assume that power." (p. 887).
In the present case, the notice issued by the Deputy Commis sioner of Sales Tax, on the face of it, discloses the reasons which led him to take proceedings for exercising his revisional powers suo motu, and it cannot be said on those facts that he was acting merely on conjecture.
The Deputy Commissioner has not yet proceeded further under the notice to make the assessment.
We have no doubt that, when the Deputy Commissioner does make an enquiry, if any, for the purpose of exercising his revisional powers, he will keep within the limitations indicated by this Court in the case cited above.
The notice cannot be quashed or the proceedings restrained merely on the ground that the Deputy Commissioner may have to hold some enquiries in order to properly exercise his revisional jurisdiction.
Mr. Desai on behalf of the appellant emphasised the circumstance that in section 12(2) of the Madras General Sales Tax Act, which was considered by this Court, the Deputy Commissioner 's power was expressed by stating that he may pass such order as he, thinks fit, while no such words occur in the corresponding provisions in the Bombay Sales Tax Acts with which we are concerned, but we do not think that this circumstance makes any difference.
A revising authority necessarily has the power to make such order as, in the opinion of that authority, the case calls for when the authority is satisfied that it is an appropriate case for interference in exercise of revisional powers.
In fact, in section 12(2) of the Madras General Sales Tax Act, the Deputy Commissioner, when exercising his powers, was to call for the record of the order or proceeding before passing any order which he thought fit, so that there was an expression used which could have been interpreted as limiting his powers to the examination of the record only without holding any further 498 enquiry, and, yet, this Court held that the, Deputy Commissioner could not be restricted to the record and was empowered to make an enquiry outside that record.
In the provisions relating to revisions in the three Bombay Sales Tax Acts, there are no such words indicating any limitation; and that would be an additional reason for holding that there can be no bar to an appropriate enquiry being held by the Deputy Commissioner when seeking to exercise his revisional powers suo motu.
The next point urged by learned counsel was that the notice in question was issued on the 7th January, 1963, when the Act of 1959 had already come into force and the Act of 1953 had been repealed, so that if any revisional jurisdiction could be exercised by the Deputy Commissioner, it could only be under the Act of 1959 and not under the Act of 1953.
On this basis, advantage was sought to be taken of the circumstance that, under the Act of 1959, the revisional powers conferred by section 57 can be exercised within five years from the date of the order sought to be revised and, at the relevant time in 1963, could only be exercised within two years from the date of that order.
The order sought to be revised was passed on 29th October, 1956, so that the notice to exercise revisional powers was being issued more than 6 years after that order had been passed.
It appears to us that this submission is adequately met by the provisions contained in section 77 of the Act of 1959.
The Act of 1953 was repealed by section 76 of the Act of 1959 and then section 77 lays down : "(1) Notwithstanding the repeal by section 76 of any of the laws referred to therein, (a) those laws (including any earlier law continued in force under any provisions thereof), and all rules, regulations, orders, notifications, forms and notices issued under those laws and in force immediately before the appointed day shall, subject to the provisions of section 42 continue to have effect for the purposes of the levy, assessment, reassessment, collection, refund or set off of any tax, or the granting of a draw back in respect thereof, or the imposition of any penalty, which levy, assessment, reassessment, collection, refund, setoff, draw back or penalty relates to any period before the appointed day, or for any other purpose whatsoever connected with or incidental to any of the purposes aforesaid; 499 (3) Without prejudice to the provisions contained in the foregoing sub sections and section thereto, section 7 of the Bombay General Clauses Act, 1904, shall apply in relation to the repeal of any of the laws referred to in section 76 as if the law so repealed had been an enactment within the meaning of section 7 of that Act." (We have only quoted the portions of section 77 with which we are concerned).
The effect of section 77 (1)(a) is to continue in force the Bombay Sales Tax Act of 1953 as well as the Bombay Sales Tax Act of 1946 to the extent to which they were in force when this Act of 1959 came into force for the purposes mentioned in that clause.
These purposes included levy, assessment, reassessment and collection of sales tax, so that the proceedings against the appellant, which had been initiated under the Act of 1946, continued to be governed by the provisions of that Act.
Section 7 of the Bombay General Clauses Act 1 of 1904, which was made applicable 'by section 77(3) to the repeal of the Act of 1953, includes the following provisions : " Where this Act, or any Bombay Act, or Maha rashtra Act, made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed, as if the repealing Act had not been passed.
" Very clearly, the repeal of the Act of 1953 by the Act of 1959 did not affect the rights and liabilities of the assessee to tax under the Act of 1953 or the Act of 1946 in respect of the turnover which became liable to sales tax under the Act of 1946.
The effect of clause (e) of section 7 of the Bombay General Clauses Act 500 further is that any legal proceeding in respect of levy, imposition or recovery of that tax is to continue and any fresh investigation, legal proceeding or remedy could be instituted as if there had been no repeal by the Act of 1959.
Consequently, the repeal of the Act of 1953 did not in any way affect the power of the Deputy Commissioner to institute proceedings for revision suo motu against the appellate order of the Assistant Collector which had been passed in exercise of his powers under the Act of 1946.
It is true, as urged by Mr. Desai in the alternative, that, in fact, the proceedings should have been taken not under section 31 of the Act of 1953, but under section 22 of the Act of 1946.
This is so, because when the Act of 1946 was repealed by the Act of 1953, similar provisions were made in the Act of 1953 to continue in force the provisions of the Act of 1946 in respect of rights and liabilities which may have accrued or have been incurred under the Act of 1946.
Section 48(2) and section 49(1) clearly contained provisions indicating that, in respect of a liability to tax under the Act of 1946, the rights and liabilities of the assessee had to be determined in accordance with the provisions of the Act of 1946 and all legal proceedings or remedies in respect thereof had also to be taken under the same Act.
Consequently, the Deputy Commissioner, in seeking to exercise revisional powers against the order of the Assistant Collector passed under the Act of 1946, had to proceed under section 22 of the Act of 1946.
That, however, is not at all material, because the provisions of section 22 of the Act of 1946 are quite similar to those of section 31 of the Act of 1953.
The mere incorrect mention of section 31 of the Act of 1953 in the notice is immaterial.
The Deputy Commissioner has the jurisdiction and power to revise the order under section 22 of the Act of 1946 and, consequently the proceedings initiated by him are not without jurisdiction.
The last submission made by Mr. Desai was that, if it be held that the revisional powers are sought to be exercised under the Act of 1946, it should be held that the proceedings sought to be instituted are barred by time, because limitation of a reasonable time, within which the revisional powers are to be exercised, must be implied in the statute itself.
Section 22 of the Act of 1946 and section 31 of the Act of 1953 do not lay down any limitation for exercise of the power of revision by a Deputy Commissioner sue motu, and we are not prepared to accept that any such limitation must be necessarily read in the two Acts.
In support of his proposition that such a limitation must be read by us, Mr. Desai referred to the decision of this Court in the State of Orissa vs Debaki Debi and Others(1).
That case, however, has no relevance at all, because, in the Orissa Sales Tax Act, there was a proviso in general terms laying down that no order "assessing the (1) 15 S.T.C. 153.
501 amount of tax shall be passed after the lapse of 36 months from the expiry of the period", and it was held that this provision was, in substance, not a real proviso to the section in which it was placed, but was, in fact, a period of limitation prescribed for all orders of assessment made under any other provision of the Act.
In the Bombay Sales Tax Acts of 1946 and 1953, there is no such general provision prescribing a period of limitation for making an assessment and, even though the effect of the order of the Dy.
Commissioner passed in revision may be to bring about an assessment to tax of turnover which was set aside by the Assistant Collector in appeal.
, such an assessment does not come under any provision relating to limitation.
The decision of the Bombay High Court in Commissioner of Income tax, Bombay City 1 vs Narsee Nagsee & Co. (1) is also similarly inapplicable.
In that case, section 11 of the Business Profits Tax Act, 1947, which had no limitation prescribed for an order of assessment, was held to be governed by the 4 years ' period of limitation which was prescribed under section 14 for issue of a notice for reassessment.
The decision in that case turned on the fact that, if proceeding for reassessment could not be started after the expiry of four years from the end of the chargeable accounting period concerned, it would be totally unreasonable to hold that the first assessment of tax can be made after the expiry of that period.
The case before us relates to exercise of revisional powers and does not deal with the question of the first assessment to be made when the Return is initially filed by an assessee.
In fact, when a revisional power is to be exercised, we think that the only limitations, to which that power is subject, are those indicated by this Court in K. M. Cheria Abdulla & Co 's(2) case.
These limitations are that the revising authority should not trench upon the powers which are expressly reserved by the Acts or by the Rules to other authority and should not ignore the limitations inherent in the exercise of those powers.
In the present case, the Deputy Commissioner, when seeking to exercise his revisional powers, is clearly not encroaching upon the powers reserved to other authorities.
Under the Act of 1946, the first assessment is made by the Sales Tax Officer under section 11.
If information comes into his possession that any turnover in respect of sales or supplies of any goods chargeable to tax has escaped assessment in any year or has been under assessed or assessed at a lower rate or any deductions have been wrongly made therefrom, proceedings can be taken afresh under section 11A.
On the face of it, if a first assessment order is made under section 11 and any turnover escapes assessment, the appropriate provision, under which action is to be taken for assessing that turnover to tax, is section 11A.
There is, however, no provision under which the power now sought to be exercised by (1) (2) ; 502 the Deputy Commissioner in the case before us could have been exercised by any other authority.
In this case, as we have indicated earlier, the first assessment of tax was made by the Sales Tax Officer, and the turnover now in question was assessed to tax by him.
Having once assessed that turnover to tax, he could .not initiate a fresh proceeding in respect of it under section 11A.
The ,assessment made by him was set aside in appeal by the Assistant Collector and it is this order of the Assistant Collector which is sought to be revised by the Deputy Commissioner.
This is, therefore, not a case where the powers are being exercised for the purpose of assessing or reassessing an escaped turnover.
The case is one where the revisional powers are sought to be exercised to correct what appears to be an incorrect order passed in appeal by the Assistant Collector, and, for such a purpose, proceedings could not possibly have been taken under section 11A.
In exercising his revisional powers, therefore, the Deputy Commissioner is not encroaching upon the jurisdiction of any other authority specially entrusted with taking such proceedings.
In this connection, Mr. Desai relied on a decision of the Bombay High Court in Manordas Kalidas vs V. V. Tatke(1).
The decision in that case also related to this very Act of 1946, but the point to be kept in view is that in that case, the revisional power was sought to be exercised in respect of the original assessment order passed by the Sales Tax Officer under section 11 of the Act.
It was in these circumstances that the Bombay High Court, after referring to its two decisions in Bisesar House vs State of Bombay (2 and Commr.
of Income tax vs Narsee Nagsee & Co. held : ,,In neither of those two cases, revisional powers were sought to be exercised, but the principle of those cases must, in our judgment, apply for the same reasons to the exercise of revisional jurisdiction, and that jurisdiction must be exercised w ithin a reasonable period, and the yard stick of reasonableness will be the period prescribed for re assessment." It appears that in view of the fact that proceedings for re assessment could have been taken under section 11A in that case and, instead, revisional powers were sought to be exercised, that Court held that the exercise of such revisional powers must be, governed by the same limitation which applied to the exercise of power of reassessment.
In fact, the correct principle that should have been applied in that case is the principle mentioned by us earlier laid down in K. M. Cheria Abdulla & Co.(4).
The revision should have been held to be incompetent on the ground that the power (1) 11 S.T.C. 87.
(2) 9 S.T.C. 654.
(3) (4) ; 503 was sought to be exercised for assessment of escaped turnover which had not 'been assessed at all at the initial stage of assessment under section 11 and proceedings under section 11A could have been competently initiated for bringing that turnover to tax.
Instead, the Court equated the proceeding in revision with the proceeding for reassessment and applied the 4 year period of limitation which was prescribed only for reassessment and not for exercise of revisional power.
In our opinion, the ultimate decision in that case was perfectly correct, but we are unable to affirm the vie,%, that the revisional power is governed by any period of limitation laid down in section 11A for proceedings for reassessment of escaped turn over.
Reference, in this connection, was also made to a decision of this Court in Maharaj Kumar Kamal Singh vs Commissioner of Income tax, Bihar and Orissa(1), in which the Court dealt with a case of an assessee whose income to the extent of Rs. 93,604/representing interest on arrears of rent was omitted to be brought to assessment by the Income tax Officer.
Subsequently, in another case, the Privy Council held that interest on arrears of rent payable in respect of agricultural land was not agricultural income and, consequently, the Income tax Officer initiated reassessment proceedings under section 34(1) (b) of the Income tax Act.
The circumstance relied upon by learned counsel for the appellant was that the omission by the Income tax Officer to bring to assessment that interest was part of an order made by him after his initial assessment order had been set aside by the Appellate Assistant Commissioner who directed a fresh assessment, allowing the appeal against that order.
In that case, it was held that the escaped income could be brought to tax under section 34 of the Income Tax Act; and, on the basis of this decision, it was urged that, similarly, in the present case, the turnover now sought to be brought to tax in exercise of revisional powers could be re assessed under section 11A.
This argument ignores the circumstance that, in that case, the last order, under which the income from interest had been exempted from tax, was an order made by the Income Tax Officer himself, though after the assessment proceedings had been remanded to him by the Appellate Assistant Commissioner.
Since the income had escaped assessment under an order passed by the Income tax Officer himself, he could competently take proceedings under section 34.
In the case before us, the turnover of the assessee now sought to be taxed in the revisional proceedings did not escape liability to tax under the orders of the Sales tax Officer and, on the other hand, was actually taxed by him, which imposition of tax was set aside in appeal.
Consequently, the Sales Tax Officer could not possibly take proceedings under section II A in respect of that turnover.
(1) 504 For these reasons, we hold that the proceedings initiated by the Deputy Commissioner of Sales Tax against the appellant are not incompetent and the High Court was right in refusing the writ sought by the appellant.
The appeal fails and is dismissed with costs.
R.K.P.S. Appeal dismissed.
| IN-Abs | The appellant was registered as a dealer under the various Sales Tax Acts in force in Bombay from time to time i.e. Bombay Acts 5 of 1946, 3 of 1953 and 51 of 1959.
In the course of its assessments to sales tax for the periods from 1st April, 1948 to 31st March, 1950, and from 1st April 1950 to 31st March, 1951, the appellant claimed exemption from tax, inter alia, in respect of certain despatches of goods from its head office in Bombay to its branches in other States.
The Sales Tax Officer rejected these claims but, in appeal, the Assistant Collector accepted the claim in respect of the despatches to various branches though he rejected all other claims for exemption.
He also directed a refund of the excess 'tax collected from the appellants.
While revision petitions filed by the appellant against these orders were pending, a notice was issued to him on January 7, 1963 by the Deputy Commissioner of Sales Tax in Form XXIV under section 31 of the Bombay Sales Tax Act, 1953, intimating the appellant that he proposed to revise suo motu the orders passed by the Assistant Collector in so far as he had allowed deduction in respect of the entire goods despatched to the appellants ' branches outside Maharashtra because, in so doing, he had overlooked certain provisions of law which were specified in the notice.
Tile appellant filed a petition under article 226 of the Institution seeking to quash the notice dated 7th January, 1963 but his petition was dismissed by the High Court.
In the appeal to this Court it was contended on behalf of the appellant, inter alia (i) that in exercise of the revisional powers, the Deputy Commissioner, whether acting under the Sales Tax Act of 1946, or of 1953, or of 1959, could only proceed to take action on the basis of the material already present on the record and was not entitled to act on conjecture or to institute any enquiry so as to include additional material nor to judge the correctness of the order sought to be revised; (ii) that the notice in question was issued on 7th January, 1963, when the Act of 1959 had already come into force and the Act of 1953 had been repealed; so that any revisional jurisdiction could only be exercised by the Deputy Commissioner under the Act of 1959 and not under the Act of 1953 , as the power under section 57 of the Act of 1959 could only be exercised within five years from the date of the order sought to be revised; the notice issued by the Deputy Commissioner was time barred; and (iii) that the proceedings to be instituted were barred by time, because limitation of a reasonable time; within which the revisional Powers are to be exercised must be implied in the statute itself.
493 HELD : The proceedings initiated by the Deputy Commissioner of Sales Tax against the appellant were not incompetent and the High Court was right in refusing the writ sought by the appellant.
(i) Whenever a power is conferred on an authority to revise an order, it is entitled to examine the correctness, legality and propriety of the order and to pass such suitable orders as it may think fit in the circumstances of the particular case.
The proceedings for revision, if started suo motu, must not be based on a mere conjecture and there should be some ground for invoking the revisional powers.
Once these powers are invoked, the actual interference must be based on sufficient grounds and, if it is considered necessary that some additional enquiry should be made to arrive at a proper and just decision, there can be no bar to the revising authority holding or directing a further enquiry and thereafter admitting additional material.
[496 A C] The State of Kerala vs K. M. Cheria Ahdulla and Company, ; , explained and followed.
State of Andhra Pradesh vs T. G. Lakshmnaiah Setty & Sons, 12 S.T.C. 663; disapproves.
In the present case,.
the notice issued by the Deputy Commissioner, on the face of it, disclosed the reasons which led him to take proceedings for exercising his revisional powers suo motu, and it could not be said on those facts that he was acting merely on conjecture.
There was no reason to think that, when proceeding with his inquiry, he would not keep within the limitations indicated by this Court in K. M. Cheria Abdullas case.
(ii) The effect of section 77(1) (a) of the Act of 1959 is to continue in force the Act of 1953 as well as: the Act of 1946 to the extent to which they were in force when the Act of 1959 came into force for the purposes of levy, assessment, reassessment and collection of sales tax.
Fur thermore, by virtue of section 7(e) of the Bombay General Clauses Act, 1904, which was made applicable to the repeal of the Act of 1953 by section 77(3) of the 1959 Act, any legal proceeding in respect of levy, imposition or recovery of tax is to continue and any fresh investigation, legal proceeding or remedy could be instituted as if there had been no repeal by the Act of 1959.
Consequently, the repeal of the Act of 1953 did not in any way affect the power of the Deputy Commissioner to institute proceedings for revision suo motu against the appellate order of the Assistant Collector which had been Passed in exercise of his power under the Act of 1946.
[499 C 500 B] Although the Deputy Commissioner, in seeking to exercise revisional powers should have proceeded under section 22 of the Act of 1946 and not under section 31 of the 1953 Act, this fact was immaterial as the provisions of the two Sections were similar.
[500 D E] (iii) Section 22 of the Act of 1946 and section 31 of the Act of 1953 do not lay down any period of limitation for the exercise of the power of revision by a Deputy Commissioner suo motu and no such limitation could be read in the two Acts.
[500 G] The State of Orissa vs Debaki Debi and Others, 15 S.T.C. 153.
Commissioner of Income tax, Bombay City 1 vs Narsee Nagsee & Co., , Manordas Kalidas vs V. V. Tatke, 11 S.T.C, 87.
Disesar House vs State of Bombay, 9 S.T.C. 654, distinguished.
494 Maharaj Kumar Kamal Singh vs C.I.T., Bihar and Orissa, , referred to.
|
minal Appeal No. 50 of 1965.
Appeal by special leave from the judgment and order dated February 15, 1965 of the Bombay High Court in Criminal Revi sion Application No. 917 of 1964.
A. section R. Chari, O. P. Malhotra, V. N. Ganpule, P. C. Bhartari, and O. C. Mathur, for the appellants.
M. section K. Sastri and section P. Nayar, for the respondent.
The Judgment of the Court was delivered by Hegde, J.
In this appeal by special leave against the judg ment of the High Court of Bombay in criminal revision application No. 917/64, the question that arises for decision is whether on the facts found by the courts below, the appellants were properly held to be guilty of all or any of the offences for which they have been convicted.
In the trial court there were as many as nine accused.
All the accused excepting accused Nos. 1 and 2 who are appellants 1 and 2 respectively in this Court, were, acquitted.
The prosecution case is as follows : The acquitted third ac cused was the owner of the jeep bearing registration No. BYF 5448.
Accused ,No. 2 is his father.
They are the residents of Malshiras.
On October 27, 1962, the appellants along with PW Rambhau Bhombe and one other, went in the jeep in question first to Phaltan which is about 33 miles away from Malshiras, from there to Rajale about seven miles away from Phaltan.
From Rajale they returned to Phaltan and from there to Malegaon.
They stayed for the night at Malegaon.
Next day they returned to Phaltan and finally to Malshiras.
During all this time, appellant No. 1 was driving the jeep.
On the way from Phaltan to Malshiras, about a mile and a half from Phaltan, the jeep struck one Bapu Babaji Bhiwarkar, as a result of which he sustained serious injuries.
The appellants put the injured person in the jeep and brought back the jeep to Phaltan where they approached PW Dr. Karwa for medical aid, but Dr. Karwa refused to treat the injured as it was a medico legal case.
He asked them to go to Government Dispensary.
The appellants instead of going to the Government Dispensary, drove straight to Malshiras.
On the way the injured died.
At Malshiras the appellants cremated his dead body.
At the time of the incident, the first appellant had 517 only a learner 's licence and no person having a valid licence for driving was by his side.
The courts below have accepted the above facts and on the basis of those facts, the trial court convicted the appellant No. 1 under section 304A IPC, section 3 read with section 112 of the Motor Vehicles Act and under section 89 of the same Act.
It convicted the second appellant under section 201 IPC, section 5 as well as under section 89 of the Motor Vehicles Act.
These convictions were affirmed by the learned Sessions Judge of Satara in appeal and by the High Court in revision.
The conviction of the first appellant under the provisions of the Motor Vehicles Act was not challenged before us, but we fail to see how the second appellant could have been convicted either under section 5 or under section 89 of the Motor Vehicles Act.
In convicting him under those provisions, the courts below appear to have overlooked the fact that he was not the owner of the jeep.
Nor was there any proof that he was in charge of the jeep.
Hence, his convictions under those provisions cannot be sustained.
The conviction of the appellant No. 2 under section 201 IPC de pends on the sustainability of the conviction of appellant No. 1 under section 304A IPC.
If appellant No. 1 was rightly convicted under that provision, the conviction of appellant No. 2 under section 201 IPC on the facts found cannot be challenged.
But on the other hand, if the conviction of appellant No. 1 under section 304A IPC cannot be sustained, then, the second appellant 's conviction under section 201 IPC will have to be set aside, because to establish the charge under section 201, the prosecution must first prove that an offence had been committed not merely a suspicion that it might have been committed and that the accused knowing or having reason to believe that such an offence had been committed, and with the intent to screen the offender from legal punishment, had caused the evidence thereof to disappear.
The proof of the commission of an offence is an essential requisite for bringing home the offence under section 201 IPC see the decision of this Court in Palvinder Kaur vs State of Punjab (1).
Therefore the principal question for decision is whether on the facts found, appellant No. 1 was rightly convicted under section 304A IPC.
On the material on record it is not possible to find out under what circumstances the accident took place.
The High Court in its judgment specifically says that "There are no witnesses whose evidence can establish rash and negligent driving on the part of accused No. 1.
" We may go further and say that there is absolutely no evidence to show that the accused was responsible for the accident.
The prosecution has not produced any evidence to show as to how the accident took place.
The High Court observed: (1) 518 'It is however, a fact conclusively established and not disputed before me that the accused No. 1 had only a learner 's licence at the material time.
It is not even suggested before me that accused No. 2 held a driving licence so that he could act as a trainer for accused No. 1.
In fact, there is no suggestion by the defence that there was a trainer by the side of accused No. 1.
Thus on the facts established, it is quite clear that at the material time, the jeep was driven by accused No. 1, who not only did not have a valid driving licence, but had only a learner 's licence.
The question for consi deration, therefore, is whether driving a jeep on a public road by a person, who does not know driving and is consequently unable to control the vehicle, is a rash and negligent act as contemplated by Section 304A IPC." The court answered that question in these words "The very fact that the person concerned holds only a learner 's licence, in my opinion, necessarily implies that he does not know driving and must be assumed to be incapable of controlling the vehicle.
If a person who does not know driving and is a consequently not able to control a car or a vehicle, chooses to drive a car or a vehicle on a public road without complying with the requirements of Rule 16 of Bombay Motor Vehicles Rules, he obviously does an act, which can be said to be rash and negligent, as contemplated by Sec.
304A IPC.
It is negligent because he does not take the necessary care of having a trainer by his side.
It is rash because it utterly disregards the public safety.
Prima facie it appears to me that driving a vehicle like a jeep or motor car on a public road without being qualified to drive, particularly in the absence of any evidence to show that the person concerned had the necessary experience and good control over the vehicle would amount to a rash and negligent act, as contemplated by Sec.
304A IPC.
" Assuming that the High Court was right in its conclusion that appellant No. 1 had not acquired sufficient proficiency in driving therefore he was guilty of a rash or negligent act in driving the jeep that by itself is not sufficient to convict him under section 304A IPC.
The, prosecution must go further and prove that it was that rash or negligent act of his that caused the death of the deceased.
Section 304A says "Whoever causes the death of any person by doing any rash or negligent act not amounting to culpable 519 homicide shall be punished with imprisonment of either description for a term which may extend to two years, or with fine, or with both." The requirements of this section are that the death of any person must have been caused by the accused by doing any rash or negligent act.
In other words, there must be proof that the rash or negligent act of accused was the proximate cause of the death.
There must be direct nexus between the death of a person and the rash or negligent act of the accused.
As mentioned earlier there is no evidence to show that it was rash or the negligent act of the accused that caused the death of the deceased.
Before referring to the decided cases, we would like to revert to prosecution evidence for finding out whether the High Court was right in its inference that the accused was novice in the matter of driving.
From the prosecution evidence itself it is clear that he drove the jeep to various places on October 27, 1962.
Then there was the evidence of PW Shankar Burmule, showing that he had seen accused No. 1 driving for about six months to a year.
The learned Judge of the High Court discarded his evidence with these observations : "In the present case, Mr. Jahagirdar relies on the evidence of Shankar Burmule, which is at Exh. 39, to contend that accused No. 1 had considerable driving experience.
Unfortunately the English notes of evi dence by the learned trial Magistrate do not indicate that the witness stated that accused No. 1 had driving experience, but the evidence recorded in Marathi undoubtedly indicates that the witness claims to have seen accused No. 1 driving for about six months to a year.
The witness seems to be a relation of accused No. 2, though not a near relation, and his word cannot be taken at par.
Moreover the admitted fact that at the material time accused No. 1 held only a learner 's licence itself indicates that no importance can be attached to the abovesaid statement of Shankar Burmule.
It is also urged that accused No. 1 did take the jeep from Malshiras to Phaltan and to some other places and that also would bear out the statement of Shankar Burmule.
All that I can say is that it was a sheer stroke of good fortune that accused No. 1 did not meet with any accident during his trip from Malshiras to Phaltan and some other places." With respect to the learned Judge we think this was not the proper way of appreciating evidence.
Conclusions must be based on the evidence on record.
PW Shankar Burmule has given material 520 evidence against the accused.
His evidence establishes an important link in the prosecution case.
He could not have been compelled to give that evidence if he was not a truthful witness.
The learned public prosecutor did not make any attempt in his reexamination to show that any portion of his evidence was untrue.
There is no presumption in law that a person who possesses only a learner 's licence or possesses no licence at all does not know driving.
For various reasons, not excluding sheer indifference, he might not have taken a regular licence.
The prosecution evidence that appellant No. 1 had driven the jeep to various places on the day previous to the occurrence is a proof of the fact that he knew driving.
There was no basis for the conclusion that it, was a sheer stroke of good fortune that he did not meet with any accident on that day.
Now let us turn to the decided cases.
Dealing with the scope of section 304A IPC, Sir Lawrence Jenkins observed in Emperor vs Omkar Rampratap(1) : "To impose criminal liability under section 304A, Indian Penal Code, it is necessary that the death should have been the direct result of a rash and negligent act of the accused, and that act must be the proximate and efficient cause without the intervention of another 's negligence.
It must be the cause causans, it is not enough that it may have been the cause sine qua non.
" That, in our opinion is the true legal position.
The scope of section 304A IPC came to be considered by this Court in Kurban Hussein Mohammedali Rangwalla vs State of Maharashtra(2).
In our opinion, the ratio of that decision governs the facts of the present case.
The facts of that case were : The appellant was the manager and working partner of a firm which manufactured paints and varnish.
The factory was licensed by the Bombay Municipality on certain conditions to manufacture paints involving a cold process and to store certain Specified quantities of turpentine, varnish and paint.
The factory did not have a licence for manufacturing wet paints but nevertheless manu factured them.
Four burners were used in the factory for the purpose of melting rosin or bitumen by heating them in barrels and adding turpentine thereto after the temperature cooled down to a certain degree.
While this unlicensed process was going on froth overflowed out of the barrel and because of heat varnish and turpentine, which were stored at a short distance caught fire, as a result of which seven workmen died.
The appellant was prosecuted and convicted under section 304A and section 285, IPC.
Hi, , appeal was summarily dismissed by the Bombay High Court.
This Court set aside the conviction under section 304A IPC, holding that (1) 4B.L.R. 679.
(2) ; 521 the mere fact that the appellant allowed the burners to be used in the same room in which varnish and turpentine were stored, even though it would be a negligent act, would not be enough to make the appellant responsible for the fire which broke out.
In the course of the judgment this Court observed that the cause of the fire was not merely the presence of the burners within the room in which varnish and turpentine were stored, though that circumstance was indirectly responsible for the fire which broke out; what section 304A requires is causing of death by doing any rash or negligent act and this means that death must be the direct or proximate result of the rash or negligent act.
On the basis of the facts of that case, this Court held that the direct and proximate cause of the fire which resulted in seven deaths was the act of one of the workmen in pouring the turpentine too early and not the appellant 's act in allowing the burners to burn in the particular room.
In the present case, we do not know what was the proximate cause of the accident.
We cannot rule Out the possibility of the accident having been caused due to the fault of the deceased.
The question whether appellant No. 1 was proficient in driving a jeep or not does not conclude the issue.
His proficiency in driving might furnish a defence, which a learner could not have, but the absence of proficiency did not make him guilty.
The only question was whether, in point of fact he was not competent to drive and his incompetence was the cause of death of the person concerned.
On behalf of the prosecution reliance was placed on the de cision of this Court in Juggankhan vs State of Madhya Pradesh (1), to which one of us was a party (Sikri, J).
The ratio of that decision does not apply to the facts of the present case.
In that ,case, it had been conclusively proved that the rash or negligent act ,of the accused was the cause of the death of the person concerned.
For the reasons mentioned above, we are unable to agree 'with the courts below that on the basis of the facts found by them the first appellant could have been held guilty under section 304A IPC.
We accordingly allow his appeal and acquit him of that offence.
From that finding, it follows that the second appellant could not have been convicted under section 201 IPC.
In the result, the second appellant 's appeal is allowed in full and he is acquitted of all the charges.
The first appellant 's appeal is allowed in part and his conviction under section 304A is set aside.
But his other convictions are sustained, namely, his convictions under section 3 read with section 112 of the Motor Vehicles Act and section 89 of the same Act, for which offences only a sentence of fine had been imposed upon him.
Appeal allowed.
| IN-Abs | The first appellant holding only a learner 's licence was driving a jeep without a trainer by his side and injured a person.
The first appellant and his companion in the journey the second appellant put the injured in the jeep for getting medical aid, but the injured died on the way.
They cremated the dead body.
The first appellant was convicted under section 304 A I.P.C. and sections 3, 89 and 112 of the Motor Vehicles Act and the second appellant under section 201 I.P.C., and sections 5 and 89 of the Motor Vehicles Act.
HELD : There was no evidence to show that the first appellant was responsible for the incident so his conviction under section 304 A could not be sustained.
[517 H] The requirements of section 304 A I.P.C. are that the death of any person must have been caused by the accused by doing any rash or negligent act.
In other words, there must be proof that the rash or negligent act of the accused was the proximate cause of the death.
There must be direct nexus between the death of a person and the rash or negligent act of the accused.
There is no presumption in law that a person who possesses only a learner 's licence or possesses no licence at all does not know driving.
For various reasons, not excluding sheer indifference, he might not have taken a regular licence.
The prosecution evidence that first appellant had driven the jeep to various places on the day previous to the occurrence war.
a proof of the fact that he knew driving.
[519 B C; 520 B C] The question whether first appellant was proficient in driving a jeep or not does not conclude the issue.
His proficiency in driving might furnish a defence.
which a learner could not have, but the absence of proficiency did not make him guilty.
[521 D E] As the conviction of the first appellant under section 304 A I.P.C. could not be sustained, the conviction of second appellant under section 201 I.P.C. had to be set aside.
Because to, establish the charge under section 201, the prosecution must first prove that an offence had been committed not merely a suspicion that it might have been committed and that the accused knowing or having reason to believe that such an offence had been committed, and with the intent to screen the offender from legal punishment, had caused the evidence thereof to disappear.
The proof of the commission of an offence is an essential requisite for bringing home the offence under section 201 I.P.C. [517 D G; 521 F G] Palvinder Kaur vs State of Punjab, , and Kurban Hussein Mohammedan Rangwalla vs State of Maharashtra ; , followed.
Emperor vs Omkar Rampratap 4 B.L.R. 679, approved.
516 Juggankhan vs State of Madhya Pradesh, ; distinguished.
The 'second appellant could not be convicted either under section 5 or section 89 of the Motor Vehicles Act.
In convicting him under those provisions, the fact that he was not the owner of the jeep had been overlooked.
Nor was there any proof that he was in charge of the jeep.
|
minal Appeal No. 183 of 1967.
Appeal by special leave from the judgment and order dated August 9, 1967 of the Patna High Court in Criminal Writ Jurisdiction Case No. 31 of 1967.
M. C. Setalvad, R. L. Kohli and J. C. Talwar, for the appellant.
B.P. Jha, for the respondent.
The Judgment of the Court was delivered by Hidayatullah, J.
The appellant (Rameshwar Lal Patwari) applied under article 226 of the Constitution and section 491 of the Code of Criminal Procedure for a writ or order in the nature of habeas corpus for his release from detention in Bhagalpur Central Jail in pursuance of an order of detention passed by the Governor of Bihar on July 4, 1967 under section 3(1)(a)(iii) of the .
He was arrested under the order on July 11, 1967 and was served on July 13, 1967 with a copy of the grounds on which his detention was based to enable him to make a representation.
He made a representation but his release was not recommended.
His application in the High Court was also dismissed.
He now appeals by special leave.
The order of the Governor recites that it is necessary to make an order for his detention to prevent him from acting in any manner prejudicial to the maintenance of supplies and services essential to the community.
The grounds which were furnished to him were as follows : (1) He is a prominent businessman of Dumka and with the association of Sarvashri Mulchand Choudhury, Kanhaiaya Choudhury, Fulchand Modi, Pir Mohammad (Bengaria P.S.) Shikaripara and others he indulges in black marketing of foodgrains.
He has four trucks, one jeep and a car which have been registered in the names of his relatives Truck No. BRL 1331 which is registered in the name of his brother in law (sala).
Sri Harichandra Agarwala was caught on 29th December, 1966 at Ranibabal near Mashanjor while carrying 95 bags of peddy for illegal trade.
In this connection a case under the Essential Commodities Act has been instituted.
He is on bail in this case.
(2) His trucks always take to wicked routes to Saithia (West Bengal) and he himself pilots them.
(3) A businessman of Barahiya disclosed that he (Rameshwar Lal Patwari) visited Barahaiya on several occasions and purchased gram, gramdal under various names and smuggled them to West Bengal.
507 (4) On the night of 2 2 66, Sri R. section Singh, 1st Class Magistrate along with Sub Divisional Officer Sadar, other Magistrate and police officers, raided the house of Sri Rameshwar Lal Patwari and found aft kinds of foodgrains in huge quantity.
His stock register was maintained in irregular way.
fie could not produce the sale register and took the plea that it was produced before the Income Tax Officer.
It was found that he has been dealing in foodgrains without any licence.
A case has been instituted in this connection in which he is on bail.
(5) Shri Babu Ram Bikaneria, owner of a Rice Mill at Saitha District Birbhum (West Bengal) visited Dumka on 26 11 66 and told him (Sri Rameshwar Lal Patwari) to supply gram and gramdal.
He (Sri Rameshwar Lal Patwari) promised to supply gram and gramdal.
On 7/8 12 66 Sri Mulchand Choudhury of Rameshwar, who is his agent sent his truck No. BRJ 2029 load ed with gram and gramdal to Saitha through Mahesh Kola Check post.
His truck No. BRL 1366 and van BRL 2005 were found at Rameshwar on 7 12 1966 wherefrom he smuggles foodgrains to West Bengal.
He purchases gram and gramdal through Gopal Mandal of Lakhisarai (District Monghyr) and smuggles them to West Bengal.
In the circumstances, the State Government are satisfied that if Shree Rameshwar Lal Patwari is allowed to remain at large, he, will indulge in activities prejudicial to the maintenance of supplies and services essential to the community.
For prevention of such activities, the State Government consider his detention necessary.
Shri Rameshwar Lal Patwari is informed that he may make a representation in writing against the order under which he is detained.
His representation, if any, may be addressed to the Under Secretary to Government, Poli tical (Special) Department, Bihar, Patna and for warded through the Superintendent of the Jail as soon as possible.
By order of the Governor of Bihar.
" These grounds were challenged by the appellant in the High Court.
According to him some of them did not exist in fact and others were vague or irrelevant.
The High Court scrutinised them and came to the conclusion that his complaint had no substance.
In this appeal he urges the same contentions and submits that the High Court was in error in its conclusion.
508 Before we consider these grounds in the light of arguments before us, we may say a few words about the and the extent to which the exercise of powers under that Act can be questioned before courts.
Article 22(1) and (2) of the Constitution lay down that no person who is arrested shall be detained in custody without being informed of the grounds for such arrest, nor shall he be denied the right to consult and to be defended by, a legal practitioner of his choice and further that the person arrested and detained in custody shall be produced before the nearest Magistrate within a period of twenty four hours and no person shall be detained beyond that period (excluding the time necessary for the journey to the court of the Magistrate) without the authority of the Magistrate.
To this there is an exception in sub cl.
(b) of cl.
(3) of the article.
It says that these provisions shall not apply to any person who is arrested or detained under any law providing for preventive detention.
There are, however, other safeguards.
Clause (4) of the article provides that no law providing for preventive detention shall authorise the ,detention of a person for a longer period than three months unless an Advisory Board has reported before the expiration of that period of three months that there is in its opinion sufficient cause for such detention.
There are other provisions prescribing other checks with which we are not presently concerned.
In pursuance of this power Parliament has enacted the .
The by its third section enables the Central Government or the State Government, if satisfied with respect to any person that with a view to preventing him from acting in any manner prejudicial to the maintenance of supplies and services essential to the community, to make an order that such person be detained.
There are other grounds on which the power to detain may also be exercised but they do not apply here.
This power is also conferred on some officers named in the section.
When an officer makes an order he has to report to the State Government together with the grounds on which the order is based and in the like manner the State Government has to report to the Central Government.
Section 11 then provides that where an Advisory Board reports sufficient cause for the detention of a person, Government may confirm the detention and continue it for such period as it thinks fit.
If the Advisory Board reports that there is no sufficient cause Government must revoke the order and release the detenu.
Section 11 A pow prescribes the maximum period of detention.
It will thus be seen that the report of the Advisory Board plays ,in important part.
In the present case the report of the Advisory Board has been produced.
It reads "In our opinion, the grounds of detention served on the detenu also are fairly particular and generally well 509 founded.
It cannot, therefore, be said that there is no material for his detention in the way in which he had been indulging in the transport of foodgrains from Bihar to West Bengal frequently.
It cannot be held that the order of detention passed upon him is unreasonable.
The order in his case also cannot be disturbed.
Sd/ section C. Mishra 25 8 67.
Sd/ R. K. Choudhury.
Sd/ U. N. Sinha.
" The appellant contends that the Advisory Board has failed to notice also that the grounds furnished to him were vague and irrelevant and some of them did not exist in law.
Now the law on the subject of, Preventive, Detention has been stated over and over again and it is not necessary to refer to all that has been decided by this Court on numerous occasions.
We ,shall refer to what concerns this case.
The formation of the opinion about detention rests with the Government or the officer authorised.
Their satisfaction is all that the law speaks of and the courts are not constituted an appellate authority.
Thus the sufficiency of the rounds cannot be agitated before the court.
However, the detention of a person without a trial, merely on the subjective satisfaction of an authority however high, is a serious matter.
It must require the closest scrutiny of the material on which the decision is formed, leaving no room for errors or at least avoidable errors.
The very reason that the courts do not consider the reasonableness of the opinion formed or the sufficiency of the material on which it is based, indicates the need for the greatest circumspection on the part of those who wield this power over others.
Since the detenu is not placed before a Magistrate and has only a right of being supplied the grounds of detention with a view to his making a representation to the Advisory Board, the grounds must not be vague or indefinite and must afford a real opportunity to make a representation against the detention.
Similarly, if a vital ground is shown to be non existing so that it could not have and ought not to have played a part in the material for consideration, the court may attach some importance to this fact.
Thus it was in Shibban Lal Saksena vs U.P. (1) that when Government itself confirmed the order on one ground rejecting the other, the order was held unsustainable.
This Court applied the case of the Federal Court in Keshav Talpade vs The King Emperor(2) and held that the detention on the ground which survived could not be .allowed to stand.
The following observations may be quoted .
The detaining authority gave here two grounds for detaining the petitioner.
We can neither decide whether these grounds are good or bad, nor can we attempt (1) (1954] 1 S.C.R. 418.
(2) 510 to assess in what manner and to what extent each of these grounds operated on the mind of the appropriate authority and contributed to the creation of the satisfaction on the basis of which the detention order was made.
To say that the other ground, which still remains, is quite sufficient to sustain the order, would be to substitute an objective judicial test for the subjective decision of the executive authority which is against the legislative policy underlying the statute.
In such cases, we think, the position would be the same as if one of these, two grounds was irrelevant for the purpose of the Act or was wholly illusory and this would vitiate the detention order as a whole.
" This case is strongly relied upon by Mr. Setalvad for reasons which will soon appear.
The other side relies upon observations in Bhim Sen vs State of Punjab(1) where blackmarketing was considered a sufficient ground for detention.
No doubt blackmarketing has at its base a shortening of supplies because blackmarket flourishes best when the availability of commodities is rendered difficult.
It has a definite tendency to disrupt supplies when scarcity exists or scarcity is created artificially by hoarding to attain illegitimate profits.
Indulging in blackmarketing is conduct which is prejudicial to the maintenance of supplies.
It is hardly necessary to read supplies conjunctively with services as was contended although cases may exist where supplies and services may both be affected.
The word 'and ' is not used conjunctively but disjunctively.
If sweepers strike, no question of disrupting supplies arises but ser vices essential to the life of the community will certainly be disrupted.
Looked at from this angle, can we say that the detenu was supplied grounds which were not vague or indefinite or irrelevant or non existing '? The grounds are five in number.
Putting aside the first and fifth rounds for the time, we may refer to the second, third and fourth grounds first.
The second ground says that "his trucks always take to wicked routes to Saithia (West Bengal) and he himself pilots them." This ground is extremely vague.
It does not mention a single instance of a truck taking a particular route so that the detenu could prove to the satisfaction of the Advisory Board that the statement was false.
Bhim Sen 's case the conduct of the black marketer was shown in an appendix.
Here no particulars are furnished and beyond denying the allegation, the detenu cannot make effective representation.
The details could not be such as were required to be concealed in the public interest under section 7(2) of the Act.
The third ground that "a businessman of Barahiya disclosed that he (Rameshwarlal Patwari) visited Barahiya on several occasions and purchased gram, gramdal under various (1) ; 511 names and smuggled them to West Bengal" is equally vague.
Learned counsel for the State admitted that some details were necessary to give the detenu an opportunity.
It is obvious that without the names of shops, dates of purchase, etc.
it is next to impossible to controvert such an allegation.
The fourth ground speaks of a pending case in which the appellant is said to be on bail.
The grounds were furnished in July 1967.
The appellant was tried for the offence and acquitted as far back as February 1967.
This ground discloses carelessness which is extremely disturbing.
That the detaining authority does not know that the appellant was tried and acquitted months before, and considers the pendency of the case against him as one of the grounds of detention shows that due care and attention is not being paid to such serious matters as detention without trial.
If the appellant was tried and acquitted, Government was required to study the judgment of acquittal to discover whether all these allegations had any basis in fact or not.
One can understand the use of the case if the acquittal was technical but not when the case was held to be false.
In any event, even if there was no need to consider the result of the case the case could not be referred to as a pending case.
What is still more disquieting is the attempt to avoid admitting frankly that there has been a mistake in including this ground.
in the return this is what is said : "That the facts stated in paragraph 4 of the ground of detention are not non est.
Those facts stated in paragraph 4 even existed after acquittal.
In regard to the facts stated in paragraph 4 the prosecution failed to prove the prosecution case and, therefore, he was acquitted.
The detenu had full knowledge of the facts that he was acquitted by the Court in regard to the facts stated in paragraph 4 of the grounds of detention and, therefore, he was not handicapped in making a representation to the Advisory Board.
" This means that anything wrong or even false may be stated in the grounds leaving the detenu to deny it and prove his version.
The attempt to cover up the mistake is as futile as it is disingenuous.
This leaves over the first and fifth grounds ' The first charges the appellant with blackmarketing of foodgrains in conjunction with certain named persons.
No facts are mentioned and this part of the ground is equally vague.
No incident is cited except one.
The ground goes on to say that his trucks, jeep and car Ire registered in the names of his relatives.
One such truck is mentioned, namely, truck No. BRL 1331.
It is said to be registered in the name of his brother in law and it is further stated that it was 512 caught on December 29, 1966 at Ranibahal (near Mashanjor) while carrying 95 bags of paddy for 'illegal trade ' and that in this connection a case under the Essential Commodities Act has been instituted against 'him '.
It is hot clear who is meant the appellant or his brother in law.
In a notice from the District Supply Officer, Dumka it was stated : "It was learnt from your driver that on 29 11 66 (sic) at 3.50 a.m., ninety five bags of paddy (190 mds.) was coming from Ranibahal to Dumka in your truck BRL 1331 belonged to you.
" The appellant has denied that the paddy belonged to him.
He pointed out that in the notice it was admitted that the paddy was being taken to Dumka in Bihar, while in the grounds it was stated that it was on its way to West Bengal and that carrying of goods from Ranibahal to Dumka (both in Bihar) was no offence.
In his reply to the District Supply Officer the appellant had stated : "1.
I am a retail dealer in food grains holding foodgrain License No. 204 of 1966.
The truck bearing No. BRL 1331 does not belong to me.
The said 95 bags of paddy loaded on the said truck No. BRL 1331 does not belong to me.
The fact is that the said 95 bags of paddy belong to Shri Prahlad Rai Giluka of village Banskuli, P. section Ranishwar who is a cultivator which he had agreed to sell to me on condition that the delivery of the said paddy will be made to me at Dumka.
I therefore, request that the cause shown above be accepted and the proceedings, if any, may kindly be dropped.
" It appears that Prahlad Rai Giluka of Mouza Banskuli, P. section Ranishwar confirmed this before the District Supply Officer by stating as follows : "1.
That your petitioner is a cultivator and owns more than 100 bighas of Dhani lands at Mouza Murgani Ranibahal and Kumnirdaha and other villages which are contiguous villages.
That the petitioner 's son Prabhudayal Giluka is to start a business and as such there was necessary (sic) of fund and the petitioner proposed to sell 95 bags of paddy to one Rameshwar Lal Patwari of Dumka from his Murgani and Ranibahal land.
513 4.
That it was agreed that the paddy will be delivered at Dumka where the price will be paid.
That the petitioner accordingly engaged the truck of one Haris Chandar Agarwala, his BRL 1331 and asked his Munshi Mahadev Pal to load 95 bags of paddy in the truck.
That when the paddy in question was in the process of loading at Ranibahal the paddy was seized by the District Supply Officer on 29 12 66. 8. 9. 10.
That the paddy in question is not involved in any offence the same should be released forthwith.
" When these documents came to be filed, the return of the State Government made the following reply and avoided the issue: "4 It appears that the notice was issued on the statement of the driver of the truck who stated that he was bringing 95 bags of paddy from Ranibahal to Dumka in the truck belonging to the appellant.
The statement of the driver clearly shows that the truck belonged to the appellant.
The driver did not ' tell anything about the facts stated in annexure 'D ' to special leave paper book (Page 49 to 51).
" This shows that there was no inquiry at all.
The alleged statement of the driver was accepted and it was assumed that the paddy was being taken to West Bengal.
At least the explanation of the persons concerned could have been obtained.
This is clearly a case of jumping to a conclusion which is being lamely justified, when it is questioned with written record.
In these circumstances there is much reason to think that this ground probably did not exist although we are not in a position to say that it is non existing.
The fifth ground mentions that one Babu Ram Bikanaria wanted gram and gramdal at his Rice Mill at Saitha District Birbhum (West Bengal) and visiting Dumka contacted the appellant.
The latter promised to supply gram and gramdal.
On 7/8 December 1966 one Mulchand Choudhury sent truck No. BRJ 2029 loaded with gram and gramdal to Saitha through Mahesh Kola checkpost.
Further Mulchand 's truck No. BRL 1366 and van BRL 2005 were found at Raneshwar on December 7, 1966 from where 'he ' smuggles foodgrains to West Bengal. 'He ' pur chases ram and gramdal through Gopal Mandal of Lakhisarai (Dist.
Monghyr) and smuggles them to West Bengal.
It is again Sup.
C1/68 2 514 not clear who this 'he ' is.
The appellant has denied that he does in gram and gramdal and has any connection with Gopal Mandal of Lakhisarai or knows him.
He has denied all contact with such persons.
No reply to this was given in the return filed in this Court.
It appears that there may be suspicion that the appellant may be connected with some blackmarketing.
We are not concerned with the sufficiency or the reasonableness of the grounds.
In this case at least two grounds are vague, one ground is found to be false and of the remaining in one there is no explanation and in the other there is a lame excuse that the driver of the truck did not furnish the full information.
The case is thus covered by our rulings that where some grounds are found to be non existing or are cancelled or given up, the detention cannot be justified.
It is further covered by our decisions that if the grounds are not sufficiently precise and do not furnish details for the purpose of making effective representation the detention can be questioned.
This case displays both these defects and it is a matter of great regret that powers of detention without a trial, which should be ,exercised with the greatest care and attention have been exercised in this case with such disregard for truth and accuracy.
We accordingly allow the appeal and hold the detention of the appellant to be illegal and order his release.
G.C. Appeal allowed.
| IN-Abs | The appellant was detained under an order of the Governor of Bihar State under section 3(1)(a)(iii) of the .
The grounds of detention supplied to him mentioned that he was engaged in the black marketing of food grains.
He made a representation before the Advisory Board but his release was not recommended.
In a writ petition before the High Court he urged that the grounds of detention supplied to him were either vague or non existent.
The petition having been dismissed by High Court the appellant by special leave, came to this Court.
HELD:(i) The formation of the opinion about detention rests with the Government or the officer authorised.
Their satisfaction is all that the law speaks of and the courts are not constituted an appellate authority.
Thus the sufficiency of the grounds cannot be agitated before the court.
However, the detention of a person without a trial, merely on the subjective satisfaction of an authority however high, is a serious matter.
it must require the closest scrutiny of the material on which the decision is fo leaving no room for errors or at least avoidable errors.
Since the detenu is not placed before a Magistrate and has only a right of being supplied the grounds of detention with a view to his making a representation to the Advisory Board, the grounds must not be vague or indefinite and must afford a real opportunity to make a representation against the detention.
If a vital ground is shown to be non existing so that it could not have and ought not to have played a part in the material for consideration, the court may attach some importance to this fact.
[509 D G] Shibban Lai Saksena vs U.P. ; and Keshav Talpade The King Emperor, referred to.
(ii) Black marketing is a sufficient ground for detention because it has a definite tendency to disrupt supplies when scarcity exists or scarcity is created artificially by hoarding to attain illegitimate profits.
Indulging in black marketing is conduct which is prejudicial to the maintenance of supplies.
It is hardly necessary to read supplies conjunctively with services, although cases may exist where supplies and services may both be affected.
The word 'and ' is not used conjunctively but disjunctively.
If sweepers strike, no question of disrupting supplies arises but services essential to the life of the community will certainly be disruped.
[510 B] Bhim Sen vs State of Punjab, ; , referred to.
(iii)The grounds of detention supplied to the appellant were either non existent or vague or otherwise deficient and, did not justify the detention of the appellant.
It was a matter of great regret that powers of detention without a trial which should be exercised with the greatest care and attention had been exercised in this case with disregard for truth and accuracy.
[514 B D]
|
Appeal No. 287 of 1967.
Appeal from the judgment and order dated May 29, 1964 of the Punjab High Court in Civil Writ No. 1609 of 1961.
Harbans Singh and R. N. Sachthey, for the appellants.
The Judgment of the Court was delivered by Shah, J.
The respondents Joint Stock Company has its principal place of business in Bombay, and a branch office in New Delhi.
The Assessing Authority, Karnal, exercising power under the Punjab Professions, Trades, Callings and Employments Taxation Act 7 of 1956, assessed the respondent to, profession tax 537 for the years 1960 61 and 1961 62 and issued a notice of demand for the amount so assessed.
The High Court of Punjab quashed the notices of demand and the assessment orders holding that the respondent did not carry on trade within the State of Punjab and was not liable to be assessed to tax under the Act.
The State of Punjab has appealed to this Court against the order of the High Court.
Section 3 of Act 7 of 1956 provides "Every person who carries on trade, either by himself or by an agent or representative, or who follows a profession or calling or who is in employment, either wholly or in part, within the State of Punjab, shall be liable to pay for each financial year or a part thereof a tax in respect of such profession, trade, calling or employment.
Provided . . .
The respondent, it is common ground, has no branch office or any other place of business in the State of Punjab.
It has also not appointed any agent or representative to carry on business on its behalf within the State.
The respondent supplies goods to the Government of Punjab and certain "semi Government bodies" in the State in execution of orders received at its branch office at Delhi.
The goods are despatched from Delhi by rail or by public motor transport.
Pursuant to the terms and conditions of the "Rate Contract" between the respondent and the Controller of Stores for the State of Punjab, the respondent consigns the goods sold by it to the appropriate Government Department F.O.R. des tination.
Inspection of the goods is made within the State of Punjab.
The price for the goods sold is collected by presenting bills or railway receipts through Banks to the consignees.
The Assessing Authority held that the respondent "may rea sonably be regarded as selling goods within" the State of Punjab because it was supplying goods F.O.R. destination.
The High Court held that the respondent could not in law be regarded as carrying, on trade at the place at which the goods were supplied, merely because the railway or other receipts were taken out in the name of the respondent and presented to the purchasers duly endorsed in their favour to secure realization of the price of the goods.
Liability to pay tax under Act 7 of 1956 arises if a person carries on trade by himself, or through his agent, or follows a profession or is in employment within the State, and not otherwise.
The expression "trade" is not defined in the Act.
"Trade" in its primary meaning is the exchanging of goods for goods or goods for money; in its secondary meaning it is repeated activity in the 538 nature of business carried on with a profit motive, the activity being manual or mercantile, as distinguished from the liberal arts or learned professions or agriculture.
The question whether trade is carried on by a person at a given place must be determined on a consideration of all the circumstances.
No test or set of tests which is or are decisive for all cases can be evolved for determining whether a person carries on trade at a particular, place.
The question, though one of mixed law and fact, must in each case be determined on a consideration of the nature of the trade, the various steps taken for carrying on the trade and other relevant facts.
In the present case, the respondent has no shop or office within the State of Punjab.
The respondent supplies goods within the State pursuant to orders received and accepted at New Delhi, and also receives price for the goods within the State.
But these are ancillary activities and do not in our judgment amount to carrying on trade within the State of Punjab.
We need not refer in detail to cases such as Grainger and Son vs Gough (Surveyor of Taxes) (1); F. L. Smith & Co. vs F. Greenwood (Surveyor of Taxes)(2); and Firestone Tyre Co. Ltd vs Lewellin, (3) which interpret the expression "trade exercised within the United Kingdom" in the English Income Tax Acts, for they merely lay down that for the purpose of the Income Tax Acts, there is no single, decisive or "crucial" test to determine whether the tax payer exercises trade at a given place.
The appeal fails and is dismissed.
The respondent has not appeared at the hearing.
There will, therefore, be no order as to ,costs.
| IN-Abs | The respondent a Joint Stock Company, having no shop or office or agent within the State of Punjab, used to supply goods within the State pursuant to orders received and accepted at New Delhi, and also used to receive the price for the goods within the State.
The Assessing Authority, Kamal, assessed the respondent to profession tax under the Punjab Professions, Trades, Callings and Employments Taxation Act, 1956.
The order was quashed by the High Court.
In appeal to this Court, HELD : The activities of the respondent in the State were mere ancillary activities and did not amount to carrying on trade within the State.
[538 C D] The expression "trade" is not defined in the Act.
"Trade" in its primary meaning is the exchanging of goods for goods or goods for money; in its secondary meaning it is repeated activity in the nature of business carried oh with a profit motive, the activity being manual or mercantile, as distinguished from the liberal arts or learned professions or agriculture.
The question whether trade is carried on by a person at a given place, though one of mixed law and fact, must in each case be determined on a consideration of the nature of the trade, the various steps taken for carrying on the trade and other relevant facts.
[537 H 538 E] Grainger and Son vs Gough (Surveyor of Taxes) , F.L. Smith & Co. vs F. Greenwood (Survevor of Taxes), 8 T.C. 193 and Firestone Tyre Co. Ltd. vs Lewellin, distinguished.
|
No. 55 of 1954.
Under article 32 of the Constitution for the enforcement of fundamental rights.
N. C. Chatterjee, (J. B. Dadachanji and Rajinder Narain, with him) for the petitioners.
K. V. Tambe and I. N. Shroff for the respondent.
April 5.
The Judgment of the Court was delivered by JAGANNADHADAS J.
This is a petition under article 32 of the Constitution and is presented to this Court under the following circumstances.
Petitioner No. I before us was an Agricultural Demonstrator of the Government of Madras and was employed as an Assistant Marketing Officer in Central Provinces and Berar for the purchase and movement of blackgram and other grains on behalf of the Madras Government.
He, as well as the second petitioner and 44 others, are under prosecution before Shri K. E. Pandey, a Special Magistrate of Nagpur, Madhya Pradesh, in Case No. I of 1949 pending before him on charges of cheating, attempt to commit cheating, criminal breach of trust 22 170 and criminal conspiracy, (i.e., for offences punishable under section 420 read with section 120 B or 109 of the Indian Penal Code, section 409 and section 409 read with section 120 B of the Indian Penal Code) and the allegation is that by reason of the acts committed by the accused, the Government of Madras had to incur an expenditure of Rs. 3,57,147 10 0 in excess of the amount due.
The Special Magistrate before whom the case is now pending was appointed by the Madhya Pradesh Government under section 14 of the Criminal Procedure Code, and as the first petitioner was a servant of the Government of Madras, the prosecution against him has been initiated by sanction given by the Government of Madras under section 197(1) of the Criminal Procedure Code.
The validity of the prosecution is challenged on various grounds, and the present petition is for quashing the proceedings on the ground of their invalidity.
The three main points taken before us are: (1) Section 14 of the Criminal Procedure Code, in so far as it authorises the Provincial Government to confer upon any person all or any of the powers conferred or conferrable by or under the Code on a Magistrate of the first, second or third class in respect of particular cases and thereby to constitute a Special Magistrate for the trial of an individual case, violates the guarantee under article 14 of the Constitution; (2) The sanction given under section 197(1) of the Criminal Procedure Code for the prosecution as against the first petitioner is invalid, inasmuch as the order of the Madras Government granting the sanction does not disclose that all the facts constituting the offences to be charged were placed before the sanctioning authority ; nor does the sanction state the time or place of the occurrence or the transactions involved in it, or the persons with whom the offences were committed.
This contention is raised relying on the Privy Council case in Gokulchand Dwarkadas Morarka vs The King(1); (3) Even if the sanction under section 197 (1) of the Criminal Procedure Code is valid, it is for the very Government which accords the sanction to specify also the Court before (1) A.I.R. 1948 P.C. 82. 171 which the trial is to be held under section 197(2) and in the absence of any such specification by the said Government, the power under section 14 of the Criminal Procedure Code of appointing a Special Magistrate for the trial of the case cannot be exercised by the Madhya Pradesh Government.
These points may now be dealt with seriatim.
In support of the objection raised under article 14 of the Constitution, reliance is placed on the decision of this Court in Anwar Ali Sarkar 's case (1).
That decision, however, applies only to a case where on the allotment of an.
individual case to a special Court authorised to conduct the trial by a procedure substantially different from the normal procedure, discrimination arises as between persons who have committed similar offences, by one or more out of them being subjected to a procedure, which is materially different from the normal procedure and prejudicing them thereby.
In the pre sent case, the Special Magistrate under section 14 of the Criminal Procedure Code has to try the case entirely under the normal procedure, and no discrimination of the kind contemplated by the decision in Anwar Ali Sarkar 's case (1) and the other cases following it arises here.
A law vesting discretion in an authority under such circumstances cannot be said to be discriminatory as such, and is therefore not hit by article 14 of the Constitution.
There is, therefore, no substance in this contention.
As regards the second ground which is put forward on the authority of the Privy Council case of Gokulchand Dwarkadas Morarka vs The King(2), it is admitted that the trial has not yet commenced.
The Privy Council itself in the case mentioned above has recognised that the lacunas, if any, in the sanction of the kind contemplated by that decision can be remedied in the course of the trial by the specific evidence in that behalf.
Learned counsel for the State, without conceding the objection raised, has mentioned to us that evidence in that behalf will be given at the trial.
It is, therefore, unnecessary to decide the point whether or not the sanction, as it is, and without such evidence is invalid.
(1) ; (2) A.I.R. 1948 P.C. 82.
172 It is the third point that has been somewhat seriously pressed before us.
The contention of learned counsel for the petitioners is based on sub section (2) of section 197 of the Criminal Procedure Code, which runs as follows : " The Governor General or Governor, as the case may be, exercising his individual judgment may determine the person by whom, the manner in which, the offence or offences for which, the prosecution of such Judge, Magistrate, or public servant is to be conducted, and may specify the Court before which the trial is to be held.
" The argument is that it is for the very Government which sanctioned the prosecution under section 197(1) to specify the Court before which the trial is to be held and no other, and that consequently, in a case to which section 197(1) applies, the exercise of any power under section 14 is excluded.
It is said that though the exercise of the power under section 197(2) in so far as it relates to specification of the Court is concerned is discretionary and optional, but if in an individual case, that power is not exercised, it must be taken that the appropriate Government did not feel called upon to allot the case 'to any special Court, and that, therefore, such allotment by another Government under section 14 would affect or nullify the power of the appropriate Government under section 197(2).
It is also suggested that such dual exercise of the power by two Governments would be contrary to the policy underlying section 197 which is for the protection of the public ser vant concerned, by interposing the sanction of the Government between, the accuser and its servants of the categories specified therein.
This argument is farfetched.
In the first instance, there is no reason to think that section 197(2) is inspired by any policy of protection of the concerned public servant, as section 197(1) is.
There can be no question of protection involved by an accused being tried by one Court rather than by another at the choice of the Government.
The power under section 197(2) appears to be vested in the appropriate Government for being exercised, on grounds of convenience, or the complexity or gravity of the case or other relevant considerations.
The argument as to 173 the implication of non exercise of the power by the appropriate Government under section 197(2) is also untenable.
The power to specify a Court for trial in such cases is a permissive power, and there can be no such implication, as is contended for, arising from the non exercise of the power.
This entire argument, however, is based on a misconception of the respective scopes of the powers under, section 197(2) and section 14.
The one relates to the "Court" and the other to the "Person".
Under sub section (2) of section 197, the sanctioning Government may specify a. Court for the trial of the ' case but is not bound to do so.
When it does not choose to specify the Court, the trial is subject to the operation of the other provisions of the Code.
But even when it chooses to exercise the power of specifying the Court before which the trial is to be held, such specification of the Court does not touch the question as to who is the person to function in such Court before which the trial is to take place.
That is a matter still left to be exercised by the Provincial Government of the area where the trial is to take place. 'The argument of learned counsel proceeds on treating the word "Court" in sub section (2) of section 197 as being the same as a "person" in sub section (1) of section 14, for which there is no warrant.
There is accordingly no substance in this contention.
In addition to the above three points, learned counsel for the petitioners has also raised a further point that in the present case Shri K. L. Pandey who was first appointed as a Special Magistrate for the trial of the case, and to whose file on such appointment this case was transferred, was later on appointed as acting Sessions Judge for some time and ceased to have this case before him.
He reverted back from his position as acting Sessions Judge to his original post.
The point taken is that without a fresh notification appointing him as Special Magistrate and transferring the case to him as such, he cannot be said to be seized of this case as Special Magistrate.
Here again, learned counsel for the State informs us, without conceding the point so taken, that he is prepared to advise the Government 174 to issue the necessary notification and have the case transferred.
In view of that statement, it is unnecessary to pronounce on the objection so raised.
In the result, all the points raised on behalf of the petitioners fail, and this petition must be dismissed.
It is desirable to observe that the questions above dealt with appear to have been raised before the High Court at previous stages by means of applications under article 226 and decided against.
No appeals to this Court have been taken against the orders therein.
Nothing that we have said is intended to be a pronouncement as to the correctness or otherwise of those orders, nor to encourage the practice of direct approach to this Court (except for good reasons) in matters which have been taken to the High Court and found against, without obtaining leave to appeal therefrom.
Petition dismissed.
| IN-Abs | The petitioner, an officer of the Madras Government, was employed in Central Provinces and Berar for the purchase of grains on behalf of the Madras Government.
He along with many others, was under prosecution before a Special Magistrate, Nagpur (Mad by a Pradesh), on charges for offences under section 420 of the Indian Penal Code etc.
for causing loss to the Madras Government.
The Special Magistrate trying the case was appointed by the Madhya Pradesh Government under section 14 of the Code of Criminal Procedure and as the petitioner was a servant of the Government of Madras, the prosecution against him was initiated with the sanction given by the Government of Madras under section 197 of the Code of Criminal Procedure.
Held, (i) that section 14 of the Criminal Procedure Code in so far as it authorises the Provincial Government to confer upon any person all or any of the powers conferred or conferrable by or under the Code on Magistrates of the first, second or third class in 169 respect of particular oases and thereby to constitute a Special Magistrate for the trial of an individual case, does not violate the guarantee under article 14 of the Constitution as the Special Magistrate in the present case had to try the case entirely under the normal procedure and no discrimination of the kind contemplated by the decision in Anwar Ali Sarkar 's Case ([1952] S.C.R. 284) arose in the present case.
A law vesting discretion in an authority under such circumstances cannot be discriminatory and is, therefore, not hit by article 14 of the Constitution.
(ii) It is not for the very Government which accords sanction under section 197(1) to specify also the Court before which the trial is to be held under section 197(2) and therefore in a case to which section 197(1) applies, the exercise of any power under section 14 is not excluded.
The word "Court" in sub section (2) of section 197 is not the same thing as a "person" in sub section (1) of section 14.
The practice of direct approach to the Supreme Court under article 32 (except for good reasons) in matters which have been taken to the High Court and found against, without obtaining leave to appeal therefrom, is not be encouraged.
Gokulchand Dwarkadas Morarka vs The King (A.I.R. 1948 P. C. 82) referred to; and Anwar Ali Sarkar 's case ([1952] S.C.R. 284) distinguished.
|
minal Appeal No. 92 of 1965.
Appeal by special leave from the judgment and order dated ' October 20, 1964 of the Madhya Pradesh High Court in Criminal Appeal No. 67 of 1964.
I.N. Shroff and M. N. Shroff, for the appellant.
O.P. Rana, for the respondent.
The Judgment of the Court was delivered by Hidayatullah, J.
The respondent Ramprasad against whom the State of Madhya Pradesh has filed this appeal by special leave was tried in the Court of Session under section 302 of the Indian Penal Code.
He was convicted by the Sessions Judge under section 324 of the Code and sentenced to rigorous imprisonment for six months.
The State Government there filed an appeal against his acquittal under section 302, Indian Penal Code and also 'an application for 523 revision for the enhancement of the sentence passed on him.
The High Court convicted him under section 304 Part II and sentenced him to 4 years ' rigorous imprisonment; concurrently the application for revision was dismissed as infructuous.
The State Government has now filed this appeal and contends that the conviction of the respondent should have been under section 302 of the Indian Penal Code and that there has been failure of justice in the case requiring interference from this Court.
The facts of the case are as follows : Ram Prasad was living with his mistress Mst.
Rajji at Mannaur in District Panna.
Evidence shows that they were having quarrels for some time previous to the incident which took place on May 24, 1963.
On that date, Ram Prasad intended leaving Mannaur for a place called Harsa, because his cattle used to be stolen at Mannaur.
Rajji was unwilling to go with him unless he first reported the matter to the police station house before taking her to Harsa; alternatively, she wanted that he should leave her at Mannaur and give her some cattle for her maintenance.
To either course Ram Prasad was unwilling.
Matters came to a head on the night of.
the 24th when Rain Prasad ordered a van in which he began putting his luggage with a view to leaving for Harsa.
Rajji then went to some of the village panchas and brought them over for intercession.
It is these panchas who have now appeared as witnesses to the incident that took place immediately afterwards.
To all the panchas Mst.
Rajji again narrated the story of her grievance and Ram Prasad insisted on taking her away.
As Rain Prasad would not give in, nor would Rajji, the panchas could do nothing further and some of them went away to their lodging which were close to the residence of Ram Prasad.
Evidence then shows that Ram Prasad approached Mannulal (P.W.4) with a lantern in one hand and an aluminium bowl in the other.
He asked for some kerosene oil, because oil in his lamp had run down, but Mannulal did not give any as he had none to spare.
Immediately thereafter Ram Prasad went back to his room and a cry was heard from Mst.
Rajji that Ram Prasad had put kerosene oil on her and set her alight.
Mannulal, Holke and others immediately arrived on the scene and put out the fire, but before that happened, Mst.
Rajii was extensively burnt.
She kept on, accusing Ram Prasad with the deed, but Ram Prasad, according to the witnesses, did not say anything in protest.
On the other hand, when he was questioned by the panchas as to why he had done so, he retorted that Mst.
Rajji was his wife and what had they to do with the matter and added that they might even get him hanged.
Rajji was then taken on cycle to the police station house although the hospital was on the way.
Evidence shows that Mst.
Rajji insisted on being taken to the police station house first.
There she made the statement which is exhibit P 7, in, which she charged Ram Prasad with her condition and stated also,, 524 that he had put kerosene oil on her and set her clothes on fire.
Later she was removed to the hospital where separately to two doctors in attendance (Dr. Mrs. Ghosh and Dr. M. L. Gupta) she again stated that she was burnt by her husband who had put kerosene oil on her.
Dr. Ghosh noted on the bed head ticket "homicidal burn by husband '.
The next day, Mst.
Rajji died Prosecution produced the panchas as witnesses to the earlier transaction in which Mst.
Rajji and Ram Prasad had disagreed over going to Harsa and also in proof of the statement of Mst.
Rajji that Ram Prasad had put kerosene oil on her and set her clothes alight.
They have also through the same witnesses proved the conduct of Ram Prasad when Mst.
Rajji accused him of having committed the outrage.
The prosecution has further relied upon the statements made by Mst.
Rajji in exhibit P 7 and to the two doctors who have deposed in the court.
The High Court and the court below have agreed in holding Ram Prasad responsible for the outrage.
They have accepted the three dying declarations as well as the evidence of the eye witnesses in support of the prosecution case. 'They have only ,differed as to the offence disclosed by this evidence.
We issued notice to the respondent to show cause against the appeal of the State Government.
Although he received the notice, he did not make any arrangement for his own representation in this Court.
We accordingly invited Mr. O. P. Rana to appear as amicus curiae on behalf of the respondent at State expense.
We allowed Mr. Rana to argue not only about the nature of the offence but also on merits with a view to point out to us any circumstance proving that the conviction itself was wrong.
Although there is no provision to this effect in the rules of this Court, we thought it safer to follow the procedure laid down for the High Court in the Code of Criminal Procedure when it hears 'a matter after notice of enhancement of sentence.
It seemed to us to be both fair and just to give the accused a chance to prove to the satisfaction of this Court that the offence itself had not 'been brought home to him.
In so far as the quarrel between Ram Prasad and Mst.
Rajji is concerned,there is nothing which can be said against it.
In fact the record bristles with evidence on this point.
All theevidence which has been brought to show that Ram Prasad was intending to leave for Harsa and Mst.
Rajji was resisting him could not be false, because the panchas were called and they attempted to intervene.
The real dispute is as to whether it was Ram Prasad who poured kerosene oil on Mst.
Rajji and set her alight or whether, as suggested by Ram Prasad and pleaded by Mr. Rana, it was Mst.
Rajji who herself put her own clothes on fire and committed suicide at the same time falsely charging Ram Prasad with the outrage.
In this connection, prosecution produc 525 ed four witnesses.
The first is Mannulal who was present at the.
calling of the panchayat by Mst.
Rajji.
In fact it was Mst.
Rajji herself who went to summon him to the house of Ram Prasad and it was from him that Ram Prasad asked for some kerosene off.
The fact that kerosene oil was asked for is admitted by Ram Prasad himself and the question arises why was it necessary for Ram Prasad to have asked for kerosene oil at that moment and why immediately afterwards Mst.
Rajji was found with her clothes burning.
No doubt, Mannulal did not give any kerosene oil but it seems to us that the lantern which Ram Prasad carried in his own hand had some kerosene oil in it.
It was possible for him to have extracted some oil from the lantern.
We do not put too much emphasis upon this aspect of the case, because there is no direct evidence.
But on the side of the prosecution and the defence, there is agreement that kerosene oil was in fact put upon the clothes before they were set on fire.
In fact the burnt clothes even in the court emitted still a smell of kerosene oil and the aluminium bowl also smelt of kerosene.
This was noted by the Sessions Judge who tried the case.
It, therefore, stands to reason that kerosene oil was in fact employed before the clothes were set on.
fire and the short question.
in this case is whether it was Ram Prasad who set fire to the clothes or it was Mst.
Rajji who put kerosene oil on herself and set herself alight.
On this part of the case, there is the evidence of Mannulal to which we have already referred.
A similar statement was made by Holke (P.W. 3) and Soni (P.W. 6).
They consistently spoke of Ram Prasad having asked Mannulal for kerosene oil and that immediately afterwards Mst.
Rajji was found with her clothes burning and accusing Ram Prasad of the outrage upon her.
There is one witness, however, who did not entirely support this story and that is Jhallu (P.W. 4).
His version was that Mst.
Rajji stated to Ram Prasad that their quarrel had been, settled, implying thereby that she had set herself on fire and thus terminated the quarrel.
This statement was made by the accused in his examination under section 342 of the Code of Criminal Procedure and support is therefore sought to the contrary story from the evidence of Jhallu.
Jhallu was declared hostile and was crossexamined with reference to his previous statement before the police.
We find that in his statement to the police he did not mention the fact to which he deposed in the Court of Session and it makes us doubtful whether what he stated in the Court of Session was true.
In fact there is nothing brought out in his deposi tion beyond this remark by Mst.
Rajji that the quarrel between the bania and herself has been settled.
Rajji in addition to making the accusation might have stated that their quarrel had got settled.
It is possible this retort might well have been uttered: with the accusation.
But it is curious that when Mst.
Rajji roundly accused Ram Prasad with having set fire to her clothes, Ram 526 Prasad did not say anything in defence which one would expect a reasonable man to do.
He should have protested then and there.
He had no reason to state to the panchas that Mst.
Rajji was his wife and the panchas had nothing to do with the matter .and that they could get him hanged.
His attitude later in not ,,going to the police station house and to the hospital speaks against him.
There are also the three statements by Rajji to say nothing of her shouts accusing her husband which were part of the res gestae.
On the whole, therefore, we are satisfied that the conclusion of the High Court and the Sessions Judge that it was Ram Prasad who had put kerosene oil upon Mst.
Rajji and set her clothes on fire was correct in the circumstances of this case.
The question then arises, what was the offence which Ram Prasad can be said to have committed ? The offence of causing injury by burning is a broad spectrum which runs from section 324 causing simple injury by burning through section 326, namely, causing grievous injury by burning to the two major offences, namely, culpable homicide not amounting to murder and even murder itself.
The Sessions Judge chose the lowest end of the spectrum which is surprising enough, because the burns were so extensive that they were certainly grievous by all account.
The High Court placed the offence a little higher, namely, culpable homicide not amounting to murder.
We think that the matter goes a little further than this.
As death has been caused the question has to be considered in the light of homicide to determine whether the action of Ram Prasad Calls within culpable homicide not amounting to murder or the higher offence of murder itself.
Here we see that death has actually been caused by the criminal act; in other words, there has been homicide and since it is not accidental or suicidal death, responsibility for the homicide, in the absence of any exceptions ;or extenuating circumstances, must be borne by the person who ,caused it.
The High Court has apparently stopped short by holding that this was a case of culpable homicide not amounting to murder.
The question is whether the offence falls in any of the clauses of section 300 Indian Penal Code.
In this connection it is difficult to say that Ram Prasad intended causing the death of Mst.
Rajji although it might well be the truth.
That he set fire to her clothes after pouring kerosene oil is a patent fact and therefore the matter has to be viewed not only with regard to the firstly of section 300, but all the other clauses also.
We do not wish to consider the second and the third clauses, because the question then would arise what was the extent of the injury which Ram Prasad intended to cause or knew would be caused to Mst.
Rajji.
That would be a matter of speculation.
In our opinion, this matter can 'be disposed of with reference to clause fourthly ,of section 300.
That clause reads as follows : . . culpable homicide is murder. . if the person committing the act knows that it is so imminently 527 dangerous that it must in all probability, cause death or such bodily injury as is likely to cause death, and commits 'such act without any excuse for incurring the risk or causing death or such injury as aforesaid.
" It is obvious that there was no excuse for Ram Prasad to have taken the risk of causing the death or such bodily injury as was likely to cause death.
The question therefore arises whether Ram Prasad knew that his act was so imminently dangerous that it must in all probability cause death or such bodily injury as is likely to cause death, so as to bring the matter within the clause.
Although clause fourthly is usually invoked in those cases where there is no intention to cause the death of any particular person (as the illustration shows) the clause may on its terms be used in those cases where there is such callousness towards the result and the risk taken is such that it may be stated that the person knows that the act is likely to cause death or such bodily injury as is likely to cause death.
In the present case, Ram Prasad poured kerosene upon the clothes of Mst.
Rajji and set fire to those clothes.
It is obvious that such fire spreads rapidly and burns extensively.
No special knowledge is needed to know that one may cause death by burning if he sets fire to the clothes of a person.
Therefore, it is obvious that Ram Prasad must have known that he was running the risk of causing the death of Rajji or such bodily injury as was likely to cause her death.
As he had no excuse for incurring that risk, the offence must be taken to fall within 4thly of section 300, Indian Penal Code.
In other words, his offence was culpable homicide amounting to murder even if he did not intend causing the death of Mst.
Rajji.
He committed an act so imminently dangerous that it was in all probability likely to cause death or to result in an injury that was likely to cause death.
We are accordingly of the opinion that the High Court and the Sessions Judge were both wrong in holding that the offence did not fall within murder.
Mr. Rana contended that there was no proof from the medical reports that kerosene oil was employed because the wounds did not smell of kerosene.
Apart from the fact that both the courts have held that kerosene was so employed, the evidence is quite satisfactory that kerosene was in fact poured upon the victim before the clothes were set on fire.
The omission of this fact in the medical reports is not of consequence.
We accordingly allow this appeal, substitute the conviction under section 302 of the Indian Penal Code in place of the conviction under section 304 Part II and sentence Ram Prasad to imprisonment for life.
V.P.S. Appeal allowed.
| IN-Abs | The accused poured kerosene upon his mistress and set her clothes on: fire.
There were extensive burns and she died as a result thereof.
On the question as do the nature of the offence.
HELD : The accused must have known that he was committing an act so imminently dangerous that it must in all probability cause death or such injury as was likely to cause death.
As he had no excuse for incurring that risk the offence falls under section 300 (fourthly) of the Indian Penal Code, that is culpable homicide amounting to murder, even if the accused did not intend to cause her death.
[527 D E] Although the clause is usually invoked in those cases where there is no intention to cause the death of any particular person, it may, on its terms, be used in those cases where there is such callousness towards the result and the risk taken is such that it may be stated that the person knew that the act was likely to cause death or such bodily injury as was likely to cause death.
[527 C] Even though there is no provision to that effect in the Rules of the Supreme Court, in the case of an appeal by the State against acquittal for the major offence, it is safer, fair and just to the accused to give him a chance to prove that he was not guilty even of the lesser offence on the analogy of section 439(6) of the Criminal Procedure Code.
[524 F]
|
minal Appeal No. 137 of 1967.
Appeal by special leave from the judgment and order dated May 9, 1967 of the Rajasthan High Court in section B. Criminal Appeal No. 254 of 1966.
Sobhag Mal Jain, for the appellants.
H. R. Khanna and R. N. Sachthey, for the respondent.
The Judgment of the Court was delivered by Vaidialingam, J.
The two appellants, in this appeal, by special leave, challenge their conviction, by the Additional Sessions Judge, No. 1, Jaipur City, for offences under sections 120B, 420, 420 read with 511, and 467 read with 471, I.P.C., as confirmed by the High Court of Rajasthan, at Jodhpur.
Bhanwar Singh has also been convicted, for an offence under section 380, I.P.C. Both of them have been sentenced to various terms of imprisonment and fine, for these offences, and the sentences of imprisonment have been directed to run concurrently.
The two appellants, along with two others, who have since been acquitted, were tried by the learned Sessions Judge, for various offences, as indicated below.
There was a common charge of criminal conspiracy, under section 120B, IPC, to do, or cause to be done, illegal acts, viz., offences of theft, cheating, forgeries, etc., against all the four accused.
Under this head, the allegation was that the four accused agreed, among themselves, to commit theft and pilferage, of Indian and British postal orders and bank cheques, belonging to different persons, which were in transmission, by post and that, after such pilfering, the names of the original payees and the names of the paying post offices were erased and forgery was committed by writing the names of fictitious persons, or the names of some of the accused, and of different post offices.
The further allegation was that the accused agreed to use, as genuine, all such pilfered and forged postal orders and cheques, which the accused knew, or had reasons to believe, were forged documents.
There was also an allegation that all the accused had also agreed to present, such pilfered and forged postal orders and cheques, for encashment at the post offices and banks at Ajmer and Jaipur, through the two appellants and Yasoda Devi, 4th accused, pretending to be either the original payees or the substituted payees.
It was further alleged that the accused had agreed to cheat, or attempt to cheat, the postal L2Sup.
CI/68 3 530 authorities and banks, at Ajmer and Jaipur, by dishonestly inducing them to make payment to the appellants and Yasoda Devi, in respect of the pilfered and forged postal orders and cheques.
It Was also stated that the accused committed the various acts, in pursuance of the agreement, regarding the postal orders and cheques, details of which were given under that charge.
Appellant Bhanwar Singh was also further charged that, in pursuance of the conspiracy, during October 1956 and December 1957, he committed theft of various postal orders and cheques, belonging to various persons and that he also forged certain postal orders, which were valuable securities, by removing the names of the original payees and inserting his own name and that he thereby cheated the postal authorities at Jaipur, by dishonestly inducing them to deliver certain amounts against such postal orders, which were really payable to a third party, and thereby he committed offences of theft, forgery and cheating, under sections 380, 467 and 420, I.P.C. There were also certain further charges, for offences punishable under section 471; and of an attempt to commit cheating in respect of a cheque, punishable under section 420 read with section 51 1, IPC.
Similarly, against Kishanlal, the 2nd appellant, there were additional charges, framed under sections 467, 420, 420 read with 511 and 471, I.P.C. Kapoorchand was also charged under sections 380 and 467 I.P.C., and Yasoda Devi, under sections 467, 471, 420 and 419 I.P.C. The case of the prosecution, in brief, was as follows.
Bhanwar Singh and Kapoorchand were constables in the C.I.D., Ajmer Zone, during 1956 57.
In the course of their duties of censoring postal mail, these two constables, after having opened the mail, for the purpose of censoring, pilfered certain Indian postal orders and British postal orders and cheques and, after erasing the names of the original payees, as also the names of the post offices or banks, where payment was to be made, inserted their own names or some fictitious names and got the postal orders or cheques encashed at different post officers and banks.
According to the prosecution, Bhanwar Singh and Kapoorchand had entered into a conspiracy, with Kishanlal and Yashoda Devi, whose services were utilised for getting the moneys from the Banks.
The matter came to light when the payees did not receive the cheques or the postal orders intended for them and lodged complaints with the post offices and banks.
On investigation, the four accused were charged, as detailed above.
The accused denied the charges levelled against them.
The learned Sessions Judge came to the conclusion that the charge of criminal conspiracy was established, against all the four accused The first appellant was found to be the main accused and he was 531 convicted under sections 380, 467/471, 420/511 read with section 120B I.P.C.
The second appellant and Yashoda Devi were convicted under sections 467, 471 and 420 read with section 120B IPC.
Kapoorchand was however convicted only for offences under sections 380 and 467 read with 120 B, IPC.
The learned Sessions Judge sentenced all of them to various terms of imprisonment, and fine, for the different offences, as stated already.
All the four accused challenged their conviction for these offences and the sentence passed against them, be before the High Court of Rajasthan.
Two contentions were raised by the accused; (i) that the trial held by the Sessions Judge was illegal and void, inasmuch as the prosecution had been conducted, without obtaining the necessary sanction, under section 196A of the Code of Criminal Procedure 1 in respect of the charge under sections 467 and 471 read with section 120B IPC; (ii) that the evidence adduced by the prosecution, did not establish the guilt of the accused.
Both these contentions have been negatived by the High Court, so far as the appellants herein are concerned.
The High Court, however, acquitted Yashoda Devi, holding that the prosecution evidence id not establish her guilt, beyond reasonable doubt.
The High Court also acquitted Kapoorchand holding that the trial against him was void, because the necessary sanction had not been obtained, under section 196A of the Code of Criminal Procedure.
On behalf of the appellants, Mr. Jain, learned counsel, raised the same two contentions before us.
Counsel urged that inasmuch as the accused were prosecuted for non cognizable offences under sections 467/471 read with section 120B, IPC., the trial was illegal and void, inasmuch as the necessary sanction, under section 196A of the Code had not been obtained.
Learned counsel further urged that the mere fact that the accused were also tried for the offence of cheat ing, under section 420 IPC, which is cognizable and for which punishment by way of imprisonment extending to 7 years could be imposed, and for which no sanction was necessary, would not make the trial valid.
Under such circumstances, the joint trial for cognizable and non cognizable offences was illegal and void.
Mr. Khanna, learned counsel for the State, met this conten tion, on behalf of the appellant, by pointing out that the main object of the conspiracy was to cheat the banks and the post offices, by obtaining money from them; the forgeries committed by the accused on the cheques and postal orders were only incidental to achieve the main object of the conspiracy, viz., to commit the offence under section 420 IPC.
Under those circumstances, Mr. Khanna pointed out, it was not necessary to obtain sanction under section 196A of the Code and therefore there was no illegality,.
which would vitiate the trial, held by the Sessions Judge.
532 We have already indicated the offences for which the appellants and the other two accused, who have since been acquitted, were tried.
It is enough to note that there was a charge under section 120B, read with section 467/471 and 420 IPC.
The offences under section 467 and 471 are non cognizable, but the offence under section 420 is a cognizable one for which the punishment could be imprisonment extending to 7 years.
Therefore, if the object of the conspiracy, under section 120B, was to commit a non cognizable offence, under section 467 or 471 I.P.C., the obtaining of sanction, from the authorities mentioned in sub section
(2) of section 196A, was absolutely necessary, and the absence of such sanction would vitiate the trial, for such offences.
Similarly, if the object of the conspiracy, under section 120B, was to commit a cognizable offence under section 420 IPC, which is punishable with imprisonment for a term above 2 years, no sanction is necessary, under section 196A.
The question is, whether sanction was necessary in the case before us, when there was a trial for offences under section 467/471 and 420 IPC, read with section 120B. In the instant case, it is admitted that no sanction was ob tained.
In The State of Andhra Pradesh vs Kandimalla Subbaiah(1) the question arose, before this Court, whether sanction under section 196A of the Code was necessary when there was a trial for offences under section 120B, read with sections 466, 467 and 420, IPC.
It was argued, on behalf of the State, that since the object of the conspiracy was to cheat the Government i.e., to commit an offence under section 420 IPC, and as the offences under sections 466 and 467 were only means to that end, the trial was not vitiated simply because no sanction was obtained for prosecuting the accused, for offences of criminal conspiracy to commit non cognizable offences, under sections 466 and 467 IPC.
But, in that decision, this Court did not express any opinion on this point, as the matter was sent back to the trial Court, for framing fresh charges and proceeding with the trial, after observing that it was for the Government to consider whether it should accord sanction for prosecution of non cognizable offences, assuming that such sanction was necessary.
The question, that was thus left open, in that decision, arises for consideration, now, in the instant case before us.
On behalf of the appellant, reliance has been placed on three decisions, in support of the contention that under such circumstances, the trial is illegal and void.
Those decisions are: Subbaiah, In re:(2), of the Andhra Pradesh High Court; Jadeda Meramanji vs State of Gujarat(3), of the Gujarat High Court; and Nibaran Chandra vs Emperor(4), of the Calcutta High Court.
(1) (3) (2) I.L.R. (4) A.I.R. 1929 Cal.
533 The decision of the Calcutta High Court does not assist the appellant, because the charge that was framed was of criminal conspiracy, under section 120B read with section 384 IPC.
The object of the conspiracy having been to commit an offence, under section 384 IPC, which is a non cognizable offence, it was held by the Calcutta High Court that the Magistrate could not take cognizance of the offence, without the necessary sanction, under section 196A; and, on this ground, the High Court held that the trial was void.
In the decisions of the Andhra Pradesh and Gujarat High Courts, referred to above, it has been held that in respect of a prosecution, for criminal conspiracy, under section 120B, read with es.
466 and 467 IPC., under which sections the offences are non cognizable, the consent, contemplated under section 196 (A) (2) is a pre requisite to any Court taking cognizance of that offence; it has also been held that sanction is not necessary to prosecute a case of criminal conspiracy to commit an offence under section 420 IPC.
The legal proposition, stated as such, is unexceptionable.
But it is not clear from the discussion, contained in the two judg ments, as to what was the object of the conspiracy.
It is also to be stated that the said two decisions had no occasion to consider the question whether sanction, under section 196 (A) (2), Cr.
P.C., is still necessary when a trial is held for offences under section 120B read with section 466, 467 and 420 IPC., and when the case of the prosecution is that the object of the conspiracy is to commit the offence of cheating, and non cognizable offences have been committed for the purpose of effecting the object of the conspiracy.
We may also point out that our attention has been drawn to the decision of this Court in Madan Lal vs State of Punjab (1).
We have gone through that decision and it does not, in our opinion, assist the appellant.
The view of the various High Courts, to which we will refer presently, and with which view we agree, is that no sanction is necessary, under section 196A(2) Cr.
P.C., when the object of the conspiracy is to commit the offence of cheating (420 IPC), but, forgery of documents (467 IPC) and similar non cognizable offences are also committed, as merely steps taken, by one or other of the accused, for the purpose of effecting the main object of the conspiracy.
A trial, under such circumstances, for offences under section 120B, read with section 467/471 and 420 IPC., without obtaining sanction, is neither illegal, nor void.
It is necessary to keep in mind the difference between the object of a conspiracy and the means adopted for realising that object.
Even if the object of the conspiracy, viz., of cheating, is (1) ; 534 sought to be attained by resort to non cognizable offences, as in the case before us, sanction under section 196A of the Code is not necessary.
This principle emerges from the following decisions: Ramaohandra Rango vs Emperor(1); Durgadas Tulsiram vs State(2); Abdul Kadar vs State(3); Paresh Nath vs Emperor(4); Golam Rahman vs The King(6); Kannan, In re(6); and Vadlamudi vs State of A.P. (7).
The object of the conspiracy has to be determined, not only by reference to the sections of the penal enactment, referred to in the charge, but on a reading of the charges themselves.
On a perusal of the charges, framed against the appellants, we are satisfied that the only object of the conspiracy was to cheat the banks or the post offices, referred to in the charges, which is an offence under section 420, read with section 120B, IPC, for which no sanction is necessary.
No doubt there are also charges of committing forgery Of valuable security and using such forged documents, which are ,offences under sections 467 and 471 IPC, and non cognizable.
But a reading of the charges, as a whole, makes it clear that it is not the case of the prosecution that committing forgery of the Indian and British postal orders or the cheques, or using such forged documents, was the object of the conspiracy.
The accused would not he satisfied by merely entering into a conspiracy to forge the postal orders or the cheques, or even to use such forged documents.
The forging of the documents and using such forged documents, were only means adopted by the accused for realising the object, of the conspiracy, which was to cheat the postal and bank authorities, at the places mentioned in the charge, by dishonestly inducing them to part with money.
Therefore the trial of these accused, for offences under sections 120B read with section 467/ 471 and 420 IPC., and other allied offences, cannot be held to be illegal, on the ground that sanction under section 196A(2) of the Code, had not been obtained.
Before closing the discussion, on this point, it is necessary to refer to the reliance placed, by the, counsel for the appellants, on the acquittal, by the High Court, of Kapoorchand, on the ground that the trial was void, because the necessary sanction had not been obtained, under section 196A, of the Code.
It will be seen that the said accused also was tried for an offence under section 120B read with section 420 IPC., as also on certain other charges.
As will be seen from the judgment of the High Court, it has taken the view that the said accused has not been convicted, by the trial Court, for an offence, under section 120B read with section 420 IPC., and hence the trial is vitiated, for lack of sanction.
(1)A.I.R. 1939 Bom.129.
(2) A.I.R. 1955 Bom.
(2)A.I.R. 1964 Rom.133.
(4) A.I.R. 1947 Cal.
(5)A.I.R. (6) (1949) 2 M.L.J. Short Notes (7)A.I.R. p. 52 (Crl.
M.P. 2686/1949) 535 Mr. Khanna, learned counsel for the respondent, has pointed out that the said accused was also tried for the offence of cheating, but he was convicted only for certain other offences; and, in this connection, he referred us to the finding of the trial Court that all the accused were guilty of the offence of cheating also.
It is not necessary to pursuematter further, because, it Will be seen from the judgment of the trial Court that the said accused was also prosecuted for anoffence under section 120 B read with section 420 IPC.
In view of what is stated above, the first contention of the learned counsel for the appellants, has to be rejected.
So far as the second contention is concerned, that really relates to merits.
Both the learned Sessions Judge, as well as the High ,Court, have very elaborately gone into the evidence regarding the appellants, and have found them guilty of the offences, for which they were punished.
We do not see any error, committed by the High Court, or the Sessions Judge, in the appreciation of the evidence, in the case, and there is no justification for any interference, by this Court.
The result is that the appeal fails, and is dismissed.
G.C. Appeal dismissed.
| IN-Abs | The appellants along with two others were charged with having entered into a criminal conspiracy in pursuance of which postal orders and cheques in the course of transit by post were pilfered and after various alterations being made therein were encashed at post offices and banks.
The charges inter alia were under sections 467/471 read with section 120 B and a. 420 read with section 120 B of the Indian Penal Code.
The Sessions Judge convicted all the four accused but the High Court maintained the conviction only of the two appellants.
In appeal before this Court the appellants urged that inasmuch as the accused were prosecuted for non cognizable offences under sections 467/471 read with section 120 B I.P.C. the trial was illegal and void as the necessary sanction under section 196 A(2) of the Code of Criminal Procedure had not been obtained.
It was further urged that the mere fact that the accused were also tried for the offence of cheating, under section 420 I.P.C. for which no sanction was required, would not make the trial valid.
Under these circumstances it was contended that the joint trial for cognizable and non cognizable offences was illegal and void.
HELD : It is necessary to keep in mind the difference between the object of a conspiracy and the means adopted for realising that object.
No sanction is necessary under section 196 A(2) Cr.
P.C. when the object of the conspiracy is to commit the offence of cheating (420 I.P.C.) but forgery of documents (467 I.P.C.) and similar non cognizable offences are also committed, as merely steps taken, by one or other of the a for the purpose of effecting the main object of the conspiracy.
[533 F H] The object of the conspiracy has to be determined, not only by reference to the sections of the penal enactment, referred to in the charge but on a reading of the charges themselves.
The charges against the appellants showed that the only object of the conspiracy was to cheat the banks or the post offices, referred to in the charges, which is an offence under section 420 read with section 120 B I.P.C. for which no sanction is necessary.
The forging of the documents and usuing such forged documents were only means adopted by the accused for realising the aforesaid object.
Therefore the trial of the accused in the present case for offences under sections 120 B read with sections 467/471 and 420 I.P.C. and other allied offences, cannot be held to be illegal on the ground that sanction under section 196 A(2) of the Criminal Procedure Code had not been obtained.
[534 B E] State of Andhra Pradesh vs Kandimala Subbaiah, Ramchandra Rango vs Emperor, A.I.R. 1939 Bom.
129, Durgadas Tulsiram vs State, A.I.R. 1955 Bom. 82, Abdul Kadar vs State, A.I.R. 1964 Bom.
133, Paresh Nath vs Emperor, A.I.R. 1947 Cal.
32, Golam Rahman 528 529 Notes p. 52 Vadlamudi vs State of A.P. A.I.R. 1961 A.P. 448, referred to.
Subbaiah, In re : I.L.R. , Jadeda Meramanji vs State of Gujarat, (1963)2 Cr. L.J. 713, Nibaran Chandra vs Emperor, A.I.R. 1929 Cal.
754 and Madan Lal vs State of Punjab, ; , distinguished.
|
Appeal No. 1249 of 1967.
Appeal from the judgment and decree dated July 21, 1967 of the Delhi High Court in Regular First Appeal No. 166 D of 1965.
A.K. Sen, Rameshwar Nath, P. L. Vohra and Mahinder Narain, for the appellant.
Bishan Narain, Radhey Mohan Lal and Harbans Singh, for the respondent.
The Judgment of the Court was delivered by Bachawat, J.
This appeal arises out of a suit for ejectment instituted by a landlord against a tenant.
It is common case that the suit is governed by the provisions of ' the Delhi and Ajmer Rent Control Act, 1952 (Act No. 38 of 1952) hereinafter referred to as the Act.
The material provisions of section 13(1) of the, Act are as follows : "13.
(1) Notwithstanding anything to the contrary contained.
in any other law or any contract, no decree or order for the recovery of possession of any premises shall be passed by any Court in favour of the landlord against any tenant (including a tenant whose tenancy is terminated) : Provided that nothing in this sub section shall apply to any suit or other proceeding for such recovery of possession if the Court is satisfied (b)that the tenant without obtaining the consent of the landlord in writing has, after the commencement of this Act, (i)sub let, assigned or otherwise parted with the possession of the whole or any part of the premises; or 550 (ii) used the premises for a purpose other than that for which they were let; or, (c) that the tenant without obtaining the consent of the landlord has before the commencement of this Act, (i)sub let, assigned or otherwise parted with the possession of, the whole or any part of the premises;, or (ii)used the premises for a purpose other than that for which they were let; or (k)that the tenant has, whether before or after the commencement of this Act, caused or permitted to be ,caused substantial damage to the premises, or notwithstanding previous notice has used or dealt 'with the premises in a manner contrary to any condition imposed on the landlord by the Government, or the Delhi Improvement Trust while giving him a lease of the land on which the premises are situated;" The respondent constructed the building known as the Hotel Imperial, New Delhi, on land leased to him by the Secretary of State for India in Council under a perpetual lease deed dated July 9, 1937.
By a deed dated August 18, 1939, he leased to the appellant the hotel premises together with fittings and furniture for a term of 20 years commencing on September 15, 1939.
On January 28, 1958, the respondent instituted the present suit alleging that in breach of the express conditions of the lease dated August .18, 1939, the appellant sub let portions of the premises and made unauthorised additions and alterations in the premises, that on such breaches he was entitled to determine the lease and he did so, by notice in writing dated January 6, 1958.
He claimed eviction of the appellant on the grounds mentioned in cls.
(b), (c) and (k) of the proviso to section 13(1) of the Act.
The appellant filed its written statement on April 3, 1958 denying most of the material allegations in the plaint.
The appellant also pleaded that the respondent had waived the breaches, if any, of the conditions of the lease by accepting rents with knowledge of such breaches and particularly by accepting rent on or about January 3, 1958.
On April 24, 1958, Sri P. L. Vohra, counsel for the appellant, made the following statement before the trial Court : "The plaintiff can seek ejectment of the defendant only under section 13 of Act 38 of 1952.
In case the 551 plaintiff succeeds in establishing the liability of, the defendant for ejectment on any of the grounds given in .section 13 of the Rent Act, the defendant would not seek any protection under the terms of the lease deed dated 18th August, 1939 executed between the parties, as regards the period of lease fixed therein.
" Having regard to the pleadings and statement of counsel, the Court settled the following issues on May 12, 1958 : "1.
Whether the defendant had sublet, assigned or otherwise parted with possession, of any part of the suit premises before the commencement of Act 38 of 1952 ? 2.
If so, was the same done with express or implied consent of the plaintiff ? 3.
Whether the defendant had sublet, assigned or otherwise parted with possession of any part of the suit premises after the commencement of Act 38 of 1952 ? 4.If so, was the same done with the prior consent in writing of the plaintiff ? 5.Whether the defendant has used the tenancy premises for a purpose other than that for which they were let ? 6.
Whether the defendant has caused substantial damage to the tenancy premises ? 7.
Whether the defendant notwithstanding previous notice has been.
using and dealing with the tenancy premises in a manner contrary to the conditions imposed on the plaintiff by, the Government while giving him lease of the site of the tenancy premises ? 8.
Is the defendant entitled to special cost ? 9.
Whether the plaintiff is estopped or has waived his right to seek ejectment of the defendant on any of the grounds mentioned above ? If so, what and to what effect ? 10.Whether the defendant is entitled to sublet any part of the hotel premises even when there was a clause to the contra in the lease dated the 18th August, 1939.
and in face of statutory provisions under the Rent Control Act (for reasons given in para 16 of the amended written statement) ?" A tenant holding premises under a subsisting lease is pro tected by the lease and needs no protection under the Rent Act.
It was open to the appellant to contend that it was protected by 552 the terms of the lease dated August 18, 1939, that the breaches, if any, of the conditions of the lease had been waived by the respondent and that the lease had not determined.
But the appellant deliberately elected to seek protection under section 13 of the Act only.
The appellant 's counsel made a ' formal statement in the trial Court that the appellant would not seek any protection under the terms of the lease deed as regards the period of the lease fixed therein.
The Court accordingly settled the ten issues.
Issue No. 8 was not pressed.
All the other issues relate to thegrounds of eviction mentioned in cls.
(b), (c) and (k) of theproviso to section 13(1) of the Act.
Issue No. 9 raises the question of waiver of the respondent 's right to seek ejectment on those grounds.
Thus, the only questions in issue between the parties was whether the appellant was entitled to protection from eviction under section 13 and whether any ground for eviction under the Act was made out.
The case was tried and decided on this footing.
We have come to this conclusion after a close examination of the 'pleadings, particulars, statement of counsel, issues and the judgment of the trial Court.
No issue was raised on the question whether the breaches of the express conditions of the lease had been waived by the respondent, and whether the lease was still subsisting.
The appellant sought to raise this plea in the High Court and also in this Court Having regard to the deliberate stand taken by the appellant in the trial Court, the appellant cannot be allowed to raise the plea at a later stage.
The lease determined by efflux of time on September 15, 1959.
Had the appellant taken the plea that the lease had not determined by forfeiture on the date of the institution of the suit, it is possible that the respondent might have filed another suit for ejectment of the appellant immediately after September 15, 1959.
Because of the stand taken by the appellant, it was not necessary for the respondent to file another suit.
This appeal must be decided on the footing that the lease had determined by forfeiture on the date of the institution of the present suit.
The respondent is entitled to a decree for eviction if any of the grounds mentioned in cls.
(b), (c) and (k) of the proviso to section 13(1) is made out.
The trial Court answered issue No. 5 in the negative.
With regard to all the other issues, the trial Court found in favour of the respondent, and held that the grounds of eviction mentioned in cls.
(b)(1), (c)(i) and (k) were proved.
With regard to the ground of eviction mentioned in cl.
(k), the trial Court held that the appellant was entitled to relief on certain conditions.
The trial Court, however, held that the respondent was entitled to an unconditional decree, for eviction on the ground of sub letting mentioned in cls.
(b)(i) and (c)(i).
The appellant preferred 553 an, appeal to the High Court.
The High Court agreed with all the findings of the trial Court, and dismissed the appeal.
The two Courts concurrently found that the appellant had sub let several rooms, counters, showcases and garages.
The two Courts found that the appellant had sub let rooms to (1) Pan American World Airways, (2) Mercury Travels, India (Private) Ltd., travel agents, (3) Indian Art Emporium, dealers in curios and jewellery, (4) Shanti Vijay and Co., dealers in jewellery, (5) Roy and James, hairdressers, (6) Sita World Travels, travel agents and (7) Ranee Silk Shop, dealers in saris and curios.
The businesses of the sub lessees were not confined to the residents of the hotel.
The letting to Pan American World Airways and Indian Art Emporium were before the commencement of the Act and the lettings to Mercury Travels, Shanti Vijay and Co., and Roy and James were after the commencement of the Act.
Sita Travels and Ranee Silk Shop were inducted as tenants after the institution of, the suit.
The entrances to the rooms were in ,the main corridor of the hotel on the ground floor.
The concurrent finding is that the occupants were given exclusive possession of the rooms occupied by them.
The appellant did not retain any control and dominion over the rooms.
It is possible that the keys of the apartments were sometimes left at the reception counter, but the evidence on this point was not convincing.
It was not a condition Of the grants that the keys would be left at the reception counter, or that the duplicate keys would be retained by the appellant.
The occupants were at liberty to take away the keys if they liked '.
The occupants availed themselves of the services of the hotel sweeper for, their own convenience.
The appellant retained control of the corridor, but it is common case before us that the entrance to the corridor was open day and night.
The occupants paid monthly sums to the appellant as the consideration of the sub leases.
The consideration though described as license fee was in reality rent.
The portion occupied by Roy and James has an interesting history.
It was formerly sub let to R. N., Kapoor.
In Associated Hotels of India Ltd. vs R. N. Kapoor(1), this Court held by a majority on a construction of the grant to R. N. Kapoor that he was a lessee and not a licensee.
Roy and James began to occupy this portion of the premises from February, 1955.
According to the appellant, the agreements with Roy and James, Mercury Travels and Shanti Vijay and Co., were in writing.
The appellant produced several documents in Court at an early stage of the suit.
The appellant 's case was that these documents were the relevant agreements.
According to the respondent, the documents were not genuine and the real agree (1) [196] 1 S.C.R. 36F 554 meats were being withheld.
The stamp auditor noted on the documents the deficiency in stamps and penalty leviable on them on the footing that they were lease deeds.
The appellant did not contest this note nor paid the penalty and deficiency as directed by the trial Court.
The surprising feature of the case is that the appellant did not attempt to prove any of the documents.
Where the agreement is in writing, it is a question of construction of the agreement whether the grant is a lease or a license.
It was for the appellant to prove the written agreements, and the Court could then construe them.
The appellant has not brought before the Court the best and the primary evidence of the terms on which the apartments were being occupied.
The onus to prove sub letting was on the respondent.
The respondent discharged the onus by leading evidence showing that the occupants were in exclusive possession of the apartments for valuable consideration.
The appellant chose not to rebut this prime facie evidence by proving and exhibiting the relevant agreements.
The documents formed part of the appellant 's case.
The appellant bad no right to withhold them from the scrutiny of the Court.
In the absence of the best evidence of the grants, the Courts below properly inferred sub lettings from the other materials on the record.
The test of exclusive possession, though not conclusive, is a very important indication in favour of tenancy, see Addiscombe Garden Estates Ltd. and Anr.
vs Crabbe and Ors.(1) The argument is that as the landlord is living in the premises, that fact raises the presumption that he intends to retain the control of the whole of the premises and that the occupation of the other parts is that of a lodger or inmate and not that of a tenant, and reliance was placed on Helman vs Horsham Assessment Committee(2) and the cases referred to therein.
Those cases consider what constitute rateable occupation.
In the case last cited, Denning, L. J. said that a person who is regarded as a lodger for rating purposes need not necessarily be a lodger for the purposes of the Rent Restriction Acts, while Evershed L.J. seems to have expressed a contrary opinion.
Normally, an occupier of an apartment in a hotel is in the position of a licensee as the hotel keeper retains the general control of the hotel including the apartment.
But it is not a necessary inference of law that the occupier of an apartment in a hotel is not a tenant.
Where, as in this case, the hotel keeper retains no control over the apart ment, the occupier is in the position of a tenant.
In Halsbury 's Laws of England, Vol. 23, article 1028, p. 433, the law is accurately summarised thus "A lodger who has no separate apartment is only a licensee, and, even though he has a separate apart (1) , 525.
(2) 555 ment, he has not in law an exclusive occupation, and is therefore in the position of a licensee, if the landlord retains the general control and dominion of the house, including the part occupied by the lodger; but, if in fact the landlord exercises no control over that part, the occupier is a tenant.
The occupier does not, however, become a lodger merely by reason of the fact that the landlord resides on the premises and retains control of the passages and staircases and other parts used in common.
" On the question whether the occupier of a separate apartment in a premises is a licensee or a tenant, the test is has the landlord retained control over the apartment ? The fact that the apartment is a room in a hotel may lead to the inference that the hotel keeper retains the general dominion of the en tire hotel including the apartment and that the occupier is in the position of a lodger or inmate.
But the inference is not a necessary inference of law.
Where, as in this case, the best evidence of the rant was withheld from the scrutiny of the Court, the inference was rightly drawn that the occupiers were tenants.
At the hearing of this appeal, the appellant moved an appli cation for reception of the documents as additional evidence.
The genuineness of the documents was disputed by the respondent.
In the Courts below, the appellant made no attempt to prove these documents.
We found no ground for directing a new trial.
Having regard to all these facts, we dismissed the application.
The hotel building constitutes premises within the meaning of section 2(g) of the Act. ' It is because the hotel building constitutes Premises that the appellant can claim protection from eviction under the Act.
A room in a hotel is a part of the hotel premises.
A sub letting of a room in a hotel in contravention of cls.
(b) and (c) of the proviso to section 13(1 ) is a ground for eviction under the Act.
Section 2(g) provides that 'premises ' does not include " a room in a hotel or lodging house.
" The sub lessee of a room in a hotel is, therefore, not a tenant and cannot claim protection under section 13 from eviction, nor can he ask for fixation of standard rent.
see Associated Hotels of India Ltd. vs R. N. Kapoor(1).
If the interest of the tenant of the hotel premises is determined, the sub tenant to whom a room in the hotel has been lawfully sublet becomes under s, 20 a direct tenant of the landlord, It may be that when the sub tenant of a room in a hotel becomes a direct tenant under section 20 he enjoys the protection of the Act because the room is no, longer a room in a hotel.
But that point does not arise and need not be decided.
Because a room in a hotel is not (1) ; 556 premises, it does not follow that the room is not a part of the hotel premises or that a sub letting of the room is not a contravention of cls.
(b) and (c) of the proviso to section 13(1).
The Courts below concurrently found that the sub lettings after the commencement of the Act were made without obtaining the consent of the landlord in writing, and the sub lettings before the commencement of the Act were made without obtaining the consent of the landlord either orally or in writing.
We are not inclined to interfere with this concurrent finding.
It is said that by the lease deed dated August 18, 1939 the respondent impliedly consented to this sub letting.
Clauses 21 .and 22 of the lease are in these terms "21.
That the lessee shall not be entitled to either transfer or sub lease the premises or any part thereof to any other party without the written consent of the lessor and on such transfer, both the transferee and the lessee shall be liable for the payment of rent to the lessor and responsible to deliver,possession of the building and equipments in the same condition as when taken.
22.That the lessee will use the premises only for the purpose of running a first class hotel.
" It is ,aid that for the purpose of running a first class hotel it was necessary to sub let the apartments.
It is impossible to accept the contention.
A hotel keeper may run a first class hotel without sub letting any part of it.
Clause 21 clearly provided that the lessee shall not sub lease the hotel premises or any part thereof.
In the teeth of cl. 21, it is impossible to read in cl. 22 an implied consent to sub letting.
Reliance is placed on the correspondence passed between the Land Development Officer, New Delhi and the respondent bet ween April 1948 and February 1949 for establishing that the respondent gave written consent to the sub lettings.
The Land and Development Officer was then complaining of the occupation of portions of the premises by Pan American World Airways and other persons.
By his letters dated November 4, 1948 and February 23, 1949, the respondent requested the Land and Development Officer to regularise the matter adding that in an first class hotels counters of air lines and show rooms of jewellery and curios were always provided.
These letter,.; do not amount to a consent in writing to sub lettings of portions of the hotel to the persons mentioned therein.
Moreover, the consent, if any, 'was to the sub lettings made before 1949 and not to the sub lettings made thereafter.
It is not possible to infer from these letters a general consent to all sub lettings.
557 It is argued that the respondent waived the requirement of consent to the sub letting.
Any subletting in breach of the provisions of cl.
(b) of the proviso to section 13 ( 1) is an offence punish able under section 44.
Assuming that the landlord can waive the requirement as to consent, it is not shown that the respondent waived it.
A waiver is an intentional relinquishment of a known right.
, There can be no waiver unless the person against whom the waiver is claimed had full knowledge of his rights and of facts enabling him to take effectual action for the enforcement of such rights.
See Dhanukdhari Singh vs Nathima Sahu(1).
It is said that the respondent knew of the sub lettings as he frequently visited the hotel.
It appears that he visited the hotel up to 1953 and he must have known of the occupation of R. N. Kapoor, Indian Art Emporium and Pan American World Airways.
But he came to know of the other lettings in January 1958 only.
Moreover, the precise nature of the grant was never communicated ,to the respondent.
The Courts below rightly held that the respondent did not waive his right to evict the appellant on the , rounds mentioned in cls.
(b) and (c) of the proviso to section 13 (1).
We are therefore satisfied that the respondent is entitled to evict the appellant on the ground of sub letting of the rooms.
The Courts below held that the appellant had also sublet several counters, show cases and garages to various persons.
We express no opinion on the question whether there was any sub letting of the counters, show cases and garages.
The sublettings of the rooms are sufficient grounds of eviction tinder cls.
(b) and (c) of the proviso to section 13(1).
Clause 2(v) of the head lease granted by the Government to the respondent provided that the respondent would not, without the previous consent in writing of the Chief Commissioner.
Delhi or a duly authorised officer, erect or suffer to be erected on any part of the demised premises any building other than the buildings erected there on the date of the lease.
The appellant had due notice of the conditions of the head lease.
Notwithstanding such previous notice, the appellant dealt with the premises in a manner contrary to the conditions imposed by cl. 2 (v).
The Courts below found that contrary to this condition, the appellant made several unauthorised constructions without obtaining the requisite consent.
To give one illustration, the appellant admittedly constructed a room 16 ft. 6 in X 19 ft. 6 in.
with R.C.C. slab and brick masonry walls.
This newly constructed room was let to Shanti Vijay and Co.
On the ground of unauthorised construction of this room alone it must be held that the appellant in contravention of cl.
(k) of the proviso to section 13 (1), notwithstanding previous notice, dealt with the premises in a manner contrary to (1) , 852.
558 a condition imposed on the respondent by the Government while ,giving him a lease of the land on which the premises are situated.
The notice of the conditions imposed by the head lease was sufficient notice for the purposes of cl.
The ground of eviction under cl.
(k) was thus made out.
The Courts below also held that the appellant caused substantial damage to the premises.
We express no opinion on it, and this question is left open.
It follows that the respondent is entitled to evict the appellant on the grounds mentioned in cls.
(b) (i), (c) (i) and (k) of the proviso to section 13(1).
In the result, the appeal is dismissed with costs.
The execution of the decree is stayed for a period of six months from today.
The appellant through Mr. A. K. Sen gives an undertaking that the appellant will hand over to the respondent, on the expiry of six months, vacant possession of the entire hotel premises except the portion in the possession of sub lessees.
Y.P. Appeal dismissed.
| IN-Abs | The respondent landlord of a hotel filed a suit for eviction of his tenant appellant under section 13(1) proviso (b) and (c) of the Delhi and Ajmer Rent Control Act, 1952 on the allegation that the appellant had sub let several rooms.
These occupants were doing business, which were not confined to the residents of the hotel.
The occupants were given ex clusive possession of the rooms occupied by them.
The appellant did not retain any control and dominion over these rooms.
It was not a condition of the grants that the keys would be left at the reception counter, or that the keys would be retained by the appellant.
The occupants were at liberty to take away the keys if they liked.
The occupants availed themselves of the services of the hotel sweeper for their own convenience.
The appellant retained control of the corridor, but the entrance to the corridor was open day and night.
The occupants paid monthly sums to the appellant as the consideration of the sub leases.
The appellanttenant denied the allegations and pleaded that the respondent landlord had waived the breaches, if any.
The suit was decreed which the High Court, in appeal maintained HELD : The landlord was entitled to the decree for eviction.
[558 B] On the question whether the occupier of a separate apartment in a premises is a licensee or a tenant, the test is has the landlord retained control over, the apartment Normally, an occupier of an apartment in a hotel is in the position of licensee as the hotel keeper retains the general control of the hotel including the apartment.
But it is not a necessary inference of law that the occupier of an apartment in a hotel is not a tenant.
A hotel keeper may run a first class hotel without sub letting any part of it.
Where as in this case, the hotel keeper retained no control over the apartment, the occupier was in the position of a tenant.
The onus to prove sub letting was on the respondent.
The respondent discharged the onus by leading evidence showing that the occupants were in exclusive possession of the apartments for valuable consideration.
The appellant chose not to rebut this prima facie evidence by proving and exhibiting the relevant agreements.
[553 D; 554 C D, F H; 555 C; 556 E] Under section 2(g) "premises" does not include " a room in a hotel or lodging house".
The sub lessee of a room in a hotel is, therefore, not a tenant and cannot claim protection under section 13 from eviction, nor can he ask for fixation of standard rent.
But, because a room in a hotel is not premises, it does not follow that the room is not a part of the hotel premises or that a sub letting of the room is not a contravention of cls.
(b) and (c) of the proviso to section 13(1).
[555 F G 556 A] Associated Hotels of India Ltd. vs R. N. Kapoor, [1960]1 S.C.R. 368, followed.
Addiscombe Garden Estates Ltd. & Anr.
vs Grabbe and Ors.
and Helman vs Horsham Assessment Committee, [1949] 2 K.B. 335,referred to.
549 A waiver is an intentional relinquishment of a known right.
There can be no waiver unless the person against whom the waiver is claimed had full knowledge of his rights and of facts enabling him to take effectual action for the enforcement of such rights.
Assuming that the landlord can waive the requirement as to consent, it was not shown that the respondent waived it.
It is said that the respondent knew of the sub lettings as be frequently visited the hotel up to 1953 and he must have known of the occupation of some of the occupants.
But he came to know of the other lettings in 1958 only.
Moreover, the precise nature of the grant was never communicated to the respondent.
[557 B D] Dhanukdhari Singh vs Nathima Sahu, , referred to.
|
Civil Appeal No. 145 of 1965.
Appeal by special leave fro.m the judgment and order dated September 24, 1956 of Madhya Pradesh (Now Madhya Pradesh) High Court at Gwalior in Civil Misc.
Application No. 91 of 1955.
N.S. Bindra, P.W. Sahasrabudde and A.G. Ratnaparkhi, for the appellant.
Rameshwar Nath and Mahinder Narain, for respondents Nos.
1 to 3.
The Judgment of the Court was 'delivered by Sikri, J.
This appeal by special leave is directed against the judgment of the High Court of Madhya Bharat in Civil Miscellaneous Application No,. 91 of 1955, read with Civil Miscellaneous Application No. 92 of 1955, filed under article 227 of the Constitution by Rao Jagdish Singh and others.
By this judgment the High Court accepted the applications and quashed the decision of the Board of Revenue and dismissed the claim of Lallu Yeshwant Singh, son of Nahar Singh, now deceased, represented by Babu Singh, appellant before us.
The relevant facts for appreciating the points arising in the appeal are as follows.
Yeshwant Singh and other sons of Lallu Nahar Singh, hereinafter referred to as the plaintiffs, filed a suit against Rao Jagdish Singh and 4 others (Revenue Case No. 24 of 2000 S.Y.) in the Court of Tehsildar, Pargana Pichhore, District Gwalior, for the possession of some agricultural land under section 326 of Qanoon Mal.
The plaintiffs ' case, in brief, was that they were gairdakhilkar cultivators and that Rao Jagdish Singh, defendant No. 1, had forcibly prevented the plaintiffs from doing cultivation and got the disputed land cultivated by defendants Nos. 2 and 3, by interfering with the possession of the plaintiffs.
The plaintiffs prayed that a decree for possession may be passed in their favour against all the defendants.
The defendants ' case, in brief, was that the village in which the land in dispute iS situated is Ryotwari village and no suit could be instituted against Jagirdars under section 326.
The defendants further alleged that the plaintiffs had failed to pay revenue and their rights had been extinguished under section 82 of Qanoon Ryotwari.
The Tehsildar decreed the suit.
The Collector on appeal upheld the order.
The Commissioner on 205 further appeal also upheld the order.
On revision, the Board of Revenue agreed with the Commissioner and dismissed ' the revision.
On behalf of the appellant it is contended (1 ) that in a suit under section 326 Qanoon Mal, read with section 163, Qanoon Ryotwari, a plaintiff is entitled to recover _possession if he is dispossessed from prior juridical possession, within six months of the suit, and the question of title is irrelevant in such a suit; and (2) that a landlord cannot forcibly enter and drive out the tenant whose tenancy is alleged to have been extinguished.
The relevant statutory provisions are as follows: "Qanoon Ryotwari section 82.
The right of the pukhta Maurusi, Sakitul Milkiyat and Mamuli Maurusi will be extinguished under the following circumstances; (3) When the Khatedar keeps in arrears the ]and revenue of his khata excepting the case where the collection of land revenue is ordered to be postponed;. section 137.
In case the land revenue for the whole year is not paid before one week of the date fixed for the last instalment the khatedar will be dealt with as follows : 1.
By issue of process; 2.
By arrest of the defaulter; 3.
By attachment and sale of movable property; 4.
By attachment and sale of immovable property; 5.
By confiscation (Jupti) of the khata and ejectment of the defaulter; 6.
By auctioning the khata; Provided if the arrears are due against such khatedar who has been a good payer (khush dehanda) and for some special reason for some years not by his own mischief but for reason beyond his control, the Suba (Collector) will be entitled to accept his instalments upto three years.
S.163.
Suits of trespass and obstruction 'between khatedars and between khatedars and other persons will be entertained in that Sega (Dept.) court and limitation which is described in Section 326 of Qanoon Mal Riyasat Gwalior Samvat 1983 and Sections 326, 206 327, 328, 330, 331, 332, 333, 334 and 335 so far as they are applicable or appendices of the.
Qanoon Mal shall apply as may be applicable to the suits under section 326 of the said Act.
Qanoon Mal section 325.
If any person claiming to be in possession of any agricultural land desires his name to be entered in Revenue papers and papers of Patwari, then the Patwari, if in case of actual physical possession enter his name in accordance with procedure in Khasra and other papers and inform the Malguzar; in case of not being in possession, the cultivator not in possession shall have the right to file within three years of the date of dispossession a suit regular in Court of Tehsil on stamp paper, which may become payable on annual income of "Lagan" according to Scale in Schedule No. 4 prescribed.
section 326.
(1) Cases in respect of the return of possession which has been disturbed unlawfully (Beja Tot Par) or for prevention of obstruction about agricultural lands, thrashing grounds, (Khaliyan) road, forest, grass pastures, gardens, trees, wells, irrigation and tanks between Malguzars and cultivators or between cultivators will be entertained in the summary jurisdiction of the Pargana revenue Court or in the Tappa courts within six (6 ) months and in case of proof of trespass or obstruction, possession and damages will be awarded against the defendant and if the court thinks fit it may also take bonds, quantum whereof will be decided in view of the nature of the trespass or obstruction.
(3) Suits beyond this duration will be entertained as per section 325 of the Qanoon Mal in the regular jurisdiction.
" The Board of Revenue was of the view that in case land revenue remains in arrears, the fight of a tenant gets extinguished under section 82 of the Qanoon Ryotwari, but nevertheless the possession of the tenant whose right has been so extinguished is not put to an end automatically, and the tenant must be legally dispossessed, The Board observed: "This is a general principle of law that no act can be done by the strength of one 's own hands but help of the law should be taken and the procedure which is 207 prescribed for that act must be acted upon.
In this case the petitioner has not obeyed any law regarding the dispossession of the opponent after the plaintiff lost his right and he himself went there and took possession.
" The Board was further of the view that action for dispossession should have been taken according to section 137 of Qanoon Ryotwari, extracted above.
The High Court, however, came to the conclusion that it was not obligatory on the defendant to have filed a suit under section 137 of Qanoon Ryotwari.
The High Court felt that the proviso to section 137; which enabled the Collector to accept arrears for three years, did not militate against such a construction.
The High Court was also of the view that under the general law applicable to a lessor and a lessee there was no rule or principle which made it obligatory for the lessor to resort to Court and obtain an order for possession before he could eject the lessee.
The High Court interpreted section 163 of Qanoon Ryotwari to mean that in a proceeding under that section it is not sufficient to determine the question of de facto possession alone but it is also necessary to.
enquire as to whether this possession is or is not wrongful.
It seems to us that on a, true interpretation of the statutory provisions, extracted above, the Board of Revenue came to the.
correct conclusion.
Under section 82(3) Qanoon Ryotwari, the fight of a Khatedar is extinguished if the khatedar keeps in arrears the land revenue of his khata but there is no automatic extinguishment of his right because section 137 of Qanoon Ryotwari enables the Collector to accept arrears if the khatedar is a good payer (khush dehanda) and there are special reasons beyond his control for not paying the land revenue.
The existence of the proviso instead of assisting the landlord 's contentions assists the tenant 's case because if the reasoning of the High Court is accepted to be correct, the proviso would become a dead letter for in every case where there are arrears of land revenue, the landlord would take.
possession forcibly without trying to recover land revenue under section 137.
Further, section 163 of Qanoon Ryotwari clearly provides for suits of the nature described in section 326 of Qanoon Mal.
When we turn to section 326, it is very similar to section 9 of the and it seems to uS that the words "disturbed unlawfully" in section 326 mean "disturbed not in due course of law.
" Otherwise, there is no reason why a shorter period of limitation and summary procedure is provided in section 326 while section 325 provides a longer period of three years for a suit for possession.
Some stress was laid on the words "in case of proof of trespass" in section 326 by the learned counsel for the respondent.
According to him, a landlord does not commit trespass when he forcibly enters on land in the possession of a tenant whose tenancy 208 has expired.
In our view, in the context, the word "trespass" here would include forcible entry and dispossession by the landlord.
Reference was made to a number of English authorities in this behalf but it is not necessary to deal with them because the law in India on this subject is different.
Under section 9 of the it is well settled that question of title is irrelevant in a suit under that section.
As the structure of section 326 of Qanoon Mal, read with section 163 of Qanoon Ryotwari, is similar to section 9 of the , there is No. reason why section 326 should be interpreted differently.
In Midnapur Zamindary Company Limited vs Naresh Narayan Roy(1), the Privy Council observed: "In India persons are not permitted to take forcible possession; they must obtain such possession as they are entitled to through a Court." In K.K. Verma vs Naraindas C. Malkani(2), Chagla, C.J., stated that the law in India was essentially different from the law in England.
He observed: "Under the Indian law the possession of a tenant who has ceased to be a tenant is protected by law.
Although he may not have a right to continue in possession after the termination of the tenancy his possession is juridical and that possession is protected by statute.
Under section 9 of the a tenant who has ceased to be a tenant may sue for possession against his landlord if the landlord deprives him of possession otherwise than in due course of law, but a trespasser who has 'been thrown out of possession cannot go to Court under section 9 and claim possession against the true Owner.
" In Yar Mohammad vs Lakshmi Das(3), the Full Bench of the Allahabad High Court observed: "No question of title either of the plaintiff or of the defendant can be raised or gone into in that case (under.
section 9 of the ).
The plaintiff will be entitled to succeed without proving any title on which he can fall back upon and the defendant cannot succeed even though he may be in a position to establish the: best of all titles.
The restoration of possession in such a suit is, however, always subject to a regular (1) 51 I A.293 at 299.
(2) I.L.R. [1954] Born.
950 at 957.
(3) I.L.R. [1958] 2 All. 394 at 4e4.
209 title suit and the person who has the real title or even the better title cannot, therefore, be prejudiced in any way by a decree in such a suit.
It will always be open to him to establish his title in a regular suit and to recover back possession.
" The High Court further observed: "Law respects possession even if there is no title to support it.
It will not permit any person to take the law in his own hands and to dispossess a person in actual ' possession without having recourse to a court.
No person can be allowed to become a judge in his own cause.
As observed by Edge, C.J., in Wali Ahmed Khan vs Ayodhya Kundu(1): "The object of 'the section was to drive the person who wanted to eject a person into the proper court and to prevent them from going with a high hand and ejecting such persons.
" Our attention was invited to the decision of the Calcutta High Court in State of West Bengal vs Birendra Nath Basunia(2)* In that case the High Court refused to issue an order under Art 226 of the Constitution prohibiting the Government from forcibly taking possession of lands which had been validly resumed by Government.
We are not concerned with that question here But we do not agree with the conclusion of the High Court that a lessor is entitled in India to use force to throw out his lessee.
In Hillaya Subbaya Hegde vs Narayanappa Timmaya(3) in was observed: "No doubt, the true owner of property is entitled to retain possession, even though he has obtained it from a trespasser by force or other unlawful means: Lillu bin Raghushet vs Annaji Parashram(4) and Bandu vs Naba(5).
" We are unable to appreciate how this decision assists the respondent It was not a suit under section 9 of the .
1n Lillu bin ' Raghushet vs Annaji Parashram(4), it was recognised that "if there is a breach of the peace in at:tempting to take possession, that affords a ground for criminal prosecution, and the attempt is successful, for a summary suit also for a restoration to possession under section 9 of the 1 of 1877 Dadabhai Narsidas vs The Sub Collector of Broach" (6) In Bandu vs Naba(5) it was observed by Sargent, C.J., as follows (1) All.
537 556.
(2) A.I.R. 1955 Cal.
(3) (4) 387 391 (5) Bom.
(6) 7 Bom.
H.C. Rep. 82 A.C.J. 210 "The Indian Legislature has, however, provided for the summary removal of any one who dispossesses another, whether peaceably or otherwise than by due course of law; but subject to such provision there is no reason for holding that the rightful owner so dispossessing the other is a trespasser, and may not rely for the support of his possession on the title vested in him, as he clearly may do by English law.
This would also appear to be the view taken by West, J., in Lillu vs Annaji(1).
" In our opinion, the law on this point has been correctly stated by the Privy Council, by Chagla, C.J., and by the Full Bench of the Allahabad High Court, in the cases cited above.
For the aforesaid reasons we hold that the High Court erred in quashing the order of the Board of Revenue.
The appeal is accordingly allowed with costs, judgment of the High Court set aside and the order of the Board of Revenue restored.
G.C. Appeal allowed (1) Bom.
387 391.
| IN-Abs | Certain tenants of ryotwari land in Gwalior district filed a suit under 'section 326 of the Qanoon Mal alleging dispossession by the landlords and praying for restoration of possession.
On behalf of the defendants it was urged that by not paying land revenue the plaintiffs ' rights had been ,extinguished under section ' 82 of the Qanoon Ryotwari.
The Revenue authorities decreed the suit on the view that even when land revenue was not paid the landlord could not take possession without recourse to a suit under section 137 Qanoon.
Ryotwari.
The High Court however allowed landlords ' petition under article 227 of the Constitution holding that it was not obligatory on the landlord to resort to Court in order to eject a defaulting lessee, and that in a proceeding under section 163 of Qanoon Ryotwari it was not sufficient to determine the question of de facto possession alone but it was also necessary to enquire as to whether ' this possession was or was not wrong.
The appellant, who was one of the tenants came to this Court.
Held: (i) Under section 82(3) Qanoon Ryotwari, the right of a Khatedar extinguished if the khatedar keeps in arrears the land revenue of his khata but there is no automatic extinguishment of his right because the proviso to section 137 of the Qanoon Ryotwari enables the Collector to accept arrears if the khatedar is a good payer (khush dehanda) and there are special reasons beyond his control for not paying land revenue.
The proviso would become a dead letter if in every case when there are arrears of land revenue the landlord could take possession forcibly without trying to recover the land revenue under section 137.
[207 E G] Further section 163 of Qanoon Ryotiwari clearly provides for suits of the nature described in section 326 of Qanoon Mat.
Section 326 is very similar 10 section 9 of the , and the words 'disturbed unlawfully '.
in section 326 mean "disturbed not in due course of law".
Otherwise.
there is no reason why a shorter period of limitation and summary procedure is provided in section 326 while section 325 provides a longer period of three years for a suit for possession.
The word 'trespass ' in section 326 would include forcible entry and dispoSsession by the landlord.
[207 G 208A] (ii) Under section 9 of the the question of title is irrelevant under that section.
Section 326 of Qanoon Mal read with Qanoon Ryotwari being similar to that section must be similarly interpreted.
[208B] Midnapur Zamindary Company Limited vs Naresh Narayan Roy, 5t I.A. 293, K.K. Verma vs Naraindas C. Malkani.
I.L.R. [1954] Born.
950, Yar Mohammad vs Lakshmi Das.
I.L.R. [1958] 2 All. 394.
Wali 204 Ahmad Khan vs Ayodhya Kundu, All. 537, State of West Bengal vs Birendra Nath Basunia, A.I.R. , Hillaya Subbaya Hegde vs Narayanappa Timmaya, , Lillu bin Raghushet vs Annaji Parashram,.
387, Bandu vs Naba, Bom. 238 and Dadabhai Narsidas vs The Sub Collector of Broach.
7 Bom.
H.C. Rep. 82 ACJ, referred to.
|
Appeals Nos. 212 to 216 of 1965.
Appeals by certificates/special leave from the judgment and decree dated September 3, 1965 of the Allahabad High Court in First Appeals Nos.
523 of 1933, and 557 of 1930.
R. K. Garg, D. P. Singh, Anil Kumar Gupta, Shiv Pujan Singh and K. M. K. Nair, for the appellants (In C.A. No. 212 of 1965).
Yogeshwar Prasad, E. C. Agrawala and P. C. Agrawala, for the appellants (In C.As.
Nos. 213 and 214 of 1965).
G. N. Kunzru, B.P. Singh and R. B. Datar, for the appellant (In C. A. No. 215 of 1965), for the respondent (In C.As.
Nos. 212, 213 and 214 of 1965 and for the respondents (In C.A. No. 216 of 1965).
C. B. Agarwala, V. K. Sanghi and K. P. Gupta, for the appellant (In C. A. No. 216 of 1965).
The Judgment of the Court was delivered by Mitter, J.
Bounded by the river Ganges on the cast, in the locality named Tripura Bhairvi of the temple studded city of Benaras there stands a math popularly known as Uttam Giri 's Math, the origin of which is lost in antiquity.
For well over a century this Math has been a sanctuary of a spiritual brotherhood of Nihang Dasnami Sanyasis.
Claim is laid that they belong to one of the ten orders of Sanyasis founded by the chelas of the 602 four disciples of the famous philosopher, Sankaracharya.
Starting probably without any nucleus of endowed immovable property, the heads of the Math appear to have prospered enormously in matters material and temporal.
Successive heads of the Math or Mahants as they were commonly known, seem to have been more keen about the acquisition of wealth and preservation of properties than about the furtherance of the spiritual benefit of the brotherhood.
Gifts in the shape of endowments seldom came their way but the Mahants who uniformly pursued a money lending business also styled as a banking business in some of the documents, went on amassing wealth and property treating themselves as full owners thereof and directing their successors almost invariably nominated by their wills, to treat the property in the same way as they themselves were doing but paying scant regard to the cause of the brotherhood or the pursuit of any charitable purposes.
One Mayanand Giri became the Mahant in 1904 and it is his acts and conduct which sparked off this litigation nearly forty years ago.
The immediate cause of the legal proceedings was his marriage which led the plaintiff, Purushottamanand Giri, to file the suit in the court of the Subordinate Judge of Benaras claiming a declaration that by his marriage, the defendant No. 1, Mayanand Giri, had lost his right to continue as Mahant and that the plaintiff as his nearest collateral should, according to the custom of Nihang Dasnami Sanyasis, be put in occupation and possession of the Math the properties appertaining thereto.
The plaintiff also challenged a number of alienations impleading no less than forty five persons as defendants and claiming that the transfers made by defendant No. 1 were invalid and not binding on the Mahant of the Math.
The suit was contested not only by Mayanand Giri but also by a number of the transferees.
The defences raised were many and various.
The first defendant pleaded inter alia that the plaintiff was not his nearest collateral, that there did not exist a Math with the customs and usages alleged in the plaint and that all the properties scheduled in the plaint were not the subject matter of any endowment.
The case of the transferees was that most of the properties were acquired by successive Mahants starting from Chaitanya Giri by the practice of a money lending business.
It was said that a banking firm styled as Uttam Giri Shivdutt Giri was 603 started by his successors and it was this business which was pursued by the Mahants that gave rise to the wealth accumulated in the Math.
The common defence of all the transferee defendants who contested the suit was that Mayanand Giri was the absolute .owner of the properties alienated and that they themselves were bona fide transferees for valuable consideration and as such the transactions entered into with them by Mayanand Giri could not be challenged.
The suit was dismissed as against a large number of defendants who were found to be dead at the time of its institution or because they were not properly brought on the record in place of the original defendants.
The Subordinate Judge after a protracted hearing came to the conclusion that the ancient documents on the record, coupled with the other evidence, established the existence of an ancient Math, that the Mahants from the time of Gangot Gir had been carrying on a money lending business, that an ancestor of Gangot Gir by name Gomtigir had established a Math on a humble scale, that Prem Giri, a grand disciple of Gangot Gir, established another Math of his own, that Uttam Gir who succeeded Prem Gir had certainly created one and that the predecessors of the defendant, Mayanand Giri like himself had two kinds of properties, namely, Math property and personal property.
According to the Subordinate Judge the nucleus from which the Math in suit originated was the personal property of Prem Gir.
On the evidence he held 12 items of property mentioned in the will of Shivdutt Gir who succeeded Prem Gir and two other items of property to be endowed properties.
The transfers effected by Mayanand were, according to the Subordinate Judge, beyond challenge because they related only to his personal properties.
Two appeals were filed against the judgment and decree of the Subordinate Judge, one by the plaintiff and the other by Mayanand.
The Allahabad High Court on appeal dismissed the suit on the view that there was no Math at all, that there was only a banking business and that the property was non religious personal property acquired by Mayanand and his predecessors by following a banking business.
A further appeal from the Allahabad High Court was disposed of by this Court by a judgment dated December 20, 1954.
After noting in brief the 604 conclusions of the Subordinate Judge and of the Allahabad High Court, it was observed by this Court that "the short and only question therefore before us is, whether or not the existence of the math which is the foundation of the plaintiff 's case has been satisfactorily made out.
" This Court then proceeded to examine the principal ancient documents and observed: "All the above documents, broadly considered, indicate definitely ,(1) the existence of a spiritual brotherhood affiliated to each other by ties of initiation and succession, (2) the existence of a mutt which is the residence of the brotherhood as well as of the gaddinashin thereof and which in specific terms has been successively provided as being inalienable, (3) the existence of certain properties at least from the date of death of Sheodat Gir which were made specifically inalienable in the hands of his successors, presumably for the use of the spiritual brotherhood, and (4) the existence of a number of items of property which in terms were dedicated for spiritual uses like Dharmashalas, feeding of ascetcis, etc.
and were designated as waqf.
" This Court then considered the evidence of prior conduct of Mayanand Giri himself and certain admissions made by him and held "that the case of the first defendant denying the existence of a mutt or of any properties as belonging to it is totally false." According to this Court "it is quite clear that what is now designated as the mutt No. 42/90 D must have been in existence at least from the time of Prem Gir i.e. for over a century and that this item of property in the hands of successors of Prem Gir was subject to the condition of in alienability, expressly provided in Premgir 's Tamliknama, and impliedly so provided in the will of Sheodat Gir.
" 605 Further "notwithstanding that there is no specific deed of endowment, the fact that the particular building has been continuously used as the residence of the brotherhood, and the seat of the head thereof in succession and the fact that it has been specifically provided as being inalienable constitute sufficient evidence of dedication of this building as a mutt.
" Examining the evidence further, both oral and documentary, this Court was not inclined to concur with the view expressed by the High Court that the evidence did not "disclose the existence at any time of a religious institution or a monastery with any attempt at religious study or religious teaching but that it disclosed only banking or money lending business which passed on from each of its proprietors to his chosen successor.
" Great stress was laid on the documents of 1828 and 1839 to be noted in detail hereafter which did not, according to this Court, indicate that the ownership given thereby to the successors was to be for their personal uses and that all the transactions disclosed by these and other documents noticed by the High Court were inter se between the members of the brotherhood and not with outsiders.
It was observed that "The document of 1887 appears to us to clinch the position by specifically providing that the properties left by Sheodat Gir were not to be alienable in the hands of the successors.
The inalienability impressed upon by these properties by the then head of the spiritual brotherhood can reasonably be presumed to be only for the purpose of spiritual brotherhood." According to this Court these circumstances should "be normally treated as indicative of the religious character of the property for the use of the brotherhood.
" The conclusion of this Court (as appearing at page 607 of the paper book) was in these terms: "We are, therefore, satisfied that the existence of a mutt as an institution has been clearly made out on the evidence in this case and that the building No. 42/ 90 D belongs to and constitutes the mutt and that the 606 contrary view is untenable.
The only substantial question in the case is whether and to what extent the properties in suit belong to this mutt as an institution.
The learned trial Judge dealt with this question and held only a few out of the large number of items mentioned in the plaint schedule as belonging to the mutt.
The learned Judges of the High Court did not feel called upon to give any finding as to this in the view that they had taken.
These appeals will, therefore, have to go back to the High Court for further consideration of this question and of other questions left un decided.
" Finally it was observed (at p. 610): "that our judgment concludes the question as to whether house No. 42/90 D is or is not mutt property.
The only substantial questions that remain are as to which of the other properties in the plaint schedule belong to the mutt and whether such alienations as relate to mutt properties are valid and binding on the mutt.
" This Court further upheld the finding of the Subordinate Judge in favour of a custom among the Dasnami Sanyasis of the neighbourhood that by reason of his marriage Mayanand had become a "Patit" and had forfeited the office of Mahantship and the same community had elected the plaintiff as the Mahant of the Math at Tripura Bhairavi.
On remand, the High Court examined the ancient documents once more and after referring to the observations of this Court quoted above, stated that it had been definitely found by this Court that some of the properties in suit must belong to the Math and went on to add: "In view of this finding of the Supreme Court the fact that the evidence on the record does not expressly indicate which property belonged to the Math and which did not, should lead to the conclusion that all the property belongs to the Math.
Property acquired by a Mahant personally but blended with the Math property will itself become Math property.
He is com petent to endow his property.
Blending it with Math 607 property is an indication that he endowed it to the Math or intended it to be Math property." According to the High Court: "It was, therefore, necessary for the defendants to establish that such and such property was acquired .not as a Mahant but as an individual and was also kept separate from the Math property which the Mahant was managing.
" The High Court then went on to consider the alienations made by the Mahants who had preceded Mayanand Giri from time to time and was of the view: "during this long period the brotherhood did purchase properties but hardly transferred any property and that this may be either as the properties were not considered personal and alienable or as the mahants had no occasion to transfer property, their income being in excess of expenditure.
" The High Court examined the transactions of Mayanand Giri challenged by the plaintiff and was not satisfied that any enquiry had been made by the alienees about the necessity or the purpose of the math justifying the alienations.
In the result, the High Court allowed the appeal with costs throughout against Mayanand Giri and a number of alienees, some of whom only have come up in appeal.
[His Lordship then examined the documentary evidence in order to ascertain the character of the property in dispute, and held:] In our view, the High Court fell into an error in holding that the observations of this Court led to the conclusion that all the property belonged to the math because the evidence on the record did not expressly indicate which property belonged to the math and which did not.
On the facts of this case it is not possible to hold that the mahants blended their self acquired and personal property with math property so as to make the whole partake of the character of the latter class of property.
A Mahant is undoubtedly competent to endow the property acquired by him but merely because in the Tamilknamas he makes no dis 608 tinction between property acquired by him personally and property which undoubtedly formed the subject matter of a prior endowment, the personally acquired properties cannot be said to be math property when the evidence on record establishes that all the mahants were holding themselves out as absolute owners of the property and were transferring various items of property from time To time albeit to persons of the same brotherhood.
On the evidence on record, we are not in a position to hold that any of the properties other than the 15 items above mentioned were math properties.
The fact that the predecessors in ' interest of Mayanand Giri had renounced the world and became sanyasis and had almost uniformly nominated the person who was to succeed them from out of the disciples or disciples of disciples, does not lead to the conclusion that the properties must be treated as math properties.
In Parama Nand vs Nihal Chand(1) the question before the Judicial Committee of the Privy Council was whether an Udasi could acquire private property with his own money or by his exertions and if he did so, whether it passed on his death to his spiritual heir including his Chela or could be inherited by his natural relatives.
There one Narain Das had filed a suit for obtaining an authoritative pronouncement on the character of certain property held by him, the case of the defendants being that Narain Das was no more than the trustee of an endowment and could be called upon to furnish details of the nature and purpose of the trust.
The High Court at Lahore had held in favour of the trust, the principal ground of their judgment being that the properties had descended from Guru to Chela.
This was not accepted by the Judicial Committee and it was observed that: "this circumstance (the descent from Guru to Chela) does not necessarily lead to the conclusion that a property, when acquired by a Mahant, loses its secular character and partakes of a religious character.
" In Raghbir Lala vs Mohammad Said(2) the plaintiffs ' case was that the land in suit claimed by the defendants directly or in (1) 65 I.A. 252.
(2) A.I.R. 1943 P.C.7.
609 directly under transfers made in 1915 and 1916 by one Jain andar Kirat were debutter.
It was established that one Manindar had purchased the land in the suit but there was no evidence that having acquired the land Manindar dedicated it to any Jain institution or religious purpose.
It transpired that he had solicited subscriptions for the erection of a temple which was not built and that except for the actual site of the foundations of the temple, he had used the rest of his land for his own purposes.
According to the Judicial Committee : "He appears to have made money by practising astrology and medicine and by lending money occupations which he added to that of a religious teacher. .
His life and conduct may not have been in accord with his religious professions as a Jain ascetic, but in fact he held and managed the property which he had bought and indeed litigated about it, as if it were his own without any interference or assistance by the Jain community." The Judicial Committee held on this evidence that the plaintiffs could not succeed on the ground of dedication by Manindar.
The Board further observed: "No doubt if a question arises whether particular property acquired by a given individual was acquired on his own behalf or on behalf of some other person or institution with whom or with which he was connected the circumstance that the individual so acquiring property was a professed ascetic may have some importance.
But it is out of question to suppose that a man 's religious opinions or professions can make him incapable in law of holding property.
" In our view, the observations made on the prior occasion by this Court were only an indication that the circumstance of succession of properties from one Mahant to another, had an important bearing on the final conclusion as to the character of the properties without being a decisive factor in respect thereof.
in this case, we find that the Mahants had systematically pursued a money lending business, that there was little nucleus of any endowed property, that during the course of a century and a half L2 Sup 68 8 610 the proved endowments were hardly of any importance, that the Mahants were transferring properties to others in recognition of the claims of the disciples or voluntarily for lawful consideration and were describing themselves in the Tamliknamas as the absolute owners of the property, we cannot but hold that the properties in their charge were their personal properties unless it be established that any particular.
item of property was the subject matter of an endowment or a gift for a particular charitable purpose.
We have already held that only 15 items of property including premises No. 42/90 D were math properties.
On the evidence, we are not in a position to declare that the other properties were not personal properties in the hands of Mayanand Giri.
It follows that the transfers of Mayanand Giri of this class of properties must be upheld so far as they are subject matter of the appeals before us.
G.C. Appeals allowed.
| IN-Abs | The successive Mahants of Uttar Giri Math in Benaras acquired properties and made dispositions of properties to their disciples who succeeded them.
The incumbent of the office of Mahant in 1904 entered into a marriage against the custom of the brotherhood.
One of his collaterals thereupon filed a suit in which he claimed to be put in possession of the properties of the Math, also challenging some of the dispositions of property made by the Mahant.
The defendants contended that all the properties in question did not belong to the Math and that the properties transferred were the personal properties of the Mahant.
The trial Court held that the transferred properties were the personal properties of the Mahant and his predecessors and that only 12 items of property were endowed properties.
In appeal the High Court held that all the items of property were personal property.
In further appeal this Court held that the building in which the brotherhood resided was certainly Math property; as to other properties the case was remanded to the High Court for determining whether, they were personal properties or endowment properties.
The High Court, noting this Court 's view that at least some properties must belong to the Math, observed : "In view of this finding of the Supreme Court the fact that the evidence on the record does not expressly indicate which property belonged to the, Math and which did not.
should lead to the conclusion that all the property belongs to the Math.
Property acquired by a Mahant personally but blended with the Math property will itself become Math property.
" On this view the High Court dismissed the appeal.
The defendants came to this Court.
HELD : The High Court fell into an error in holding that the observations of this Court in the earlier appeal led to the conclusion that all the property belonged to the Math because the evidence on record did not expressly indicate which property belonged to the Math and which did not.
If such had been the intention of the learned Judges bearing the appeal they would have clearly said so.
[607 G H] On the facts of the case it was not possible to hold that the Mahants blended their self acquired and personal property with Math property so as to make the whole partake of the character of the latter class of property.
The Mahants had systematically pursued a money lending business, had transferred properties to others in recognition of the claims of 601 the disciples or voluntarily for lawful consideration and were describing themselves in the Tamliknamas as the absolute owners of the property.
[607 H; 609 GH] On an examination of the evidence only 15 items of property including main building in which the Math was situated were Math property.
About the rest of the, property it could not be said that it was not the personal property of the Mahant.
The transfers of such property by the latter could not therefore be challenged.
[608 OC; 609 H] The fact that the successive Mahants had renounced the world and became sanyasis and had almost uniformly nominated the person who was to succeed them from out of the: disciples or disciples of disciples does not lead to the conclusion that the properties must he treated as Math properties.
[608 C] Parama Nand vs Nihal Chand, 65 I.A. 252 and Raghbir Lala vs Mohanmad Said, A.I.R. 1943 P.C. 7, relied on.
|
minal Appeal No. 124 of 1965.
Appeal by special leave from the judgment and order dated April 26, 1965 of the Punjab High Court, Circuit Bench at Delhi in Criminal Revision No. 266 D of 1964.
Bhawani Lal, Kartar Singh Suri and E. C. Agrawala for P. C. Agrawala, for the appellants.
R. N. Sachthey, for the respondent.
457 The Judgment of the Court was delivered by Hegde, J.
Two questions that arise for decision in this appeal by special leave are : (1) whether the appellants have established satisfactorily the right of private defence pleaded by them and (2) if they had that right, have they exceeded the same ? The prosecution case is as follows : Field No. 1129/477 measuring five bighas and thirteen biswas situated in Kilokri was an evacuee property and as such was under the management of the managing officer.
That property was acquired by the Central Government under the Displaced Persons Act, 1954.
(For the sake of convenience we shall refer to that property hereinafter as evacuee property.) The same was sold by public auction on January 2, 1961 and purchased by PW 17 Ashwani Kumar Dutt for a sum of Rs. 7,600.
Provisional delivery of that property was given to the vendee on October 10, 1961.
The sale certificate was issued on February 8, 1962.
The actual delivery was given on June 22, 1962 as per the warrant issued by PW 5.
Khushi Ram, the managing officer.
The said delivery was effected by PW It) Sham Das Kanungo.
On July 1, 1962 when PW 17 and his father PW 19, R. P. Dutt went to the field with PW 16, Gopal Das, PW 15 Nand Lal and one B. N. Acharya with a trac tor to level the land, the appellants came armed with spears and lathis attacked the complainants ' party and caused injuries to PWs 17 and 19 and the tractor driver, B. N. Acharya.
Though the appellants in their statement under section 342 Cr.
P.C. denied having been present at the scene of occurrence or having caused injuries to any one, the plea taken on their behalf at all stages was one of private defence.
Their case is that their relation Jamuna (DW 3) was the tenant in the land for over thirty years.
His tenancy was never terminated.
He had raised crops in the field in question.
There was no delivery on June 22, 1962.
If there was any delivery as alleged by the prosecution, the same was without the authority of law and as such was of no effect.
Hence, Jamuna continued to be in possession of the property even on July 1, 1962.
On the day prior to the occurrence, PWs 17 and 19 tried to intimidate Jamuna to come to terms with them and to peacefully deliver possession of the property to them.
But he put off the question of compromise by pleading that he was going out of station and the question of compromise could be considered after his return.
With a view to forcibly assert their right to the property, the complainant party came to the field in a body on July 1, 1962 with a tractor.
At that time PW 19 was armed with an unlicensed pistol.
It is at this stage that the appellants who are near relations of Jamuna went to the field and asked the complainant party to clear out of the field.
When they refused to do 458 so, they pushed them and thereafter used minimum force to throw them out of the field.
On the basis of the above facts, it was urged on behalf of the appellants that they were not guilty of any offence.
The courts below have accepted the prosecution version both as regards possession as well as to the manner in which the incident took place.
The appellants have been convicted under sections 447, 324 read with 149 and 148 I.P.C.
We have now to see whether on the basis of the undisputed facts as well as the facts found by the High Court, the defence can be said to have made out the plea of defence of property advanced on their behalf.
It is true that appellants in their statement under section 342 Cr.
P.C. had not taken the plea of private defence, but necessary basis for that plea had been laid in the cross examination of the prosecution witnesses as well as by adducing defence evidence.
It is well settled that even if an accused does not plead selfdefence, it is open to the court to consider such a plea if the same arises from the material on record see In re Jogali Bhaigo Naiks and another(1).
The burden of establishing that plea is on the accused and that burden can be discharged by showing prepon derance of probabilities in favour of that plea on the basis of the material on record.
The first question that arises for decision in this case is as to who was in possession of the field in dispute on the date of the occurrence, i.e., on July 1, 1962.
For deciding that question it is necessary to find out as to who was in possession of the same prior to June 22, 1962, the date on which that field was said to have been delivered to PW 17.
On this question, the prosecution is silent.
DW 3, Jamuna, in his evidence deposed that he had been in possession of that field as a tenant for over thirty years.
His case was that he was formerly the tenant in respect of that field under some Muslim landlords and after their migration to Pakistan, under the officer managing the evacuee property.
This evidence of his was not challenged in cross examination.
That evidence is supported by the prosecution exh.
The courts below have also proceeded on the basis that Jamuna was in possession of the field till June 22, 1962.
Therefore, we have to see whether there was any lawful delivery of that field on June 22, 1962.
At this stage it is necessary to recapitulate that the field in question had been sold by the managing officer on January 2, 1961.
Its provisional delivery was given on October 12, 1961.
The sale certificate was issued on 8 2 62 (exh.
Therefore, the government had no interest in that field on or after the aforementioned sale.
It is not the case of the prosecution that Jamuna 's tenancy had been terminated by any of the authorities constituted under (1) AIR 1927 Mad.
459 the (to be hereinafter referred to as the Act).
It may further be noted that the exh.
PM The terms and conditions under which the auction of the field was held does not show that the government had undertaken to deliver physical possession of that field to the purchaser.
From the facts stated above it is obvious that Jamuna continued to be the tenant in the land even after the sale in favour of PW 17.
The prosecution case is that delivery of that field was given to PW 17 by PW 10 the kanungo on June 22, 1962 as per the delivery warrant issued by PW 5, the managing officer.
Even according to the prosecution version, at the time of that delivery Jamuna was not present.
There is also no evidence to show that Jamuna was aware of the alleged delivery.
It is true that as a token of the delivery, some ploughing was done at the time of the alleged delivery.
At this stage it is also necessary to mention that at the time of the alleged delivery, crops grown by Jamuna were there in a portion of the field.
It was said that the kanungo who delivered the field, valued the crops in question at Rs. 60 and the same was deposited by PW 17 with PW 5 as per the orders of the latter for being paid over to Jamuna.
We were not told under what authority those steps were taken.
This takes us to the question whether the purported delivery is valid in law.
Normally before a tenant can be evicted from his holding, his tenancy must be terminated and the eviction should be done through a court of competent jurisdiction.
No landlord has any right to throw out his tenant from his holding.
The law on the subject was explained by this Court in Lallu Yeshwant Singh vs Rao Jagdish Singh and others(1).
Therefore, it is clear that PW 17 who had become the owner of the land long before June 22, 1962 could not have evicted Jamuna from the land in the manner alleged.
The next question is whether PW 5, the managing officer was competent to evict Jamuna.
We fail to see how he could have done it.
He had no interest in the land in question on June 22, 1962.
The right, title and interest of the government in the land had long been alienated.
The managing officer had already given to the vendee such possession as he could have, namely, the landlord 's possession.
Thereafter it went out of the compensation pool and the managing officer had no power to deal with it unless otherwise expressly provided.
Our attention has not been invited to any provision in the Act authorising the managing officer to deal with a property which had ceased to be an.
evacuee property.
Therefore we fail to see how PW 5 could have issued any warrant for the delivery of the field in question on June 22, 1962.
(1) ; 460 Before the courts below it was pleaded on behalf of the prosecution which plea commended itself to those courts that the .delivery in question was effected under section 19 of the Act.
Section 19 ,to the extent it is material for our present purpose, reads thus I Notwithstanding anything contained in any contract or any other law for the time being in force but subject to any rules that may be made under this Act, the managing officer or managing corporation may cancel any allotment or terminate any lease or amend the terms of any lease or allotment under which any evacuee property acquired under this Act is held or occupied by a person, whether such allotment or lease was granted before or after the commencement of this Act.
(2) Where any person (a) has ceased to be entitled to the possession of any evacuee property by reason of any action taken under sub section (1), or (b) is otherwise in unauthorised possession of any evacuee property or any other immovable property forming part of the compensation pool; he shall, after he has been given a ,reasonable opportunity of showing cause against his eviction from such property, surrender pos session of the property on demand being made in this behalf by the managing officer or managing corporation or by any other person duly authorised by such officer or corporation.
(3) If any person fails to surrender possession of any property on demand made under sub section (2) the managing officer or managing corporation may, notwithstanding anything to the contrary contained in.
any other law for the time being in force, eject such person and take possession of such property and may, for such purpose, use or cause to he used such force as may be necessary.
" The above provisions apply only to properties which are under .the control of the managing officers or managing corporations.
They do not apply to properties which have ceased to be evacuee properties.
Further, it is not the prosecution case that any action under sub sections 1 and 2 of section 19 had ever been taken against Jamuna.
If that was so, no action under sub section
3 of section 19 could have been taken.
As a condition precedent for taking action under sub section
.of section 19 it was necessary to take the steps prescribed by sub section
461 of section 19.
It must be noted that the power conferred under sub section 3 is a special power conferred for a special purpose.
Such a power has to be exercised strictly in accordance with the conditions prescribed.
If it is not so exercised, the exercise of the power would be vitiated.
Having not taken any action under sub section 2 of section 19, the managing officer was incompetent to issue any warrant for delivery under sub section
3 of section 19 under which he is said to have acted.
It was for the vendee to take the necessary steps under law for taking possession from Jamuna.
Therefore, it is obvious that the alleged delivery has no legal force.
In the eye of the law it is non est.
Hence Jamuna continued to be in possession of the field in question even after the so called delivery on Juno 22, 1962.
This aspect of the case was completely lost sight of by the courts below.
It is seen from the evidence of DW 3, Jamuna, which evidence was not even challenged in cross examination, that PWs 17 and 19 were aware of the fact that the purported delivery on June 22, 1962 was merely a paper delivery.
In his chief examination, DW 3, Jamuna, deposed thus: " A day prior to the occurrence, R. P. Dutta and his son Ashwani Kumar had met me and had asked me to get the compromise effected.
I told him that since I was proceeding out station in connection with some marriage, any talk of compromise could take place after my return from there.
Both R. P. Dutta and his son Ashwani Kumar had threatened me that in case I would not deliver possession of the land in question willingly, they would get possession of the same by force under the pressure of the police.
AR the accused are near relations of mine.
" To repeat, this evidence was not challenged in cross examination.
From that evidence it is clear that at about the time of occurrence PWs 17 and 19 were conscious of the fact that Jamuna still continued to be in possession of the field.
PWs 17 and 19 were aware of the fact that Jamuna was un willing to deliver possession of the field.
This is borne out by the fact that at the time of the alleged delivery on June 22, 1962, police assistance was applied for and obtained.
From the foregoing it is clear that Jamuna was in effective possession of the field on the date of the occurrence.
But it was urged on behalf of the prosecution that rightly or wrongly PW 17 had taken possession of the property on June 22, 1962, and therefore, if Jamuna had any grievances, he should have agitated LISup(CI)/68 15 462 the same in a court of law, and that his relations had no right to take law into their own hands.
This contention is based on a misconception of the law.
If by the alleged delivery PW 17 could not be held to have been put in possession of the field, he could not be said to have been in possession of the same.
The fact that some formalities were gone through in pursuance of an unauthorised order issued by PW 5 is no ground for holding that possession of the field had passed into the hands of PW 17 Steps taken by PW 17 and others who accompanied him on June 22, 1962 were unauthorised acts.
It is true that no one including the true owner has a right to dispossess the trespasser by force if the trespasser is in settled possession of the land and in such a case unless he is evicted in due course of law, he is entitled to defend his possession even against the rightful owner.
But stray ,or even intermittent acts of trespass do not give such a right against the true owner.
The possession which a trespasser is entitled to defend against the rightful owner must be a settled possession extending over a sufficiently long period and acquiesced in by the true owner.
A casual act of possession would not have the effect of interrupting the possession of the rightful owner.
The rightful owner may re enter and reinstate himself provided he does not use more force than necessary.
Such entry will be viewed only as a resistance to an intrusion upon possession which has never been lost.
The persons in possession by a stray act of trespass, a possession which has not matured into settled possession, constitute an unlawful assembly, giving right to the true owner, though not in actual possession at the time, to remove the obstruction even by using necessary force.
It is not the case of the prosecution that between June 22 and July 1, 1962 the complainant or his men had been to the field in question.
We have earlier seen that PWs 17 and 19 had unsuccessfully tried to intimidate Jamuna on June 30, 1962 to deliver peaceful possession of the field.
It is only thereafter on July 1, 1962, they along with their friends went to the field with a tractor, and at that time PW 19 was armed with a pistol for which he had no licence.
It was at that stage, the appellants who are close relations of Jamuna came to the field, some armed with sticks and others with spears.
They first asked the complainant 's party to clear out of the field, but when they refused, they pushed them and thereafter attacked them as a result of which PW 17, PW 19 and the tractor driver Acharya were injured (see evidence of PW 19, R. P. Dutt).
The injuries caused by them were held to be simple injuries.
From the proved facts, it is evident that PWs 17 and 19 had gone to the field with their friends, PW 19 being armed with a 463 deadly weapon, with a view to intimidate Jamuna and to assert their possession.
Therefore they were clearly guilty of criminal trespass.
They also constituted an unlawful assembly.
The law relating to defence of property is, set out in section 97 IPC, which says that every person has a right, subject to the restrictions contained in section 99, to defend First his own body, and the body of any other person, against any offence affecting the human body; Secondly. the property, whether movable or immovable, of himself or of any other person, against any act which is an offence falling under the definition of theft, robbery, mischief.
or criminal trespass, or which is an attempt to commit theft, robbery, mischief or criminal trespass.
Section 99 of the Code lays down that there is no right of private defence in cases in which there is time to have recourse to the protection of the public authorities.
It further lays down that the right of private defence in no case extends to the inflicting of more harm than it is necessary to inflict for the purpose of defence.
It was urged on behalf of the prosecution that even assuming that Jamuna was in possession of the field in view of the delivery that had taken place on June 22, 1962, he and his relations had enough time to have recourse to the protection of the public authorities and therefore the appellants could not claim the right of private defence.
The case of Jamuna and the appellants was that they were unaware of the alleged delivery on June 22, 1062.
Admittedly neither Jamuna nor any of the appellants were present at the time of that delivery.
Nor is there any evidence on record to show that they were aware of :the same.
Further, as seen earlier, the conversation that PWs 17 and 19 had with Jamuna on the day prior to the occurrence, proceeded on the basis that Jamuna was still in possession of the field.
Under these circum stances when the complainant party invaded the field on July 1 1962, Jamuna 's relations must have been naturally taken by surprise.
Law does not require a person whose property is forcibly tried to be occupied by trespassers to run away and seek the protection of the authorities.
The right of private defence serves a social purpose and that right should be liberally construed.
Such a right not only will be a restraining influence on bad characters but it will encourage the right spirit in a free citizen.
There is nothing more degrading to the human spirit than to run away in the face of peril.
In Jai Dev vs State of Punjab (1), this Court while dealing with the right of defence of property and person observed (at p. 500) "In appreciating the validity of the appellants ' argument, it would be necessary to recall the basic assump (1) 464 tions underlying the law of self defence.
In a wellordered civilised society it is generally assumed that the State would take care of the persons and properties of individual citizens and that normally it is the function of the State to afford protection to such persons and their properties.
This, however, does not mean that a person suddenly called upon to face an assault must run away and thus protect himself.
He is entitled to resist the attack and defend himself.
The same is the position if he has to meet an attack on his property.
In other words, where an individual citizen or his property is faced with a danger and immediate aid from the State machinery is not readily available, the individual citizen is entitled to protect himself and his property.
That being so, it is a necessary corollary to the doctrine of private defence that the violence which the citizen defending himself or his property is entitled to use must not be unduly disproportionate to the injury which is to be averted or which is reasonably apprehended and should not exceed its legitimate purpose.
The exercise of the right of private defence must never be vindictive or malicious." In Horam and others vs Rex(1), a division bench of the Alla habad High Court observed that where a trespasser enters upon the land of another, the person in whom the rightful possession is vested, while the trespasser is in the process of acquiring possession, may turn the trespasser out of the land by force and if in doing so, he inflicts such injuries on the trespasser as are warranted by the situation, he commits no offence.
His action would be covered by the principle of private defence embodied in sections 96 to 105 IPC.
Similar was the view taken by a division bench of the Hyderabad High Court in Sangappa and Ors.
vs State(2).
Therein it was held that if some body enters on the land of a person who does not acquiesce in the trespass he would still retain possession of the land and as the possessor of the land, is entitled to that possession.
If he brings friends with him and with force of arms resists those who are trespassing on the land, who are also armed, he and his friends would not be guilty of forming themselves into an unlawful assembly, for those who defend their possession are not members of an unlawful assembly.
If the person acquiesces in his dispossession and subequently, under claim of title comes again to dispossess his opponents, then he and his friends would be members of an unlawful assembly.
That is also the view taken by the Madras High Court in re.
Mooka Nadar(3) We are in agreement with the ratio of those decisions.
(1) (2) I.L.R. (3) A.I.R. 1943 Mad.
465 On the basis of the proved facts it cannot be said that the appellants had exceeded their right of private defence.
In the result, this appeal is allowed, the conviction of the appellants is set aside and they are acquitted.
R.K.P.S. Appeal allowed.
| IN-Abs | Certain land which was evacuee property acquired by the Central Government under the Displaced Persons Act, 1954 and under the management of the Managing Officer, was purchased by A at a public auction on January 2, 1961.
Pro visional delivery of the property was given to the vendee on October 10, 1961.
A sale certificate was issued to him on February 8, 1962, and the actual delivery was given on June 22, 1962, on a warrant issued by the Managing Officer.
On July 1, 1962, when A, accompanied by a party, went to the land with a tractor to level the land, the appellants attacked the complainant 's party and caused injuries to some of them.
Upon their subsequent prosecution, the plea taken on their behalf was one of private defence.
Their case was that their relation J was the tenant in the land for over 30 years and his tenancy was never terminated; there was no delivery on June 22, 1962, and the alleged delivery was without the authority of law and of no effect; J therefore continued to be in possession of the property on July 1, 1962.
The appellants had therefore used minimum force to prevent the cormplainant 's party from taking forcible possession of the land.
The Courts below accepted the prosecution version and convicted the appellants under sections 447 and 324 read with 149 and 148 IPC.
On appeal to this Court, HELD : Allowing the appeal : On the basis of the proved facts it could not be said that the appellants had exceeded their right of private defence.
[465 A] It was not disputed that J was in possession of the field on June 22, 1962 and the record established that he continued to be the tenant of the land even after the sale in favour of A.
After the issue of the sale certificate to A, the Government had no interest in the land and the managing officer was not therefore competent to evict J. He bad no interest in the land on June 22, 1962 and could not have issued any warrant for the delivery of the field on that date.
The alleged delivery therefore had no legal force; in the eye of the law it was non est.
[461 B] There was no force in the contention that the delivery in question was effected under section 19(3) of the Displaced Persons Act, 1954.
The provisions of that Section apply only to properties which are under the control of the managing officers or managing corporations and not to properties which have ceased to be evacuee properties.
Furthermore, it was not 456 shown that any action under sub sections (1) and (2) of section 19, which was a condition precedent for taking action under sub section (3), had been taken against J. [460 H] Normally before a tenant can be evicted from his holding his tenancy must be terminated and the eviction should be done through a Court of competent jurisdiction.
A who had become the owner of the land long before June 22, 1962 could not have evicted J from the land in the manner alleged.
(459 E] Lallu Yeshwant Singh vs Rao Jagdish Singh and others; , It could not be said that as A had, rightly or wrongly, taken on of the property on June 22, 1962, J should have agitated the matter in a court of law and the appellants had no right to take the law in their own hands.
The fact that some formalities were gone through in pursuance of an unauthorised delivery order was no ground for holding that possession of the field had passed to A.
It is true that no one including the true owner has a right to dispossess the trespasser by force if the trespasser is in settled possession of the land and in such a case unless he is evicted in due course of law, he is entitled to defend his possession even against the rightful owner.
But stray or even intermittent acts of trespass do not give such a right against the true owner.
The possession which a trespasser is entitled to defend against the rightful owner must be a settled possession extending over a sufficiently long period and acquiesced in by the true owner.
A casual act of possession would not have the effect of interrupting the possession of the rightful owner.
The rightful owner may re enter and reinstate himself provided he does not use more force than necessary.
Such entry will be viewed only as a resistance to an intrusion upon possession which has never been lost.
The persons in possession by a stray act of trespass, a possession which has not matured into settled possession, constitute an unlawful assembly, giving right to the true owner, though not in actual possession at the time, to remove the obstruction even by using necessary force. [462 B E] From the proved facts, it was evident that A and his party, of whom one was armed, had gone to the field with a view to intimidate J and to assert their possession.
They were therefore guilty of criminal trespass and also constituted an unlawful assembly.
The appellants were therefore entitled to prevent hem, by using necessary force, from taking possession.
[462 HI In re Jogali Bhaigo Naiks and Anr.
AIR 1927 Mad.
97, Jai Dev vs State of Punjab, ; Horam and others vs Rex, ; Sangappa and Ors.
vs State, ILR ; in re Mooka Nadar, AIR, 1943 Mad. 590, relied upon.
|
Appeal No. 599 of 1961.
Appeal from the judgment and order dated March 13, 1958, of the Bombay High Court in I.T. R. No. 40 of 1957.
R. Ganapathy Iyer and R. N. Sachthey, for the appellant.
A. V. Viswanatha Sastri and I. N. Shroff, for the respondent.
September 17.
The judgment of the Court was delivered by 85 HIDAYATULLAH, J.
This is an appeal on a certificate of fitness granted by the High Court of Bombay against the judgment of the High Court dated March 13, 1958, on a reference, made by the Income Tax Appellate Tribunal.
The Commissioner of Income Tax, Bombay City I, is the appellant and the jubilee Mills Ltd., Bombay, the respondent.
The only question raised in this appeal is the application of s.23A of the Income tax Act to the assessee company.
The assessee company is a limited liability company with a paid up capital of Rs. 15,25,000/ .
Its paid up capital is made up as under: I Lakh Ordinary Shares of Rs. 10 each Rs. 10,00,000 5,000 Cumulative Preference Shares of Rs. 25 paid up.
Rs. 1,25,000 4,000 Second Preference Shares of Rs. 100 each fully paid up.
Rs. 4,00,000 The Second Preference Shares do not entitle the holders to vote.
Thus shares of the assessee company carrying votes are 1,05,000.
This was the position on June 30, 1947.
We are concerned with the assessment year 1948 49 corresponding to the previous year ended on June 30, 1947.
In that year, the company was assessed on a total income of Rs. 7,47,639/ .
The Income Tax Officer calculated the tax at Rs. 3,27,091, and t`e balance available for distribution was Rs.4,20,548.
In that year, the company ought, if section 23A was applicable, to have distributed 60% of the above amount.
The company, however, declared dividends which in the aggregate amounted to Rs. 24,750.
The Income Tax Officer, with the previous approval of the Inspecting Assistant Commissioner applied the provisions of section 23 A of the Income Tax Act and held that the company was deemed to have declared dividend of Rs. 3,97,788/ .
The assessee company was being managed by a firm called Mangaldas Mehta & Co. That firm 86 consisted of 14 partners of whom seven were the directors of the assessee company.
The members of the Managing Agents who were also directors held between them 35,469 ordinary shares and 880 First Preference Shares.
The remaining seven members of the Managing Agents, who were not directors of the assessee company, held respectively 41,659 and 370 shares of the two categories.
75 shares were held by Girdhardas & Co. Ltd. to which company admittedly section 23 A was applicable.
Some of the members of the Managing Agency firm held on behalf of their minor children or on behalf of their joint families 9,899 Ordinary Shares and 937 First Preference Shares.
The following is a detailed break up of the share holdings: Category 'A ' ; Share in Shares held by Directors Holding the part Holding who are partners in the of nership of the firm of Managing Agents ordinary of firm 1st Pre shares of Mg.
ference Agents ' Shares firm 1. ,, Shri Homi Mehta 50 8/128 Nil 2. ,, Sheth Mathuradas Man galdas Parekh 6,466 14/128 273 3.
,, Madanmohan Mangaldas 11,052 14/128 273 4. ,, Madhusudan Chamanlal Parekh 3,616 7/128 20 5.
,, Mahendra Chamanlal Parekh 3,616 7/128 20 6.
,, Surendra Man galdas Parekh 7,053 14/128 274 7.
,, Indrajit Chamanlal Parekh 3,616 7/128 20 35,469 880 87 Category 'B ': Share in Shares; held by the partners Holding the part Holding of the Managing Agents of Ordi nership of the firm excluding the holding nary firm of 1st Pref.
of the Directors who are shares Mg.
Shares.
also partners as shown Agents ' above.
firm 1.
Shri Harshavadan Mangaldas 11,053 14/128 274 2.
Savitagavri Chamanlal Parekh 3,750 7/128 16 3.
Shri Viren a minor by dra Chaman his mother lal Parekh and guardian Mrs.
Savitaga vri Chaman lal Parekh.
6,328 7/128 20 4.
Shri Man mohan Chamanlal Parekh do 4,462 7/128 20 5.
Shri Kamalnayan Chamanlal Parekh do 4,962 7/128 20 6.
Shri Nutan Chamanlal Parekh do 4,962 7/128 20 7.
Shri Hussein Essa 6,142 8/128 Nil 41,659 370 88 Category 'C ': Shares represented by the Holding of Pref.
Shares Directors ordinary Holding of Shares the 1st.
Sheth Madhusudan Chamanlal Parekh (No. 4 in 'A ' above) as Karta of the joint Family estate of Sheth Chamanlal Girdhardas Parekh 3,899 937 2.
Sheth Mathuradas Mangaldas Parekh (No. 2 in 'A ' above) as guardian and father of minor, Ben Purnima Mathuradas 1,000 3.
do do Ben Veena 1,000 4.
do do Ben Sunita 1,000 5.
do do jagatkumar Mathuradas 1,000 6.
Sheth Surendra Mangaldas Parekh (No. 6 in 'A ' above) As guardian and father of minor Darshan Surendra Parekh 1,000 7.
do as guardian and father of minor Ben Babi Surendra Parekh 1,000 9,899 937 It appears that in the past the assessee company incurred heavy losses and it had to reconstruct its capital in 1930 because it had a debit balance of Rs. 12,75,OOO in the Profit and Loss Account which had to be paid out of capital.
This was done by reducing the face value of the Ordinary Shares from Rs. 100 to Rs. 10 each and of the Preference Shares from Rs. 100 to Rs. 25 each, after obtaining the approval of the High 89 Court ' It is the reconstituted capital which has been shown by us in an earlier part of this judgment.
It also appears that Income Tax Officer granted to the assessee company a rebate of one anna under proviso (a) to paragraph (B) of part (1) of the, Second Schedule of the Finance Act, 1948.
This rebate was granted to those companies to which the provisions of section 23 A were not applicable.
Subsequently, the Income Tax Officer, as stated already,, applied section 23 A to this company and it was contended that he was incompetent to do so as he must be; deemed to have impliedly held already that section 23 A was not applicable.
Section 23 A before its amendment in 1955, in? so far as it is material read as follows: "23A. Power to assess individual members of certain companies. (1) Where the Income tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company up to the end of the sixth month after its accounts for that previous year are laid before the company in general meeting are less than sixty per cent of the assessable income of the company of that previous year, as reduced by the amount of income tax and super tax payable by the company in respect thereof he shall, unless he is satisfied that having regard to losses incurred by the company in earlier years or to the smallness of the profit made, the payment of a dividend or a larger dividen d than that declared would be unreasonable, make with the previous approval of the Inspecting Assistant Commissioner an order in writing that the undistributed portion of the assessable income of the company of that previous year as computed for income tax pur poses and reduced by the amount of income tax and super tax payable, by the company in respect thereof shall be deemed to have been distributed as dividends, amongst the shareholders as at the date of the general meeting aforesaid, and 90 thereupon the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income: x x x x x x x x Provided further that this subsection shall not apply to any company in which the public are substantially interested or to a subsidiary company of such a company if the whole of ' the share capital of such subsidiary company is held by the parent company or by the nominees thereof Explanation.
For the purpose of this sub section, a company shall be deemed to be a company in which the public are substantially interested if shares of the company (not being shares entitled to a fixed rate of dividend, whether with or without a further right to participate in profits) carrying not less than twenty five per cent of the voting power have been allotted unconditionally to, or acquired unconditionally by, and are at the end of the previous year beneficially held by the public (not including a company to which the provisions of this sub section apply), and if any such shares have in the course of such previous year been the subject of dealings in any stock exchange in the taxable territories or are in fact freely transferable by the holders to other members of the public.
" We are really concerned with the application of the Explanation to the facts of this case.
The Explanation, is so far as it is relevant to our purpose, says that a company shall be deemed to be a company in which the public are substantially interested if the 91 shares of the company carrying not less than 25% of the voting power have been allotted unconditionally, to or acquired unconditionally by the public and are: held beneficially by the public.
The Income tax Officer held that this was not a company in which the public were substantially interested and that the grant of the rebate earlier by him did not estop him from applying section 23A to this company.
His order was upheld by the Appellate Assistant Commissioner and the Tribunal on both the points.
The assessee company then applied for a reference and the Tribunal referred the following questions for decision by the High Court: "(1) Whether, on the facts and in the circums tances of the case, the Income tax Officer was competent to pass an order under Section 23A(1) of the Act after having allowed a rebate of one anna per rupee in the assessment under the proviso (a) to paragraph (B) of Part I of the Second Schedule of the Finance Act, 1948? (2) If the answer to question No. 1 is in the affirmative whether on the facts and in the circumstances of the case, the assessee com pany is a company in which the public are substantially interested for the purposes of Section 23A of the Act? (3) Whether the loss of Rs. 12,75,000 incurred by the company prior to its reconstruction in 1930, could be taken into consideration for purposes of the applicability of Section 23A (1) of the Act?" The High Court, by the judgment under appeal answered the first two questions in the affirmative and in view of the answer to Question No. 2 it considered it unnecessary to answer the third.
The Commissioner of Income Tax obtained a certificate of fitness and filed the present appeal.
92 The answer to the first question is in favour of the Commissioner of Income Tax.
The other side has not appealed and Mr. Vishwanath Sastri for the assessee company conceded before us that the High Court was right.
The third question depends on the answer to the first question but as it has not been answered by the High Court we do not consider it necessary to answer it here for the first time.
We shall now address ourselves to the second question.
The Tribunal in dealing with the question whether the public could be said to hold 25% or more of the voting power in the assessee company took into consideration a decision of the Privy Council in Commissioner of Income Tax vs H. Bjordal,(1) and held that though directors, qua directors, do not cease to be members of the public, the holding of the group of 14 individuals who collectively formed the Managing Agency firm of Mangaldas Mehta & Co. could not be counted as held by the members of the public in this case for purposes of the Explanation.
The Tribunal was further of the opinion that this group of persons had a 'juristic personality ' and it should be taken into account as a group in determining where the Controlling power vested according to the test laid down by the Privy Council in the said case.
The High Court reversed the decision of the Tribunal following its earlier decision reported in Raghuvan8hi Mills Ltd. vs Commissioner of Income Tax(2).
In that case the High Court had held that directors, qua directors must be contrasted with the public and if the directors held more than 75% of the voting power then alone the company could be said to be one in which the public were not substantially interested.
The High Court 's view was that the Managing Agents act under the direction of the directors and unless the directors were themselves controlling the voting power above the limit stated by the Explanation, the company must be regarded as one in which (1) (2) 93 the public were substantially interested.
Applying the same test to the present case, the High Court found that the directors between them held only the shares which we have shown in tabular form: under category 'A '. 'Since the number of these shares was not up to the mark to, attract section 23A, the High Court answered the second question in favour of the assessee company.
The request of the Department that a supplemental statement of the case be asked from the Tribunal as to whether any person belonging to categories 'B ' and 'C ' was so much within the control of the directors as not to hold the shares unconditionally or beneficially for himself was rejected by the High Court observing that this would give a second chance to the Department to lead further evidence.
Following the decision of the House of Lords in Thomas Fattorini (Lancashire) Ltd. vs Inland Revenue Commissioner.
(1) they refused to take action under section 66 (4).
The High Court took notice of the fact that the Privy Council in Bjordal 's case (supra) had indicated a test to determine what is meant by "public" which was different from that indicated by them in Raghutanshi case (supra).
They, however, held that after 1950 the decisions of the Privy Council had only a persuasive authority and the decision of the High Court was binding in the absence of ' a decision by this Court.
They therefore, applied their own ' decision in Raghuvanshi Mill 's case and decided this case Accordingly.
It may be pointed out that the High Court did 'appreciate the point of view expressed by tile Privy Council in the above mentioned case.
They observed as follows: "It may be that our view is erroneous; and it may be and very probably it is that the view taken by the Privy Council is the right one.
But, as we have said, so long as the judgment of the Bombay High Court stands,it was the duty both of he Department and of the Tribunal to give effect to that decision." (1) , 94 Section 23A is not applicable to a company in which the public are substantially interested.
What is "substantial" interest of the public is stated in the Explanation.
That interest represented in terms of the share holding must not be less than 25% of the total number of the shares, but no person can be said to belong to the "public" unless he holds the shares unconditionally and beneficially for himself.
What is meant by (unconditionally" and "beneficially" was explained by this Court in an appeal against the decision of the High Court of Bombay in the Raghuvanshi Mills ' case.
The decision of this Court is reported in This Court pointed out that by the words "unconditionally" and "beneficially" is indicated that the voting power arising from the holding of those shares should be free and not within the control of some other shareholder and the registered holder should not be a nominee of another.
It was pointed out again by this Court in Shri Changdeo , Sugar Mills Ltd. vs commissioner of Income Tax Bombay, (1) that by "unconditional" and. "beneficial" holding is meant that the share,, are held by the holders for their own benefit only and without any control of another.
This Court approved the decision of the Privy Council in Bjordal 's case that directors, qua directors, are not without the pale of the public.
This Court pointed out that what one has to find out is whether there is an individual who, or a group acting in concert which, controls or control the affairs of the company to the exclusion of others by reason of his or their voting power.
Such person or group of persons do not answer the description "public.
" There is nothing inherent in the office of directors which would lead one to think that the directors must act in unison.
They are persons in whom the shareholder,% have reposed confidence and on whom they have conferred powers which under the scheme ' of the Companies Act, have to be exercised for the benefit (1) [1961] 41 95 of the shareholders.
The directors are, in a manner of speaking, trustees of these powers.
It is the duty of the directors to exercise these powers to the best of their independent judgment.
There is therefore, . nothing in the nature of things or at all that requires the directors to act in unison.
This Court pointed out in the Raghuvanshi Mills 'case (1) that such a group may be composed of directors or their nominees or relations in different combinations or may be composed of persons none of whom is a director provided such a group forms a block which holds the controlling interest in its hands.
It would, therefore, follow from what we have stated that we have first to see whether there is an individual or a group holding the controlling interest which group acting in concert can direct the affairs of (lie company at its will.
The controlling interest, of course, is effective only if the group owns 51 of the total shares.
But the company will still lie a company in which the public can be said to be substantially interested because lo cease to be so the holding of the group must be more than 75 %.
In the group, any person be he a director or a nondirector, a relative of a director, a promoter of the company or a, stranger, may be included but only if belonging to a group or as holding the shares as a nominee of someone else belonging to the group.
We have indicated again the true test which was not applied in the judgment of the Bombay High Court in the Raghuvansi Mills ' case( ) and applying which we reversed that decision.
Applying the above test, we have to see whether there is such a group in this company.
It is obvious from what we have said that category 'A ' which consisted of the directors could not be regarded as outside "public" merely by reason that they were directors.
But there is, however, an intimate connection between category 'A ' and category 'B ' in as much as both are members of the Managing Agency (1) (2) 96 firm.
In other words, there is evidence of yet another group, namely, the group of shareholders who constitute the Managing Agency firm.
We agree with the High Court that Managing Agents act under the control and direction of the directors.
The Managing Agents are also appointed by the company.
The control of the affairs of a company is ordinarily in the hand of the directors of the company but there may be cases in which the Managing Agents, by reason of their superior holding of shares, may be able to appoint the directors and generally to control the views of the directors.
Where the 'Managing Agents hold an interest which is small and is thus not capable of exercising an overriding power, other evidence may be required to show that they, in conjunction with others, are running the affairs of the company to the exclusion of the public.
Where, however, the Managing Agents admittedly hold 51 % or more of the shares, it is obvious that the controlling interest belongs to the Managing Agents. ' When, therefore, the Managing Agents, either by themselves or with those who act in concert with them, hold shares above the 75% limit they can be regarded as constituting a group which cannot be counted as " public".
In such a case the holding of the Managing Agents, if above 75%, may furnish proof that the company is one in which the public are not substantially interested.
It was contended before us that even among the Managing Agents some may take an independent view.
Normally Managing Agencies are not formed by parties except for the purpose of mutual gain and the commonness of the interest lends a cohesion.
to the body which enables it to act in its own interest.
When such a body holds shares carrying more than 75% of the voting power the company itself is run mainly as the Managing Agents desire it to be run.
Such a Managing Agency could easily choose its own directors and the directors would not be independent persons but mere nominees of the 97 Managing Agents.
In such a case the inference is irresistible that we have a group, which as a group, can run the company at its will and which not only controls the voting at the meeting of the shareholders but, by selecting its own directors, gets the directors to act according to its own desires.
No member of such a Managing Agency firm can be regarded as belonging to "the public" and when this happens the company comes within the reach of section 23A.
Applying the above test to the present case, it is clear that the Managing Agents, between them hold 77,128 out of 1,00,000 ordinary shares, well above the limit.
They have in addition 1,250 First Preference Shares out of 5,000 which also carry voting power.
To this must be added 75 shares held by Girdhardas & Co. Ltd. to which section 23A is admittedly applicable.
This brings the total holding to 78,453.
75% of the total shares bearing votes is 78,750.
This shows that the holding of the Managing Agents is short by 298 shares for the application of the Explanation to section 23A.
But when we turn to category "C" we find that 6,000 shares were held by the members of the Managing Agency on behalf of minor children and the voting power arising from these shares was in their own hands as guardians.
There is no doubt that in the present case shares carrying more than 75% of the voting power are held by persons who form a group in the sense indicated by this Court in Raghuvanshi Mills case and by us here.
The reason is this: Shares carrying more than 75% of the voting power are held by the partners of the managing agency or persons under its control.
Now it seems to us that it is to the interest of the partners of this firm to exercise their voting power in one way, namely the way that brings to them the largest profit out of the company.
It is true that the managing agents are the servants of the company in a manner of speaking and not its masters and also that the object of a firm of managing agents is to carry out certain administrative 98 duties concerning the company under the control of the directors of the company.
That however is irrelevant and in any case is far from the truth in the present case.
Here the partners of the managing agency practically own the company.
At the hearing a point was raised that it has to be proved as a fact that the persons constituting the oil which owns shares carrying more than seventyfive percent of the voting power, were acting in unison.
The test is not whether they have actually acted in concert but whether the circumstances are such that human experience tells us that it can safely be taken that they must be acting together.
It is not necessary to state the kind of evidence that will prove such concerted actings.
Each case must necessarily be decided on its own facts.
The exclusion of "public" in the manner indicated generally from more than 75% of the shares and the concentration of such a holding in a single person or a group acting in concert is what attracts section 23 (A).
In our opinion the High Court was not right in answering the second question in the affirmative.
The appeal is allowed.
The answer of the High Court is sit aside and the question is answered in the negative.
The respondent shall pay the costs here and in the High Court.
Appeal allowed.
| IN-Abs | Section 23A of the income tax Act, 1922, empowered the Income tax Officer to assess individual members of a company in respect of undistributed assessable income of the company in certain circumstances.
The proviso to this section made section 23A inapplicable to a company in which the public was substantially interested.
The explanation to the proviso laid down that a company shall be deemed to be one in which the public was 84 substantially interested if the shares of the company carrying not less than 25% of the voting power had been allotted unconditionally to or acquired by the public and were held beneficially by the public.
It was found that though the directors 'of the company 's qua directors did not hold more than 75% of the shares, the shares held by such directors as were partners in the firm of the Managing Agents of the company together with the shares held by other partners of the Managing Agents and the shares held by the members of the Managing Agency on behalf of minor children exceeded 75% of the voting power.
Held, that the company was not one in, which the public was substantially interested and section 23A was applicable to it.
No person could be said to belong to the "public" unless he held the shares unconditionally and beneficially for himself.
The words "unconditionally" and "beneficially" indicated that the voting power arising from the holding of those shires should be free and not within the control of some shareholder and the holder should not be a nominee of another.
Directors, qua directors, were not without the pale of the public as there was nothing that required them to act in unison.
What had to be seen was whether there was any individual or a group holding the controlling interest which group acting in concert could direct the affairs of the company at its will.
The partners of the Managing, Agency constituted a group holding more than 75% of the voting power in the company and they could not be counted as public as they must be taken to act in their own interest in unison".
Commissioner of Income tax vs H. Bjordal, [1955] 28 I. T. R. 25, referred to.
Shri Changdeo Sugar Mills Ltd. vs Commissioner of Income tax, Bombay, [1961] 41 and Raghuvanshi Mills Ltd. vs Commissioner of Income tax [1961] 41 , relied on.
|
Appeal No. 442 of 1965.
Appeal from the judgment and decree dated August 10, 1961 of the Bombay High Court in Appeal No. 23 of 1960.
H.R. Gokhate, P. N. Duda, and J. B. Dadachanji, for the appellant.
H. M. Seervai, Advocate General for the State of Maharashtra, R. Gopalakrishnan and R. N. Sachthey, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought, by certificate, from judgment of the Bombay High Court dated August 10, 1961 by which the appeal of the respondent against the judgment of section M. Shah, J. of that High Court was allowed and the suit of the appellant was dismissed.
The appellant was a member of the Bombay Medical Service, Class 11 and as such was an employee of the State of Maharashtra.
In 1943, the appellant was posted at the Civil Hospital, Ahmedabad and on February 18, 1950 he was in charge of the Medico Legal Section of that hospital.
On January 19, 1950, one Nabimahomed complained to Mr. Rathod, Sub Inspector of Police ' Anti Corruption Branch, Ahmedabad, 580 implicated by the Anti Corruption Branch of the Police and asking him to consider the representation before giving his sanction for prosecution of the appellant and before making an order of suspension.
The Surgeon General forwarded the report of Sub Inspector, Mr. Rathod as well as the representation of the appellant to the State Government by his letter dated February 1, 1950.
He requested the Government that in the circumstances mentioned in the Sub Inspector 's report orders may be issued for placing the appellant under suspension.
His recommendation was approved by the Minister for Health and by the Chief Minister.
By a letter dated February 13, 1950, the Deputy Secretary to the Government informed the Surgeon General that the appellant should be suspended with immediate effect pending further orders.
The Surgeon General thereafter issued an order to the Civil Surgeon, Ahmedabad dated February 16, 1950 that the appellant should be placed under suspension pending further orders from the date of the receipt of the memorandum.
In pursuance of the directions received by him from the Surgeon General, the Civil Surgeon, Ahmedabad, issued the following office order and sent it; to the appellant : "Under orders from the Surgeon General, with the Government of Bombay, conveyed in his Memorandum No. section 97/189/A dated 16th February, 1950, you are informed that you are suspended pending further orders with effect from the afternoon of 18th instant.
You should hand over your charge to Mr. section section Doctor, B.M.S. Class 11 at this hospital.
" On August 21, 1950 the Government directed that the appellant should be allowed subsistence allowance at Rs. 153 5 0 per mensem from the date of his suspension February 19, 1950 to March 31, 1950, at Rs. 158 13 0 per mensem from April 1, 1950 to February 18, 1951 and at Rs. 119 2 0 per mensem from February 19, 1951 onwards.
The Government also directed that the appellant should be paid in addition Rs. 35/ per mensem as dearness allowance and Rs. 14/ as house rent allowance during the entire period of suspension.
On May 6, 1950 sanction was given for the prosecution of the appellant under section 161, Indian Penal Code.
On February 26, 1951 the appellant was convicted by the First Class City Magistrate at Ahmedabad and sentenced to one day 's imprisonment and a fine of Rs. 1000/ .
The appellant filed an appeal to the Sessions Court, but his appeal was dismissed.
Thereafter, the appellant took the matter in revision to the Bombay High Court.
The revision application was allowed and the conviction and sentence passed against the appellant were set aside.
On March 14, 1952, the appellant made a representation to the Government praying that he should be reinstated in service.
581 The Government, however, applied to the High Court for leave to appeal to this Court against the decision if the High Court and on the said application being rejected, the Government applied to this Court for special leave to appeal.
This Court rejected the application on October 13, 1952.
On November 27, 1952 the Government issued another order in regard to the payment of subsistence allowance to the appellant.
On February 20, 1953 the Government directed that a departmental enquiry should be held against the appellant.
The Civil Surgeon, Ahmedabad was appointed Inquiry Officer and he was asked to complete the inquiry within three months and submit his report to the Government through the Surgeon General.
For reasons which are not apparent the departmental inquiry was delayed and ultimately an order of dismissal was made against the appellant on February 11, 1960.
Before the conclusion of the departmental inquiry and while that inquiry was going on the appellant gave a notice to the respondent under section 80 of the Civil Procedure Code.
On April 11, 1953 the appellant brought the present suit against the respondent praying for a declaration that the order of suspension was illegal and inoperative in law and the appellant continued in service as though no order for suspension had been passed.
The appellant claimed remuneration and allowances with usual increments from the date of his suspension till the date of his reinstatement.
The respondent controverted the allegations made in the plaint and asserted that the suspension of the appellant was not illegal.
Shah, J. of the Bombay High Court before whom the suit was tried held that the appellant was entitled to salary and allowances upto the date when he was dismissed i.e., February 11, 1960.
He granted to the appellant a declaration that the order of suspension was illegal and inoperative in law and the appellant continued to be on duty till February 11, 1960 as though no order of suspension had been made.
He also granted a decree directing the respondent to pay to the appellant Rs. 51,135.28 with interest on Rs. 43,223/ at the rate of 4 per cent p.a. and the cost of the suit.
The respondent appealed against the judgment of the trial Judge.
The appeal was heard by a Bench consisting of the Chief Justice and Mody, J.
The Appellate Bench held that the respondent had inherent power to suspend the appellant and to withhold full remuneration for the period of suspension under Rule 151 of the Bombay Civil Services Rules.
The Appellate Bench therefore held that the order of suspension made by the respondent was legally valid as it was in exercise of the inherent power as regards prohibition of work, and in exercise of its powers conferred by the rules so far as the withholding of pay during enquiry against his conduct was concerned.
The Appellate Bench also held that the suit was barred under Article 14 of the Schedule to the Indian Limitation Act.
For these reasons the Appellate Bench allowed the appeal, set aside the decree passed by the trial 582 Judge and dismissed the suit and ordered the appellant to pay four fifths of the costs of the respondent through out.
The first question to be considered in this appeal is whether Government had the power to suspend the appellant by its order dated February 13, 1950 pending enquiry into his alleged misconduct.
It was contended on behalf of the appellant that the power to suspend is not an implied term in an ordinary contract between master and servant and that such a power can only be the creature either of a statute governing the contract, or of an express term in the contract itself.
It was urged that there was no express provision in the Bombay Civil Services Rules granting a power to the Government to suspend a Government servant pending enquiry into the allegations made against him.
The argument was put forward that in the absence of any express provision either in the contract of employment or in any statute or statutory rules governing such employment, there was no power to suspend a public servant pending inquiry into the allegations of his misconduct.
We are unable to accept the argument put forward on behalf of the appellant as correct.
The general law on the subject of suspension has been laid down by this Court in three cases, viz., The Management of Hotel Imperial, New Delhi vs Hotel Workers ' Union,(1) T. Cajee vs U. Jormanik Siem,(2) and R. P. Kapur vs Union of India(3).
It is now well settled that the power to suspend, in the sense of a right to forbid a servant to work, is not an implied term in an ordinary contract between master and servant, and that such a power can only be the creature either of a statute governing the contract, or of an express, term in the contract itself.
Ordinarily, therefore, the absence of such power either as an express term in the contract or in the rules framed under some statute would mean that the master would have no power to suspend a workman and even if he does so in the sense that he forbids the employee to work, he will have to pay wages during the period of suspension.
Where, however, there is power to suspend either in the contract of employment or in the statute or the rules framed thereunder, the order of suspension has the effect of temporarily suspending the relationship of master and servant with the consequence that the servant is not bound to render service and the master is not bound to pay.
This principle of law of master and servant is well established: (See Hanley vs Pease & Partners, Ltd., (4) Wallwork vs Fielding, (5) and the judgment of Cotton, L. J. in Boston Deep Sea Fishing and Ice Co. vs Ansell) (6).
It is equally well settled that an order of interim suspension can be passed against the employee while an inquiry is pending into his conduct even though there is no such term in the contract of appointment or in the rules, but in such a case the employee would (1) ; (3) ; (5) (2) ; (4) (6) 583 be entitled to his remuneration for the period of suspension if there is no statute or rule under which it could be withheld.
In this connection it is important to notice the distinction between suspending the contract of service of an officer and suspending an officer from performing the duties of his office on the basis that the contract is subsisting.
The suspension in the latter sense is always an implied term in every contract of service.
When an officer is suspended in this sense it means that the Government merely issues a direction to the officer that so long as the contract is subsisting and till the time the officer is legally dismissed he must not do anything in the discharge of the duties of his office.
In other words, the employer is regarded as issuing an order to the employee which, because the contract is subsisting, the employee must obey.
The general principle therefore is that an employer can sus pend an employee pending an inquiry into his misconduct and the only question that can arise in such suspension will relate to payment during the period of such suspension.
If there is no express term relating to payment during such suspension or if there is no statutory provision in any enactment or rule the employee is entitled to his full remuneration for the period of his interim suspension.
On the other hand, if there is a term in this respect in the contract of employment or if there is a provision in the statute or the rules framed thereunder providing for the scale of payment during suspension, the payment will be made in accordance therewith.
This principle applies with equal force in a case where the Government is an employer and a public servant is an employee with this qualification that in view of the peculiar structural hierarchy of Government administration, the employer in the case of employment by Government must be held to be the authority which has the power to appoint the public servant concerned.
It follows therefore that the authority entitled to appoint the public servant is entitled to suspend him pending a departmental enquiry into his conduct or pending a criminal proceeding, which may eventually result in a departmental enquiry against him.
But what amount should be paid to the public servant during such suspension will depend upon the provisions of the statute or statutory rule in that connection.
If there is such a provision the payment during suspension will be in accordance therewith.
But if there is no such provision, the public servant will be entitled to his full emoluments during the period of suspension.
On general principles therefore the government like any other employer, would have a right to suspend a public servant in one of two ways.
It may suspend any public servant pending departmental enquiry or pending criminal proceedings; this may be called interim suspension.
The Government may also proceed to hold a departmental enquiry and after his being found guilty order suspension as a 584 punishment if the rules so permit.
This will be suspension as a penalty.
As we have already pointed out, the question as to what amount should be paid to the public servant during the period of interim suspension or suspension as a punishment will depend upon the provisions Of the statute or statutory rules made in that connection.
On behalf of the respondent Advocate General of Maharashtra relied upon Rules 151 and 152 of Ch.
VIII of the Bombay Civil Service Rules.
These rules provide as follows: "151.
A Government servant under suspension is entitled to the following payments : (a) In the case of a military officer who is liable to revert to military duty, to the pay and allowances to which he would have been entitled had he been suspended while in military employment.
(b) In any other case, to a subsistence grant at such rates as the suspending authority may direct, but not exceeding one fourth of the pay of the suspended Government servant.
Provided that the suspending authority may direct that the Government servant under suspension shall be granted in addition such compensatory allowances as the Government may sanction by general or special order for issue under this proviso.
Note 1.
The grant of subsistence allowance cannot altogether be withheld." "152.
When the suspension of a Government servant is held to have been unjustifiable or not wholly justifiable; or when a Government servant who has been dismissed, removed or suspended is reinstated, the revising or appellate authority may grant to him for the period of his absence from duty (a) if he is honourably acquitted, the full pay to which he would have been entitled if he had not been dismissed, removed or suspended and, by an order to be separately recorded any allowance of which he was in receipt prior to his dismissal, removal or suspension; and (b) if otherwise, such proportion of such pay and allowances as the revising or appellate authority may prescribe.
585 In a case falling under clause (a), the period of absence from duty will be treated as a period spent on duty.
In a case falling under clause (b) it will not be treat ed as a period spent on duty unless the revising or appellate authority so direct. .
Note 2 Under this rule the revising or appellate authority can convert a period spent under suspension into one of leave admissible under the rules.
The period of suspension cannot, however, be converted into leave without pay except in accordance with the conditions in Rule 752.
Subsistence allowance paid under this rule should be adjusted or recovered from the Government servant when the period of suspension is converted into leave with or without pay.
" On behalf of the appellant Mr. Gokhale contended that Rule 151 applies only to a case where a Government servant is suspended by way of penalty and not to a case of interim suspension.
We see no warrant for accepting this argument.
Suspension is used in Rule 151 in a general sense and Rule 151 applies to all kinds of suspension, whether it is imposed by way of penalty or as an interim measure pending departmental inquiry or a criminal proceeding.
We see no reason, either in the context or the language of Rule 151, to place a restricted interpretation upon the meaning of the word "suspension" in that rule.
On the contrary, the language of Rules 153 and 156 suggests that the suspension contemplated by these rules includes not only suspension by way of penalty but also interim suspension pending a departmental inquiry or a criminal proceeding.
Rules 153 and 156 state as follows "153.
Leave may not be granted to a Government servant under suspension." "156.
A Government servant committed to a prison either for debt or on a criminal charge should be conssidered as under suspension from the date of his arrest and therefore entitled only to the payments specified in Rule 151 until the termination of the proceedings against him when, if he is not removed or dismissed from service, an adjustment of his pay and allowances should be made according to the conditions, and terms prescribed in rule 152 the full amount being given only in the event of the Government servant being considered to be acquitted of blame, or, if the imprisonment was for debt, of its being proved that the Government servant 's liability arose from circumstances beyond his control.
" If the word "suspension" in Rules 153 and 156 contemplates suspension pending an inquiry we see no reason why it should be 586 given a different interpretation in Rules 151 and 152.
We are accordingly of the opinion that Rule 151 empowers the State Government to withhold pay for the period of interim suspension but the Government servant is entitled under that rule to a subsistence allowance at such rate as the suspending authority may direct but not exceeding one fourth of his pay.
It follows therefore that the order of the State Government dated February 13, 1950 suspending the appellant pending enquiry into his conduct was legally valid and the argument of the appellant on this aspect of the case must be rejected.
The view that we have expressed is supported by the ratio of the principle of the decision of this Court in R. P. Kapur vs Union of India(1).
The question in that case arose with regard to the interpretation of Fundamental Rule 53 which provided for payment to a Government servant under suspension and which states as follows "53(1).
A Government servant under suspension shall be entitled to the following payments, namely : (i) in the case of a Commissioned Officer of the Indian Medical Department or a Warrant Officer in Civil Employ who is liable to revert to Military duty, the pay and allowances to which he would have been entitled had he been suspended while in military employment; (ii)in the case of any other Government servant (a) a subsistence allowance at an amount equal to the leave salary which the Government servant would have drawn if he had been on leave on half average pay or on half pay and in addition, dearness allowance, if admissible on the basis of such leave salary: Provided that where the period of suspension exceeds twelve months, the authority which made or is deemed to have made the order of suspension shall be competent to vary the amount of subsistence allowance for any period subsequent to the period of the first twelve months as follows Fundamental Rule 54 is to the following effect: "54(1) When a Government servant who has been dismissed, removed, compulsorily retired or suspended is re instated or would have been re instated but for his retirement on superannuation while under suspension.
the authority competent to order the reinstatement shall consider and make a specific order (1) ; 587 (a) regarding the pay and allowances to be paid to the Government servant for the period of his absence from duty or for the period of suspension ending with the date of his retirement on superannuation as the case may be; and (b) whether or not the said period shall be treated as a period spent on duty.
(2) Where the authority mentioned in sub rule (1) is of opinion that the Government servant has been fully exonerated or, in the case of suspension, that it was wholly unjustified, the Government servant shall be given the full pay and allowances to which he would have been entitled, had he not been dismissed, removed, compulsorily retired or suspended, as the case may be.
It was held by the majority decision of this Court that Fundamental Rule 5 3 contemplates all kinds of suspension, whether it is a penalty or as an interim measure pending departmental inquiry or criminal proceeding.
It is manifest that Rules 151 and 152 of the Bombay Civil Service Rules are couched in a similar language to that of Fundamental Rules 53 and 54 and it must be held for this reason also that Rules 151 and 152 of the Bombay Civil Service Rules comprise in their scope both kinds of suspension, whether it is a penalty or as an interim measure pending an inquiry into the conduct of the Government servant concerned or criminal proceeding against him.
We proceed to consider the next question arising in this case i.e., whether the order of suspension came to an end on February 15, 1952 when the appellant was acquitted by the High Court in revision and whether in consequence the appellant is entitled to full pay for the period from February 15, 1952 to February 11, 1960 when he was ultimately dismissed.
It was contended on behalf of the appellant that he was suspended pending an inquiry into the charge for the criminal offence alleged to have been com mitted by him and as the proceedings in connection with that charge ended with the acquittal of the appellant by the High Court on February 15, 1952, the order of suspension must be deemed to have automatically come to an end on that date.
We see no justification for accepting this argument.
The order of suspension dated February 13, 1950 recites that the appellant should be suspended with immediate effect "pending further orders".
It is clear therefore that the order of suspension could not be automatically terminated but it could have only been terminated by another order of the Government.
Until therefore a further order of the State Government was made terminating the suspension 588 ,the appellant had no right to be reinstated to service.
On behalf ,of the appellant reliance was placed on the decision of the Orissa High Court in Narayan Prasad Rewany vs State of Orissa(1).
But the facts of that case are clearly to be distinguished.
The order of suspension in that case did not contain the phrase "pending further ' orders".
Furthermore, the order of suspension was passed under R. 93A of the Orissa Service Code, Vol. 1, under which the Government servant could be suspended during the periods when he was not actually detained in custody or imprisoned.
Having, regard to the terms of that rule it was held by the Orissa High Court that the order ceased to be operative as soon as criminal proceedings had terminated.
In the present case, however, the appellant was not suspended under any rule similar to rule 93A of the Orissa Service Code, Vol. 1 and the decision of the Orissa High Court has therefore no rele vance.
We are therefore of the opinion that the order of suspension of the appellant made by the State Government on February 13, 1950 did not come to an end on the date of the order of acquittal made by the High Court and Counsel for the appellant is unable to make good his submission on this aspect of the case.
It is not necessary for us to express any opinion as to whether the suit is barred under Article 14 of the Schedule to the Indian Limitation Act as we have held that the claim of the appellant is devoid of merit.
For the reasons already expressed, we hold that the judgment of the Bombay High Court dated August 10, 1961 is correct and this appeal must be dismissed.
In view of the circumstances of the case we do not propose to make any order as to costs ,of this Court.
R.K.P.S. Appeal dismissed.
(1) A.I.R. 4957 Orissa 51.
| IN-Abs | The appellant was a member of the State Medical Service and as such an employee of the respondent State.
On a report made in January 1950 by the Anti Corruption branch, sanction was given in May 1950 for his prosecution under section 161 Indian Penal Code for accepting a bribe and the trial court convicted him of the offence in February 1951.
In February 1950, he was suspended by an order of the Civil Surgeon pending further orders and in August 1950,directions were given about the payment of subsistence allowance to the appellant during the period of his suspension.
Thereafter a revision application against his conviction was allowed by the High Court and a special leave petition to this Court was rejected.
In February 1953 the respondent State Government directed that a departmental enquiry should be held against the appellant, as a result of which an order of dismissal was made against the appellant on February 11, 1960.
While the enquiry was going on the appellant gave notice to the respondent under section 80 of the Civil Procedure Code and then filed a suit against the respondent praying for a declaration that the order of suspension was illegal and inoperative in law and the appellant continued in service as though no order for suspension had been made; he therefore claimed remuneration and allowances with usual increments from the date of his suspension till the date of his reinstatement.
A Single Bench of the High Court decreed the suit in the appellant 's favour but a Division Bench allowed an appeal and held that the respondent had inherent power to suspend the appellant and to withhold full remuneration for the period of suspension under r. 151 of the Bombay Civil Service Rules.
In the, appeal to this Court it was contended, inter alia, on behalf of the appellant (i) that the power to suspend is not an implied term in an ordinary contract between master and servant and that such a power can only be the creature either of a statute governing the contract, or of an express term in the contract itself; in the absence of any express provision either in the contract of employment or in the Bombay Civil Service Rules, there was no power to suspend a public servant pending inquiry into the allegations of his misconduct; and (ii) as the appellant was suspended pending an inquiry into the charge for the criminal offence alleged to have been committed by him and as the proceedings in connection with that charge ended with the acquittal of the appellant by the High Court on February 15, 1952, the order of suspension must be deemed to have automatically come to an end on that date and the appellant was entitled to full pay from then until February It, 1960 when he was ultimately dismissed.
HELD : dismissing the appeal (i)The order of the State Government dated February 13, 1950.
suspending the appellant pending enquiry into his conduct was valid.
[586 B] L2Sup.
C.11/ 8 6. 578 The general principle is that a employer can suspend an employee pending an enquiry into his misconduct and the only question that can arise in such suspension will relate to payment during the period of such suspension.
it is now well settled that the power to suspend, in the sense of a right to forbid a servant to work, is not an implied term in an ordinary contract between master and servant, and that such a power can only be the creature either of a statute governing the contract, or of an express term in the contract itself.
Ordinarily, therefore, the absence of such power either as an express term in the contract or in the rules framed under some statute would mean that the master would have no power to suspend a workman and even if he does so in the sense that he forbids the employee to work, he will have to pay wages during the period of suspension.
Where, however, there is power to suspend either in the contract of employment or in the statute or the rules framed thereunder, the order of suspension has the effect of temporarily suspending the relationship of master and servant with the consequence that the servant is not bound to render service and the master is not bound to pay.
[582 D G; 583 C D] It is equally well settled that an order of interim suspension can be passed against the employee while an enquiry is pending into his conduct even though there is no such term in the contract of appointment or in the rules, but in such a case the employee would be entitled to his remuneration for the period of suspension if there is no statute or rule under which it could be withheld.
In this connection it is important to notice the distinction between suspending the contract of service of an officer and sus pending an officer from performing the duties of his office on the basis that the contract is subsisting.
The suspension in the latter sense is always an implied term in every contract of service.
When an officer is suspended in this sense it means that the Government merely issues a direction to the officer that so long as the contract is subsisting and till the time, the officer is legally dismissed he must not do anything in the discharge of the duties of his office.
In other words, the employer is regarded as issuing an order to the employee which, because the contract is subsisting, the employee must obey.
[582 H; 583 A C] The Management of Hotel Imperial, New Delhi vs Hotel Workers ' Union, ; , T. Cajee vs U. Jormanik Siem, ; ; R. P. Kapur vs Union of India, ; ; Hanley vs Pease & Partners, Ltd. ; Wallwork vs Fielding, ; Boston Deep Sea Fishing and Ice Co. vs Ansell, [1888] 39 Ch.
D. 339, referred to.
If there is no express term relating to payment during such suspension or if there is no statutory provision in any enactment or rule the employee is entitled to his full remuneration for the period of his interim suspension.
[583 G H] However, in the present case Rule 151 of the Bombay Civil Service Rules empowered the State Government to withhold pay for the period of interim suspension but the Government servant was entitled under that rule to a subsistence allowance at such rate as the suspending authority may direct but not exceeding one fourth of his pay.
There was no force in the contention that Rule 151 of the Bombay Civil Service Rules applies only to a case where a Government servant is 'suspended by way of penalty and not to a case of interim suspension.
[585 D] R. P. Kapur vs Union of India, 5 S.C.R. 431, relied on.
(ii)The order of suspension dated February 13, 1950 recited that the appellant should be suspended with immediate effect "pending further 579 orders".
It is clear therefore that the order could not be terminated automatically but only by another order of the Government.
Until therefore a further order of the State Government was made terminating the suspension the appellant had no right to be reinstated in service and to the remuneration claimed.
[587 H] Narayan Prasad Rewany vs State of Orissa, A.T.R. 1957 Orissa 51, distinguished.
|
Appeal No. 781 of 1964.
Appeal from the judgment and decree dated September 6, 1961 of the Punjab High Court in Regular Second Appeal No. 54 of 1960.
N. section Bindra, Kartar Singh Suri, Champat Rai and E. C. Agrawala, for the appellants.
section P. Sinha, section K. Mehta and K. L. Mehta, for respondents Nos. 1, 3, 5 and 6.
Bishan Narain, section K. Mehta and K. L. Mehta, for respondent No. 4.
The Judgment of the Court was delivered by Ramaswami, J.
The question to be considered in this appeal is whether under the customary law applicable to Sidhu Jats of Muktsar Tahsil of Ferozepore district collaterals of the 5th degree of the deceased land owner could take precedence over his married daughters in succession to his non ancestral property.
The dispute relates to 1574 kanals 4 marlas of land situated in village Kotli Ablu, Muktsar Tahsil of Ferozepore district.
Dulla Singh was the last male holder of the land and he was succeeded by his widow, Smt.
Indi on his death.
Indi died on September 8, 1955 and thereafter the estate was mutated by the revenue authorities on February 1, 1956 in favour of the defendants who were the reversioners of her husband in the 5th degree.
Nihal Kaur is the daughter of Dulla Singh.
On November 14, 1957 she instituted the suit which is the subject matter of the present appeal in the court of Subordinate Judge, Muktsar for a declaration that she was the legal heir of the land left by Smt.
Indi and that 653 she was entitled to inherit the estate to the exclusion of the collaterals.
The suit was resisted by the defendants who claimed that the whole of the land was ancestral and they were preferential heirs to the deceased Dulla Singh than the plaintiff.
The trial court held that the land in dispute was not the ancestral property of Dulla Singh, but the defendants who were 5th degree collaterals of Dulla Singh were entitled to exclude his daughter from succession even to the non ancestral property under the custom of the district.
Accordingly the trial court dismissed the suit of the plaintiff.
The decree was affirmed by the Additional District Judge, Ferozepore in appeal.
Nihal Kaur preferred a Second Appeal to the Punjab High Court which was allowed and the suit of the plaintiff was decreed.
The High Court took the view that the general custom of the Punjab as laid down in Rattigan 's Customary Law was that the daughters excluded collaterals for succession to the self acquired property of their father and the special custom set out in the Riwaj i am that the agnates, however, remote, exclude daughters from succession to their father 's property was opposed to the general custom referred to above and the Riwaj i am was only a presumptive evidence in favour of the collaterals and the presumption has been rebutted by the plaintiff Mst.
Nihal Kaur in the circumstances of the present case.
In other words, the High Court, held that the general custom in favour of the daughter 's succession prevailed and the defendants had not been able to prove that the general custom had been varied by a special custom enabling the collaterals to exclude the daughters.
This appeal is brought by the defendants on a certificate from the judgment of the Punjab High, Court dated September 6, 1961 in Regular Second Appeal No. 54 of 1960.
On the question of custom the respondents relied upon the statements in paragraph 23 of Rattigan 's Digest of Customary Law (14th Edn.), a book of unquestioned authority in the Punjab, State.
In para 23, p. 132 it is stated that (1) a daughter only succeeds to the ancestral landed property of her father, if an agriculturist, in default : (1) of the heirs mentioned in the preceding paragraph (viz., male lineal descendants, widow or mother), or (2) of near male collaterals of her father, provided that a married daughter sometimes excludes near male collaterals in certain circumstances specified in the paragraph, (2) But in regard to the acquired property of her father, the daughter is preferred to collaterals.
It is further stated at p. 152 that "the general custom of Punjab is that a daughter excludes collaterals in succession to self acquired property of her father and the initial onus, therefore, is on the collaterals to show that the general custom in favour of the daughter 's succession to the self acquired property of her father, has been varied by a special custom 654 excluding daughters".
This being the legal position of the parties the question arises whether the defendants had discharged the onus ,of proving the existence of a special custom excluding the daughters.
On this point the appellants relied upon the answers to ,Questions 48 and 49 in the Compilation of the Customary Law of Ferozepore district by M.M.L. Currie, Settlement Officer.
These ,questions and answers are comprised in the Riwaj i am of the settlement of Ferozepore district of 1914 and are reproduced below : " Question 48 Under what circumstances are daughters entitled to inherit ? Are they excluded by the sons or near male kindreds of the deceased ? If they are excluded by the near male kindred, is there any fixed limit of relationship within which such near male kindred must stand towards the deceased in order to exclude his daughter ? If so, how is the limit ascertained? If this depends on descent from a common ancestor, state within how many generations relatively to the deceased such common ancestor must come? Answer At last settlement Mr. Francis wrote "Except a few Sayyads all tribes say that a daughter can never succeed.
Some Sayyads say that an unmarried daughter can succeed like a son; but no instances are given. ' The custom has now changed completely, most tribes admitting that a daughter is entitled to succeed till marriage in the absence of a widow or male lineal descendants.
The following groups, however, do not admit that a daughter can succeed : Dogars of Fazilka, Nipals, Sayyads of Ferozepore, Zira and Muktsar, Bodlas (unless there are no collaterals in the 5th degree), ,Chishtis (unless no collaterals in the 7th degree), Pathans of Ferozepore (except the Kasuria group), Rajputs of Fazilka, Wattus of Zira and Fazilka, Moghals except in Ferozepore, Mahtams, Sodhis, Bagri Jats, Kumhars and Suthars, Bishnois and the following Jat Sikhs in Fazilka Tahsil Dhaliwals, Sidhhus, Gils and Sandhus.
The Kasuria Pathans state that a daughter succeeds if there are no sons, and the Arians state that she excludes collaterals who do not come within the 4th degree.
Question 49 Is there any distinction as to the rights of daughters to inherit (i) the immovable or ancestral, (ii) the movable or acquired property of their father ? 655 Answer There is no distinction.
A father can of course gift his movable or acquired property to his daughter.
" In the present case, there is no proof of any instance for or against the right of inheritance of a daughter of a deceased last male holder of the, Sidhu tribe of Jats, either in the Muktsar Tahsil or in the whole district of Ferozepore.
At least, none was brought to the notice of the lower courts by the plaintiff or the defendants.
It was contended on behalf of the appellants that the Riwaj i am of 1914 was entitled to a presumption as to the existence of a custom even though not supported by proof of instances and it must therefore be held that the defendants have discharged the initial onus of proving that the general custom has been varied by a special custom enabling them to exclude the married daughter.
The real controversy in this appeal is, however, on the question whether the entries in the Riwaj i am on which the defendants rely refer at all to non ancestral property or not.
In Mst.
Raj Kaur vs Talok Singh(1) Sir Donald Johnstone, the Chief Justice held that the Riwaj i am as compiled, did not cover self acquired property and that where the Riwaj i am talked about succession to land without discrimination between ancestral and self acquired land, the rule laid down could only be taken to apply to ancestral property.
This case related to property in Ferozepore district, though with regard to a different tehsil and different sub caste of Jats, but the important point is that the questions of the Riwaj i am of 1878 in that case were exactly in the same language as questions 48 and 49 of the Riwaj i am of 1914.
A similar view was taken by Shadilal and Wilberforce, JJ.
in Budhi Prakash vs Chandra Bhan(2).
The view was followed by other judges of the Lahore High Court in Narain vs Mst.
Gaindo(3), and Fatima Bibi vs Shah Nawaz ( 4 ) .
In Abdul Rahman vs Mst.
Natho(5) it was observed by the High Court as follows : " According to the Customary Law of the district, collaterals within the fifth degree exclude daughters, but it has been consistently held by this Court that Riwaj i am refer only to ancestral land unless there is a clear statement to the contrary.
It is unnecessary to refer to the numerous decisions on this point.
Customary law is in fact usually only concerned with protecting ancestral property, while self acquired property can be disposed of as the owner pleases, that is, reversioners are usually concerned only with property ancestral qua them." (1) A.I.R. 1916 Lah. 343.
(2) A.I.R. 1918 Lah.
(3) A.I.R. 1918 Lah.
(4) A.T.R. 1921 Lab.
(5) I.L.R. 656 The decision of this case was affirmed by the Full Bench of the Lahore High Court in Mst.
Hurmate vs Hoshiaru(l).
Din Mohammad, J. delivering the leading judgment in this case,, observed as follows : "In my view, the raison d ' etre of those cases which lay down that the Manuals of Customary Law were ordinarily concerned with ancestral property only is quite intelligible.
Collaterals are, as stated by Addison, J. in Abdul Rehman vs Mst.
Natho ( 2 ) really speaking interested in that property only which descends from their common ancestor and this is the only basis of the agnatic theory.
What a maleholder acquires himself is really no concern of theirs.
It is reasonable, therefore, to assume that when manuals of customary law were originally prepared and subsequently revised, the persons questioned, unless specifically told to the contrary, could normally reply in the light of their own interest alone and that, as stated above, was confined to the ancestral property only.
The fact that on some occasions the questioner had particularly drawn some distinction between ancestral and non ancestral property would not have put them on their guard in every case, considering their lack of education and lack of intelligence in general.
Similarly, the use of the terms 'in no case ' or 'under no circumstances ' would refer to ancestral property only and not be extended so as to cover self acquired property unless the context favoured that construction.
" The decision of the Full Bench of the Lahore High Court was approved by the Judicial Committee in Mst.
Subhani vs Nawab and Ors.(3) in which the controversy arose with regard to the interpretation of questions 16 and 17 and the answers thereto in Wilson 's Manual of Customary Law which are reproduced below "Question 16 (p. 48) Under what circumstances are daughters entitled to inherit ? Are they excluded by the sons or by the widow, or by the near male kindred of the, deceased ? If they are excluded by the near male kindred, is there any fixed limit of relationship within which such near kindred must stand towards the deceased in order to exclude his daughters ? If so, how is the limit ascertained ? If it depends on descent from a common ancestor, state within how many generations relatively to the deceased such common ancestor must come.
(1) I.L.R. I.L.R. (3) 68 I. A. 1. 657 Answer 16 All Musalmans.
A married daughter in no case inherits her father 's estate or any share in it.
An unmarried daughter succeeds to no share in presence of agnate descendants of the deceased, or of her own mother; but if there be no agnate descendants and no sonless widow, the un married daughters succeed in equal shares to the whole of their father 's property, movable and immovable, till their marriage, when it reverts to the agnate heirs.
If there be a widow and daughters of another wife who has died, the unmarried daughters of the deceased wife succeed to their mother 's share till their marriage.
Question 17 (p. 49) Is there any distinction as to the rights of daughters to inherit (1) the immovable or ancestral, (2) the movable or acquired, property of their father? Answer 1.7 All Musalmans.
As regards the right of the daughter to inherit, no distinction is made between the movable and immovable ancestral and acquired, property of the father.
If she inherits at all she takes the, whole estate.
" It was held by the Judicial Committee that though in the answers to question No. 17 in Wilson 's Manual no distinction was made between ancestral and non ancestral or between movable and immovable property, and the rule was stated as a wide generalization (in answer to question No. 16) that a married daughter in no case inherits her father 's estate or any share in it, it must be taken in view of the numerous decisions of the Punjab courts that the Riwaj i am which states the rule in such wide and general terms governs ancestral property only.
It should be noticed that Questions 16 and IT of the Wilson 's Manual are couched in similar language to Questions 48 and 49 of the Riwaj i ani with which we are concerned in the present appeal.
In view of these authorities we have therefore come to the conclusion that the entries in the Riwaj i ani with regard to Questions 48 and 49 on which the appellants rely do not refer at all to non ancestral property and are therefore not relevant evidence to establish a special custom among the Sidhu Jats of Muktsar Tahsil of Ferozepore district entitling collaterals for succession to non ancestral property in preference to daughters.
It follows therefore that the appellants have not discharged the onus which lay upon them of proving that the general custom has been varied by a special customs enabling the collaterals to exclude the daughters.
It is manifest therefore that the customary law among the Sidhu Jats of Muktsar Tahsil of Ferozepore district as regards non ancestral property is the same 658 as recorded generally for the State of Punjab in paragraph 23 of Rattigan 's Digest i.e., a daughter is preferred to collaterals.
We shall, however, assume in favour of the appellants that Questions 48 and 49 of the Riwaj i am relate also to succession of non ancestral property of the last male holder.
Even upon that assumption we are of opinion that the case of the appellants cannot succeed.
The reason is that though the entries in the Riwaj i am are entitled to an initial presumption in favour of their correctness, the quantum of evidence necessary to rebut this presumption would vary with the facts and circumstances of each parti cular case.
Where, for instance, the Riwaj i am laid down a custom in consonance with the general agricultural custom of the State, very strong proof would be required to displace this presumption, but where, on the other hand, this was not the case, and the custom as recorded in the Riwaj i am was opposed to the rules generally prevalent, the presumption would be considerably weakened.
Likewise, where the Riwaj i am affected adversely the rights of females who had no opportunity whatever of appearig before the revenue authorities, the presumption would be weaker still, and very little evidence would suffice to rebut it.
In Narain vs Mst.
Deoki(l), Roe, J. stated as follows : "There is no doubt a general tendency of the stronger to over ride the weak, and many instances may occur of the males of a family depriving females of rights to which the latter are legally entitled.
Such instances may be followed so generally as to establish a custom, even though the origin of the custom were usurpation; but the Courts are bound carefully to watch over the rights of the weaker party, and to refuse to hold that they had ceased to exist unless a custom against them is most clearly established".
In a later case, Sayad Rahim Shah vs Sayad Hussain Shah (2) a similar caution was uttered by Robertson, J. who observed as follows: "The male relations, in many cases at least, have been clearly more concerned for their own advantage than for the security of the rights of widows and 'other female relatives with rights or alleged rights over family property, and the statements of the male relatives in such matters have to be taken cum grano salis where they tend to minimize the rights of others and to extend their own.
(1) (1893) 24 P R. 124.
(2) (1901) 102 P.R. 353.
6 5 9 The same view was expressed by the Lahore High Court in a still later case Bholi vs Man Singh(1) where the Riwaj i am had laid down that daughters were excluded by collaterals, even up to the tenth degree and it was stated as follows: "As the land is rising in value under British rule, the land holders are becoming more and more anxious to exclude female succession.
They are ready to state the rule against daughters as strongly as possible, but if the custom is so well established, it is strange that they are unable to state a single instance in point on an occasion like the compilation of the Riwaj i am, when detailed inquiries are being made and when the leading men are supposed to give their answers with deliberation and care.
" The principle was reiterated by this Court in Mahant Salig Ram vs Mst.
Maya Debi(2) It was pointed out in that case that it was well settled that the general custom of the Punjab State was that the daughter excluded collaterals from succession to self acquired property of her father and so the initial onus must therefore be on the collaterals to show that the general custom in favour of the daughter 's succession to the self acquired property of her father has been varied by a special custom excluding the daughter.
It was also well settled that the entries in the Riwaj i am are entitled to an initial presumption in favour of their correctness but the presumption will be considerably weak ened if it adversely affects the rights of the females who have no opportunity of appearing before the Revenue authorities.
In the present case, apart from the general custom of the Punjab to which due weight must be attached three instances have been referred by the High Court in the course of its judgment to show that the presumption attaching to Riwaj i am has been rebutted in this case.
The first instance is the subject matter of the decision in Mst.
Rai Kaur vs Talok Singh(3).
It was a case of Gill Jats from Zira Tahsil of Ferozepore district.
It was held in that case that the plaintiffs on whom the onus rested had failed to prove that by custom among Gill Jats of mauza Lohara, tahsil Zira, district Ferozepore, they, as near collaterals of a deceased sonless proprietor, succeeded to his self acquired estate in preference to a daughter.
As we have already pointed out earlier, Questions 48 and 49 correspond to Questions 1 and 2 of the Riwaj i am of 1878 which were dealt with in this case.
The second instance is reported as Ratta vs Mst.
Jai Kaur(4).
It is case of a Daliwal Jat of Tahsil Moga, District Ferozepore.
It was admitted that daughter of the last male holder was entitled to succeed to his self acquired property.
It is true that the case (1) (1908) 86 P.R. 402.
(3) A.T.R. L2 SupCI/68 12 (2) [1955]1 S.C.R. 1191.
(4) 660 was decided upon the admission of Counsel for the collaterals but it is improbable that if there was material evidence in support of the collaterals the Counsel would have made such an admission.
The third instance referred to by the High Court is R.F.A. No. 220 of 1954, decided on April 11, 1961, in which it was held that sister of the last male holder excludes his collaterals from inheritance in regard to his non ancestral or acquired property.
That is a case of Jats from Fazilka tahsil of Ferozepore district.
The property, however, was situated in two villages, one in Fazilka tahsil and the other in Muktsar tahsil.
It was held in that case that in Muktsar and in Fazilka in regard to non ancestral or acquired property of the last male holder his sister was a preferential successor as against collaterals.
In this connection it should be noticed that in the Riwaj i am of 1914 Question 58 concerns the rights of succession of sisters and sisters ' sons and the answer is that they never inherit.
Considering therefore that in the neighbouring tahsils of the same district in regard to non ancestral property a daughter has excluded collaterals and in Muktsar tahsil a sister has excluded collaterals, there is in our opinion sufficient material to displace the presumption of correctness of the Riwaj i am entries in this case.
In view of the considerations already mentioned in the judgment the presumption attaching to the Riwaj i am entries is a weak presumption and in our opinion it has been sufficiently discharged by the evidence adduced by the respondents in this case.
It is necessary to add that the appellants defendants have not relied upon any instances in support of their case.
For the reasons expressed we hold that the judgment of the High Court dated September 6, 1961 in Regular Second Appeal No. 54 of 1960 is correct and this appeal must be dismissed with costs.
| IN-Abs | D, a Sidhu Jat of Muktsar Tahsil, Ferozepore District, Punjab was tile last male holder of certain land in that area.
He was succeeded by his widow after whose death, the land was mutated in favour of D 's collaterals in the 5th degree.
D 's daughter filed a suit for a declaration that she was the legal heir of .he land and was entitled to inherit to the exclusion of the collaterals.
The trial court held that the land was not ancestral but the defendants were preferential heirs under the custom of the district.
The decree was affirmed by the first appellate court.
In second appeal, however, the High Court decided in favour of the plaintiff holding that the general custom recorded in Rattigan 's Digest had not been shown to be displaced by any special custom in the Riwaj i am, The defendants appealed.
HELD : The entries in the Riwaj i am on which the appellants relied, did not refer at all to non ancestral property and were therefore not relevant evidence to establish a special custom among the Sidhu jats of Muktsar Tahsil of Ferozepore District entitling collaterals for succession to non ancestral property in preference to daughters.
The appellants had not discharged the onus which lay upon them of proving that the general custom had been varied by a special custom enabling the collaterals to exclude the daughters.
It was manifest therefore that the customary law among the Sidhu Jats of Muktsar Tahsil of Ferozepore district Is regards non ancestral property was the same as recorded generally for the State of Punjab in Paragraph 23 of Rattigan 's Digest i.e. a daughter is preferred to collaterals.
[657 G H] Mst.
Rai Kaur vs Talok Singh, A.I.R. 1916 Lab. 343, Budhi Prakash vs Chandra Bhan, A.I.R. 1918 Lab.
225, Narain vs Mst.
Gaindo, A.I.R. 1918 Lab.
304, Fatima Bibi vs Shah Nawaz.
A.I.R. 1921 Lab.
180, Abdul Rahiman vs Mst.
Natho, I.L.R. [1932] 13 Lab.
458, Mst.
Hurmate vs Hoshiaru, I.L.R. 25 Lab.
228 and Mst.
Subhani vs Nawab and Ors.
, 68 I.A. 1, referred to.
(ii) Even on the assumption that the Riwaj i am entries referred to the non ancestral property of the last male holder the appellants could not succeed.
For though the entries in the Riwaj i am are entitled to an initial presumption in favour of their correctness, the quantum of evidence necessary to rebut this presumption would vary with the facts and circumstances of each particular case.
Where, for instance, the Riwaj i am laid down a custom in consonance with the general agricultural custom of the State, very strong proof would be required to displace this presumption, but where, on the & her hand, this was not the case, and the custom as recorded in the Riwaj i am was opposed to the rules generally 652 prevalent the presumption would be considerably weakened.
Likewise, when the Riwaj i am affected adversely the rights of females who had no opportunity whatever of appearing before the revenue authorities, the presumption would be weaker still, and very little evidence would suffice to rebut it.
[658 B D] Har Narain vs Mst.
Deoki, (1893) 24.
P.R. 124.
Sayad Rahim Shah vs Sayad Hussain Shah, (1901) 102 P. R. 353, Bholi vs Man Singh, ( 1908) 86 P. R. 402 and Mahant Salig Ram vs Mst.
Maya Devi , referred to.
(iii)In.
the present case the High Court bid mentioned three instances in its judgment which showed that the presumption attaching to Riwaj i am had been rebutted in this case.
The appellant 's defendants had not relied upon any instances in support of their case.
The High Court therefore rightly decided in favour of the plaintiffs.
[660 C D] Mst.
Rai Kaur vs Talok Singh, A.I.R. 1916 Lah.
343, Ratta vs Mst Jai Kaur, and R.F.A. No. 220 of 1954 decided by the Punjab High Court on April 11 1961, referred to.
|
iminal Appeal No.42 of 1965.
Appeal by special leave from the judgment and order dated December, 16, 17, 18, 19, 21, 22 of 1964 of the Bombay High Court in Criminal Appeal No. 53 of 1964.
Nuruddin Ahmed, E. C. Agrawala, Champat Rai, section V. Pikale and P. C. Agrawala, for the appellant.
Adi P. Gandhi, H. R. Khanna and section P. Nayar, for the res pondent.
The Judgment of the Court was delivered by Hidayatullah, J.
The appellant Haroon is the sole appellant from a batch of 18 persons who were tried jointly before the Chief Presidency Magistrate, Esplanade Court, Bombay for offences under section 120 B of the Indian Penal Code read with section 167(81) of the Sea Customs Act and certain offences under the Foreign Exchange Regulations Act, 1947.
Of these, No. 17 accused (Saleh Mohamed Bhaya) was discharged by the Magistrate, No. 1 accused (Govind Narain Bengali) died after the conclusion of the case but before judgment in the Court of triad and No. 4 accused (Noor Mohammad) jumped bail just before the same judgment.
The case against Bengali was held to have 643 abated and that against Noor Mohammad was kept pending.
Nos. 11, 12, 13 and 16 accused were acquitted.
Of the remaining accused who were convicted, Haroon alone is before us.
His appeal to the High Court of Bombay was dismissed but he obtained special leave under article 136 of the Constitution and brought this appeal.
As this appeal is to be considered on a question of law, it is not necessary to give the facts in detail.
The several accused (and many others unknown) were said to be concerned in a criminal conspiracy the object of which was to smuggle gold into India from the Middle East.
Gold was brought in steam launches from places on the Persian Gulf and transhipped into Indian boats standing out at sea, which would then shore it to be taken away by persons waiting for it.
The operations were organised by No. 15 accused (Haji Sattar) and his nephew No. 9 accused (Ayub) with the assistance of Bengali, Noor Mohammad and Kashinath (P.W. 1).
Four trips, in which gold of the value of nearly a crore of rupees was smuggled, were made and Haroon is said to have taken part in the third and fourth trips.
His share in the affair was only this; that he was present when gold was landed and he helped in taking it away and accompanied Haji Sattar and Ayub in their car.
As the smuggling of gold and the details of the operations are admitted it is not necessary to consider the prosecution evidence with a view to finding out whether there existed sufficient proof on that part of the case.
It may, however be stated that as the raid took place while the last consignment of gold was still with the smugglers and many of them were arrested there and then, no successful attempt to refute it could at all be made.
The only question was who were in the conspiracy besides those caught at the spot.
The argument in this appeal is that there is no legal evidence to connect Haroon with the others.
The case against Haroon stands mainly on the basis of the statement of the accomplice Kashinath (P.W. 1).
Kashinath must be held to be a competent witness in view of our decision in the Chauraria 's case(1).
Corroboration for Kashinath 's evidence on the general aspects of the conspiracy was amply available from diverse sources and this is not denied but in respect of Haroon (whose name (foes not figure in the rest of the oral or documentary evidence) it was found to exist in the statement of Kashinath.
before the Customs authorities, and statements made by Bengali and Noor Mohammad also to the Customs Officers, all in answer to notices under section 171 A of the Sea Customs Act.
The use of these statements is objected to generally and in particular on the.
(1) ; 1.2 Sup CI/68 10 644 following grounds: It is submitted firstly that these statements are not confessions proper to which section 30 of the Evidence Act can be made applicable; secondly, that as Bengali died and Noor Mohammad absconded before the trial was finally concluded against them. their statements are not of persons jointly tried with Haroon; thirdly a confession of a co accused is no better than accomplice evidence and just as one accomplice cannot be held to corroborate another accomplice, the confession of a co accused cannot also be held to be sufficient corroboration; fourthly as these confessions, were later retracted their probative value is nil; and fifthly Kashinath 's previous statement cannot be used to corroborate him as an accomplice cannot corroborate himself.
On these submissions it is urged that Haroon 's conviction is based really on the uncorroborated testimony of an accomplice.
We may begin by stating that we have read the deposition of Kashinath as the first prosecution witness.
We have been impressed by the simplicity of the narrative and there is on record a note by the Magistrate that he was impressed by the manner in which Kashinath deposed.
The High Court and the Magistrate have, concurred in accepting it and we have not seen anything significant to reject it as false.
To corroborate Kashinath, the Magistrate and the High Court have looked into his statement under ,section 171 A of the Sea Customs Act.
In Rameshwar vs State of Rajasthan(1) the previous statement was held under section 157, Evidence Act, corroborative evidence provided it was made "at ,or about the time when the fact took place.
" This is perhaps true of other testimony but as pointed out by the.
Judicial Committee in Babhoni Sahu vs Emperor(1), the use of the previous statement of an accomplice is to make the accomplice corroborate himself.
We have, therefore, not used exhibit A to corroborate Kashinath but we cannot help saying that only Iwo discrepancies were noticed on comparison.
The first was that Haroon 's name was mentioned in exhibit A in the second trip while in the deposition in Court he was shown to have taken part in the third trip.
The details of the trips where his name is mentioned are identical and it seems that in counting the trips, Kashinath has made a confusion, counting the reconnaisance trip as the first trip in his deposition but not in his statement.
The second was the omission of a couple of names from the long list of those who were on the beach to receive the gold.
This is not of much Consequence because any one who tries to give a long list of names, often makes such an omission.
On the whole the two statements contained the same story with sufficient details for verification from outside sources.
The reception of exhibit A as corroborative of accomplice testimony, although open to some ,objection, has, however, not affected the case.
(1) ; (2) A.I.R. 1949 P.C. 257.
645 This leads us to the consideration of the statements of Bengali and Noor Mohammad which were received in corroboration of Kashinath 's testimony.
These statements contain admission constituting the guilt of the makers under the charged sections.
They also mention the name of Haroon, among others, as being concerned in the smuggling and in much the same way as does the accomplice.
The question is, can they be used to corroborate him? These statements are not confessions recorded by a Magistrate under section 164 of the Code of Criminal Procedure but are statements made in answer to a notice under section 171 A of the Sea Customs Act.
As they are not made subject to the safeguards under which confessions are recorded by Magistrates they must be specially scrutinised to finding out if they were made under threat or promise from some, one in authority.
If after such scrutiny they are considered to be voluntary, they may be received against ,the maker and in the same way as confessions are received, also against a co accused jointly tried with him.
Section 30 of the Evidence Act does not limit itself to confessions made to Magistrates, nor do the earlier sections do so, and hence there is no bar to its proper application to the statements such as we have here.
No doubt both Bengali and Noor Mohammad retracted their statements alleging duress and torture.
But these allegations came months later and it is impossible to heed them.
The statements were, therefore, relevant.
Both Bengali and Noor Mohammad were jointly tried with Haroon right to the end and all that remained to be done was to pronounce judgment.
Although Bengali was convicted by the judgment, the case was held abated against him after his death.
In Ram Sarup Singh and Others vs Emperor (1), J was put on his trial along with L; the trial proceeded for some time and about six months before the delivery of judgment, when the trial had proceeded for about a year, J died.
Before his death J 's confession had been put on the record.
R. C. Mitter, J. (Henderson, J. dubitante) allowed the confession to go in for corroborating other evidence but not as substantive evidence by itself.
Of course, the confession of a person who is dead and has never been brought for trial is not admissible under section 30 which insists upon a joint trial.
The statement becomes relevant under section 30 read with section 32(3) of the Evidence Act because Bengali was fully tried jointly with Haroon.
There is, however, difficulty about Noor Mohammad 's statement because his trial was separated and the High Court has not relied upon it.
The statement of Bengali being relevant we have next to see how far it can be held to be legal corroboration of Kashinath 's accomplice evidence.
The law as to accomplice evidence is settled.
The Evidence Act in section 133 provides that an accomplice (1) A.I.R. 1937 Cal.
39. 646 is a competent witness against an accused person and that a conviction is not illegal merely because it proceeds upon the uncorroborated testimony of an accomplice.
The effect of this provision is that the court trying an accused may legally convict him on the single evidence, of an accomplice.
To this there is a rider in illustration (b) to section 114 of the Act which provides that the Court may presume that an accomplice is unworthy of credit unless he is corroborated in material particulars.
This cautionary provision incorporates a rule of prudence because an accomplice, who betrays his associates, is not a fair witness and it is possible that he may, to please the prosecution, weave false details into those which are true and his whole story appearing true, there may be no means at hand to sever the false from that which is true.
It is for this reason that courts, before they act on accomplice evidence, insist on corroboration in material respects as to the offence itself and also implicating in some satisfactory way, however small, each accused named by the accomplice.
In this way the commission of the offence is confirmed by some competent evidence other than the single or unconfirmed testimony of the accomplice and the inclusion by the accomplice of an innocent person is defeated.
This rule of caution or prudence has become so ingrained in the consideration of accomplice evidence as to have almost the standing of a rule of law.
The argument here is that the cautionary rule applies, whe ther there be one accomplice or more and that the confessing co accused cannot be placed higher than an accomplice. 'Therefore, unless there is some evidence besides these implicating the accused in some material respect, conviction cannot stand.
Reliance is placed in this connection upon the observations of the Judicial Committee in Bhuboni Sahu vs Emperor(1), a case in which a conviction was founded upon the evidence of an accomplice supported only by the confession of a co accused.
The Judicial Committee acquitting the accused observed: Their Lordships whilst not doubting that such a conviction is justified in law under section 133, Evidence Act, and whilst appreciating that the coincidence of a number of confessions of co accused all implicating the particular accused given independently, and without an opportunity of previous concert, might be entitled to great weight, would nevertheless observe that Courts should be slow to depart from the rule of prudence,, based on long experience, which requires some independent evidence implicating the particular accused.
The danger of acting upon accomplice evidence is not merely that the accomplice is on his own admission a (1) A. I.R. 647 man of bad character who took part in the offence and afterwards to save himself betrayed his former associates, and who has placed himself in a position in which he can hardly fail to have a strong bias in favour of the prosecution; the real danger is that he is telling a story which in its general outline is true, and it is easy for him to work into the story matter which is untrue.
As against this the State relies upon the observations of Imam, J. in Ram Prakash vs State of Punjab(1): "The Evidence Act nowhere provides that if the confession is retracted, it cannot be taken into consideration against the co accused or the confessing accused.
Accordingly, the provisions of the Evidence Act do not prevent the Court from taking into consideration a retracted confession against the confessing accused and his co accused.
Not a, single decision of any of the courts in India was placed before us to show that a retracted confession was not admissible in evidence or that it was irrelevant as against a co accused.
An examination of the reported decisions of the various High Courts in India indicates that the preponderance of opinion is in favour of the view that although it may be taken into consideration against a co accused by virtue of the provisions of section 30 of the Indian Evidence Act, its value was extremely weak and there could be no conviction without the fullest and strongest corroboration on material particulars.
The corroboration in the full sense implies corroboration not only as to the factum of the crime but also as to the connection of the co accused with that crime.
In our opinion, there appears to be considerable justification for this view.
The amount of credibility to be attached to a retracted confession, however, would depend upon the circumstances of each particular case.
Although a retracted confession is admissible against a co accused by virtue of section 30 of the Indian Evidence Act, as a matter of prudence and practice a court would not ordinarily act upon it to convict a co accused without corroboration.
" The State further relies upon the observations of Govinda Menon J. in Subramania Goundan vs State of Madras(2) where the value of a confession was compared with the value of accomplice evidence.
The case of the Judicial Committee dealt with accomplice evidence which was sought to be corroborated by retracted con (1) , 1223.
(2) ; 648 fessions.
The case of this Court dealt with a retracted confession which was sought to be used without corroboration.
Both cases treat the retracted confession as evidence which may be used although not within the definition of evidence.
But both cases regard this evidence as very weak and only to be used with great caution.
Although Govinda Menon, J. in Subramania Goundan 's case(1) placed a confession on a slightly higher level than accom plice evidence, the observation is intended to convey the difference between the extent of corroboration needed for the one or the other before they can be acted upon.
To read more meaning into the observations is not permissible for no such meanig was intended.
The confession there considered was also intended to be used against the maker and not against a co accused.
A confession intended to be used against a co accused stands on a lower level than accomplice evidence because the latter is at least tested 'by cross examination whilst the former is not.
The observations of Govinda Menon, J. must not be applied to those cases where the confession is to be used against a co accused.
As pointed out by this Court in Nathu vs State of Uttar Pradesh (2) , confessions of co accused are not evidence but if there is other evidence on which a conviction can be based, they can be referred to as lending some assurance to the verdict.
In this connection the question of retraction must also be considered.
A retracted confession must be looked upon with greater concern unless the, reasons given for having made it in the first instance (not for retraction as erroneously stated in some cases) are on the face of them false.
Once the confession is proved satisfactorily any admission made therein must be satisfactorily withdrawn or the making of it explained as having proceeded from fear, duress, promise or the like from some one in authority.
A retracted confession is a weak link against the maker and more so against a co accused.
In Rameshwar vs State of Rajasthan(3) this Court laid down certain general rules about the nature of corroboration needed before accomplice evidence may be accepted.
It is there pointed Out that every detail of the story of the accomplice need not be confirmed by independent evidence although some additional independent evidence must be looked for to see whether the approver is speaking the truth and there must be some evidence, direct or circumstantial which connects the co accused with the crime independently of the accomplice.
One such circumstance may be the making of a number of confessions without a chance for prior consultation between the confessing co accused.
But before even a number of such confessions can (1) ; (3) ; (2) A.I. R. 649 be used each such confession must inspire confidence both in its content and in the manner and circumstances of its making.
If there be any suspicion of false implication the confession ' must be discarded as of no probative value.
This may result from a variety of circumstances of which a few alone may be mentioned, such as why the, accused confessed whether he expected a gain for himself by implicating his co accused, the part he assigns to himself and that to his co accused, the opportunity for being coached up to narrate a false story or a story false in certain.
details.
Where there is a single retracted confession corroborating other accomplice evidence, the caution must necessarily be still greater and the probative value smaller.
Even if there are more than one such confession and they are proved to be given independently and without an opportunity for a prior concert,.
the probative value may increase but the need for caution remains because a number of suspects may be prompted by the. same or different motives to embroil a particular individual.
It is only when false implication is excluded after close scrutiny that confession of a co accused can be used to lend assurance to other evidence.
This was so stated by Sir Lawrence Jenkins in Emperor vs Lalit Mohan Chuckerburty(1) and accepted by this Court, and a retracted confession cannot obviously go further or have higher value.
The offence in this case was detected on the night of August 13, 1961 and investigation went on till the morning of the 14th.
Thereafter the customs authorities served notices upon various suspects and recorded their statements in answer to these notices.
The statements of Kashinath (exhibit A) and Bengali (exhibit Z 27) were recorded on the 15th, the former by Kamik (P.W. 24) and the latter by Rane (P.W. 26).
These statements were recorded simultaneously or almost simultaneously.
The statement of Noor Mohammad (exhibit Z 17) was recorded by Randive (P.W. 22) on August 19.
As there was no gap of time between the statements.
of Kashinath and Bengali and the incident was only a few hours old, it is impossible that the officers could have tutored them to, make statements which agree in so many details.
Both the statements receive corroboration at numerous points in the story from other than accomplice evidence.
For example the statements of Kashinath regarding the boats employed, the names of the owners and pilots, the manner the trips were made, the names of persons who took part and what they did, the description of the residences of the Muslim co accused, the furniture and furnishings in the, room where gold used to be secreted, the description of the cars employed, and the identity of the several participants other than Haroon, are amply borne out by evidence which is not accomplice in character.
A bare reading of the statement of Kashinath made (1) I.L.R.38 Cal.559,588.
650 before the Court and corroborated by his earlier statement to the Customs authorities (except in two particulars already considered) leaves one convinced that he is speaking the truth.
We are not seeking corroboration of the accomplice from his own statements because that does not advance accomplice evidence any further.
We are only looking into the previous statement to see if it discloses any variation which would put us on further inquiry.
The real check comes when one compares these two statements with that made by Bengali.
A remarkable degree of agreement is found there also.
In fact they are so consistent that Mr. Nuruddin Ahmad sought to make a point and said that they must be the result of collusion.
Apart from the fact that there was no time to collude, there are extra details in the different statements which also receive independent corroboration.
Further, although Noor Mohammad 's statement was not used by the High Court and we have reluctantly left it out of consideration also, nothing was shown to us to destroy the conclusion about the truth of accomplice evidence.
If it was, we would have considered seriously Whether we should not take it into consideration.
Further Haroon himself was also served with a notice like others.
He was unwilling to make a statement till he had seen what the others had said.
This may well be regarded as peculiar conduct in a man who now claims that he was not concerned with the smuggling.
The High Court has very searchingly examined the evidence of Kashinath and applied to it the checks which must always be applied to accomplice evidence before it is accepted.
There is corroboration to the evidence of Kashinath in respect of Haroon from the confession of Bengali given independently and in circumstances which exclude any collusion or malpractice.
Regard being had to the provisions of section 133 of the Evidence Act, we do not think that we should interfere in this appeal by special leave, particularly as we hold the same opinion about the veracity of Kashinath.
The appeal, therefore, fails and is dismissed.
Appellant to surrender to his bail.
V.P.S. Appeal dismissed.
| IN-Abs | Gold was smuggled into India by bringing it in steam launches from places on the Persian Gulf, transhipping it into Indian boats standing out at sea, then bringing it to the Indian shores and by being taken away by persons waiting for it.
There was a raid on the night of August 13, 1961 while a consignment was being brought in.
Many of the smugglers were arrested, the case was investigated into, and on the 14th, the Customs Authorities served notices upon the suspects under section 171A of the Sea Customs Act.
On the 15th, two Customs Officers recorded the statements, in answer to the notices, from two of the suspects K and B, independently, and almost simultaneously.
The statement of K implicated himself and the appellant in the smuggling and the satement of B contained a confession of his own guilt as well as the implication of the appellant in the smuggling.
The, appellant himself was served with a notice by the Customs authorities, but he was unwilling to make a statement till he had seen what the others had said.
The appellant and 17 others were tried for (the offence of conspiracy to smuggle gold into India.
At the trial, K was a witness for the prosecution and B, who was jointly tried with the appellant retracted the confession he made before the Customs authorities alleging duress and torture.
He however died before judgment was delivered but after the conclusion of the trial of the case.
Some of the accused were acquitted and others, including the appellant, were convicted.
In appeal, the High Court, confirmed the conviction of the appellant relying on the evidence of K corroborated by his statement before the Custom authorities and the retracted confession of B.
In appeal to this Court, it was contended that, as K was an accomplice, no conviction could be based on his evidence unless it was corroborated in material particulars; and the statement of K before the Customs authorities and the confession of B to the Customs authorities.
which was later retracted, could not be used for purposes of such corroboration.
HELD : An accomplice is a competent witness and his evidence could be accepted and a conviction based on it if there is nothing significant to reject it as false.
But the rule of prudence, ingrained in the consideration of accomplice evidence, requires independent corroborative evidence first of the offence and next connecting the accused, against whom the accomplice evidence is used, with the crime.
Such corroborative evidence could be direct or circumstantial.
On such circumstance may be the making of confessions by more than one accused, provided there was no chance for prior consultation between the confessing co accused for implicating another, and they inspire confidence both in their content and in the manner and circumstances of their making.
If a confessing co accused is tried jointly, within the.
meaning of section 30 of the Evidence Act, with the accused against whom the accomplice evidence is sought to be used for has 642 ing a conviction, the confession could be referred to as lending some assurance to the verdict.
The fact that the confession was later retracted would make no difference unless the admissions made in the confession are satisfactorily withdrawn, or, the making of it explained as having proceeded from fear, duress, promise or the like, of some one in authority.
[644 D. 646 A. C E; 648 D H; 650 E F] In the present case, though K was an accomplice and his own statement before the Customs authorities could not be used for purposes of corroboration, his evidence, impressed the lower Courts and was accepted by them.
There was nothing to make this Court form a different opinion about his veracity.
There was no gap of time between the statements of K and B, and it was impossible that the Customs officers could have tutored them to make the statements which agree in many details.
Further, both the statements received corroboration at numerous other points in the story from independent evidence.
Therefore, the confession of B given independently and in circumstances which exclude any collusion or malpractice affords corroboration to the evidence of K in respect of the appellant.
B 's confession could also be taken into consideration under section 30 of the Evidence Act, to lend assurance to the verdict, as B was fully tried jointly with the appellant, and his allegations of duress and torture for retracting his confession came months later and it was impossible to heed them.
[644 C D; 645 D E; 649 F G] Rameshwar vs State of Rajasthan, ; , Nathu vs State of U.P., A.I.R. 1956 section C. 56, Subramania Goundan vs State of Madras, 119581 S.C.R. 428, Ram Prakash vs State of Punjab, , Chauraria 's case [1968] 2 S.C.R. 624, Babhoni Sahu vs Emperor, A.I.R. 1949 P.C. 257, Emperor vs Lalit Mohan Chuckerburty, I.L.R. and Ram Sarup Singh.
& Ors.
vs Emperor, A.I.R. 1937 Cal. 39, referred to.
|
riminal Appeal No. 33 of 1952.
Appeal under Article 134(1)(c) from the Judgment and Order dated the 19th February, 1952, of the 93 High Court of Orissa at Cuttack in Criminal Appeal No. 66 of 1950 arising out of the Judgment and Order dated the 19th September, 1950, of the Court of the Additional Sessions Judge, Cuttack Dhenkanal, Cuttack, in Sessions Trial No. 9 C of 1950.
Nur ud Din Ahmed, R. Patnaik and R. C. Prasad, for the appellant.
R. Ganapathy lyer, for the respondent.
April 7.
The Judgment of the Court was delivered by BOSE J.
The appellant was an Inspector of Factories under the Government of Orissa. 'It was a part of his duty to inspect factories and mills in the State of Orissa.
He toured the districts of Koraput and Balasore from 18th August, 1948, to 27th August, 1948, and from 29th September, 1948, to 30th October, 1948, respectively.
The prosecution case is that he collected bribes from persons connected with some of the mills he inspected in those districts.
It is said that he used to threaten to close their mills and impose other penalties for alleged defects unless they paid him a bribe.
On 3rd October, 1948, he was camping at the Dak Bungalow at Basta in the Balasore district.
Because of information received against him his person and belongings were searched on that day and a sum of Rs. 3,148 was recovered from him consisting of Rs. 450 paid at the time as a trap and Rs. 2,698 already in his possession.
He was arrested on the spot but was later released on bail.
Departmental and other proceedings were taken against him and he was eventually brought to trial on 29th March, 1950, and charged under section 5(2) of the Prevention of Corruption Act (II of 1947) for criminal misconduct in the shape of habitually accepting illegal gratification.
He was also separately charged and separately prosecuted under section 161 of the Indian Penal Code for three specific offences of bribe taking but we are not concerned here with that as he was acquitted on all three counts.
His, conviction here is under section 5(2) alone.
The trial Court 94 sentenced him to rigorous imprisonment for four years and a fine of Rs. 5,000.
The High Court upheld the conviction on appeal but reduced the sentence to two years and a fine of Rs. 3,000.
The accused applied for a certificate to appeal under article 134(1)(c) on three points.
The High Court held that two of them were not of sufficient importance to justify the issue of a certificate particullarly as one of the two was covered by the principle laid down by this Court.
But it granted leave on all three as it considered that the first point was of importance.
The points were formulated as follows: "(i) whether the view of this Court as to the requirement of sanction in a case of this kind and the interpretation of Morarka 's case in A.I.R. 1948 P.C. p. 82 adopted by this Court in its judgment are correct; (ii)whether the interpretation of this Court relating to the requirements as to the corroboration of an accomplice witness in a bribery case with reference to the latest unreported case of the Supreme Court which has been referred to in the judgment and which has since been reported in 1952 S.C.J. p. 46 is correct; and (iii)whether the law as propounded by the decision now ' sought to be appealed against with reference to the considerations that arise in judging the presumptions under section 5(3) of the Prevention of Corruption Act is correct.
" The first point arises in this way.
Four kinds of criminal misconduct are set out in section 5 of the Prevention of Corruption Act.
They are enumerated in clauses (a), (b), (c) and (d) of sub section (1).
The sanction is general and does not specify which of these four offences was, meant.
It runs as follows: " Government of Orissa.
Commerce and Labour Department.
Order No. 4561/Com., dated 3 11 1948.
In pursuance of section 6 of the Prevention of Corruption Act, 1947 (II of 1947), the Governor of 95 Orissa is hereby pleased to accord sanction for prosecution of Sri B. B. Nayak, Inspector of Factories.
Orissa, employed in connection with the affairs of the Province under sub section (2) of section 5 of the said Act.
Nature of offence committed: Criminal misconduct in discharge of official duty.
By order of the governor, Sd./ V. Ramanathan, Secretary to Government.
It was contended that the Privy Council held in Gokutchand Dwarkadas Morarka vs The King(1) that such a sanction is invalid.
The High Court rejected this argument.
We agree with the High Court.
The passage of the Privy Council judgment on which reliance is placed is as follows "In their Lordships ' view, in order to comply with the provisions of clause 23 it must be proved that the sanction was given in respect of the facts constituting the offence charged.
It is plainly desirable that the facts should be ' referred to on th; face of the sanction but this is not essential since clause 23 does not require the sanction to be in an particular form nor even to be in writing.
But if the facts constituting the offence charged are not known on the face of the sanction, the prosecution must prove by extraneous evidence that those facts were placed before the sanctioning authority.
" The Judgment of the Judicial Committee relates to clause 23 of the Cotton Cloth and Yarn (Control).
Order, 1943, but the principles apply here.
It is no more necessary for the sanction under the Prevention of Corruption Act to be in any particular form, or in writing or for it to set out the facts in respect of which it is given than it was under clause 23 of the Order which their Lordships were considering.
The desirability of such a course is obvious because when the facts are not set out in the sanction proof has to be given (1) A.I.R. 1948 P.C. 82.
96 aliunde that sanction was given in respect of the facts constituting the offence charged, but an omission to do so is not fatal so long as the facts can be, and are, proved in some other way.
The High Court finds that the facts to which the sanction relates were duly placed before the proper sanctioning authority.
We need not consider the evidence about telephone calls and the like because the letter of the District Magistrate asking for sanction (Exhibit 26) is enough to show the facts on which the sanction is based. 'It is in these terms: "I have the honour to report that Sri B.B. Nayak, Inspector of Factories, Orissa, in the course of his visit to this district had been visiting certain mills, and on information received by me that he had been collecting heavy sums as illegal gratification from the Manager or Proprietor of Mills under threat of mischief to the mill owners, it was arranged to verify the truth of this information by handing over 3 hundred rupee notes marked with my initials in presence of the Superintendent of Police and two other respectable gentlemen and millowners, on the evening of the 2nd October, 1948.
On the 3rd October the Factory Inspector having actually received the illegal gratification of Rs. 45o which sum included the three marked hundred rupee notes, the Prosecuting Inspector seized the marked notes along with a further heavy sum of Rs. 2,698 from his possession.
Under section 6 of the Prevention of Corruption Act, 1947, the accused being a public servant in the employ of the Provincial Government the sanction of the Provincial Government is necessary prior to taking cognisance of an offence under section 161, Indian Penal Code or subsection (2) of section 5 of the Act." A sanction based on the facts set out in this letter,.
namely the information received about the collection of heavy sums as bribes and the finding of Rs. 2,698 in his possession would be sufficient to validate the present prosecution.
It is evident from this letter and from the other evidence that the facts placed before the 97 Government could only relate to offences under section 161 of the Indian Penal Code and clause (a) of section 5(1) of the Prevention of Corruption Act.
They could not relate to clauses (b) or (c).
Therefore, when the sanction was confined to section 5 (2) it could not, in the circumstances of the case, have related to anything but clause (a) of sub section (1) of section 5.
Therefore, the omission to mention clause (a) in the sanction does not invalidate it.
The present prosecution is confined to section 5(1)(a) which runs as follows: "(1) A public servant is said to commit the offence of criminal misconduct in the discharge of his duty(a) if he habitually accepts or obtains or agrees to accept or attempts to obtain from any person for himself or for any other person, any gratification (other than legal remuneration) as a motive or reward such as is mentioned in section 161 of the Indian Penal Code.
" Then comes sub section (3) which sets out a new rule of evidence in these terms: "In any trial of an offence punishable under subsection (2) the fact that the accused person or any other person on his behalf is in possession, for which the accused person cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income may be proved, and on such proof the Court shall presume, unless the contrary is proved, that the accused person is guilty of criminal misconduct in the discharge of his official duty and his conviction therefor shall not be invalid by reason only that it is based solely on such presumption." Therefore, all that the prosecution has to do is to show that the accused, or some person on his behalf, is in possession of pecuniary resources or property disproportionate to his known sources of income and for which the accused cannot satisfactorily account.
Once that is established then the Court has to presume, unless the contrary is proved, that the accused is guilty of the new offence created by section 5, namely criminal misconduct in the discharge of his official duty.
13 98 Now the accused was found in possession of Rs. 3,148.
He accounted for Rs. 450 of that sum by showing that it was paid to him at the time as a trap.
He has been acquitted of that offence, so all he had to account for was the balance Rs. 2,698.
This is a large sum for a touring officer to carry with him in cash while on tour.
His explanation was not considered satisfactory and that is a question of fact with which we are not concerned in this Court.
Therefore, all that remains to be seen is whether this was disproportionate to his known sources of income.
The accused is a Government Factory Inspector and we were told that his salary is only Rs. 450 a month.
The High Court finds that the total sums drawn by him during his entire period of service of thirteen months was Rs. 6,045 as salary and Rs. 2,155 as travelling allowance.
It also finds that he owns 0.648 acres of land which brings in no income worth the name.
On the expenditure side of the accused 's account the High Court finds that he has a substantial family establishment which would not leave him enough margin for saving such a large sum of money.
No other source of income has been disclosed.
It is evident that no touring officer of his status and in his position would require such a large sum of money for his touring purposes even if he was away from headquarters for a month.
His explanation was considered unsatisfactory by both Courts and was disbelieved.
These are all questions of fact.
Once the facts set out above were found to exist and the explanation of the accused rejected as unsatisfactory, section 5(3) was at once attracted and the Court was bound to presume (the word used in the section is "shall" and not "may") that the accused was guilty under section 5(2), especially as this part of the section goes on to say "and his conviction therefor shall not be invalid by reason only that it is based solely on such presumption.
" These facts alone are enough to sustain the conviction and we need not consider the other matters.
The High Court was right in holding that the sanction was sufficient and in convicting the accused.
99 The third point set out in the certificate of the High Court relates to the absence of particulars in the charge and, we gathered from the arguments, in the sanction.
But no particulars need be set out in the charge in such a case because the offence under section 5(1)(a) does not consist of individual acts of bribe taking as in section 161 of the Indian Penal Code but is of a general character.
Individual instances may be useful to prove the general averment in particular cases but it is by no means necessary because of the presumption which section 5(3) requires the Court to draw.
There was therefore no illegality either in the sanction or in the charge; nor has the accused been prejudiced because he knew everything that was being urged against him and led evidence to refute the facts on which the prosecution relied.
He was also questioned about the material facts set out above in his examination under section 342 of the Criminal Procedure Code and was given a chance then as well to give such explanation as he wished.
The appeal fails and is dismissed.
Appeal dismissed.
| IN-Abs | Held, that it is not necessary for the sanction for an offence punishable under section 5(2) of the Prevention of Corruption Act, 1947 (Act II of 1947) to be in any Particular form or in writing or for it to set out the facts in respect of which it is given.
It is, however, desirable to state the facts on the face of sanction, because when the facts are not set out in the sanction, proof has to be given aliunde that sanction was given in respect of the facts constituting the offence charged but an omission to set out the facts in the sanction is not fatal so long as the facts can be and are proved in some other way.
Where the sanction was confined to section 5(2) of the Act, it could not, under the circumstances of the case, have related to anything but clause (a) of sub section (1) of section 5 and therefore an omission to mention clause (a) in the sanction did not invalidate it.
under section 5(3) of the Act all that the prosecution has to do is to show that the accused or some person on his behalf is in possession of pecuniary resources or property disproportionate to his known sources of income and for which the accused cannot satisfactorily account.
Once that is established then the Court is bound to presume unless the contrary is proved, that the accused is guilty of the new offence created by section 5 namely criminal misconduct in the discharge of his official duty.
Held, also that there was no illegality either in the sanction or in the charge on the ground that no particulars were given because the offence under section 5(1)(a) of the Prevention of Corruption Act does not consist of individual acts of bribe taking as in section 161 I.P. C. but is of a general character and individual instances are not necessary because of the presumption which section 5(3) requires the Court to draw.
Gokulchand Dwarkadas Morarka vs The King (A.I.R. 1948 P.C. 82) referred to.
|
Appeal Nos.
2523 and 2524 of 1966.
Appeals from the judgment and order dated October 26, 1964 of the Gujarat High Court in Expenditure Tax Reference No. 1 of 1963.
B.Sen, R. N. Sachthey and section P. Nayar, for the appellant (in both the appeals).
S.T. Desai and I. N. Shroff, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Shah, J.
One Surendra had by his wife Rameshchandrika (who died in 1947) three children Darshan, Ranna and Rajeshri.
By his second wife Pratima he had two sons and one daughter.
Surendra, his wife Pratima and his children formed a Hindu undivided family.
Surendra executed three deeds settling certain assets belonging to the Hindu undivided family in favour of his children Darshan, Ranna and Rajeshri, and appointed trustees to manage the assets and to collect the income arising therefrom.
The three children also owned some property which they had inherited from their mother.
Separate books of account were maintained in respect of the two sets of properties and of income received therefrom.
Surendra was also possessed of separate property.
Expenditure for the education of the three children was, it appears, defrayed out of the income received from the trust estates.
In a proceeding for assessment of tax under the Expenditure tax Act, 1957, of the Hindu undivided family for the assessment year 1958 59 the Expenditure Tax Officer brought to tax Rs. 20,508/ being the aggregate of the following heads of expenditure less the basic allowance of Rs. 30,000/ : Rs. 11,504/ Expenditure of the Hindu undivided family; Rs. 10,321/ Expenditure for the minors out of the separate properties; Rs. 28,683/ Expenditure incurred by Surendra out of his separate property.
The order of the Tax Officer was confirmed by the Appellate Assistant Commissioner and the Appellate Tribunal.
The Tribunal referred to the High Court of Gujarat under section 25(1) of the Act, three questions, out of which only two survive for consideration: "1.
Whether on the facts of the case,, in computing the taxable expenditure of the assessee H.P.F. the sum 592 of Rs. 28,683/ being the expenditure incurred by Shri Surendra, the Karta of the H.U.F. out of his own self acquired and separate property was includible in law ? 2.
Whether on the facts of the case in computing the taxable expenditure of the assessee H.U.F. the sum of Rs. 10,321/ being the amount spent by the trustees was includible in law?" The High Court answered the two questions in favour of the assessee.
Appeal No. 2523 of 1966 arises out of that order.
The relevant provisions of the Act may be briefly noticed.
Clause (c) of section 2 defines an "assessee" as meaning "an individual or a Hindu undivided family by whom expenditure tax or any other sum of money is payable under this Act, and includes every individual or Hindu undivided family against whom any proceeding under this Act has been taken for the assessment of his expenditure".
Section 2(g) defines "dependent" as meaning "(i) where the assessee is an individual, his or, her spouse or child wholly or mainly dependent on the assessee for support and maintenance; (ii) where the assessee is a Hindu undivided family (a) every coparcerner other than the karta; and (b) any other member of the family who under any law or order or decree of a court, is entitled to maintenance from the joint family property".
Section 2(h) defines "expenditure" as meaning "any sum in money or money 's worth, spent or disbursed or for the spending or disbursing of which a liability has been incurred by an assessee, and includes any amount which under the provisions of this Act is required to be included in the taxable expenditure".
Section 3 which imposes the charge of expenditure tax provides "Subject to the other provisions contained in this Act, there shall be charged for every financial year commencing on and from the first day of April, 1958, a tax (hereinafter referred to as expenditure tax) at the rate or rates specified in the Schedule in respect of the expenditure incurred by any individual or Hindu undivided family in the previous year: Provided Section 4 deals with the amount to be included in the taxable expenditure.
The section as applicable to the year of assessment 1958 59 read as follows "Unless otherwise provided in section 5, the following amounts shall be included in computing the expenditure of an assessee liable to tax under this Act, namely 593 (i) any expenditure incurred, whether directly or indirectly by any person other than the assessee in respect of any obligation or personal requirement of the assessee or any of his dependents which, but for the expenditure having been incurred by that other person, would have been incurred by the assessee, to the extent to which the amount of all such expenditure in the aggregate exceeds Rs. 5,000/ in any year; (ii) any expenditure incurred by any dependants of the assessee for the benefit of the assessee or of any of his dependants out of any gift, donation or settlement on trust or out of any other source made or created by the assessee, whether directly or indirectly.
Explanation.
Section 5 sets out certain exemptions and section 6 sets out certain deductions in the computation of taxable expenditure.
In computing the taxable expenditure of an assessee under the Act, the expenditure actually incurred by an assessee is increased by certain specific items of expenditure incurred by persons other than the assessee, and reduced by the amounts exempted under section 5 or permitted to be deducted under section 6 of the Act.
The dispute in the appeal relates to the inclusion of the expenditure incurred by Surendra out of his separate estate, and the expenditure incurred out of the estate beneficially vested in his children under the deeds of trust.
The Tax Officer brought to tax the first item under section 4 (i) read with cl.
(ii) (b) of section 2 (g), and the second item under section 4(ii) of the Act.
The Appellate Assistant Commissioner and the Tribunal were of the view that both the items were chargeable to tax under section 4 (i) of the Act.
The High Court held that the two items were not chargeable to tax.
Counsel for the Revenue contended that a karta in a Hindu undivided family is a "dependant", and any expenditure incurred by the karta even out of his separate estate for his own needs or pleasures is expenditure incurred by a person other than the assessee for the personal requirement of a dependant, and is liable to be included in the taxable expenditure of the Hindu undivided family under section 4(i) of the Act.
In the definition of the expression "Dependant" in section 2(g) (ii)(b) the expression "other member of the family" does not include a coparcener: it means wives and unmarried daughters of coparceners and widows in the family.
A karta of a Hindu family being expressly excluded from cl.
(a), he is not within 2Sup.
CI/68 8 594 the meaning of cl.
(b) "other member of the family".
To in clude him in the expression "other member of the family" would make the exclusion of the karta in cl.
(a) meaningless.
A karta of a Hindu undivided family is therefore not a "dependant" within the meaning of section 2(g) (ii) of the Act.
Under the Act a Hindu undivided family is a taxable entity distinct from its coparceners and other members.
A coparcener or other member of a Hindu undivided family is for purposes of assessment of the family to expenditure tax a person other than the assessee.
Expenditure incurred out of the family estate, by the karta for and on behalf of the family is undoubtedly expenditure by the Hindu undivided family and taxable accordingly.
Expenditure incurred by a coparcener or other member of the family out of his separate property is liable to be included in the taxable expenditure of the family, only if it is incurred in respect of the obligations of the family, or for the personal requirements of the coparceners or other members of the family, which if not incurred would have been incurred by the family.
But every item of expenditure incurred by a corparcener or other member of the .Hindu undivided family for his own purposes out of his separate property is not expenditure in respect of an obligation of the Hindu undivided family; nor is it expenditure to meet the personal requirements of the coparceners or other members of the family.
For an item to be included under section 4(i) within the taxable expenditure of a Hindu undivided family, it must be incurred for the collective obligation of the family, or for the separate personal requirements of the coparceners or other members of the family in their capacity as members of the family The karta of a Hindu undivided family assessed to tax under the Expenditure tax Act is by the express words of section 2(g)(ii)(b).
not a dependant, and when expenditure is incurred by a karta out of his separate estate for his own purposes, even though the family would have been liable to meet that expenditure if the expenditure were not incurred, the expenditure will, prima facie, not be liable to be included in the taxable expenditure of the family.
Counsel for the Revenue contended that the Parliament could not have intended, in the computation of the taxable expenditure of a Hindu undivided family, to exclude the expenditure for the personal requirement of the karta, when expenditure for the personal requirement of other coparceners and members of the family is liable to be included.
He submitted that the distinction between expenditure for personal requirement of the karta and ,of other coparceners of the family, from property not belonging to the family is based on no rational principle, and on that account the definition of dependant in section 2(g) must be held 595 inapplicable in the interpretation of the Act.
Undoubtedly the definitions in section 2 of words and expressions used in the Act apply unless the context otherwise requires, and if the context in section 4 requires that the expression " dependant" should not be given the meaning which is assigned thereto by the definition in cl.
(g) of section 2, the Court would be justified in discarding that definition.
It is a settled rule of interpretation that in arriving at the true meaning which is assigned thereto by the definition in cl.
(g) of to be viewed isolated from its context; it must be viewed in its whole context, the title, the preamble and all the other enacting parts of the statute.
It follows therefrom that all statutory definitions must be read subject to the qualifications expressed in the definition clauses which create them, such as "unless the context otherwise requires"; or "unless a contrary intention appears"; or "if not inconsistent with the context or subject matter".
But there is nothing in the scheme of the Act which suggests that the expression "dependant" in section 4(i) of the Act was used in a different sense.
Section 4(i) is intended to include expenditure incurred directly or indirectly by a person other than the assessee for discharging any obligation or for personal requirement of the assessee or dependant of the assessee.
The clause applies in the computation of the expenditure of an individual as well as a Hindu undivided family.
It is not claimed that the definition in section 2 (g) (i) does not apply to the computation of the taxable expenditure under section 4 of an individual assessee : it is only contended that a part of the definition in section 2 (g) (ii) does not apply to the interpretation of section 4 (i).
When a karta of a Hindu undivided family incurs expenditure out of the joint family property to discharge an obligation of the family the expenditure is clearly by the Hindu undivided family, for in that case the karta must be deemed to be acting in incurring the expenditure for and on behalf of the Hindu undivided family.
When the karta incurs expenditure for the coparceners or other members out of his separate estate and for that expenditure the family would have been liable if it had not been incurred, the expenditure will be included in the taxable expenditure of the family.
But when the expenditure is incurred by the karta out of his separate estate for his personal requirements it will not be included even if the family would have been liable to incur that expenditure if it had not been incurred.
This may apparent ly be anomalous.
But that is not a ground for attributing to the expression "dependent" a wholly artificial meaning different from its statutory definition.
No coparcener in a Hindu undivided family is a dependant of the family: he is an owner of the entire property of the family in common with the other coparceners.
His rights arise on birth into the family, and so long as the family remains joint, his interest in the property is no whit less than the interest of any other coparcener.
596 The Parliament in devising a special definition of the expression "dependant" has included therein all coparceners except the karta.
If it be that the definition given in section 2 (g) is not to apply in interpreting section 4 of the Act, expenditure incurred for the personal requirements of all the coparceners would have to be excluded.
But that is not the contention of the revenue.
No rule of interpretation permits for the purpose of section 4(i) of the Act the application of the statutory definition of "dependant" to bring within the net of taxation, expenditure incurred for coparceners other than the karta, and of a special meaning of that expression inconsistent alike with the personal law of the parties, and the statutory definition to bring within the net the expenditure for the karta.
The Court cannot attribute two different meanings to a single expression in its application to two different situations contemplated by a single clause.
The case is one clearly of defective draftsmanship.
In sections 5 & 6 wherever it was thought necessary, having regard to the special relation between members of a Hindu undivided family, the Parliament has restricted the use of the expression "dependant" to individual assessees, and has used different phraseology in defining exclusions and deductions in computing the taxable expenditure of assessees : see section 5 (r); section 6(c)(ii); section 6(f)(ii); section 6(g) and section 6(h).
In section 4, however, the Parliament has in seeking to attain undue brevity failed to make provision for inclusion in computing the ,taxable expenditure of a Hindu undivided family expenditure incurred by the karta out of his separate estate, which expenditure would have been incurred by the family if it was not incurred by the karta.
Expenditure incurred by Surendra out of his separate pro perty cannot therefore be taken into account in computing the taxable expenditure of the Hindu undivided family, in the absence of a finding that expenditure was incurred either for the obligation of the family, or for the personal requirements of the other coparceners or members of the family, which would have been incurred by the family if it had not been incurred by Surendra.
The amount of Rs. 10,321/ consists of two components expenditure incurred out of the trust estate of the children of Surendra, and out of their personal estate.
It is not clear from the finding recorded by the Tribunal whether the expenditure was incur red by the children of Surendra from the income received from the trust estate, or whether it was incurred on behalf of the children by the trustees.
Clause 2(b) which is common to all the three deeds of trust provides that the trustees shall ,,pay, spend or apply the residue of the trust income to and after the beneficiary until the beneficiary attain the age of twenty one 597 years for or towards the maintenance, education, advancement in life, religious ceremonies, marriage, welfare and benefit of the beneficiary in such manner as the trustees shall in their absolute and uncontrolled discretion deem fit.
" The Tribunal has in the statement of the case stated that in accordance with the terms of the trust settlement, the "trustees had paid, spent or applied the income in the account year 1957.
" That finding of the Tribunal is vague.
But the position in law in any one of the three alternatives is plain.
If the trustees incurred the expenditure for the education, maintenance, advancement in life.
or for religious ceremonies, the case would clearly fall within the terms of section 4 (i), for there can be no doubt that the ex penditure would be deemed to be incurred by a person other than the assessee the Hindu undivided family, for the dependants to discharge obligation which the family was bound to discharge.
If it be held that the expenditure was incurred by or on behalf of the children after it was received from the trustees, the case, in our judgment, would, even if it be assumed that it does not fall within cl.
(i), fall within the terms of cl.
The trusts were created by Surendra out of the family funds; the children were dependants within the meaning of section 2(g); and the expenditure was incurred for the benefit of the dependants of the family.
We arc unable to agree with the High Court that the dependant who incurs expenditure, to bring the case within the terms of section 4(ii), must be other than the dependant who obtains the benefit of that expenditure.
In our view, the High Court was in error in observing that the expenditure contemplated under cl.
(ii) of section 4 is one which enures for the benefit of a person other than the person who incurs the expenditure.
If expenditure was incurred by a dependant for his own purposes or benefit out of any gift, donation or settlement on trust or out of any other source made or created by the Hindu undivided, family, the case clearly fell within the terms of section 4(ii) before the clause was amended by the Finance Act, 1959.
There is nothing in the Act to show that the application of the clause was restricted to cases in which the dependant incurred expenditure for another dependant.
Turning now to Civil Appeal No. 2524 of 1966 which arises out of the reference to the High Court on two questions framed in language identical with the language of the questions in the main appeal, but with different amounts of expenditure relating to the assessment year 1959 60, it is unnecessary to set out the different components of the taxable expenditure incurred by the Hindu undivided family, expenditure incurred from the trust estate, and the expenditure incurred by Surendra in his individual capacity.
The questions raised are only about 598 the liability to tax: the figures are not in dispute.
Section 4, as it stood in the year of assessment 1959 60 read as follows: "Unless otherwise provided in section 5, the following amount shall be included in computing the expenditure of an assessee liable to tax under this Act, namely : (i) any expenditure incurred, whether directly or indirectly by any person other than the assessee in respect of any obligation or personal requirement of the assessee or any of his dependants, to the extent to which the amount of all such expenditure in the aggregate exceeds Rs. 5,0001in any year; (ii) where the assessee is an individual, any expenditure incurred by any dependent of the assessee, and where the assessee is a Hindu undivided family, expenditure incurred by any dependant from or out of any income or property transferred directly or indirectly to the dependant by the assessee.
" Clause (i) is a reproduction of the original clause, subject the deletion of the words "which but for the expenditure having been incurred by that other person, would have been incurred by the assessee.
" In our view, the words which were deleted did not add to the meaning of the expression "obligation or personal requirement of the assessee or any of his dependants".
Expenditure which was not related to any obligation or personal requirement of the dependants in their capacity as dependants did not fall within the terms of section 4(i) before it was amended.
The words to which we have already referred, were a surplusage: by deleting them no intention to alter the meaning of the original cl.
(i) may be attributed to the Legislature.
We are of the view, for the reasons already set out in dealing with the assessment year 1958 59, that the expenditure incurred by Surendra out of his personal estate is not liable to be included in the taxable expenditure for the year 1959 60.
If the amount expended from out of the trust estate be held, for reasons already set out to be expended by the trustees, the case falls within the terms of cl.
(i): if it be held that the expenditure was incurred by or on behalf of the children after the income was received from the trustees it would fall within cl.
The Legislature has by the amended clause (ii) expressly provided that where the assessee is a Hindu undivided family, any expenditure incurred by any dependant of the assessee from or out of any income or property transferred directly or indirectly to the depen 599 dant by the assessee, is liable to be included.
The words are not susceptible of the interpretation that the dependant who incurs the expenditure must be other than the dependant to whom the property is transferred by the assessee.
Expenditure incurred for his own purposes by the dependant to whom the property is transferred by the Hindu undivided family clearly falls within section 4 (ii) as amended.
We therefore modify the order of the High Court.
The answer to the first question for each year will be in the negative.
The answer to the second question will be in the affirmative.
It must, however, be understood that this answer does not imply that the amount of Rs. 10,321/ in respect of the assessment year 1958 59 was the amount spent by the trustees.
In disposing of the appeal under section 25(6) of the Expenditure tax Act, the Tribunal must make appropriate adjustments in declaring the liability of the assessee to pay tax in respect of the expenditure incurred from the trust estate by the trustees after making the per missible deductions under sections 5 & 6 of the Act.
In view of the partial success, there will be no order as to costs in this Court and in the High Court.
V.P.S. Order modified.
| IN-Abs | Section 4(i) of the Expenditure Tax Act, 1957, is intended to include in the taxable expenditure of an assessee, the expenditure incurred directly or indirectly by a person other than the assessee for discharging any obligation of the assessee, or for the personal requirement of the assessee or of any of the assessee 's dependents, which, but for the expenditure havingbeen incurred by that other person would have been incurred by thesee; and, section 4(ii) is intended to include any expenditure incurred byany dependent of the assessee for the benefit of the assessee or of any of his dependents out of any settlement on trust or other source made or created by the assessee.
A Hindu, his children by his first wife, his second wife, and children by her, formed a Hindu undivided family, with himself as the karta.
By deeds of trust he settled certain assets belonging to the joint family in favour of the children by the first wife and appointed trustees to manage the assets, to collect the income and to defray the expenses of the children.
The karta was also possessed of separate property.
In computing the taxable expenditure of the assessee family for the years 1958 59 and 1959 60, under the Expenditure Tax Act, the department included two items : (1) the expenditure incurred by the karta, out of his own separate property for his own purposes; and (2) the sum spent out of the trust estate for the children.
On a reference, the High Court held that the two items were not chargeable to tax.
In appeal to this Court it was contended that the first item was liable to be included in the expenditure of the assessee family under s 4(i) because, the karta in a Hindu undivided family is a 'dependent ' and the expenditure incurred was by a person other than the assessee for the personal requirement of a 'dependent ' and the family would have been liable to meet the expenditure if it were not incurred by the Karta, and the second, either under section 4(i) or (ii).
HELD : (1) The expression 'other member of the family ' in section 2(g) (H) (b) does not include a coparcener : it means wives and unmarried daughters of coparceners and widows of the family.
A karta, is expressly excluded from cl.
(a) and is not within the expression 'other member of the family ' in cl.
Therefore, the karta is not a 'dependent '.
The facts that when a karta incurs expenditure for the coparceners or other members out of his separate estate the expenditure is liable to be included in the taxable expenditure of the family, and that the expenditure incurred by a coparcener or other member of family out of his separate property in respect of the obligations of the family, or for the personal requirements of the coparceners or other members of the family, is also liable to 590 ,be included in the taxable expenditure of the family, are not grounds for attributing to the expression 'dependent ' a wholly artificial meaning different from its statutory definition.
There is nothing in the scheme of the Act which suggests that the expression 'dependent ' in section 4(1) of the Act was used in a sense different from that of the definition.
No rule of interpretation permits, for the purpose of section 4(i) of the Act, the application of the statutory definition of 'dependent ' to bring within the net of taxation, expenditure incurred for coparceners other than the karta, and of .a special meaning of that expression, inconsistent alike with the personal law of the parties, and the statutory definition, to bring within the net of taxation, the expenditure for the karta.
The Court cannot attribute two different meanings to a single expression in its application to two different situations contemplated by a single clause.
[593 H; 594 C D, F; 595 C E; 596 B C] For the year 19591 60, s.4(i) was amended by the deletion of the words 'which but for the expenditure having been incurred by that other person, would have been incurred by the asses see '.
But these words were a surplusage : by deleting them no intention to alter the 'meaning of the original clause (i) could be, attributed to the Legislature [598 E F] Therefore, for both the years, the expenditure incurred by the karta out of his separate property for his own purposes could not be taken into account in computing the taxable expenditure of the assessee family, even if the family would have been liable to incur that expenditure [596 F] (2)The Appellate Tribunal found that as regards the children of the karta, the trustees 'had paid, spent or applied the income.
If the finding meant that the trustees incurred the expenditure for necessary expenses of the children, the case would fall under section 4(i) for, the expenditure would be deemed to be incurred by a person other than the assesseefamily for discharging an obligation of the family.
If it meant that the ,expenditure was incurred by or on behalf of the children after it was received from the trustees, the case would fall under cl.
(ii). 'no trusts were created by the karta out of the family funds; the children were dependants within the meaning of section 2(g); and the expenditure was incurred for the benefit of the dependents of the family.
The High Court was in error in observing that the expenditure contemplated by section 4(ii) is one which enures for the benefit of a person other than the person who incurs the expenditure.
If expenditure was incurred by a dependent for his own benefit out of any gift, donation or settlement on trust or out of any other source made or created by the undivided family, the case falls within the terms of section 4(ii).
[597 B F] For the year 19,59 60, the Legislature amended s.4(ii) and expressly provided that where the assessee is a Hindu undivided family, any expenditure, incurred by any dependent of the assessee from or out of any income or property transferred directly or indirectly to the dependent by the assessee, is liable to be included in the taxable expenditure of the assessee.
Thus the dependent who incurs the expenditure need not be other than the dependent to whom the property is transferred by the assessee, and, the expenditure incurred for his own purposes by the defendant to whom the property is transferred by the assessee family falls within s.4(ii) as amended.
Therefore, if the amount expended from out of the trust estate be held to be expended by the trustees, the case falls within the terms of cl.
(i): if it be held that the expenditure was incurred by or on behalf of the children after the income was received from the trustees it would fall within the amended cl.
[598 F H; 599 A B] 591
|
minal Appeals Nos.
50 52 of 1964.
Appeals from the judgment and order dated January 17, 24, 1964 of the Bombay High Court in Criminal Appeals Nos.
961 to 963 of 1962.
A. K. Sen, R. Jethmalani, Jethmalani, Kumar M. Mehta, B. Parthasarathy and J. B. Dadachanji, for the appellants (in Cr. A. No. 50 of 1964).
R. Jethmalani, Kumar M. Mehta, Jethmalani and J. B. Dada chanji, for the appellants (in Cr.
51 and 52 of 1964).
K. G. Khandalawala, H. R. Khanna, B. A. Panda, R. H. Dhebar and section P. Nayar, for the respondent (in all the appeals).
The Judgment of the Court was delivered by Hidayatullah, J.
The appellants who are three brothers appeal 'by certificate against their conviction under section 120 B of the Indian Penal Code and section 167(81) of the Sea Customs Act and the sentences of imprisonment and fine respectively imposed on them.
A ,fourth brother had filed Criminal Appeal No. 55 of 1964 but did not press it at the hearing.
One other person (section L. Daga) was also convicted with them but has not appealed.
These persons were found to have entered into a criminal conspiracy among themselves and with others including one Yau Mockchi, a Chinese citizen in Hong Kong, to smuggle gold into India.
The method adopted was to insert strips of gold (about 250 tolas) under the .lining of the lid of a suitcase, which could be retrieved by 627 unscrewing the metal comer supports and pulling on strings attached to the strips.
The suitcases were brought into India by air stewardnesses, and Ethyl Wong (P.W. 1), an Anglo Chinese girl employed by Air India, was one of them.
Discovery came, after gold was successfully smuggled on many occasions, when Yau Mockch approached one Sophia Wong of the B.O.A.C. line.
She was en gaged to a police officer and informed her superior officers.
A trap was laid.
Yau Mockchi was caught with a suit case with gold in it after he had explained to Sophia how the gold was inserted and how it could be taken out.
On the search of his person and also of his place of business, visiting cards of several persons including those of Ethyl Wong and Laxmipat Choraria (Crl.
Appeal 50/64), photographs of Laxmipat and Balchand Choraria (Crl.
Appeal No. 52/64), their addresses and telephone num bers, and other incriminating letters, accounts, cables, etc., were found.
Immediately thereafter raids took place in India and at Hong Kong where the other two accused who are not before us (Kundanmal Choraria and section L. Daga) were running a firm called Global Agencies.
Numerous documents (some in simple code) and account books were seized.
Many of these documents were photostated.
The originals were unfortunately returned under the orders of the Supreme Court of Hong Kong and have since been suppressed.
On the strength of these materials the prosecution was started.
At the commencement of the trial Ethyl Wong was examined as the first witness and gave a graphic account of the conspiracy and the parts played by the accused and her own share in the transactions.
Her testimony was clearly that of an accomplice.
Although she could have been prosecuted, she was not arraigned and it is her testimony which has been the subject of a major part of the arguments before us.
No effort has been spared to have it excluded.
In two other appeals which we are deciding today with these appeals, the evidence of the accomplices was also questioned on the same grounds.
For convenience the whole question has been considered here.
In these appeals it is, however, admitted that if her evidence is received, it is sufficiently corroborated both generally and in respect of the three appellants before us.
But the evidence of Ethyl Wong is questioned in respect of the identification of Laxmipat and Balchand because she was shown their photographs before her statement was taken.
The use of the photostats without the originals is also questioned and it is submitted that these documents should be excluded.
The main argument is that Ethyl Wong could not be examined as a witness because (a) no oath could be administered to her as she was an accused person since section 5 of the Indian Oaths Act bars such a course and (b) it was the duty of the prosecution and/or the Magistrate to have tried Ethyl Wong jointly with the appellants.
L2SupCI./68 10 628 The breach of the last obligation, it is submitted, vitiated the trial and the action was discriminatory.
In the alternative, it is submitted that even if the trial was not vitiated as a whole, Ethyl Wong 's testimony must be excluded from consideration and the appeal reheard on facts here or in the High Court.
It is further submitted that in any event, Ethyl Wong 's evidence was so discrepant as to be worthless.
In the appeal of Balchand an additional point is urged and it is that the incriminating documents against him were compared with a letter Z 217 purported to be written by him but not proved to be so written.
Since the appeals were argued mainly on law, we need not trouble ourselves with the facts.
Ethyl Wong admittedly carried gold for Yau Mockchi on several occasions.
She admitted this in court and her evidence receives ample corroboration as to the mode employed from the statement of Sophia Wong and the seizure of the suitcase when Yau Mockchi had explained how the gold was secreted.
We may say at once that if Ethyl Wong 's evidence is not to be excluded from consideration for any reason, then we see no reason not to believe her.
Apart from the fact that the High Court and the, court below have concurrently believed it already, we find ample corroboration for it from her own previous statements made without warning, her pointing out the flats where she delivered gold, her cable written in code to inform the parties in Hong Kong after successful smuggling, her visiting card in the possession of Yau Mockchi, the passenger manifests showing her trips, the entries in the hotel registers and the telephone calls made by her to the flat of the accused and so on and so forth.
No doubt there are some discrepancies in her account and she corrected her first version on points on which she had made mistakes.
But this is explained by the fact that when she was first accosted, she was unprepared and shocked by the discovery.
The corrections were made by her after reviewing in her mind her past trips and without any prompting by the customs authorities.
Both statements were voluntary and without any collusion on the part of the customs officials.
On the whole her testimony impressed us and as it has been accepted by the High Court and the Magistrate we shall not go into it for the third time.
We shall accordingly address ourselves to the objections to its admissibility and the propriety of examining a self confessed criminal as a witness against her former associates.
The argument is that section 5 of the Indian Oaths Act prohibits the administering of oath or affirmation to an accused person in a criminal proceeding and Ethyl Wong, by her own statements made earlier to the customs officials and later in court, showed herself to be the unknown carrier shown at No. 12 of the complaint.
It is, therefore, contended that she could not be examined 629 as a witness.
Next it is submitted that as the provisions relating to tender of pardon to accomplices contained in Chapter XXIV of the Code do not apply to offences under section 120 B (First Part) of the Indian Penal Code and section 168(81) of the Sea Customs Act, the only two ways in which Ethyl Wong 's testimony could have been obtained was either to take her plea of guilty and convict and sentence her or to withdraw the prosecution against her under section 494, Indian Penal Code.
Not to send up a person for trial with the sole object of taking accomplice evidence is said to be illegal.
Further it is argued that under section 351 read with section 91 of the Code it was the duty of the Court to have detained Ethyl Wong and included her in the array of accused before it.
We shall now consider these arguments.
The offences were non cognizable and were not investigated by the police.
The investigation was by customs officers under the Sea Customs Act and not by the police under Chapter XIV of the Code.
Therefore, no question of the application of sections 169 and 170 arose.
Ethyl Wong 's statements were obtained under section 171 A of the Sea Customs Act.
The persons were placed for trial on the complaint of the Assistant Collector of Customs under the authority of the Chief Customs Officer, Bombay.
Although the Magistrate was taking cognizance of offences and not of offenders, it was no part of his duty to find offenders in view of the bar of section 187A if the complaint did not name a particular offender.
All that the Magistrate could do was lo take a bond from Ethyl Wong for her appearance in court if required.
At the time of Ethyl Wong 's examination the appellants had raised the question that she should also be tried.
The Magistrate said that he would later consider the matter.
Then it appears to have been forgotten.
Nor did the appellants raise the question again.
Apparently they only wanted that Ethyl Wong should be tried jointly with them so that her testimony might not be available against them but were not interested in her separate trial.
In so far as the customs authorities are concerned it is clear that they had some reason to think that Ethyl Wong might be one of the carriers as her visiting card was found with 26 other such cards in Yau Mockchi 's possession.
But it was not certain that she was one of the carriers until she was questioned or there was some other evidence against her.
The complaint was filed in court on April 6, 1960 and the case was to commence on January 2, 1961.
On December 27, 1960 Ethyl Won landed at the Bombay Air Terminal.
Two customs officers were waiting for her and questioned her.
It was then that Ethyl Wong made her first statement (exhibit 1) admitting her own share, in the smuggling racket set up by Yau Mockchi.
On December 29, 1960 she gave a second statement (exhibit 2) and corrected certain inaccuracies in 630 her first statement.
On January 2 ', 1961 she was examined as the first prosecution witness.
Now there can be no doubt that Ethyl Wong was a competent witness.
Under section 118 of the Indian Evidence Act all persons are competent to testify unless the court considers that they are prevented from understanding the questions put to them for reasons indicated in that section.
Under section 132 a witness shall not be excused from answering any question as to any matter relevant to the matter in issue in any criminal proceeding (among others) upon the ground that the answer to such question will incriminate or may tend directly or indirectly to expose him to a penalty or forfeiture of any kind.
The safeguard to this compulsion is that no such answer which the witness is compelled to give exposes him to any arrest or prosecution or can it be proved against him in any criminal proceeding except a prosecution for giving false evidence by such answer.
In other words, if the customs authorities treated Ethyl Wong as a witness and produced her in court, Ethyl Wong was bound to answer all questions and could not be prosecuted for her answers.
Mr. Jethmalani 's argument that the Magistrate should have promptly put her in the dock because of her incriminating answers overlooks section 132 (proviso).
In India the privilege of refusing to answer has been removed so that temptation to tell a lie may be avoided but it was necessary to give this protection.
The protection is further fortified by article 20(3) which says 'that no person accused of any offence shall be compelled to be a witness against himself.
This article protects a person who is accused of an offence and not those questioned as witnesses.
A person who voluntarily answer questions from the witness box waives the privilege which is against being compelled to be a witness against himself, because he is then not a witness against himself but against others.
Section 132 of the Indian Evidence Act sufficiently protects him since his testimony does not go against himself.
In this respect the witness is in no worse position than the accused who volunteers to give evidence on his own behalf or on behalf of a coaccused.
There too the accused waives the privilege conferred on him by the article since he is subjected to cross examination and may be asked questions incriminating him.
The evidence of Ethyl Wong cannot, therefore, be ruled out as that of an incompetent witness.
Since Ethyl Wong was a self confessed criminal, in conspiracy with others who were being tried, her evidence was accomplice evidence.
The word accomplice is ordinarily used in connection with the law of evidence and rarely under the substantive law of crimes.
Accomplice evidence denotes evidence of a participant in crime with others.
Section 133 of the Evidence Act makes the accomplice a competent witness against an accused person.
Therefore, Ethyl Wong 's testimony was again that of a competent witness.
It has been 631 subjected to scrutiny and the usual checks for corroboration and was, therefore, received with due caution.
The short question that remains is whether she could be administered an oath in view of the prohibition in section 5 of the Indian Oaths Act.
We have already shown above that Ethyl Wong was not an saccused person at the trial.
Now the Indian Oath Act provides "5.
Oath or affirmation shall be made by the following persons : (a) all witnesses, that is to say, all persons who may lawfully be examined or give, or be required to give, evidence by or before any court or person having by law or consent of parties authority to examine such persons or to receive evidence; Nothing herein contained shall render it lawful to administer, in a criminal proceeding, an oath or affirmation to the accused person unless he is examined as a witness for the defence. .
Mr. Jethmalani in interpreting the exclusionary clause argues that every person against whom there is an accusation (whether there be a prosecution pending against him or not) is an accused person, more so a person against whom an investigation is going on or has been made.
In this connection he has referred to those sections of the Code of Criminal Procedure where the word 'accused ' occurs and has attempted to establish that sometimes the word is employed to denote a person on trial and sometimes a person against whom there is an accusation but who is not yet put on his trail.
He has also referred to the expression 'in a criminal proceeding ' which he says are words of sufficient amplitude to take in a person against whom an investigation is to be made or has been made on an accusation.
In either case, he submits, the case of Ethyl Wong must fall within the exclusionary clause.
There is no need to refer to the sections of the Code of Criminal Procedure because it may safely be assumed that the word 'accused ' bears these different meanings according to the context.
That does not solve the problem of interpretation of the same word in the Code for there it may have been used in one of the two senses or both.
The historical reason behind the prohibition in the Indian Oaths Act and section 342 of the Code, need not be gone into either.
It is well known that formerly a person on his trial could not give evidence.
At Common Law, the parties to a civil action were not allowed to give evidence because of their personal 632 interest and in criminal trials, the private prosecutor could give evidence because he represented the Crown but not the accused.
The Common Law of England was altered by statutory enactments between 1843 and 1898 and finally by the Criminal Evidence Act 1898 the accused was allowed to give evidence.
The discomfiture of the first person to give evidence on his own account while under cross examination is also well known.
He was literally convicted out of his own mouth by the cross examination by the Attorney General.
In India the right was first conferred by the Code of Criminal Procedure Amendment Act XXVI of 195 5.
This Amending Act added section 342A to the Code: "342.
Accused person to be competent witness.
Any person accused of an offence before a Cri minal Court shall be a competent witness for the defence and may give evidence on oath in disproof of the charges made against him or any person charged together with him at the same trial : Provided that and added the words "unless he is examined as a witness for the defence" to the exclusionary clause in section 5 of the Indian Oaths Act.
Yet the provisions of section 343 of the Code continues that except as provided in sections 337 and 338 of the Code, no influence, by means of any promise or threat or otherwise shall be used on an accused person to induce him to disclose or withhold any matter within his knowledge.
The section prohibits influence in two ways in the making of the disclosure and in the withholding of the disclosure.
In other words, the prosecuting agency has to be neutral unless it seeks to prosecute the person himself.
If they do not prosecute a particular person and tender him as a witness, the bar of the Indian Oaths Act ceases because the person is hot an accused person in a criminal proceeding.
The interrelation of section 342(4) of the Code and section 5 of the Indian Oaths Act, which both prohibited the giving of oath or affirmation to an accused on.
trial is fully evidenced by the simultaneous amendment of the Code in 1955 by which the right to give evidence on oath is conferred on the accused and provisions in pari materia are made in section 5 of the Oaths Act.
The only prohibition against the use of accomplice testimony exists in the rule of caution about corroboration and the interdiction of influence in any form by section 343 of the Code.
If any influence by way of promise of pardon has to be made, the provisions of sections 337 and 338 or of the Criminal Law Amendment Act have to be observed.
That, however, applies to special kinds of cases of which the present is not one.
They are 633 concerned with offences triable exclusively by the High Court or the Court of Session, or offences punishable with imprisonment which may extend to seven years and certain offences specially named for which special provision has been made in the Criminal Law Amendment Act.
In other words, we are not concerned with the provisions for tender of a pardon found in the Code or the Criminal Law Amendment Act.
The position that emerges is this : No pardon could be ten dered to Ethyl Wong because the pertinent provisions did not apply.
Nor could she be prevented from making a disclosure, if she was so minded.
The prosecution was not bound to prosecute her, if they thought that her evidence was necessary to break a smugglers ' ring.
Ethyl Wong was protected by section 132 (proviso) of the Indian Evidence Act even if she gave evidence incriminating herself.
She was a competent witness although her evidence could only be received with the caution necessary in all accomplice evidence.
The expression 'criminal proceeding ' in the exclusionary clause of section 5 of the Indian Oaths Act cannot be used to widen the meaning of the word accused.
The same expression is used in the proviso to section 132 of the Indian Evidence Act and there it means a criminal trial and not investigation.
The same meaning must be given to the exclusionary clause of section 5 of the Indian Oaths Act to make it conform to the provisions in pari materia to be found in sections 342, 342A of the Code and section 132 of the Indian Evidence Act.
The expression is also not rendered superfluous because if given the meaning accepted by us it limits, the operation of the exclusionary clause to criminal prosecution, , as opposed to investigations and civil proceedings.
It is to be noticed that although the English Criminal Evidence Act, 1898, which (omitting the immaterial words) provides that "Every person charged with an offence. shall be a competent witness for the defence at every stage of the proceedings" was not interpreted as conferring a right on the prisoner of giving evidence on his own behalf before the grand jury or in other words, it received a limited meaning; see Queen vs Rhodes(1).
Before we leave this subject we may refer to certain rulings to which our attention was drawn.
Mr. Jethmalini has referred to Karim Buksh vs Q.E., (2 ) Da vs Sivan Chetty(3), Parameshwarlal vs Emperor (4) , Emperor vs Johrit (3), Albert vs State of Kerala(6) These cases arose in connection with section 211 of the Indian Penal Code.
The expression "causes to be instituted criminal proceedings" was held to include the making of a report to the police or to such officer whose duty it is to forward the report for action (1) (3) I.L.R. (5) A.I.R. 1931 All. 269.
(2) I.L.R. (4) I.L.R. 4 Patna 472.
(6) A.I.R. 1966 Kerala.1.
634 by the police.
It is argued that in section 5 of the Indian Oaths Act the words 'criminal proceedings ' must receive wide interpretation.
Mr. Jethmalini also relied upon Karam Ilahi vs Emperor(1) where a Division Bench of the Lahore High Court has held that, since according to the Criminal Procedure Code a person becomes an accused person as soon as he has been arrested by the police for an offence, the word 'accused ' in section 5 of the Indian Oaths Act must also receive a similar meaning.
We have already shown that the exclusionary clause in section 5 is to be interpreted as a whole and 'criminal proceedings ' means a criminal inquiry or a trial before a court and the 'accused ' means a person actually arraigned, that is, put on a trial.
In fact this meaning finds support even from the Lahore ease on which Mr. Jethmalini relies.
The scheme of the two provisions being different it is impossible to use the meaning given in respect of section 211 of the Indian Penal Code, in aid of the construction of similar words in section 5 of the Indian Oaths Act.
On the side of the State many cases were cited from the High Courts in India in which the examination of one of the suspects as a witness was not held to be illegal and accomplice evidence was received subject to safeguards as admissible evidence in the case.
In those cases, section 342 of the Code and section 5 of the Indian Oaths Act were considered and the word 'accused ' as used in those sections was held to denote a person actually on trial before a court and not a person who could have been so tried.
The witness was, of course, treated as an accomplice.
The evidence of such an accomplice was received with necessary caution in those cases.
These cases have all been mentioned in In re Kandaswami Gounder(2), and it is not necessary to refer to them in detail here.
The leading cases are: Queen Emperor vs Mona Puna(3), Banu Singh vs Emperor(4), Keshav Vasudeo Kortikar vs Emperor(5 ) , Empress vs Durant(6) Akhoy Kumar Mookerjee vs Emperor(7), A. V. Joseph vs Emperor() Amdumiyan and others vs Crown(8), Galagher vs Emperor(10), and Emperor vs Har Prasad, Bhargava(11).
In these cases (and several others cited and, relied upon in them) it has been consistently held that the evidence of an accomplice may be read although he could have been tried jointly with the accused.
In some of these cases the evidence was re ceived although the procedure of section 337, Criminal Procedure Code was applicable but was not followed.
It is not necessary to deal with this question any further because the consensus of opinion (1) A.T.R. (2) A.T.R. (3) I.L.R. (4) I.L.R. (5) I.L.R. (6) I.L.R. (7) I.L.R. (8) I.L.R. 3 Rang.
(9) I.L.R. (10) I.L.R. (II) I.L.R. 45 All.
635 in India is that the competency of an accomplice is not destroyed because he could have been tried jointly with the accused but was not and was instead made to give evidence in the case.
Section 5 of the Indian Oaths Act and section 342 of the Code of Criminal Procedure do not stand in the way of such a procedure.
It is, however, necessary to say that where section 337 or 338 of the Code apply, it is always proper to invoke those sections and follow the procedure there laid down.
Where these sections do not apply there is the procedure of withdrawal of the case against an accomplice.
The observations of Cockburn, C.J. and Black burn and Mellor, JJ.
in Charlotte Winsor vs Queen(1) must always be borne in mind.
Cockburn, C.J. observed: "No doubt that state of things, which the resolution of the judges, as reported to have been made in Lord Hold 's time, was intended to prevent, occurred; it did place the prisoner under this disadvantage; whereas, upon the first trial that most important evidence could not be given against her, it was given against her upon the second, so that the discharge of the jury was productive to her of that disadvantage.
I equally feel the force of the objection that the fellow prisoner was allowed to give evidence without having been first acquitted, or convicted and sentenced.
I think it much to be lamented.
" To keep the sword hanging over the head of an accomplice and to examine him as a witness is to encourage perjury.
Perhaps it will be possible to enlarge section 337 to take in certain special laws dealing with customs, foreign exchange, etc.
where accomplice testimony will always be useful and witnesses will come forward because of the conditional pardon offered to them.
We are, therefore, of the opinion that Ethyl Wong 's evidence was admissible.
The case was one under section 120 B of the Indian Penal Code.
As the existence o f a conspiracy is proved beyond a shadow of doubt, section 10 of the Indian Evidence Act is attracted.
That section provides : "10.
Things said or done by conspirator in reference to common design.
Where there is reasonable ground to believe that two or more persons have conspired together to commit an offence or an actionable wrong, anything said, done or written by any one of such persons in reference to their common intention, after the time when such intention (1) 636 was first entertained 'by any one of them, is a relevant fact as against each of the persons believed to be so conspiring, as well for the purpose of proving the existence of the conspiracy as for the purpose of showing that any such person was a party to it.
" The conspiracy was headed by Yau Mockchi who in a sense was the brain behind the whole racket.
The discovery with him of the visiting card and photograph of Laxmipat and the photograph and addresses of Balchand was an incriminating circumstance as Ethyl Wong was connected with Yau Mockchi on the one hand and these brothers at the other.
Further letters and writings of all the brothers were seized which were related to the conspiracy.
Unfortunately, the originals were not available at the trial but only photostats of the letters.
The photostats have been proved to our satisfaction to be genuine photographs of the letters.
The copies were made through the Indian Embassy and bore the certificate.
The use of the photostats without the originals was questioned before us but not in the High Court.
Since it was a pure question of law, we allowed it to be raised.
It is submitted that expert testimony as to handwriting can only be based upon the examination of the originals and not photographs.
It is pointed out that there is nothing in the Evidence Act which makes a photograph of a disputed writing the basis of conviction.
Nor, it is submitted, expert testimony can be invited about it.
Reliance is placed on M 'Cullough vs Munn(1) and Phipson on Evidence 10th Edition p. 146.
In our opinion this submission cannot be accepted.
Apart from the fact that this was not argued in the High Court and the handwriting was admitted there, the law as propounded is not sound.
The originals were suppressed by the appellants after they were returned.
The order of the Supreme Court of Hong Kong has not been produced before us and we do not know why the original documents were returned.
Adequate precaution against the suppression of these documents apparently was not taken.
This was perhaps necessary because the offence was a part of an international smuggling racket, in which offenders had to be tried in two different countries and both countries needed the documents as evidence.
If the photostats were not available this prosecution would have been greatly jeopardised.
Even if the originals be not forthcoming, opinions as to handwriting can be formed from the photographs.
It is common knowledge that experts themselves base their opinion on enlarged photographs.
The photos were facsimiles of the writings and could be compared with the enlargements of the admitted comparative (1) 637 material.
In Phipson (10th Edn.) paragraphs 316/317 the rules as to identification of handwriting is stated from the Criminal Procedures Act, 1865 as follows : " Comparison of a disputed writing with any writing proved to be satisfaction of the judges to be genuine shall be permitted to be made by witnesses etc. . (para 316) In dealing with the scope of the rule, Phipson observes "Under the above Act, both the disputed and the genuine writings must be produced in court, and the former, if lost, cannot be compared, either from memory or from a photographic copy, with the latter, and the latter must also be duly proved therein." (para 317).
Phipson himself in paragraph 316 observes that the production of 'real ' evidence is not now compulsory.
For the first part of the proposition in paragraph 317 reference is made to M 'Cullough vs Munn.(1).
That was an action for libel contained in a letter alleged to have been written by the defendant.
The original was lost but a photographic copy of the letter was available, and the envelope had been preserved.
The photograph was seen by the jury but the Judge ruled that the photograph was evidence of the contents of the letter but not of the handwriting and could not be compared with other admitted writings.
The jury gave a verdict for the plaintiff which was set aside by the Divisional Court and a new trial was ordered.
At the second trial, the photograph was not tendered but a 'plain copy ' was put in.
The trial resulted in a verdict for the defendant.
The Divisional Court refused to set aside the verdict.
The plaintiff then relied upon Lucas vs Williams (2 ) claiming that the photograph was evidence.
The Lord Chancellor and Holmes L.J. observed: "The plaintiff would have been justified in putting in the photograph as evidence of the contents of the libel, and apparently it was the only legal evidence by way of copy of its contents; and, I think, they might also, on the authority of the decision in Brookes vs Tichborne ; have used it for purposes of calling attention to peculiarities of spelling and use of capital letters and punctuation.
" At the first trial Lord Chief Baron ruled (with which Wright, J.agreed in the King 's Bench) (1) (2) 638 .lm15 "that upon the loss of the original letter the photograph was admissible to prove the contents of that letter, but that it could not be used for purposes of comparison with genuine documents.
" The above observations have received adverse comments from Wigmore (3rd Edition) Vol.
III paragraph 797.
The earlier cases probably took into account the possibility of trick photography and the changes likely by adjustment of the apparatus.
Wigmore rightly points out that unless we are prepared to go to the length of maintaining that exact reproduction of the handwriting by photography is in the nature of things impossible, the photograph must be admissible in proof.
Wigmore then observes "The state of the modern photographic art has long outlawed the judicial doubts above quoted.
All that can be said is that a photograph of a writing may be made to falsify, like other photographs and like other kinds of testimony, and that a qualified witness affirmation of its exactness suffices to remove this danger, as much as any such testimonial danger can be removed.
Ac cordingly, it is generally conceded that a photographic copy of handwriting may be used instead of the original, so far as the accuracy of the medium is concerned.
" In the footnotes to the above passage many cases are cited from various countries and in regard to the Irish case just cited by us the author observes that it raised "a doubt which was perversely unnecessary".
On the whole, we think that if the court is satisfied that there is no trick photography and the photograph is above suspicion, the photograph can be received in evidence.
It is, of course, always admissible to prove the contents of the document, but subject to the safeguards indicated, to prove the authorship.
This is all the more so in India under section 10 of the Evidence Act to prove participation in a conspiracy.
Detection and proof of crime will be rendered not only not easy but sometimes impossible if conspirators begin to correspond through photographs of letters instead of originals, Many conspiracies will then remain unproved because one of the usual methods is to intercept a letter, take its photograph and then to send it on and wait for the reply.
But evidence of photographs to prove writing or handwriting can only be received if the original cannot be obtained and the photographic reproduction is faithful and not faked or false.
In the present case no such suggestion exists and the originals having been suppressed by the accused, were not available.
The evidence of photographs as to the contents and as to handwriting was receivable.
639, Regarding the specimen writing in the letter Z 217, with which, the impugned writings were compared, we think the letter must be treated as genuine for the purpose of comparison of handwriting.
The letter was written on June 1, 1960 from Bombay to one Begraj Choraria at Bidsedar.
It was admittedly recovered.
from Balchand appellant 's ancestral house.
It was addressed to Dadaji Sahib and it contains numerous references to domestic matters which are usually written in such letters.
Corroboration of some of the things said there was available from other sources.
It is impossible to think that such a letter could have been forged and planted at Bidsedar in the ancestral home.
The letters in BC series 1 45 were rightly compared with it to determine Balchand 's handwriting.
The next question is whether Ethyl Wong 's identification of Laxmipat and Balchand, whose photographs were shown to her at the Air Terminal at Bombay should be accepted.
Reference in this connection has been made to English cases in which it has been laid down that the showing of a large number of photographs to a witness and asking him to pick out that of the suspect is a proper procedure but showing a photograph and asking the witness whether it is of the offender is improper.
We need not refer to these cases because we entirely agree with the proposition.
There can be no doubt that if the intention is to rely on the identification of the suspect by a witness, his ability to identify should be tested without showing him the suspect or his photograph, or furnishing him the data for identification.
Showing a photograph prior to the identification makes the identification worthless.
If the prosecution had to rely on the identification by Ethyl Wong to fix the identity of the suspects, the fact that ' photographs were shown would have materially affected the value of identification.
But the prosecution was not required to rely on Ethyl Wong 's identification.
It had other evidence on this point.
Further, before Ethyl Wong had seen the photographs she had given the names and description of the suspects.
In addition to identifying the suspects from the photograph, Ethyl Wong had shown the flat in Bombay and the record of telephone calls at her hotel showed that she was in touch with the suspect in Bombay.
Again, she spoke of the suspect at Calcutta and gave a description of the visiting card without having seen it.
This visiting card is blue in colour and has the device in the left hand corner of a heart with a Swastika as an inset in the heart.
When she pointed out the flat, she was accompanied by a customs officer who did not even know what it was all about.
It is also significant that Balchand 's photograph was demanded from Hong Kong.
It was also said that if the photograph was not available, address and telephone number would do. 'In Yau Mockchi 's possession photographs, addresses and visiting cards were found.
There are other letters which speak of certain goods 640 to be brought and the account books show that they were sent from Hong Kong.
One significant article is a Rolex watch which was asked for and was bought in Hong Kong.
The letters themselves and the account of gold purchased etc.
and the commission paid speak volumes.
Gold was described as 'lali ' and its fineness and price were mentioned.
To refer to gold as 'lali ' in the letters was to employ a childish code which is easily broken when one sees the weight of 'lali ' in tolas, the price and the fineness.
The internal evidence of the letters furnishes all necessary clues to the identity and inter relation of the several conspirators.
No wonder the identity of the writers and recipients of the letters was not specially challenged in the High Court.
Mr. Jethmalini attempted to argue several questions of fact but in view of the practice of this Court and the concurrent findings of the High Court and the Magistrate, we have not attempted to go into the evidence.
In fact we can only say that there is such overwhelming evidence of the complicity of the appellants that when the points of law fail there is very little to be said in their favour.
The last contention that there has been discrimination and violation of articles 14 and 20 is without substance.
Reliance was placed on section G. Jaisinghani vs Union of India and others(1) that the absence of arbitrary power is the first essential of the rule of law and here there is room for selecting one out of several accused to lead accomplice evidence.
Reference was made to other cases of this Court where unrestrained power of selection without guidelines was held to offend article 14.
But the case of the accomplice evidence is different.
Section 337 of the Code of Criminal Procedure has already been held not to offend article 14 and the matter of taking accomplice evidence outside section 337 by using section 494 or otherwise is not very different.
We do not hold that there was any breach of the Constitution in receiving Ethyl Wong 's evidence, To hold otherwise would shut out accomplice evidence completely.
There is thus no force in the appeals.
Mr. Jethmalini argued that the High Court was wrong in enhancing the sentences of Balchand and Poonamchand appellants and the sentence of Laxmipat which is the maximum permissible under law was also too severe.
Gold smuggling has become one of the major difficulties in maintaining our economic structure.
The case evidences an international ring of smugglers.
In view of this we see no reason to interfere.
The appeals will stand dismissed.
Appellants to surrender to their bail.
R.K.P.S. (1) ; Appeals dismissed.
| IN-Abs | The three appellants were convicted under section 120B I.P.C. and section 167(81) of the Sea Customs Act for having entered into a criminal conspiracy among themselves and with a Chinese citizen in Hong Cong to smuggle gold into India with the, help of E, an Airlines stewardess.
E gave evidence at the trial as a witness for the prosecution.
Her testimony was clearly that of an accomplice and although she could have been prosecuted, she was not arraigned.
It was contended, inter alia, on behalf of the appellants (i) that it was the duty of the prosecution and/or the Magistrate to have tried E jointly with the appellants and the breach of this obligation vitiated the trial; in the alternative, E 's testimony must be excluded from consideration and the appeal re heard on the facts; (ii) that no oath could be adminis tered to E as she was an 'accused person in 'a criminal proceeding ' within the meaning of section 5 of the Indian Oaths Act as shown by her own statements made to the Customs officials and in Court; she could not therefore be examined as a witness; furthermore, the provisions relating to tender of pardon to accomplices contained in Chapter XIV of the Criminal Procedure Code do not apply to offences under section 120B (first Part) I.P.C. and section 168 (81) of the Sea Customs Act; the only ways in which E 's testimony could have been obtained was either to, take her plea of guilty and convict and sentence her or withdraw the prosecution against her under section 494 Cr. P. C. Not to send up a person for trial with the sole object of taking accomplice evidence is illegal.
Furthermore, under section 351 read with section 91 of the Code it was the duty of the Court to.
have detained E and included her in the array of accused before it; (iii) the evidence of E in respect of the identification of two of the appellants was inadmissible because she had been shown "heir photographs before her statements were taken; (iv) the photostats of certain document 's without the production of the originals were wrongly admitted and should have been excluded; and (v) selection, of E as once out of several accused ",,is discriminatory.
HELD : dismissing the appeal, (i) The offences were non cognizable and were investigated by Customs officers under the Sea Customs Act and not by the Police under Chapter XIV of the Code.
Therefore, no question of the application of sections 169 and 170 arose.
The accused were placed on trial on the complaint of the 625 Assistant Collector of Customs under the authority of the Chief Customs Officer, Bombay.
Although the Magistrate was taking cognizance of offences and not of offenders, it was no part of his duty to find offenders in view of the bar of section 187A if the complaint did not name a particular offender.
All that the Magistrate could do was to take a bond from E for her appearance in court if required.
[629 C E] Under section 118 of the Evidence Act, all persons are competent to testify unles the court considers that they are prevented from under standing the questions put to them for reasons indicated in that section.
Under section 132 a witness is not excused from answering any relevant question upon the ground that the answer will incriminate him or expose him to a penalty of forfeiture of any kind and when compelled to answer such question is protected 'against arrest or prosecution by the safeguard in the proviso to section 132 as well as in Art, 20(3).
The evidence of E could not therefore be ruled out, as that of an incompetent witness.
Since E was a self confessed criminal, in conspiracy with others who were being tried, her evidence was accomplice evidence.
section 133 of the Evidence Act makes the accomplice a competent witness against an accused person.
For this reason also E 's testimony was that of a competent witness.
[630 B H] (ii) The competency of an accomplice is not destroyed because he could have been tried jointly with the accused but was not and was instead made to give evidence in ;the case.
Section 5 of the Indian Oaths Act and section 342 of the Code of Criminal Procedure do not stand in the way of such a procedure.
If any accomplice is not prosecuted but is tendered as a witness, the bar of the Indian Oaths Act ceases because the person is not an accused person in a criminal proceeding.
The interrelation of section 342(4) of the Code and section 5 of the Indian Oaths Act.
both of which prohibited the giving of oath or affirmation to an accused on trial is fully evidenced by the simultaneous amendment of the Code in 1955 by which the right to give evidence on oath is conferred on the accused and provisions in pari materia are made in section 5 of the Oaths Act.
The only prohibition against the use of accomplice testimony exists in the rule of caution about corroboration and the interdiction, of influence in any form by section 343 of the Code.
If any influence by way of promise of pardon has to be made, the provisions of sections 337 and 338 or of the Criminal Law Amendment Act have to be observed.
That, however, applies to special kinds of cases of which the present was not one.
[632 F H] The expression, 'criminal proceeding ' in the exclusionary clause of section 5 of the Indian Oaths Act cannot be used to widen the meaning of 'he word 'accused '.
The same expression is used in.
the proviso to section 132 of the Indian Evidence Act and there it means a criminal trial and not investigation.
The same meaning must be given to the exclusionary clause of section 5 of the Indian Oaths Act to make it conform to the provisions in pari materia to be found in sections 342, 342A of the Code and section 132 of the Indian Evidence Act.
The expression is also not rendered superfluous because, given this meaning, it limits the operation.
of the exclusionary clause to criminal Prosecutions as opposed to investigations had civil proceedings.
[633 D F] (iii) If the court is satisfied that there is no trick photography and the photograph is above suspicion, the photograph can be received in evidence.
It is, of course, always admissible to prove the contents of the document, but subject to the safeguards indicated to prove the authorship.
This is all the more so in India under section 10 of the Evidence Act 626 to prove participation in a conspiracy.
Detection and proof of crime will be rendered not only not easy but sometimes impossible if conspirators begin to correspond through photographs of letters instead of originals.
But evidence of photographs to prove writing or handwriting can only be received if the original cannot be obtained and the photo graphic reproduction is faithful and not faked or false.
In the present case no such suggestion exists and the originals having been suppressed by the accused, were not available.
The evidence of photographs as to the contents and as to handwriting was receivable.
[638 F H] (iv) If the prosecution had to rely only on the identification by E to fix the identity of the suspects, the, fact that their photographs were shown to her would have materially affected the value of identification.
How, ever there was considerable other evidence of identification and the prosecution was not required to rely only on this identification.
(v) Section 337 Cr.
P.C. has been held not to offend article 14 and the matter of taking accomplice evidence outside section 337 by using section 494 or otherwise is not very different.
It cannot be held that there was any breach of the Constitution in selecting E out of several accused to give evidence.
[640 F] Case law discussed.
|
iminal Appeal No.105 of 1965.
Appeal from the judgment and order dated January 11, 1965 of the Gujarat High Court in Criminal Revision Application No. 378 of 1964.
N. N. Keswani, for the appellant.
G. L. Sanghi and section P. Nayar, for the respondent.
The Judgment of WANCHOO, C.J., SHELAT and VAIDIALINGAM, JJ. was delivered by SHELAT, J. BACHAWAT, J. on behalf of MITTER, J. and himself delivered a separate Opinion.
Shelat, J.
The appellant, a practising advocate, was engaged by Rama Shamal and Raiji Shamal two of the accused in Crimi nal Case No. 26 of 1963 in the court of the Judicial Magistrate, Baroda, in respect of charges under sections 302, 436, 334 read with section 149 of the Penal Code.
On January 12, 1963, the appellant presented a bail application on behalf of the said two accused.
The Magistrate granted bail on each of the two accused executing a personal bond of Rs. 1,500 with surety for the like amount.
On January 25, 1963, bail bonds were furnished by a person calling himself Udesing Abhesing.
The appellant identified that person as Udesing Abhesing and as personally known to him.
On the strength of his identification the Magistrate accepted the bonds and released the two accused on bail.
Thereafter, one of 687 them absented himself from the Court on three occasions and the Magistrate issued a notice on the said surety.
On March 11, 1963, the real Udesing Abhesing appeared and denied that he had executed the said bonds or stood as surety.
The Magistrate issued an informal notice to the appellant to explain why action should not be taken against him for identifying a person who had falsely impersonated as Udesing Abhesing.
The appellant gave his reply.
The Magistrate recorded statements of the real Udesing Abhesing and of one Chiman Shamal.
He did so to satisfy himself that there was substance in the allegation of the said Udesing that be was not the person who had stood as surety.
On July 19, 1963, the Magistrate issued a show cause notice to the appellant under section 476, Cr.
P.C. and the appellant filed his reply.
After an enquiry under section 476, the Magistrate ordered filing of a complaint against the appellant in respect of offences under sections 205, 467 and 468 read with section 114 of the Penal Code.
In an appeal filed by the appellant, the Additional Sessions Judge, held that the said complaint was justified but only in respect of the offence under section 205 read with section 114.
In a revision by the appellant a single Judge of the High Court of Gujarat passed the following order: "This is a matter in which this Court should never interfere in revision.
The revision application is, therefore, dismissed".
The High Court gave certificate under article 134(1)(c) of the Constitution and that is how this appeal has come up before us.
Mr. Sanghi for the respondent raised the preliminary conten tion that the High Court 's order dismissing the revision was not a final order as it did not determine the complaint filed by the Magistrate nor did it decide the controversy between the parties therein, viz., the State of Gujarat and the appellant, whether the appellant had committed the said offence.
That controversy being still a live one, the order, according to him, was not final, the certificate granted by the High Court was incompetent and consequently the appeal is not maintainable.
Article 134 (1) (c) reads as follows : "An appeal shall lie to the Supreme Court from any judgment, final order of sentence in a criminal proceeding of a High Court .
If the High Court certifies that the case is a fit one for appeal to the Supreme Court".
The question as to whether a judgment or an order is final or not has been the subject matter of a number of decisions; yet no single general test for finality has so far been laid down.
The reason probably is that a judgment or order may be final for one 688 purpose and interlocutory for another or final as to part and interlocutory as to part.
The meaning of the two words "final" and . 'interlocutory" has, therefore, to be considered separately in relation to the particular purpose for which it is required.
However, generally speaking.
a judgment or order which determines the principal matter in question is termed final.
It may be final although it directs enquiries or is made on an interlocutory application or reserves liberty to apply.(1) In some of the English de cisions where this question arose, one or the other of the following four tests was applied.
Was the order made upon an application such that a decision in favour of either party would determine the main dispute ? 2.
Was it made upon an application upon which the main dispute could have been decided ? 3.
Does the order as made determine the dispute ? 4.
If the order in question is reversed, would the action have to go on ? The first test was applied in Salaman vs Warner(2) and Stan dard Discount Co. vs La Grange(3).
But the reasoning in the latter case was disapproved in A.G. vs Great Eastern Rail Co.(4).
In Shutrook vs Tufnell(5) the order did not decide the matter in the litigation but referred it back to the arbitrator, though on the application on which it was made, a final determination might have been made.
The order was held to be final.
This was approved in Bozson vs Altrincham Urban Council( 6) by Lord Halsbury who declined to follow the dictum in Salaman vs Warner(2) and Lord Alverstone stated the test as follows : "Does the judgment or order as made finally dispose of the rights of the parties? This test, however, does not seem to have been applied in A. G. vs Great Eastern Urban Council(6) where an order made on an application for summary judgment under R.S.C. Ord.
14 refusing unconditional leave to defend was held not to be an interlocutory order for purposes of appeal though made on an interlocutory application.
An interlocutory order, though not conclusive of the main dispute may be conclusive as to the sub ordinate matter with which it deals.
(1) Halsbury 'S Laws of England ( 3d Etc.) Vol.
22, 742 ' 743.
(2) (3) (4) (5) (6) 689 There are also a number of decisions on the question of finality by the Privy Council and the Courts in India.
In Abdul Rehman vs D. K. Cassim & Sons(1) the test applied was that "the finality must be a finality in relation to the suit.
If after the order the suit is still a live suit in.
which the rights of the parties have still to be determined no appeal lies against it".
And the fact that the impugned order decides an important and even a vital issue is by itself not material.
if the decision on an issue puts an end to the suit, the order is undoubtedly a final one but if the suit is still left alive and has yet to be tried in the ordinary way, no finality could attach to the order.
in this case the order was clearly an order of remand which kept the entire case undecided.
This test was adopted in section Kuppuswami Rao vs The King(2) where the court also held that the words 'judgment ' and 'order ' have the same meaning whether the proceeding is a civil or a criminal proceeding.
In Mohammad Amin Brothers Ltd. vs Dominion of India(3) the Federal Court following its earlier decision adopted against the test, viz., whether the judgment or order finally disposed of the rights of the parties.
In Sardar Syedna Taher Saifuddin Saheb.v.
The State of Bombay(4), this Court applying, the test held that the appeal before it was not maintainable as the impugned order disposed of a preliminary issue regarding the validity of the Bombay Prevention of Excommunication Act, 1949.
but (lid not decide the rest of the issues in the suit.
In Jethanand and Sony vs The State of Uttar Pradesh(5) the order on.
which certificate under article 133 (1) (c) was granted was clearly an order of ' remind.
Indeed, the High Court gave leave to the parties to amend the pleadings and directed the trial court to hold a de novo trial on the amended pleadings and the issues arising therefrom and the order was said to be not a final order since the dispute between the parties still remained to be tried by the trial Court.
But these were cases where the impugned orders were passed in appeals or revisions and.
since an appeal or a revision is continuation of the original suit or proceeding the test applied was whether the order disposed of the original suit or proceeding.
11 ' it did not, and the suit or proceeding was a live one, vet to be tried.
the order was held not to be final.
Different tests have been applied.
however to orders made in proceedings independent of the original or the main proceedings.
Thus in Premchand Sastramdasv.
The State of Bihar(6) an order of the High Court dismissing an application to direct the Board of Revenue to state a case to the High Court under the Bihar Sales tax Act, 1944, was held (1) 6, I.A. 76.
(3) (5) ; (2) (4) (6) ; 690 not to be a final order on two grounds : (1) that the order was made under a jurisdiction which was consultative and standing by itself, it did not bind or affect the rights of the parties though the ultimate order which would be passed by the Board would be based on the opinion expressed by the High Court, and (2) that on a construction of article 31 of the Letters Patent of the High Court of Patna an appeal would lie to the Privy Council only in cases of orders passed by the High Court in its appellate or original jurisdiction and not the advisory jurisdiction conferred by the Act.
It is clear that though the proceeding in which the High Court passed the impugned order may be said to be an independent proceeding, one of the tests applied was that it did not determine the rights of the parties as the controversy as to the liability of the assessee still remained to be determined by the Board.
The decision in State of Uttar Pradesh vs Sujan Singh(1) does not help because the proceeding in which the impugned order was passed was assumed to be an interlocutory one arising from and during the course of the trial itself.
The question was whether the order rejecting the State 's claim of privilege from producing a certain document was a final order within the meaning of article 134(1) (c).
The criminal proceedings, said the Court, were the proceedings against the respondents for an offence under section 6(1) of the Prevention of Corruption Act, 1947.
They were still pending before the Special Judge.
In the course of those proceedings the respondents applied for the production of the document by the Union Government and that was allowed by the Court.
The order, therefore , was an interlocutory order pending the said proceedings.
It did not purport to decide the rights of the parties i.e. the State of Uttar Pradesh and the respondents, the accused.
It only enabled the accused to have the said document proved and exhibited in the case and therefore was a procedural step for adducing evidence.
The court also said that assuming that the order decided some right of the Union Government, that Government was neither a party to the criminal proceedings nor a party either before the High Court or this Court.
This decision was clearly on the footing that the respondents ' application for production of the document in which the Union Government, not a party to the trial, claimed privilege was an interlocutory and not an independent proceeding.
The question is what would be the position if (a) the application was an independent proceeding, and (b) if it affected the right of the Union Government.
The decision in Ramesh vs Patni(2) would seem to throw light on these questions.
There the Claims Officer under the Madhya Pradesh Abolition of Proprietory Rights Act, 1950 (1) [1964]7S.C.R.734.
(2) ; 691 held in an application by the appellants that a debt due by them to the respondents was a secured debt though the respondents had obtained a decree therefore.
He, accordingly, called upon the respondents to file their statement of claim as required by the Act.
The respondents filed the statement, but the officer held that it was out of time and discharged the debt.
In appeal the Commissioner held that though the Claims Officer had jurisdiction, he could not discharge the debt as action under section 22(1) of the, Act had not been taken.
The appellants thereupon filed article 226 petition alleging that the Commissioner had no jurisdiction to entertain or try the appeal.
The High Court dismissed the petition summarily.
The contention was that the High Court 's order was not a final order be cause it did not decide the controversy between the parties and did not of its own force affect the rights of the parties or put an end to the controversy.
This court observed: (1) that the word 'proceeding ' in article 133 was a word of a very wide import, (2) that the contention that the order was not final because it did not conclude the dispute between the parties would have had force if it was passed in the exercise of the appellate or revisional jurisdiction of the High Court, as an order of the High Court if passed in an appeal or revision would not be final if the suit or proceeding from which there was such an appeal or revision remained still alive after the High Court 's order, (3) but a petition under article 226 was a proceeding independent of the original controversy between the parties; the question therein would be whether a proceeding before a Tribunal or an authority or a court should be quashed on the ground of want of jurisdic tion or on other well recognised grounds and that the decision in such a petition, whether interfering or declining to interfere, was a final decision so far as the petition was concerned and the finality of such an order could not be judged by co relating it with the original controversy between the parties.
The court, however, observed that all such orders would not always be final and that in each case it would have to be ascertained what had the High Court decided and what was the effect of the order.
If, for instance, the jurisdiction of the inferior tribunal was challenged and the High Court either upheld it or did not, its order would be final.
The effect of this decision is that a writ petition under article 226 is a proceeding independent of the original proceedings between the parties; that the finality of an order passed in such an independent proceeding is not to be judged from the fact that the original proceedings are not disposed of by it but are still pending determination; that the test as to whether the impugned order determines the rights of the parties in controversy in the original proceedings instituted by one of them would not apply to a proceeding independent of such original proceedings; and that if the L2 Sup CI/68 14 692 order finally determines the controversy in such a proceeding and that proceeding is disposed of, the order is final in so far as that controversy is concerned.
Even an order ex facie interlocutory in character has been held to be final if it finally disposed of the proceeding though the main controversy between the parties remained undisposed of.
An illustration of such a case is to be found in the State of Orissa vs Madan Gopal(1).
The dispute there was whether the State Government had the power to annul or cancel leases granted by the ex proprietor whose territory had under the agreement of merger merged in the Union Territory and by reason of section 4 of the Extra Provincial Jurisdiction Act, 1949 was administered by the State of Orissa.
The respondents gave notice to the State under section 80 of the Code of Civil Procedure but apprehensive that before the prescribed period expired, the State might annul their leases filed a writ petition.
The High Court did not decide the dispute but granted a mandamus restraining the Government from taking action until the proposed suits were filed.
in an appeal against that order the State contended that the order was not final as it was for an interim relief and the dispute between the parties remained to be deter mined in the proposed suits.
Though the order had not determined the rights of the parties, this Court negatived the contention and held that the order was final as 'in view of the fact that with these orders the petitions were disposed of finally and nothing further remained to be done in respect of the petitions".
Facts similar to the facts in the present case were in Durga Prasad vs State of U.P.(2).
A complaint was filed charging the applicant with offences, inter alia under section 193 of the Penal Code. ']"he applicant filed an appeal before the Sessions Judge under section 476B of the Code of Criminal Procedure against the order filing the complaint.
The Sessions Judge held that the order was bad as section 476 under which the complaint was filed stood impliedly repealed by section 479A and set aside the order filing the complaint.
In a revision against that order, the High Court held that the Sessions Judge was not right and setting aside his order remanded the matter to him to decide it on merits.
The High Court on an application for certificate held that its order was not final as the real controversy between the parties i.e. the State and the applicant, was whether the complaint was justified.
Since that question was remitted to the Sessions Judge for determination on merits, the order was only one of remand and did not determine the aforesaid controversy.
This decision proceeds on the footing that there were two independent controversies between the parties involved in the two proceedings.
One was the complaint which charged the applicant with the offence under section 193 of the Penal Code and the other was the appeal which he (1) [1952] S.C.R. 28.
(2) A.I.R. 1960 All.
69 3 filed before the Sessions Judge alleging that the complaint was not justified and that it could not be filed under section 476 as it was impliedly repealed by section 479A of the Code of Criminal Procedure.
The order was held, not to be final because it did not determine the latter controversy viz., whether the complaint was justified and not on the ground that the controversy in the complaint that the appellant had committed the offence with which he was charged, had yet to be tried by the court.
It follows that according to the, High Court 's reasoning its order would have been final, if, instead of remanding the matter to the Sessions Judge the High Court had held either that it was justified or not justified.
This decision is in conformity with the ratio laid down in Ramesh vs Patni(1) and State of Orissa vs Madan Gopal(l).
The aforesaid discussion leads to the conclusion that when the Magistrate ordered the filing of the complaint against the appelant, the parties to that controversy were the State and the applicant and the controversy between them was whether the appellant had committed offence charged against him in that complaint.
The appeal filed by the appellant before the Additional Sessions Judge was against the order filing the complaint, the controversy therein raised being whether the Magistrate was, justified in filing it, that is to say, whether it was expedient in the interest of justice and for the purpose of eradicating the evil of false evidence in a judicial proceeding before the Court.
The controversies in the two proceedings were thus distinct though the parties were the same.
When the Additional Sessions Judge held that the complaint was justified in respect of the offence under section 205 read with section 114 and was not justified in respect of the other offences his judgment in the absence of a revision by the State against it finally disposed of that part of the controversy, i.e., that the complaint in respect of offences under sections 467 and 468 read with section 114 was not justified.
When the appellant filed re vision in respect of the complaint for the remaining offence under section 205 read with section 114 the Single Judge of the High Court dismissed that revision.
His order of dismissal disposed of that controversy between the parties and the proceeding regarding that question as to whether the complaint in that regard was justified or not was finally decided.
As observed in Ramesh vs Patni(1) the finality of that order was not to be judged by corelating that order with the controversy in the complaint, viz., whether the appellant had committed the offence charged against him therein.
The fact that that controversy still remained alive is irrelevant.
It must consequently be held that the order passed by the High Court in the revision filed by the appellant was a final order within the meaning of article 134(1) (c).
(1) ; (2) [1952] S.C.R 28.
694 Even so, the next question is whether this was a case where the High Court could have granted the certificate.
In Haripada Dey vs The State of West Bengal, (1) it was held that the High Court had no jurisdiction to grant a certificate under article 1 3 4 (1 ) (c) on a mere question of fact.
In Bab vs State of Uttar Pradesh, ( 2 ) it was again observed that the Constitution does not confer ordinary criminal jurisdiction on this Court except in cases covered by clauses (a) and (b) of article 134 which provide for appeals as of right.
The High Court before it certifies the case in cases not covered by clauses (a) and (b) of article 134 must be satisfied that it involves some substantial question of law or principle.
Only a case involving something more than mere appreciation of evidence is contemplated by the Constitution for the grant of a certificate under article 134(l ) (c) which alone applies in this case.
The question in the revision application before the High Court was whether the Magistrate was right in his conclusion that offences referred to in section 1 95 (q) (b) or (c) of the Code of Criminal Procedure appeared to have been committed in or in relation to a proceeding in his court and that it was expedient in the interest of justice to file a complaint.
Obviously, this is a question of fact and involve no substantial question of law or principle.
It seems that the certificate was issued because it appeared as if the single Judge in the language in which he passed his order meant that the High Court as a matter of law would never exercise its revisional jurisdiction in such cases.
The order, how ever, cannot mean that the High Court cannot entertain.
and decide revision applications in respect of orders passed tinder section 476 of the Code of Criminal Procedure.
What the single Judge presumably meant was that the question being one of fact only.
the High Court would not interfere particularly where there is a concurrent finding both of the Magistrate and the Sessions Judge in appeal.
The question being one of fact only and there being no substantial question of law or principle, the High Court was not competent to certify the case under article 134 (1) (c).
In this view it is not necessary to go into the contentions on merits raised by the appellant 's counsel.
The appeal is not maintainable and is dismissed.
Bhachawat, J. The Judicial Magistrate, First Class, Third ,Court Baroda made an enquiry under section 476 of the Code of Criminal Procedure and directed the.filing of a complaint ' against the appellant in respect of offences under sections 205, 467 and 468 read with section 114 of the Indian Penal Code alleged to have been committed by the appellant in relation to proceedings in his Court.
He found that there was a prima facie case for enquiry into the (1)[1956]1 S.C. R. 639.
(2) ; 695 offences and it was expedient in the interests of justice that such an enquiry should be made.
In an appeal filed after the complaint was made, the Additional Sessions Judge, while setting aside the order in respect of the offences punishable under sections 467 and 468 read with section 114, confirmed the order directing the filing of a complaint with regard to the offence punishable under section 205 read with section 114.
A revision application filed by the appellant was dismissed by the High Court.
In view of section 195(1)(b) of the Code of Criminal Procedure, a prosecution for an offence punishable under section 205 read with section 114 alleged to have been committed in relation to a proceeding in any Court cannot be launched without a complaint in writing of such Court or of a superior Court.
The effect of the order of the High Court confirming the direction for the filing of a complaint in respect of the offence is that the bar of section 195 ( 1 ) (b) is removed, and the trial of the offence can now proceed.
The appellant is still on trial.
The Court has not pronounced on his guilt or innocence, He is being tried for the offence by a competent Court and an order of conviction or acquittal is yet to follow.
The order of the High Court involves no determination of the merits of the case or of the guilt or innocence of the appellant.
From whatever point of view the matter is looked at, the order is interlocutory.
In a civil proceeding, an order is final if it finally decides the rights of the parties, see Ramchand Manjilal vs Goverdhandas Vishindas Ratanchand(l).
If it does not finally decide the rights of the parties the order is interlocutory, though it conclusively determines some subordinate matter and disposes of the proceeding in which the subordinate matter is in controversy.
For this reason, even an order setting aside an award is interlocutory, fee Croasdell and Cammell Laird & Co., Limited vs In re(2).
A similar test has been applied for determining whether an order ill a criminal proceeding is final, see section Kuppuswami Rao vs The King(: ').
For the purposes of this appeal, we do not propose to examine all the decisions cited at the bar and to formulate a fresh test on the subject.
Whatever test is applied, an order directing the filing of a complaint and deciding that there is a prima facie case for an enquiry into an offence is not a final order.
It is merely a preliminary step in the prosecution and therefore an interlocutory order.
As the order is not final, the High Court was not competent to give a certificate under article 1 34 (1) (c) of the Constitution.
The appeal is not maintainable and is dismissed.
G.C. (1) (1920) L.R. 47 I.A. 124.
(2) (3) Appeal dismissed.
| IN-Abs | After an enquiry under section 476 of the Code of Criminal procedure the Judicial Magistrate, Baroda, ordered that the appellant he prosecuted for offences under sections 205, 467 and 468 read with section 114 of the Indian Penal Code.
In Appeal the Additional Sessions Judge held that the said complaint was justified but only in respect of the offence under section 205 read with section 114.
The High Court dismissed the appellant 's revision pettion but granted a certificate under article 134(1)(c).
The appellant came to this Court.
On behalf of the respondent State it was contended that the High Court 's order dismissing the revision was not a final order as it, did not determine the complaint filed by the Magistrate nor did it decide the controversy between the parties viz., the State of Gujarat and the appellant.whether the appellant had committed the offence.
Held : (Per Wanchoo C. J. and Shelat and Vaidialingam JJ.) (i) A judgment or order may be final for one purpose and interlocutory another or final as to part and interlocutory as to part.
The meaning of the two words 'final ' and 'interlocutory ' his, therefore to be considered separately in relation to the particular purpose for which it is required However, generally speaking a judgment or order which determines the principal matter in question is termed final.
It may be final although it directs enquiries or is made on an interlocutory application or reserves liberty to apply.
[687 H; 688 A ,B] Salaman vs Warner , Standard Discount Co., vs La Grange, , A. Great Eastern Rail Co. [1879] 27 W.R,.
759, Shutrook vs Tufnell, , Bozson vs
Altrincham Urban Council, , Abdul Rehman vs The King [1947] Cassim & Sons vs 60 IA.
76, S.Kuppusami Rao vs King, , Mohammad Amin Brothers Ltd. vs Dominion of India, Sardar Svedna Taher Saifuddin Saheb vs The State of Bombay , Jethainand and Sons vs The State of Uttar Pradesh ; , Premchand Satramadas vs State of Bihar ; , State of Uttar Pradesh vs Sujan Singh, [1964] 7 S.C.R. and State of Orissa vs Madan Gopal [1952] S.C.R. 28, referred to.
(ii) The order of the High Court in the present case disposed of the controversy whether the filing of the complaint against the appellant was justified, The finality of that order was not to be judged by co relating that order with the controversy in the controversy viz., whether the appellant had committed the offence charged against him therein.
The fact 686 that that controversy remained alive was irrelevant.
Consequently the order passed by the High Court in the revision filed by the appellant was it final order within the meaning of article 134(1)(c).
[693 D H] Ramesh vs Patni, ; , relied on.
(iii) The High Court, before it certifies the case in cases not covered by clauses (a) and (b) of article 134(1)(c), must be satisfied that it involves some substantial question of law or principle.
Only it case involving something more than mere appreciation of evidence is contemplated by the Constitution for the grant of a certificate under article 134(1) (c) The question in the revision petition before the High Court was whether the filing of a complaint against the appellant was expedient in the interest of justice.
This was a question of fact and therefore the grant of certificate was not justified.
[694 B F] Haripada Dey vs Slate of West Bengal, ; , and Babu State of Uttar Pradesh, relied on.
Per Bachawat and Mitter, JJ.
(dissenting) : Whatever test is applied,in order directing the filing of a complaint and deciding that there is a prima facie case for enquiry into an offence is not a final order.
It is merely a preliminary step in the prosecution and therefore and, interlocutory order.
As the order is not final, the High Court was not competent to grant a certificate under article 134(1)(c).
[695 B] section Kuppuswamy Rao vs The King , relied on.
|
Appeal No. 495 of 1965.
Appeal by special leave from the judgment and decree dated December 22, 1959 of the Punjab High Court, Circuit Bench at Delhi in Regular First Appeal No. 78 D of 1953.
Rameshwar Dayal and A. D. Mathur, for the appellants.
Veda Vyasa,K. K. fain and H. K. Puri, for respondent No. 6.
The Judgment of the Court was delivered by Bhargava, J.
The first appellant, Messrs. Delhi Motor Com pany, is a partnership firm (hereinafter referred to as "the firm"), of which the other four appellants Nos. 2 to 5 are partners.
Respondent No. 6, New Garage Ltd., is a private limited company (hereinafter referred to as "the Company"), of which respondent 722 No. 1 was the Managing Director, and respondents Nos. 2 to 5 were members of the Board of Directors.
The firm brought a ' suit against the Company for possession of part of the building known as "Scindia House" situated in Connaught Circus, New Delhi, on the basis of an agreement of subleases Possession was claimed of a portion of the Show Room on the ground floor, of 1/2 portion of the Balcony, and another portion of the premises which were, in the year 1950, in the possession of Messrs. Kanwar Brothers Ltd. The case put forward by the firm was that the Company was the tenant of Scindia House and was in occupation of the Show Room and other parts of the building, while a, part of it was occupied by Messrs. Kanwar Brothers Ltd. as sub lessee of the Company.
According to the firm, the agreement to sub lease, or the sub lease on the basis of which possession was claimed by the firm from the Company, is evidenced by three documents, the first one of which is letter, Ext.
P. 1, dated 20th February, 1950, written by K. section Bhatnagar, appellant No. 2, on behalf of the firm, to U. A. Basrurkar, respondent No. 1, who was the Managing Director of the Company.
The second document is letter, Ext.
P. 2, dated 22nd February, 1950, written by respondent No. 1 Basrurkar to appellant No. 2 Bhatnagar; and the third document is Ext.
P. 3, which purports to be notes on agreement arrived at between Basrurkar and Bhatnagar on 22nd February, 1950.
The case of the firm was that, though these documents did not purport in so many words to be an agreement of sub lease.
to be granted by the Company to the firm, in substance and in fact, the agreement arrived at was of a sub lease in respect of the premises mentioned above.
Since, under the Delhi and Ajmer Merwara Rent Control Act 19 of 1947, if a sub lease had been granted by the Company to the firm without the consent of the landlord, the Company would have been liable to ejectment from the premises, the agreement was not made as directly evidencing a sub lease, so that the landlord should not have an opportunity of suing the Company for ejectment.
In February, 1950, when the agreement evidenced by these three documents was arrived at, respondent No. 1, U. A. Basrurkar as Director did not have the authority to enter into this transaction on behalf of the Company with the firm and, consequently on 22nd March, 1950, the Board of Directors of the Company, by a resolution Ext.
P. 9, authorised the Managing Director to enter into this transaction.
Thereafter, the firm came into possession of two portions of the leased property and started its business in them with effect from 1st April, 1950.
The two portions of the leased property, which came into the possession of the firm, were a portion of the ShowRoom on the ground floor and a half portion of the Balcony on the first floor.
The agreement contained in these letters and, 723 documents also required parties to carry out some other obligations and, according to the firm, it complied with them.
In order to avoid the, liability of the Company for ejectment under the Delhi and Ajmer Merwara Rent Control Act, 1947, the agreement was sought to be given the.
form of a partnership; and in order to enable the Company to enter into such a transaction, a special resolution Ext.
P. 4 was passed on 24th November, 1950 at an Extra ordinary General Meeting of the Share holders of the Company amending the Memorandum of Association of the Company.
This amendment was subsequently approved by the District Judge and was registered with the Registrar of Companies.
So far as the landlord is concerned, lie was not a party to these t ransactions, though, on 5th April, 1951, the landlord gave a letter Ext.
P. 22 recognising the possession of the firm, but he specifically stated in that letter that the firm would be a licensee and not a sub lessee.
One other term in the, agreement arrived at was that appellant No. 2, K. section Bhatnagar, was to be taken as a Director of the Company and he was in fact included in the Directors of the Company thereafter.
The further case of the firm was that when Messrs. Kanwar Brothers Ltd. vacated the portion of the premises which was included in the sub leases the Company did not give possession of that portion of the leased property to the firm and also started obstructing the use of those portions of the property by the firm of which the firm had secured possession by 1st April, 1950.
A stage came when the firm was completely dispossessed from the property ]eased and, ultimately, after giving notices, the firm instituted a suit on 18th June, 1952.
The principal prayer in the suit was for delivery of possession in respect of all the three portions of the leased property.
Then, there was a claim for damages to the extent of Rs. 10,000/ in respect of loss incurred on account of dispossession and obstruction in use of the leased property at the instance of the Company.
Injunctions were also sought restraining the Company from interfering with the rights of the firm and with their uninterrupted use of the leased property.
There were further prayers for other consequential injunctions which need not be described in detail.
On behalf of the Company and its Directors, the plea put forward was that there was no agreement of sub lease or a completed sub lease between the Company and the firm and that, in fact, all that took place were negotiations for entering into a partnership.
Even the agreement for partnership was never completed, so that the firm was not entitled to any relief at all.
The trial Court held that the contract evidenced by these documents was an agreement for a sub lease and, since this agreement did not require registration, the firm was entitled to the 724 reliefs claimed on the basis of this agreement.
The Company and its Directors appealed to the High Court of Punjab and that Court held that these documents constituted a completed lease or at least an agreement to lease falling within section 2(7) of the Indian Registration Act and, since the lease or the agreement to lease was evidenced by documents in writing and they were unregistered, the lease or the agreement to lease could not be enforced.
On this sole ground, the High Court allowed the appeal and dismissed the suit of the firm.
The firm has now come up in, appeal to this Court by special leave.
The first point urged on behalf of the firm was that, in this case, there was a completed sub lease, but it did not require registration for Iwo reasons.
The first reason advanced was that the lease was not evidenced by the documents Exts.
P. and P. 3 only, but was, in fact, completed subsequently when, after the resolution of the Board of Directors of the Company, the Company gave possession of the leased property to the firm on or about the 1st April, 1950.
The second reason was that, in any case, this lease was not a lease from year to year or for any term exceeding one year or reserving a yearly rent, so that section 107 of the was not applicable and registration was not compulsory.
These submissions fail, because the lease, as relied upon by the firm, has to be held to be a lease of immovable property for a term exceeding one year, and such a lease is fully governed by section 107 of the .
The firm itself came forward with the case that the rights that were being claimed were under a lease and the lease was in respect of immovable property consisting of the three portions of the Scindia House which have been mentioned above.
It was, however, urged that this lease was not for any fixed term at all and was for an indefinite period, so that it could not be held to be a lease from year to year either.
It was further submitted that yearly rent had not been reserved in respect of this lease.
Even these submissions were made on the basis that the terms of the lease have to be ascertained from the three documents Exts.
P. and P. 3 which were relied upon by the firm to claim the relief in the suit.
It appears to us that, if these documents are properly interpreted, an inference necessarily follows that the lease, if any, brought into existence by these documents was certainly for a period exceeding one year.
Since reliance was placed on these documents on behalf of the firm to urge that there was a completed lease, learned counsel for the firm was asked to point out the provision which fixed the rent payable in respect of the leased property.
The only provision, on which he relied to show that rent had, in fact, been agreed upon the fixed, was para 1 of Ext.
P. 3 which 725 contains notes on agreement, dated 22nd February, 1950.
That paragraph is as follows : "Profit share of party No. 1 would be 10% of net profit of New Delhi business only and will be settled at the end of the 1st closing of the financial year which would be 30th June, 1951.
" Accepting this submission that this paragraph lays down the rent payable, it is clear that, under it, the rent payable for the first time would be 10 % of the net profits earned by the firm in its New Delhi business up to 30th June, 1951.
The period would naturally begin on the date on which the lease commenced.
That date, according to the firm itself, was 1st April, 1950.
From these facts it follows that when the rent is to be paid for the first time, it would be an amount of 10% of the net profits earned by the firm in its New Delhi business between 1st April, 1950 and 30th June, 1951, and, naturally enough, the rent will be in respect of the same period.
This term, therefore, clearly laid down that the very first payment of rent was to be for a period of one year and three months, so that, even though so further period for the continuance of the lease after 30th June, 1951 was laid down, the lease at least made rent pay able for the first period of fifteen months.
The lease was, therefore, at least for a period of fifteen months and, consequently, for a period exceeding one year.
Section 107 of the was, thus, clearly applicable and such a lease could not have been validly made, except under a registered instrument.
Admittedly, there was no registration of the documents which constituted the lease and consequently, the firm could not claim any rights on the basis of this lease evidenced by unregistered documents.
Learned counsel tried to urge that, since in these documents no definite period for the lease was mentioned, we should hold that section 106 of the was applicable and the lease being in respect of immovable property for purposes other than agricultural or manufacturing must be deemed to be a lease from month to month.
We are unable to accept this submission, because none of the documents, on which reliance has been placed on behalf of the firm to prove the lease, contains any clause indicating that the tenancy was to be from month to month or the rent was payable monthly.
In fact, the indication from para 1 of Ext.
P. 3 quoted above is that the rent was to be payable annually, so that the contract itself seems to give an indication that it was to be a lease from year to year and annual rent was payable.
These circumstances, however, are immaterial, because we have already indicated earlier our 726 finding that this lease was at least for a minimum period of 15 months and, consequently, section 107 of the becomes applicable, irrespective of the question whether it was a lease from month to month or from year to year.
The High Court was, therefore, quite correct in holding that on the basis of this lease the reliefs claimed by the firm could not be granted to it.
In these circumstances, an argument was put forward on behalf of the firm that, though this contract to lease had not been registered, the firm could claim possession under it in view of the provisions of section 53A of the , because, in this case, the Company would be debarred from enforcing against the firm any right in respect of that property of which the firm had already taken possession, viz., part of the Show Room and a portion of the Balcony.
In our opinion, this argument proceeds on an incorrect interpretation of section 53A. because that section is only meant to bring about a bar against enforcement of rights by a lessor in respect of property of which the lessee had already taken possession, but do not give any right to the lessee to claim possession or to claim any other rights on the basis of an unregistered lease.
Section 53A of the is only available as a defence to a lessee and not as conferring a right on the basis of which the lessee can claim rights against the lessor.
is interpretation of section 53A was clearly laid down by their Lordships of the Privy Council in Probodh Kumar Das and Others vs Dantra Tea Company Limited & Others(1).
Learned counsel for the firm, however, relied on a decision of the Allahabad High Court in Ram Chander vs Maharaj Kunwar and Others(2).
In that case.
the lessee, under a registered lease which was detective and (lid not comply with the requirement of section 107 of the , brought a suit against a subsequent purchaser of the house of the lessor on the allegation that the purchaser ha(], in collusion with the Municipal Board, procured the demolition or a portion of the house, and claimed a relief of perpetual injunction retraining the purchaser from demolishing the house or otherwise interfering with the lessee 's rights as such.
and for restoration of the demolished portion at the purchaser 's cost.
The High Court, in allowing the claim of the lessee, held "Now, in the present case, what is it that the plaintiff is attempting to do ? He is not attempting to set up a transfer which is he has not instituted a suit for the declaration of the validity of the transfer; (1) I.L.R. [1939] All.
(1) 66 I.A. 293.
727 he has not instituted a suit in which he claims an order against the defendant directing him to perform any convenant of the transfer.
What he is seeking to do is to debar the defendants from interfering with his possession into which he has entered with the consent of his transferor after the execution of a transfer in his favour.
He is, in other words, seeking to defend the rights to which he is entitled under section 53A of the .
The defendants Nos. 1 and 2 in demolishing part of the property of which the plaintiff had obtained possession were acting suo motu with the aid of the Municipal Board of Moradabad.
It is the defendants who are seeking to assert rights covered by the contract.
The plaintiff seeks merely to debar them from doing so; the plaintiff is seeking to protect his rights.
In a sense, in the proceedings he is really a defendant and we see nothing in the ;terms of section 53A of the to disentitle him from maintaining the present suit.
" Without expressing any opinion as to the correctness of the view taken by the Allahabad High Court, we have to point out that the interpretation put on section 53A of the even by that Court is of no assistance to the firm in the present case.
In this case, the firm is seeking to enforce rights under the unregistered lease and to seek a decree for possession against the lessor.
The Allahabad High Court in that case proceeded on the basis that the plaintiff of that suit was in the position of a defendant and was only seeking to protect his right,; by resort to the provisions of section 53A of the , so that no principle was laid down by the High Court that section 53A is available to a lessee otherwise than as a defence.
We are unable to accept the submission that the judgment in that case should be read as recognising a right of a lessee to enforce rights on the basis of an unregistered lease by resort to that provision, of law.
In, fact, if that case be interpreted as laying down such a principle, it must be held that it.
has been directly over ruled by the decision of the Privy Council in the case of Probodh Kumar Das and Others(1) and is not correct. 'Mat decision may be justified, if at all, on the basis that, though the lessee in that case was a plaintiff, he was actually seeking protection under section 53A of the by being in the real position of a defendant.
On the question whether a person, who sues as a plaintiff, may still be regarded as defending the rights 'Sought to be conferred upon him by an unregistered deed, we need express no opinion.
In the present case before us, the claim, which was put forward by the firm in the plaint, can by (1) 66 I.A. 293.
728 no means be construed as a mere defence of the firm 's rights.
What the firm is actually seeking to do is to enforce the rights under the lease and, in such a case, section 53A of the is clearly inapplicable.
Reliance was also placed on behalf of the firm on the deci sion of this Court in Ram Kumar Das vs Jagadish Chandra Deb Dhabal Deb and Another(1), in which case also, a registered Kabuliyat executed by the lessee did not comply with the requirements of section 107 of the , and on the facts of the case it was held that, though under the Kabuliyat the land was leased out for a period of ten years, the lease in fact must be presumed to be from month to month under section 106 of that Act.
The facts of that case were, however, quite different.
In that case, the terms of the lease were not ascertained from the Kabuliyat in which the period of lease was fixed at 10 years.
The terms of the lease were ascertained from other documents, including receipts for rent paid by the lessee to the lessor, and on the basis of that evidence it was found that a lease had come into existence under which rent was being paid monthly.
No such circumstances appear in the case before us.
In fact, it was at no stage pleaded and no evidence was led to show that, independently on the three documents Exts.
P. 1, .P. 2 and P. 3, there was material from which it could be inferred that a lease from month to month had come into existence between the firm and the Company.
No such point was urged either in the trial Court or before the High Court and no such finding of fact exists.
In these circumstances, section 106 of the would clearly be inapplicable, and the lease has to be held to be for a period exceeding one year for the reasons given by us above.
In the alternative, learned counsel for the firm urged that the firm was entitled to contend that these documents Exts.
P. 1 to P. 3 constituted an agreement in writing to lease the property in suit and could claim specific performance of this contract.
There are three reasons why we are unable to accept this submission.
The first is that, in the plaint itself, no specific performance of contract was claimed on behalf of the firm.
Though the pleadings included averments about this contract, the relief claimed was for a decree for possession, damages and injunctions.
These reliefs could only be claimed on the basis of a completed lease and could not be the reliefs in a suit for specific performance of a contract to lease.
The second reason is that, as mentioned by us earlier, the firm itself came forward with the case that the entire contract was not included within these three documents Exts.
P. 1 to P. 3, because, at the stage when (1) ; 729 these documents came into existence, the Managing Director of the Company had no authority to enter into such a contract on behalf of the Company and that the contract was only completed subsequently when the Board of Directors passed a resolution authorising the Managing Director to enter into such a contract and actual possession of part of the property was given on or about the 1st April, 1950.
The contract being a contract to lease immovable property and unregistered, specific performance of it could not be sought, except under section 27A of the Specific Relief Act.
That section, however, applies only if the entire contract is made in writing, while, according to the case put forward on behalf of the firm itself, ' the entire contract was not in writing.
The third reason why specific performance of the contract cannot be claimed by the firm under section 27A of the Specific Relief Act is that such a claim under that provision of law is only available to a lessee, when the lessee, in part performance of the contract, has taken possession of the property, or, being already in possession, continues in possession in part performance of the contract.
In the present case, the pleas put forward on behalf of the firm itself show that the firm never got possession of the entire property to which the contract related.
Possession was taken by the firm of only two items of property, while the firm never obtained possession of the third item of property which was in possession of Messrs. Kanwar Brothers ' Ltd. Clause (b) of section 27A can apply only if possession of the entire property, which is the subject matter of the contract of lease, has been taken by the lessee.
The pleadings in the plaint show that, even though the third item of property was vacated by M/s. Kanwar Brothers Ltd. in December, 1950, possession of that property was never obtained by the firm.
To meet this objection, it was urged by learned counsel on behalf of the firm that we should interpret section 27A of the specific Relief Act as being applicable even if possession of part of the property, which is the subject matter of the contract, is obtained by the lessee; but we are unable to accept this submission.
The language used makes it clear that possession must be obtained of the entire property to which the contract relates.
In this connection, it is significant to note that under section 53A of the , a transferor is barred from interfering with the rights of the transferee, even if the transferee gets possession of any part of the property sought to be trans ferred by the unregistered document of transfer.
That section specifically uses the expression "taken possession of the property or any part thereof", whereas the words used in section 27A of the Specific Relief Act are : "taken possession of the property".
The omission of the words "any part thereof" in section 27A of the Specific Relief Act when compared with the provision in section 53A of the 730 clearly brings out the position that the former section is only applicable when possession of the entire property, which is the subject matter of the contract, has been taken, while the latter section is made applicable even if the lessee takes possession of any part of the property.
Consequently, on the facts of the present case, the firm could not claim specific performance of the contract under section 27A of the Specific Relief Act, even if such a claim had been put forward in the plaint.
This alternative contention also, therefore, fails.
The appeal is, consequently.
dismissed, but, in view of the cirucumstances of this case and the conduct of the parties relating to the contract, we direct parties to bear their own costs of the appeal.
G.C. Appeal dismissed.
| IN-Abs | Certain documents were executed between the appellant firm and the respondent company in respect of premises of which the latter was a tenant.
According to the appellant these documents were intended to effect a sublease of three portions of the premises in question though in order to avoid consequences under the Delhi and Ajmer Merwara Rent Control Act 10 of 1947 they apparently purported to create a partnership.
The firm was actually given possession of two of the three portions thus given to it.
After some time the firm was dispossessed by the company of the premises occupied by it and it therefore filed a suit claiming delivery of possession.
In defence the company contended that the documents relied upon by the firm did not evidence either a sub lease or a partnership.
According to it there were negotiations for a partnership which never fructified.
The trial court held that the documents executed by the parties evidenced an agreement for a sub lease and since the agreement did not require registration the firm was entitled to the reliefs claimed by it on the basis of the agreement.
In appeal by the company the High Court held that the documents constituted a completed lease of at least an agreement to lease falling within section 2(7) of the Indian Registration Act, and since the lease or the agreement to lease was evidenced by documents in Writing and they were unregistered, the lease or the agreement to lease could not be enforced.
On this sole ground, the High Court allowed the appeal and dismissed the suit of the firm, which thereupon, appealed to this Court.
HELD : (i) The three documents in question were relied on by the appellant firm itself as evidence of the lease and the terms thereof; the firm could not therefore be heard to say that these documents did not represent the completed lease and did not, for that reason, require registration.
[724 C H] (ii) According to the firm 's case based on the said documents rent in the first instance was payable to.
the company in the shape of 10% of the profits of the firm for the period 1st April 1950 to 30th June 1951.
Therefore the lease that came into existence through these documents was certainly for more than a year.
Section 107 of the was thus clearly applicable and such a lease could not have been validly made except under a registered instrument.
Admittedly there was no registration of the documents which constituted the lease, and, consequently, the firm could not claim any rights on the basis of this lease evidenced by unregistered documents.
[725 B F] (iii) Merely because the ]case was for an indefinite period and related to immovable property which was not used for agricultural or manufacturing purposes it could not be held to be a lease from month to month 721 to which section 106 of the was applicable.
There was nothing in the terms of the lease which showed that it was from month to month.
[725 F H] Ram Kumar Das vs Jagadish Chandra Deb Dhabal Deb & Anr. ; , distinguished.
(iv) Section 53A of the is only meant to bring about a bar against enforcement of rights by a lessor in respect of property of which the lessee had already taken possession, but does not give any right to the lessee to claim possession or to claim any other right on the basis of an unregistered lease.
Section 53A is only available PA a defence to a lessee and not as conferring a right on the basis of which the lessee can claim rights against the lessor.
[726 C E] In the present case the claim which was put forward by the firm in the plaint, could by no means be construed as a mere defence of the firm 's rights.
What the firm was actually seeking to do was to enforce the rights under the lease and, in such a case, section 53A of the was clearly inapplicable.
[727 H 728 A] Probodh Kumar Das & Ors.
vs Dantmara Tea Company Ltd.,& Ors.
I.A. 293, relied on.
Ram Chander vs Maharaj Kunwar & Ors., I.L.R. 1939 All.
distinguished.
(v) Specific performances of the lease could not be enforced because (a) In the plaint no specific performance was claimed by the appellant, (b)The appellant 's own case was that the entire contract was not included in the three written documents, and section 27A of the Specific Relief Act under which only the contract could be enforced requires the whole contract to be in writing; (c) The difference between the words of section 53A of the and section 27A of the Specific Relief Act brings out clearly that the latter is applicable when the entire property under contract has been taken possession of by the lessee in part performance of the contract.
In the present case only two out of the three portions of the premises leased out to it were taken possession of by the appellant.
[728 G H, 729 H, 730 A B]
|
Appeal No. 240 of 1967 Appeal from the judgment and order dated December 22, 1966 of the Delhi High Court in Letters Patent Appeal No. 1 of 1966.
Appellant in person.
Avadh Behari, for respondents Nos. 1 and 2.
P. Ram Reddy, and A. V. Rangam, for respondent No. 3.
Purshottam Trikamdas and 1.
N. Shroff, for respondent No. 4.
Purshottam Trikamdas and section P. Nayar, for respondent No. 5.
The Judgment of the Court was delivered by Shelat, J.
This appeal by certificate raises the question as to ,he scope of entries 77 and 78 in List I and entry 26 in List III of the Seventh Schedule to the Constitution.
The question arises in the following manner On a complaint by the Subordinate Judge that the appellant, while taking inspection of the Court record in an arbitration matter pending before his Court, had mutilated the copy of a notice in that record by wilfully tearing a portion thereof, the District Judge, Delhi filed a report against the appellant before the Delhi 711 State Bar Council for taking action under the , 25 of 1961 (hereinafter referred to as the Act).
The Disciplinary Committee of the said Council after hearing the appellant found him guilty of professional misconduct and ordered his suspension for one year under section 35 (3) (c) of the Act.
An appeal filed by the appellant under section 37 before the Bar Council of India failed.
Thereupon he filed an appeal against the said order under section 38 in this Court.
The appeal was placed for preliminary hearing and summarily rejected at that stage.
The appellant thereafter filed a writ petition in the High Court of Punjab (Delhi Bench) for quashing the said order of suspension, the order of the appellate authority confirming the said order and the order of this Court dismissing the appeal.
He thereafter filed a review petition against the dismissal of his appeal contending, inter alia, that rule 7 of O. 5 of the Supreme Court Rules, was ultra vires section 38 of the Act.
The review petition also was dismissed.
At the hearing of his writ petition, the appellant, inter alia, contended that section 38 of the Act was ultra vires article 138(2) of the Constitution inasmuch as the appellate jurisdiction conferred on this Court by section 38 fell under entry 26 in List III and that there being no special agreement between the Government of India and the Government of any State as required by clause 2 of article 138 sec.
38 was invalidly enacted.
He also contended that O. 5 r. 7 of the Supreme Court Rules under which the appeal was placed for preliminary hearing was Ultra vires section 38 as the said rule cut down and impaired his right of appeal under section 38.
Lastly, he contended that the decision of the Bar Council of India was bad for the several grounds alleged by him in his writ petition.
The learned Single Judge who heard the writ petition rejected these contentions and dismissed it.
As regards the first contention he held that clause 2 of article 1 38 did not apply and that it was clause 1 of that Article which was applicable as the subject matter of the fell under entry 77 of the Union List.
As to the other two contentions he held that rule 7 of the O. 5 was valid and did not contravene section 38; that the Bench before which the appeal came up for preliminary hearing had heard the appellant 's counsel and in addition had called for production of a document desired by him.
There was no affidavit by Counsel appearing for him that he was not heard on any point which he desired to contend.
He also held that the appellant had specifically raised the contention as to the vires of the said rule in his review petition and that that contention having been rejected, the appellant could not reagitate it in the writ petition.
He also held that the appellant was similarly not entitled to reagitate the question as to the merits of the said order of suspension.
the same having been considered and rejected at the time of the preliminary hearing of his appeal.
Aggrieved by the order of the learned Single Judge, 712 the appellant filed a Letters Patent Appeal.
At the hearing of that appeal the appellant 's counsel conceded that he could not raise, any contention on the merits of the case in view of this Court having disposed of those very contentions and that therefore he would confine his arguments only to the question of the vires of section 38.
The learned Judges who heard that appeal were of the view (1) that the Act was a composite piece of legislation.
that it did not, as held by the learned Single Judge, fall exclusively under entries 77 and 78 of List I but that it fell partly under those entries and partly under entry 26 of List 111; (2) that article 138 had no application as the jurisdiction to entertain and try appeals under section 38 was not 'further jurisdiction ' within the meaning of that Article; that the jurisdiction to hear such appeals was already vested in this Court under article 136 even without section 38 as the Bar Councils of Delhi and of India were quasi judicial tribunals and that therefore this Court had jurisdiction to entertain and try appeals against their orders; and (3) that the only effect of section 38 was that by providing for an appeal Parliament removed the hurdle of an appellant having to obtain special leave under article 136.
On this reasoning the learned Judges dismissed the contention as to the vires of section 38.
Dismissing the appeal the learned Judges observed : "There is no bar to the Parliament legislating with respect to jurisdiction and powers of the Supreme Court subject to the express provisions of the Constitution like articles 132 and 134.
When a provision for appeal to the Supreme Court is made in a statute, within the sphere covered by articles 132 to 136 it is not conferment of further power and jurisdiction as envisaged by article 138, such power would be exercisable by reason of entry 77 of List I".
In this appeal the appellant challenges the correctness of this view.
The question which falls for consideration is one of inter pretation of entries 77 and 78 of List I and entry 26 of List 111.
If it is held that it is entry 26 of List III under which the Act was enacted, clause 2 of article 138 would apply and in that case a special agreement with the State Government becomes a condition precedent to the enactment of section 38 of the Act.
In that case the difficulty would be to reconcile entries 77 and 78 of List I with entry 26 of the List III.
It is a well recognised rule of construction that the Court while construing entries must assume that the distribution of legislative powers in the three Lists could not have been intended to he in conflict with one another.
A general power ought not to 713 be so construed as to make a nullity of a particular power conferred by the same instrument and operating in the same field when by reading the former in a more restricted sense, effect can be given to the latter in its ordinary and natural meaning.
It is, therefore, right to consider whether a fair reconciliation cannot be effected by giving to the language of an entry in one List the meaning which, if less wide than it might in another context bear, is yet one that can properly be given to it and equally giving to the language of another entry in another List a meaning which it can properly bear.
Where there is a seeming conflict between one entry in one List and another entry in another List, an attempt should always be made to avoid to see whether the two entries can be harmonised to avoid such a conflict of jurisdiction.
(C.P. & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938(1); Citizens Insurance Company of Canada vs Parsons (2) Bhola Prasad vs Emperor(3); Governor General in Council vs Province of Madras(4), and State of Bombay vs Balsara(5).
It is in the background of these principles of construction that we must proceed to examine the content of the various relevant entries dealing with the constitution and Organisation of courts and their jurisdiction and powers and the scheme envisaged thereunder.
Entries 77 and 78 of List I read as under : "77.
Constitution, Organisation, jurisdiction and powers of the Supreme Court (including contempt of such Court) . persons entitled to practise before the Supreme Court." "78.
Constitution and Organisation (including vacations) of the High Courts . ; persons entitled to practice before the High Courts.
" Entry 95 of List I reads as follows "95.
Jurisdiction and powers of all courts, except the Supreme Court, with respect to any of the matters in this List; admiralty jurisdiction.
" Entry 65 of List II reads "65.
Jurisdiction and powers of all courts, except the Supreme Court, with respect to any of the matters in this List.
" Entry 46 in List III reads "46.
Jurisdiction and powers of all courts, except the Supreme Court, with respect to any of the matters in this List.
" (1) (2) [1881] 7 A.C. 96.
(3) (4) (1945] 72 I.A. 91.
(5)[1951] S.C.R. 68 ' ).
714 The scheme for conferring jurisdiction and powers on courts is (a) to avoid duplication of Courts, Federal and State Courts as.
in the Constitution of the United States, (b) to enable Parliament and the State Legislatures to confer jurisdiction on courts in respect of matters in their respective lists except in the case of the Supreme Court where the legislative authority to confer jurisdiction and powers is exclusively vested in Parliament.
In the case of the Concurrent List both the legislatures can confer jurisdiction and powers on courts except of course the Supreme Court depending upon whether the Act is enacted by one or the other.
Entry 3 in List 11 confers legislative powers on the States in the matter of "Administration of Justice; constitution and organisation of all courts, except the Supreme Court and the High Courts; officers and servants of the High Court; procedure in rent and revenue courts; fees taken in all courts except the Supreme Court.
" It is clear that except for the constitution and the Organisation of the Supreme Court and the High Courts the legislative power in the matter of administration of justice has been vested in the State Legislatures.
The State Legislatures can, therefore enact laws, providing for the constitution and organisation of courts except the Supreme Court and the High Courts and confer jurisdiction and powers on them in all matters, civil and criminal, except the admiralty jurisdiction.
It would, of course, be open to Parliament to bar the jurisdiction of any such court by special enactment in matters provided in Lists I and III where it has made a law but so long as that is not done the courts established by the State Legislatures would have jurisdiction to try all suits and proceedings relating even to matters in Lists I and 111.
Thus, so far as the constitution and organisation of the Supreme Court and the High Courts are concerned, the power is with Parliament.
As regards the other courts, Entry 3 of List 11 confers such a power on the State Legislatures.
As regards jurisdiction and powers, it is Parliament which can deal with the jurisdiction and powers of the Supreme Court and the admiralty jurisdiction.
Parliament can confer jurisdiction and powers on all courts in matters set out in List I and List III where it has passed any laws.
But under the power given to it under entry 3 in List 11, a State Legislature can confer jurisdiction and powers on any of the courts except the Supreme Court in respect of any statute whether enacted by it or by Parliament except where a Central Act dealing with matters in Lists I and II otherwise, provides.
That these entries contemplate such a scheme was brought out in State of Bombay vs Narothamdas(1), where it was contended that the Bombay City Civil Court Act, 40 of 1948, constituting the said Civil Court as an additional court was ultra vires the Provincial Legislature as it conferred jurisdic (1) ; 715 tion on the new court not only in respect of matters in List 11 of the Seventh Schedule of the Government of India Act, 1935 but also in regard to matters in List I such as promissory notes in item 8 of List I, Rejecting the contention it was held that the impugned Act was a law with respect to a matter enumerated in List 11 and was not ultra vires as the power of the Provincial Legislature to make laws with respect to "administration of justice" and ."constitution and Organisation of all courts" under item 1 of List II was wide enough to include the power to make laws with regard to the jurisdiction of courts established by the Provincial Legislature; that the object of item 53 of List I, item 2 of List 11 and item 15 of List III was to confer such powers on the Central and the Provincial Legislatures to make laws relating to the jurisdiction of courts with respect to the particular matters that are referred to in List I and II respectively and the Concurrent List, and that these provisions did not in any way curtail the power of the Provincial Legislature under item 1 of List 11 to make laws with regard to jurisdiction of courts and to confer jurisdiction on courts established by it to try all causes of a civil nature subject to the power of the Central and Provincial Legis latures to make special provisions relating to particular subject,,.
referred to in the Lists.
It may be mentioned that item 53 in ,List 1, items 1 and 2 in List 11 and item 15 in List III in the Seventh Schedule to the 1935 Act more or less correspond to entries 77, 78 and 95 in List 1, entries 3 and 65 in List 11 and entry 46 in List III of the Seventh Schedule to the Constitution.
This being the scheme with regard to the constitution and Organisation of courts and their jurisdiction and powers let us next proceed to examine entry 26 in List III.
Entry 26, which is analogous to Item 16 in List III of the Seventh Schedule to the 1935 Act, deals with legal, medical and other professions but is not concerned with the constitution and Organisation of courts or their jurisdiction and powers.
These, as already stated, are dealt with by entries 77, 78 and 95 in List 1, entries 3 and 65 in List II and entry 46 in List III Enactments such as the , the , the , the and the , all Central Acts, would fall under the power to deal with professions under entry 26 of List III in the Seventh Schedule to the Constitution and item 16 of List III of 1935 Act.
It will, however, be noticed that entries 77 and 78 in List I are composite entries and deal not only with the constitution and Organisation of the Supreme Court and the High Courts but also with persons en titled to practise before the Supreme Court and the High Courts.
The only difference between these two entries is that whereas the jurisdiction and powers of the Supreme Court are dealt with in 716 entry 77, the jurisdiction and powers of the High Courts are dealt with not by entry 78 of List I but by other entries.
Entries 77 and 78 in List I apart from dealing with the constitution and Organisation of the Supreme Court and the High Courts also deal with persons entitled to practise before the Supreme Court and the High Courts.
This part of the two entries shows.
that to the extent that the persons entitled to practise before the Supreme Court and the High Court are concerned, the power to legislate in regard to them is carved out from the general power relating to the professions in entry 26 in List III and is made the exclusive field for Parliament.
The power to legislate in regard to persons entitled to practise before the Supreme Court and the High Courts is thus excluded from entry 26 in List III and is made the exclusive field for legislation by Parliament only [Re : Lily Isabel Thomas(l) and also Durgeshwar vs Secretary, Bar Council, Allahabad 2 ) ].
Barring those entitled to practise in the Supreme Court and the High Courts, the power to legislate with respect to the rest of the practitioners would still seem to be retained under entry 26 of List III.
To what extent the power to legislate in regard to the legal profession still remains within the field of entry 26 is not the question at present before us and therefore it is not necessary to go into it in this appeal.
The was passed to amend and consolidate the law relating to legal practitioners and to provide for the constitution of Bar Councils and an All India Bar.
Section 2(a) and (i) define an 'advocate ' and a 'legal practitioner '.
Chapter II deals with the establishment of Bar Councils and their functions, viz., to admit persons on its roll, to prepare and maintain such roll, to entertain and determine cases of misconduct against advocates on its roll etc.
Section 7 lays down the functions of the Bar Council of India, that is, to prepare and maintain a common roll of advocates, to lay down the standard% of professional conduct and etiquette, to lay down procedure to be followed by its disciplinary committee and the disciplinary committee of each State Bar Council, to exercise general supervision and control over State Bar Councils etc.
Chapter III deals with admission and enrolment of advocates.
Section 16(1) provides that there shall be two classes of advocates, senior advocates and other advocates.
Chapter IV deals with the right,to practise.
Section 29 provides that subject to the provisions of this Act and the rules made thereunder, there shall, as from the appointed day, be only one class of persons entitled to practise the profession of law, namely, the advocates.
Section 30 provides that subject to the provisions of this Act, every advocate whose name is entered in the common roll shall be entitled as of right to practise throughout the terri (1) ; ,236.
(2) A.I.R. 1954 All.
717 tories to which this Act extends in all courts including the Supreme Court and before any tribunal or any other authority before whom such advocate is by or under any law for the time being in force entitled to practise.
Chapter V deals with the conduct of advocates.
Section 35 lays down that where on receipt of a complaint or otherwise a State Bar Council has reason to believe that any advocate on its roll has been guilty of professional or other misconduct, it shall refer the case for disposal to its disciplinary committee.
The disciplinary committee has to fix a date for the hearing of the case and give a notice thereof to the advocate concerned and to the Advocate General of the State.
(3) provides that such committee after giving the advocate concerned and the Advocate General an opportunity of being heard, may make, inter alia, an order suspending the advocate from practice as it may deem fit.
Similar powers are also conferred on the Bar Council of India under section 36 in relation to an advocate on the common roll.
Section 37 gives a right of appeal to the Bar Council of India by any person aggrieved by an order of the disciplinary committee of a State Bar Council.
Section 38 confers a right of appeal to the Supreme Court on any person aggrieved by an order by the disciplinary committee of the Bar Council of India under section 36 or section 37 and empowers the Supreme Court to pass such orders thereon as it deems fit.
The object of the Act is thus to constitute one common Bar for the whole country and to provide machinery for its regulated functioning.
Since the Act sets up one Bar, autonomous in its character, the Bar Councils set up thereunder have been entrusted with the power to regulate the working of the profession and to prescribe rules of professional conduct and etiquette, and the power to punish those who commit breach of such rules.
The power of punishment is entrusted to the disciplinary committees ensuring a trial of an advocate by his peers.
Sections 35, 36 and 37 lay down the procedure for trying complaints, punishment and an appeal to the Bar Council of India from the orders passed by the State Bar Councils.
As an additional remedy section 38 provides a further appeal to the Supreme Court.
Though the Act relates to the legal practitioners, in its pith and substance it is an enactment which concerns itself with the qualifications, enrolment, right to practise and discipline of the advocates.
As provided by the Act once a person is enrolled by any one of the State Bar Councils, he becomes entitled to practise in all courts including the Supreme Court.
As aforesaid, the Act creates one common Bar, all its members being of one class, namely, advocates.
Since all those who have been enrolled have a right to practise in the Supreme Court and the High Courts, the Act is a piece of legislation which deals with persons entitled to practise before the Supreme Court and the High Courts.
There L3 Sup.
CI/68 2 718 fore the Act must be held to fall within entries 77 and 78 of List I.
As the power of legislation, relating to those entitled to practise in the Supreme Court and the High Courts is carved out from the general power to legislate in relation to legal and other professions in entry 26 of List 111, it is an error to say, as the High Court did, that the Act is a composite legislation partly falling under entries 77 and 78 of List I and partly under entry 26 of List 111.
In this view, the right of appeal to this Court under section 38 of the Act creates a jurisdiction and power in relation to a matter failing under entries 77 and 78 of the Union List and the Act would, therefore, fall under clause I and not clause 2 of article 138.
The argument that section 38 falls under article 138(2) and is invalid on account of its having been enacted without a special agreement with the State Government is, therefore, without merit.
As regards the validity of rule 7 of O. 5 the contention, as already pointed out, was raised and rejected in the said review petition filed by the appellant.
The contention having thus been concluded could not obviously be raised in the writ petition filed by the appellant, nor would he be entitled to any writ or order from the High Court as against the said decision.
The rule, in any event, merely provides for the placing of an.
appeal filed under section 38 for a preliminary hearing and enables this Court to dismiss at that stage an appeal if it finds it has no substance.
The appellant in such an appeal is heard; if the court finds that there is nothing in the appeal, the court declines to issue notice on the opposite side and disposes of the appeal there and then.
Section 38 confers no doubt a right of an appeal on a person aggrieved by an order passed under sections 36 and 37 and the appellant does not have to obtain any special leave under article 136.
But the fact that under rule 7 the appeal is placed for preliminary hearing and is liable to be disposed of at that stage does not mean that the content of the right of appeal under section 38 is in any way curtailed as the party filing the appeal has to be heard on all points raised by him therein.
There is, therefore, no substance in the argument that rule 7 contravenes section 38, and is therefore ultra vires the section.
On the express terms of article 145(1) (b), the rule is within the rule making power of this Court as it merely lays down how and in what manner an appeal filed under section 38 is to be dealt with and does not deal with or affect the right of appeal.
The validity of the rule cannot, therefore, be impeached.
The decision in Prem Chand Carg vs Exercise Commissioner (1) cannot assist the appellant.
In that decision rule 12 (1) [1963] Supp. 1 S.C.R. 885. 719 of O. xxxv of the Supreme Court Rules was declared void in so far as it related to the furnishing of security on the ground that the right to move the, Supreme Court under article 32 was absolute and the rule by providing security for costs impaired such an absolute right.
Furnishing of security in the case of persons without means to do so would obviously obstruct such persons from vindicating their rights under article 32 and would, therefore, curtail the right under that Article.
That obviously is not so in the case of the rule with which we are concerned in this appeal.
The contention, therefore, that rule 7 curtails the right of appeal under section 38 or contravenes that section must be rejected.
The appellant cited a number of authorities but it is not necessary to deal with them as they have no bearing on the questions before us.
He also tried to question the correctness of the order passed against him by the Bar Council of India but we did not allow him to reagitate it as it stood concluded on the dismissal of the appeal and the review petition filed by him in this Court.
The appeal fails and is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | The appellant filed a writ.
petition in the High Court for quashing, (a) the order of suspension passed against him by the State Bar Council under s.4.
35 of the , (b) the order of the Bar Council of .India in appeal under section 37 of the Act, confirming the order of suspension, and (c) the order of this Court summarily rejecting his appeal to this Court under section 38, under O.V., r, 7 of the Supreme Court Rules, 1966.
He contended that : (1) the jurisdiction conferred on this Court by section 38 related to a matter under Entry 26 of List III of the Constitution, that it therefore fell under article 138(2), and as there was no special agreement between the Government of India and the Government oaf a State as required by article 138(2), section 38 was not validly enacted; and (2) O. 5, r. 7 of the Supreme Court Rules under which the appeal was placed for preliminary hearing was ultra vires section 38, as the rule cut down and im paired the right of appeal under the section.
The writ petition was dismissed.
In appeal to this Court, HELD : (1) While Entry 26 of List III deals with the legal, medical and other professions, Entry 77 of List I, deals with the constitution, organisation, jurisdiction and powers of the Supreme Court, and also with persons entitled to practise before the Supreme Court.
Since there is a seeming conflict between the two entries they have to be harmonised by reading the, general power in Entry 26 in a restricted sense.
That is, the power to legislate in regard to persons entitled to practise before the Supreme Court under Entry 77 of List I should be held to be carved out from the general power relating to the professions in Entry 26 of List III, and made the exclusive field of Parliament.
[715 E F, H; 716 A C] The object of the is to constitute one common bar for the whole country and to provide machinery for its regulated functioning Though the Act relates to legal practitioners, in its pith and substance it is an enactment dealing with the qualifications, enrolment, right to practise and discipline of Advocates.
Since the Act provides that once a person is enrolled by any State Bar Council he becomes entitled to practise in all court , including the Supreme Court, the Act is a piece of legis lation dealing with persons entitled to practise before the Supreme Court.
Therefore, the Act, including the right of appeal to this Court under section 38, deals with a matter relating to Entry 77 of List I and falls under article 138(1) and within the exclusive field of Parliament.
The Act is not 710 a composite legislation partly failing under Entry 77 of List I and partly tinder Entry 26 of List 111.
It does not fall under article 138(2) and a special agreement with a State Government, is therefore not necessary.
[717 E, F H; 718 A C] State of Bombay vs Balsara, ; , State of Bombay V. Narothamdas, ; and In re : Lily Isabel Thomas; , followed.
C. P. & Berar Sales of Motor Spirit and Lubricants Taxation Act, 1938 , Citizens Insurance Co. of Canada vs Parsons, [1881] 7 A.C. 96, Bhola Prasad vs Emperor, , G. G. in Council vs Province of Madras, (1945) 72 ].A. 91 and Durgeshwar vs Secretary, Bai Council, Allahabad, A.I.R. 1954 All. 728, referred to.
(2) On the express terms of article 145(1)(b) of the Constitution, 7 of O. 5 of the Supreme Court Rules is within the rule making power of this Court, as it merely lays down how and in what manner an appeal filed under section 38 is to be dealt with and does not deal with or affect the right of appeal.
The fact that under the rule the appeal is placed for preliminary hearing and is liable to be disposed of at that stage does not mean that the content of the right of appeal under the section is in any way curtailed, because, the party filing the appeal is heard on all points raised by him even at that stage.
[718 F M] Prem Chand Garg vs Excise Commissioner, [1963] Supp. 1 S.C.R. 885, distinguished.
|
Appeals Nos. 54 to 65, 67 and 69 to 71 of 1963.
Appeals from the judgment and decree dated January 10, 1956 of the Madras High Court in Appeal Suit Nos. 223 and 224 of 1951, and 264 to 273, 275 and 277 to 279 of 1952.
R. Kesava Iyengar, R. Thiagarajan and R. Ganapathy Iyer, for the appellants (in all the appeals).
Bishan Narain and O. P. Malhotra, for respondent No. 1 (in C.A. Nos. 54 and 55 of 1963).
M. R. K. Pillai, for respondent No. 2 (in C.A. No. 55 of 1963) and for the respondents (in C.As.56 to 65, 67 to 71 of 1963).
The Judgment of the Court was delivered by Ramaswami, J.
These appeals are brought against the judgment and decree in A.S. nos.223 and 224 of 1951, 264 to 273 of 1952, 275 of 1952 and 277 to 279 of 1952 of the Madras High Court dated January _10, 1956 affirming the judgment and decree in O.S. nos.75, 77 to 81 of 1949 and 19 to 22, 24 to 26, 28 & 30 to 31 of 1950 of the Subordinate Judge, Tanjore.
The appellant instituted the above mentioned suits for re covery of possession from the respective defendants of the disputed lands and for payment of damages at the rate of Rs. 501per annum per acre.
The case of the appellant was that the disputed lands which were purchased by him by a sale deed dated November 11, 1948 (exhibit A 145) are situated in Orathur Padugai which is attached to Pannimangalam, one of the villages comprised in what is known as the "Tanjore Palace Estate", that 756 the said lands are not situated in an estate as defined by the Madras Estates Land Act 1 of 1908 (hereinafter referred to as the 'Act ') and in any event the said lands are 'private lands ' of the appellant and not 'ryoti lands ' as defined in the Act and the various defendants are trespassers in unlawful occupation of the lands and had no right to continue in possession and were therefore liable to ejectment.
The appellant also claimed that the defendants were liable to pay damages at the rate of Rs. 501 per, annum per acre in respect of the lands in their unlawful occupation.
The defence in all the suits was substantially the same.
it was contended by the defendants that the disputed lands are situated in an estate within the meaning of section 3 (2) (d) of the Act, that the lands are 'ryoti lands ' in which they have permanent right of occupancy and that they are not "private lands" as alleged by the appellant and the civil court had therefore no jurisdiction to entertain the suits and the Revenue Courts alone had jurisdiction.
By his two judgments dated October ')1, 1950 and February 2, 1951, the Subordinate Judge, Tanjore dismissed the suits, holding that the lands were situated in an estate and were 'ryoti lands ' in which the defendants were entitled to occupancy rights.
The appellant took the matter in appeal to the Madras High Court which affirmed the decision of the trial court and dismissed all the appeals.
The two principal questions which are presented for deter mination in these appeals are : (1) whether the suit lands are located in an estate within the meaning of section 3 (2) (d) of the Act, and (2 ' ) if the answer to the first question is in the affirmative, whether the suit lands are 'private lands ' or 'ryoti lands ' as defined in the Act.
Section 3 (2) (d) of the Act, as originally enacted states "3.In this Act unless there is something repugnant in the subject or context (2) 'Estate ' means (d) any village of which the land revenue alone has been granted in inam to a person not owning the kudivaram thereof, provided that the grant has been made, confirmed or recognised by the British Government, or any separated part of such village;" The section was amended by the Madras Estates Land (Third Amendment) Act 18 of 1936 to the following effect 757 " (d) any inam village of which the grant has been made, confirmed or recognised by the British Government, notwithstanding that subsequent to the grant, the village has been partitioned among the grantees, or the successors in title of the grantee or grantees.
Explanation (1): Where an inam village is resumed by the Government,it shall cease to be an estate; but, if any village so resumed is subsequently regranted by the Government as an main, it shall, from the date of such re grant be regarded as an estate.
Explanation (2): Where a portion of an inam village is resumed by the Government, such portion shall cease to be part of the estate, but the rest of the village shall be deemed to be an inam village for the purposes of this sub clause.
If the portion so resumed or any part thereof is subsequently regranted by the Government as an inam, such portion or part shall, from the date of such re grant be regarded as forming part of the inam village for the purposes of this sub clause.
" By section 2 of the Madras Act 11 of 1945 section 3 of the Act was further amended as follows "Section 2 : (1) In sub clause (d) of clause (2) of section 3 of the Madras Estates Land Act, 1908 (hereinafter referred to as the said Act) Explanations (1) and (2) shall be renumbered as Explanations (2) and (3) respectively and the following shall be inserted as Explanation (1)namely : Explanation (1): Where a grant as an inam is expressed to be of a named village, the area which forms the subject matter of the grant shall be deemed to be an estate notwithstanding that it did not include certain lands in the village of that name which have already been granted on service or other tenure or been reserved for communal purposes : (2)The amendment made by sub section (1) be deemed to have had effect as from the date on which the Madras Estates Land (Third Amendment) Act, 758 1936 came into force and the said Amendment shall be read and construed accordingly for all purposes;" Section 3(19) of the Act has defined a "Village" as follows " 'Village ' means any local area situated in or constituting an estate which is designated as a village in the revenue accounts and for which the revenue, accounts are separately maintained by one or more karnams or which is now recognised by the State Government or may hereafter be declared by the State Government for the purposes of this Act to be a village, and includes any hamlet or hamlets which may be attached thereto.
" The history of what is known as the "Tanjore Palace Estate" is well known and will be found in various reported decisions of the Judicial Committee and of the Madras High Court : (See Jijoyiamba Bayi Saiba vs Kamakshi Bayi Saiba(l), Sundaram Ayyar vs Ramachandra Ayyar(2), Maharaja of Kolhapur vs Sundaram Iyer (3) and Chota Raja Saheb Mohitai vs Sundram Iyer(4).
In 1799, Serfoji, the then Raja of Tanjore, surrendered his territory into the hands of the East India Company, but he was allowed to retain possession of certain villages and lands which constituted his private property.
When his son the last Raja died in 1855 without leaving male issue, the East India Company took possession of all his properties including his private property.
Thereupon the senior widow, Kamachee Boye Sababa filed a Bill on the Enquiry Side of the Supreme Court of Madras, and obtained a decree that the seizure of the private properties was wrong.
On appeal by the Secretary of State in Council of India, the Privy Council reversed the decree, and ordered the dismissal of the Bill.
Thereafter, a memorial was submitted to the Queen and in 1862 the Government of India which had succeeded the East India Company "sanctioned the relinquishment of the whole of the landed property of the Tanjore Raj in favour of the heirs of the late Raja".
Under instructions from the Government of India, the Government of Madras, on August 21, 1862, passed an order the material part of which is as follows : "In Col. Durand 's letter above recorded the Government of India have furnished their instructions with reference to the disposal of the landed property of the Tanjore Raj regarding which this Government addressed them under date the 17th May last.
Their decision is to the effect, that 'since it is doubtful whether the lands in question can be legally dealt with as State property, and since the plea in equity and policy, for treating them as the private property of the Raja is so strong that it commands the unanimous support of the members of the Madras Government, ' the whole of the lands are to be relinquished in favour of the heirs of the late Raja (page 228).
The Tan ore Palace Estate came into being as a result of this grant.
The question in these appeals is whether the property invol ved in the suits being a part of the Tanjore Palace Estate can be considered to be an "estate" within the meaning of the term in the Act.
It was conceded by the Counsel for the appellant that if it was part of an inam it would be an ,estate ' within the meaning of that Act.
It was, however, contended that the manner in which the property reverted to the widows of the Raja in 1862 after an act of State did not show that the estate was freshly granted but was restored to the widows who enjoyed both the warams, in the same way as the warams were enjoyed before.
To put it differently, the argument was that the effect of restoration or re linquishment was only the undoing of the wrong and therefore if the villages were the private properties of the Raja at the time of the seizure then the same character is maintained when they were handed back to his widow.
The contention was that what actually happened in 1862 was the restoration of the status quo ante rather than a fresh grant by the British Government.
The argument is not a new one but has been raised before and rejected in a number of authorities.
In Jijoyiama Bayi Saiba vs Kamakshi Bayi Saiba(1) it was held by the Madras High Court that the Government Order, 1862 was a grant of grace and favour to persons who had forfeited all claims to the personal properties of the Rajah by the act of State and was not a revival of any antecedent rights which they might have bad.
A similar opinion of the grant was expressed in a Full Bench case of the Madras High Court in Sundaram Ayyar vs Ramachandra Ayyar(2) But in Maharaja of Kolhapur vs Sundaram Iyer(3), Spencer, O.C.J., appeared to doubt the decision of Scotland, C.J., in Jijoyiamba Bayi Saiba vs Kamakshi Bayi Saiba(l) that there was a grant of grace and favour in 1862.
A similar view was taken in Sundaram vs Deva Sankara(4), but these cases have been subsequently explained or not accepted on this point.
In T.R. Bhavani Shankar Joshi vs Somasundra Moopanar(1), it was held by this Court that the act of State having made no distinction between the private and public properties of the Rajah the private properties were lost by the Act of State leaving no right outstanding in the existing claimants.
The Government Order, 1862 was therefore a fresh grant due to the bounty of the Government and not because of any antecedent rights in the grantees.
It was pointed out that the words "relinquished" or "restored" in the Government Order did not have the legal effect of reviving any such right because no rights survived the act of State.
The root of title of the grantees was the Government Order of l862 and it was therefore held that the restoration amounted to a grant in inam by the British Government within the meaning of the Act.
But the question whether with regard to any particular area what was granted in inam is a whole village or less than a whole village is a question that has to be decided with reference to the facts of each particular case.
The question therefore arises whether the area in question, viz., Orathur Padugai, constitutes a whole village and therefore an estate within the meaning of section 3 (2) (d) of the Act.
It was contended for the appellant that the suit lands were not comprised in a whole inam village.
The contention was rejected by both the lower courts which concurrently held that the lands were located in Orathur Padugai, a whole village by itself or a named village and therefore an estate within the meaning of the Act.
It was argued on behalf of the appellant that the finding of the lower courts is vitiated in law because it is based on no evidence.
In our opinion, there is no justification for this argument.
On behalf of the respondents reference was made to exhibit A 64, Pannimangalam Vattam Jamabandhi Account individual war, Fasli 1296, which shows in column No. 3 Orathur Padugai as a village .
Similarly, in exhibit A 78(a), Cess account for Pannimangalam Vattam and exhibit A 79, the Village war Jamabandhi Account Fasli 1309 Orathur Padugai village is shown as a whole village.
Exhibit A 82, Village war Jamabandhi Individual War, Fasli , Jamabandhi Ghoshpara for the village, Fasli 1311 and Exs.A 153 to A 157 all mention Orathur Padugai as a village.
All the leases, lease auctions and receipts given for payment of rent speak of Orathur Padugai as a separate village.
Even the sale deeds, Exs.B 6, B 31, B 32 and B 33 contain a recital of Orathur Padugai as a separate village.
It is manifest therefore that there is sufficient material to show that at least since 1830 onwards Orathur Padugai is a whole village.
On behalf of the appellant reference was made (1) 761 to exhibit A 128 and exhibit A 129 dated April 6, 1800 and July 5, 1800.
Exhibit A 128 is a letter from the President, Tanjore to the Secretary to the Government of Madras in which there is a reference to Pannimungalam.
It is stated therein 'that "the fields of Pannymungalam to the westward of Tanjore which from time immemorial have been reserved for the pasture of the circar cow do remain in the Raja 's possession.
There is neither village nor cultivation on these lands".
In answer to this letter there is a communication from the Chief Secretary to the Government to the Resident, Tanjore, exhibit A 129.
In para 5 of this letter it is stated: "The fields of Pucanymangalam containing neither village nor cultivation shall remain in the hands of Rajah for the pasturage of His Excellency 's cows.
" Much reliance was placed by Counsel for the appellant on these two documents, but the High Court has rightly pointed out that the identity of the lands referred to in Exs. A 128 and A 129 is doubtful.
The lands in suit ate situated at least 30 miles south east of Tanjore town in Mannaroudi taluk but in Exs.A 128 and A 129 the lands are described as westward of Tanjore.
That there was Orathur village in existence even as early as 1830 is clear from exhibit A 151 because in describing certain boundaries of another village it is mentioned as to the north of assessed Orathur village nadappu karai (bund pathway).
Exhibit A 4 of 1868 is a Debit and Credit Balance account relating to Orathur Padugai attached to Mukasa Pannimangalam Thattimal.
It is clear from this Exhibit that the entire village except the waste land was assessed.
From Exhibit A 5 dated September 4, 1870, it appears that the punja lands in Orathur village were taken on lease from the Collector of Tanjore who was the receiver and manager of the estate of the Rajah of Tanjore for a period of 5 years on payment of a total sum of Rs. 122/9/3.
Exhibits A 7, A 8, A 12 to A 16 and A 18 are either Adaiyolai muchilikas or lease deeds for leasing the lands in Orathur padugai village for a term ranted by the Collector of Tanjore.
In all these documents the description is that the lands are situated in Orathur Padugai in Mokhasa Pannymangalam Thattimal.
The documents range between the years 1870 to 1875.
In Ex.A 63 which is the individual war settlement register for Pannymangalam vattam for Fasli 1296 against column 6 it is stated that the income in the matter of the amani cultivation of sugarcane, etc., on 95 kullis is Rs. 4 and it is in Orathur padugai village, Pannymangalam vattam.
Exhibit A 61 is the debit and credit balance account of Orathur padugai for Fasli 1294.
Similarly, in exhibit A 64, the individual war settlement register for Pannimangalam vattam, column 3 relating to the village of Orathur states that the Orathur padugai is a village and the vattam is Pannimangalam.
There are similar des 762 criptions of Orathur as a village in exhibit A 65 which is the settlement register for Pannimangalam vattam for Fasli 1297.
Exhibit A 80 contains a similar description of Orathur village in Pannimangalam vattam.
Exhibits A 153 to A 155 and A 157 are all lease deeds between the years from 1901 to 1906 relating to lease of lands in Orathur padugai.
It is manifest that there is sufficient evidence to show that from 1868 right up to 1907 Orathur padugai was considered as a separate village.
It was contended for the respondents that even after the passing of the Act Orathur padugai was treated as a separate village.
Reference was made in this connection to a number of documents, Exs.A 158, A 105, A 159, A 106, A 116, A 161, B 17,A 117 to A 120, B 18, A 12 1, A 1 62 and A 1 63.
In our opinion, the finding of the lower courts that Orathur padugai is a whole village and therefore constitutes an 'estate ' within the meaning of the Act is supported by proper evidence and Counsel for the appellant is unable to make good his argument that the finding of the lower courts is in any way defective in law.
We proceed to consider the next question arising in this case, viz., whether the suit lands are 'private lands ' within the meaning of section 3 ( 1 0) (b) of the Act which reads as follows : "3.In this Act, unless there is something repugnant in the subject or context . . . . .(10) 'Private land ' (b) in the case of an estate within the meaning of sub clause (d) of clause (2), means (i) the domain or home farm land of the landholder, by whatever designation known, such as, kambattam, khas, sir or pannai; or (ii) land which is proved to have been cultivated as private land by the landholder himself, by his own servants or by hired labour, with his own or hired stock, for a continuous period of twelve years, immediately before the first day of July 1908, provided that the landholder has retained the kudivaram ever since and has not converted the land into ryoti land; or (iii) land which is proved to have been cultivated by landholder himself, by his own servants or by hired labour, with his own or hired stock, for a continuous period of twelve years immediately before the first day of November 1933, provided that the landholder has 763 retained the kudivaram ever since and has not converted the land into ryoti land; or (iv) land the entire kudivaram in which was acquired by the landholder before the first day of November 1933 for valuable consideration from a person owning the kudivaram but not the melvaram, provided that the landholder has retained the kudivaram ever since and has not converted the land into ryoti land, and provided further that, where the kudivaram was acquired at a sale for arrears of rent the land shall not be deemed to be private land unless it is proved to have been cultivated by the land holder himself, by his own servants or by hired labour, with his own or hired stock, for a continuous period of twelve years since the acquisition of the land and before the commencement of the Madras Estates Land (Third Amendment) Act, 1936.
" Section 3(16) of the Act defines 'Ryoti land ' as follows : "Ryoti land ' means cultivable land in an estate other than private land but does not include (a) beds and bunds of tanks and of supply, drainage, surplus or irrigation channels; (b) threshing floor, cattle stands, village sites, and other lands situated in any estate which are set apart for the common use of the villagers; (c) lands ranted on service tenure either free of rent or on favourable rates of rent if granted before the passing of this Act or free of rent if granted after that date, so long as the service tenure subsists.
" Section 185 of the Act enacts a presumption that land in inam village is not private land and reads as follows : "185.When in any suit or proceeding it becomes necessary to determine whether any land is the landholder 's private land, regard shall be had (1) to local custom, (2) in the case of an estate within the meaning of sub clause (a), (b), (c), or (e) of clause (2) of section 3, to the question whether the land was before the first day of July 1898, specifically let as private land, and (3) to any other evidence that may be produced Provided that the land shall be presumed not to be private land until the contrary is proved: 764 Provided further that in the case of an estate within the meaning of sub clause (d) of clause (2) of section 3 (i) any expression in a lease, patta or the like, executed or issued on or after the first day of July, 1918 to the effect or implying that a tenant has no right of occupancy or that his right of occupancy is limited or restricted in any manner, shall not be admissible in evidence for the purpose of proving that the land concerned was private land at the commencement of the tenancy; and (ii) any such expression in a lease, patta or the like, executed or issued before the first day of July 1918, shall not by itself be sufficient for the purpose of proving that the land concerned was private land at the com mencement of the tenancy.
" Section 6 is to the following effect "6.(1) Subject to the provisions of this Act, every ryot now in possession or who shall hereafter be admitted by a landholder to possession of ryoti land situated in the estate of such landholder shall have a permanent right of occupancy in his holding.
Explanation (1).For the purposes of this subsection, the expression 'every ryo t now in possession ' shall include every person who, having held land as a ryot continues in possession of such land at the commencement of this Act.
The Subordinate Judge and the High Court have concurrently come to the conclusion, upon consideration of the evidence, that the lands in suit are not private lands but ryoti lands.
On behalf of the appellant Mr. Kesava Iyengar conceded that onus is on the appellant to show that the lands are 'private lands ' within the meaning of the Act ', but the argument was stressed that the lower courts have failed to take into account certain important documents filed on behalf of the appellant, viz., A 128, A 129 and the Paimash account dated August 25, and the Land Register, exhibit A 134.
In our opinion, there is no warrant for the argument advanced on behalf of the appellant.
As regards Exs A 128 and A 129 it is apparent that apart from the question as to the identity of the land, they relate to a period previous to the grant of 1862 which alone constitutes the root of title of the grantees and there is no question of restoration or revival of any anterior right.
The same reasoning applies to the Paimash account dated August 25, which 765 cannot, therefore, be held to be of much relevance in this connection.
Reliance was placed on behalf of the appellant on exhibit A 134, the Land Register for Pannimangalam which shows that in Orathur Thattimal Padugai which consists of Punjais (dry lands) and are rain fed, the land holder (the Tanjore Palace Estate) owns both the warams (Iruwaram in vernacular).
It was argued for the appellant that the expression 'Iruwaram ' means that the land was owned as Pannai or private lands.
Reference was made to the record of rights and Irrigation Memoir dated January 13, 1935, exhibit B 8 which shows that the lands are lruwaram and there are no wet lands.
But the use of the expression "Iruwaram" in these documents is not decisive of the question whether the land is private land of the appellant or not.
Under section 3(10) of the Act, private land comprises of two categories, private lands technically so called, and lands deemed to be private lands.
In regard to private lands technically so called, it must be the domain or home farm land of the landholder a,,.understood in law.
The mere fact that particular lands are described in popular parlance as pannai kambattam, sir, khas, is not decisive of the question unless the lands so called partake of the characteristics of domain or homefarm lands.
In our opinion the correct test to ascertain whether a land is domain or home farm is that accepted by the Judicial Committee in Yerlagadda Malikarjuna Prasad Nayudu vs Somayya(1), that is, whether it is land which a zamindar has cultivated himself and intends to retain as resumable for cultivation by himself even if from time to time he demises for a season.
The Legislature did not use the words 'domain or home farm land ' without attaching to them a meaning; and it is reasonable to suppose that the Legislature would attach to these words the meaning which would 'be given to them in ordinary English.
It seems to us that the sub clause (b) (i) of the definition is intended to cover those lands which come obviously within what would Ordinarily be recognised as the domain or home farm, that is to say, lands appurtenant to the landholder 's residence and kept for his enjoyment and use.
The home farm is land which the landlord cultivates himself, as distinct from land which he lets out to tenants to be farmed.
The first clause is, therefore meant to include and signify those lands which are in the ordinary sense of he word home farm lands.
The other clauses of the definition appear to deal with those lands which would not necessarily be regarded as home farm lands in the ordinary usage of the term; and with reference to those lands there is a proviso that lands purchased at a sale for arrears of revenue shall not be regarded as private lands unless cultivated directly by the landlord for the required period.
It seeing to us that the definition reads as a whole (1) I.L.R. 3 Sup.CI/68 5 766 indicates clearly that the ordinary test for 'private land ' is the ' test of retention by the landholder for his personal use and cultivation by him or under his personal supervision.
No doubt, such lands may be let on short leases for the convenience of the landholder without losing their distinctive character; but it is not the intention or the scheme of the Act to treat as private those lands with reference to which the only peculiarity is the fact that the landlord owns both the warams in the lands and has been letting them out on short term leases.
There must, in our opinion be something in the evidence either by way of proof of direct cultivation or by some clear indication of an intent to regard these lands as retained for the personal use of the landholder and his establishment in order to place those lands in the special category of private lands in which a tenant under the Act cannot acquire occupancy rights.
In the present case there is no proof that the lands were ever directly cultivated by the landholder.
Admittedly, soon after the grant of 1862 the estate came under the administration of Receivers, who always let out the lands to the tenants to be cultivated.
In exhibit B 8, the Record of Rights the lands are entered in column 5 as Punja or dry land.
In column 4 which requires the entry to be made as private land they are not entered as private lands.
If was argued for the appellant that the lands are sometimes called 'Padugai ' and that the expression meant that the lands were within the flood bank and forming part of the river bed.
But the description of the land as 'Padugai ' is not of much consequence because they are also called as Orathur 'Thottam meaning a garden where garden crops are raised to distinguish it from paddy fields.
It appears that the lands actually lie between two rivers and comprise more than 100 acres, and by their physical feature cannot be 'padugai ' in the sense in which the term is normally used.
The argument was stressed on behalf of the appellant that leasing rights of the land were auctioned periodically.
But the High Court has observed that one and the same tenant continued to bid at the auction and there was evidence that tenants continued to cultivate the lands without break or change, and the fact that there were periodical auctions of the lease rights did not necessarily deprive the tenants of the occupancy rights which they e ' were enjoying.
We accordingly hold that the appellant has not adduced sufficient evidence to rebut the presumption under section 18: of the Act that the lands in the inam village are not private land and the argument of the appellant on this aspect of the case must be rejected.
For the reasons expressed we hold that the judgment of the Madras High Court dated January 10, 1956 is correct and these appeals must be dismissed with costs one set of hearing fee.
| IN-Abs | When the Raja of Tanjore died in 1855 without leaving male issue the East India Company took possession of all his properties including his private property.
However on a memorial being presented by the senior widow of the late Raja, the Government of India in 1862 "sanctioned the relinquishment, of the whole of the landed property of the Tanjore Raja in favour of the heirs of the late Raja.
" The Tanjore Palace Estate thus came into existence.
In 1948 the appellant purchased certain lands situate in Orathur Padugai which was part of the aforesaid Tanjore Palace Estate, and thereafter instituted suits for possession of these lands from various defendants.
The trial court dismissed the suits on the ground that the lands were situated in an 'estate under section 3(2)(d) of the Madras Estates Lands Act 1 of 1908 and they were 'ryoti lands ' as defined in section 3(16) in which the defendants had acquired occupancy rights.
The Madras High Court affirmed the decree, whereupon the appellant came to this Court.
it was contended on behalf of the appellant that (i) the lands did not form an 'estate ' under section 3 (2) (d) of the aforesaid Act because the restora tion of the land to the widows of the Raja of Tanjore did not amount to a fresh grant but only a restoration of the status quo ante; (ii) that Orathur Padugai was not a whole village as required by the definition of 'estate '; (iii) the widows of the Raja enjoyed both the 'warams ' and the lands purchased by the appellant were 'private lands ' in section 3(10)(b) so that the defendants did not have any occupancy rights therein.
HELD: (i) The relinquishment by the Government of India in favour of the widows of the Raja in 1862 was a fresh grant as already held in several cases.
In view of the authorities it could no longer be questioned that the Tanjore Palace state was an 'estate ' within the meaning of section 3(2)(d) of the Madras Estates Lands Act.
[759 F 760 B] Jijoiamba Bayi Saiba vs Kamakshi Bayi Saiba, 3 M.H. C.R. 424, Sundaram Ayyar vs Ramachandra Ayyar, I.L.R. 40 Mad.
3891, Maharaja of Kolhapur vs Sondaram Iyer, I.L.R. 48 Mad. 1, Sundaram vs Deva Sankara, A.I.R. 1918 Mad.
428 and T. R, Bhavani Shankar Joshi vs Somasunakra Moopanar, , relied on.
Chota Raja.
Saheb Mahitai vs Suddaram Iyer, 63 I.A. 224, referred to.
(ii) There was sufficient material on the record to show that at least since 1830 onwards Orathur Padugai was a whole village and therefore an 'estate ' within the meaning of the Act.
[762 C] (iii) The lands in suit were 'ryoti lands ' and not 'private lands '.
The definition in section 3(10) read as a whole indicates clearly that the ordinary test for 'private land ' is the test of retention by the landholder 7 5 5 for his own personal use and cultivation by him or under his personal supervision.
No doubt, such lands may be let on short leases for the convenience of the landholder without losing their distinctive, character; but it is not ' the intention or the scheme of the Act to treat as private those lands with reference to which the only peculiarity is the fact that the landlord owns both the warams in the lands and has been letting them out on short ]cases.
1765 H 766 B) In the present case there was no proof that the lands were ever directly cultivated by the landholder.
The High Court had found that the same tenants continued to cultivate the lands without break or change, and the fact that there were periodical auctions of the lease rights did not necessarily deprive the tenants of the occupancy rights which they were enjoying.
The appellant had not been able to adduce sufficient evidence to rebut the presumption under section 185 of the Act that the lands in the inam village are not private lands.
[766 C G] Yerlagadda Malikarjuna Prasad Nayudu vs Somayya, I.L.R. , referred to with approval.
|
Appeal No. 355 of 1965.
Appeal by special leave from the judgment and order dated April 4, 1961 of the Madras High Court in Appeal No. 99 of 1957.
N. C. Chatterjee, R. Thiagarajan for R. Ganapathy Iyer, for the appellants.
K. Gopalachari and R. Gopalakrishnan, for the respondents.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought on behalf of the plain tiffs, by special leave, against the judgment of the Madras High Court dated April 4, 1961 in Appeal No. 99 of 1957.
In the suit which is the subject matter of this appeal, the plaintiffs prayed for the settlement of a scheme in respect of a Trust Known as Sina Ravanna Mana Pana Sona Guru Puja Mutt at Pillamangalam Alagapuri, Tiruchnapalli District and for an account of the management of the Trust by the late N. section Chockalingam Chettiar and for certain incidental reliefs.
The case of the plaintiffs was that the Trust was a joint foundation made on November 12, 1919 by Sinnakaruppan Chettiar, father of plaintiffs I and 2 and grand father of plaintiffs 3, Raman Chettiar, father of plaintiff No. 4, Subramaniam Chettiar Plaintiff No. 5, Perianan Chettiar, father of defendant No. 3 and Chockalingam Chettiar, father of defendant No. 1 and grand father of defendant No. 2.
It was said that the Trust was founded for conducting puja to God Vinayagar installed in the Mutt, by an Oduvar; to do special pujas for the Samayarcharyars, viz., Appar, Sundarar, Sambhandar and Manickavachakar and ordinary pujas to the other 63 Nayanmars on their birth days; to conduct a Thevaram Patasala, and feeding the Pupils.
It was alleged that at the time of the foundation Chockalingam Chettiar contributed Rs. 25,000/Sinnakaruppan Chettiar, Raman Chettiar, Subramaniam Chettiar, and Perianan Chettiar contributing Rs. 6,250/ each.
Hundies were passed by the four contributors for Rs. 6,250 each in favour 899 of the first defendant 's father on November 12, 1919 and they were cashed in due course.
it was alleged that the joint founders had at the time of foundation appointed Chokalingam Chettiar who was the largest contributor as the manager and executive Trustee and the latter had constructed buildings for the Mutt and bought lands in Manakkarai village, Mannargudi taluk.
On November 27, 1943, Chockalingam Chettiar nominated defendant No. 2, his grand son as the executive Trustee.
It was alleged by the plaintiffs that defendant No. 2 had stopped the pujas to the Nayanmars and Samayacharyas and had discontinued the Thevaram school and the feeding of the boys.
Several other acts of mismanagement were alleged in the plaint.
The suit was mainly contested by the second defendant who alleged that the sole founder of the Mutt was the late N. section Chockalingam Chettiar, his grandfather, who at first installed the Vinayakar image and also the 63 Nayanmars and established the pujas for the four Samayacharyars and the Nayanmars.
He was also the sole trustee and was in exclusive management from the foundation of the trust till November 29, 1943 when by a registered instrument he appointed the second defendant and his descendants as hereditary trustees.
It was denied that the plaintiffs were joint founders, though they had made contributions for the management of the Mutt.
It was said that from the very date of contribution the plaintiffs never bargained for any rights as trustees but they accepted N. section Chockalingam Chettiar as the sole trustee.
The charge of mismanagement was totally denied by the defendants and it was said that the trust was being maintained and conducted on a much grander scale than during the trusteeship of the senior Chockalingam.
It was asserted that the daily puja to the Vinayakar and the ordinary and special pujas to the Nayanmars and the Samayacharyars were all performed with scrupulous regularity.
The suit was dismissed by the Subordinate Judge of Pudukkotai by his judgment dated January 31, 1957.
The finding of the Subordinate Judge was that the sole founder of the trust was the senior Chockalingam Chettiar who conducted it with the aid of moneys contributed by himself and other persons and that at the time of the foundation the other four contributors did not reserve for themselves any right in the trusteeship of the Mutt.
It was also found by the Subordinate Judge that the charges of mismanagement were unfounded and no case was made out on behalf of the plaintiffs for framing a scheme.
The judgment of the Subordinate Judge was affirmed by the High Court in Appeal No. 99 of 1957 by its judgment dated April 4, 1961.
The High Court substantially agreed with the finding of the Subordinate Judge.
It was held by the High Court that the evidence made it quite clear that the contributors agreed to leave the management of the trust solely in charge of the senior Chockalingam.
The High Court also agreed with the Subordinate Judge that the 900 plaintiffs had failed to establish that all the contributories were joint founders and that they were entitled to turns of management in proportion of 'their contributions.
The only matter on which the High Court expressed its disagreement with the Subordinate Judge was with regard to the date of the foundation of the trust.
The High Court expressed the view that the trust was founded in 1919 but the Subordinate Judge found that the trust had been founded much earlier, though it took a definite shape in the year 1919.
As regards the charge of mismanagement, the High Court agreed with the Subordinate Judge and held that none of the charges had been established and accordingly there were no grounds made out for the framing of a scheme or the removal of the second defendant from the management of the trust.
The first question to be considered in this appeal is whether the appellants are right in their contention that they were joint founders of the trust along with the senior Chockalingam.
It was contended on their behalf that Exs.
A 1 and A 3 described the contributions of the sum of Rs. 6,250/ as having been made towards 1/8th 'Pangu ' or share.
Reference was also made to exhibit A 5, ledger account of the Mutt in which the contribution is described as the share capital.
It was pointed out by Mr. N. C. Chatterjee that the vilasam of the trust S.R.M.P.A.S. supports the claim of the appellants that they were joint founders.
The High Court has, however, rightly pointed out that these two circumstances are not decisive.
There is on the contrary an admission on 'behalf of the first plaintiff that the contributories were not treated as founders.
In the course of his evidence the 5th plaintiff as P.W. 1 stated as follows : "As Chockalingam Chettiar held the largest number of shares the other four requested him to administer the suit trust maintain accounts and render accounts to the four other shares on demand. .
All the five pangudars were present when the decisions to found the charity was arrived at.
We decided that senior Chockalingam should manage the charity to be founded.
None of us demanded that the pangudars should administer the trust by rotation.
None of us suggested that the terms of the endowment should be reduced to writing.
We wanted senior Chockalingam to consult us with reference to important matters pertaining to the administration.
We did not define the nature of the matters with reference to which we should be consulted.
. . . . . . 901 Since the inception of the trust no meeting of the five pangudars was ever held.
Nor were minutes of such proceedings kept.
Chockalingam used to have informal consultations with us.
At no time, between 1919 and 1945, the year of senior Chockalingam 's death did we ever call upon him to show us his accounts.
Nor did he show us his accounts.
We never asked him to what the total income from the lands and buildings was.
I do not remember the particulars of information which senior Chockalingam voluntarily gave us.
" The conduct of the parties subsequent to the foundation of the trust is also not consistent with the claim now put forward on behalf of the appellants.
Senior Chockalingam acquired considerable properties between 1919 and 1945 on behalf of the trust.
Exhibit B 2, dated June 23, 1920, exhibit B 3, dated January 27, , dated June 18, dated June 22, dated January 4, dated March 2, dated September 30 dated September 30, dated June 6, 1936 and exhibit B 12 dated April 5, 1937 are all sale deeds solely in the name of the senior Chockalingam.
The mutt building had always stood in the name of the senior Chockalingam in the register of Alacapuri Panchayat Union.
The oral evidence adduced on behalf of the respondents which has been accepted both by the Subordinate Judge and by the High Court also shows that there was a total non interference on the part of the plaintiffs in the management of Chockalingam till he appointed the second defendant as his succeeding trustee under exhibit B 1 and there was a total non interference also with the management of the second defendant after that date.
P.W. I also admitted in his evidence that the second defendant was appointed as the successor of senior Chockalingam and at the time of the appointment all the plaintiffs and defendant No. 3 agreed that defendant No. 2 should be so appointed as the sole managing trustee.
If the plaintiffs had any right to manage the trust by turns, as they now claim, it is not likely that they would have agreed to the second defendant being appointed as the sole trustee in place of senior Chockalingam.
In our opinion, the High Court was right in reaching the finding that the plaintiffs have failed to establish that they were the joint founders of the trust or that they were entitled in turns to management in proportion to their contributions.
It is not a correct proposition of law to state that every donor contributing at the time of foundation of a trust becomes a founder of the trust.
It may be that in a particular case all the contributors of a trust fund become the founders of the trust itself, but the question when a contributor would become in law a joint founder of the trust would depend not merely upon the fact of his 902 contribution but also upon the surrounding circumstances proved in the particular case and the subsequent conduct of the parties.
In In the Matter of the Endowed Schools Act, 1869 and In the Matter of the St. Leonard, Shoreditch, Parochial Schools(1) it was held by the House of Lords that where a charity is established by.
subscriptions the original subscribers alone are the founders, and the later benefactions are on the footing of the original foundation.
At page 308 of the Report Earl of Selborne, L.C. stated "Now let us consider what is the reasonable manner of applying to such a charity the word 'founder '.
It is reasonably clear that not every subscriber or contributor could be a founder having control over the school, or capable within the meaning of the Act of Parliament of impressing on it, by his own act or by his own authority a denominational character.
It is also reasonably plain, when you have once started with a foundation in 1705, though by small beginnings, yet that everything afterwards added, every accretion to the original subscriptions, which was not an endowment for any new and special purpose, must be taken to be upon the footing of the original foundation; not a new foundation, but something contributed for the purpose of the original foundation. . .
Now it is quite conceivable that a number of persons might have met at that time, and might have come to a common agreement as to the purposes for which they should subscribe and solicit subscriptions; and if that had been embodied in writing, and if they had solicited subs criptions on the footing that either they themselves were to make a law for the charity and give it statutes, or that this was to be done by others in a particular manner, or if in any original documents soliciting sub scriptions there had been a written law laid down for the charity expressing the purposes for which it was to be founded, those persons so initiating the subscriptions, and so declaring the purpose for which they were made and solicited, might be regarded as founders within the meaning of this clause.
But it appears to their Lordships to be quite impossible to attribute that character to those who come after them whether they contributed to the building fund or any other fund in aid of the existing charity or not.
They did not found the charity; they found it existing; they merely aided and assisted it." (1) Io A.C. 304.
90 3 In Sattikara Venkatarama Chettiar vs 0.
P. Damodaram Chet tiar(1) there was a deed of trust executed by V in favour of 19 persons known as Chettithanakaras which stated that he alone was unable to make and set up idols of Ramalingam and Choudeswari Amman in the Choudeswari Amman Temple Devasthanam built by him and that the nineteen persons agreed to raise a fund and to put up the idol in the temple and according to the agreement that they set up the idols of Ramalingam and Choudeswari Amman and they agreed to purchase property for endowing the temple.
and the document then went on to state "that the nineteen persons should manage the temple from generation to generation.
" Funds were collected by V and by the nineteen persons mentioned in the document; they built the temple installed the idols in it, and col lected funds for the upkeep of the temple and managed the temple under the deed of trust.
It was held by the Madras High Court that the deed of trust conferred the hereditary right to the trusteeship upon V and the nineteen Chettithankars.
At page 461 of the Report the High Court stated as follows : "If persons invite subscriptions on a representation that they would devote the subscriptions so collected to a particular purpose and they divert the subscriptions to some other purpose the subscribers have to object to the funds being diverted to other purposes than those for which they were collected.
But so long as the subscribers do not object to the person or persons collecting subscriptions for building or endowing any particular institution, the person or persons so building or and endowing it have the right to provide for its management for all time to come.
There is nothing in the evidence to show that the persons who gave subscriptions gave them on the understanding that the founders should not have the hereditary right of management.
All that appears from exhibit A is, that subscriptions were collected, funds were raised, a temple was built and idols were installed and the management was in the hands of Venkatarama Chetti and others and all of them.
" As we have already stated, the appellants have failed to prove that all the contributories were the joint founders of the trust and that they were all in turns entitled to management in proportion to the amounts that they had contributed.
On the other hand, the evidence makes it quite clear that the contributories agreed to leave the management of the trust solely in the hands of the senior Chockalingam and subsequently of defendant No. 2.
We are accordingly of the opinion that Mr. N. C. Chatterjee has been unable to make good his argument on this aspect of the case.
(1) 904 We proceed to consider the next question arising in this appeal, viz., whether the plaintiffs are entitled to ask for the settlement of a scheme even on the assumption that they were not co founders of the trust.
The parties in this case have proceeded on the footing that the trust is a private trust, but the authorities establish that even in the case of a private trust a suit can be filed for the removal of the trustee or for settlement of a scheme for the purpose of effectively carrying out the objects of the trust.
If there is a breach of trust or mismanagement on the part of the trustee, a suit can be brought in a civil court by any person interested for the removal of the trustee and for the proper administration of the endowment. (See, for example, Pramatha Nath Mullick 's case(1) and Manohar Mookerjee vs Peary Mohan(2).
There are also authorities to the effect that a Civil Court may frame a scheme in the ,case of a private endowment at the instance of the parties interested.
The question has been discussed by the Calcutta High Court in Bimal Krishna 's case(3) and it was held in that case that a scheme for the administration of a private endowment can be framed by a Civil Court.
Mookerjee, J. observed in that case that in India the Crown is the constitutional protector of all infants and as the deity occupies in law the position of an infant, the shebaits who represent the deity are entitled to seek the assistance of the Court in case of mismanagement, fraud or maladministration on the part of the shebait and to have a proper scheme for management framed for the administration of the private trust.
In Pramatha Nath Mullick 's(1) case to which we have already made reference, the Judicial Committee itself directed the framing of a scheme in the case of a private endowment and the case was expressly remanded to the trial court for that purpose.
In the present case the appellants being contributors to the trust are interested in the proper administration of the trust and, in our opinion, they have a sufficient right to bring a suit in a Civil Court in case there is mismanagement or breach of trust on the part of the managing trustee and for framing of a scheme.
But the question in the present appeal is whether the appellants have made out any grounds for framing of a scheme or for the removal of the second defendant from the management of the trust.
It was alleged by the appellants in the plaints that 'the trust had been mismanaged by the senior Chockalingam and by his grandson, 2nd defendant and both have been guilty of breach of trust.
The main charge levelled against defendant No. 2 was the nonperformance of the pujas and the closing down of the Thevara Patasala and the feeding of the pupils.
The Subordinate Judge has :examined the evidence dealing with the charge and found that it (1) 52 I.A. 245.
(2) 90 5 was not established.
The High Court, upon analysis of the evidence, has reached the same conclusion.
It was also alleged by the appellants that Account Books, Exs.
A 9 and A 10 have been fabricated by defendant No. 2 but the Subordinate Judge and the High Court both held that the allegation was not true.
Certain other charges were also levelled by the plaintiffs against defendant No. 2 and senior Chockalingam but the High Court as well as the Subordinate Judge found that these charges were not substantiated.
The question whether defendant No. 2 or the senior Chockalingam was guilty of breach of trust or of acts of mismanagement is a question of fact and in view of the concurrent finding of both the lower courts on this question we are of opinion that no ground has been made out on behalf of the appellants for framing of a scheme or for removal of defendant No. 2 from the office of the managing trustee.
It follows that the suit brought by the appellants has been rightly dismissed.
For these reasons we hold that the judgment of the High Court dated April 4, 1961 in Appeal No. 99 of 1957 is correct and this appeal must be dismissed with costs.
R.K.P.S. Appeal dismissed.
C.I./68 16 1 69 2,500 GIPF.
| IN-Abs | The appellants filed a suit praying for the settlement of a scheme in respect of a trust and for an account of the management of the trust by C and for certain incidental reliefs.
Their case was that the trust was a joint foundation made on November 12.
1919 by the ancestors of various parties to the suit and the first respondent 's late father C; that it was founded for conducting certain special and ordinary Pujas in the Mutt and for the feeding of the pupils.
It was alleged that at the time of the foundation C contributed Rs. 25,000 and four others contributed Rs. 6,250 each and the joint founders had at the time of foundation appointed C, who was the largest contributor, as the Manager and executive trustee.
On November 27, 1943 C had nominated the second respondent, his grandson, as the executive trustee.
Various allegations of mismanagement of the trust were made against the second respondent claiming that he had stopped the Pujas and various other activities for which the trust was created.
The Trial Court dismissed the suit on the finding that C was the sole founder of the trust who had conducted it with the money contributed by himself and other persons and that at the time of the foundation the other four contributors did not reserve for themselves any right in the trusteeship of the Mutt.
It also held that the charges of mismanagement were unfounded and no case was made out for framing a scheme.
An appeal to the High Court was dismissed.
On appeal to this Court.
HELD : (i) The High Court was right in finding the appellants had failed to establish that they were joint founders of the trust and that they were entitled in turns to management in proportion to their contribution.
It is not a correct proposition of law to state that every donor contributing at the time of foundation of a trust becomes a founder of the trust.
It may be that in a particular case all the contributors of a trust fund become the founders of the trust itself, but the question when a contributor would become in law a joint founder of the trust would depend not merely upon the fact of his contribution but also upon the surrounding circumstances proved in the particular case and the subsequent conduct of the par ties.
[901 H] In the Matter of the Endowed Schools Act, 1869 and In the Matter of the St. Leonard, Shoreditch, Parochial Schools, 10 A.C. 304 and Settikara Venkatarama Chettiar vs 0.
P. Damodaram Chettiar, referred to.
Even in the case of a private trust a suit can be filed for the removal of the trustee or for settlement of a scheme for the purpose of effectively carrying out the objects of the trust.
If there is a breach of trust or mismanagement on the part of the trustee, a suit can be brought in a civil court by any person interested for the removal of the trustee and for the 898 proper administration of the endowment.
In the present case the appellants being contributors to the trust were interested in the proper administration of the trust and had a sufficient right to bring a suit in case there was mismanagement or breach of trust on the part of the managing trustee and for framing of a scheme.
However, in view of the concurrent finding of both the lower Courts that the allegations of breach of trust or mismanagement had not been established, no ground had been made out on behalf of the appellants for framing of a scheme or for the removal of the second respondent.
[904 A C] Pramatha Nath Mullick 's case, 52 I.A. 245; Manohar Mookerjee vs Peary Mohan, ; and Bimal Krishna 's case, ; referred to.
|
Appeal No. 335 of 1966.
Appeal by special leave from the judgment and order dated November 6, 1963 of the Mysore High Court in Misc.
Appeal No. 293 of 1961.
could not be ignored.
[894 B C] I 893 Niren De, Solicitor General, R. Gopalakrishnan and section P. Nayar, for the appellant.
Naunit Lal and T. section Ramachandran, for the respondents.
The Judgment of the Court was delivered by Shah, J.
On April 15, 1952, the Government of Mysore granted an area of I I acres and 38 gunthas of land situate in village Hebbyle to the respondents to this appeal.
The grant was made in Form Appendix 'E ' to the Mysore Land Revenue Rule. , with the added condition that "in the event of the Government requiring the land for any reason whatsoever, the grantee shall surrender the land to the Government without claiming any compensation".
On January 11, 1958, the Government of Mysore published a notification under section 4 of the Land Acquisition Act that the land granted was likely to be needed for a public purpose.
By a subsequent notification made under section 17(4) of the Land Acquisition Act, Government dispensed with the enquiry under section 5 A of the Act and obtained possession of the land.
In assessing compensation, the Land Acquisition Officer did not award any compensation for the land, and awarded Rs. 1,495/ for improvement claimed to have been made to the land by the grantees.
In a reference under section 18 of the Land Acquisition Act, the District Court agreed with the Land Acquisition Officer.
In appeal, the High Court of Mysore set aside the award and remanded the case to the District Court with a direction to determine the compensation payable to the grantees and to dispose of the case according to law.
The High Court observed that since the Government had failed to exercise the right which it had under the terms of the grant and had adopted the procedure prescribed by the Land Acquisition Act, compensation for acquisition under the Land Acquisition Act and the process by which the grantees were to be deprived of the land must be followed.
Against the order passed by the High Court, this appeal is preferred with special leave.
Under section 3(a) "land" is defined as including benefits to arise out of land, and things attached to the earth or permanently fastened to anything attached to the earth.
By section 4 the appropriate Goverrnment is authorised to issue a notification that land in any locality is needed or is likely to be needed for any public purpose, and thereafter to exercise certain powers in respect of the land for determining its suitability for the purpose notified.
The Government may under section 17 in cases of urgency take possession of any waste or arable land needed for the public purpose and the land thereupon vests absolutely in the Government free from all encumbrances.
The Government of Mysore did not purport to exercise the power reserved by the terms of the grant, and adopted the proce 894 dure prescribed by the Land Acquisition Act.
The High Court observed, relying upon the decision of the House of Lords in Attorney General vs De Kayser 's Royal Hotel Ltd.(1) that the Government could not, after adopting the procedure prescribed by the Land Acquisition Act, seek to resort to the conditions of the grant and claim that no compensation for acquisition of the land was payable.
It is true that after obtaining possession of the land in pursuance of statutory authority under section 17, the Government of Mysore could not seek to exercise the option conferred by the terms of the grant.
But on that account in assessing compensation payable to the grantees, existence of the condition which severely restricted their right could not be ignored.
The grantees were entitled to compensation for the, land of which the ownership was vested in them.
The measure of that compensation is the market value of the land at the date of the notification, and the measure of that market value is what a willing purchaser may at the date of the notification under section 4 pay for the right to the land subject to the option vested in the Government.
The High Court also placed reliance upon the judgment of the Madras High Court in The State of Madras vs A. Y. section Parisutha Nadar(2).
In that case the main question decided was whether it was open to a claimant to compensation for land under acquisition to assert title to the land notified for acquisition as against the State Government when the land had become vested in the Government by the operation of the Madras Estates (Abolition and Conversion into Ryotwari) Act 26 of 1948.
On behalf of the State it was contended that once an estate is taken over by the State in exercise of its powers under the Estates Abolition Act, the entire land in the estate so taken over vested in the State 'in absolute ownership, and that no other claim of ownership in respect of any parcel of the land in the estate could be put forward by any other person as against the State Government without obtaining a ryotwari patta under the machinery of the Act.
The High Court rejected that contention observing that the Government availing itself of the machinery under the Land Acquisition Act for compulsory acquisition and treating the subject matter of the acquisition as not belonging to itself but to others, is under an obligation to pay compensation as provided in the Act, and that the Government was incompetent in the proceeding under the Land Acquisition.
Act to put forward its own title to the property sought to be acquired so as to defeat the rights of persons entitled to the compensation.
The propositions so broadly stated are, in our judgment, not accurate.
The Act contemplates acquisition of land for a public purpose.
By acquisition of land is intended the purchase of such interest outstanding in others as clog the right of the Government to use the land for the public purpose.
Where (1) ; (2) 895 the land is owned by a single person, the entire market value payable for deprivation of the ownership is payable to that person : if the interest is divided, for instance, where it belongs to several persons, or where there is a mortgage or a lease outstanding on the land, or the land belongs to one and a house thereon to another, or limited interests in the land are vested in different persons, apportionment of the compensation is contemplated.
The Act is, it is true, silent as to the acquisition of partial interests in the land, but it cannot be inferred therefrom that interest in land restricted because of the existence of rights of the State in the land cannot be acquired.
When land is notified for acquisition for a public purpose and the State has no interest therein, market value of the land must be determined and apportioned among the persons entitled to the land.
Where the interest of the owner is clogged by the right of the State, the compensation payable is only the market value of that interest, subject to the clog.
We are unable to agree with the High Court of Madras that when land is notified for acquisition, and in the land the State has an interest, or the ownership of the land is subject to a restrictive covenant in favour of the State, the State is estopped from setting up its interest or right in the proceedings for acquisition.
The State in a proceeding for acquisition does not acquire its own interest in the land, and the Collector offers and the Civil Court assesses compensation for acquisition of the interest of the private persons which gets extinguished by compulsory acquisition and pays compensation equivalent to the market value of that interest.
There is nothing in the Act which prevents the State from claiming in the proceeding for acquisition of land notified for acquisition that the interest proposed to be acquired is a restrictive interest.
We agree with the observations made by Batchelor, J., Government of Bombay vs Esufali Salebhai(1) at p. 636 : " The procedure laid down in the Act is so laid down as being appropriate to the special case which is considered in the Act, i.e., the case where the complete interests are owned privately.
But that special case is, as I understand it, singled out by the legislature as the norm or type with the intent that in other cases which only partially conform to the type the procedure should be followed in so far as it is appropriate, nor that such cases should be excluded from the Act because they do not wholly conform to the type.
In other words, Government . are not debarred from acquiring and paying for the only outstanding interests merely because the Act, which primarily contemplates all interests as I.L.R. 896 held outside Government, directs that the, entire compensation based upon the market value of the whole land, must be distributed among the claimants.
In such circumstances, as it appears to me, there is no insuperable objection to adapting the procedure to the case on the footing that the outstanding interests, which are the only things to be acquired, are the only things to be paid for.
" The principle of Esufali Salebhai 's case(1) was it may be observed, approved by this Court in The Collector of Bombay vs Nusserwanji Rattanji Mistri & Others(1).
But the view expressed by the District Court that the grantees are not entitled to any compensation for the land cannot be sustained.
The District Court was bound to determine the market value, at the date of the notification under section 4 of the Land Acquisition Act, of the interest of the grantees in the land.
The order passed by he High Court is maintained subject to the modification that the market value of the interest of the grantees in the land (of the nature hereinbefore mentioned) at the date of the notification under section 4 of the Land Acquisition Act shall be determined and paid to the grantees in addition to the compensation paid for the improvement in the land.
There will be no order as to costs in this appeal.
Y.P. Order of the High Court modified.
(1) I.L.R. (2) [1955] section C. R .
| IN-Abs | The, Government of Mysore, granted a plot of land to the respondents with the added condition that "in the event of the Government requiring the land for any reason whatsoever.
the grantee shall surrender the land to the Government without claiming any compensation".
The Government acquired the land by adopting the procedure prescribed by the Land Acquisition Act but no compensation was awarded to the grantees for the land.
The High Court, in appeal, held that since the Government had failed to exercise the right which it had under the terms of the grant and had acted under the Land Acquisition Act, the grantees were entitled to compensation as provided under the Act.
In appeal, this Court, HELD : After obtaining possession of the land in pursuance of statutory authority under section 17 of the Land Acquisition Act, the Government could not seek to exercise the option conferred by the terms of the grant.
The grantees were entitled to Compensation for the land of which the ownership was vested in them.
But in assessing compensation payable to the grantees, existence of the condition which severely restricted their right could not be ignored.
[B C] The Act is silent as to the acquisition of partial interests in land but it cannot be inferred therefrom that interest in land restricted because of the existence of rights of the State in the land cannot be acquired.
When land is notified for acquisition for a public purpose and the State has no interest therein, market value of the land must be determined and apportioned among the persons entitled to the land.
Where the interest of the owner is.
clogged by the right of the State, the compensation payable is only the market value of that interest, subject to the clog.
[895 B, C] The Collector of Bombay vs Nusserwanji Rattanji Mistri & Ors. ; , followed.
Attorney General vs De Kayser 's Royal Hotel Ltd., ; , referred to.
Government of Bombay vs Esufali Salebhai, I.L.R. 34 Bom.
618, approved.
State of Madras vs A.Y.S. Parisutha Nadar, [1961] M.L.J. 285, disapproved.
|
ivil Appeals Nos.
1148, 1656 and 2341 of 1966.
Appeals by special leave from the judgment and decree dated July 27, 1965 of the Punjab High Court in Letters Patent Appeals Nos.
13 to 15 of 1965.
Prem Chand Jain and Janardan Sharma, for the appellants (in all the appeals).
D.D. Sharma, for respondents Nos. 1 (iv to xiii) in all the appeals).
The Judgment of the Court was delivered by Ramaswami, J.
These appeals are brought by special leave on behalf of the defendants against the judgment of the Punjab High Court dated 27th July, 1965 in Letters Patent Appeals Nos. 13 and 14 of 1965.
Dhara Singh, respondent No. 2, executed three sale deeds with regard to lands at village Bhadani, 'Tehsil Jhajjar, Rohtak in favour of the appellants in all the three appeals.
The first sale was of land measuring 27 kanals and 4 marlas dated September 20, 1960, the second was of land measuring 36 kanals and 19 marlas dated November 23, 1960 and the third was of land measuring 33 kanals and 18 marlas dated March 6, 1961.
Neki deceased, who was the father 's brother of Dhara Singh, vendor, instituted three suits in the court of Subordinate Judge at Jhajjar for possession of the aforesaid lands covered by the three sales on the ground that he had a superior right of pre emption on the basis of his relationship with the vendor as against the appellants under section 15(1)(a) of the Punjab Pre emption Act, 1913 (Punjab Act 1 of 1913).
These suits were contested by the appellants.
After hearing the contentions of the rival parties, the Subordinate Judge granted decrees in ail the three suits in favour of the plaintiffs.
In suit No. 311 of 1961 the decree stipulated that the plaintiff should deposit the amount of Rs. 3,500/ in court on or before 15 1 1963.
In suit Nos. 368 and 369 of 1961 the condition was that the plaintiffs should make the deposit of Rs. 5,000/ and Rs. 7,000/ respectively in court on or before 15 1 1963.
The appellants took the matter in appeal before the Senior Subordinate Judge who by his judgment dated 30th January, 1963 dismissed the appeals against the decrees in 835 suits Nos. 313 and 369 of 1961 and modified the decree in suit No. 368 of 1961 to the extent that the plaintiff was called upon to deposit a further sum of Rs. 2,000/ on or before 1 3 1963.
The appellants preferred regular Second Appeals Nos. 280, 281 and 282 of 1963 in the High Court against the decrees and judgment of the Senior Subordinate Judge, Rohtak.
The plaintiffs also preferred in the High Court appeal No. 830 of 1963 against the increase made in the price of the land by the Senior Subordinate Judge Rohtak in the appeal arising out, of decree in suit No. 368 of 1961.
While the appeals were pending in the High Court, Neki plaintiff died on April 7, 1963.
After his death, the appellants vendors in the three regular appeals moved applications under 0.22, r. I of the Civil Procedure Code to bring on record of the appeals the legal representatives of Neki, deceased plaintiff, namely, Dhara Singh, Ramkishan and Balbir Singh.
All the four appeals were heard and dismissed by Mr. Justice Khanna by his judgment dated 17th September, 1964.
The appellants preferred appeals under the Letters Patent which were dismissed by a Division Bench of the Punjab High Court by a common judgment dated 27th July, 1965.
The claim of Neki for pre emption was based on sections 14 and 15 (1) (a) of the Punjab Pre emption Act 1913 (Punjab Act 1 of 1913).
Section 14 states : "No person other than a person who was at the date of sale a member of an agricultural tribe in the the same group of agricultural tribes as the vendor shall have a right of pre emption in respect of agricultural land sold by a member of an agricultural tribe".
"Section 15 (I) (a) reads as follows "The right of pre emption in respect of agricultural land and village immovable property shall vest (a) where the sale is by a sole owner: FIRST, in the son or daughter or son 's son or daughter 's son of the vendor; SECONDLY, in the brother or brother 's son of the vendor; THIRDLY, in the father 's brother or father 's brother 's son of the vendor; FOURTHLY, in the tenant who holds under tenancy of the vendor the land or property sold or a part thereof .
" The Punjab Pre emption Act, 1913 was amended by Punjab Act 10 of 1960 and section 6 of the amending Act inserted a new section 31 in the Principal which states as follows: 836 "No court shall pass a decree in a suit for pre emption whether instituted before or after the commencement of the Punjab Pre emption (Amendment) Act, 1960, which is inconsistent with the provisions of the said Act".
It is necessary also to refer at this stage to the provisions of 0.22, r.1 and 0.22, r. 1 1 which are to the following effect : "0.22, r. 1 : The death of a plaintiff or defendant shall not cause the suit to abate if the right to sue survives".
"0.22, r.
I I : In the application of this Order to appeals, so far as may be, the word 'plaintiff ' shall be held to include an appellant the word 'defendant ' a respondent, and the word 'suit an appeal".
In support of these appeals, learned counsel put forward the argument that the right of pre emption claimed by Neki deceased plaintiff was a personal right which died with him upon his death and the legal representatives of Neki were not entitled to be granted a decree for pre emption.
The argument was that the statutory right of pre emption under the Punjab Act was not a heritable right and no decree for pre emption should have been passed by the lower court in favour of ',he legal representatives as representing the estate of Neki.
We are unable to accept the argument put forward by the appellants.
It is not correct to say that the right of pre emption is a personal right on the part of the pre emptor to get the re transfer of the property from the vendee who has already become the owner of the same.
It is true that the right of pre emption becomes enforceable only when there is a sale but the right exists antecedently to the sale, the foundation of the right being the avoidance of the inconveniences and disturbances which would arise from the introduction of a stran (Ter into the land.
The correct legal position is that the statutory law of pre emption imposes a limitation or disability upon the ownership of a property to the extent 'that it restricts the owner 's right of sale and compels him to sell the property to the person entitled to pre emption under the statute.
In other words, the statutory right of pre emption though not amounting to an interest in the land is a right which attaches to the land and which can be enforced against a purchaser by the person entitled to pre empt.
In the present case, Neki obtained decrees for pre emption in all the three suits against the appellants and these decrees were confirmed by the first appellate Court.
While the second appeals were pending in the High Court, Neki died and the question is whether under the provisions of 0.22, r. I and 0.22, r. I I of the Code of Civil Procedure, the right to sue survived after the death of Neki.
In this context, it is necessary to consider the provisions of section 306 of the Indian 837 Succession Act XXIX of 1925.
This section expresses a qualification of the maxim actio personalis mortiur cum persona to the extent that the section indicates that, amongst causes of action which survive, are included some actions of a personal nature, that is to say personal actions other than those expressly excluded by the section itself.
It is true that the right of pre emption under section 15(1)(a) of the Punjab Act of 1913 is a personal right in the sense that the claim of the pre emptor depends upon the nature of his relationship with the vendor.
But under section 14 of the Act, the pre emptor must be a member of an agricultural tribe in the same group of agricultural tribes as the vendor and the land of which pre emption is sought must be in respect of agricultural land sold to a member of the agricultural tribe.
We are of opinion that if an involuntary transfer takes place by inheritance the successor to the land takes the whole bundle of the rights which go with the land including the right of pre emption.
The view which we have taken is supported by the language of section 306 of the Indian Succession Act and it follows therefore that the claim of Neki for pre emption did not abate upon his death and that the legal representatives of Neki were properly brought on record of the second appeals under the provisions of 0.22, r. 1 read with 0.22, r. 10 of the Code of Civil Procedure.
The view that we have expressed is borne out by a decision of the Punjab High Court in Faqir Ali Shah vs Ram Kishan & Ors.(1).
The question that arose for determination in that case was whether the right to sue for pre emption under s.12 of the Punjab Laws Act upon a cause of action which accrued to a person in his life time passed at his death to his successor who inherited the property through which the right had accrued.
The view of the Full Bench as regards the transfer by inheritance was that the general principle applied and that the right of pre emption passed with the land and the learned Judges distinguished the transfer by inheritance from the transfer of property by some voluntary act of the par ties.
At p. 641 of the Report, Clark, C.J. observed : "While, therefore, there is good reason why volun tary transfers should not pass a right of pre emption as regards properties previously sold, those reasons do not apply to transfers by inheritance.
As regards transfers by inheritance, the general principle should apply that the right of pre emption passes with the land.
Mr. Grey laid great stress on sections 13 and 16 of the, Punjab Laws Act urging that the father was the person on whom the notice had to be served, and that it was he who had the right to sue and that the right was thus a personal one that could not (1) 133 P. R. 1907.
838 be inherited by the son.
The right was no doubt a personal one in the father based on his land, but I can see no reason why such right cannot be inherited by the son.
If the father had waived or otherwise disposed of his right this would no doubt be binding on the son, as the father was representing the whole estate.
Where, however, the father has done nothing of the kind, but has simply taken no steps in the matters, there seems to me no reason why the son should not step into the shoes of his father and take the same action as the father could have done.
The son inherits the other causes of 'action belonging to his father and why not this one ? Nor do I see why the son cannot come in under Section 16, simply alleging that no notice as required by section 13 was served on his father".
A similar view was expressed by the Full Bench of the Allahabad High Court in Wajid Ali & Ors.
vs Shaban & Ors.
It was held that where a right of pre emption exists by custom as recorded in the village wajib ul arz, the right having once accrued did not of necessity lapse by the death of the pre emptor before making a claim, but descended along with the property in virtue of which it subsisted to the heir of the pre emptor.
It is necessary to emphasize that we are dealing in this; case with the statutory right of pre emption under Punjab Act 1 of 1913 and its subsequent amendment and not with the right of preemption under the Mohammedan Law.
In regard to the latter right it has been held that according to the Mohammadan law applicable to the Sunni sect if a plaintiff in a suit for pre emption has not obtained his decree for pre emption in his life time the right to sue does not survive to his heirs. (See Muhammad Husain vs Niamet un nissa and Ors.) (2).
It is not necessary for us to express any opinion on this point in the present case.
On behalf of the respondent it was also pointed out that after the passing of the decree by the, trial court, Neki complied with the terms of the decree and made payments within the time given.
It was said that under the terms of section 14 and section 1 5 (1 ) (a) the title to the land in the pre emption suits must be deemed to have accrued to Neki from the date of such payment.
It was argued that before his death, Neki became the owner of the lands which were the subject matter of pre emption and the legal representatives of Neki were substituted in his place as representing the estate of Neki.
In support of this proposition counsel relied upon the language of 0.20 r. 14(1) which states : "Where the court decrees a claim to pre emption in respect of a particular sale of property and the pur (2) 1.
L. R. 20 All.
88. 839 chase money has not been paid into Court, the decree shall (a) specify a day on or before which the purchasemoney shall be so paid, and (b) direct that on payment into Court of such purchase money, together with the costs (if any) decreed against the plaintiff, on or before the day referred to in clause (a) the defendant shall deliver possession of the property to the plaintiff, whose title thereto shall be deemed to have accrued from the date of such payment, but that, if the purchase money and the costs (if any) are not so paid, the suit shall be dismissed with costs.
" In this connection counsel referred to the decision of the Punjab High Court in Ganga Ram & Ors.
vs Shiv Lal(1) where it was held that the title to the preempted property passes to the pre emptor under a pre emption decree on deposit of the purchase money in terms of the decree and was deemed to.
pass to him from the date of the deposit.
So far suit No. 368 is concerned, there is a dispute as to whether or not Neki deposited the amount under the decree within the time prescribed but as regards suits Nos. 311 and 369 of 1961, it is admitted that the deceased Neki made the payment of the amount under the two decrees within the time prescribed.
So far as these two decrees are concerned, the deposit of the purchase money is an additional reason for holding that the legal representatives of Neki were properly substituted in his place in the proceedings of the second appeals.
It was finally urged on behalf of the appellants that, in any vent, section 31 of the Punjab Act 1 of 1913 as amended by Punjab Act 10 of 1960 stood as a bar to the granting of a decree in favour of the substituted respondents.
The argument was stressed that section 31 of the Punjab Act 1 of 1913 was in plain words retrospective in character and Dhara Singh and his two sons as legal representatives of Neki could not be granted a decree for pre emption.
In our opinion, this argument is wholly irrelevant.
The reason is that the Amending Act came into force on February 4, 1960 and Neki instituted the present suits for pre emption long after this date.
Even the three sales of land were effected after the promulgation of the Amending Act.
Reliance was placed on behalf of the appellants on the decision of this Court in Ram Sarup vs Munshi & Ors.(1) but the material facts of that case are quite different.
It appears that the claim of pre emption in that case was based upon section 15(c) 'thirdly ' of the Punjab Pre emption Act 1913 which states: (1) 66 P. L. R. (1964), 251.
(2) 840 "Subject to the provisions of section 14 the right of preemption in respect of agricultural land and village immoveable property shall vest (a) where the sale is by a sole owner or occupancy tenant or, in the case of land or property jointly owned or held, is by all the co sharers jointly, in the persons in order of succession, who but for such sale would be entitled, on the death of the vendor or vendors, to inherit the land or property sold; (b) where the sale is of a share out of joint land or property, and is not made by all the co sharers jointly, firstly, in the lineal descendants of the vendor in order of succession; secondly, in the co sharers, if any, who are agnates, in order of succession; (c) If no person having, a right of pre emption under clause (a) of clause (b) seeks to exercise it: thirdly, in the owners of he estate;. . " By section 4 of the amending Act (Act 10 of 1960) section 1 5 of the parent Act was repeated and in its place was substituted a new provision which omitted to confer a right of pre emption in the case of persons 'owning land in the estate ' as the original section 15(c) 'thirdly ' had done.
Retrospective effect was given to the provision by the insertion of a new section 31 in the.
parent Act.
The question for consideration was that whether by reason of this amendment in the law the respondent was entitled to the benefit of the decree which he obtained under the previously existing enactment.
It was the case of the plaintiff that he owned land in the 'estate ' whereas the vendee did not own land there.
The defendant while not disputing that the plaintiff owned land in the village or the correctness of the allegation that the land was in an 'estate ', sought to prove that he too owned land in the same village and 'estate ' but in this he failed.
As the case of the plaintiff was directly covered by the terms of the statute his suit was decreed by the trial court on Novber 8, 1951, and an appeal and second appeal therefrom were also dismissed.
The question was whether the respondent was entitled to a decree in view of section 31 of the Punjab Pre emption Act 1913 as amended by Punjab Act 10 of 1960 which came into force on February 4, 1960.
It was held by this Court that in view of the plain language of section 3 1, the substantive law enacted by the legislature in the amended section 15 of the Pre emption 841 Act should be applied and the decree for pre emption in favour of the first respondent should be set aside.
It is manifest that the material facts of the present case are different and the ratio of the decision of this Court in Ram Sarup vs Munshi & Ors.
(1) has no application to the present case.
In Ram Sarup 's case(1) the right of the plaintiff to pre empt was extinguished retrospectively; in the present case Neki 's right to sue has not been extinguished Neki had the right of pre emption under the Amended Act at the time he, instituted the suit and Neki 's right was not extinguished on his death but passed to his legal representatives.
For the reasons expressed above, we hold that these appeals have no merit and must be dismissed with costs.
There will be one set of hearing fee.
Y.P. (1) ; Appeals dismissed.
| IN-Abs | By section 4 of the Amending Act (Punj.
Act 10 of 1960) section 15 of the Punjab Pre emption Act, 1913 was repealed and in its place was substituted a new provision which omitted to confer a right of pre emption in the case of persons 'owning land in the estate ' as the original section 15(c) 'thirdly ' had done.
Retrospective effect was given to the provisions by the insertion of new section 31 in the parent Act.
In respect of sales effected after the promulgation of the Amending Act, one N filed suits and obtained decrees for pre emption in all suits against the appellants under section 15(1)(a) of the Punjab Pre emption Act.
These decrees were confirmed by the first appellate court.
While the second appeals were pending in the High Court, N died, and his legal representatives were brought on record.
The High Court dismissed the appeals.
In appeals to this Court, it was contended that (i) the statutory right of pre emption under the Punjab Preemption Act, was not a 'heritable right ' and no decree for pre emption should have been passed by the lower court in favour of the legal representatives; and (ii) section 31 of the Act as amended retrospectively by Punjab Act 10 of 1960, stood as a bar to the granting of a decree in favour of substituted legal representatives.
HELD : The appeals must be dismissed.
(i) The statutory right of pre emption though not amounting to an interest in the land is a right which attaches to the land and which can be enforced against a purchaser by the persons entitled to pre empt.
The right of pre emption under section 15(1) (a) of the Punjab Act of 1913 is a personal right in the sense that the claim of the pre emptor depends upon the nature of his relationship with the vendor.
But under section 14 of the Act, the pre emptor must be a member of an agricultural tribe in the same group of agricultural tribes, as the vendor and the land of which preemption is sought must be in respect of agricultural land sold to a member of the agricultural tribe.
If an involuntary transfer takes place by inheritance the successor to the land takes the whole bundle of the rights which go with the land including the right of pre emption.
This view is sup ported by the language of section 306 of the Indian Succession Act and therefore, the claim of N for pre emption did not abate upon his death and his legal representatives were properly brought on 'record of the second appeals under the provisions of 0. 22, r. 1 read with 0. 22, r. 10 of the Code of Civil Procedure.
(836 G; 837 B D] Faqir Ali Shah vs Rani Kishan & Ors.
133 P.R. 1907 and Wajid Ali & Ors.
vs Shaban & Ors.
1.L.R. 31 All 623, approved.
Muhammad Husain vs Niamat un nissa & Ors.
I.L.R. 20 All, 88, referred to. 834 (ii) The Amending Act came into.
force long before N instituted the present suits.
Even the sales of land were effected after the promulgation of the Amending Act.
In Ram Sarup 's case, the right of the plaintiff to pre empt was extinguished retrospectively; in the present case N 's right to sue has not been extinguished.
N had the right of pre emption under the Amended Act at the time he instituted the suit and N 's right was not extinguished on his death but passed to his legal representatives.
[839 G] Ram Sarup vs Munshi & Ors.
[196.3] 3 S.C.R. 858, distinguished.
|
iminal Appeal No.122 of 1965.
Appeal from the judgment and order dated December 1, 1964 of the Allahabad High Court in Government Appeal No.785 of 1963.
P. Rana, for the appellant.
J. P. Goyal and Sobhag Mal Jain, for the respondents.
The Judgment of the Court was delivered by Hegde, J.
In this appeal by certificate, the only question that arises for decision is as to the true scope of the expression "time requisite for obtaining a copy of the decree, sentence or order appealed from" found in sub section
2 of section 12 of the Indian Limitation Act 1908 which wilt be hereinafter referred to as the Act.
The said question arose for decision under the following circumstances: The respondents were tried for various offences before the learned assistant sessions judge, Farrukhabad.
The said learned judge acquitted them.
Against the order of acquittal the State went up in appeal to the High Court of Allahabad.
The said appeal was dismissed as being barred by limitation.
The correctness of that decision is in issue in this appeal.
Item 157 of the first schedule to the Act prescribes that the period of limitation for an appeal under the Code of Criminal Procedure 1898, from an order of acuittal is three months from the date of the order appealed from.
But sub section 2 of section 12 provides that in computing the period of limitation prescribed for an appeal the day on which the judgment complained of was pronounced and the time requisite for obtaining a copy of the order appealed from shall be excluded.
The memorandum of appeal was filed into court on March 29, 1963.
The order appealed from bad been delivered on Novem ber 10, 1962.
According to the information contained in the copy of the order produced along with the said memorandum the appeal was within time.
It showed that that copy was, applied for on November 15, 1962 and the same was ready on January 3, 1963.
It was contended on behalf of the respondents that the appeal was out of time in view of the fact that the appellant had applied for and obtained two other copies of the order appealed from and if time is calculated on the basis of those copies the appeal was beyond time.
In addition to the copy referred to earlier, the 844 appellant had applied for another copy of the order appealed from on December 3, 1962 and that copy was ready for delivery on December 20, 1962.
The appellant also applied for yet another copy of the same order on December 21, 1962 and that copy was made ready on the same day.
There is no dispute that if the period of limitation is computed on the basis of those copies the appeal was barred by limitation.
But the point for consideration is whether the obtaining of those copies has any relevance in the matter of computing the period of limitation for the appeal.
The High Court of Allahabad accepted the contention of the respondents that in determining the time requisite for obtaining a copy of the order appealed from, it had to take into consideration the copies made available to, the appellant on the 20th and 21st December, 1962.
It opined that the expression 'requisite ' found in section 12(2) means "properly required", and hence the limitation has to be computed on the basis of the copy made available to the appellant in December, 1962.
It was not disputed on behalf of the respondents that it was not necessary for the appellant to apply for a copy of the order appealed from immediately after the order was pronounced.
The appellant could have, if it chose to take the risk, waited till the ninety days period allowed to it by the statute was almost exhausted.
Even then the time required for obaining a copy of the order would have been deducted in calculating the period of limitation for filing the appeal.
Hence the expression 'time requisite ' cannot be understood as the time absolutely necessary for obtaining the copy of the order.
What is deductible under section 12(2) is not the minimum time within which a copy of the order appealed against could have been obtained.
It must be, remembered that sub section 2 of section 12 enlarges the period of limitation prescribed under entry 157 of Schedule 1.
That section permits the appellant to deduct from the time taken for filing the appeal, the time required for obtaining the copy of the order appealed from and not any lesser period which might have been occupied if the application for copy had been filed at some other date.
That section lays no obligation on the appellant to be prompt in his application for a copy of the order.
A plain reading of section 12(2) shows that in computing the period of limitation prescribed for an appeal, the day on which the judgment or order complained of was pronounced and the time taken by the court to make available the copy applied for, have to be excluded.
There is no justification for restricting the scope of that provision.
If the appellate courts are required to find out in every appeal filed before them the minimum time required for obtaining a copy of the order appealed from, it would be unworkable.
In that event every time an appeal is filed, the court not only will have to see 84 5 whether the appeal is in time on the basis of the information available from the copy of the order filed along with the memorandum of appeal but it must go further and hold an enquiry whether any other copy had been made available to the appellant and if so what was the time taken by the court to make available that copy.
This would lead to a great deal of confusion and enquiries into the alleged laches or dilatoriness in respect not of copies produced with the memorandum of appeal but about other copies which he might have got and used for other purposes with which the court has nothing to do.
The High Court in arriving at the decision that the appeal is barred by time relied on the decision of the Lahore High Court in Mathela and Others vs Sher Mohammad(1).
It also sought support from the decisions of the Judicial Committee in Pramatha Nath Roy vs Lee( ) and J. N. Surty vs T. section Chettyar(3).
The Lahore decision undoubtedly supports the view taken by the High Court.
It lays down that the words "time requisite" mean simply time required by the appellant to obtain a copy of the decree assuming that he acted with the reasonable promptitude and diligence.
It further lays down that the time requisite for obtaining a copy is the shortest time during which the copy would have been obtained by the appellant, and it has nothing to do with the amount of time spent by him in obtaining the copy which he chooses to tile with the memorandum of appeal.
With respect to the learned judges who decided that case we are unable to spell out from the language of section 12(2) the requirement that the appellant should act with reasonable promptitude and diligence and the further condition that the time requisite for obtaining a copy should be the shortest time during which a copy could have been obtained by the appellant.
We are of the opinion that the said decision does not lay down the law correctly.
Now we shall proceed to consider the decisions of the Judicial Committee relied on 'by the High Court.
In Pramatha Nath Roy vs Lee (2) the appellant was found to be guilty of laches.
The Judicial Committee held that he was not entitled to deduct the time lost due to his laches.
It is in that context the Board observed that the time which need not have elapsed if the appellant had taken reasonable and proper steps to obtain a copy of the decree or order could not be regarded as 'requisite ' within sub section 2 of section 12.
That decision does not bear on the question under consideration.
In J. N. Surty vs T. section Chettyar 3 the question that fell for decision by the Judicial Committee was whether in reckoning the time for presenting an appeal, the time required for obtaining (1) A.I.R. 1935 Lah. 682.
L3Sup.
CI/68 10 (3) 55 [.A. 161.
(2) 49 I.A. 3 7. 846 a copy of the decree or judgment must be excluded even though by the rules of the court it was not necessary to produce with the memorandum of appeal the copy of the decree or judgment.
Their Lordships answered that question in the affirmative.
While deciding that question, their Lordships considered some of the observations made by the High Court relating to the dilatoriness of some Indian practitioners.
In that context they observed "There is force no doubt in the observation made in the High Court that the elimination of the requirement to obtain copies of the documents was part of an effort to combat the dilatoriness of some Indian practitioner; and their Lordships would be unwilling to discourage any such effort.
All, however, that can be done, as the law stands, is for the High Courts to be strict in applying the provision of exclusion.
The word 'requisite ' is a strong word; it may be regarded as meaning something more than the word ` required '.
It means 'properly required ' and it throws upon the pleader or counsel for the appellant the necessity of showing that no part of the delay beyond the prescribed period is due to his fault.
" In other words, what their Lordships said was that any delay due to the default of the pleader of the appellant cannot be deducted.
There can be no question of any default if the steps taken by the appellant are in accordance with law.
Hence, the above quoted observations of the Judicial Committee can have no application to the point under consideraion.
Preponderance of judicial opinion is in favour of the con clusion reached by us earlier.
The leading case on the subject is the decision of the full bench of the Madras High Court in Panjamv.
Trimala Reddy(1), wherein the court laid down that in section 12 the words 'time requisite for obtaining a copy of the decree ' mean the time beyond the party 's control occupied in obtaining the copy which is filed with the memorandum of appeal and not an ideal lesser period which might have been occupied if the application for the copy had been filed on some other date.
This decision was followed by the Travancore Cochin High Court in Kunju Kesavan vs M. M. Philip(2), by the Allahabad High Court in B. Govind Rai Sewak Singh and Another vs Behuti Narain Singh(3) and by the Madhya Pradesh High Court in K. U. Singh vs M. R. Kachhi (4) .
From the above discussion it follows that the decision under appeal does not lay down the law correctly.
But yet we are of (1) I.L.R. (3) A.I.R. 1950 All. 486.
(2) A.I.R. 1953 T.C. 552.
(4) A.I.R. 1960 M.P. 140.
847 the opinion that this is not a fit case to interfere with the order of the High Court dismissing the appeal.
The respondents were acquitted by the assistant sessions judge, Farrukhabad on November 10, 1962.
We were informed by learned counsel for the State that this appeal was brought to this court mainly with a view to settle an important question of law, and under instructions from the State government he told us that he does not press the appeal on merits.
Accordingly this appeal is dismissed.
R.K.P.S. Appeal dismissed.
| IN-Abs | The appellant State filed an appeal in the High Court on March 29, 1963 against the order made by the trial court on November 10, 1962 acquitting the respondents.
According to the information contained in the copy of the order produced along with the Memorandum of Appeal, the appeal was filed within time.
It Showed that the copy was applied for on November 15, 1962 and it was ready on January 3, 1963.
It was contended on behalf of the respondents that the appeal was out of time in view of the fact that the appellant had applied for and obtained two other copies of the order appealed from and if time was calculated on the basis of those copies the appeal was beyond time.
In addition to the copy referred to earlier, the appellant had applied for another copy of the order appealed from on December 3, 1962, and that copy was ready for delivery on December 20, 1962.
The appellant also applied for yet another copy of the same order on December 21, 1962 and that copy was made ready on the same day.
It was not disputed that if the, period of limitation was computed on the basis of the two later copies, the appeal was barred by limitation.
The High Court accepted the respondent 's contention and dismissed the appeal.
On appeal to this Court.
HELD : That the decision of the High Court under appeal did not lay down the law correctly.
The expression 'time requisite ' in section 12(2) of the Limitation Act cannot be understood as the time absolutely necessary for obtaining the copy of the order.
What is deductible under section 12(2) is not the minimum time within which a copy of the order appealed against could have been obtained.
It must be remembered that section 12(2) enlarges the period of limitation prescribed under entry 157 of Schedule 1.
That section permits the appellant to deduct from the time taken for filing the appeal, the time required for obtaining the copy of the order appealed from and not any lesser period which might have been occupied if the application for copy had been filed at some other date.
That section lays no obligation on the appellant to be prompt in his application for a copy of the order.
A plain reading of section 12(2) shows that in computing the period of limitation prescribed for an appeal, the day on which the judgment or order complained of was pronounced and the time taken by the court to make available the copy applied for.
have to be excluded.
There is no justification for restricting the scope of that provision.
[844 E H] Mathela.
and others vs Sher Mohammad, A.I.R. 1935, Lah. 682; disapproved.
Pramatha Nath Roy V. Lee, 49 I.A. 307 and J. N. Surty vs T. section Chettyar, 55 I.A. 161; distinguished.
84 3 Panjam vs Trimala Reddy, I.L.R. ; Kunju Kesavan vs M.M. Philip, A.I.R. 1953 T.C. 552; B. Govind Rai Sewak Singh and Anr.
vs Behuti Narain Singh.
A.I.R. 1950, All. 486 and K. U. Singh vs M. R.Kachhi, A.I.R. 1960 M.P. 140; referred to.
|
Appeal No. 124 of 1951.
Appeal by Special Leave granted by His Majesty in Council, dated the 30th October, 1945, from the Judgment and Decree, dated the 12th July, 1944, of the High Court of Judicature at Lahore in Civil Regular Second Appeal No. 450 of 1942, against the Judgment and Decree, dated the 14th January, 1942, of the Court of the District Judge, Gurdaspur, in Appeal No. 91 of 1941, arising from the Judgment and Decree, dated 31st July, 1941, of the Court of Senior Subordinate Judge, Gurdaspur, in Suit No. 80 of 1940.
G. section Vohra and Harbans Singh for the appellants.
Achhru Ram (J. B. Dadachanji and R. N. Sachthey, with him) for respondents.
45 1954.
April 1.
The Judgment of the Court was delivered by GHULAM HASAN J.
This is an appeal by special leave granted by the Privy Council against the judgment and decree dated July 12, 1944, of a Division Bench of the High Court at Lahore passed in second appeal confirming the dismissal of the appellants ' suit cone currently by the trial Court and the Court of the District Judge, Gurdaspur.
The two appellants are admittedly the first cousins of the respondent, Harnam Singh, and belong to village Gillanwali, Tahsil Batala, District Gurdaspur.
Gurmej Singh, respondent No. 2, is a collateral of Harnam Singh in the 8th degree.
The appellants sued for a declaration that the deed of adoption executed by Harnam Singh on July 30, 1940, adopting Gurmej Singh was invalid and could not affect the reversionary rights of the appellants after the death of Harnam Singh.
The appellant 's case was that under the Customary Law of Gurdaspur District applicable to the Gill Jats ,of village Gillanwali, Harnam Singh could only adopt a is near collateral" and Gurmej Singh being a distant collateral his adoption was invalid.
The defence was a denial of the plaintiffs ' claim.
Both the trial Judge and the District Judge on appeal held that the factum and the validity of the adoption were fully established.
In second appeal Trevor Harries C. J. and Mahajan J. (as he then was) held that there was sufficient evidence of the factum of adoption as furnished by the deed and the subsequent conduct of Harnam Singh.
They held that all that was necessary under the custom to constitute an adoption was the expression of a clear intention on the part of the adoptive father to adopt the boy concerned as his son and this intention was clearly manifested here by the execution and registration of the deed of adoption coupled with the public declarations and treatment as adopted son.
Upon the legal validity of the adoption the High Court found that the answer to Question 9 of the Riwaj i am of Gurdaspur District of the year 1913 laying down that the adoption of "near collaterals only " was recognised was not mandatory.
The High Court relied in support of their 46 conclusion on a decision of Tek Chand J. in Jowala vs Diwan Singh (1) and the Privy Council decision in Basant Singh vs Brij Raj Saran Singh (2).
The first question regarding the factum of adoption need not detain us long.
The deed of adoption, Exhibit D. 1, recites that Harnam Singh had no male issue who could perform his kiry a karam ceremony after his death, that Gurmej Singh had been brought up while he was an infant by his wife and that he had adopted him according to the prevailing custom.
The recital continues that since the adoption he had been treating and calling Gurmej Singh as his adopted son.
This fact was well, known in the village and the adoptee was en joying all rights of a son.
He had executed a formal document in his favour in order to put an end to any dispute which might be raised about his adoption.
As adopted son he made him the owner of all of his property.
We are satisfied that there is ample evidence to sustain the finding on the factum of adoption.
The main question which falls to be considered is whether under the terms of the Riwaj i am applicable to the parties, Gurmej Singh being a collateral of Harnam Singh in the 8th degree could be validly adopted.
The custom in question is founded on Question 9 and its answer the Customary Law of the Gurdaspur District.
They are as follows: " Question 9.
Is there any rule by which it is required that the person adopted should be related to the person adopting ? If so, what relatives may be adopted ? Is any preference required to be shown to particular relatives ? If so, enumerate them in order of preference.
Is it necessary that the adopted son and his adoptive father should be (1) of the same caste or tribe; (2) of the same got? Answer : The only tribes that recognised the adoption of a daughter 's son are the Sayyads of the Shakargarh and the Arains of the Gurdaspur Tahsil.
The Brahmans of the Batals Tahasil state that only such of them as are not agriculturists by occupation recognize such adoption.
The Muhamadan Jats of the (1) (2) I.L.R. 57 All 494.
47 Gurdaspur.
Tahsil could not come to an agreement on this point.
The remaining tribes recognise the adoption of War collaterals only.
The right of selection rests with the person adopting.
The Khatris, Brahmans and Bedis and Sodis of the Gurdaspur Tahsil, however, state that the nearest collaterals cannot be sperseded and selection should always be made from among them" It is contended for the appellants that the expression " near collaterals only " must be construed to mean a collateral up to the third degree and does not cover the case of a remote collateral in the 8th degree.
The restriction as regards the degree of relationship of the adoptee, it is urged, is mandatory and cannot be ignored.
The expression " near collaterals " is not defined by the custom.
The relevant answer which we have underlined above gives no indication as to the precise import of the words " near collaterals.
" The custom recorded in the Riwaj i am is in derogation of the general custom and those who set up such a custom must prove it by clear and unequivocal language.
The language is on the face of it ambiguous and we can see no warrant for limiting the expression to signify collateral relationship only up to a certain degree and no further.
We are also of opinion that the language used amounts to no more than an expression of a wish on the part of the narrators of the custom and is not mandator.
If the intention was to give it a mandatory force, the Riwaj i am would have avoided the use of ambiguous words which are susceptible of a conflicting interpretation.
The provision that the right of selection rests with the person adopting also detracts from the mandatory nature of the limitation imposed upon the degree of relationship.
Though the adoption of what the custom describes as "near collaterals only" was recognized by the community of Jats, the right of selection was left to the discretion of the adopter.
There is no meaning in conferring a discretion upon the adopter if he is not allowed to exercise the right of selection as between collaterals inter se.
We are unable to read into the answer a restriction upon the choice of the adopter of any particular collateral however near in degree he may be, 48 In his valuable work entitled "Digest of Customary Law in the Punjab" Sir W.H. Rattigan states in paragraph 35 that "a sonless proprietor of land in the central and eastern parts of the Punjab may appoint one of his kinsmen to succeed him as his heir" and in paragraph 36 that "there is no restriction as regards the age or the degree of relationship of the person to be appointed".
It appears to us that the basic idea underlying a customary adoption prevalent in the Punjab is the appointment of an heir to the adopter with a view to associate him in his agricultural pursuits and family affairs.
The object is to confer a personal benefit upon a kinsman from the secular point of view 'unlike the adoption under the Hindu Law where the primary consideration in the mind of the adopter if a male is to derive spiritual benefit and if a female, to confer such benefit upon her husband.
That is why no emphasis is laid on any ceremonies and great latitude is allowed to the adopter in the matter of selection.
Mulla in his well known work on Hindu Law says: "It has similarly been held that the texts which prohibit the adoption of an only son, and those which enjoin the adoption of a relation in preference to a stranger, are only directory; therefore, the adoption of an only son, or a stranger in preference to a relation, if completed, is not invalid.
In cases such as the above, where the texts are merely directory, the principle of factum valet applies, and the act done is valid and binding." (Page 541).
We see no reason why a declaration in a Riwaj i am should be treated differently and the text of the answer should not be taken to be directory.
However peremptory may be the language used in the answers given by the narrators of the custom, the dominant intention underlying their declarations which is to confer a temporal benefit upon one 's kinsmen should not be lost sight of.
A number of cases have been cited before us to show that in recording the custom the language used was of peremptory nature and yet the Courts have held that 49 the declarations were merely directory and non compliance with those declarations did not invalidate the custom.
In Jiwan Singh and Another vs Pal Singh and Another(1) Shah Din and Beadon JJ.
held "that by custom among Randhawa Jats of Mauza Bhangali, Tahsil Amritsar, the adoption, by a registered deed, of a collateral in the 9th degree who is of 16 years of age is valid in the presence of nearer collaterals.
" The adoption was objected to on the ground that the adoptee was a remote collateral and that he was not under the age of twelve at the time of the adoption as required by the Riwaj i am.
The learned Judges held that the provision as regards the age was recommendatory and not of a mandatory character.
In Sant Singh vs Mula and Others ) Robertson and Beadon Jj.
held "that among Jats and kindred tribes in the Punjab, the general, though not 'the universal, custom is that a man may appoint an heir from amongst the descendants of his ancestor and that he need not necessarily appoint the nearest collateral.
" This was a case where a distant collateral was preferred to a nearer collateral.
The learned Judges expressed the opinion that the clause which points to the advisability of adopting from amongst near collaterals was nothing more than advisory.
In Chanan ' Singh vs Buta Singh and Others(3), a case from Jullundur District, the question and answer were as follows : "Q. No. 71: Are any formalities necessary to constitute a valid adoption, if so, describe them.
State expressly whether the omission of any customary ceremonies will vitiate the adoption ? A. .
The essence of adoption is that the fact of adoption be declared before the brotherhood or other residents of the village.
The usual practice is that the Baradari gathers together and the adopter declares in their presence the fact of the adoption.
Sweets are distributed and a deed of adoption is also drawn up.
If (1) 22 P.R. (2) 44 P.R. (3) A.I.R. 1935 Lah.
7 50 these formalities are not observed the adoption is not considered valid.
" The adoption was challenged on the ground that there was no gathering of the brotherhood.
The learned Judges (Addison and Beckett JJ.) held that it was immaterial whether there was or was not a gathering of the brotherhood at the time.
It appears that the adopter had made a statement in Court acknowledging the appointment or adoption in question.
The next day he celebrated the marriage of the boy as his son, and thereafter he looked after his education and allowed him to describe himself as his adopted son or appointed heir, and the boy lived with him as his son.
The learned Judges held that the details given in the answers to questions in various Customary Laws were not necessarily mandatory but might be merely indicatory.
In Jowala vs Dewan Singh(1) Tek Chand J. held "that an adoption of a collateral in the fourth degree, among Jats of Mauza Hussanpur, Tahsil Nakodar, District Jullundur, is valid although nearer collaterals are alive." He also held "that an entry in the Riwaj i am as to the persons who can be adopted is merely indicatory".
In a case from Delhi reported in Basant Singh and Others vs Brij Raj Saran Singh(2)the Privy Council held "that the restriction in the Riwaj i am of adoption to persons of the same gotra is recommendatory and a person of a different gotra may be adopted.
" Counsel for the appellants frankly conceded that he could cite no case where the declarations governing customary adoptions were held to be mandatory.
Whether a particular rule recorded in the Riwaj i am is mandatory or directory must depend on what is the essential characteristic of the custom.
Under the Hindu Law adoption is primarily a religious act intended to confer spiritual benefit on the adopter and some of the rules have, therefore, been held to be mandatory and compliance with them regarded as a condition of the validity of the adoption.
On the other hand, under the (1) (2) 57 All, 494. 51 Customary Law in the Punjab, adoption is secular in character, the object being to appoint an heir and the rules relating to ceremonies and to preferences in selection have to be held to be directory and adoptions made in disregard of them are not invalid.
There is no substance in the appeal and we dismiss it with costs.
Appeal dismissed.
| IN-Abs | Held, that under the Customary Law of Gurdaspur District (Punjab) applicable to the Gill Jats of village Gillanwali, the adoption of a collateral of the 8th decree is not invalid.
The answer to question 9 in Customary Law of the Gurdaspur District that "the adoption of near collateral only" should be recognised is not mandatory but directory.
Under the Customary Law in the Punjab, adoption is secular in character, the object being to appoint an heir and the rules relating to ceremonies and to preferences in selection have to be held to be directory and adoptions made in disregard of them are not invalid.
Jiwan Singh and Another vs Pal Singh and Another (22 P.R. 1913 at p. 84); Sant Singh vs Mula and Others (44 P.R. 1913 at p. 173); Charan Singh vs Butta Singh and Others (A.I.R. ; Jowala vs Dewan Singh ; and Basant Singh and Others vs Brij Raj Saran Singh (I.L.R. 57 All. 494) referred to:
|
Appeal No. 47 of 1965.
Appeal from the judgment and decree dated December 12, 1962 of the Patna High Court in Appeal from Original Decree No. 433 of 1959.
H. R. Gokhale, section N. Prasad and B. P. Singh, for the appellant.
883 emption and not of renewal was granted to the appellant Com pany.
The High Court of Patna confirmed the decree passed by the Trial Court but on different grounds.
The High Court held that the right granted by cl. 29 gave rise to an "encumbrance" which was extinguished when the interest of the owners in the land vested in the State.
With certificate granted by the High Court, this appeal has been preferred by the Company.
A notification under section 3(1) of the Bihar Land Reforms Act, 1950, on June 27, 1953 was issued in respect of the land of the owners.
Section 4 of the Act prescribes the consequences of the publication of the notification under section 3(1) : it provides, insofar as it is relevant : "Notwithstanding anything contained in any other law for the time being in force or in any contract, on the publication of the notification under sub section (1) of section 3, or sub section (1) or (2) of section 3A the following consequences shall ensue, namely : (a) Such estate or tenure including the interests of the proprietor or tenure holder in any building or part of a building comprised in such estate or tenure and used primarily as office or cutchery for the collection of rent of such estate or tenure, and his interests in trees, forests, fish eries, jalkars, hats, bazar, mela and ferries and all other sairati interests as also his interest in all sub soil including any rights in mines and minerals, whether discovered or undiscovered, or whether being worked or not, inclusive of such rights of a lessee of mines and minerals comprised in such estate or tenure (other than the interests of raiyats and under raiyats) shall, with effect from the date of vesting, vest absolutely in the State free from all encumbrances and such proprietor or tenure holder shall cease to have any interests in such estate or tenure, other than the interests expressly saved by or under the provisions of this Act.
" The opening words of this clause "Subject to the subsequent provisions of this Chapter" were omitted by Bihar Act 16 of I 959, but that omission has no practical significance in this case.
Section 10 of the Act provides : "(1) Notwithstanding anything contained in this ,Act, where immediately before the date of vesting of the estate or tenure there is a subsisting lease of mines or minerals comprised in the estate or tenure or any part thereof, the whole or that part of the estate or tenure 884 comprised in such lease shall, with effect from the date of vesting, be deemed to have been leased by the State Government to the holder of the said subsisting lease for the remainder of the term of that lease, and such holder shall be entitled to retain possession of the leasehold property.
(2) The terms and conditions of the said lease by, the State Government shall mutatis mutandis be the same as the terms and conditions of the subsisting lease referred to in sub section (1), but with the additional condition that, if in the opinion of the State Government the holder of the lease had not, before the date of the commencement of this Act, done any prospecting or developing work, the State Government shall be entitled at any time before the expiry of one year from the said date to determine the lease by giving three month 's notice in writing Provided (3) Counsel for the appellant Company contended that cl. 29 created an interest in the demised land in favour of the Company and the State of Bihar as successor in title of the original owners took the land subject to that interest.
In the alternative, counsel contended, the Company acquired immediately on execution of the indentures of lease an indefeasible right to obtain renewal and that right was enforceable against the owners and their successors in interest alike.
We are unable to agree with those contentions.
The covenant granting an option of renewal of the lease on the expiry of the period of the lease outstanding is a covenant running with the land : it creates no interest in land.
In The, State of Bihar vs Indian Copper Corporation Ltd.(1) the High Court of Patna held that a clause for renewal of a lease on the expiry of it% period has not the effect of a present demise nor does it operate to create an interest in land on the date on which the original lease was executed : a covenant for renewal is not tantamount to an actual demise and therefore "no leasehold interest is created for the renewed term when the original lease is granted.
" Under the terms of the lease dated September 30, 1940, the appellant Company became entitled to a lease for a period of fifteen years.
On the expiry of that period the Company could have entorced their right to get a renewal of the lease for a period of fifteen years against the owners if their interest had not been extinguished.
If the owners declined to carry out their obligation, the Company could sue for specific performance and claim a right to remain I ) I.L.R. 38 Pat.
1160, 885 in possession for a period of fifteen years stipulated in cl. 29.
But the provisions of the Bihar Land Reforms Act intervened.
By the express terms of section 4 (a) of the Act all the interests of the owners in all sub soil including any rights in mines and minerals, whether discovered or undiscovered or whether being worked or not, inclusive of such rights of the lessee of mines and minerals comprised in such estate or tenure became vested in the State with effect from the date of vesting absolutely and free from all encum branches.
Even the interest of the lessees of the mines and minerals comprised in the estate therefore ceased, and all encumbrances on the interest of the owners ' estate were extinguished and the State took the estate free from all the rights of the lessees.
The original contractual lease came to an end by the operation of section 4 (1 )(a,) of the Act, and a fresh statutory lease for the remainder of the term of that lease in favour of the lessee came into being under s.1 0 ( 1 ) of the Act.
The appellant Company therefore acquired the rights of a statutory lessee for the period between June 27, 1953 and September 30, 1955, with terms and conditions mutatis mutandis the same as the conditions of the original lease granted by the owners on September 30, 1940.
But by virtue of section 4 that covenant by which ,he owners had agreed to renew the lease at the option of the lessee being merely of the nature of an encumbrance and not an interest in the land was extinguished, the land vested in the State free from the obligation created by the renewal clause.
We agree with the High Court that "a clause for renewal of the lease at a future date was a limitation imposed upon the lessor.
His freedom as an absolute owner was sought to be curtailed by such agreement.
It was thus an encumbrance and all encumbrances were wiped out by section 4. . . .
Taking all these provisions into consideration, an agreement for renewal of a lease in future cannot be binding upon the State Government after the vesting of the estate".
Counsel for the appellant relied upon r. 40 of the Mineral Concession Rules, 1949, and contended that under the scheme of the Rules a lessee of a mining lease is entitled to at least one renewal.
Rule 40, insofar as it is material, provides : "(1) The period for which a mining lease may be granted shall be 30 years in the case of coal, iron ore and bauxite for manufacture of aluminium, and 20 years in the case of any other minerals, unless the applicant himself asks for a shorter period.
The lease shall be renewable at the option of the lessee, for one or two periods, each not exceeding the duration of the original lease, in the case of iron ore and bauxite for manufacture of aluminium, and one period not exceeding the 8 8 6 duration of the original lease in the case of other minerals.
" But r. 40 has no application.
Manifestly, the rule applies to grants made by the Government : it has no application to statutory leases arising by virtue of section 10 of the Bihar Land Reforms Act.
Even assuming that r. 40 applies to such a statutory lease, the duration of the "original lease" may be deemed to be no longer than the period between the date of vesting and September 30, 1955.
That period for which renewal may have been claimed has expired many years ago, and recognition of the rights of the appellant Company will be of no practical significance in this appeal.
The appeal fails and is dismissed with costs.
Appeal dismissed.
| IN-Abs | The appellant company obtained a lease of certain mica bearing land from the owners for a period of fifteen years.
The lease deed provided for a renewal of the lease on the expiry of the period at the option of the lessee.
The land was within an estate and by virtue of a notification under the Bihar Land Reforms Act, 1950, the estate vested in the State Government under section 4, free from all encumbrances and free from all rights of the lessees.
But the appellant continued in occupation for the remaining period of the contractual lease, under a statutory lease deemed to have been granted by the State under section 10 of the Act.
On the question whether the appellant was entitled to specific performance of the covenant of renewal, HELD : The agreement of renewal of the lease infuture was not binding upon the State Government after the vesting ofthe estate.
(1) The Original contractual lease came to an endby the operationof section 4 and under section 10 a fresh statutory lease for theremainder of the term of that lease, in favour of the lessee, came into being with terms and conditions mutatis mutandis the 'same as the conditions of the original lease.
But the covenant granting an option of renewal of the lease on the expiry of the period of the lease is merely a covenant running with the land, and does not create any interest in land.
It being in the nature of an encumbrance and by virtue of section 4 it was extinguished and the land vested in the State free from the obligation created by the renewal clause.
[885 C E] The State of Bihar vs Indian Copper Corporation Ltd. I.L.R. 38 Pat.
1160, approved.
(2) Rule 40 of the Mineral Concession Rules, 1949, under which a lessee of a mining lease is entitled to at least one renewal for a period not exceeding the duration of the original lease, applies to grants made by Government and not to statutory leases.
Therefore, the rule has no application.
Even assuming the rule was applicable, the duration of the original lease in the case of such a statutory lease must be deemed to be no longer than the period between the date of vesting and the date of expiry of the original lease and that period, for which renewal may have been claimed, expired many years ago.
[885 G; 886 A B]
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Appeal No. 1627 of 1967.
Appeal by special leave from the Award dated March 31, 1967 of the Industrial Tribunal, Andhra Pradesh in Industrial Dispute No. 55 of 1965.
H. R. Gokhale and D. N. Gupta, for the appellant.
M. K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for the respondents.
The Judgment of the Court was delivered by Hegde, J.
This appeal has been brought to this Court by special leave.
It arises from the decision ' of the Industrial Tribunal, 9 Andhra Pradesh, Hyderabad.
The only question that arises for decision is whether on the basis of the material on the record there was any justification for framing a gratuity scheme for appellant 's staff.
The admitted facts are these : The appellant concern is hav ing about 500 looms. ' It has a subscribed capital of a little over 3 5 lakhs.
Its built up reserve is over thirty lakhs.
In three out of the six years during the period 1960 65 it has suffered substantial losses.
Out of the remaining three years, in one year it made a profit of about Rs. 45,000 in another year about Rs. 13,000 and in 1962 over rupees twelve lakhs.
The annual expenses of the appellant 's concern under the head 'salaries, wages and bonus ' are nearly 47 lakhs.
It was found by the tribunal that the appellant concern and the Nellimarla Jute Mills are sister concerns.
Both of them are under a single management, viz., M/s. Mcleod and Company, Calcutta.
They are located in the same region, the distance between the two being about 25 miles.
In Nellimarla Jute Mills a gratuity scheme for the staff is in existence and that in addition to provident fund benefits.
Our attention was not invited to any material on record to show that these findings are not correct.
In the appellant concern also there is a provident fund scheme for the staff.
The appellant in its counter affidavit filed before the tribunal admitted that it had always been the policy of the management to introduce identical terms of employment for the workmen at Nellimarla and Chitavalsah.
From the material before us it is not possible to find out the financial position of the Nellimarla mills.
We ascertained from the learned counsel for the appellant that the appellant concern had made a profit of over a lakh of rupees in 1966.
The tribunal has found and that finding was not challenged before us that the additional burden to be borne by the appellant as a result of the gratuity scheme framed by it is about Rs. 3,000 per year.
On behalf of the appellant two contentions were advanced in opposition to the proposed gratuity scheme.
They are (1) the wage board was unable to recommend a gratuity scheme for the jute industry and hence there was no justification to frame the impugned scheme, and (2) in view of the losses incurred by the appellant during the years 1960 65., no additional burden should have been cast on it by introducing a gratuity scheme.
So far as the Wage Board recommendations is concerned, it pertains to the jute industry as a whole.
After taking into consideration the 'importance of the jute industry for.
the national L4Sup.
Cl/68 2. 11 Burhanpur Tapti Mills Ltd. vs B. T. Mills Mazdoor Sangh [(1965) ". . there are two general methods of fixing the terms of a gratuity scheme.
It may be fixed on the basis of industry cum region or on the basis of units.
Both, systems are admissible but regard must, be had to the surrounding circumstances to select the right basis.
Emphasis must always be laid upon the financial position ,of the employer and his profit making capacity whichever method is selected, and it must be further seen "whether the industrial court was right in appraising the financial condition and the profit making capacity of the company A scheme for gratuity no doubt imposes a burden on the finances of the concern but the pressure is ex facie distributed over the years for it is limited to the number of retirements each year.
The employer is not required to provide the whole amount at once.
He may create a fund, if he likes and pay from the interest which accrues on a capitalised sum determined actuarially.
This is one of providing the money.
Ordinarily the payment is made each year to those who retire.
To judge whether the financial position would bear the strain the average number of retirements per year must be found out.
This is one part of the inquiry.
The next part of the inquiry is to see whether the employer can be expected to bear the burden from year to year.
The present condition of his finances, the past history and the future prospects all enter into the appraisal of.
his ability." In Calcutta Insurance Co. Ltd. vs Their Workmen(1), this Court observed "On the financial aspect 'of a gratuity scheme, we were referred to the case of Wenger & Co. vs Their workment [(1963) II LIJ 403].
There it was observed by this Court that the problem of the burden imposed by the gratuity scheme could be looked at in two ways.
one was to capitalise the burden on actuarial basis.
which would show theoretically that the burden would be very heavy; and the other was to look at the scheme in its practical aspect and find out how many employees retire every year on the average.
According to this Court, it was this practical approach which ought to be 'taken into account." (1) ; 12 In the light of the principles noted above and on the material placed before the tribunal it is not possible to hold that the tribunal 's conclusion was without any just basis.
For the reasons mentioned above this appeal fails and the same is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | The appellant was a jute mill.
The Industrial Tribunal framed a gratuity scheme for its workers.
It was challenged by the appellant before this Court in an appeal under article 136 of the Constitution.
Two contentions were urged, namely : (i) that the wage board was unable to recommend a gratuity scheme for the jute industry and hence there was no justi fication to frame the impugned scheme; (ii) in view of the losses incurred by the appellant during the years 1960 65, no additional burden should have been cast on it by introducing a gratuity scheme.
HELD : (i) The Wage Board 's recommendation pertained to the jute industry as a whole and not to any individual industrial unit.
It cannot be understood as recommending that there should be no gratuity scheme for the employees in any particular unit in that industry.
What was relevant to find out was whether the appellant could bear the additional burden.
[10 B] (ii) The Tribunal recommended the gratuity scheme after taking into consideration the financial position of the appellant as well as the fact that in a sister concern such a scheme was in existence.
The losses suffered by the appellant were considered by the Tribunal to be a passing phase.
What is of essence is the profit making capacity of the concern.
In determining that question one has to take into consideration the paid up capital of the company, its reserves, its earnings in the past and its future prospects.
A practical view of the question has to be taken.
[10 D, G] In the light of these principles and on the material placed before the Tribunal it was not possible to hold that the Tribunal 's conclusion was without any just basis.
[12 A] National Iron & Steel Co. Led. & Ors.
vs State of West Bengal & Anr.
; and Calcutta Insurance Co. Ltd. vs Their Workmen, ; , relied on.
|
Appeal No. 1862 of 1967.
Appeal under section 116 A of the Representation of the People Act 1951 from the judgment and order dated November 16, 1967 of the Punjab and Haryana High Court in Election Petition No. 19 of 1967.
112 A. K. Sen, B. Dutta, P. C. Bhartari, M. L. Aggarwal and J. B. Dadachanji, for the appellant.
section K. Mehta and K. L. Mehta, for respondent No. 1 The Judgment of the Court was delivered by Hidayatullah, J.
This appeal is directed against the judgment of the High Court of Punjab and Haryana at Chandigarh, November 16, 1967 by which the election of the appellant to the Vidhan Sabha of Haryana State from the Kaithal constituency has been declared to be void.
The election was held on February 19, 1967 and the result of the pool was declared on February 22, 1967.
The appellant had a margin of nearly 2000 votes.
over the first respondent who was the closest rival.
One other candidate had also stood but we are not concerned with him in the present appeal since he has not shown any interest in it.
He secured less than 1000 votes and forfeited his security.
The election petition was based upon allegations of corrupt practice against the successful candidate.
The gravamen of the charge was that she as a minister in the Government of Mr. Bhagwat Dayal Sharma used certain discretionary grants to bribe the voters of her constituency and in particular by paying two sums, of Rs. 2,000 for the construction of two dharamsalas ,for the Kumhar and the Sweeper Colonies at Kaithal.
There were other allegations also against her but as they have been found against the election petitioner and have not been brought to our notice we need not say anything about them.
The learned Judge who tried the election petition did not accept the evidence tendered by the election petitioner to prove the corrupt practice outlined above but held on a general appraisal of the circumstances of the case that these sums were in fact paid to bargain for votes and to influence the voters in favour of the appellant.
We shall now give a few facts of the case before stating our conclusion.
The election petition was filed on April 7, 1967.
It was later amended and better particulars were supplied on July 29, 1967.
In the original election petition as filed by the election petitioner it was stated that a sum of Rs. 2,000 from the discretionary giant of the appellant was paid to the Harijans of Keorak Gate, Kaithal for the construction of a dharamsala.
The allegation then was that in the beginning of January 1967 the Harijans were approached by the appellant and were asked to vote for her.
They flatly refused to vote for her.
Thereupon she promised to provide funds for the construction of a dharamsala in their basti and tempted by this offer they agreed to vote for her.
In regard to the other discretionary grant it 'was ' stated in the original petition that the Kumhar voters who reside in Dogran Gate.
Kaithal, were also 113 approached,by the appellant in the beginning of January 1967 and were asked to vote for her.
When they refused to vote she promised them a sum of Rs. 2,000 for building the dharamsala in their locality.
It was further pointed out that the first sum of Rs. 2,000 was paid through the Deputy Commissioner, Kamal, vide his Memo No. 78 BP III/67/335 of January 12, 1967.
The second payment was also made on the same date through the Deputy Commissioner, Karnal, vide Development Department Memo No. 47 BAP III 67/326.
The affidavit in support of the election petition was sworn by the election petitioner on information supplied by others and believed to be true.
It was stated in the verification clause that.this information was received "from my workers and believed to be true".
On an objection being raised that the particulars of the corrupt practice were not adequate and on the other hand vague and that the affidavit did not disclose the persons from whom the information was derived the Court ordered that better particulars be supplied and a fresh affidavit filed.
The amended election petition was then filed in July, 1967.
In this election petition a change was introduced.
It was stated that on December 22, 1966 the Harijans were called to a Canal Rest House through one Om Prakash Shorewala.
President of the Municipal Committee, Kaithal.
Other members of the Municipal Staff including the Executive Officer Bhalla were also present.
Among those who came were one Khaki Ram, Banwari Lal and one Harijan Lamberdar whose name was not given.
In the presence of these persons request Was made to the Harijans to vote for the appellant, and when they refused to do a sum of Rs. 2,000 was promised from the discretionary grant, and on this offer the Harijan voters consented to .vote for the appellant.
It was further alleged that this.
amount was ultimately paid to Khaki Rain and Banwari Lal through Shri Om Parkash Shorewala (R.W. 4).
As regards the second charge it was stated that on December 29. 1966 the Kumhar voters were summoned to the Canal Rest House and three persons, Thakru, Attra and Lilloo came as the representatives of the Kumhar community.
The same procedure, viz., asking them to vote for her candidature was followed by the appellant and on their refusal to do so a sum of Rs. 2,000 was promised to them for the construction of a dharamsala in their basti at Dogran Gate.
Kaithal.
This induced them to change their views.
The affidavit was also corrected.
It was stated that the allegation was based upon information received from Pandit Kailash Chander, s/o Pandit Hari Ram of Kaithal and Ch.
Inder Rai, ex Municipal Commissioner, Chandena Gate Gamri, Kaithal.
114 In answer to the amended election petition the written statement added that the allegation was a pure concoction.
The appellant pointed out that the grant for the construction of the dharamsalas was made by the appellant as far back as December 19, 1966 and that the allegation that it was the result of a bargain either on December 22 or December 29, was a pure fiction.
The election petitioner examined fourteen witnesses.
We are, however, not concerned with all of them because they are connected with the other allegations in the election petition.
Witnesses bearing upon this case were only four.
They were Gurbax Singh (P.W. 1), who only proved certain documents, P. N. Bhalla (P.W. 3), the Executive Officer of the Municipality, Thakru (P.W. 8), whose name has already been mentioned by us and Abnash Chander, the election petitioner.
In the evidence a change was again introduced.
It was attempted to be proved that the bargain which had been referred to in the election petitions actually took place on December 3, 1966.
This time it was affirmed that the Kumhars and the Sweepers were called together.
An objection was taken before the learned Judge that this evidence could not be considered because the plea was quite different.
The learned Judge ruled that the objection would be decided later.
It appears that the learned Judge did not put too much emphasis on the change of pleading presumably because he found the evidence to be unsatisfactory and unreliable.
On the side of the appellant were examined one R. N. Kapur (R.W. 1), the personal Secretary of the appellant who proved her tour programme to give a lie to some of the allegations in the election petition.
Attroo (R.W. 3), who was said to have been present at the conferences, Om Parkash Shorewala (R.W. 4), the Municipal President, Mr. Bhagwat Dayal Sharma (R.W. 5), the Chief Minister in whose Ministry the appellant was working as the Finance Minister and the appellant herself.
It is not necessary to go largely into what the witnesses said because the learned Judge himself observed as follows "Whereas according to the respondent the fact of the grant is not disputed, but it is denied that the grant was made in consideration of these communities voting for her.
If the matter had remained at this stage and the executing agency (the Sub Divisional Magistrate) had disbursed these grants I would not have been prepared to accept the oral evidence regarding the bargain which led to the grants.
But the manner, how the money was realised and disbursed, lends ample support to the evidence that the bargain was struck.
" It is clear that the learned Judge was of the opinion that the evidence led to prove the conference and the bargain at the con 115 ference was unacceptable.
He, however, accepted it because it was supported by circumstantial details of the withdrawing of the money which was sanctioned; but for this the learned Judge would not have accepted the election petition.
We shall glance at this evidence which has been led in the case.
As pointed out above the only witnesses from 'the conference are Thakru (P.W. 8) and Bhalla (P.W. 3).
With regard to Thakru it is sufficient to point out what the learned Judge himself said at the end of the deposition of Thakru : "The testimony of, this witness has not at all impressed me.
I will place no reliance whatsoever on his testimony.
" In view of this observation of the learned ' Judge we think we are entitled to ignore his testimony altogether.
As regards Bhalla (P.W. 3), he seems to have deposed not only in.
respect of these two grants but every allegation made in the election petition.
Mr. A. K. Sen, for the appellant, very pertinently described him as an omnibus witness.
His evidence is not convincing.
It appears on the record of this .case (and it was in fact admitted by Bhalla) that the appellant had taken action against him in respect of a house which fell down owing to the negligence of the Municipal Authorities.
It appears to us that Bhalla was hostile to the appellant.
There is enough material to show that he was trying to get even with the appellant for her action in putting the blame upon him for the falling down of a house from seepage of water from the municipal mains.
The learned Judge did not place any direct reliance upon Bhalla 's testimony.
As we have shown above, if it had not been for the circumstances attending the grant the learned Judge himself would have discarded his testimony.
We must, therefore, proceed with extreme caution in dealing with Bhalla 's evidence in the case.
It may be pointed out here that in the election petition as well as in the evidence it was stated that the Harijans and Kumhars were summoned through Bhalla and the peon was ordered by Om Prakash Shorewala to call the leaders of these two communities to the Canal Rest House: Sat Prakash, the peon was not examined in the case.
Of the persons present on the first occasion, viz., Banwari Lal, Khaki Ram, Lilloo and Attra and the Harijan Lamberdar who was not even named, none was examined except Attroo and Thakru.
Attroo was examined by the appellant.
We have shown above that the learned Judge placed no reliance upon Thakru 's word.
He made a similar remark about Attroo also so that the case really comes to this that there is only the evidence of the parties and such other evidence as was furnished by Shore wala and Bhalla.
The persons from whom information was derived as stated in the verification of the affidavit were not called as witnesses.
We have shown that Bhalla 's testimony must not be taken on its face value.
, Om Prakash Shorewala was support 116 ing the election petitioner but even so his evidence goes in favour Of the appellant.
The fact, 'however.
remains that the .
election petitioner himself was fumbling with the facts and was not able to state quite categorically when the conferences took place and on what date and at which place.
He changed the dates as more information came to hand.
This was not information about the conferences but the date on which the grant was sanctioned and the dates on which the appellant could be expected to have held the conferences.
In these circumstances, we are satisfied that in this case the oral evidence is practically non existing.
Mr. Mehta, who argued the case on behalf of the answering respondent, stated that it was not necessary at all to give the facts about the conferences and that the charge of bribery could be proved even without the details of how the bribe came to be given.
He relied upon the judgment of the Madras High Court in Kandaswami vs section B. Adityan for the proposition that a bribe is a bribe although the date on which it is given may not be capable of being specified if it could be established otherwise that the.
money was in: fact paid; and he further relied on a judgment of this Court in Bhagwan Datta Shasri vs Ram Ratanji Gupta & Ors.
that even if the full particulars be not given evidence might still be led to determine whether a corrupt practice had in fact taken place or not.
We need not decide in this case what the pleadings and the proof should be.
The ordinary rule of law is that evidence is to be given only on a plea properly raised and not in contradiction.
of: the plea.
Here the pleas were made on two different occasions and contradicted each other.
The evidence which was tendered contradicted both the pleas.
The source of the information was not attempted to 'be proved and the witnesses who were brought were found to be thoroughly unreliable.
In these circumstances we do not propose to refer to the evidence in this judgment any more.
This brings us to the question whether the circumstances of this case clearly demonstrated that there must have been some kind of bargain before the grant was made and that this bargain was with a view to inducing the voters to support the candidature of the appellant.
In Ghasi Ram vs Dal Singh & Ors.
(3) in which the judgment of this Court was pronounced today, the law relating to corrupt practice specially in the matter of giving of discretionary grants has been considered and stated.
It has been pointed out that a Minister in the discharge of his duties may be required to do.
some acts of administration including the granting of money for the uplift of certain communities and this action of the Minister is not to be construed against him unless it can be established (1) (3) ; 2.
(2) A.I.R. 1960 S.C. 200.
117 that there 'was a bargain with the voters for getting their assistance at the election.
Since the oral evidence in this case is non existing we must now look at the circumstances whether this conclusion which has been drawn by the High Court can be irresistibly reached.
The State of Haryana came into existence on November 1,1966.
Immediately afterwards the Cabinet placed certain sums of money at the disposal of, the Chief Minister, the Cabinet Ministers, Ministers for State and Deputy Ministers, to be used at their, discretion for the uplift of the communities.
A sum of Rs. 50,000 was placed in the discretionary grant of a Minister and the appellant as the Finance Minister in the Ministry of Shri Bhagwat Dayal Sharma was required to spend this money.
The money had to be disbursed before the end of the Financial Year, that is to say, before March 31, 1967.
It is reasonable to think that there must have been several demands in this State from the various community centres for their own uplift and they must have been clamouring even before for money for the establishment of schools, hospitals, supply of water, and so on.
The policy statement attached to the sanction of the discretionary grant stated the purposes for which the money could be utilised.
It was stated quite clearly that the money should not be given to any private person 'but should be given through the Development Commissioner for purposes of public utility and for benefit of the general public and that the execution of the works should be through certain named agencies such as Zilla Parishad, Panchayat Samities, the Panchayats concerned, the Public Works Department or any other Government Agencies or Municipality as the Minister may indicate.
In the present case money was to be disbursed through the Municipal Committee.
It is argued that the money was withdrawn and made available a day before the poll suggesting thereby that this was done to assure the voters that the money had come in as a result of the, bargain.
The hurry in reaching the money to these two wards in the Kaithal Municipality is the main reason behind the learned Judge 's conclusion that it must have been a part of a bargain.
Evidence, however shows that Bhalla (who was not favourable to the appellant) himself wrote saying that the money should be made available at once; and this money came to the hands of Om Prakash Shorewala, who, as we have already pointed out, was helping the answering respondent in his election.
It appears to us that all this hurry which did not emanate from the appellant was the result of and anxiety on the part of the recipients that the money should be made available as soon as possible.
| IN-Abs | The State of Haryana came into existence On 1st November 1966.
The Cabinet placed certain sums of money at the disposal of the ministers, one of whom was the appellant to be used at their discretion for purposes of public utility, for the benefit of the general public and for the uplift of backward communities.
The money had to be disbursed before 31st March 1967 through Panchayat, Municipal or Government agencies.
The appellant sanctioned certain payments for building two dharmashalas in two wards of a Municipality.
Long after the sanction, her candidature for election to the Vidhan Sabha of the State was recognised by her party and she stood for election from a constituency which included these two wards.
She was elected, and some time later, the money was made available to the wards though the recipients were writing that the money should be made available at once.
The first respondent challenged the election alleging corrupt practices and later amended the petition giving better particulars.
The pleas in the petition contradicted each other, the evidence tendered at the trial of the petition contradicted the pleas, and the witnesses were found to be thoroughly unreliable.
In spite of this the petition was allowed on the ground that the circumstances showed that the were in fact paid to bargain for votes and to influence the voters in favour of the appellant.
In appeal to this Court, HELD : The action of the appellant could not be construed against her.
It was done in the ordinary course of her duties as Minister and there was no evidence that it was, directly or indirectly, part of a bargain with the voters.
No hurry to make the money available to the recipients emanated from the appellant.
It was only the persons who were to benefit by the discretionary grant that were anxious to lay hands on the money, as soon as possible, so that the grant might not be cancelled later by a change of attitude caused by the election going against the particular party.
[117 H; 118 A C] Ghasi Ram vs Dal Singh & Ors. ; followed.
Bhagwan Dutta Shastri vs Ram Ratanji Gupta, A.I.R. 1960 S.C. 200 and Kandaswami vs Adityan, , referred to.
|
ON: Civil Appeals Nos. 289 to 311 of 1965 and 999 to 1001 of 1967.
Appeals from the judgments, and orders dated July 13, 1964 Of Panjab High Court in Civil Writs Nos.
587 D, 590 D, 592 595 D, 643 D, 851 D, 852 D, 1163, 1164, 1167 and 1196 of 1963, 45 D of 1964, and 994, 588 D, 589 D, 591 D,593 D,594 D, 1165, 1166, 1168, 1169, 1197, 1240, 1216 and 1155 of 1963 respectively and writ Petition No. 212 of 1966.
Petition under article 32 of the Constitution of India for the enforcement of fundamental rights.
S.V. Gupte, Rameshwar Nath and Mahinder Narain, for the appellants (in C.As.
289 to 311 of 1965).
Rameshwar Nath and Mahinder Narain, for the appellants (in C.A. No. 999 of 1967).
S.Sorabji, 'D. section Dang and Ravinder Narain, for the appellants (in C. A. No. 1000 of 1967).
S.V Gupte and K. K. Jain, for the appellants (in C.A. No. 1001 of, 1967);.
23 N, A.Palkhivala, F. N. Kaka, O. P. Malhotra O. C. Mathur and Ravinder Narain, for the 'petitioner (in W.P. No, 212 Of 1966).
C.K. Daphtary, Attorney General, B. Sen, R. H.Dhebar and S.P. Nayar, for the respondents (in W. P. No. 212 of 1966) and the respondents (in, C.A. Nos,. 289 to 311 of 1965).
C. K. Daphtary, Attorney General, and R. H. Dhebar for the respondents (in C.As.
999, 1000 and 1001 of 1967).
N. A. Palkhivala, 0.
C. Mathur and Ravinder, Narain, for the intervener (in C.As.
289 to 311 of '1965).
The Judgment of the Court *as delivered by Shelat, J. These appeals, by certificate, are against the common judgment of the High Court of Punjab which dismissed, the writ petitions filed by the appellant companies challenging the legality of excise duty levied against them, under Item 14 H in ' Sch. 1 to the Central Excise and Salt Act, 1 of 1944.
Writ Petition 212 of 1966 by Tata Chemicals Ltd. also raises die same.
question.
As both the appeals and the writ petition raise a common question of law they were heard together and are disposed of by this common judgment.
The appellant companies manufacture sugar by carbonation process as against sulphitation process employed by some other manufacturers of sugar and pay excise duty on the sugar manufactured by them under Item 1 of Sch. 1 to the Apt.
According to the affidavit of V. J. Bakre, Deputy Chief Chemist of the Central, Revenue Control Laboratory, these manufacturers bum limestone with coke in a lime kiln with a regulated amount of air and generate a mixture of gases consisting of carbon dioxide, nitrogen, oxygen and a small quantity of carbon monoxide.
Most of the oxygen from the air is used up by the coke in the process of burning itself.
The coke so burnt supplies the heat which decomposes the limestone so as to generate carbon dioxide.
The gas thus produced is sucked,by a pump through a pipe which connects the kiln with the inlet side of the pump.
The gas enters the chamber of the pump and is then immediately compressed by means of the compression stroke of the pump.
At this stage the gas is forced into a narrower space and as a result of the compression stroke it acquires pressure exceeding the atmospheric pressure.
The gas so compressed is let into the delivery pipe, which connects the outlet side of the pump with the tank containing the sugarcane juice and enters.
the sugarcane juice with the acquired pressure behind it.
But for the compression resulting in pressure the gas would not bubble in the sugarcane juice.
In the 24 tank there, is besides the sugarcane juice milk of lime which is mixed so as to remove the impurity in and refine the juice.
Thus, it is carbon dioxide which reacts on the lime and what is produced is an insoluble content known as calcium carbonate.
The other gases viz., nitrogen, 'oxygen, carbon monoxide do not contribute in the process of clarification of the sugarcane juice.
These are innocuous so far as the process of clarification of sugarcane juice is concerned and escape into the atmosphere by a vent provided in ' the sugarcane juice tank.
Along with these gases a certain amount of carbon dioxide which remains unabsorbed also escapes.
The carbon dioxide content in the mixture of gases ranges from 27 to 36.5%.
Thus, the process involves the forcing of impure carbon dioxide into a narrower space within the chamber of the pump where it is compressed and pushed first into the delivery pipe and then into the, tank containing the juice.
The respondents ' case therefore was that the process employed by the appellant companies involves compressing carbon dioxide with the pressure achieved pushing it through sugarcane juice.
The 'appellant companies therefore produced carbon dioxide through the lime kiln which was taken first to the Co2 pump and there compressed and then pushed into the tank.
The Tata Chemicals Ltd. manufactures among other products soda ash by solvay ammonia soda process.
The solvay process as described by the said V. J. Bakre is as follows First common salt is dissolved in water and ammonia gas is passed through such dissolved salt called brine.
The ammonia gas gets absorbed in the brine.
The solution so formed is called AB solution, that is, ammoniated brine.
The AB solution is introduced at the top of a carbonating tower and passed from section to section.
from the top to the bottom of the tower.
At the bottom of the tower compressed carbon dioxide is forced through at a pressure of 40 to 50 pounds per square inch and is bubbled through the liquid in all the sections of the tower.
The chemical reactions involved in the tower are: (i) Ammonia Gas plus, (ii) Carbon dioxide plus, (iii) water of the brine solution.
These react together to form ammonium bicarbonate which reacts with salt in brine to produce sodium bicarbonate and ammonium chloride.
The sodium bicarbonate thus formed being much less soluble in the liquid is precipitated and is then taken out from the bottom of the tower.
It is then filtered and the sodium bicarbonate in moist condition is left on the bed of the filter and the solution which is mostly of ammonium chloride is pumped to ammonia reaction tower where ammonia is produced.
Moist sodium bicarbonate is then washed and is heated in a calciner at 200 ' centigrade.
, The sodium bicarbonate, gets decomposed to give soda ash, water and carbon dioxide.
Carbon 25 dioxide thus produced is reutilised in the cycle of manufacture of soda ash.
It contains 85% pure carbon dioxide (according to the Company 's expert 50 to 60%) and is mixed with carbon dioxide sucked by the compressor from the lime kiln.
The whole mixture, which contains about 60% of pure carbon dioxide is compressed in the compressor to a pressure of 40 to 45 lbs.
per inch Thus carbon dioxide is essential in the production of soda ash and is produced by burning limestone with coke in a kiln in the same manner as by the, sugar manufacturing concerns which employ carbonation process.
The carbon dioxide so produced in the kiln is first compressed in the compressor during the compression stroke, and thereafter the piston compresses the. gas in the said cylinder at pressure of more than 40 to 50 pounds per square inch.
The gas so compressed is compressed carbon dioxide which comes out of another valve in the cylinder and comes into the delivery side of the compressor admixed with carbon dioxide from the calciner.
This gas is throughout at a pressure of 40 to 45 lbs.
per sq. inch.
This gas so manufactured is independent of soda ash.
The compressed carbon dioxide so produced does not lose its identity of being compressed carbon dioxide.
Pure compressed carbon dioxide is isolated from the admixture of gases in the carbonating tower where chemical reaction takes place and is used in the manufacture of soda ash.
According to the Revenue the processes employed by the appellant companies and by Tata.
Chemicals Ltd. thus involve produc tion of compressed carbon dioxide which is amenable to excise duty.
Item 14 H of Sch.
I reads as follows "14 H. Compressed, liquefied or solidified gases, the following (iv) Carbon acid Fifty per cent Fifty per cent (carbon dioxide) ad valorem By a notification dated March 2, 1963 issued under r. 8 (1 ) of the Central Excises Rules, 1944 the Central Government exempted as from April 24, 1962 carbonic acid utilised in manufacture of sugar within the factory of production for clarifying and bleachin sugarcane juice or syrup from so much of the excess of Rs. 25/ per metric tonne.
The contentions raised on behalf of the appellant companies and Tata Chemicals Ltd. may be summarised as follows : (1) that the lime kiln is maintained to generate a mixture of gases and not carbon dioxide; 4Sup.
C.I./168 3 26 (2) that at no stage in the process of generating this mixture and sucking it into the sugarcane juice for refining, carbon dioxide which forms one of the contents of the said mixture is either compressed, liquidified or solidified; (3) that the mixture of gases so generated is not carbon dioxide as known to the market; (4) that according to the specifications laid down by the Indian Standards Institution carbon dioxide content has to be at least 99%; (5) that the mixture of gases so generated has no other use except for processing sugarcane juice; (6) that the said mixture is neither sold nor is marketable nor known to the trade; (7) that the excise duty sought to be recovered on the con tent of carbon dioxide in the said mixture of gases cannot fall under Item 14 H; (8) that these concerns are not manufacturers of carbon dioxide as carbon dioxide is not separated from the said mixture of gases by any process nor is the carbon dioxide content in the said mixture compressed, liquefied or solidified; (9) that the mere fact that the said mixture of gases is passed through a conduit pipe by a process of suction cannot mean that carbon dioxide becomes compressed carbon dioxide at that or any other stage; (10) that the term "compressed" in Item 14 H contemplates the form in which the article sought to be levied is manufactured.
There is no separation of carbon dioxide from the said mixture at any stage nor is it compressed or stored as carbon dioxide in cylinders; and lastly (11) that the duty being, on goods it can be charged only on goods known as carbon dioxide in the trade and marketable as such.
The contentions of the Revenue, on the other hand, were (1) that the mixture of gases generated as aforesaid is nothing but impure carbon dioxide in the sense that during the process of burning limestone with coke a small quantity of carbon monoxide is released by the burning of coke, the other gases in the mixture being nitrogen and oxygen derived from the ' air which is let into the kiln to aid combustion; 27 (2) that these concerns require carbon dioxide for refining sugarcane juice and manufacture it out of limestone and coke.
The other gases which get mixed up are unavoidable on account of the process employed by them; (3) that these extraneous gases can be separated and the manufacturers would separate them if what they require is pure carbon dioxide.
They do not do so because carbon dioxide mixed with other gases produces the same effect in the process of refining as without them; (4) that the fact that in the process Of its manufacture carbon dioxide gets mixed up with other gases does not mean that carbon dioxide which is intended to be and is in fact produced loses its characteristics as such.
The gas thus produced contains 30 to 35% carbon dioxide; (5) that the specifications laid down by the Indian Standards Institution are not relevant as they are for cylindered carbon dioxide bought and sold in the market as pure carbon dioxide; (6) that carbon dioxide produced by these concerns can be sold in the condition in which it is produced and used by other sugar mills and by factories manufacturing soda ash by solvay process.
In support of their contentions the appellant companies as also the Tata Chemicals Ltd. relied on the specifications laid down by the Indian Standards Institution and the several affidavits made by concerns using carbon dioxide for the manufacture of their respective goods.
As most of them are identical, it is sufficient to take the affidavit of one Shantilal Patel as typical.
The deponent there asserts that the company of which he is the senior chemist uses carbon dioxide in considerable quantity in manufacturing aerated waters, that carbon dioxide so used contains 99.5% of pure carbon dioxide, that compressed liquidified or solidified carbon dioxide as known to the trade or sold in the market contains a minimum of 99% carbon dioxide conforming to the specifications of the Indian Standards Institution, that such carbon dioxide is contained in steel cylinders under a pressure of minimum of 1000 lbs.
per sq. inch and that kiln or calciner gas is not known to the trade as carbon dioxide nor is it marketed as such.
Dr. Homi Ruttonji whose affidavit was produced by Tata Chemicals Ltd. states that for the purpose of manufacturing carbon dioxide an elaborate plant shown in the annexure to his affidavit would have to be set up separate from the plant and equipment used in the manufacture of soda ash and refutes the statement of the said Bakre that compressed carbon dioxide is forced through at a pressure of 40 to 45 lbs.
per sq. inch or that 28 at the bottom of the said carbonating tower pure compressed carbon dioxide is or can be isolated from the mixture of gases in that tower where chemical reaction takes place.
He also refutes the statement that the process of generating kiln gas is independent of the manufacture of soda ash and states that the process of manufacture of soda ash is a continuous and integrated process wherein a certain quantity of kiln gas is released which is directly utilised without removal or storage in the manufacture of soda ash.
According to him, kiln gas released during the manufacture of soda ash is never known as carbon dioxide in the market.
To, obtain marketable carbon dioxide from kiln gas an elaborate plant would be required for separation and purification and it is such carbon dioxide which becomes marketable after it is compressed at a pressure of 1000 to 1800 lbs.
per sq. inch in cylinders of the specifications laid down by the Government of India under Rule II of the Gas Cylinder Rules, 1940.
Notwithstanding the divergence of opinion between the two experts one thing is clear and that is that in the case of both sugar and soda ash the manufacturer does require carbon dioxide for the purpose of producing the two articles and sets up lime kiln for that purpose.
The question is whether what he actually produces by combusting limestone with coke is carbon dioxide and if so whetheris compressed carbon dioxide as contemplated by Item 14 H.
In the Courseof their arguments counsel referred to certain works on Chemistry in general and sugarcane industry in particular.
There are observations in some of them which.
might throw some light on the question before us.
The Handbook of Cane Sugar Engineering by E. Hugot (1960 ed.) at pp. 286 to 289 states that carbon dioxide necessary for the carbonation process is produced at the same time as lime in a lime kiln adjacent to the sugar factory.
The combustion of limestone with coke produces kiln gases consisting of carbon dioxide, carbon monoxide, oxygen, nitrogen and a certain amount of moisture.
The proportion of carbon dioxide in these kiln gases varies from 25 to 33% averaging about 30%.
The carbon dioxide leaving the washer is at a temperature of 60 'C.
Its pressure at the suction of the pump varies from 1.6 to 5 in of mercury and the delivery pressure varies from 4 to 10 lbs.
per sq. inch.
It is also stated that the,pumps known as Co2 pumps are fully analogous to air pumps.
(see also Cane Sugar ' Handbook by Guildord L. Spencer and G. P. Meade, p. 138).
The carbonation process according to Hugot is one of the cheapest, cleanest *id most reliable process in the sugarcane industry ensuring standard quality of sugar.
Roger 's Industrial Chemistry, (6th ed.) p. 415 29 in the chapter dealing with "Alkali and Chlorine production" states thus "The kilns used in the process are built and operated with special precautions to produce as high a concentration of Co., as possible.
In practice 41 to 43 per cent of Co2 is.
obtained in kiln gases with very little Co or 02, the rest of the gas being N15/2.
" At pp. 415 to 417 of the said work, the Solvay process is described in the same terms as in the affidavit in support of the, petition of Tata Chemicals Ltd. J.A. Timm in his General Chemistry (4th ed.), p. 470 states that commercial carbon dioxide can be obtained as a bye product of certain industries, e.g., flue gases R. Norris Shreve in his Chemical Process Industries, (3rd ed.) states that there are three important processes for commercial production of carbon dioxide, viz., flue gases by burning carbonacious material, bye product from fermentation industries through dextrose breakdown into, alcohol and carbon dioxide and bye product of lime kiln operation.
He also states that an absorption system is used for concentrating C02 gas obtained from sources 1 and 3 to over 99%, and that in all cases the almost pure carbon dioxide must be given various chemical treatments for the removal of minor impurities which contaminate the gas.
Similarly, KirkOthmer in the Encyclopedia of Chemical Technology, (2nd ed.) Vol. 1, p. 722 observe as follows : "The carbon dioxide evolved consists of both that generated by the decomposing limestone and ' that resulting from combustion of the carbon in the coke.
The kiln gases are considerably diluted with nitrogen from the air used to burn the coke; they usually con tain 37% to 42% carbon dioxide together with stone dust, coke ash, particles and gaseous impurities.
The gas is cooled to some extent in the kiln itself by the upper layers of stone; it is further cooled and purified in water scrubbers until it is absolutely free from dust and tarry matters, and then, in the more modern plants which make a very pure soda ash, the gas is finally purified electrostatically." Arthur and Elizabeth Rose, in their Condensed Chemical Dic tionary, (7th ed.) p. 178 divide commercial carbon dioxide into two grades, both of them having at least 99% carbon dioxide.
Such carbon dioxide when solidified is packed in 50 lbs.
blocks 'in insulated boxes and is at a temperature of 109 ' below zero.
When liquified it is packed in steel cylinders.
The uses of solidified or liquefied carbon dioxide are refrigeration of foods, carbonated beverages, industrial refrigeration, fire extinguishers, welding etc.
30 These extracts show that commercial carbon dioxide as brought to the market for being bought or sold and used for the purposes enumerated above has content of at least 99% of carbon dioxide and is either compressed and packed in steel cylinders or liquefied or solidified.
As the Revenue argued these concerns undoubtedly require carbon dioxide in the processes employed by them while manu facturing sugar and soda ash and to meet, their requirement they have set up lime kilns by which they produce kiln gas which includes carbon dioxide to the extent of about 30 to 35%, which they in fact use after compressing it through a pump or otherwise, at one stage or the other in their manufacturing processes.
Nonetheless, is it possible to say that the lime kilns set up for the aforesaid purpose produce carbon dioxide and even if it be so, that at one stage or the other, through the pump or otherwise, the carbon dioxide so produced becomes compressed carbon dioxide as envisaged by the legislature when it decided to introduce Item 14 H in the First Schedule ? It cannot be gain said that by burning limestone with coke in the kiln the manufacturer actually produces kiln gas of which one of the constituents undoubtedly is carbon dioxide and which he utilises while producing his ultimate excisable goods.
But if it is possible to say that what he produces is carbon dioxide during the process which Mr. Palkhiwala termed as an integrated and continuous manufacturing process or separately as the Revenue insisted, it is equally possible to say that the combustion of limestone with coke results in the manufacture of nitrogen, whose content in the kiln gas is about 53%.
As the text books produced before us and the affidavits show, the correct picture is that what is produced is kiln gas which consists of several gases, viz., carbon dioxide, carbon monoxide, oxygen and nitrogen, the last one being in a larger quantity than carbon dioxide.
The mixture of gases so generated is known as kiln gas in the trade, i.e. to those who manufacture sugar and soda ash.
The affidavits of concerns which use carbon dioxide definitely assert that kiln gas is never known in the market as carbon dioxide nor is it a marketable article in the sense that it is loose and is not transportable nor is it brought to the market for being bought and sold unless carbon dioxide is extracted out of it.
Such extraction requires an elaborate plant.
After extraction it would have to be compressed in cylinders of certain specifications or liquefied or solidified before it can become a marketable article.
It is true as the Revenue contended that the gas produce through the kiln can be made marketable in the sense that it car be sold in the very same condition in which it is produced to concerns interested in the carbonation process through" for example, pipes.
But, apart from such a method of disposal being 31 uneconomic and hardly likely to be employed by the trade, though it is possible in theory, what would be transported is that which is produced through the kiln, viz., the kiln gas containing among other things a certain quantity of carbon dioxide.
As one of the text books points out carbonation process is employed by manufacturers of sugar because it is one of the cheapest methods to ensure production of sugar of standard quality.
The fact is that in employing carbonation process the manufacturer who requires carbon dioxide produces kiln gas and as that mixture of gases contains carbon dioxide he pumps through a pipe that mixture of gases and not carbon dioxide alone ex tracted from it.
Therefore, in truth and in fact what he uses is the kiln gas produced by him in the lime kiln.
Even assuming that this gas is compressed either through a narrow pipe what is compressed is the kiln gas and it is that kiln gas containing no doubt a certain percentage of carbon dioxide which is inducted in the sugarcane juice for refining.
The same must also be said of the solvay process used in the production of soda ash though in that case the percentage of carbon dioxide is larger than in the case of refining sugarcane juice.
The Act charges duty on manufacture of goods.
The word "manufacture" implies a change but every change in the raw material is not manufacture.
There must be such a transformation that a new and different article must emerge having a distinctive name, character or use.
The duty is levied on goods.
As the Act does not define goods, the legislature must be taken ,to have used that word in its ordinary, dictionary meaning.
The dictionary meaning is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market.
That it would be such an article which would attract the Act was brought out in Union of India vs Delhi Cloth & General Mills Ltd.(1) The contention there was that in the course of manufacture of vanaspati, a vegetable product from groundnut and til oil, the respondents brought into existence at an intermediate stage of manufacturing refined oil which fell within the description of "vegetable nonessential oil, all sorts," in Item 23 of the First Schedule.
The contention would seem to assume that the goods subjected to duty must be goods known as such in the market.
The contention was that the respondents, after they bought raw oil with all its impurities, manufactured, by application of certain processes of refinement, refined oil which was the same as refined Oil available in the market and that it was "refined oil" which became after further processes the ultimate, vegetable product.
It was argued that the fact that the vegetable product was the ultimate (1) [1963] Supp. 1 S.C.R. 586.
32 product and was chargeable to duty did not alter the position that at an earlier stage, the respondents manufactured "refined oil" as known to the market and that the fact that they did not put this "refined oil" in the market but used it to produce the finished product did not affect their liability.
This Court held that if a new substance was brought into existence from raw materials and that substance was the same as "refined oil" as known to the market it would be subject to duty.
The question, therefore, was, was the substance sought to be charged "refined oil" known to the market ? The affidavits showed that deodorization was necessary before the product could be called "refined oil".
It was not in dispute that that process was employed after hydrogenation and not at the stage when what was called "refined oil" came into existence at an intermediate stage.
No evidence was produced by the Union of refined oil being brought to the market without deodorization.
It was held that raw oil purchased by the respondents for the purpose of manufacturing vanaspati did not become at any stage "refined oil" as known to the consumers and the commercial community.
The affidavits filed in the instant cases and the scientific works referred to above show that the mixture of gases produced from the kiln is known both in trade and in science as kiln gas and not as carbon dioxide. 'The Revenue has not produced any affidavit of persons dealing in carbon dioxide to show that kiln .gas is known to the market as carbon dioxide.
The aforesaid affidavits show that carbon dioxide known to and brought in the market for being bought and sold for its diverse uses is carbon dioxide compressed, liquefied or solidified as Item 14 H describes it.
The analogy given by the learned Attorney General of a manufacturer of cotton cloth also producing at an intermediate stage cotton yarn and such cotton yarn being liable to excise duty would not help the Revenue as cotton yarn obtained by such a manufac turer is known as such in the commercial community and brought to the market for being bought and sold.
That cannot be said of kiln gas.
If kiln gas were to be offered in discharge of a contract to supply carbon dioxide it would certainly be rejected on the ground that it is no+, carbon dioxide but is kiln gas.
It is also not correct to say that because the sugar manufacturer wants carbon dioxide for carbonation purpose and sets up a kiln for it that he produces carbon dioxide and not kiln gas.
In fact what he produces is a mixture known both to trade and,, science as kiln gas, one of the constituents of which is, no doubt, carbon dioxide.
The kiln gas which is generated in these cases is admittedly never liquefied nor solidified and is therefore neither liquefied nor solidified carbon dioxide, assuming that it can be termed carbon dioxide.
It cannot be called compressed carbon dioxide as 33 understood in the market among those who deal in compressed carbon dioxide.
Compressed carbon dioxide is understood generally as carbon dioxide compressed in cylinders with pressure ranging from 1000 to 1800 lbs.
per sq. inch.
The mere fact that at one stage or the other kiln gas is pressed at 40 to 45 lbs.
per sq.
inch by a pump or otherwise cannot mean that it is compressed carbon dioxide.
At the same time the duty being on manufacture and not on sale the mere fact that kiln gas generated by these concerns is not actually sold would not make any difference if what they generate and use in their manufacturing processes is carbon dioxide.
The fact that the gas so generated has carbon dioxide below 99% and does not conform to the specifications of the Indian Standards Institution also would not matter for the gas may be sub standard, provided what is produced is carbon dioxide.
In our view, the gas generated by these concerns is kiln gas and not carbon dioxide as known to the trade i.e., to those who deal in 'it or who use it.
The kiln gas in question therefore is neither carbon dioxide nor compressed carbon dioxide known as such to the commercial community and therefore cannot attract Item 14 H in the First Schedule.
In this view it is not necessary for us to consider certain other contentions raised by the appellants and the petitioners in the writ petition.
In the result, the appeals and the writ petition must allowed and the orders passed by the High Court in the appeals must be set aside.
We hold that the demand notices served on these concerns are illegal and must be quashed.
The respondents in these appeals as also in the writ petition will pay costs to the appellants and the petitioner in the writ petition.
The costs will be one hearing fee for the appeals and a separate set of costs in respect of the writ petition.
R.K.P.S. Appeals and Petition allowed.
| IN-Abs | The appellant companies manufactured sugar by carbonation process.
land paid excise duty on sugar manufactured by them under item 1 of Sch. 1 to the Central Excise and Salt Act, 1944.
According to an affidavit filed on behalf of the respondents, these manufacturers employed a process of burning lime stone with coke in a lime kiln with a regulated amount of air whereby a mixture of gases was generated consisting of carbon dioxide, nitrogen, oxygen and a small quantity of carbon monoxide.
The gas thus produced was thereafter compressed so as to achieve pressure exceeding atmospheric pressure and then passed through a tank containing sugarcane juice so as to remove impurities from it and to refine the juice.
For this process of refining it was only the carbon dioxide in the gas which was used and the other gases i.e. nitrogen, oxygen and carbon monoxide escaped into the atmosphere by a vent provided for the purpose.
The carbon dioxide content in this mixture of gases ranged from 27 to 36.5%.
Similarly, another company manufactured soda ash by solvay ammonia soda process for which also carbon dioxide is required and this was produced by the petitioner by burning lime stone with coke in a kiln in the same manner as the appellant 'sugar manufacturing companies employing the carbonation process.
The respondents regarded all the companies as manufacturers of compressed carbon dioxide and levied excise duty on them under Item 14 H in Sch. 1 to the Act.
The appellants filed writ petitions in the High Court challenging the validity of this excise duty but these petitions were dismissed.
It was contended, inter alia, on behalf of the appellants that the lime kiln was maintained to generate a mixture of gases and not carbon dioxide and at no stage in the process of generating this mixture and passing it through the sugarcane juice was carbon dioxide which formed one of the contents of the mixture either compressed, liquidified or solidified.
The mixture of gases so generated was not carbon dioxide as known to the market nor was it according to the specifications laid down by the Indian Standards Institution which required the carbon dioxide content to be at least 99%.
Therefore the excise duty sought to be recovered on the content of carbon dioxide in the mixture of gases could not fall under Item 14 H. Furthermore the duty being on goods it could be charged only on goods known as carbon dioxide in the trade and marketable as such.
22 HELD : The gas generated by the appellant companies was kiln gas and not carbon dioxide as known to the trade, i.e., to those who deal in it or who use ' it.
The kiln gas in question.
therefore is neither carbon.
dioxide nor compressed carbon dioxide known as such to the commercial community and therefore cannot attract Item 14 H in the First Schedule.
It was not correct to say that because the sugar manufacturer wants carbon dioxide for carbonation purposes and sets up a kiln for it that he produces carbon dioxide and not kiln gas.
In fact what he produces is a mixture known both to trade and science as kiln gas one of the constituents of which is, no doubt, carbon dioxide.
The kiln gas which is generated in these is admittedly never liquified nor solidified and is therefore neither liquified nor solidified carbon dioxide, assuming that it can be termed carbon dioxide.
It cannot be called compressed carbon dioxide as understood in the market among those who deal in compressed carbon dioxide.
Compressed carbon dioxide is understood generally as carbon dioxide compressed in cylinders with pressure ranging from 1,000 to 1,800 lbs.
per sq. inch.
The mere fact that at one stage or the other kiln gas is pressed at 40 to 45 lbs.
per sq.
inch by a pump or otherwise cannot mean that it is compressed carbon dioxide.
At the same time the duty being on manufacture and not on sale the mere fact that kiln gas generated by these is not actually sold would not make any difference if what they generate and use in their manufacturing processes is carbon dioxide.
The fact that the gas so generated has carbon dioxide below 99% and does, not conform to the specifications of the Indian Standards Institution also would not matter for the gas may be sub standard, provided what is produced is carbon dioxide.
[32 D H] Union of India v, Delhi Cloth & General Mills Ltd. [1963] Supp.
I S.C.R. 586, referred to.
|
Appeal No. 1693 of 1967.
14 Appeal under section 116 A of the Representation of the People Act, 1951 from the judgment and order dated September 21, 1967 of the Madhya Pradesh High Court in Election Petition No. 10 of 1967.
G. N. Dikshit and R. N. Dikshit, for the appellant.
C. B. Agarwala Uma Mehta, section K. Bagga and Shureshta Bagga, for respondent No. 1.
The Judgment of the Court was delivered by Hidayatullah, J.
This is an appeal against the, judgment of the High Court of Madhya Pradesh at Jabalpur, dated September 21, 1967.
dismissing the election petition filed by the appellant on the preliminary ground that a proper copy of the election petition was not served upon the answering parties.
The facts of the case are as follows The appellant was a candidate for election to the Sagar Lok Sabha Scheduled Castes constituency No. 24.
The election took place on February 20, 1967.
There were three other contesting candidates of whom the first respondent secured the largest number of votes and was declared elected.
The appellant secured the second largest number of votes, her votes being less by just under 300 than the successful candidate 's votes.
An election petition was thereafter filed by the appellant on April 5, 1967.
In this ,election petition the appellant challenged the election of the first respondent on four grounds.
They were (a) wrongful acceptance . ,of his nomination paper, (b) corrupt practice inasmuch as .he appealed to religion through a pamphlet marked Annexure (c) undue influence, and (d) breaches of the.
Act and Rules.
The pamphlet to which reference is made was styled Bhayankar Vajraghat and was published by Sarvadaliya Goraksha Mahabhiyan Samiti, Deori Kalan Branch.
It charged the party of the appellant namely the Congress with encouraging cow slaughter and ,offending.
the Hindu Sentiment.
Details were given in it of the number of animals slaughtered every day in Madhya Pradesh land elsewhere and blamed the Congress with being a party to the practice.
In the body of the election petition a translation in English of the Hindi pamphlet was incorporated.
The original pamphlet was attached to the election petition and was marked Annexure 'A '.
The election petitioner proceeded to say in her petition "it forms part of the petition".
When parties appeared the first respondent filed his written statement in great.
detail.
He dealt with this pamphlet and answered the allegations of the election petitioner in relation thereto paragraph by paragraph.
As a result of these pleas a number of issues were raised on July 18, 1967.
No issue was raised in 15 regard to the service of a defective copy of the election petition upon the respondents in general and the first respondent in particular.
However, on August 3, 1967, a special objection was made by the first respondent claiming that the copy of the pamphlet had not been annexed to the copy of the election petition served upon him and therefore the election petition was liable to be dismissed in accordance with the provisions of section 86 of the Representation of the People Act.
A detailed reply to this objection was given by the election petitioner.
She stated that this was an after thought inasmuch as the translation of the pamphlet was incorporated in the election petition and the allegations regarding the pamphlet had been answered in detail by the answering respondent.
The Court thereupon framed an additional issue on August 4, 1967.
The issue ran as follows "Whether the election petition is liable to be dismissed for contravention of section 81 (3) of the Representation of the People Act, 1951 as copy of Annexure A to the petition was not given along with the petition for being served on the respondents".
Parties first filed a number of affidavits pro and con.
Later the Court ordered attendance of the deponents for crossexamination.
In this way the appellant and her counsel who had filed affidavits earlier were examined.
Their.
case was that the copies of the election petition had been properly, put together including in each copy an original pamphlet for service on the respondents.
On the other side the first respondent and two others filed affidavits stating that when the copy of the election petition was received it was not accompanied by the pamphlet.
In their examination in Court all maintained the same position, and were cross examined.
The learned Judge trying the case also ordered the attendance of the Reader of the Deputy Registrar of the High Court who had dealt with the election, petition and he ' was examined as Court witness No. 1.
He stated that the copies of the petition were complete except that the pamphlet was not annexed to each copy.
He stated that he had noted at the time this fact but had treated the pamphlet as a document and not as an Annexure to the election petition.
The learned Judge, on an appraisal of this material held that the copies of the election petition served upon the respondents were not accompanied by the pamphlet which was an Annexure to the election petition.
After examining the law on the subject the learned Judge came to the conclusion that the election petition should be dismissed under section 86 of the Representation of the People Act and he accordingly dismissed it with costs.
No other 16 issue which was struck between the parties was gone into because the election petition failed at the very threshold.
In this appeal it is contended that the learned Judge was in error in thinking that the pamphlet ought to have accompanied the copies of the election petition or that the law required that it should have been annexed to the copy of the election petition served on the respondents.
In this connection our attention was drawn to the provisions of the Representation of the People Act to which we shall refer presently.
On the other side it was contended that whatever the meaning of the expressions "the election petition", "annexures" or "schedules" in the Act, the election petitioner by her own conduct had made this document a part Of the election petition and therefore it was incumbent upon her to have served the whole of the election petition and not only a part of it as she did and therefore the order now appealed against was correct.
Before we come to these rival contentions we find it necessary to refer first to the relevant provisions on the subject Section 81 of the Representation of the People Act occurs in Chapter 11 which is headed "Presentation of Election Petitions to Election Commission".
It provides as follows: "Presentation of Petitions (1) An election petition calling in question any election may be presented on one or more of the , rounds specified in sub section (1) of section 100 and section 101 to the High Court by any candidate at such election or any elector within forty five days from, but not earlier than, the date of election of the returned candidate, or if there are more than one returned candidate at the election and the dates of their election are different, the later of those two dates.
Explanation : In this subsection, 'elector ' means a person who was entitled to vote at the election to which the election petition relates, whether he has voted at such election or not.
(3) Every election petition shall be accompanied by as many copies thereto as there are respondents mentioned in the petition and every such copy shall be attested by the petitioner under his own signature to be a true copy of the petition." 17 The first respondent draws pointed attention to the third sub section which says that every election petition shall be accompanied by as many copies thereof as there are respondents mentioned in the petition and every such copy shall be attested by the petitioner under his own signature to be a true copy of the petition.
The dispute therefore is whether the pamphlet could be described in this case as, a part of the election petition.
The answering respondent says that it is so and was considered to be so by the election petitioner herself when she stated that it was to be read as a part of the election petition.
The matter, in our opinion, is not to be resolved on how the election petitioner viewed the matter but from the point of view of the requirement of the law on the subject.
For this purpose we have to turn to section 83 of the Representation of the People Act which provides what the contents of the election petition shall be.
It reads as follows (1) An election petition (a) shall contain a concise statement of the material facts on which,the petitioner relies; (b) shall set forth full particulars of any corrupt practice that the petitioner alleges, including as full a statement as possible of the names of the parties alleged to have committed such corrupt practice and the date and place of the commission of each such practice; and (c) shall be signed by the petitioner and verified in the manner laid down in the Code of Civil Procedure, 1908 (5 of 1908), for the verification of pleadings.
Provided that where the petitioner alleges any corrupt practice, the petition shall also be accompanied by an affidavit in the prescribed form in support of the allegation of such corrupt practice and the particulars thereof.
(2) Any schedule or annexure to the petition shall also be signed by the petitioner and verified in the same manner as the The answering respondent herein again draws pointed attention to the fact that the schedules and the annexures to the petition are mentioned and they have to be signed and verified in the same manner as the petition meaning thereby that as the election petitioner had made the pamphlet a part of the election petition she was required to sign and verify the pamphlet and also to serve a 18 copy of it as required by sub section
(3) of section 81 when the election petition was served. 'He then relies upon section 86 which provides that the High Court shall dismiss an election petition which does not comply with the provisions of section 81, section 82 or section 117.
An argument was raised in this case as to whether section 86(1) is mandatory or merely directory.
We need not go into this aspect of the case.
In our opinion the present matter can be resolved on an examination of the relevant facts and the contents of the election petition as detailed in section 83 reproduced above.
It may be pointed out here that the trial of election petition has to follow as.
far as may be ,the provisions of the Code of Civil Procedure.
We are therefore of opinion that it is permissible to look into the Code of Civil Procedure to see what exactly would have been the case if this was a suit and not a trial of an election petition.
Under the Code of Civil Procedure, a suit is commenced by a plaint.
This is provided by O.IV, r. 1 which says that every suit shall be instituted by presenting a plaint to the Court.
After the plaint, is received O.V provides the summoning of the defendants in the case and r. 2 of that order says that every summons shall be accompanied by a copy of the plaint, and if so permitted, by a concise.
statement.
We then turn to the provisions of O.VII Which.
deals with the contents of a plaint.
The first rule mentions the particulars which must be in a plaint.
It is not necessary to refer to them '.
The plaint has to be signed and verified.
Rule 9 then provides that the plaintiff shall endorse on the plaint and annex thereto a list of documents, if any, which he has produced along with it and, if the plaint is admitted, shall present as many .copies on plain paper of the plaint as there are defendants unless the Court by reason of the length of the plaint or the number of defendants, or for any other sufficient reason, permits him to present a like number of concise statements of the nature of the claims made,.
It will be noticed here that what is required to be provided are copies of the plaint itself or the concise statement according to the number of defendants.
There is no mention here of any, other documents of which a copy is needed to be presented to the Court for service to the defendants.
Then we come to r. 14 which states that where a plaintiff sues upon a document in his possession or power he shall produce it in court when the plaint is presented and shall at the same time deliver the document or a copy thereof to.
be filed with the plaint.
It will be noticed that he is required to file only one copy of the document and not as many copies as there are defendants in the case.
It would therefore follow that a copy of the document is not expected to be delivered with the copy of the plaint to the answering defendants when summons is served on them.
In the schedules to the Code of Civil Procedure we have got Appendix B which 19 prescribes the forms for summons to the defendants.
There is only one form of summons in Appendix B, (Form No. 4) in which the copy of the negotiable instrument is to accompany the copy of The plaint.
That is so, because of the special law applying to the negotiable instruments and the time limit within which pleas to that document have to be raised and this is only in summary suits.
No other form makes any mention of any document accompanying the summons with the, copy.
of the plaint.
We need not go into more details,.
It is clear that the documents which are filed with the plaint have to be accompanied by one copy of those documents.
This is because the copy is compared with the original and the copy is endorsed by the clerk of court and the document is sometimes returned to the party to be produced into Court later. 'the copy takes the place of the document concerned and is not to be sent out to the parties with the plaint.
We may now see whether the election law provides anything different.
The only provision to which our attention has been drawn is sub section
(3) of section 81 and sub section
(2) of section 83.
The first .provides that every election petition shall be accompanied by as many copies thereof as there are respondents mentioned in the ;petition and that every such copy shall be an authenticated true copy.
The words.
used here are only "the election petition".
There is no mention of any document accompanying the election petition.
If the matter stood with only this sub section there would ;be no doubt that what was intended to be served is only a copy of the election petition proper.
Assistance is however taken from the provisions of sub section
(2) of section 83 which provides that.
any schedule or any annexure to the petition shall also be signed by the petitioner and verified in the same manner as the petition it is contended that since the pamphlet was an annexure to the petition it was not only necessary to sign and verify it, but that it should have been treated as a part of the election petition itself and a copy served upon the respondents.
in this way, non compliance with the provisions of section 86(1) is made Out.
In our opinion, this is too strict a reading of the provisions.
We have already pointed.
out that section 81(3) speaks only of the election petition.
Pausing here, we would say that since the election petition itself reproduced the whole of the pamphlet in a translation in English, it could be said that the averments with regard to the pamphlet were themselves a part of the petition and therefore the pamphlet was served upon the respondents although in a translation and not in original.
Even if this be not the case, we are quite clear that subs.
(2) of section 83 has reference not to.
a document which is produced as evidence of the averments of the election petition but to averments of the election petition which are put, not in the election petition but in he accompanying schedules or annexures.
We can 20 give quite a number of examples from which it would be apparent that many of the averments of the election petition are capable of being put as schedules or annexures.
For example, the details of the corrupt practice there in the former days used to be set out separately in the schedules and which may, in some cases, be so done even after the amendment of the present law.
Similarly, details of the averments too compendious for being included in the election petition may be set.
out in the schedules or annexures to the election petition.
The law then requires that even though they are outside the election petition, they must be signed and verified, but such annexures or schedules are then treated as integrated with the election petition and copies of them must be served on the respondent if the requirement regarding service of the election petition is to be wholly complied with.
But what we have said here does not apply to documents which are merely evidence in the case but which for reasons of clarity ,and to lend force to the petition are not kept back but produced or filed with the election petitions.
They are in no, sense an integral part of the averments of the petition but are only evidence of those averments and in proof thereof.
The pamphlet therefor must be treated as a document and not as a part of the election petition in so far as averments are concerned.
When ,the election petitioner said that it was to be treated as part of her election petition she was merely indicating that it was not to be thought that she had not produced the document in time.
She was insisting upon the document remaining with the petition so that it could be available whenever the question of the election petition or its contents arose.
It would be stretching the words of sub section
(2) of section 83 too far to think that every document produced as evidence in the election petition becomes a part of the election petition proper.
In this particular case we do not think that the pamphlet could be so treated.
We are, therefore, of the opinion that whether or not section 86(1) is mandatory or directory there was no breach of the provisions of the Representation of the People Act in regard to the filing of the election or the service of the copies thereof and the order under appeal was therefore erroneous.
We accordingly set aside the order and remand the case for trial from this stage.
The costs of the appellant will be costs in the cause.
The respondent will bear his own costs.
Y. P. Appeal allowed and case remanded.
| IN-Abs | The appellant filed an election petition with a pamphlet as annexure thereto.
A translation in English of the pamphlet was incorporated in the body of the election petition, and it was stated in the petition that it formed part of the petition.
The first respondent raised an objection that a copy of the pamphlet had not been annexed to the copy of the election petition served on him and therefore, the election petition was liable to be dismissed under section 86 of the Representation of the People Act.
The High Court accepted the objection and dismissed the election petition.
In appeal, this Court, HELD : The order of the High Court must be set aside.
The words used in section 81(3) are only "the election petition".
There is no mention of any document accompanying the election petition.
Since the election petition itself reproduced the whole of the pamphlet in a translation in English, it could be said that the averments with regard to the pamphlet were themselves a part of the petition, and therefore the pamphlet was served upon the respondents although in a translation and not in original.
[19 E H] Even if this be not the case, it is quit,. clear that section 83 (2) has reference not to a document which is produced as evidence of the averments of the election petition but to averments of the election petition which are put, not in the election petition but in the accompanying schedules or annexures.
Details of averments too compendious for being included in the election petition may be set out in the schedules or annexures to the election petition.
The law then requires that even though they are outside the election petition, they must be signed and verified.
The annexures or schedules are then treated as integrated with the election petition and copies of them must be served on the respondents if the requirement regarding service of election petition is to be wholly complied with.
But this does not apply to documents which are merely evidence In the case but for reasons of clarity and to lend force to the petition are not kept back but produced or filed with election petitions.
They are in no sense an integral part of the averments of the petition but are only evidence of those averments and in proof thereof.
[19 H 20 D] The pamphlet, therefore.
must be treated as a document and not as a part of the election petition in so far as averments are concerned.
When the election petitioner said that it was to be treated as part of her election petition she was merely indicating that it was not to be though that she had .not produced the document in time.
She was insisting upon the document remaining with the petition so that it could be available whenever the question of the election petition or its contents arose.
[20 D E]
|
Appeal No. 322 of 1965.
Appeal from the judgment and decree dated December 5, 1960 of the Mysore High Court in Regular Appeal No. 81 of 1956.
A. K. Sen and R. Gopalakrishnan, for the appellants.
H. R. Gokhale, K. R. Chaudhuri and K. Rajendra Chaudhri for respondent No. 1.
The Judgment of the Court was delivered by Ramaswami, J.
This, appeal is brought by certificate from the judgment of the Mysore High Court dated December 5, 1960 in R. A. No. 81 of 1956.
120 The appellants and respondent No. 4 are the daughters and legal representatives of Savoy Ranganna who was the plaintiff in O.S. 34 of 1950 51 instituted in the court of the District Judge, Mysore.
The suit was filed by the deceased plaintiff for partition of his share in the properties mentioned in the schedule to the plaint and for granting him separate possession of the same.
Respondent No., 1 is the brother 's son of the Plaintiff.
The rela tionship of the parties would appear from the following pedigree: Savoy Ranganna (Sr) Rangamma Savoy Ranganna Chikka Ranganna (Died 45 Alamma (plaintiff) (Died in 1947 years ago (Deft. 2) Dodda Rangamma M. section R. Ranganna, 3 (Deft. 2 (a) (Deft. 1) Lakkamma Kenchanna (suppl, (D. W. 10) Def).
Chikka Rangamma PuttaRangamma Rangathayamma Chinnathayyamma (Deft. 3) (1st L. R. of (2nd L. R. of (3rd I R. Of plaintiff) plaintiff) plaintiff) The case of the plaintiff was that he and the defendants lived together as members of a Joint Hindu family till January 7, 1951, Plaintiff being the karta.
The plaintiff had no male issue but had only four daughters, Chikka Rangamma, Putta Rangamma, Rangathayamma and Chinnathayamma.
The first 2 daughters were widows.
The fourth daughter Chinnathayamma was living with her husband.
Except Chinnathayamma, the other daughters with their families had been living with the joint family.
The plaintiff became ill and entered 'Sharda Nursing Home for treatment as an in patient on January 4, 1951.
In order to safeguard the interests of his daughters the plaintiff, Savoy Ranganna issued a notice on January 8, 1951 to the defendants declaring his unequivocal intention to separate from them.
After the notices were registered at the post office certain well wishers of the family intervened and wanted to bring about a settlement.
On their advice and request the plaintiff notified to the post office that he intended to withdraw the registered notices.
But as no agreement could be subsequently reached between 'the parties the plaintiff.instituted the present suit on January 13 The 951 'for partition 'of his share of the joint family properties.
The suit was contested mainly by 121 respondent No. 1 who alleged that there was.
no separation of status either because of the notice of January 8, 1951 or because of the institution of the, suit on January 13, 1951.
The case (if respondent No. 1 was that Savoy Ranganna was 85 years of age and in a weak state of health and was not in a position to understand the contents of the plaint or to affix his signature or thumb impression thereon as well as on the Vakalatnama.
As regards the notice of January 8,1951, respondent No. 1 asserted that there was no communication of any such notice to him and, in any case, the notices were withdrawn by Savoy Ranganna unconditionally from the post office.
It was therefore contended that there was no disruption of the joint family at the time of the death of Savoy Ranganna and the appellants were not entitled to a decree for partition as legal representatives of Savoy Ranganna.
Upon the examination of the evidence adduced in the case the trial court held that Savoy Ranganna had properly affixed his thumb impression on the plaint and the Vakalatnama and the presentation of the plaint was valid.
The trial court found that Savoy Ranganna was not dead by the time the plaint was presented.
On the question whether Savoy Ranganna was separate in status the trial court held that the notices dated January 8, 1951 were a clear and unequivocal declaration of the intention of Savoy Ranganna to become divided in status and there was sufficient communication of that intention to respondent No. 1 and other members of the family.
The trial court was also of the opinion that at the time of the issue of the notices dated January 8, 1951 and at the time of execution of the plaint and the Vakalatnama dated January 13, 1951 Savoy Ranganna was in a sound state of mind and conscious of the consequences of the action he 'Was taking.
The trial court accordingly granted a decree in favour of the appellants.
Respondent no took the matter in appeal to the Mysore High Court which by its judgment dated December 5, 1960 reversed the decree of the trial court and allowed the appeal.
Hegde, J. one of the members of the Bench held that the suit could not be said to have been instituted by Savoy Ranganna as it was not proved that Savoy Ranganna executed the plaint.
As regards the validity of the notice exhibit
A, and as to whether it caused any disruption in the, joint family status, Hegde, J. did not think it necessary to express any opinion.
The other member of the Bench, Mir.
lqbal Husain, J., held that the joint family of which the deceased Savoy Ranganna was a member had not been disrupted by the issue of the notice dated January 8, 1951.
The view taken by Mir lqbal Husain, J. was that there was no proof that the notice was communicated either to respondent No. 1 or other members of the family and, in any event, the notice had been withdrawn by Savoy Ranganna and so there was no severance of joint status from the date of the notice.
L4Sup.
C.1/68 9 122 The first question to be considered in this appeal is whether Savoy Ranganna died as a divided member of the joint family as alleged in the plaint.
It is admitted that Savoy Ranganna was very old, about 85 years of age and was ailing of chronic diarrhoea.
He was living in the family house till January 4, 1951 when he was removed to the Sharda Nursing Home where he died on January 13, 1951 at 3 p.m According to the case of respondent No. 1 Savoy Ranganna had a paralytic stroke in 1950 and was completely bed ridden thereafter and his eyesight was bad for 5 to 6 years prior to his death.
It was alleged in the written statement that Savoy Ranganna was unconscious for some days prior to his death.
The case of respondent No. 1 on this point is dis proved by the evidence of D.W. 6, Dr. Venkata Rao who was in charge of the Sharda Nursing Home on the material dates.
This witness admitted that the complaint of Savoy Ranganna was that he was suffering from chronic diarrhoea for over five months.
He was anaemic but he was not suffering from any attack of paralysis.
As regards the condition of Savoy Ranganna on January 8, 1951, the evidence of P.W. 1, Dr. Subbaramiah is important.
This witness is the owner of the Sharda Nursing Home and he has testified that the notice exhibit A was read over to Savoy Ranganna and after getting it read the latter affixed his thumb mark thereon.
The witness asked Savoy Ranganna whether he was able to understand the contents of the notice and the latter replied in the affirmative.
The witness has certified on the notice, exhibit A 1 that Savoy Ranganna was conscious when he affixed his left thumb mark, to the notice in his presence.
No reason was suggested on behalf of the respondents why the evidence of this witness should be disbelieved.
The trial court was highly impressed by the evidence of this witness and we see no reason for taking a different view.
The case of the appellants is that respondent No. 1 had knowledge of the notice, exhibit A because he was present in the Nursing Home on January 8, 1951 and he tried to snatch away the notice from the hands of P.W. 1 but he was prevented from.
so doing.
P.W. 5, Chinnanna stated in the course of the evidence that after P.W. 1 had signed the certificate in all the three copies, respondent No. 1 and one Halappa came to the ward and tried to snatch away the notices.
The first respondent tried to snatch away the copy exhibit A 1 that was in the hands of Dr. Subbaramiah and attempted to tear it.
Dr. Subbaramiah somehow prevented respondent No. 1 from taking away exhibit A and handed it over to P.W. 5.
The evidence of P.W. 5 with regard to the "snatching incident" is corroborated by Dr. Subbaramiah who stated that after Savoy Ranganna had executed the notices and he had signed the certificates, one or two persons came and tried to snatch the document.
P.W. 1 is unable to identify the first respondent as one of the persons who had taken part in the "snatching incident".
The circumstance that P.W. 1 was unable to identify respondent No. 1 123 is not very material, because the incident took place about three years before he gave evidence in the court, but his evidence with regard to the "snatching incident ' strongly corroborates the allegation of P.W. 5 that it was respondent No. 1 who bad come into the Nursing Home and attempted to snatch the notice.
There is also another circumstance which supports the case of the appellants that respondent No. 1 had knowledge of the contents of exhibit A and of the unequivocal intention of Savoy Ranganna to become divided in status from the joint family.
According to P.W. 5 res pondent No. 1 and his wife and mother visited Savoy Ranganna in the Nursing Home later on and pressed him to withdraw the notices promising that the matter will be amicably settled.
Sowcar T. Thammanna also intervened on their behalf.
Thereafter the deceased plaintiff instructed his grandson P.W. 5 to withdraw the notice.
Accordingly P.W. 5 prepared two applications for the withdrawal and presented them to the postal authorities.
The notice, exhibit A meant for the first respondent and exhibit E meant for the original second defendant were withheld by the postal autho rities.
These notices were produced in court by the postal authorities during the hearing of the case.
In our opinion, the evidence of P.W. 5 must be accepted as true, because it is corroborated by the circumstance that the two notices, Exs.
A and E were intercepted in the post office and did not reach their destination.
This circumstance also indicates that though there was no formal.
communication of the notice, exhibit A to the first respondent, he had sufficient knowledge of the contents of that notice and was fully aware of the clear and unequivocal intention of Savoy Ranganna to become separate from other members of the joint family.
It is now a settled doctrine of Hindu Law that a member of a joint Hindu family can being about his separation in status by a definite, unequivocal and unilateral declaration of his intention to separate himself from the family and enjoy his share in severalty.
It is not necessary that there should be an agreement between all the coparceners for the disruption of the joint status.
It is immaterial in such a case whether the other coparceners give their assent to the separation or not.
The jural basis of this doctrine has been expounded by the early writers of Hindu Law.
The relevant portion of the commentary of Vijnaneswara states as follows [And thus though the mother is having her menstrual courses (has not lost the capacity to bear children) and the father has attachment and does not desire a partition, yet by the will (or desire) of the son a partition of the grandfather 's wealth does take place]" 124 Saraswathi Vilasa, placitum 28 states [From this it is known that without any speech (or explanation) even by means of a determination (or resolution) only, partition is effected, just an appointed daughter is constituted by mere intention without speech.]" Viramitrodaya of Mitra Misra (Ch. 11.
23) is to the following effect: [Here too there is no distinction between a partition during the lifetime of the father or after his death and partition at the desire of the sons may take place or even by the desire (or at the will) of a single (coparcener)].
" Vyavahara Mayukha of Nilakantabhatta also states [Even in the absence of any common (joint family) property, severance does indeed result by the mere declaration 'I am separate from thee ' because severance is a. particular state (or condition) of the mind and the declaration is merely a manifestation of this mental state (or condition).]" (Ch.
IV, section iii I).
Emphasis is laid on the "budhi visesha" (particular state or condition of the mind) as the decisive factor in producing a severance in status and the declaration is stated to be merely "abhivyanjika" or manifestation which might vary according to circumstances.
In Suraj Narain vs Iqbal Narain(1) the Judicial Committee made the following categorical statement of the legal position : "A definite and unambiguous indication by one member of intention to separate himself and to enjoy his share in severalty may amount to separation.
But to have that effect the intention must be unequivocal and clearly expressed. .
Suraj Narain alleged that he separated a few months later; there is, however, no (1) I.L.R. 35 All. 80.
(P.C.) 125 .lm15 writing in support of his allegation, nothing to show that at that time he gave expression to an unambiguous intention on his part to cut himself off from the joint undivided family.
" In a later case Girja Bai vs Sadashiv Dhundiraj(1) the Judicial Committee examined the relevant texts of Hindu Law and referred to the well marked distinction that exists in Hindu law between a severance in status so far as the separating member is concerned and a de facto division into specific shares of the property held until then jointly, and laid down the law as follows : "One is a matter of individual decision, the desire on the part of any one member to sever himself from the joint family and to enjoy his hitherto undefined or unspecified share separately from the others without being subject to the obligations which arise from the joint status; whilst the other is the natural resultant from his decision, the division.
and separation of his share which may be arrived at either by private agreement among the parties, or on failure of that, by the intervention of the Court.
Once the decision has been unequivocally expressed and clearly intimated to his co sharers, his right to his right to have his share allocated separately from has a title is unimpeachable; neither the co sharers can question it nor can the Court examine his conscience to find out whether his reasons for separation were well founded or sufficient; the Court has s imply to give effect to his right to have his share allocated separately from the others.
In Syed Kasam vs Jorawar Singh (2), Viscount Cave, in delivering the judgment of the Judicial Committee, observed "It is settled law that in the case of a joint Hindu family subject to the law of the Mitakshara, a severance of estate is effected by an unequivocal declaration on the part of one of the joint holders of his intention to hold his share separately, even though no actual division takes place : and the commencement of a suit for partition has been held to be sufficient.to _effect a severance in interest even before decree." These authorities were quoted with approval by this Court in Addagada Raghavamma vs Addagada Chenchamma(3), and it was held that a member of a joint Hindu family seeking to separate himself from others will have to make known his intention to other members of his family from whom he seeks to separate.
The (1) I.L.R. (2) I.L.R. (3) ; 126 correct legal position therefore is that in a case of a joint Hindu family subject to Mitakshara law, severance of status is effected by an unequivocal declaration on the part of one of the jointholders of his intention to hold the share separately.
It is, how.ever, necessary that the member of the joint Hindu family seeking to separate himself must make known his intention to other member of the family from whom he seeks to separate.
The process of communication may, however, vary in the circumstances of each particular case.
It is not necessary that there ' should be a formal despatch to or receipt.
by other members Of the family of the communication announcing the intention to divide on the part of one member of the joint family.
The proof of such a despatch or receipt of the communication is not essential, nor its absence fatal to the severance of the status.
It is, of course, necessary that the declaration to be effective should reach the person or persons affected by some process appropriate to the given situation and circumstances of the particular case.
Applying this principle to the facts found in the present case, we are of opinion that there was a definite and unequivocal declaration of his intention to separate on the part of Savoy Ranganna and that intention was conveyed to respondent No. 1 and other members of the joint family and respondent No. 1 had full knowledge of the intention of Savoy Ranganna.
It follows therefore that there was a division of status of Savoy Ranganna from the joint Hindu family with effect from January 8, 1951 which was the date of the notice.
It was, however, maintained on behalf of the respondents that on January 10, 1951 Savoy Ranganna had decided to withdraw the two notices, Exs.
A & E and he instructed the postal authorities not to forward the notices to respondent No. 1 and other members of the joint family.
It was contended that there could be no severance of the joint family after Savoy Ranganna had decided to withdraw the notices.
In our opinion, there is no warrant for this argument.
As we have already stated, there was a unilateral declaration of an intention by Savoy Ranganna to divide from the joint family and there was sufficient communication of this intention to the other coparceners and therefore in law there was in consequence a disruption or division of the status of the joint family with effect from January 8, 1951.
When once a communication of the intention is made which has resulted in the severance of the joint family status it was not thereafter open to Savoy Ranganna to nullify its effect so as to restore the family to its original joint status.
If the intention of Savoy Ranganna had stood alone without giving rise to any legal effect, it could, of course, be withdrawn by Savoy Ranganna, but having communicated the intention, the divided status of the Hindu joint family had already come into existence and the legal consequences had taken effect.
It was not, therefore, possible for Savoy Ranganna to get back 127 to the old position by mere revocation of the intention.
It is, of course, possible for the members of the family by a subsequent agreement to reunite, but the mere withdrawal of the unilateral declaration of the intention to separate which already had resulted in the division in status cannot amount to an agreement to reunite.
It should also be stated that the question whether there was a subsequent agreement between the members to reunite is a question of fact to be proved as such.
In the present case, there is no allegation in the written statement nor is there any evidence on the part of the respondents that there was any such agreement to reunite after January.8, 1951.
The view that we have expressed is borne out by the decision of the Madras High Court in Kurapati Radhakrishna vs Kurapati Satyanarayana(1) in which there was a suit for declaration that the sales in respect of certain family properties did not bind the plaintiff and for partition of his share and possession thereof and the plaint referred to an earlier suit.
for partition instituted by the 2nd defendant in the later suit.
It was alleged in that suit that 'the plaintiff being unwilling to remain with the defendants has decided to become divided and he has filed this suit for separation of his one fifth share in the assets remaining after discharging the family debts separated and for recovery of possession of the same '.
All the defendants in that suit were served with the summons and on the death of the 1st defendant therein after the settlement of issues, the plaintiff in that action made the following endorsement on the plaint : "As the 1st defendant has died and as the plaintiff had to manage the family, the plaintiff hereby revokes the intention to divide expressed in the plaint and agreeing to remain as a joint family member, he withdraws the suit. ' It was held by the Madras High Court that a division in status had already been brought about by the plaint in the suit and it was not open to the plaintiff to revoke or withdraw the unambiguous intention to separate contained in the plaint so as to restore the joint status and as such the members should be treated as divided members for the purpose of working Out their respective rights.
We proceed, to consider the next question arising in this appeal whether the plaint filed on January 13, 1951 was validly executed by Savoy Ranganna and whether he had affixed his thumb impression thereon after understanding its contents.
The case of the appellants is that Sri M. section Ranganathan prepared the plaint and had gone to the Sharda Nursing Home at about 9 30 or 10 a.m. on January 13, 1951.
Sri Ranganathan wrote out the plaint which was in English and translated it to Savoy Ranganna who approved the same.
P.W. 2, the clerk of Sri Ranganathan has deposed to this effect.
He took the ink pad and affixed the left thumb impression of Savoy Ranganna on the plaint and also on the Vakalatnama.
There is the attestation of Sri M. section Ranganathan on the (1) (1948)2M.L.J.331.
128 plaint and on the Vakalatnama.
The papers were handed over to P.W. 2 who after purchasing the necessary court fee stamps filed the plaint and the Vakalatnama in the court at about 11.30, a.m. or 12 noon on the same day.
The evidence of P.W. 2 is corroborated by P.W. 5 Chinnanna.
Counsel on behalf of the respondents.
, however, criticised the evidence of P.W. 2 on the ground that the doctor, D.W. 6 had said that the mental condition of the patient was bad and he was not able to understand things when he examined him on the morning of January 13, 1951.
D.W. 6 deposed that he examined Savoy Ranganna during his usual rounds on January 13, 1951 between 8 and 9 a.m. and found "his pulse imperceptible and the sounds of the heart feeble".
On the question as to whether Savoy Ranganna was sufficiently conscious to execute the plaint and the Vakalatnama, the trial court has accepted the evidence of P.W. 2, Keshavaiah in preference to that of D.W. 6.
We see no reason for differing from the estimate of the trial court with regard to the evidence of P.W. 2.
The trial court has pointed out that it is difficult to accept the evidence of D.W 6 that Savoy Ranganna was not conscious on the morning of January 13, 1951.
In cross examination D.W. 6 admitted that on the night of January 12, 1951 Savoy Ranganna was conscious.
He further admitted that on January 13, 1951 he prescribed the same medicines to Savoy Ranganna as he had prescribed on January 12, 1951.
There is no note of the necessary data in the case sheet, exhibit I to suggest that Savoy Ranganna was not conscious an January 13, 1951.
It is therefore not unreasonable assume that the condition of Savoy Ranganna was the same on January 13 ', 1951 as on January 12, 1951 and there was no perceptible change noticeable in his condition between the two dates.
In these circumstances it is not possible to accept the evidence of D.W. 6 that Savoy Ranganna was unconscious on the morning of January 13, 1951.
It was pointed out on behalf of the respondents that D.W. 7, Miss Arnold has also given evidence that the condition of Savoy Ranganna became worse day by day and on the last day his condition was very bad and he could not understand much, nor could he respond to her calls.
The trial court was not.
impressed with the evidence of this witness.
In our opinion, her evidence suffers from the same infirmity as of D.W. 6, because the case sheet, exhibit I does not corroborate her evidence.
It is also difficult to believe that D.W. 7 could remember the details of Savoy Ranganna 'section case after a lapse of three years without the help of any written case sheet There is also an important discrepancy in the evidence of D.W. 7.
She said that on January 13, 1951 she called D.W. 6 at 12 noon since the condition of the patient was very bad, but D.W. 6 has said that he did not visit Savoy Ranganna after 8 or 9 a.m. on that date.
Comment was made by Counsel on behalf of the respondents that Sri Ranganathan was not examined as a witness to prove that he had prepared 129 the plaint and Savoy Ranganna had affixed his thumb impression in his presence.
In our opinion, the omission of Sri Ranganathan to give evidence in this case is unfortunate.
It would have been proper conduct on his.
part if he had returned the brief of the appellants and given evidence in the case as to the execution of the plaint and the Vakalatnama.
But in spite of this circumstance we consider that the, evidence of the appellants or, this aspect of the case must be accepted as true.
It is necessary to notice that the plaint and the Vakalatnama are both counter signed by Sri Ranganathan a responsible Advocate and it is not likely that he would subscribe his signatures to these documents if they had been executed by a person who was unable to understand the contents thereof.
As we have already said, it is unfortunate that the Advocate Sri Ranganathan has not been examined as a witness, but in spite of this omission we are satisfied that the evidence adduced in the case has established that Savoy Ranganna validly executed the plaint and the Vakalatnama and that he was conscious and was in full possession of his mental faculties at the time of the execution of these two documents.
It follows therefore that the, appellants and respondent No. 4 who are the daughters and legal representatives of Savoy Ranganna are entitled to a decree in the terms granted by the District Judge of Mysore.
For the reasons expressed, we hold that this appeal should be allowed, the judgment of the Mysore High Court dated December5, 1960 in R.A. No. 81 of 1956 should be set aside and that of ' the District Judge, Mysore dated October 31, 1955 in O.S. No. 34 of 1950 51 should be restored.
The appeal is accordingly allowed with costs.
V.P.S. Appeal allowed.
| IN-Abs | The karta of a joint Hindu family fell ill.
He had no male issue arid in order to safeguard the interests of the appellant and fourth respondent, who were his daughters, he issued registered notices to the other members of the joint family declaring his unequivocal intention to separate from them.
Later, he decided to withdraw the notices and instructed the postal authorities not to forward them, but, the unequivocal declaration of his intention to separate was conveyed to the other members, of the joint family and they had full knowledge of such intention.
A few days thereafter he instituted a suit for partition and possession of his share of the Property.
The plaint was prepared by a responsible advocate, who explained the contents to the plaintiff (the karta), who was conscious and in full possession of his mental faculties, had his thumb impression affixed on the plaint and Vakalatnama, signed them both and had them filed in court.
After the suit was filed on the same day, the plaintiff died.
The trial court decreed (the suit, but the High Court, in appeal, reversed the decree.
In appeal to this Court, HELD: The mere withdrawal of the Plaintiffs unilateral declaration of intention to separate, which already had resulted in his division in status because of the communication of the intention to the other members, did not nullify its effect so as to restore the family to its original joint status, or amount to an agreement to reunite; and (the appellant and the fourth respondent, as the legal representatives of the plaintiff, were entitled to the decree.
[126 G H; 127 A B; 129 D] Radhakrishna vs Satyanarayana, , approved.
|
s Nos. 114, 216, 223 and 252 of 1966 and 85 of 1967.
Petitions under Article 32 of the Constitution of India for the enforcement of fundamental rights.
C.B. Agarwala and K. P. Gupta, for the petitioners (in W.P.s Nos. 114, 216 and 252 of 1966 and 85 of 1967.) R.V. section Mani and K. P. Gupta for the petitioner (in W.P. No. 223 of 1966).
Niren De, Solicitor General, B. R. L. lyengar and R. N. Sachthey for the respondents (in W.Ps.
Nos. 114 and 216 of 1966).
Niren De, Solicitor General, R. H. Dhebar and R. N. Sach they, for respondents Nos. 1 to 5 (in W.P. No. 223 of 1966 and the respondents (in W. P. No. 85 of 1967).
R. N. Sachthey, for respondent No. 9 (in W. P. No. 223 of 1966).
M. K. Ramamurthi, Vineet Kumar and Shyamala Pappu for respondents Nos.
12(a) to 12(d) (in W.P. No. 223 of 1 966).
45 V. A .
Seyid Muhammad and R. H. Dhebar and R. N. Sachthey, for respondents Nos.
1 to 5 (in W. P. No. 252 of 1966).
P.C. Bhartari, for the intervener (in W.P. No. 114 of 1966).
The Judgment of WANCHOO, C.J., BACHAWAT and MITTER, JJ. was delivered by MITTER, J. The dissenting opinion of SHELAT and VAIDIALINGAM, JJ. was delivered by SHELAT, J. Mitter, J. Ms is a group of five Writ Petitions under article 32 of the Constitution challenging in four cases the validity of land acquisition proceedings started by a notification dated November 13, 1959 under section 4 of the Land Acquisition Act and declarations contained in other notifications dated March 18, 1966 onwards under section 6 of the said Act and for other incidental reliefs including the issue of appropriate writs for the purpose.
Various persons.
have joined as petitioners in three of the applications.
In Writ Petition No. 114 of 1966 the petitioners number 61.
They all own lands in village Mandawali Fazilpur, on Patparganj Road within the union territory of Delhi, the notification of the declaration under, section 6 having been made on March 18, 1966.
in Writ Petition No. 216 of 1966 there are 71 petitioners who also own lands in the same village.
Their complaint is based on the same notification under section 4 and a notification dated July 12, 1966 under section 6 of the Act.
In Writ Petition No. 223 of 1966 the single petitioner is Pandit Lila Ram who owned lands in villages Masjid Moth, Raipur Khurd and Shahpur Jat respectively within the union territory of Delhi.
His complaint is based on a section 4 notification dated September 3, 1957, a notification dated April 15, 1961 under section 6 of the Act and several awards of Land Acquisition Col lector, Delhi made in 1961.
In Writ Petition No. 252 of 1966, there are eight petitioners who owned lands in village Kotla at Patparganj Road within the union territory of Delhi.
Their grievance is against section 4 notification dated November 13, 1959 and a notification dated June 14, 1961 under section 6 of the Act.
In Writ Petition No. 85 of 1967 the sole petitioner is one Rai Bahadur Sohan Lal who owned land in village Kilokri on the Delhi Mathura Road within the union territory of Delhi.
His grievance is against section 4 notification dated November 13, 1959, a notification dated July 27, 1961 under section 6 of the Act and an award dated February 16, 1962.
Although there are some distinctive features in some of the petitions to be mentioned later, the common attack is based on the judgment of this Court delivered on February 9, 1966 in State .of
Madhya Pradesh vs V. P. Sharma(1).
That case arose out of proceedings for acquisition of land in eleven villages in Madhya Pradesh for the steel plant at Rourkela.
There a notification had been issued under section 4(1) of the Land Acquisition Act on May 16, (1) ; 46 1949 declaring that lands in eleven named villages were likely to be needed for a, public purpose i.e., the erection of an iron and steel plant.
Thereafter, notifications were issued under section 6 from time to time and some lands in village Chhawani were acquired in the year 1956.
In August 1960 a fresh notification under section 6 of the Act was issued proposing to acquire, Ac.
486 17 of land in the said village.
Some owners of the land in the village who were affected by the notification filed 'a writ petition challenging the validity of the notification under section 6.
The High Court accepted their contention whereupon the State of Madhya Pradesh came up to this Court in appeal.
It was held by this Court that sections 4, 5 A and 6 of the Land Acquisition Act were integrally connected and that acquisition always began with a notification under section 4(1) followed by consideration of all objections thereto under section 5 A and a declaration under section 6.
According to this Court, once a declaration under section 6 was made the notification under section 4(1) was exhausted and the latter section was not a reservoir from which the Government might from time to time draw out land and make declaration with respect to it successively.
The ultimate conclusion was that there could be no successive notifications under section 6 with respect to land in a locality specified in one notification under section 4(1) and in the result, the appeal of the State was dismissed.
The present Writ Petitions were all filed after the said judgment of this Court.
The omnibus notification under section 4 in four of these cases dated November 13, 1959 covered an area of Ac.
34,070 00 marked as blocks Nos.
A to T and X in a map enclosed with the notification excepting therefrom certain classes of lands, namely, (a) Government land and evacuee land, (b) land already notified either under section 4 or under section 6 of the Act for any Government scheme, (c) land already notified either under section 4 or under section 6 for house building co operative societies mentioned in annexure (iii) to the notification and the land under graveyards, tombs, shrine , and those attached to religious institutions and wakf property, The notification stated that land was required by the Government at the public expense for a public purpose, namely, the planned development of Delhi.
As already noted, there were several notifications under section 6 made from time to time, the earliest one in this series of petitions being dated June 14, 1961.
It is clear that on the basis of the judgment of this Court the validity of the notifications under section 6 of the Act after the first of the series could not be upheld in A court of law.
On January 20, 1967 an Ordinance was promulgated by the President of India styled The Land Acquisition (Amendment and Validation) Ordinance (1 of 1967).
The scheme of the Ordinance was that the Land Acquisition Act of 1894 was to have effect, subject to the amendments specified in sections 3 and 4 of the Ordin 47 ance.
Section 3 purported to amend section 5 A of the Land Acquisition Act (hereinafter referred to as the principal Act) by enabling different reports to be made in respect of different parcels of land under section 5 A of the Act.
Similarly, section 4 of the Ordinance purported to amend section 6 of the principal Act by enabling different declarations to be made from time to time in respect of different parcels of land covered by the same notification under section 4.
Section 5 of the Ordinance purported to validate all acquisitions of land made or purporting to have been made under the principal Act before the commencement of the Ordinance, notwithstanding any judgment, decree or order of any court to the contrary.
On April 12, 1967 Parliament passed an Act (Act 13 of 1967) styled The Land Acquisition (Amendment and Short Title Validation) Act, 1967.
Section 2 of this Act purported to amend section 5 A of the principal Act to allow the making of more than one report in respect of land which had been notified under section 4(1).
Section 3 similarly purported to amend section 6 of the principal Act by empowering different declarations to be made from time to time in respect of different parcels of land covered by the same notification under section 4(1) irrespective of whether one report or different reports had been made under section 5 A sub section
Clause (ii) of section 3 inserted a new proviso to section 6(1) reading.: "Provided that no declaration in respect of any particular land covered by a notification under section 4, sub section (1), published after the commencement of the Land Acquisition (Amendment and Validation) Ordinance, 1967, shall be made after the expiry of three years from the date of such publication." As a. good deal of argument turns on the interpretation of section 4 of the Amending Act, it is necessary to set the same out in extenso : "4.
(1) Notwithstanding any judgment, decree or order of any court to the contrary, (a) no acquisition of land made or purporting to have been made under the principal Act before the commencement of the Land Acquisition (Amendment and Validation) Ordinance, 1967, and no action taken or thing done (including any order made, agreement entered into, or notification published) in connection With such acquisition shall be deemed to be invalid or ever to have become invalid merely on the ground (i) that one or more Collectors have performed the functions of Collector under the principal Act in respect of the land covered by the same notification under sub section (1) of section 4 of the principal Act; (ii)that one or more reports have been made under sub section (2) of section 5 A of the principal Act, whe 48 ther in respect of the entire land, or different parcels thereof, covered by the same notification under sub section (1) of section 4 of the principal Act; (iii) that one or more declarations have been made under section 6 of the principal Act in respect of different parcels of land covered by the same notification under sub section (1) of section 4 of the principal Act; (b) any acquisition in pursuance of any notification published under sub section (1) of section 4 of the prin cipal Act before the commencement of the Land Acquisition (Amendment and Validation) Ordinance 1967, may be made after such commencement and no such acquisition and no action taken or thing done (including any order made, agreement entered into or notification published), whether before or after such commencement, in connection with such acquisition shall be deemed to be invalid merely on the grounds referred to in clause.
(a) or any of them.
(2) Notwithstanding anything contained in clause (b) of sub section (1), no declaration under section 6 of the principal Act in respect of any land which has been notified before the commencement of the Land Acquisition (Amendment and Validation) Ordinance, 1967, under sub section (1) of section 4 of the principal Act, shall be made after the expiry of two years from the commencement of the said Ordinance.
(3)Where acquisition of any particular land covered by a notification under sub section (1) of section 4 of the principal Act, published before the commencement of the Land Acquisition (Amendment and Validation) Ordinance, 1967, is or has been made in pursuance of any declaration under section 6 of the principal Act, whether made before or after such commencement, and such declaration is or has been made after the expiry of three years from the date of publication of such notification, there shall be paid simple interest, calculated at the rate of six per cent per annum on the market value of such land, as determined under section 23 of the principal Act, from the date of expiry of the said period of three years to the date of tender of payment of compensation awarded by the Collector for the acquisition of such land : Provided that no such interest shall be payable for any period during which the proceedings for the acquisition of any land were held up on account of stay or injunction by order of a court 49 Provided further that nothing in this sub section shall apply to the acquisition of any land where the amount of compensation has been paid to the persons interested before the commencement of this Act.
" Section 5 of the Amending Act repealed the Land Acquisition, (Amendment and Validation) Ordinance, 1967 and further pro vided that notwithstanding such repeal, anything done or any action taken under the principal Act as amended by the said Ordinance shall be deemed to have been done or taken under the principal Act as amended by,_this Act as it this Act had come into force on the 20th January, 1967.
The petitions before us were amended by leave of the Court so that the Validation Act of 1967 could.
be challenged.
Mr. C. B. Agarwala who appeared for the petitioners in Writ Petitions Nos. 114, 216, 252 of 1966 and 85 of 1967 raised the following points in support of the petitions : (1) The Validation Act does not revive the notification under section 4 which had become exhausted.
after the first declaration under section 6 and no acquisition could be made without a fresh notification under section 4.
(2) The Validation Act violated article 31( 2) of the Constitution inasmuch as it purported to authorise acquisitions without fresh notifications under section 4 thereby allowing compensation to be paid on the basis of the dead notification under section 4.
It was argued that once a notification under section 4 was exhausted Government had to make a fresh one under the said section; as a result thereof compensation had to be assessed on a different basis altogether.
(3) The Validation Act violated article 14 of the Constitution in various ways (a) It made discrimination inasmuch as a notification under section 4 made before the commencement of the Ordinance had to be followed by a declaration under section 6 within two years of the said ' date, whereas if a notification under section 4 was made after 20th January 1967 i.e. the date of the Ordinance, the declaration under section 6 could be made within a period of three years from the date of the notification under section 4.
The discrimination lay in the fact that whereas a declaration under section 6 had to be made in respect of a notification under section 4 bearing date subsequent to 20th January 1967 within three years, a much longer period of time might elapse between a date of declaration under section 6 and a notification under section 4 issued prior to the date of the Ordinance.
(b) If a notification under section 4 was made after the date of the Ordinance, compensation had to be paid on the basis of such notification but if a notification had been made under section 4 of the Act before the date of the Ordinance, compensation would be awarded on the basis, of the exhausted notification under section 4 however much time might have elapsed since the date of the dead notification.
50 (c)If compensation had not been paid before the Ordinance, interest at 6% had to be paid to the owner of the land on the ,amount of compensation fixed, but if the owner had received compensation before the date of the Ordinance, he had no claim to interest although the acquisition in both cases flowed from the same notification under section 4.
(d) It was open to Government to make a fresh notification under section 4 after the lapse of three years from the date of the Ordinance and such notification might be issued after every period of three years in any case where acquistion was not completed.
In such cases, owners of land would be substantially benefited by the new notification under section 4.
But if a notification had been made before the date of the Ordinance, the owner of the land would receive compensation based on the old notification although a period much longer than three years might elapse between the date of the notification under section 4 and a declaration under section 6, his only solatium being interest at 6% p.a. on the amount of the compensation.
This would result in discrimination inasmuch as a person affected by a section 4 notification prior to the date of the Ordinance would be treated.
very differently from another person whose land was acquired in terms of a notification made after the commencement of the Ordinance.
On the first point, it was argued by Mr. Agarwala that sections 2 :and 3 of the Amending Act had no retrospective operation, that there was no law which purported to validate retrospectively any but the first report made under section 5 A of the principal Act or any but the first declaration issued under section 6 of the Act and consequently there was no legal basis for the validation of such past acts by the operation of section 4 of the Amending Act.
It was therefore argued that the defect in the principal Act as pointed out by this Court in V. P. Sharma 's case(1) was not removed by section 4 of the Amending Act.
It was urged that Acts seeking to validate past transactions can only be effective if the amendment introduced had retrospective operation so as to cure the lacuna 'in the enactment from a date anterior to that of the impugned transactions.
If the Amending Act had no retrospective operation, it could not protect past transactions which would still have to be declared invalid inasmuch as the notification under section 4 made on November 13, 1959 having exhausted itself after the first declaration under section 6 was not resusciated by any provision ,of the Amending Act.
On the second point, the broad contention urged was that the amendment was hit by article 31(2) of the Constitution inasmuch as its whole purpose was to avoid payment of enhanced compensation which would be necessitated if a fresh notification had to be issued under section 4.
The notification dated November 13, 1959 (1) ; 51 having spent itself, a fresh one in the normal course would have to be issued and compensation be paid not on the basis of valuation on November 13, 1959 but on that prevailing at least 8 or 9 years afterwards which would be substantially higher.
It was argued that acquisition on the basis of any declaration under section 6 of the Act after the first one would in effect be providing for compensation on the basis of a notification under section 4 which had no relation to the acquisition.
In other words, the date of the earlier notification under section 4 must be treated to be an arbitrary date divorced, from and completely alien to the acquisition sought to be made by a subsequent declaration under section 6.
In such circumstances, the ratio of a number of decisions of this Court starting from that of The State of West Bengal vs Mrs. Bela Banerjee(1) to a recent judgment in Union of India vs
Kamalabai Harjivandas Parekh and others(2) would apply.
It is not necessary to examine all these decisions in detail.
The notable decisions to which reference was made at some length are P. V. Mudaliar vs Dy. Collector(3),, Jeejeebhoy vs Asstt.
Collector(4)and State of Madras vs D. Namasivaya Mudaliar(5).
It was argued that though the Land Acquisition Act was saved by article 31(5) (a) of the Constitution, any amendment thereto after the coming into force of the Constitution had to pass the test of article 13 and article 31(2) would apply with full force to any amendment of the Land Acquisition Act if as a result thereof a person expropriated was being deprived of compensation, i.e., the just equivalent of the property acquired.
The point sought to be made was that the notification of November 13, 1959, having exhausted itself, the value of the property at or about that date would be illusory com pensation in violation of article 31(2) in respect of a declaration under section 6 made after the first one of the series.
Reference was made to proceedings for compulsory acquisition of land in England under the Lands Clauses Acts under which "once the undertakers or authority are authorised to purchase, the next step in the normal course is to serve a notice to treat" see Halsbury 's Laws of England, third edition, Vol.
10, page 60, article 97.
It is pointed out in article 102 of the said book that "The effect of serving a notice to treat is to establish a relation analogous in some respects to that of a purchaser and vendor, a relation which binds the undertakers to take the land and binds the, land owner to give up the land subject to his being paid compensa tion, but until the price is ascertained the land remains the property of the l andowner.
Both parties have the (1) ; (2) C.A. 1564/1966 decided on 7 9 1967.
(3) ; (4) ; (5) ; 52 right to have the price ascertained and the purchase completed in manner provided by the Lands Clauses Acts.
" It was said that the English procedure ensured the payment of just equivalent of the property to the person who was deprived of it and that issue of a declaration under section 6 made years after the notification under section 4 the date of which alone was to be considered for fixing the value of the property, ignored the rights of the person to the lawful compensation aimed at by article 31(2) of the Constitution.
Reference was made to the judgment of the Judicial Committee of the Privy Council in Ezra vs Secretary of State for India(1) where on a reference to the sections of the Land Acquisition Act as they then stood, it was observed : "that the expert official charged with the duty of fixing a value should be possessed of all the information in the hands of the department, and should at the same time avail himself of all that is offered at the enquiry, his ultimate duty being not to conclude the owner by his so called award, but to fix the sum, which in Ms best judgment is the value and should be offered.
" On the question of violation of article 14 of the Constitution, besides the general argument already referred to, it was urged that in Writ Petition No. 85 of 1967 there was a further point as to discrimination.
The facts laid in this petition are as follows.
The petitioner was the owner of land measuring Ac.
10 62 in village Kilokri.
He wanted to develop the land by establishing a residential colony and selling the same out in plots.
For this purpose, he had spent a good deal of money and taken enormous trouble and divided the area after development into 78 residential plots.
In 1956 he had submitted a lay out plan of the land in question for necessary, sanction to the Delhi Development Provisional Authority.
On June 18, 1956 he was informed by the Delhi Development Provisional Authority that the, final lay out plan had been approved by the said authority.
In September 1957 the said authority demanded from the petitioner a security for Rs. 12,850 25 as a guarantee for carrying out the development of the colony in accordance with the approved standards and this sum was duly deposited by the petitioner.
On September 15, 1958 the petitioner submitted service plans in respect of his colony and these were duly checked and found to be in order : the case was ordered to be Placed before the Standing Committee of the Municipal Corporation for approval.
By December 24, 1958 the Standing Committee 'referred the case R. 32 Calcutta 605 at 629.
53 back to the Town Planner for a scrutiny of the ownership documents.
The question relating to the proof of ownership was settled on March 19, 1961.
In the meantime, the notification dated November 13, 1959 had been issued under section 4(1) of the Act.
The petitioner duly filed his objections under section 5 A of the Act.
By a notification dated July 1, 1960 published by the Delhi Administration the Chief Commissioner, Delhi, withdrew the land of 16 colonies from the acquisition out of the area covered by the notification of November 13, 1959 on the ground that their lay out plan had been sanctioned by the Delhi Municipal Corporation and as per general decision of the Standing Committee, Delhi Municipal Corporation, the petitioner was asked by the Town Planner by letter dated April 16, 1960 to submit a de notification certificate to the effect that the land comprising the proposed lay out of his colony was excluded from the purview of the notification issued under section 4 of the Act.
On June 14, 1961 the Deputy Housing Commissioner, Delhi Administration, issued the first notification under section 6 of the Act in respect of 97 bighas and 4 biswas of land in village Kilokri as required by the Government for a public purpose at the public expense, namely, the planned development of Delhi.
The petitioners land was not covered by this notification.
The Deputy Housing Commissioner, Delhi Administration, purported to issue another noti fication dated 26/27th July, 1961 under section 6 of the Act declaring that land specified therein in village Kilokri was required to be taken by the Government at public expense for a public purpose.
This notification covered the petitioners land in question in village Kilokri.
On January 9, 1962 the petitioner was informed by a letter issued by the office of the Town Planner, Municipal Corporation, Delhi, that the Standing Committee of the Municipal Corporation by its resolution No. 1190 dated December 18, 1961 had rejected the lay out plan of the petitioner 's colony.
According to the petitioner, this resolution went to show that his land was sought to be acquired because it had not been de notified along with the land of the other colonies on the ground that the Standing Committee had rejected the lay out plan of his colony.
Thereafter the Land Acquisition Collector, Delhi, made an award No. 1276 dated February 16, 1962 with respect to the petitioner 's said land.
In March 1965 the petitioner learnt about the notification issued by the Delhi Administration on July 1, 1960 under section 48(1) of the Act withdrawing the land of the 16 colonies mentioned therein from the acquisition out of the area covered by the notification dated November 13, 1959 on the ground that their lay out plan had been sanctioned by the Delhi Municipal Corporation.
By letter dated March 10, 1965 the petitioner asked the Deputy Housing Commissioner, Delhi Administration, for restoration of his land on the same basis because his lay out plan 54 had been sanctioned before the section 4 notification.
This request was however turned down by letter dated May 14, 1965 on the ground that the petitioner 's land had already been acquired and could not be released.
According to the petitioner, there was no basis for treating his land in a manner different from that of the 16 colonies.
This differential treatment has resulted in violation of article 14 of the Constitution so far as the petitioner 's colony is concerned.
Mr. Agarwala also tried to make a subsidiary point in this connection and urged that acquisition of petitioner 's land was a colourable exercise of the power under the Act inasmuch as the petitioner was out to do the same thing as was sought to be achieved by proceedings under Land Acquisition Act, the only difference being that whereas the sales effected by him were at reasonable rates, those fetched at auction of lands acquired under the Act were for much higher figures and the State was really making revenue out of such acquisitions.
Mr. R. V. section Mani who appeared for the petitioner in Writ Petition No. 223 of 1966 adopted the arguments of Mr. Agarwala in general but sought to make a special point of his own.
In substance the additional ground urged by him was that by the Validating Act the Legislature had sought to encroach into the domain of the Judiciary.
Mr. Mani contended that although there was no clear separation of legislative and judicial powers in our Constitution, nevertheless the Constitution did not confer unlimited powers on the legislature and it was for the Judiciary to declare the limits of the legislative powers enshrined in the Constitution.
To quote Mr. Mani 's words : "The Legislature exercises judicial power if its legislative action retroacts on past controversies and overrides or reverses the decisions of the Judiciary.
" Such an act, argued Mr. Mani, bad to be struck down in courts of law.
Mr. Mani 's main argument was that inasmuch as sections 2 and 3 of the Amending Act had not been given retrospective effect, the validation sought to be effected by section 4 with respect to the past transactions was of no avail as the impugned actions, i.e., the subsequent declarations under section 6 of the Act, had no legal basis.
In our opinion no useful purpose will be served by referring to the clear demarcation between the judicial powers and legislative powers in America and attempt to engraft the said principle in the working of our Constitution.
This development of the 55 law, as pointed out in A. K. Gopalan vs State(") was due to historical reasons.
In that case it was pointed out by Das, J. (see, at p. 286) that "the Supreme Court of the United States, under the leadership of Chief Justice Marshall, assumed the power to declare any law unconstitutional on the ground of its not being in "due process of law," It is thus that the Supreme Court established its own supremacy over the executive and the Congress.
In India the position of the Judiciary is somewhere in between the Courts in England and the United States.
While in the main leaving our Parliament and the State Legislatures supreme in their respective legislative fields, our Constitution has, by some of the articles, put upon the Legislature certain specified limitations. .
Our Constitution, unlike the English Constitution, recognises the Court 's supremacy over the legislative authority, but such supremacy is a very limited one, for it is confined to the field where the legislative power is circumscribed by limitations put upon it by the Constitution itself.
Within this restricted field the Court may, on a scrutiny of the law made by the Legislature, declare it void if it is found to have transgressed the constitutional limitations.
" It will not serve any useful purpose to note the decisions of this Court where reference has been made to the distinction between, the Indian Constitutional law and the American Constitutional law on this subject.
Mr. Mani sought to rely on a statement of the law made by Cooley in his Constitutional Limitations, 7th ed., p. 137, as quoted in Willoughby 's Constitution of the United States, second edition, Vol. 3, at page 1651 that "If the legislature would prescribe a different rule for the future from that which the courts enforce, it must be done by statute, and cannot be done by a mandate to the courts which leaves the law unchanged, but seeks to compel the courts to construe and apply it not according to the judicial, but according to the legislative judgment. .
If the legislature cannot thus indirectly control the action of the courts, by requiring of them a construction of the law according to its own views, it is very plain it cannot do so directly, by setting aside their judgments ' compelling them to grant new trials, ordering the discharge of offenders, or directing what particular steps shall be taken in the progress of a judicial.
inquiry.
(1) ; at 198.
56 According to Willoughby, "Retroactive legislation, which does not impair vested rights, or violate express constitutional prohibitions, is valid, and therefore, particular legal remedies, and, to a certain extent, rules of evidence may be changed and, as changed, made appli cable to past transactions,.
But substantial rights may not thus be interfered with.
" Willoughby seeks to fortify his statement quoting from Cooley again : "The legislature does, or may, prescribe the rules under which the judicial power is exercised by the courts; and in doing so it may dispense, with any of those formalities which are not essential to the jurisdiction of the court; and whatever it may dispense with by statute anterior to the proceedings, we believe it may also dispense with by statute after the proceedings have been taken, if the court has failed to observe any of those formalities.
But it would not be competent for the legislature to authorize a court to proceed and adjudicate upon the rights of parties, without giving them an opportunity to be heard before it and, for the same reason it would be incompetent for it, by retrospective legislation, to make valid any proceedings which had been had in the courts, but which were void for want of jurisdiction over the parties.
" Relying on the above Mr. Mani proceeded to argue that the wording of section 4 of the Amending Act was not a question of mere form and that it was a decree purporting to operate as such.
According to him unless section 3 was ' retrospective, section 4 would be meaningless and should be struck down.
Mr. Mani relied particularly on the decision of the Federal Court in Basanta Chandra Ghose vs King Emperor(1) where it was held by this Court that Ordinance No. III of 1944 did not take away the power of the court to investigate and interfere with orders of detention or deprive the court of its power to pass orders under section 491 of the Criminal Procedure Code and the court was still at liberty to investigate whether an order purporting to, have been made under r. 26 of the Defence of India Rules and deemed to be made under .the Ordinance or a new order purporting to be made under the ,Ordinance was in fact validly made, in exactly the same way as immediately before the promulgation of the Ordinance; and if on a consideration the Court came to the conclusion that it was not (1) 57 validly made on any ground other than the ground that r. 26 of the Defence of India Rules was ultra vires section 10 of the Ordinance would no more prevent it from so finding than section 16 of the Defence of India Act did.
We shall deal with the argument based on this case later on.
The learned Solicitor General first dealt with the question as to whether Parliament was competent to pass the Validating Act and whether section 4 of the Amending Act could be given effect to unless the legislature gave retrospective operation to section 3.
According to the Solicitor General and that is undoubtedly the position in law the legislative competence of Parliament is only circumscribed by the scope of the entries in the appropriate Lists under the Seventh Schedule and the fundamental rights enshrined in Part III of the Constitution.
The power of Parliament to make laws for the whole or any part of the territory of India is dealt with by the Constitution in articles 245 to 250, 252 and 253.
Acquisition and requisitioning of property is an entry in List III and Parliament is competent to make laws enumerated in that list under article 246(2) of the Constitution.
As early as in the year 1878 it was pointed out by the Judicial Committee of the Privy Council in The Queen vs Burah(1) that the Indian Legislature when acting within the limits prescribed (by the Act of the Imperial Parliament which created it) had plenary powers of legislation as much, and of the same nature as those of Parliament itself and "If what has been done is legislation, within the general scope of the affirmative words which give the power, and if it violates no express condition or restriction by which that power is limited (in which category would, of course, be included any Act of the Imperial Parliament at variance with it), it is not for any Court of Justice to inquire further, or to enlarge constructively those conditions and restrictions.
" In that case the question before the Judicial Committee was whether Act XXII of 1869 of the Indian Legislature which ex cluded the jurisdiction of the High Court within certain specified districts was not inconsistent with the Indian High Courts Act or with the Charter of the High Court and so in its general scope within the legislative power of the Governor General in Council.
Under section 4 of that Act the territory known as Garo Hills was removed from the jurisdiction of the Courts of Civil and Criminal Judicature and from the control of the officers of revenue, constituted by the regulations.
of the Bengal Code and the Acts passed by any Legislature established in British India as well ,is (1) L.R. 5 I.A. 178 at 194.
L4Sup.
C.I./68 5 58 from the law prescribed for such courts or officers by the Regulations and Acts aforesaid.
This section further provided that no Act thereafter passed by the Council of the Governor General for making laws and regulations shall be deemed to extend to any part of the said territory unless the same was specially named therein.
Under section 9 of the Act the Lieutenant Governor was authorised by notification in the Calcutta Gazette to extend mutatis mutandis all or any of the provisions contained in the other sections of the Act to the Jaintia Hills, the Naga Hills, and such portion of the Khasi Hills as might for the time being form part of British India.
The Lieutenant Governor of Bengal, acting under powers conferred by section 9, extended the provisions of Act XXII of 1869 to the territory of Khasi and Jaintia Hills and excluded therefrom the jurisdiction of the courts of civil and criminal judicature.
The High Court of Calcutta held that the 9th section was not legislation but was a delegation of 'legislative power.
This was not accepted by the Judicial Committee and it was observed (at p. 195) : ". it is a fallacy to speak of the powers thus conferred upon the Lieutenant Governor (large as they undoubtedly are) as if, when they were exercised, the efficacy of the acts done under them would be due to any other legislative authority than that of the GovernorGeneral in Council.
Their whole operation is, directly and immediately, under and by virtue of this Act (XXII of 1869) itself." Reference was made by counsel to the case of Abeyesekra vs Jayatilake(1).
The question there arose as to whether an Order in Council of 1928 amending another of 1923 making provision that the action of a common informer brought to recover penalties under the Order in Council of 1923 be dismissed and further amending the 1923 Order so as to except the office held by the respondent from its operation was valid and constituted all effective defence to the action although it was retrospective in operation.
In upholding the validity of 1928 Order, it was observed by the Judicial Committee that legislators "have certainly the right to prevent, alter or reverse the consequences of their own decrees.
" The effect and validity of retrospective legislation has had to be considered by the Federal Court of India and this Court on a number of occasions.
In the case of The United Provinces, V. Atiqa Begum(2) a question arose as to whether, the Regularisation of Remissions Act, 1938 of the United Provinces Legislature (1) (2) 59 was within its competence.
There was an Act in force, namely, the Agra Tenancy Act, 1926 the purpose whereof was to consolidate and amend the law relating to agricultural tenancy and certain other matters.
Section 73 of that Act provided that "when for any cause the Local Government or any authority empowered by it, remitted or suspended for any period the whole or any part of the revenue payable in respect of any land, a Collector might order that the rents of the tenants should be remitted or suspended to an amount which shall bear the same proportion to the whole of the amount payable in respect of the land as the revenue of which the payment has been so remitted or suspended bears to the whole of the revenue payable in respect of such land.
" In 1931 there was a catastrophic fall in agricultural prices followed by threats on the part of tenants to withhold rent on a large scale.
The Government of the United Provinces devised a scheme for the systematic reduction of rents, varying with the circumstances of the different districts, followed later by consequential adjustments in land revenue.
The Allahabad High Court had held in Muhammad Abdul Qaiyum vs Secretary of State for India(1)that remissions made in pursuance of the orders of Government had no legal effect.
In 1938 the Provincial Legislature passed the Regularisation of Remissions Act which precluded any question as to the validity of the orders of remission being raised in the courts of law.
The Allahabad High Court took the view that the Act was contrary to the provisions of section 292 of the Gov ernment of India Act, 1935 because it amounted to an attempt to legislate retrospectively.
Section 2 of the Act of 1938 provided that "notwithstanding anything in the Agra Tenancy Act, 1926. . . or in any other law for the time being in force where rent has been remitted on account of any fall in the price of agricultural produce which took place before the commencement of this Act, under the order of the Provincial Government or any authority empowered by it in that behalf, such order, whether passed before or after the commencement of this Act, shall not be called in question in any civil or revenue court.
" Referring to the case of Queen vs Burah(2) Gwyer, C.J., said that there was nothing in section 292 which suggested any intention on the part of Parliament to impose a fetter against retrospective legislation.
According to the learned Chief Justice, the impugned Act was an Act with respect to "remission of rents" although it might also be an act with respect to something else, that is to say, the validation of doubtful executive orders.
The learned Chief Justice said : (1) I.L.R. 1938 Allahabad , 114.
(2) L.R.I.A. 178.
60 "It is true that "Validation of executive orders" or any entry even remotely analogous to it is not to be found in any of the three Lists; but I am clear that legislation for that purpose must necessarily be regarded as subsidiary or ancillary to the power of legislating on the particular subjects in respect of which the executive orders may have been issued.
" His Lordship further opined that powers of the court were not affected merely because certain executive orders were not allowed to be questioned in any court.
In Piare Dusadh & others vs The Kink Emperor(1) one of the questions raised was whether it was competent for the Legislature by retrospective legislation to make valid any proceedings which had been had in the courts but which were void for want of jurisdiction over the parties.
In this case the facts were as follows.
The appellants had been convicted by courts functioning under the Special Criminal Courts Ordinance (Ordinance No. 11 of 1942).
On 4th June, 1943, the Federal Court held that the courts constituted under that Ordinance had not been duty invested with jurisdiction, in view of the nature of the provisions contained in sections 5, 10 and 16 of that Ordinance.
The next day, the Governor General made and promulgated another Ordi nance (Ordinance No XIX of 1943) whereby Ordinance No. 11 of 1942 was repealed and certain provisions were made in respect of sentences which had been passed by the special courts and in respect of cases which were pending before them on that date.
By sub section
(2) of section 3 of the new Ordinance, a right of appeal against sentences which had already been passed by the special courts was given and appeals were accordingly preferred to the High Court in some cases.
In certain other cases applications for a writ in the nature of habeas corpus were made.
In both sets of cases, it was contended on behalf of the accused that the new Ordinance did not, and in any event could not, give validity on the sentences which had been passed by the special courts, and it was claimed that the sentences should be treated as void or set aside.
Section 4 of the new Ordinance provided that "Where the trial of any case pending before a court constituted under the said Ordinance has not concluded before the date of the commencement of this Ordinance, the proceedings of such court in the case shall be void and the case shall be deemed to be transferred" to the ordinary criminal courts for enquiry or trial in accordance with the Code of Criminal Procedure.
Section 3 of the Ordinance provided as follows (1) 61 .lm15 "(a)Any sentence passed by a Special Judge, a Special Magistrate or a Summary Court in exercise of jurisdiction conferred or purporting to have been conferred by or under the said Ordinance shall have effect, and subject to the succeeding provisions of this section shall continue to have effect, as if the trial at which it was passed had been held in accordance with the Code of Criminal Procedure, 1898 by a Sessions Judge, an Assistant Sessions Judge or a Magistrate, of the first class respectively, exercising competent jurisdiction under the said Code.
(2)Notwithstanding anything contained in any other law, any such sentence as is referred to in sub section (1) shall, whether or not the proceedings in which the sentence was passed were submitted for review under section 8, and whether or not the sentence was the subject of an appeal under Section 13 or Section 19, of the said Ordinance, be subject to such rights of appeal as would have accrued, and to such powers of revision as would have been exercisable under the said Code if the sentence had at a trial so held been passed on the date of the commencement of this Ordinance.
(3)Where any such sentence as aforesaid has been altered in the course of review or on appeal under the said Ordinance, the sentence as so altered shall for the purpose of this section be deemed to have been passed by the Court which passed the original sentence.
" Learned counsel for the accused conceded that the principle of validation by subsequent legislation was quite applicable to judicial as to ministerial proceedings but relying on Cooley 's Constitutional Limitations, 8th ed., p. 205 and also pp.
773 776, they contended (a)that while such legislation might seek to aid and support judicial proceedings, the legislature could not under the guise of legislation be permitted to exercise judicial power, and (b) that it was not competent to the legislature by retrospectivelegislation to make valid any proceedings which had been held inthe courts, but which were void for want of jurisdiction over the parties.
Spens, C. J., observed (see at p. 100): "As a general proposition, it may be true enough to say that the legislative function belongs to the legisla 62 ture and the judicial function to the judiciary.
, Such differentiation of functions and distribution of powers are in a sense part of the Indian law as of the American law.
But an examination of the American authorities will show that the development of the results of this distribution in America has been influenced not merely by the simple fact of distribution of functions, but by the assumption that the Constitution was intended to reproduce the provision that had already existed in many of the State Constitutions positively forbidding the legislature from, exercising judicial powers .
One result of the application of this rule in the United States has been to hold that "legislative action cannot be made to retroact upon past controversies and to reverse decisions which the courts in the exercise of their undoubted authority have made.
" The reason given is that "this would not only be the exercise of judicial power, but it would be its exercise in the most objectionable and offensive form, since the legislature would in effect sit as a court of review to which parties might appeal when dissatisfied with the ruling of the courts. .
In India, however ', the legislature has more than once enacted laws providing that suits which had been dismissed on a particular view of the law must be restored and retried.
" The learned Chief Justice referred to the Australian case, Federal Commissioner of Taxation vs Munro(1) where a Board of Appeal constituted under an Act of 1922 had given certain decisions in appeals in income tax matters.
The law courts declared that the Australian Parliament had no power to invest this Board of Appeal with judicial power.
A later Act established what was described as a Board of Review and assigned to it functions which were held to be different in character from those assigned to the former Board of Appeal.
This Act however went on to provide that decisions which had already been pronounced by the Board of Appeal "should be deemed to be and at all times to have been decisions of a Board of Review given in pursuance of the provisions of the later Act.
" This later Act was challenged as vesting judicial power in the Board of Review, but this contention was overruled.
Reference may be made to the judgment of Starke, J. quoted by Spens, C.J. that "Parliament simply takes up certain determinations which exist in fact, though made without authority, and prescribes not that they shall be acts done by a Board (1) 63 of Review, but that they shall be treated as they would be treated if they were such acts.
The sections, no doubt, apply retrospectively but they do not constitute an exercise of the judicial power on the part of the Parliament.
" The learned Chief Justice observed that this aptly described what had happened in the case before the Federal Court and answered the argument that it was an impossible feat to convert what was not a trial under the Code of Criminal Procedure into a trial under the Code: According to the learned Chief Justice, the real question was, whether the Ordinance was covered by any of the entries in the Seventh Schedule to the Constitution Act. "It was not contended said the Chief Justice "that the mere absence of a specific provision about validating laws" was by itself of much significance.
" As observed by this Court in Atiqa Begum 's case(1), "the power of validation must be taken to be ancillary or subsidiary to the power to deal with the particular subjects specified in the Lists.
" There is nothing in Basanta Chandra Ghose 's case ( 2 ) which detracts from the propositions of law laid down in Atiqa Begum 's case(1) or Piare Dusadh 's case(3).
In Basant Chandra Ghose 's case(2) Cl.
(2) of section 10 provided : "If at the commencement of this Ordinance there is pending in any Court any proceeding by which the validity of an order having effect by virtue of section 6 as if it had been made under this Ordinance is called in question, that proceeding is hereby discharged.
Spens, C.J. said with regard to this clause that "here there has been no investigation or decision by any Tribunal which the legislating authority can be deemed to have given effect to.
It is a direct disposal of cases by the legislature itself." (see at p. 309).
It was pointed out that the nature of the provision considered in Piare Dusadh 's case(3) was essentially different from cl.
(2) of section 10 of the impugned Ordinance.
The question has engaged the attention of this Court in a number of cases and we may refer to the case of West Ramnad Electric Distribution Co. Ltd. vs State of Madras (4) by way of (1) (2) (3) (4) [1963] 2 S.C.R.747 64 illustration.
In that case, the Madras Legislature had passed an Act (43 of 1949) on January 24, 1950 for the acquisition of undertakings supplying electricity in the Province of Madras.
In pursuance of section 4(1) of the Act the State of Madras passed an order on May 17, 1951 declaring that the appellant undertaking shall vest in the respondent from September 21, 1951.
The Chief Electrical Inspector took over possession of the appellant and all its records etc.
The State paid to the appellant Rs. 8,34,000 and odd as compensation.
According to the appellant, about Rs. 1,00,000 still remained to be paid.
Some of the electrical undertakings in Madras which had ' been taken over filed writ petitions in the High Court which upheld the validity of the impugned Act in so far as it related to the licencees other than municipalities.
In Rajahmundry Electric Supply Corporation Ltd. vs The State of Madras(1) this Court had held that the impugned Act of 1949 was ultra vires on the ground that it went beyond the legislative competence of the Madras Legislature inasmuch as there was no entry in any of the three Lists of the Seventh Schedule of the Government of India Act, 1935 relating to compulsory acquisition of any commercial or industrial undertaking.
After the decision in this case, the Madras Legislature passed Act XXIX of 1954 which received the assent of the President on 9th October, 1954.
This Act incorporated the main provisions of the earlier Act and purported to validate action taken under the earlier Act.
The appellant then filed a writ petition alleging that to the extent to which the Act purported to validate acts done under the earlier Act of 1949 it was ultra vires.
It was further urged that the three bases of compensation as laid down by the Act were inconsistent with the requirement of article 31 of the Constitution.
Section 24 of the Act ran as follows "Orders made, decisions or directions given, notifications issued, proceedings taken and acts or things done, in relation to any undertaking taken over, if they would have been validly made, given, issued, taken or done, had the Madras Electricity Supply Undertakings (Acquisition) Act, 1949 (Madras Act XLIII of 1949), and the rules made thereunder been in force on the date on which the said orders, decisions or directions, notifications, proceedings, acts or things, were made, given, issued, taken or done are hereby declared to have been validly made, given, issued, taken or done, as the case may be, except to the extent to which the said orders, decisions, directions, notifications, proceedings, acts or things are repugnant to the provisions of this Act." (1) ; 65 It was held by this Court that this was "a saving and validating provision and it clearly intends to validate actions taken under the relevant provisions of the earlier Act which was invalid from the start.
The fact that section 24 does not use the usual phraseology that the notifications issued under the earlier Act shall be deemed to have been issued under the Act, does not alter the position that the second part of the section has and is intended to have the same effect.
" The contention that the impugned notification contravened article 31(1) because of want of existence of an antecedent law depriving the citizen of his property was turned down with the observation "In our opinion, this argument is not well founded.
If the Act is retrospective in operation and section 24 has been enacted for the purpose of retrospectively validating actions taken under the provisions of the earlier Act, it must follow by the very retrospective operation of the relevant provisions that at the time when the impugned notification was issued, these provisions were in existence.
That is the plain and obvious effect of the retrospective operation of the statute.
" Reference was made to the cast of the United Provinces vs Mst.
Atiqa Begum(1), Piare Dusadh vs The King Emperor(2) and also to the decision in Union of India vs Madan Gopal Kabra(3) and it was finally said (at p. 766) ". there is no doubt about the competence of the Legislature to enact a law and make it retrospective in operation in regard to topics included within the relevant Schedules of the Constitution.
" Reference may also be made to the case of Rai Ramkrishna vs
The State of Bihar(4).
All these decisions lay down that the power to legislate for validating actions taken under statute which were not sufficiently comprehensive for the purpose is only ancillary or subsidiary to legislate on any subject within the competence of the legislature and such Validating Acts cannot be struck down merely because courts of law have declared actions taken earlier to be invalid for want of jurisdiction.
Nor is there any reason to hold that in order to validate action without legislative support the Validat ing Act must enact provisions to cure the defect for the future (1) (2) (3) ; at 544.
(4) ; 66 and also provide that all actions taken or notifications issued must be deemed to have been taken or issued under the new provisions so as to give them full retrospective effect.
No doubt legislatures often resort to such practice but it is not absolutely necessary that they should do so so as to give full scope and effect to the Validating Acts.
By way of illustration reference may be made to the following Acts.
(1) The Professions Tax Limitation (Amendment and Validation) 'Act, 1949 where section 3(i) provided that "Notwithstanding anything to the contrary in any other law for the time being in force, (i) no tax on circumstances and property imposed before the commencement of this Act under clause (ix) of sub section (1) of section 128 of the United Provinces Municipalities Act, 1916, or, clause (b) of section 108 of the United Provinces District Boards Act, 1922, shall be deemed to be, or ever to have been invalid merely on the ground that the tax imposed exceeded the limit of Rs. 50/ per annum prescribed by the said Act, and the validity of the imposition of any such tax shall not be called in question in any Court;" (2)The (Act 19 of 1960) was passed to obviate the short comings in the Hindu Marriage Act pointed out by the Punjab High Court in Janak Dulari vs Narain Das (A.I.R. 1959 Punjab 50).
There the High Court held that the court of an additional Judge cannot be regarded as a principal court of civil jurisdiction within the meaning of the Hindu Marriage Act and that a District Judge to whom a petition under the Act is presented cannot transfer it to an additional Judge for trial.
The object of the Validation Act was to validate all proceedings taken and decrees and orders passed by any of the Courts specified in cl.
(2) exercising or purporting to exercise jurisdiction under the Hindu Marriage Act.
Section 2(1) ran as follows : "All proceedings taken and decrees and orders passed before the commencement of this Act by any of the Courts referred to in sub section (2) exercising or purporting to exercise jurisdiction under the shall, notwithstanding any judgment, decree or order of any court, be deemed to be as good and valid in law as if the court exercising or purporting to, exercise such jurisdiction had been a district court within the meaning of the said Act.
" The courts referred to in sub section (1) are : the court of an additional Judge, additional district Judge, etc.
67 In our opinion the contentions raised about the invalidity of the Amending Act on the ground that section 3 thereof was not made expressly retrospective or that it encroached upon the domain of the judiciary by seeking to nullify judicial decisions cannot be sustained.
The American doctrine of well defined separation of legislative and judicial powers has no application to India and it cannot be said that an Indian Statute which seeks to validate invalid actions is bad if the invalidity has already been pronounced upon by a court of law.
In view of the decisions of the Judicial Committee, the Federal Court and this Court referred to above, it must be held that the absence of a provision in the Amending Act to give retrospective operation to section 3 of the Act does not affect the validity of section 4 as contended for.
It was open to Parliament to adopt either course, e.g. (a) to provide expressly for the retrospective operation of section 3, or, (b) to lay down that no acquisition purporting to have been made and no action taken before the Land Acquisition (Amendment and Validation) Ordinance, 1967 shall be deemed to be invalid or ever to have become invalid because inter alia of the making of more than one report under section 5 A or more than one declaration under section 6 of the Land Acquisition Act, not withstanding any judgment, decree or order to the contrary.
Parliament was competent to validate such actions and transactions, its power in.
that behalf being only circumscribed by the appropriate entries in the Lists of the Seventh Schedule and the fundamental rights setforth in Part III of the Constitution.
As shown above, there have been instances where the latter course had been adopted by the Indian Parliament in the past.
Section 4 of the Amending Act being within the legislative competence of Parliament, the provisions thereof are binding on all courts of law notwithstanding judgments, orders or decrees to the contrary rendered or made in the past.
We find ourselves unable to accept the contention about the violation of article 31(2) of the Amending Act.
It is not suggested that the Validating Act in express words enacts.
any law which directly affects compensation payable in respect of the property acquired or lays down any principles different from those which were already in the Land Acquisition Act of 1894.
After the amendment of the Constitution in 1955 the question of adequacy of compensation is not justiciable and it is enough if the law provides that a person expropriated must be given compensation for his property or lays down the principles for the determination thereof.
There is not a word about "compensation" in section 4 of the Validating Act.
Indirectly however, it would affect a person 's right to compensation,, inasmuch as but for the Validating Act the notification under section 4 issued on 13th November 1959 could 68 not be resorted to for the purpose of making more than one declaration under section 6 of the Act.
Schemes of the magnitude of the plan for the development of Delhi or for the establishment of an iron and steel plant did not have to be considered in pre Constitution days.
The Land Acquisition Act of 1894 contained sufficient measures to allow acquisition of small parcels of property for the different schemes of the extent and magnitude which had to be considered in the past.
Even then, the law with regard to compensation did not remain static from the days of the Act of 1870 to 1923.
In the Act of 1894 the date of declaration under Is. 6 was made to take the place of the date in section 24 of the Act of 1870.
Under the Act of 1870 the market value of the land at the time of awarding compensation was the criterion.
The date for the assessment of compensation was further shifted to the date of the notification under section 4 only in 1923.
The Legilature might well have provided in the Act of 1894 that it would be open to the appropriate government after issuing a notification under section 4 to consider objections raised under section 5 with regard to different localities from time to time enabling different reports to be made under section 5 A with consequent adjustments in section 6 providing for declarations to be made as and when each report under section 5 A was considered.
By the validation of actions taken under section 6 more than once in respect of a single notification under section 4, the original scheme of acquisition is not altered.
The public purpose behind the notification under section 4 remains the same.
It is not as if a different public purpose and acquisition of land for such purpose were being interpolated by means of the Validating Act.
The principle of compensation remains the same under the Validating Act as it did under the principal Act of 1894.
Only the shortcomings in the Act as to want of provision to enable more than one declaration under section 6 are being removed.
In our opinion, the Validating Act does not fall within the mischief pointed out by this Court in various decisions starting from the State of West Bengal vs Mrs. Bela Baner jee(1) : Entry 42 in List III of the Seventh Schedule before its amendment read "Principles on which compensation for property acquired or requisitioned for the purposes of the Union or of a State or for any other public purpose is to be determined, and the forms and the manner in which such compensation is to be given.
" In Mrs. Bela Banerjee 's case(1) section 8 of the impugned West Bengal Land Development and Planning Act 1948 provided that the com (1) ; 69 pensation to be awarded for acquisition of land was not to exceed the market value thereof on December 31, 1946.
This provision was held to be arbitrary by this Court inasmuch as it fixed the ceiling on compensation by reference to the market value of the land on the above mentioned date no matter when and how long afterwards the acquisition took place.
Similarly in dismissing the appeal of the State in State of Madras vs D. Namasivaya Mudaliar (1) where the Madras Act XI of 1953 provided that compensation was payable on the basis of the valuation of the land on April 28, 1947 together with some improvements made thereon up to the date of notification under section 4(1) of the Land Acquisition Act because of the discovery of the presence of lignite in certain taluks in 1947 and the announcement by Government by a press note that it proposed to undertake legislation to compel persons purchasing such lands after a date to be prescribed in 1947, it was held that "a law which authorises acquisition of land not for its true, value, but for value frozen on some date anterior to the acquisition, on the assumption that all appreciation in its value since that date is attributable to purposes for which the State may use the land at some time in future, must be regarded as infringing the fundamental right" and "there was no true relation between the acquisition of the land. and the fixation of compensation based on their value on the market rate prevailing on April 28, 1947.
" Referring to the provision in the Land Acquisition Act for assessment of compensation on the basis of the market value of the land not on the date on which the interest of the owner was extinguished under section 16 but to the date of the notification under section 4(1) it was observed that "any princi ple for determination of compensation denying to the owner all increments in value between a fixed date and the date of issue of the notifications under section 4(1) must prima facie be regarded as denying to him the true equivalent of the land which is expropriated.
In our opinion, the Amending Act cannot be said to lay down any principle which suffers from the vice of the Act struck down in the above decisions.
The date of valuation is that of the issue of notification under section 4(1) a principle which has held the field since 1923.
It is true that the underlying principle of the Act of 1894 was that all increments due to the setting on foot of the acquisition proceedings were to be ignored whereas due to the ever spiralling of all prices all over India land values are mounting up all the time in all the States, specially round about big cities an occurrence quite unconnected with the issue of a notification under section 4(1) but it cannot be said that because owners of land are to be deprived of all the increments due to the latter phenomenon it must be held that there is a Violation of article 31(2).
Legislative competence to acquire land under the provisions of (1) ; 70 the Land Acquisition Act cannot be challenged because of constant appreciation of land values all over the country due to the prevalent abnormal inflation.
There must be some time lag between the start and conclusion of land acquisition proceedings and in principle there is nothing wrong in accepting the said start as the date for valuation.
Sections 4 and 23 of the Land Acquisition Act are protected by article 31(5) (a) of the Constitution.
Only sections 5 A and 6 of the Act have been amended.
The amendments do not alter the principle of compensation fixed by the Act nor contravene article 31 of the Constitution in any way.
The Amending Act does not really derogate from the principle that the valuation on the date of issue of notification affords the criterion for determining compensation of all lands to be acquired.
It only keeps alive the said notification for sustaining more than one declaration under section 6 to meet the exigencies of the situation where it was not possible to make one comprehensive declaration under section 6 and where the State has been obliged to validate actions which could not be supported under the principal Act.
It cannot be said of the Validating Act that it was fixing an arbitrary date for the valuation of the property which bore no relation to the acquisition proceedings.
At the same time when the notification under section 4 was issued on 13th November 1959, the State had considered that a very large area round about Delhi would have to be acquired so that the development of the city could proceed in an orderly manner step by step not only 'Lo meet the immediate needs of the then.
population of the city but with an eye to the ever increasing demands of the exploding population in all cities in India and specially in its capital.
It was before, November 1959 that the State had to consider the, acquisition of a large tract of land for the purposes of development of Delhi but it was not possible to take up simultaneously all schemes for the future development of the city.
It was also not practically possible to take up all schemes in all directions at the same time.
The resources of the State were not adequate to take up the schemes for improvement of the city by the acquisition of an area like Ac.
34,000,00, at the same time keeping in, mind not only the need of land for housing purposes but also for, other purposes like education, industry and manufacture not to speak of amenities for recreation, entertainment etc.
Of necessity,, the area under the proposed acquisition would have to be carved into blocks and the development of one or more blocks at a time could only be taken up in consonance with the resources available.
Even contiguous blocks could be developed gradually and systematically.
If a particular area, say block 'A ' was meant to provide lands for building houses for residential purposes only a block contiguous thereto, say block 'B ' might be set apart for industrial purposes.
There may be nothing common between 71 Block A and Block B to require their simultaneous development .although both the Blocks would form part of a composite whole to serve the needs of a growing city.
Can it be said that acquisition of lands for Block A and Block B must be made simultaneously and is the law to be struck down because it enables a declaration under section 6 with respect to Block B to be made some time after a similar declaration in respect of Block A ? In such a case, it would be incongruous to award compensation for lands acquired in Block B on a basis different from that in respect of lands in Block A covered by an earlier declaration under section 6.
The scope of article 31(2) as amended was considered by this Court in P. V. Mudaliar vs Deputy Collector(1).
It was there, pointed out that after the amendment "what is excluded from the courts ' jurisdiction is that the said law cannot be questioned on the ground, that the compensation provided by that law is not adequate;" and "if a law lays down principles which are not relevant to the property acquired or to the value of the property at or about the time it is acquired, it may be said that they are not principles contemplated by article 31(2) of the Constitution.
" In that case it was also observed by this Court that "in the context of continuous rise in land prices from year to year depending upon abnormal circumstances it cannot be said that fixation of average price of over five years is not a principle for ascertaining the price of the land in or about the date of acquisition.
" The decision is also an authority for the proposition that the omission of one of the elements that should properly be taken into account in fixing the compensation might result in the inadequacy of compensation but such omission in itself did not constitute fraud on power.
it is also to be noted that in this case this Court upheld the Land Acquisition (Madras Amendment) Act, 1961 although the said Act substituted a new clause for the first clause in section 23 ( 1 ) of the Land Acquisition Act.
The substituted clause provided for pay ment of compensation on the basis of the market value of the land at the date of the publication of the notification under section 4(1) or an amount equal to the average market value of the. land during the five years immediately preceding such date, whichever was less.
It is significant that the Act which was a postFourth Constitution Amendment Act, was upheld although by its own terms and independently of the Land Acquisition Act it provided for payment of compensation on the basis of the market value of the land at the date of the publication of the notification under section 4(1).
It may therefore be inferred that in upholding the Land Acquisition (Madras Amendment) Act, 1961, this Court was of the view that the principle of fixing compensation on the basis of the price prevailing on the date of the notification under section 4(1) of the Land Acquisition Act was a relevant principle.
In (1) ; 72 the result the court turned down the contention about the violation.
of article 31(2) because of the modification of some of the principles for assessing compensation laid down in section 23 of the Act.
In the present case, there has been no variation of the law formulated in section 23 of the Act.
As such, in our opinion, there has been no violation of article 31(2) merely because the actions already taken have been sought to be 'validated.
Nor are we satisfied that there has been any colourable or fraudulent exercise of legislative power.
With regard to the question as to discrimination violative of article 14, it goes without saying that whenever an Amending Act is passed, there is bound to be some difference in treatment between transactions which have already taken place and those which are to take place in the future.
That by itself will not attract the operation of article 14.
Again, even with respect to transactions which may be completed in the future, a reasonable classification will not be struck down as was held by this Court in Jalan Trading Co. vs Mazdoor Union(1).
"If the classification is not patently arbitrary, the Court will not rule it discriminatory merely because it involves hardship or inequality of burden.
With a view to secure a particular object a scheme may be selected by the Legislature wisdom whereof may be open to debate; it may even be demonstrated that the scheme is not the best in the circumstances and the choice of the Legislature may be shown to be erroneous, but unless the enactment fails to satisfy the dual test of intelligible classification and rationality of the relation with the object of the law, it will not be subject to judicial interference under article 14.
Invalidity of legislation is not established by merely finding faults with the scheme adopted by the Legislature to achieve the purpose it has in view.
" Before scrutinising the provisions of the Amending Act, we must examine the objects of the Act.
, They may be summed up as follows : (a) To amend the Act for the future by empowering the making of more than one declaration under section 6.
(b) To validate completed acquisitions on the basis of more than one declaration under that section.
(c) To authorise more than one declaration under the said section in cases where there is already in existence a notification under section 4.
(1)[1967] 1 S.C.R. 15 at 36.
73 (d)To prescribe a time limit for future acquisitions as also pending proceedings not yet completed; and (e) To provide additional compensation by way of interest in all cases where acquisition has not yet been completed and where a declaration under section 6 is issued more than three years after the notification under section 4.
There is nothing arbitrary or irrational about the said objects.
It is well known that in some cases there has been unusual delay in the issue of declaration under section 6 after a notification under section 4.
The Amending Act puts an end to this harsh treatment by providing that in respect of notifications under section 4 made before the date of the Ordinance i.e. 20th January 1967, a declaration under s ' 6 must be made within two years after that date.
If such a declaration is not made, then it will not be open to Government to make use of the old section 4 notification and the State would be obliged to issue a fresh notification under section 4.
The Act also limits the time within which a declaration under section 6 may be made when a notification under section 4 is issued after 20th January, 1967.
This period is limited to three years there having been no time limit in the past.
We are not impressed by the argument that a person whose land may be covered by a notification under section 4 issued more than one year before 20th January 1967 would seemingly be treated differently from a person whose land comes under the notification under section 4 after that date.
The Legislature has sought to improve upon the existing provisions of the Land Acquisition Act and there is no discriminatory treatment which should be struck down as violative of article 14.
The Legislature in its wisdom thought that some time limit should be fixed in respect of section 4 notifications issued before 20th January, 1967 and that a time limit should also be fixed for acquisition where such a notification is issued after that date.
No fault can be found with the Legislature because it has provided for a period of two years in one case and three years in the other.
As was pointed out in Jalan Trading Co. vs Mazdoors Union(1).
"Equal protection of the laws is denied if in achieving a certain object persons, objects or transactions similarly circumstanced are differently treated by law no rational relation to the object sought to be achieved by the law.
" It is not possible to say that because the legislature thought of improving upon the Act of 1894 by prescribing certain limits of time as from 20th January 1967 the difference in treatment in cases covered by notification before the said date and after the said date denies equal protection of laws because the transactions are not similarly circumstanced.
Some of the notifications (1) ; LA Sup.
C.I./68 6 74 issued under section 4 must have been made even more than 3 years before 20th January 1967 and such cases obviously could not be treated in the same manner as notifications issued after,that date.
article 14 does not strike at a differentiation caused by the enactment of a law between transactions governed thereby and those which are not so governed.
As was pointed out by this Court in Hatisingh Manufacturing Co. Ltd. vs Union of India(1).
"When Parliament enacts a law imposing a liability as flowing from certain transactions prospectively, it evidently makes a distinction between those transactions which are covered by the Act and those which are not covered by the Act, because they were completed before the date on which the Act was enacted.
" With respect, the dictum can also be applied as between cases where the transaction was in the course of completion and those which had to be started after a particular date.
On the whole the Amending Act seeks to improve the legislation which covered the field of acquisition of land.
The Legislature might have made more liberal provisions for improvement but it is not for this court to strike down a piece of legislation because the improvement falls short of the expectation of the litigants.
With regard to the provision for payment of interest, in addition to compensation or by way of additional compensation no grievance can be made in that interest is not allowed in respect of transactions which have been already completed and compensation taken.
The Legislature felt that because there has been unreasonable delay in the payment of compensation, interest should be, allowable where the period of three years has already expired or may expire between the date of section 4 notification and the date of declaration under section 6.
No grievance can be made because interest is denied to persons who have already taken the compensation.
Even here the classification is 'not unreasonable and cannot be said to be unrelated to the object of the Act.
As regards violation of Art.14, in the case of Sohan Lal who filed Writ Petition No. 85 of 1967 the learned solicitor drew our attention to a few facts which are not clearly brought out in the affidavit in opposition and will be referred to presently.
Here the attack is on an executive act, namely, the differential treatment meted out to 16 colonies whose lands were covered by the notification dated 13th November, 1959 but in respect of which de notification orders were issued subsequently.
It would appear that some of the letters which were received by Sohan Lal did not bring out the full facts and the policy underlying the ap parent discrimination in this case.
It is pointed out in paragraph 36 of the affidavit in opposition: (1) ; at 543.
75 "After the issue of the notification No.
F.15(111)/59LSG dated 13 11 1959, it was decided by the Government that the colonies in respect of which the layout and service plans had been sanction before the date of notification viz., 13 11 1959, may be released from the purview of acquisition. . .The petitioner 's colony known as Kanwal Park could not be released from the purview of acquisition because in its case only the layout plans had been sanctioned and not the service plans.
" This policy is corroborated by the records of the Land and Housing Department, Delhi Administration which were made available to us at the hearing.
It appears from that record that after the notification of 13th November 1959 private owners of land who wanted to lay out colonies and had taken steps in respect thereof by making some arrangement and spent money threon had approached the Administration for release of their lands from the notification and a proposal for de notification of the colonies was considered at a high level.
It appears that a meeting 'was held on 29th June 1960 at which were present a number of persons including the Chief Secretary, Vice Chairman, Delhi Development Authority, Engineer Member, Architect, Town Planning Organisation, Deputy Commissioner, Delhi Municipal Corporation, Architects of Delhi Municipal Corporation, Secretary, Local Self Government and Under Secretary to the State Government.
The records show that the case of each notified colony was considered separately and it was felt that cases in which the layout and service plans had been finally approved in all respects before 13th November, 1959 should be recommended for de notification.
On 1st of July, 1960, the Commission, Delhi Municipal Corporation went into the matter and recommended that "All those colonies in respect of which both lay out plans and service plans h ad been approved by the Delhi Development Provisional Authority the Delhi Development, Authority or the Delhi Municipal Corporation may be de notified irrespective of whether security was demanded or not and whether the time limit for completion of development was imposed or not and irrespective of whether security has been paid or not and ' whether development has been completed or not." According to this recommendation, 16 colonies named therein ' fell in this category.
Sohan Lal 's colony was not one of those sixteen.
It is unfortunate that the petitioner who submitted the lay out plan of the colony as early as June 18, 1956 had not the service plan approved before 13th November, 1959.
It is clear from 76 the annexures to the petition that the details of the lay out of the colony were submitted on 30th August, 1956.
The petitioner submitted service plans on 15th September, 1959.
There was nothing wrong with the plans intrinsically except that there were more than one small pocket of land within the colony to which the petitioner could not prove his, ownership statisfactorily.
Mr. Agarwala appearing for the petitioner submitted that the only difficulty was that in respect of the small pockets they were owned not by the petitioner alone but in co ownership with others and the petitioner subsequently excluded these pockets from the pur view of his lay out plan: but this was done only on March 19, 1961, The petitioner 's subsequent efforts to have his colony denotified were of no avail even though he had excluded these pockets on 20th January, 1960.
On these facts, we cannot hold that the petitioner was subjected to any discrimination.
There was a policy behind the de notification and it has not been suggested that the policy was vitiated by any malafides on the part of the authorities.
All the points urged by the petitioners, therefore, fail and the petitions will stand dismissed.
There Will be no order as to costs.
Shelat J.
The facts in these five writ petitions have been sufficiently set out by our learned brother Mitter J.in his judgment and therefore need not be repeated here.
Though they differ in some particulars, the contentions raised by Counsel for the petitioners are common except the additional contentions raised by Mr. Mani in Writ Petition 223 of 1966 and by Mr. Agarwala in Writ Petition 85 of 1967.
These writ petition arise as a result of and challenge inter alia the validity of the following notifications.
No November 13, 1959 the Chief Commissioner, Delhi, issued a notification under sec.
4 of the Land Acquisition Act 1, of 1894 (hereafter referred to as the Principal Act) notifying that land measuring 34070 acres marked in blocks A to T and X in the map enclosed there with was required by the Delhi Administration for the planned development of Delhi.
In pursuance of that notification, the Delhi Administration issued sec.
6 notification dated June 14, 1961 in respect of the land situate in village Kilkori measuring 97 bighas 14 biswas only from out of the said notified area.
The notification directed the Collector to take order for its acquisition under section 7 of the Act.
The Collector thereafter made his award on August 31, 1961 in respect of the said 97 bighas of land at Rs. 2500 a bigha, the total amount including the solatium awarded being Rs. 2,80,887.50.
Nothing thereafter was done till March 18; 1966 when another notification under sec.
6 was issued in 77 respect of 1752.2 bighas of land situated in Mandawali Fazilpur, Khuraj Khas and Shakarpur Khas.
On February 9, 1966 this Court delivered its judgment in M. P. State vs V. P. Sharma (1) where facts were similar to the facts in the present cases and where the land was required for the erection of a steel plant in public sector.
In that case the notification under sec. 4 covering land in eleven villages was issued in May 1949.
This was followed by several notifications under sec.
6, the last of them being in.
After examining the provisions of secs.
4, 5A and 6 of the Act, this Court declared as follows : "At the stage of sec.
4, the land is not particularised but only the locality is mentioned; at the stage of section 6 the land in the locality is.
particularised and thereafter the notification under section 4(1) having served its purpose exhausts itself.
The sequence of events from a notification of the intention to acquire under section 4 to the declaration under sec.
6, leads to the conclusion that once a declaration under section 6 particularising the area is issued, the remaining non particularised area in the notification under section 4(1) stands automatically released.
The intention of the legislature was that one notification under section 4(1) should be followed by survey under.
section 4(2), objections under section 5A heard, and thereafter, one declaration under sec.
6 issued.
If the Government requires more land in that locality, there is nothing to prevent it from issuing another notification under section 4(1) making a further survey if necessary, hearing objections and then making another declaration under section 6, whereas there is likely to be prejudice to the owner of the land if there is great delay between the notifications under section 4(1) and section 6.
" One of the contentions urged in that case was that where the land is required for a small project and the area is not large the government may be able to make up its mind once for all what land it needs but where, land is required for a large project requiring a large area of land, government may not be able to make up its mind at once.
This contention was rejected on the ground that even if it be so there is nothing to prevent the government from issuing another notification under sec.
4 followed by a notification under sec.
6, that the government 's power to acquire land in a particular locality is not exhausted by issuing one notification under sec.
4(1) followed by a notification under s.6 and that it can proceed to do so by a fresh notification under Section 4(1) and a fresh declaration under sec.
6 and that such a procedure would be fair to all concerned.
(1) ; 78 Sarkar J. who delivered a separate judgment also repelled the contention by observing that he could not "imagine a government which has vast resources not being able to make a complete plan of its project, at a time.
Indeed, I think, when a plan is made it is a complete plan.
I should suppose that before the government starts acquisition proceedings by the issue of a notification under sec.
4 it has made its plan for otherwise it cannot state in the notification, as it has to do, that the land is likely to be needed.
Even if it had not then completed its plan it would have enough time before the making of a declaration under section 6 to do so.
I think therefore that the difficulty of the government, even if there is one, does not lead to the conclusion that the Act contemplates the making of a number of dec larations under sec.
" In the view taken Sharma 's case(1) sec. 6 notification dated March 18, 1966 was invalid as sec.
4 notification dated Nov ember 13, 1959 on which it was founded ceased to be efficacious and became exhausted after sec.
6 notification dated June 14, 1961 wag issued and the rest of the land not covered by it became as a result released from acquisition.
Depending on the declaration of law made in this decision the petitioners filed these writ petition in April 1966 and thereafter.
Realising that if the view taken in Sharma 's case(1) were to stand the government would have to issue a fresh sec.
4 notification and would have to pay compensation on the basis of the market value of the land on the date of such new notification instead of on November 13, 1959, the government promulgated an Ordinance dated January 20, 1967 called the Land Acquisition (Amendment and Validation) Ordinance 1 of 1967.
It is not necessary to set out the provisions of the Ordinance as it has been substituted by Land Acquisition (Amendment and Validation) Act, 13 of 1967 (hereafter referred to as the Amendment Act) passed on April 12, 1967.
There can be no manner of doubt that the Ordinance and the Amendment Act were enacted with the object of setting at naught the decision in Sharma 's case(1).
Section 2 of the Amendment Act substituted the following words in sec.
5A (2), viz., "Submit the case for the decision of an appropriate government together with the record of the proceedings held by him and a report containing his recommendations on the objections." by the following words viz., (1) 79 "either make a report in respect of the land which has been notified under sec.
4 sub sec.
(1) or make different reports in respect of different parcels of such land.
" Section 3 added the following words in sec.
6(1) after the words 'certify its orders ', viz., "and different declaration may be made from time to time in respect of different parcels of any land covered by the same notification under sec.
4 sub sec.
(1) irrespective of whether one report or different reports has or have been made (wherever required) under sec.
5A sub section (2).
" Section 3 also substituted the existing proviso to sec.
6(1) by the following : " provided that no declaration in respect of any particular land covered by a notification under sec.
4(1) published after the commencement of the said ordinance (after 20 1 1967) shall be made after the expiry of three years from the date of such publication.
" Sec. 4(1) of the Amendment Act is a validating provision.
By clause (a) it provides that no acquisition purporting to have been made before the commencement of the said Ordinance (i.e., before 20 1 67) and no action taken or thing done including any notification published in connection with such acquisition shall be deemed to be invalid or ever to have become invalid on the ground that (i)one or more collectors have performed the functions of collector in respect of the entire land covered by section 4 notification.
(ii) one or more reports have been made under s.5A(2) whether in respect of the entire land or different parcels thereof covered by the same notification, and (iii) that more than one declaration are made under sec .
6 in respect of different parcels of land covered by the same notification under sec.
Clause (b) of sec.
4(1) provides that any acquisition in pursuance ,of a sec.
4 notification published before 20 1 67 may be made after that date and no such acquisition and no action taken or thing done including any order, agreement or notification made or published whether before or after 20 1 67 in connection with such acquisition shall be deemed to be invalid merely on the said grounds mentioned in clause (a).
Sub sec.
(2) of, sec.
4. provides that no declaration under sec.
6 shall be made in respect of land covered by sec.
4 notification published before 20 1 67 after the expiry of two years from that 80 date, that is, 20 1 69.
4(3) provides for payment of interest in the circumstances set out therein.
The result of the Amendment Act clearly is that an area of land notified under sec.
4(1) can be acquired piecemeal at any time the only restriction being that under sec.
3 in the case of land covered by a sec.
4 notification published after 20 1 67, sec.
6 notification can be issued within 3 years from the date of such notification and in respect of land notified under sec.
4(.1) before 20 1 67 within two years after 20 1 67.
The direct consequence of the Amendment Act is that the unitary character of acquisition by a single inquiry, a single report, ' a single declaration and a single award under the Principal Act is done away with.
The government can freeze an area by issuing a sec.
4 notification and can, subject to the limitations in sec.
3 and sec.
4 (2) of the Amendment Act, go on acquiring parcels of such area at its convenience irrespective of the time when it makes up its mind to acquire and pay, compensation on the basis of the 'Value at the date of sec.
4 notification.
In the case of land notified under sec.
4(1) after 20 1 67 the owner is deprived of appreciation in the value of his land during three years by reason of limitation prescribed in sec.
3 but in the case of land notified before 20 1 67 such deprivation ' can be for an uncertain period from the date of sec.
4 notification up to two years from 20 1 67 i.e., up to 20 1 69 depending upon when its acquisition is made.
As has happened in the instant cases the entire area of 34070 acres was frozen for the purpose of computation of compensation as from Nov. 13, 1959 portons of that area were acquired as late as 1966 and the remaining area can still be acquired until 20 1 769, each owner being thus deprived of the appreciation in value of his land depending upon when during all this long period the government decides to acquire it.
Thus, if the land is notified in 1959 and is acquired in 1960, the loss of appreciation in value is only of one year.
But the owner of another plot even if it is contiguous to it, if the government decides to acquire it in 1969, would be deprived of the appreciation in value which has taken place right from 1959 to 1969.
The entire area is in the meantime frozen both for the purpose of compensation and as pointed out in Sharma 'section Case(1) from its full beneficial enjoyment, the owner not knowing until government chooses to make sec.
6 declaration Whether it will ultimately be acquired or not.
Under the Principal Act as construed in Sharma 's Case(1) once a sec.
6 notification is issued sec.
, 4 notification would become exhausted and the land not declared as needed thereunder would be relieved from acquisition.
If government then desires to acquire any land in addition to.
the one so declared it would have to be notified a fresh and the government would be obliged to pay compen (1)[1966] 3 S.C.R. 557. 81 sation at the market rate prevailing on such date.
The practical effect of the Amendment Act is that by keeping alive sec.
4 notification and by declaring the declarations made after the first declaration valid, the legislature dated back the basis of compensation which would have been, put for this validation, the rate prevailing at the date of sec.
4 notification howsoever belatedcessary.
The real purpose of enacting sec.4 is thus to enable government to freeze an unlimited area by first notifying it under sec.
4 and then to acquire bit by bit and pay compensation at the rate prevailing at the date of sec.
4 notification howsoever belatedly it may choose to acquire such bits, provided it does so before 20 1 69 where the land is notified before 20 1 67 and before the expiry of three years where section 4 notification is issued after 20 1 67 and thus avoid compensating the appreciation in value in the meantime to which the owner would have been entitled to.
Though in form the Amendment Act purports to validate acquisitions in cluding orders and declarations made therefor, the real purpose of enacting the Amendment Act is to, avoid having otherwise to compensate for the appreciation in the land value during the intervening period.
It is a well settled principle that in determining the constitutionality of a provision impugned, on the ground of its being.
an invasion on a fundamental right the court must weigh not its form which may apparently look innocuous but its real effect and impact on such fundamental right.
Re Kerala Education Bill(1); Gajapati Deo vs State of Orissa (2) It will be seen that.
2 and 3 which enable piecemeal and multiple inquiries and reports of a Collector or Collectors under s, 5A. diverse declarations, and awards in respect of different 'Parcels of land covered by sec.
4 notification are prospective.
It is only sec.
4 which is made retrospective.
But it merely seeks to nullify the decision in Sharma 's Case(3) and purports to keep alive sec.
4 notifications which would have otherwise lost their efficacy and validates acquisitions including orders and see.
6 declarations purported to have been made on the basis of such sec.
4 notifications.
Section 4, however, does not contain any provision retrospectively amending sec.
4 or sec.
5A or sec.
6 and merely seeks to revitalise sec.
4 notifications already exhausted.
The section does not also provide that an acquisition or an order or declaration under sec.
6 made on the basis of such exhausted notification will be deemed to have been made or issued under secs.
2 and 3 of the Amendment Act and as if the Amendment Act was in force at that date as, is usually done in such validating Acts.
A notification under sec.
4 having exhausted itself after a declaration under sec.
6 in respect of a part of the land covered by it and the rest of the land being relieved from acquisition, (1) [1959] S.C.R. 995.
(2) (3) ; 82 there would be prima facie no basis for a sec.
6 declaration or acquisition unless such notification is retrospectively validated by a supporting amendment of sec.
4 of the Principal Act or by making secs.
2 and 3 of the Amendment Act retrospective.
and by a fiction deeming it to have been made under such amending provision.
Counsel for the petitioners raised the following conten tions: (1) that Act 13 of 1967 does not revive sec.
4 notification dated November 13, 1959 which became exhausted after the first sec.
6 declaration in 1961 was made and therefore no acquisition in respect of the rest of the land could be made without a fresh sec.
4 notification.
The contention was that secs.
2 and 3 being prospective they did not resuscitate the sec.
4 notification though subsequent acquisitions including orders and declarations under sec.
6 are validated and that such validation has no efficacy as there would be no basis by way of a sec.
4 notification for such acquisition or order or declaration.
(2) that Act 13 of 1967 is in derogation of the requirements of article 31(2) as it purports to authorise acquisition without a fresh sec.
4 notification thereby allowing compensation to be paid on the basis of an exhausted sec.
4 notification and on the value of the land prevailing on the date of such exhausted notification.
(3) that the Amendment Act is in violation of article 14 in that (a) where a sec.
4 notification is made before 20 1 1967, sec.
6 declaration can be made within 2 years from the said date, i.e., on or before 20 1 69.
But where the land is notified after 20 1 67 sec.
6 declaration would have to be made within 3 years from the date of such notification.
In the former case a much longer period is provided for a sec.
6 declaration than in the latter case; (b) where a sec.
4 notification is made after 20 1 67 compensation would be fixed on the basis of the value on that date but where a sec.
4 notification is made before 20 1 67 compensation would be on the basis of the value on the date of the exhausted notification howsoever long a period has elapsed since such notification; (c)if compensation has not been paid before 20 1 67 interest has to be paid on the compensation amount, but if compensa tion has been paid before 20 1 67 no interest is payable though acquisition in both the cases springs from the same sec.
4 notification; 83 (d)in the case of sec.
4 notification issued after 20 1 67 if Sec.
6 declaration is not made within three years a fresh sec.
4notification is necessary and compensation would be on the basis of the value on the date of such fresh notification but where a section 4 notification is issued before 20 1 67 there is no defined period and sec.
6 declaration can be made until 20 1 69.
Therefore the owner gets compensation on the value at the date of section 4 notification howsoever long the intervening period may be.
A person affected by see.
4 notification issued after 20 1 67 is thus differently treated than the one who is affected by such a notification issued ' before 20 1 67.
In Writ Petition No. 85 of 1967 an additional point was raised, viz., that though 16 colonies in village Kilkori were denotified under section 48, the land of the petitioner though, situate within the same notified area was not denotified thus.wrongly discriminating him.
In Writ Petition No. 223 of 1966,Mr.
Mani contended that the Amendment Act merely seeks to reverse the decision of this Court, that the Act is not a legislative but a judicial act and that though the Constitution has not brought about separation of powers nonetheless it does not confer unlimited powers on the legislature to encroach upon the judicial power.
In other words, the legislature seeks to control the courts 'function by requiring of them a construction of law according to its views.
The legislative action cannot be made to retroact upon past transactions and controversies and reverse decisions which the courts in exercise of their undoubted authority have made,.for, that would mean not only exercise of a judicial function but in effect to sit as a court of review to which the past transactions and controversies are referred to.
The question as formulated by him is whether a statute which simply validates acts and orders pronounced upon by a court as invalid is sustainable without a retrospective law providing that such acts and orders are deemed to have been made under the validating Act and as, if such validating Act was in existence at the date of such acts and orders.
On the question whether the Amendment Act is in derogation of the requirements of article 31(2), the contention of the Solicitor General was that it is not the law contemplated by Art.31(2) as it merely amends sections 5A and 6 of the Principal Act and does not touch either section 4 or section 23 which deal with compensation,.that it amends only the procedural provisions and that sec.
4 thereof merely validates acquisitions including orders and notifications purported to have been made or passed to get over the difficulty create by Sharma 's Case(1).The impugned Act does not frankly deal with compensation.
But as already stated it is not the form of a statute under (1) [19661 3 S.C.R. 557.
84 challenge which matters but its substance, and the direct impact it has on the constitutional requirements.
Though sees.
2 and 3 amend sections 5A and 6 of the Principal Act enabling multiple inquiries, reports and declarations in respect of different parcels of land notified under section 4, the validating provisions of section 4 have a direct, impact on the question of compensation payable under the Act.
Where a sec.
4 notification has been issued at any time before 20 1 67, as has happened in the instant cases, a large area can be notified under sec.
4, say, in 1959, and yet sec.
6 declarations can be made by reason of section 4 of the impugned Act at different times and as late as 1969.
Yet, the compensation would be on the value in 1959 irrespective of the fact that such value has appreciated in the meantime due to the general spiralling of prices and not as a consequence of its having been notified under sec.
It is manifest that but for the validating provisions of section 4 of the Amendment Act government would have had either to proceed with the acquisition of the whole of the notified land or to proceed with part of it and thus exhaust the sec.
4 notification and release the rest of the land from acquisition.
If further land is subsequently needed a fresh notification under section 4 would have been necessary and compensation would have to be paid on the basis of the value on that date.
The impugned Act enables government to acquire the land once it is notified under sec.
4 in different parcels and if the notification is of a date prior to 20 1 67 pay the same compensation depriving the owner of the appreciation of value during the intervening period.
Such appreciation would have had to be compensated for but for sec.
4 of the impugned Act .
Each parcel of land in an area notified under sec.
4 would thus be dealt with differently depending on at what point of time it is acquired.
A piece of land would fetch compensation at X amount even though its market value has doubled by the time sec.
6 declaration in respect of it is made.
Another piece of the very same land would be awarded the same compensation even if the appreciation "in its value is four fold only because government can now acquire it at a subsequent date.
The deprivation of the appreciated value to different owners or to the same owner if both the parcels of land belong to the same would vary depending upon when government chooses to acquire each of such parcels.
Therefore, from the mere fact that the impugned Act does not amend sec.
4 or sec. 23 it is not possible to say that it is not an Act dealing with or affecting compensation.
Besides, by amending sees.
5A and 6 and validating acquisitions, orders and declarations the Amendment Act brings about changes of a fundamental character in the Act by converting the unitary character of an acquisition into a diversified one, in that instead of one inquiry and one report by the same officer,.
one declaration under sec.
6 and one award, it permits several inquiries and several reports by different officers, several declarations and even 85 several awards thus altering the very structure of the Principal Act.
It is thus impossible to say that the impugned Act is not the law of acquisition contemplated by article 31(2).
, It was, however, contended that even so, (1) the impugned Act does not alter the principle in section 23 of the Act that compensation is to be fixed on the basis of market value at the date of section 4 notification and that such mode of compensation is based on a long standing principle that the owner is not entitled to any increase in value as a result of the land having, been notified; and (2) that the basis of compensation emerging from the Amendment Act has a bearing on the adequacy of compensation and hence the court is barred under the amended article 31(2) from making any scrutiny.
The principle on which compensation is to be ascertained has., undergone changes from time to time.
In the Act of 1870, section 24 provided that it should be fixed on the basis of the value at the time of paying compensation.
That was changed in the Act of 1894 under which the date of section 6 notification was made,.the crucial date for ascertaining compensation.
This was changed in 1923 when the market value on the date of section 4 notification was made the measure of compensation.
This was done as section 5A was then introduced for the first time in the Act.
It was felt that the insertion of section 5A would create, a time.
gap between the notification under section 4 and the actual acquisition.
The date of section 4 notification was accepted as the crucial date on the principle that in calculating compensation it was fair to exclude appreciation due, to the land having been notified for a scheme for which 'it was sought to be acquired.
The, principle on which appreciation in value after the issuance of section 4 notification was.
excluded is no longer valid or in accord with the present day realities for it is a notorious fact that prices of properties have, been continuously rising for reasons into which it is neither ne cessary nor relevant to go into.
The principle excluding appreciation as a result of section 4 notification has been there for a long time.
But the argument that section 23 is not altered by the Amendment Act does not lead us any further, for, the inquiry is what is the impact of the impugned Act on the question of compensation payable to the expropriated owner.
If the impugned Act had not nullified the decision in Sharma 's Case(1) and had not ruled that section 4 notification would not become exhausted, fresh notification under section 4 Would have become necessary and higher compensation would have become payable than now.
The fact that neither section 4 nor section 23 is altered therefore does not make any difference.
(1) ; 86 The impugned Act being a legislation after the 4th Consti tution amendment of 1955 the question as to the adequacy of compensation is no longer amenable to judicial scrutiny but the amendment of article 31(2) in 1955 has not affected the constitutional requirement that no property can be compulsorily acquired except under a law providing for compensation or which provides principles fixing such compensation.
As to what the term "compensation" in article 31 means has been the subject matter of several decisions of this Court and the term has as a result acquired a well settled interpretation.
In Bela Banerjee 's Case(1) Patanjali Sastri C.J. in repelling the contention that compensation 'in Entry 42 of List III could not mean full cash equivalent laid stress on the distinction between the word "compensation ' in article 31 and the said Entry and the words "the acquisition of property on just terms" in section 51 (XXXI) of the Australian Constitution Act and held that compensation meant just equivalent and the principles which should govern the determination of compensation amount to be given to the expropriated owner must ensure that what is determined must be such compensation, i.e., just equivalent.
In striking down the proviso to section 8 of the West Bengal Land Development and Planning Act, XXI of 1948 he observed that the fixing of an anterior date which has no relation to the value of the land when it is acquired, may be many years later, cannot but be regarded as arbitrary.
Similarly in Namasivaya Mudaliar 's Case (2) this Court held, following Bela Banerjee 's Case(1), that any principle for determination of compensation denying the owner all increments in ' value between a fixed date and the date of section 4 notification must be regarded as denying to the owner the true equivalent of the land which is ,expropriated and that it is for the State to show that fixation of compensation on the market value on an anterior date does not constitute violation of the constitutional guarantee.
This decision was in respect of a law before the 1955 amendment and the court expressed no opinion on the question whether it was possible by enacting legislation after the 1955 amendment to provide that compensation may be fixed on the basis of value prevailing on a certain anterior date.
Jeejeebhai vs Assist.
Collector(3).
It was thus well settled before the amendment of article 31(2) in 1955 that there could not be a valid acquisition unless the law authorising it provided.
compensation, i.e., just equivalent or principles fixing such compensation, i.e., just equivalent of what the owner is deprived of., The question as to the impact of the 1955 amendment of article 31(2) on this principle arose in (1) ; at p. 563 64.
(3) ; (2) ; 87 P. Vajravelu Mudaliar vs Deputy Collector(1).
This decision laid down the following propositions : (i) whether the principles laid down in an impugned Act take into account all the elements to make up the true value of the property and exclude matters which are to be included is a justiciable issue; (ii) that the law fixing compensation or laying down princi ples governing its fixation cannot be questioned on the ground of inadequacy; (iii)that the connotation of "compensation" and the question of justiciability are distinct concepts and should be kept apart while considering the validity of the impugned provision; (iv) that the fact that the amended Article uses the same words, viz., "compensation" and "principles" shows that Parliament used them in the sense in which they were construed by this Court, and (v) that the legislature must provide for a just equivalent or lay down principles fixing such just equivalent and if that is done, such a law cannot be questioned on the ground of inadequacy of compensation.
As to how and in what manner the question of adequacy would arise was illustrated by giving various examples.
Article 31(2) as amended means therefore that if the impugned Act either fixes just equivalent as compensation or lays down principles for fixing such just equivalent it cannot be impeached on the ground that such compensation is inadequate or that when working out those principles the resultant compensation is inadequate.
But this does not mean that the amendment permitted the legislature, to fix inadequate compensation or to lay down principles fixing compensation which is not just equivalent.
Such a theory attributes an intention to the legislature to enact a law in terms of.
contradiction, for, compensation which, is not just equivalent is no compensation as interpreted by this Court and understood when article 31(2) was amended and giving any such meaning to that Article would be contrary to the well settled principle of construction that where the legislature uses in an Act a legal term which has received judicial interpretation it must be assumed that it is used in the sense in which it has been judicially interpreted unless a ' contrary intention appears.
At p. 629 of the report it has clearly been laid down that "If the legislature though ex facie purports to provide for compensation or indicates the principles for ascertaining the same but in effect and substance takes (1) ; 88 away a property without paying compensation for it, it will be exercising power which it does not possess.
If the legislature makes a law for acquiring a property by ,providing for an illusory compensation or by indicating the principles for ascertaining the compensation which do not relate to the property acquired or to the value of such property at or within a reasonable proximity Of the date of acquisition or the principles are so designed and so arbitrary that they do not provide for compensation at all one can easily hold that the legislature made the law in fraud of its powers.
" Following this decision this Court held in the Union of India vs Metal Corporation of India(1) that the principles laid down in the impugned Act were not in accord with article 31(2) and that an acquisition law "to justify itself has to provide for the payment of a just equivalent to the property acquired or lay down principles which are not arbitrary but which are relevant to the fixation of compensation.
It is only when the principles stand this test that the adequacy of the resultant compensation falls outside the judicial scrutiny under the second limb of article 31(2).
" It is true that in Vajravelu 's Case(2) it was held that in the context of the continuous rise in land prices, fixation of an average price over 5 years amounted to ascertaining the price of the land in or about the date of acquisition and that omission of one of the elements which should properly be taken into account for fixing compensation though resulting in inadequacy of compensation would not constitute fraud on power.
But there is no analogy between the provisions of the impugned Act in that case and ' the instant cases.
Though that Act varied the method of ascertainment of compensation provided by section 23 of the Principal Act it provided for taking the average of prices prevailing during the 5 years in or about the date of acquisition.
By striking the average of prices during those 5 years the Act actually took into account the appreciation in value during the 5 years preceding the acquisition for fixing the compensation.
The position in the instant cases is quite different.
The impugned Act does not provide for any such average price as was done in Vajravelu 's Case.(2) Though section 4 apparently validates ' acquisitions, orders and notifications made on the basis of section 4 notification issued before 20 1 67, in effect and substance it seeks to treat such a notification under section 4 which had lost its efficacy and had become exhausted where section 6 declaration has been made (1) ; , (2) ; 89 for a part of the land covered by such section 4 notification as still outstanding.
This is sought to be done without any legislative provision in the impugned Act revitalising the notification which had become dead and inefficacious.
Such a thing could not be done by merely validating acquisitions, orders and declarations without revitalising by some provision the notifications under section 4 which had become exhausted and on which such acquisitions including orders and declarations are founded.
Nor could it validate inquiries and reports under section 5A and declarations under section 6, all of which are made on the basis of a notification which was no longer alive except by retrospectively amending section 4 and declaring such section 4 notification as having been made under such amended section 4.
Not having so done, the direct result of the validating provisions of section 4 of the impugned Act is to fix compensation on the basis of the market value existing on the date of section 4 notification which had exhausted itself.
By validating the acquisitions, orders and declarations made on the basis of such an exhausted notification the impugned Act saves government from having to issue a fresh section 4 notification and having to pay compensation calculated on the market value as on the date of such fresh notification and depriving the expropriated owner the benefit of the appreciated value in the meantime.
The real object of section 4 of the impugned Act is thus to save the State from having to compensate for such appreciation under the device of validating all that is done under an exhausted section 4 notification and thus in reality fixing an anterior date, i.e., the date of such a dead s.4 notification for fixing the compensation.
We apprehend that section 4 of the impugned Act suffers from a two told vice : (i) that it purports to validate acquisitions, orders and notifications without resuscitating the notification under section 4 by any legislative provision on the basis of which alone the validated acquisitions, orders and declarations can properly be sustained and (2) that its provisions are in derogation of article 31(2) as interpreted by this Court by fixing compensation on the basis of value on the date of notifications under section 4 which had become exhausted and for keeping them alive no legislative provision is to be found in the impugned Act.
It is therefore not possible to agree with the view that the purpose of section 4 is to fill in the lacuna pointed out in Sharma 's Case(1) nor with the view that it raises a question of adequacy of compensation.
The section under the guise of validating the acquisitions, orders and notifications camouflages the real object of enabling acquisitions by paying compensation on the basis of values frozen by notifications under section 4 which by part acquisitions thereunder had lost their efficacy and therefore required the Test of the land to be notified afresh and paying compensation on the date of such fresh notifications.
(1) ; L4Sup.
C.I/68 7 90 In this view, it is not necessary to go into the other questions raised by the petitioners and we refrain from expressing any opinion on them.
We would declare section 4 as invalid and allow the petitions with costs.
ORDER In accordance with the opinion of the majority the petitions are dismissed.
No order as to costs.
| IN-Abs | In the State of Madhya Pradesh vs V. P. Sharma, ; this Court held that once a declaration under section 6 of the Land Acquisition Act 1894 was made the notification under section 4(1) of the Act was exhausted and there could be no successive notifications under section 6 with respect to land in a locality specified in one notification under section 4(1).
Relying on the above judgment the present writ petitions were filed in order to challenge successive notifications under section 6 following a single notification under section 4(1) in respect of land belonging to them.
Meanwhile in order to meet the situation created by the judgment in V. P. Sharma 's case the President of India promulgated the Land Acquisition (Amendment and Validation) Ordinance (1 of 1967).
The Ordinance was later followed by the Land Acquisition (Amendment and Validation) Act 1967.
Section 2 of this Act purported to amend section 5 A of the principal Act by allowing the making of more than one report in respect of land which had been notified under section 4(1).
Section 3 purported to amend section 6 of the principal Act by empowering different declarations to be made from time to time in respect of different parcels of land covered by the same notification under section 4(1) irrespective of whether one report or different reports had been made under section 5 A sub section
Section 4 of the Act purported to validate all acquisitions of land made or purporting to have been made under the principal Act before the commencement of the ordinance namely January 10, 1967, notwithstanding that more than one declaration under section 6 had been made in pursuance of the same notification under section 4(1), and notwithstanding any judgment, decree or order of any court to the contrary.
The Amending Act also laid down time limits for declarations under section 6 of the principal Act after the notification under s 4(1), had been issued in respect of notifications made after January 20.
1967 the time limit was three years; in respect of notification made before that date the time limit was to be two years after that date.
Provision was also made for payment of interest on compensation due to persons in respect of whose land declarations under section 6 had been delayed beyond a specified period; no interest was however, to be paid to those to whom compensation had already been paid.
The petitioners by leave of Court amended their petitions to attack the validity of the.
aforesaid Validating Act on the following main grounds : (1) By seeking to validate past transactions of a kind which had been declared invalid by this Court without retrospectively changing the substantive law under which the past transactions had been effected the legislature was encroaching over the domain of the judicial power vested by the Constitution in the judiciary exclusively; (ii) The Validating Act did not L4Sup.
C.I.1684 42 revive the notification under section 4 which had become exhausted after the first declaration under section 6 and no acquisition following thereafter could be made without a fresh notification under section 4; (iii) The Validating Act violated article 31(2) of the Constitution inasmuch as it purported to authorise acquisitions without fresh notifications under section 4 thereby allowing compensation to be paid on the basis of the said .
notification under section 4 without allowing for increase in the value of land thereafter; (iv) The Validating Act violated article 14 of the Constitution in various ways.
HELD: Per Wanchoo C.J., Bachawat & Mitter, JJ. (i) The American doctrine of well defined separation of legislative and judicial powers has no application to India and it cannot be said that an Indian Statute which seeks to validate invalid actions ' is bad if the invalidity has already been pronounced upon by a court of law.
A.K. Gopalan vs State, ; , referred to.
(ii) The absence of a provision in the amending Act to give retrospective operation to section 3 of the Act does not affect the validity of section 4.
It was open to Parliament to adopt either course e.g. (a) to provide expressly for the retrospective operation of section 3, or, (b) to lay down that no acquisition purporting to have been made and no action taken before the Land Acquisition (Amendment and Validation) Ordinance, 1967 shall be deemed to be invalid or even to have become invalid because, inter alia, of the making of more than one declaration under section 6 of the Land Acquisition Act, notwithstanding any judgment decree or order to the contrary.
Parliament was competent to validate such actions and transactions, its power in that behalf being only circumscribed by appropriate entries in the Lists of the Seventh Schedule and the fundamental rights set forth in Part III of the Constitution.
Section 4 of the Amending Act being within the legislative competence of Parliament, the provisions thereof are binding on all courts of law notwithstanding judgments, orders or decrees to the contrary rendered or made in the past.
[67 C F] Case law referred to.
(iii) The impugned Act does not violate article 31(2).
The Act does not in express terms enact any law which directly affects compensation payable in respect of property acquired nor does it lay down any principles different from those which were already in the Land Acquisition Act of 1894.
After the amendment of the Constitution in 1955 the question of compensation is not justiciable and it is enough if the law provides that a person expropriated must be given compensation for his property or lays down the principles therefor.
[67 G H] The Legislature might well have provided in the Act of 1894 that it would be open to the appropriate Government after issuing a notification under section 4 to consider objections raised under section 5 with regard to the different localities from time to time enabling different reports to fie made under section 5 A with consequent adjustments in section 6 providing for declarations to be made as and when each report under section 5A was considered.
By the validation of action taken under section 6 more than once in respect of a single notification under section 4, the original scheme of acquisition is not altered.
The public purpose behind the notification remains the same.
It is not as if a different public purpose and acquisition of land for such purpose were being interploated by means of the Validating Act.
Only the shortcoming in the Act as to want to provision to enable more than one decla ration under section 6 are being removed.
[68 D F] 43 The date of valuation under the Validation Act is that of the issue of notification under section 4(1), a principle which has held the field since 1923 Legislative competence to acquire land under the provisions of the Land Acquisition Act cannot be challenged because of constant appreciation of land values all over the country due to the prevalent abnormal inflation.
There must be some time lag between the commencement and conclusion of land acquisition proceedings and in principle there is nothing wrong in accepting the said commencement as the date of valuation.
Sections 4 and 23 of the Land Acquisition Act are protected by article 31(5) (a) of the Constitution.
Only sections 5 A and 6 of the Act have been amended.
The amendment does not alter the principle of compensation fixed by the Act nor contravene article 31 of the Constitution in any way.
[69 G 70 B] It cannot be said of the Validating Act that it was fixing an arbitrary date for the valuation of the property which bore no relation to the acquisition proceedings.
The population in Indian cities especially in the capital is ever increasing.
The State has to plan the development of cities and it is not possible to take up all schemes in all directions at the same time.
The resources of the State may not be sufficient to acquire all the area required by a scheme at the same time.
Of necessity the area under the proposed acquisition would have to be carved into blocks and the development of one or more blocks at a time could only be taken up in consonance with the resources available.
Even contiguous blocks could be developed gradually and systematically.
In view of such factors it cannot be said that the principle of fixing compensation on the basis of the price prevailing on the date of the notification under section 4(1) of the Land Acquisition Act was not a relevant principle which satisfied the requirements of article 31(2).[70 C 71 H] The State of West Bengal vs Mrs. Bela Banerjee, ; , State of Madras vs D. Namasivaya Mudaliar, ; and, P.V. Mudaliar vs Deputy Collector, ; , considered.
(iv) The validating Act was not violative of article 14.
Whenever an Amending Act is passed there is bound to be some difference in treatment between transactions which have already taken place and those which are to take place in the future.
That by itself will not attract the operation of article 14.
Again, even with respect to transactions which may be completed in the future, a reasonable classification will not be struck down.
[72 C] Jalan Trading Co. vs Mazdoor Union, ; , relied on.
It is not possible to say that because the Legislature thought of improving upon the Act of 1894 by prescribing certain limits of time as from 20th January 1967 the difference in treatment in cases covered by the notification before the said date and after the said date denies equal protection of laws because the transactions are not similarly circumstanced.
Some of the notifications issued under section 4 must have been made even more than 3 years before 20th January, 1967 and such cases obviously could not be treated in the same manner 'as notifications issued after that date.
article 14 does not strike at differentiation caused by the enactment of a law between transactions governed thereby and those which are not so governed.
[73 H 74 B] Hatisingh Manufacturing Co., Ltd. vs Union of India, ; No grievance can be made because interest is denied to persons who have already taken the compensation.
Even here the classification is not unreasonable and cannot be said to be unrelated to the object of the Act.
[74 E F] 44 Per Shelat and Vaidialingam, JJ.
(dissenting) By validating the acquisition orders and declarations made on the basis of an exhausted notification under section 4 the impugned Act saves government from having to issue a fresh notification and having to pay compensation calculated on the market value as on the date of such fresh notification and depriving the expropriated owner of the benefit of the appreciated value in the meantime.
The real object of section 4 of the impugned Act is thus to save the State from having to compensate for such appreciation under the device of validating all that is done under an exhausted section 4 notification and thus in reality fixing an anterior date i.e. the date of such a dead section 4 notification for fixing the compensation.
The impugned Act thus suffers from a two fold vice : (i) that it purports to validate acquisitions orders and notifications without resuscicating the notification under section 4 by any legislative provision on the basis of which alone the validated acquisitions, orders and declarations can properly be sustained and (ii) that its provisions are in derogation of article 31(2) as interpreted by this Court by fixing compensation on the basis of value on the date of notifications under section 4 which had become exhausted and for keeping them alive no legislative provision is to be found in the impugned Act.
It is therefore not possible to agree with the view that the purpose of section 4 is to fill the lacuna pointed out in Sharma 's case nor with the view that it raises a question of adequacy of compensation.
The section under the guise of validating the acquisitions, orders and notifications camouflages the real object of enabling acquisitions by paying compensation on the basis of values frozen by notifications under s 4 which by part acquisitions thereunder had lost their efficacy and therefore required the rest of the land to be notified afresh and paying compensation on the date of such fresh notifications.
The fact that neither section 4 nor section 23 of the principal Act are altered does not make any difference.
[89 D H, 85 H] Section 4 of the Amending Act must therefore be struck down as invalid.
[90 A]
|
Appeal No. 433 of 1965.
Appeal from the judgment and order dated January 7, 1963 of the Punjab High Court in Letters Patent Appeal No. 157 of 1957.
Vikrant Chand Mahajan, R. N. Sachthey and section P. Nayar, for the appellants.
Sardar Bahadur, Arub B. Saharya, Vishnu B. Saha a and Youginder Khushalan, for the respondent.
The Judgment of the Court was delivered by Mitter, J.
This appeal is by a certificate granted by the Punjab High Court under article 133 of the Constitution against its judgment and order dated January 7, 1963 in Letters Patent Appeal.
No. 157 of 1959 reversing a decision of a single Judge of that Court who had dismissed a writ petition filed by the respondents on June 7, 1958 to declare that the order of the first appellant reverting him to his permanent post in the Delhi Administration was invalid and to quash the same.
The facts laid in the writ petition are as follows.
The petitioner, Sukh Raj Bahadur, respondent herein was a permanent official of the office of the Chief Commissioner, Delhi.
On December 9, 1952 he was accepted as a candidate for the post of Extra Assistant Commissioner on the Register A II of the Punjab Government along with two others, on the advice of the Punjab Public Service Commission.
He was posted as Inspector, Local Bodies, Jullundur Division and Assistant to Commissioner, Jullundur Division.
Later on, he acted as Personal Assistant to the Deputy Commissioner, Amritsar.
On being relieved from the Delhi State Government on January 15, 1953 he assumed charge of the post of Personal Assistant to the De Duty Commissioner, Amritsar in the P.C.S. (Executive Branch Cadre) on January 24, 1953.
He passed all the departmental examinations prescribed under rule 236 21 of the Punjab Civil Service (Executive Branch) Rules, 1930.
Under r. 22 of the aforesaid rules, he was to remain on probation for a period of 18 months subject to his completing the training and subject to further extension of the period of probation as the case maybe.
In his case, the period of probation expired in July 1954.
The same was however not extended by any order of the Governor of Punjab.
The petitioner claimed that under r. 24 of the said rules he became qualified for substantive permanent appointment to the P.C.S. (Executive Branch).
He received a charge sheet with a letter dated January 14, 1957 from the Secretary to the Government of Punjab, Anti Corruption Department, asking him to reply to the charge sheet within a fortnight and to inform whether he would produce defence or whether he would like to be heard in person.
The petitioner replied to the charge sheet on January 28, 1957 stating that he wanted an opportunity of being heard in person.
By order of the Punjab State dated 23/26th May 1958 purporting to be one, under r. 23 of the aforesaid rules, he was reverted by the Punjab State Government to his substantive post of Superintendent under the Chief Secretary, Delhi Administration with immediate effect.
According to the petitioner, the said order of 23/26th May 1958 terminated his service under the Punjab State Government and permanently removed him from the Punjab Civil Service.
The petitioner also complained that under r. 9 of the Punjab Civil Services (Punishment and Appeal) Rules, 1952, he should have been apprised of the grounds to terminate his employment as probationer for any specific fault or on account of any unsatisfactory record or unfavourable reports implying his unsuitability for service and given an opportunity to show cause against the same.
before any orders were passed by the authority competent to terminate the appointment.
The petitioner was never apprised of the rounds of any such proposal nor given an opportunity to show cause against it before the order reverting him to the post, of Superintendent mentioned above was made.
There was thus a clear breach of r. 23 of the Punjab Civil Service (Executive Branch) Rules.
Accordingly the petitioner prayed that the said order of 23/26th May 1958 be quashed and suitable relief be given to him.
The order complained of runs as follows "The Governor of Punjab is pleased to revert Shri Sukh Rai Bahadur, Extra Assistant Commissioner, officiating, from P.C.S. (Executive Branch) to the post of Superintendent under the Chief Secretary, Delhi Administration, with immediate effect.
" In the written statement of the respondents to the petition it was stated that the impugned order was not a penalty calling for compliance with the provisions regarding penalty etc.
and the 237 Punjab Civil Services (Punish ment and Appeal) Rules were not applicable.
It was submitted that he was appointed to the Punjab Civil Service (Executive Branch) as a nominee of the Chief Commissioner, Delhi, who was one of the nominating authorities under r. 8 of the Punjab Civil Service (Executive Branch) Rules, 1930 along with some of the officers of the Punjab Government.
By passing the departmental examinations in November 1956, the petitioner was due for confirmation thereafter.
The absence of confirmation implied that the probationary period was extended under r. 22(c) of the Punjab Civil Service Rules.
Lastly, it was said that the reversion of a probationer to his substantive rank could not amount to a punishment.
It is not necessary to examine the charges which were levelled against the petitioner in the charge sheet.
Suffice it to say that they were all of a fairly serious nature.
The points put forward before the learned single Judge who heard the petition were : (1) On the expiry of the period of probation and on his passing the departmental examinations, the petitioner became qualified for substantive permanent appointment.
(2) The impugned order in fact terminated his services under the Punjab State Government and removed him from the said service.
The petitioner was not afforded any opportunity to show cause against the charges contained in the charge 'sheet or against the proposed punishment.
As such there was violation of the provisions of article 311(2) of the Constitution.
(3) The petitioner being a probationer, r. 9 of the Punjab Civil Services (Punishment and Appeal) Rules, 1952 was applicable.
The procedure prescribed by the rule was not followed although it was mandatory that before his employment as a probationer could be terminated, he should have been apprised of the grounds of the proposed termination and given an opportunity to show cause against it.
The learned single Judge held that the petitioner bad not acquired the status of a permanent member of the Punjab Civil Service merely by efflux of time and by reason of his having passed the departmental examinations.
He further held that the petitioner continued only in an officiating capacity.
The second point also was turned down by the learned Judge holding that the petitioner 's case was one of reversion and not of termination of service as the petitioner was never appointed in a permanent capacity and was not visited with any evil consequences.
In coming to this conclusion the, learned single Judge relied on several decisions starting from the case of Parshotam Lal Dhingra vs Union of India(1).
(1) 238 The learned single Judge examined the third point at some length.
It was urged before him that the petitioner did not fall within the definition of a 'probationer ' in rule 2.49 of the Punjab Civil Service Rules, Volume 1, Part 1.
On behalf of the petitioner, reference was made to the definition of 'Government ' contained in r. 2.24 of the Punjab Civil Service Rules and the definition of 4 cadre ' contained in r. 29 and "it was submitted that if the peti tioner had held a substantive post in a cadre under the Punjab Government and had been appointed on probation to another post, then the term 'probationer ' would not have covered his case, but since the petitioner held a lien on a post in Delhi State and not under the Punjab Government, he could not be deemed to fall within the exception contained in the definition of a 'probationer ' in r. 2.49.
" Reference was made to a number of other rules on behalf of both the parties.
Ultimately, on examination of the respective contentions of the parties, the learned Judge concluded that the petitioner "could not be regarded as a probationer within the meaning of r. 2.49 of the Punjab Civil Service Rules" and "he could not claim the benefit of r. 9 of the Punjab Civil Services (Punishment and Appeal) Rules, 1952.
" He however did not think it necessary to decide whether in the presence of r. 23 of the Punjab Civil Service Rules the Punishment and Appeal Rules would apply at all.
Further, even if the said rule applied, the petitioner did not fall within the meaning of the word 'probationer ' as given in rule 9.
The learned Judge was of the view that there was force in the contention that r. 9 of the Punishment and Appeal Rules could not cover the case of revision as r. 9 only dealt with a case where it was proposed to terminate the employment of a probationer.
In the result, he dismissed the application.
The appeal was allowed by the Letters Patent Bench.
It ap pears that the Bench examined only the second point urged before the learned single Judge and over ruling his decision allowed the appeal quashing the order reverting the writ petitioner from the P.C.S. (Executive Branch).
The Bench relied principally on the judgment of this Court in Madan Gopal vs State of Punjab (1) and The State of Bihar vs Gopi Kishore Prasad (2) .
According to the Bench the enquiry started with a notice which expressly stated that it was being made under sub r.
(2) of r. 7 of the Punjab Civil Services (Punishment and Appeal) Rules, 1952.
Sub r.
(1) of r. 7 provided that an order of dismissal, removal or reduction should not be passed unless the person concerned had been given reasonable opportunity of showing cause against the action proposed to be taken in regard to him while sub r.
(2) laid down the manner in which the enquiry was to be held.
From this the Bench inferred that : (1) [1963] 3 S.C.R. 716.
(2) A.I.R. 1960 S.C. 689.
239 .lm15 "When the charge sheet was sent to the appellant (writ petitioner), the object and the intention of the State Government was to punish him either by way of dismissal or removal or reduction in rank, .
Such an enquiry and any action consequent on such an enquiry would not be covered by principle of Rain Narayan Das 's case, as laid down by the Supreme Court in Madan Gopal vs The State of Punjab & others(1).
" The Bench however observed that although no enquiry in the proper sense of the word had been held the omission to hold such an enquiry could not be made a ground for saying that the case differed in principle either from Gopi Kishore Prasad 's(2) case or Madan Gopal 's(1) case.
Accordingly the conclusion reached was that "the reversion of the appellant was by way of punishment and amounted either to reduction in rank or removal from the P.C.S. (Executive Branch)" and as "these actions could not be taken without affording the appellant, adequate opportunity of showing cause against the punishment" there was violation of article 311(2) of the Constitution.
We find ourselves unable to accept the reasoning or the con clusion arrived at by the learned Judges of the Division Bench of the Punjab High Court.
It is not necessary to examine in detail the earlier decisions of this Court which bear on the issue before us.
In this case, the respondent did not cease to be a probationer at the time when the impugned order was passed on him.
Although the period of probation was fixed at 18 months and although the respondent had passed all the departmental examinations, he could not merely, as a consequence thereof, be considered to be holding a post substantively.
Apart from the question as to the right of the respondent under the Punjab Civil Service Rules, the respondent could not complain merely because he had been reverted to the post formerly held by him.
He would have cause to complain if he could show that the order of reversion was by way of punishment.
As was pointed out in Parshotam Lal Dhingra 's (3) case.
"The mere fact that the servant has no title to the post or the rank and the Government has, by contract, express or implied, or under the rules, the right to reduce him to a lower post does not mean that an order of reduction of a servant to a lower post or rank cannot in any circumstances be a punishment.
The real test for determining whether the reduction in such cases is or is not by way of punishment is to find out if the order for the reduction also visits the servant with any penal consequences. . the court has to apply the two (1) [1963] 3 S.C.R. 716.
(2) A.T.R. 1960 S.C. 689.
(3) ; 240 tests mentioned above, namely, (1) whether the servant had a right to the post or the rank or (2) whether he has been visited with evil consequences of the kind hereinbefore referred to ? If the case satisfies either of the two tests then it must be held that the servant has been punished and the termination of his service must be taken as a dismissal or removal from service. . ." In the case of State of Orissa and another vs Ram Narayan Das(1) the respondent who was a Sub Inspector of Police on probation in the Orissa Police Force, was served with a notice to show cause why he should not be discharged from service "for gross neglect of duties and unsatisfactory Work".
He submitted an explanation which was considered by the Deputy Inspector General of Police as unsatisfactory.
The said authority passed an order discharging the respondent from service "for unsatisfactory work and conduct '.
The respondent 's contention was that the order was invalid because he had not been given a reasonable opportunity to show cause against the proposed action in terms of article 31.1(2) and that he was not give an opportunity to be heard nor was any evidence taken on the chaires.
It was pointed out by this Court that the enquiry against the respondent was only for ascertaining whether lie was fit to be confirmed, and although "an order discharging a public servant, even if a probationer , in in enquiry on charges of misconduct, negligence, inefficiency or other disqualifications, may appropriately be regarded as one by way of punishment, an order discharging a probationer following upon an enquiry to ascertain whether he should be confirmed is not of that nature.
" The Court distinguished Gopi Kishore Prasad 's(2) case on the round that there the public servant had been discharged from service consequent upon an enquiry into alleged misconduct and the Enquiry Officer had found that the public servant was 'unsuitable for the post '.
Finally it was held by this Court in Ram Narayan Das 's(1) case that ". the fact of the holding of an enquiry is not decisive of the question.
What is decisive is whether the order is by way of punishment in the light of the tests laid down in Parshotam Lal Dhingra 's (3 ) .
" In the result the appeal of the State was allowed.
Reference may also be made to the case of R. C. Lacy vs The State of Bihar and other(1).
In this case the appellant who was working, as in Assistant Professor of Botany in Class IT Bihar Educational Service was temporarily promoted to Class I of the said service against a Permanent post created in April 1949 and (1) ; (2) A.I.R. 1960 S.C. 689.
(3) ; (4) Civil Appeal No. 590/1962 decided on 23 10 63.
241 appointed Professor of Botany in the college where he was working.
He was informed that Government would consider him for permanent appointment depending on the efficiency with which he ran the department, the extent to which he enjoyed the goodwill of his colleagues and the devotion to research work that he revealed during the course of the year.
In April 1950 the appellant moved the Government for confirmation in Class I.
The Government however decided to continue his temporary service in Class I for another year with the concurrence of the Public Service Commission.
Following an incident on February 9, 1951, the Commissioner of Patna Division was appointed to make an enquiry into the same.
The report of the enquiry was against the appellant.
On August 21, 1951, the Government passed an order reverting the appellant to his substantive post in Class 11 and trans ferred him from Patna College to Ranchi College.
The appellant filed a suit which was dismissed by the Subordinate Judge.
Losing appeal before the High Court, the appellant came to this Court by special leave.
It was contended on his behalf that the order of 21st August, 1951 amounted to infliction of punishment.
In dismissing the appeal, it was pointed out by this Court that "the enquiry which was held by the Commissioner in this case was in the nature of a preliminary enquiry to enable the Government to decide whether disciplinary action should be taken against the appellant.
It is clear however that the Government did not decide to hold any enquiry for the purpose of taking disciplinary action against the appellant, for no enquiry officer was appointed, no charges were framed and no regular departmental enquiry as envisaged by the rules and article 311(2) of the Constitution Was ever held." According to this Court the action of the Government was in pursuance of its right to revert an officer holding, a higher post temporarily if he was not found.
fit for the purpose.
In Madan Gopal vs State of Punjab(1) the termination of the appellant 's service was held to be in violation of article 311(2) of the Constitution.
There the appellant, Madan Gopal, was appointed an Inspector of Consolidation "on temporary basis and terminable with one month 's notice".
He was served with a charge sheet to the effect that he had received illegal ratification and called upon to show cause why disciplinary action should not be taken against him.
The appellant submitted his explanation and the Settlement Officer who had sent out the charge sheet submitted his report to the Deputy Commissioner that the charge relating to receipt of illegal gratification had been proved.
Thereupon the Deputy Commissioner ordered that the services of Madan Gopal be terminated forthwith and that in lieu of notice he would receive one month 's (1) [1963] 3 S.C.R. 716.
242 pay as required by the rules.
It was held by this Court that the enquiry made by the Settlement Officer was with the object of ascertaining whether disciplinary action should be taken against the appellant for his misdemeanour and the purpose of the enquiry was to take punitive action including dismissal or removal from service if the charge was substantiated.
After discussing Ram Narayan Das 's(1) case, the conclusion arrived at was that "Such an enquiry and order consequent upon the report made in the enquiry will not fall within the principle of Ram Narayan Das 's(1) case.
" In the result, the appeal was allowed.
In Jagdish Mitter vs Union of India(1) this Court allowed the appeal of the appellant who was appointed as a temporary second division clerk in the General Post Office, Lahore for a period of six months in October 1946.
His appointment was continued from time to time when the impugned order was passed terminating his services.
It was pointed out by this Court that even before discharging a temporary servant the authority may have LO examine the question about the suitability of the said servant to.
be, continued and: "a acting bona fide in that behalf, the authority may also give a chance to the servant to explain, if any complaints are made against him, or his competence, or suitability is disputed on some grounds arising from the discharge of his work; but such an enquiry would be held only for the purpose of deciding whether the temporary servant should be Continued or not.
There is no element of punitive proceedings in such an enquiry; the idea in holding such an enquiry is not to punish the temporary servant but just to decide whether he deserves to be continued in service or not. . . in some cases, the authority may choose to exercise its power to dismiss a temporary servant and that would necessitate a formal departmental enquiry in that behalf.
If such a formal enquiry is held, and an order terminating the services of a temporary servant is passed as a result of the finding recorded in the said enquiry, prima facie the termination would amount to the dismissal of the temporary servant.
" The Court however was careful to add that considerations of the motive operating in the mind of the authority had to be eliminated in determining the character of the termination of service of a temporary servant and that the form in which the order terminating his services was expressed would not also be decisive.
If a (1) ; (2) A.I.R. 1964 S.C. 449.
243 formal departmental enquiry had been held in which findings were recorded against the temporary servant and as a result of the said findings, his services were terminated, the fact that the order by which his services were terminated, ostensibly purported to be a mere order of discharge would not disguise the fact that in substance and in law the discharge in question amounted to the dismissal of the temporary servant.
The order of discharge of the appellant ran as follows : "Shri Jagdish Mitter, a temporary Second Division Clerk of this office, having been found undesirable to be retained in Government service is hereby served with a months notice of discharge with effect from November 1, 1949.
" According to this Court, the order cast an aspersion on the temporary servant and in substance it amounted to an order of dismissal.
The last decision to which we may refer is the one in A. G. Benjamin vs Union of India(1).
In this case, the appellant was temporarily employed as Stores Officer in the Central Tractor Organisation.
As he was not a confirmed government servant, his services could be terminated under r. 5 of the Central Civil Service (Temporary Service) Rules, 1949 with one month 's notice on either side.
The services of the appellant were terminated on April 23, 1954.
There. had been certain complaints against him in respect whereof the Chairman of the, Central Tractor Organisation sent a notice to him asking him to show cause why disciplinary action should not be taken against him and an Enquiry Officer was appointed, but before the enquiry could be completed, the Chairman recommended that the services of 'the appellant should be terminated under r. 5 observing in his note to the Secretary that : "The departmental proceedings will take a much longer time and we are not sure whether after going through all the formalities we will be able to deal with the accused in the way he deserves.
" Acting upon this suggestion the appellant was served with the order complained of.
The order was to the effect that the appellant was being informed that his services were no longer required in the organisation and the same were terminated with effect from the date on which the notice was served on him.
He was further informed that in lieu of the notice one month 's pay and allowances due to him, he would be given the same for that period.
This Court distinguished the facts in this case from those in Madan Gopal 's (2 ) case and held that the principle of that case could not be applicable.
(1) Civil Appeal No. 1341/1966 decided on 13 12 1966.
(2) (19631 3 S.C.R. 76.1 244 On a conspectus of these cases, the following propositions are clear: 1.
The services of a temporary servant or a probationer can be terminated under the rules of his employment and such termination without anything more would not attract the operation of article 31 1 of the Constitution.
The circumstances preceding or attendant on the order of termination of service have to be examined in each case, the motive behind it being immaterial.
If the order visits the public servant with any evil consequences or casts an aspersion against his character or integrity, it must be considered to be one by way of punishment, no matter whether he was a mere probationer or a temporary servant.
An order of termination of service in unexceptionable form preceded by an enquiry launched by the superior authorities only to ascertain whether the public servant should be retained in service, does not attract the operation of article 311 of the Constitution.
If there be a full scale departmental enquiry envisaged article 311 i.e. an Enquiry Officer is appointed, a charge sheet submitted, explanation called for and considered, any order of termination of service made thereafter will attract the operation of the said article.
In this case the departmental enquiry did not proceed beyond the stage of submission of a charge sheet followed by the respondent 's explanation thereto.
The enquiry was not proceeded with, there were no sittings of any Enquiry Officer, no evidence recorded and no conclusion arrived at on the enquiry.
In these circumstances, the principle in Madan Gopal 's(1) case or Jagdish Mitter 's (2) case will not be applicable.
The case is in line with the decisions of this Court in State of Orissa vs Ram Narain Das(3).
R. C. Lacy vs The State of Bihar(3) and A. G. Benjamin vs Union of India(5).
In this view of the matter.
we are unable to concur with the opinion of the Division Bench of the Punjab High Court.
This does not however conclude the matter.
The respondent also complained against the non observance of the Punjab Civil Services (Punishment and Appeal) Rules.
The learned single Judge of the Punjab High Court does not appear to have expressed himself definitely on the third point canvassed before him although he observed that the contention of the Advocate General about the inapplicability of r. 9 was not without force, The learned Judges of the Division Bench did.
not consider this (1) [1963] 3 S.C.R. 716.
(2) A.I.R. 1964 S.C. 449.
(3) [1961] 1 S.C.R.606.
(4) C.A. No. 590/1962 (5) C.A No. 1341/66 dated 13 12 66.decided on 23 10 68.
245 question at all.
We therefore allow the appeal and set aside the judgment of the Punjab High Court and remand the matter to that court for consideration of the respective contentions of the parties based on Punjab Civil Services (Punishment and Appeal) Rules, 1952.
The costs of this appeal will abide by the decision of the High Court.
V.P.S. Appeal allowed and case remanded.
| IN-Abs | The respondent who was a permanent official in the Delhi Administration was appointed to the Punjab Civil Service (Executive Branch).
He was on probation in the new post for a period of 18 months subject to extension of the period and subject to his completing training.
He passed all the departmental examinations.
The period of probation expired in July 1954, and there was no extension of it.
In January 1957, he received a charge sheet with a letter from the Anti Corruption Department asking him to reply to the charge sheet and to, state whether he would like to be heard in person.
The respondent replied that be wanted an opportunity of being heard in person.
There was however no enquiry at all, and much later, by an order dated 23/26th May 1958, the Punjab Government reverted him to his substantive post in the Delhi.
Administration without making any reference to the charges.
The respondent thereupon challenged the order on the grounds namely (1) that on the expiry of the period of probation and on his passing the departmental examinations he became entitled to a substantive permanent appointment; (2) that the impugned order terminated his service under the Punjab Government and removed him from the said service, in viola tion of the provisions of article 311(2) of the Constitution; and (3) under r. 9 of the Punjab Civil Services (Punishment and Appeal) Rules, 1952, it was mandatory that, before his employment as a probationer could be terminated, be should have been apprised of the grounds of the proposed termination and given an opportunity to show cause against it.
The High Court accepted the second contention and allowed the petition.
In appeal to this Court, HELD : (1) Merely because the respondent had passed all the departmental examinations and completed the period of probation fixed, he could not be considered to be holding the post substantively, or as being entitled to it.
[239 E F] (2) The respondent could not complain against the order reverting him to his former post because, the order of reversion was not by way of punishment.
[239 F] The circumstances preceding or attendant on the order of termination of service of a public servant have to be examined in each case, f(t determining whether the order was by way of punishment.
The motive behind it is immaterial.
it is only in a case whether either of the two tests, namely, (a) whether the public servant had a right to the Post or rank.
or (b) whether the public servant, no matter whether he was a probationer or a temporary servant, has been visited with evil consequences or an aspersion has been cast on his character or integrity, that the order could be said to be by way of punishment.
But the services of a temporary 235 servant or a probationer can be terminated under the rules of his employment and such termination without anything more, will not attract the operation of article 311.
[240 A; 244 A B, C D] Parshotam Lal Dhingra vs Union of India, ; , State of Orissa vs Rain Narayan Das, ; , R. C. Lacy vs State of Bihar, C.A. No. 590 of 1962 dated 23 10 63, A G. Benjamin vs Union of India , C.A. No. 1341/66 decided on 13 12 66, followed.
Madan Gopal vs State of Punjab, [1963] 3 S.C.R. 716, State of Bihar V. Gopi Kishore Prasad, A.I.R. 19 S.C. 689 and Jagdish Mitter V. Union of India, A.I.R. 1964 S.C. 449.
referred to.
(3) As the High Court had not considered the contention of the respondent based on r. 9 of the Punjab Civil Services (Punishment and Appeal) Rules, 1952, the matter should be remanded to the High Court for consideration of that question.
[244 H]
|
No. 151 of 1967.
Petition under article 32 of the Constitution of India for the enforcement of fundamental rights.
M. C. Chagla and Mohan Behari Lal, for the petitioner.
section T. Desai and O. P. Rana, for respondent No. 1.
C. B. Agarwala and O. P. Rana, for respondent No. 2.
O. P. Rana, for respondent No. 3.
P. M. Mukhi, Bishamber Lal and H. K. Puri, for the intervener.
The Judgment of WANCHOO, C.J., SIKRI, SHELAT and VAIDIALINGAM, JJ. was delivered by SHELAT, J. BHARGAVA, J., delivered a separate opinion.
Shelat, J.
On August 17, 1934 the Governor in Council of the then United Provinces, in exercise of powers under section 3 (1) of the Indian Electricity Act, IX of 1910 issued three licences to M/s. Alopi Parshad & Sons Ltd. for the supply of electrical energy within the tahsil areas of Firozabad in the district of Agra Shikohabad in the district of Manipur and Etawah in the district of Etawah.
The licences inter alia provided that the licensee would be supplied electrical energy in bulk by the Public Works Department, U.P. and the licensee in its turn should transmit the same on its own high tension mains within the areas of the licences.
The licences also provided that the responsibility for the maintenance of supply of electrical energy in the licensee 's, plant shall be borne entirely by the Public Works Department and thereafter by the licensee.
In 1937 the licences were assigned by the said M/s. Alopi Parshad and Sons Ltd. to the petitioner company with the consent of the Government.
The petitioner company has since then been supplying under the said licences electricity to consumers within the said areas of the licences.
It is an admitted 314 position that though the petitioner company had the said licences assigned to it it did not acquire any exclusive or monopolistic right of supplying electrical energy within the said areas.
Clause (e) of sec.
3(2) of 1910 Act which governed the said licences provides that the grant of a licence thereunder shall not in any way hinder or restrict the grant of a licence to another person within the same area of supply for a like purpose.
The Electricity (Supply) Act, LIV of 1948 (hereinafter referred to as 1948 Act) by sec.
5(1) enjoins upon the State Government to constitute a State Electricity Board.
19(1) provides that the Board may, subject to the provisions of this Act, supply electricity to any licensee or person requiring such supply in any area in which a scheme sanctioned under Chapter V is in force.
The proviso to Sec.
19(1), however, lays down that the Board shall not : "(b) supply electricity for any purpose to any person, not being a licensee for use in any part of the area of supply of a licence without the consent of the licensee, unless the maximum demand of the licensee, being a distributing licensee and taking a supply of energy in bulk is, at the time of the request, less than twice the maximum demand asked for by any such person; or the licensee is unable or unwilling to supply electricity for such purpose in the said part of such area on reasonable terms and conditions and within a reasonable time.
" Section 26 provides that "Subject to the provisions of this Act, the Board shall, in respect of the whole State, have all the powers and obligations of a licenses, under the , and this Act shall be deemed to be the licence of the Board for the purposes of that Act.
" The definition of a licensee in section 2(6) of 1948 Act, however, states that it would not include the Board.
Though the Board is not a licensee for the purposes of the 1948 Act the Act being deemed to be the licence for the Board under Sec.
26 it is a licensee under the 1910 Act.
26 however is subject to the provisions of the Act which means that it is inter alia subject to the provisions of sec.
Therefore, in the absence of a scheme under Chapter V, the Board, though a licensee under the 1910 Act, was not competent to supply directly electrical energy to consumers such as the 3rd respondent.
This was the position until 1961, When the U.P. legislature to remove this disability of the Board, passed the Indian Electricity (U.P.) Amendment Act, XXX of 1961.
Section 2 of the Amendment Act substituted the following, for cl.
(e) of sec.
3(2) of the 1910 Act: 315 "(e) grant of a licence under this Part for any purpose shall not in any way hinder or restrict (i) the grant of licence to another person within the same area of supply for a like purpose; or (ii) the supply of energy by the State Government or the State Electricity Board wihin the same area, where the State Government deems such supply necessary in public interest.
" It also added after sub sec.
2, the following sub sec.
3: "(3) Where the supply of energy in any area of the State Electricity Board is deemed necessary under subclause (ii) of clause (e) of sub section (2), the Board may, subject to any terms and conditions that may be laid down by the State Government, supply energy in that area notwithstanding anything to the contrary contained in this Act or the Electricity Supply Act, 1948.
" Sec. 3 of the Amendment Act also added a new sub sec.
(1 B) in sec.
28 of the 1910 Act.
The new sub section reads as under: "(1 B).
The State Government may notwithstanding that sanction for engaging in the business of supplying energy to the consumer in an area has been given to any person under sub section (1), whether before or after coming into force of the Indian Electricity (U.P. Sanshodhan) Adhiniyam, 1961, give direct supply, or authorise the State Electricity Board to give direct supply, in the same area.
" This sub section has no application to the licensees for, it empowers the State Government either to supply directly or authorise the Board to directly supply energy even in an area for which it has given sanction to a person other than a licensee to engage in the business of supplying energy to the public in such area.
A perusal of these provisions makes it clear that the Board can directly supply electricity to the consumers and the State Government also can authorise the Board to do so provided the State Government deems it necessary in public interest that it should be so done.
The condition precedent for the direct supply by the Board to the consumers in the area where a licence has been granted to a licensee is that such supply by the Board must be deemed necessary by the State Government in public interest.
In pursuance of the powers under sees.
46 and 49 of the 1948 Act, the Board by a notification dated April 24, 1962 fixed the rates and tariffs for electrical energy for the Ganga Sarda 316 Grid.
These were to apply to both the licensees obtaining bulk supply from the Board and to consumers to whom electrical energy was being supplied direct by the Board in the area covered by the said Grid.
According to these rates, consumers to whom electrical energy was being supplied direct by the Board would pay a demand charge at the rate of Rs. 8/ per KVA and on energy charge at the rate of 4.5nP per KWH for the first 170 KWH per KVA, at the rate of 3.5nP for the next 170 KWH per KVA and at the rate of 3.0 nP per KWH for the remaining KVA consumed during the month.
For the licensees, the rates were Rs. 12.75 per KVA for the demand charge for the first 500 KVA, Rs. 10 per KVA for the next 1500 KVA and Rs. 8.50 per KVA for above 2000 KVA of the chargeable demand during the month.
For energy charge, the rates were 5 nP per KWH for the first 170 KVM per KVA, 4nP per KWH for the next 170 KWH per KVA and 3nP per KWH for the remaining KWH per KVA of chargeable demand consumed during the month.
The rates chargeable from licensees were thus higher than those applicable to the consumers both in respect of demand and energy charges even though licensees would be larger customs who in the normal course of business would be charged lower rates than the consumers.
The notification is not under challenge before us and therefore it is not necessary for us to consider its validity.
As the Board was not yet authorised by the State Government to supply electricity directly to the consumers within the areas of the petitioner company 's licences the 3rd respondent entered into an agreement in 1964 for a period of 3 years under which the petitioner company was to supply electricity to it.
On September 21, 1966 the State Government issued a notification which stated that the Governor deemed it necessary in public interest that the State should supply energy to the 3rd respondent and in exercise of the power under sec.
3 (2) (e) of the 1910 Act as amended by Act XXX of 1961 directed the Board to give direct supply of energy to the 3rd respondent on the same terms and conditions on which the Board was supplying energy I to other consumers.
Thereupon the 3rd respondent by its notice dated January 19, 1967 terminated the said agreement.
It seems that the Board was still not ready to supply energy direct to the 3rd respondent and therefore on April 18, 1967, only one day before the said agreement would have ended, the 3rd respondent withdrew the said notice.
On June 23 1967, the 3rd respondent, however, gave a fresh notice terminating the said agreement as from September 23, 1967.
The result of the notification dated September 21, 1966 was two fold : (1) that notwithstanding the subsistence of the petitioner company 's licences and its right thereunder to supply energy to consumers within the areas of its licences, the Board 317 was directed to supply energy to the 3rd respondent and (2) that the Board was directed to supply energy to the 3rd respondent at rates lower than the rate charged by the Board from the petitioner company as the licensee.
Mr. Chagla appearing for the petitioner company raised the following three contentions : ( 1 ) that the amended sec.
3 (2) (e) was invalid on the ground that it amounted to acquisition of the petitioner company 's property and as no compensation has been provided for such acquisition cl.
(e) of section 3 (2) was in violation of article 31(2) of the Constitution; (2) that the notification dated September 21, 1966 was ultra vires sec.
3 (2) (e) as the direction by the State Government to the Board to supply electricity directly to the 3rd respondent was not founded on public interest; and (3) that the said direction to supply electricity at rates chargeable from the consumers as against the rates chargeable to the licensees was discriminatory.
The respondents, on the other hand, contended that the 3rd respondent was a concern in which the Government has an interest to the extent of 51 % of its share capital, that therefore, it was almost a public utility concern, that supply by the petitioner company to the 3rd respondent was found to be defective resulting in lay off of labour on several occasions and consequent loss in production and that therefore the Government was justified in public interest to issue the said notification.
In support of these allegations the respondents filed an annexure to their counter affidavit showing low voltage and high tension trippings during the months of April, May and June 1966.
It was alleged that owing to defective and short supply by the petitioner company there Were high tension trappings on numerous occasions resulting in low voltage, the consequence Whereof was that the 3rd respondent was obliged to stop the working of the Mills sometimes for several hours.
The petitioner company 's case, however, was that these allegations were an afterthought and that the real object in issuing the notification dated September 21, 1966 was to subvert the petitioner company 's rights under the said licences.
We are inclined to think that there is considerable force in the contention of the petitioner company.
Though the allegation was that supply of energy by the petitioner company to the 3rd respondent suffered from shortage and other defects the 3rd respondent does not seem to have at any time made any complaint about such shortage or defects either to the petitioner company or to the Board or to the State Government.
Similarly, the Board also does 318 not seem to have at any time complained to the petitioner company about such defective supply.
Even when the petitioner company, after the said notification was issued, made a representation to the State Government to reconsider its decision the Government did not, while rejecting it, rely upon the fact that the petitioner company was not in a position to give full and proper supply of energy to the 3rd respondent or that supply by it was, as now alleged, short or defective.
It is an undisputed fact that the petitioner company has been throughout all these years supplying high tension energy to the 3rd respondent and the 3rd respondent has been converting such high tension energy into low tension energy through its own transformers.
The aforesaid annexure shows that though the high tension trippings were only for a few minutes except on three or four occasions low voltage was for several hours.
In some cases though there was no tripping at all there was low voltage for as long as sixteen hours.
It is clear, therefore, that the petitioner company had no difficulty in maintaining supply of high tension electrical energy to the 3rd respondent and there must have been some defect in the stepping down system of.
the 3rd respondent resulting in low voltage.
It is impossible thus to find from the annexure that the petitioner company was guilty in any manner of shortage or defective supply of high tension energy to the 3rd respondent.
The allegation therefore that the 3rd respondent suffered in production and losses as a result of short or defective supply by the petitioner company is not borne out by the record in this case.
If there was any justification for the allegation now made by the respondents it is inconceivable that for all these years the 3rd respondent would not have made any complaint for such defective supply either to the Board or to the State Government.
It is certain that but for the amendment of sec.
3 (2) (e) of 1910 Act, the Board, though a licensee under that Act, could not have supplied energy directly to the 3rd respondent in the absence of a scheme under sec.
19 of 1948 Act.
Under the proviso to that section the Board would not have been entitled to supply energy for any purpose to any person not being a licensee for use in any part of the area of supply of a licensee without the consent of such licensee.
It is true that under its licences the petitioner company was not conferred monopolistic rights to supply energy to the consumers and the Government could have granted another licence to another licensee.
But the Government has not granted such licence to any other person.
But it was said that the Board was another such licensee.
As already stated the Board could not have distributed energy to the consumers though it is a licensee under 1910 Act unless (a) there was a scheme or (b) that it was authorised in public interest under the amended sec.
3 (2) (e).
Neither of these two conditions having been fulfilled it 319 is clear that the notification of September 21, 1966 and the direction contained therein to the Board to supply energy to the 3rd respondent were in breach of the petitioner company 's rights under its licences and the requirements of the amended sec.
3 (2) (e).
Apart from its being in breach of the amended sec.
3 (2) (e) and the petitioner company 's rights under its licences, the notification and the Government 's direct on to the Board therein results in clear discrimination.
If the Board were to supply energy directly to the 3rd respondent it has to do so at rates lower than the rates at which electricity is supplied by it to the petitioner company.
The petitioner company being thus charged at higher rates must as a distributor charge hi her rates from its other consumers with the result that the 3rd respondent would get energy at substantially lower rates than other consumers including other industrial establishments in the area.
The notification thus results in discrimination between the 3rd respondent on the one hand and the other consumers on the other as also between the 3rd respondent and the petitioner company.
It follows therefore that the notification of September 21, 1966 cannot be sustained as a valid notification as it is discriminatory and is also in breach of the amended sec.
3 (2) (e) of 1910 Act.
In that view the Board is not entitled to supply directly electricity to the 3rd respondent as the direction contained in the said notification which is the only authority under which it could so supply is invalid in law.
In this view, it is not necessary for us to decide the question whether the amended sec.
3 (2) (e) amounts to acquisition and whether such acquisition is in violation of article 31 of the Constitution.
The said notification being thus invalid respondents 1 and 2 are directed not to, supply electrical energy directly to the 3rd respondent.
The respondents will pay to the petitioner company the costs of this petition.
Bhargava, J. I agree with my brother Shelat J. that the notification of September 21, 1966 cannot be sustained as a valid notification because it is discriminatory and consequently I concur in the order proposed by him.
I am, however, not prepared to hold that that notification is also invalid, on the other two grounds, viz., that the notification and the directions contained therein to he Electricity Board to supply energy to the third respondent were in breach of the petitioner Company 's rights under its licence and of The requirements of the amended section 3 (a) (e).
I may briefly indicate the reasons for my view.
It is admitted on all hands that under its licences, the petitioner company was not conferred monopolistic rights to supply energy 320 to the consumers in the area covered by the licences and that Government could have granted another licence to another licensee to supply energy in the same areas without violating any provision of the Electricity Act of 1910 or of the conditions or which licences were granted to the petitioner Company.
It in true that the Government has not granted any such licences to any other person but, in my opinion the effect of the subsequent legislation is to bring into existence another statutory licencee viz., the Electricity Board and any directions permitting the Elec tricity Board to supply electricity in the areas covered by the petitioner Company 's licences cannot be held to be in violation of the conditions of those licences.
By the Electric Supply Act 1948, the Board 'was constituted a licensee for purposes of the Electricity Act of 1910, though section 26, which brought about this result, provided that in that capacity, the Board was subject to other provisions of the Electric Supply Act 1948.
One such provision is contained in section 19(1) of the Act of 1948.
The U.P. Electricity Amendment Act 1961, however, introduced provi sions in the Act of 1910 the result of which was that the Board, in acting as a licensee under the Act of 1910, was no longer subject to the limitation laid down in section 19(1) of the Act of 1948.
It has not been contended that either the Supply Act of 1948 or 'the U.P. Electricity Amendment Act of 1961 was not competently enacted by the appropriate legislature.
The Supply Act of 1948 was no doubt passed by the Central Legislature in respect of a concurrent subject but the U.P. Electricity Amendment Act of 1961 was reserved for the assent of the President and, having received the assent of the President, the provisions of that Act would prevail to the extent to which they may be inconsistent with the, Central Act of 1948.
The result of that legislation was that the Electricity Board became a licensee under the Electricity Act of 1910 and was no longer subject to the limitation laid down in section 19(1) of the Electricity Supply Act of 1948.
The only limitation after the enactment of the U.P. Electricity Amendment Act 1961 that remained was that the Board could supply electricity only after the Stat Government issued a valid notification under clause (e) of section 3(2) of the Act of 1910.
If the State Government was competent under the original section 3(2) (e) of the Act of 1910 to grant a licence to any person for supply of electricity in the areas covered by the licences issued to the petitioner Company, I do not see why v similar result could not be validly brought about by legislation, by the appropriate legislatures creating a statutory licensee for purposes of the Act of 1910.
Consequently, the power granted to the Electricity Board by the notification of September 21, 1966 to supply electricity to a consumer in the area covered by one of the licences of "he petitioner Company cannot be, held to be in violation of the conditions of the licence.
321 I further considered that, in view of the language of the provisions contained in the amended section 3(2) (e) of the Act of 1910, it is not competent for this Court in this writ petition, on the material available, to declare that the notification of September 21, 1966 is invalid because the direction contained therein was not made by the State Government in public interest.
The power under the amended section 3 (2) (e) is to be exercised when Government deems it necessary in public interest.
The notification, on the face of it, shows that the State Government did apply its mind before issuing that notification and form the opinion that in this particular case it was necessary in public interest that the Board should be directed to supply electricity to respondent No. 3 in the area covered by one of the licences of the petitioner Company.
The opinion was formed by the.
State Government on material which I do not think can be said to be totally irrelevant for the purpose of forming such opinion.
As long as the State Government based its order on an opinion formed on relevant material, it is not open to the courts to examine and take a different view on the basis of other material such as want of complaints by respondent No. 3 to the Government that the supply of energy by the petitioner Company was not satisfactory.
It is not for courts to sit in judgment over the view of the State Government which the State Government is required to form in order to make an order under the amended section 3 (2) (e).
Consequently, I cannot hold that the notification of September 21, 1966 was invalid on the ground that it was issued in breach of the amended section 3(2) (e) of the Act of 1910.
| IN-Abs | The petitioner company a licensee was supplying electrical energy to the 3rd respondent.
By the Electric Supply Act 1948 the Electricity Board was constituted and by Indian Electricity (U.P.) Amendment Act, 1961, the disability of the Board to supply directly electrical energy to consumers such as the 3rd respondent was removed.
The State Government issued a notification directing the Board to directly supply energy to the 3rd respondent.
The rates chargeable by the Board for energy supplied to licensees were higher than the rates the direct consumers.
The 3rd respondent terminated the agreement with the petitioner company.
The petitioner company filed a petition under article 32 of the Constitution.
HELD : (Per Full Court) : The notification could not be sustained as a valid notification as it was discriminatory.
If the Board were to supply energy directly to the 3rd respondent it had to do so at rates lower than the rates at which electricity was supplied by it to the petitioner company ' The petitioner company being thus charged at higher rates must as a distributor charge higher rates from its other consumers with the result that the 3rd respondent would get energy at substantially lower rates than other Consumers including other industrial establishments in the area.
The notification thus resulted in discrimination between the 3rd respondent on the one hand the other consumers on the other as also between the, 3rd respondent and the petitioner company.
[319 B D] (Per Wanchoo C.J., Sikri, Shelat and Vaidialingam, JJ.).
The Board ,could not have distributed energy to the consumers though it was a licensee under 1910 Act unless (a) there was a scheme or (b) that it was authorised in public interest under the amended section 3(2)(e).
Neither of these two ,conditions having been fulffilled the notification and the direction contained therein to the Board to supply energy to the 3rd respondent were in breach of the petitioner company 's rights under its licences and the, requirements of the amended section 3 (2) (a).
[3 1 8 H] The allegation that the 3rd respondent suffered in production and losses as a result of short or defective supply by the petitioner company was not borne out by the record in this case.
if there was any justification for the allegation now made by the respondents it is inconceivable that for all these years the 3rd respondent would not have made any complaint for such defective supply either to the Board or to the State Government.
(Per Bhargava, J.) The notification cannot be held to be invalid on the ground that it was issued in breach of the amended section 3 (e) of the Act.
If the State Government was competent under the original section 3 (2) (e) of the Act of 1910 to grant a licence to any person for supply of electricity 313 in the areas covered by the, licences issued to the petitioner company , it cannot be seen why a similar result could not be validly brought about by legislation by the appropriate legislatures creating a statutory licensee for purposes of the Act of 1910.
Consequently the power granted to the Electricity Board by the notification to supply electricity to a consumer in the area covered by one of the licences of the petitioner company could not be held to be in violation of the conditions of the licence.
In view of the language of the provisions contained in the amended 3 (2) (e) of the Act of 1910, it was not competent for this Court in this writ petition, on the material available, to declare that the notification was invalid for the reason that the direction contained therein was not made by the State Government in public interests As long as the State Government based its order on an opinion formed on relevant material, it was not open to the courts to examine and take a different view on the, basis of other materials.
[320 G 321 B]
|
iminal Appeal No.28 of 1965.
Appeal by special leave from the judgment and order dated December 14, 1964 of the Rajasthan High Court in section B. Criminal Appeal No. 656 of 1963.
K. R. Chaudhuri, for the appellants.
K. Baldev Mehta,for the respondent.
The Judgment of the Court was delivered by Hegde, J.
The two appellants were convicted by the High Court of Rajasthan under sections 120 B and 1 61, IPC, and under sections 5 ( 1 ) (a) and 5 ( 1 ) (d) read with section 5 (2) of the Prevention of Corruption Act.
They have come up in appeal to this Court by special leave.
The first appellant was a Havaldar and the second appellant a Subedar in the Rajasthan Armed Constabulary.
At the relevant point of time they were serving in the outpost at SajanKa Par in Barmer district of Rajasthan State, which was a border outpost.
That post was within two miles from the Pakistan border.
The prosecution case is that the two appellants conspired to extort money as well as other valuable things from the villagersby using force or threat of force or by harassment.
Though they were indulging in these activities for quite some time, the matter came to a head when they tried to compel PW 1 Mohammad to give them Rs 100.
It was said that about the middle of September 1962, the first appellant came to the field of Mohammad and took him to the outpost saying that the second appellant wanted him to go over there.
At the outpost the second appellant told him that he was constantly visiting Pakistan; he was also blackmarketing; hence unless he gave him (2nd appellant) Rs. 200 he would send him to prison.
PW 1 pleaded that he was innocent.
He also pleaded that he was a poor man and hence he was unable to pay the amount demanded.
As the second appellant insisted on the payment he agreed to pay him Rs. 100 but as he had no money at that time PW 3 Kalla stood surety for him.
After a few days when PW 1 was sitting in the shop of PW 5 Bhoja, he happened to talk about the illegal activities of the appellants.
It so happened that a CID officer was there who evidently passed on that information to PW 17 Kaneihalal the Deputy Superintendent of Police,in the Special Police Establishment.
On getting that information PW 17 came to the village on September 30, 1962 and checked up the 191 facts with PW 1.
On the morning of October 1, 1962.
PW 1 was again called to the outpost by the 2nd appellant and told that the amount should be paid immediately.
He promised to pay the same that afternoon and asked the appellants to come to his house that afternoon to which they agreed.
Thereafter he passed on that information to PW 17 and gave him the complaint Exh.
Then a trap was arranged.
PW 1 produced before PW 17, Rs. 100 in ten rupee currency notes.
PW 17 noted down their numbers in the presence of panch witnesses PW 2 Bhakha and PW 4 Ballu and returned the amount to PW 1 with instructions to give the same to the appellants if they again demanded money.
At the same time he instructed PWs 2 and 4 to be with.
PW 1 so that they may witness the payment.
of the money.
Then PW 17 posted himself in a house near the house of PW 1.
On the evening of that day the first appellant came to the house of PW 1 and demanded the money.
He told PW 1 that the second appellant could not come as.
he was not well.
Then PW 1 took out the currency notes whose numbers had been noted down earlier and paid the same to the first appellant.
The first appellant put them in his pocket.
On receipt of that information, PW 17 came to the place and asked the first appellant to produce those currency notes.
On seeing PW 17, the first appellant became pale and nervous.
After some hesitation he took out the notes in question from his pocket and gave them to PW '17.
On examining their numbers it was found that they were the very notes which had been returned to PW 1 after noting their numbers.
As soon as the villagers came to know of the trap, several of them came forward with complaints against the, appellants.
After investigating all those complaints this case was launched.
It was tried by the special judge,, Balotra, who accepted the prosecution case in full and convicted the appellants under sections 161 and 120B, IPC and under section 5 (2) read with section 5 (1) (a) and 5(1)(d) of the Prevention of Corruption Act.
In appeal the High Court of Rajasthan affirmed the convictions of the appellants in respect of all the charges levelled against them.
It did not award any separate sentence in respect of the offence under section 161 or section 120 B, IPC.
As regards the other offences it reduced the sentence awarded by the trial court.
We shall now proceed to consider the evidence relating to the various charges levelled against the appellants.
It is not disputed that both the appellants were public servants.
So far as the evidence relating to the trap is concerned, we have the evidence of PWs 1,2,4 and 17.
Their evidence has been believed by the trial court as well, as the High Court.
The plea of the 1st appellant was that on that evening when he was going in front of the house of PW 1, PWs 1 and 192 2 and others caught hold of him and struggled with him; at that, time his note book fell down; thereafter he saw them producing the currency notes in question before PW 17.
This is a very artificial story.
The same has been disbelieved by the trial court as Well as, the appellate court.
No case is made out to interfere with their findings.
The evidence relating to the trap does not by itself connect the second appellant with that incident but then the evidence of PWs 1 and 3, which has been accepted by the trial court as well as the High Court, shows that it was the 2nd appellant who compelled PW 1 to give that amount.
The contention of the second appellant that he had incurred the displeasure of the their way of smuggling goods from Pakistan to India and from India to Pakisthan and therefore he 'was victimised was not,accepted either by the trial court or the High Court.
Those. courts also did not accept his version that several days before the trap was laid he had reported against 'most of the prosecution witnesses in this case.
The defence evidence led by him was disbelieved by those courts and even the documents produced by him were rejected either on the ground that they were got up for the purpose of this case or as having been tampered with.
This ' court being a court of special jurisdiction, does not interfere with, findings of facts reached by the High Court except under exceptional circumstances.
No such circumstance is available in this case.
We are unable to accept the contention of the Iearned coun sel for the appellants that PWs 1, 2, 3, 4 and 17 and,, other prosecution witnesses to whose evidence we shall presently refer, ' should be considered as accomplices and therefore their evidence is required to be corroborated in material particulars before being accepted.
On the proved facts, even those who gave illegal gratification to the appellants cannot be considered 'as accomplices as the same was extorted from them.
Though PWs 1, 2, 4 and 17 can be considered as interested.
witnesses as regards their evidence relating to trap, as a matter of law, it is not correct to say that their.
evidence cannot be accepted without corroboration, see the State of Bihar vs Baswan Singh(1).
The next incident is that spoken to by Bhoja PW 5 and Hussain, PW 6.
Their evidence was.
that on June 22, 1962 the ,second appellant along with the first appellant visited the shop of PW 5 and told, him that he was blackmarketing and that people ; 193 from Pakistan were visiting him.
He denied those charges.
Then the second appellant told him that unless he (PW 5) paid him Rs. 50 he would involve him in some case some day.
But still PW 5 did not give any money to the second appellant.
Then the second appellant insisted that he should give at least the wrist watch that he was wearing.
Finding no alternative her gave him the watch, article 3.
According to him when all these things happened PW 6 was in his shop.
PW 6 fully corroborated PW 5.
It was not denied that PW 17 seized the watch in question from the second appellant.
But his explanation was that that watch had been pledged by PW 5 with Shriram PW 4for Rs. 50 but that amount had been advanced to DW 4 by him (appellant No. 2); DW 4 left the watch with him and that is how he happened to be in possession of the watch.
Neither the trial court nor the appellant court accepted this version.
On the other hand they relied on.
the evidence of PWs 5 and 6 coupled with the, circumstance that the watch was seized from the second appellant.
We see no reason to disturb the findings reached by those courts.
PW 18 Ukaram spoke to the fact of having paid a sum of Rs. 101 to the second appellant in the presence of the first appellant on August 13, 1962.
Though his evidence was believed by the trial court, the same was not relied on by the High Court.
Therefore we exclude that evidence from consideration.
We next come to the evidence of PWs 8, 11 and 12.
PW 8 is one Kastura.
His evidence is that some days prior to October 1, 1962 the first appellant came and.
took him to the outpost.
There the second appellant accused him of being in the habit of visiting Pakistan.
When he denied that charge he was asked to kneel down.
Sometimes thereafter he was asked to pay Rs. 100.
As he had no money he was kept in the outpost during the night.
On the next morning Imam PW 11 and Bhakha PW: 2 happened to come to the post.
8, 11 and 12 pleaded with the second appellant to accept a lesser sum.
Ultimately, the second appellant agreed to receive Rs. 50.
Thereafter PW 1 1 was sent to the house of PW 8 to sell his goats and get Rs. 50.
He accordingly went to the village,, sold some goats of PW 8 and ' got Rs. 50.
During this incident, according to the evidence of the above witnesses, the first appellant was also present in the outpost.
Sadiq PW 13 speaks to the fact that about nine days prior to his arrest the first appellant went to his house and took him to the outpost saying that he was wanted by the second appellant.
There he was falsely accused of selling goats in Pakistan; then, he was beaten by the second appellant and thereafter he was.
told by the second appellant that he should pay him Rs. 100.
As, 194 he could not make the payment in question he was kept in the outpost that night.
Next day his brother Gafoor came there and paid a sum of Rs. 80 to the second appellant.
It is only thereafter he was allowed to go back.
At about the time when money was extorted from PW 13, Alladin PW 14 was said to have been in the outpost.
PW 14 corroborated the testimony of: PW 13.
PW 14 has his own grievance against the. appellants.
His case was that about 25 days prior his arrest, the first appellant ,came to his field and demanded his camel for cultivation of his field.
But as he himself required the camel he refused to give it.
After about 8 or 9 days both the appellants came to his field .and, forcibly took him to the outpost and beat him.
Thereafter, they demanded from him a sum of Rs. 60 and he was told that if he did not pay that amount, lie would be prosecuted in some false case.
Next we come to the evidence of Murad PW 7 and Subhan PW 9.
The evidence of these two witnesses was that about seven or eight days before the first appellant was arrested .
both the appellants came to their houses in the village Talab Ka Par and took them to the outpost.
There they were made to kneel down.
Further they were falsely accused of indulging in smuggling ,of goods and visiting Pakistan without valid permits.
Thereafter Rs.80 were demanded from PW 7 and Rs. 200 from PW 9.
Ultimately it was settled that PW 7 should pay Rs. 50 and PW 9 Rs. 150.
By that time Kalla PW 3 came there.
He was sent to .the house of those witnesses to get money.
He got Rs. 40 for PW 7 and Rs. 130 for PW 9.
Those, amounts were paid to the second appellant.
Next we come to the evidence of Minimal PW 10.
His version was that in July or August 1962 his brother in law died and in that connection a feast had been arranged.
When the feast was about to commence the first appellant came there and told him that unless he paid a sum of Rs. 100 he would not be allowed to have the feast.
As he refused to pay that money he was taken to the outpost.
There the second appellant again demanded from him Rs. 100.
Ultimately PW 10 paid the second appellant Rs. 30.
Lastly we come to the evidence of Nemichand PW 15.
His case was that about a month before the first appellant was trap ped he had come to his shop and told him that he should go and meet the second appellant at the outpost.
Accordingly he went to the outpost.
There the second appellant accused him of indulging in black marketing and demanded from him Rs. 100, and he was told that if he did not pay that amount he would be beaten and prosecuted.
Ultimately it was settled that he should 195 pay Rs. 50.
Thereafter he was allowed to go home and get the money.
On the next day he went to the outpost and paid Rs. 50 to the second appellant.
The evidence of all the witnesses mentioned above excepting PW 18 has been accepted by the trial court as well as by the appellate court, and we see no reason to differ from them.
This takes us to the question whether on the basis of the evidence accepted by the High Court both or any of the appellants could in law have been convicted for any of the offences with which they were charged.
The first appellant was a subordinate of the second appellant.
From the evidence referred to earlier it is clear that both the appellants were acting together.
It is obvious that the second appellant was mainly responsible for the extortions complained of and the first appellant was aiding him in his activities.
Hence there was no need to charge the appellants under section 120 B, IPC even in respect of the amount received from PW 1.
The evidence adduced by the prosecution shows that every single act complained of amounts to an extortion in law.
Before an offence is held to, fall under section 161 IPC, the following requirements have to be satisfied: (1) the accused at the time of the offence was, or expected to be, a public servant, (2) that he accepted, or obtained, or agreed to accept, or attempted to obtain from some person a gratification, (3) that such gratification was not a legal remuneration due to him, and (4) that he accepted the gratification in question as a motive or reward, for (a) doing or forbearing to do an official act; or (b) showing, or forbearing to show favour or disfavour to.
some one in the exercise of his official functions; or (c) rendering, or attempting to render, any service or disservice to some one, with the Central or any State Government or Parliament or the Legislature of any State, or with any public servant.
As mentioned earlier admittedly the appellants were public servants.
It is also established that they obtained from the several witnesses examined in this case illegal gratification.
The word 'obtain ' is a strong word.
It includes also things received by extortion.
But can it be said that they obtained the gratifications in question as a motive or reward for doing or for forbearing to do an official act or for showing or for forbearing to show favour or disfavour to the persons in question in the exercise of their official functions.
The evidence on record clearly shows that neither the appellants intended to, show any official favour to the persons from whom they extorted money or valuable things, nor those persons expected any official favour from them.
, They paid the amounts in question solely with a view to avoid being ill treated 196 or harassed.
The scope of section 161, IPC had been considered by this Court in State of Ajmer vs Shivji Lal(1) as well as in State Of Uttar Pradesh vs Kuljas Rai(2).
Though the former decision.
was overruled in certain respects by a later decision of this Court to which reference will be made hereinafter, that part of 'the decision which considered the requirements of section 161 I.P.C. was not differed from.
Therefore it is difficult to hold that the acts complained against the appellants can be held to constitute offences under section 161, IPC.
Before an offence can, be held to come within cl.
(a) of subs.
1 of section 5 of the Prevention of Corruption Act, the requirements of section 161, IPC have to be satisfied.
If an offence does not fall under section 161, IPC.
it cannot come.
within section 5(1)(a) of the Prevention of Corruption Act.
But so far as cl.
(d) of sub section 1 of section 5 of the Prevention of Corruption Act is concerned, that stands on a different footing.
At the relevant time that sub section read "A public servant is said to commit the offence Of criminal misconduct in the discharge of his duty . . . . . . (d) if he, by corrupt or illegal means or by otherwise abusing his position as public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage.
Therefore if it is proved that the appellants had by illegal means or by otherwise abusing their position as public servants obtained for themselves money or other valuable things, then, they can be said to have committed the offence of criminal misconduct in the discharge of their official duties.
To bring home an offence under section 5 (1) (d), it is not necessary to prove that the acts complained of were done by the appellants in the discharge of their official duties.
The contrary view taken by this Court in State of Ajmer vs Shivji Lal(1) was over ruled by this Court in Dhaneshwar Narain Saxena vs The Delhi Administration(3).
In that case it was observed that the words occurring in section 5 of the Prevention of Corruption Act "in the discharge of his duty" do not constitute an essential ingredient of the offence under section 5 (1) (d), the ingredients of that offence being (1) that the accused should be a public servant, (2) that he should use some corrupt or illegal means or otherwise abuse his position as a (1) (1959) Supp. 2 S.C.R. 739.
(2) Cr.
Appeal 177 of 1960, decided on 22 8 62.
(3) ; 197 public; servant; (3) that he should have obtained a valuable thing or pecuniary advantage, and (4) for himself or any other person.
That decision was followed in State of Uttar Pradesh vs
Kuljas Rai(1).
It must be noted that clause 5 (1) (d) is much wider in scope than clause 5 ( 1 ) (a).
Therefore, the conviction of the, Appellants under section 5(1) (d) read with section 5(2) of the Prevention of Corruption Act stands on a firm ground.
It was contended on behalf of the State that if this Court holds that the conviction of the appellants under section 161, IPC and under section 5 (1 ) (a) of the Prevention of Corruption Act is,, not sustainable, their conviction may, be altered to one under section 384, IPC It was said that such an alteration cannot be said to prejudice the appellants though they were no charged and tried for that offence.
We have not thought it necessary to examine that question as in any event the appellants are liable to be convicted under section 5 (2) read with section 5 ( 1 ) (d) of the Prevention of Corruption Act.
In the result we partly allow the appeal and acquit the appellants under sections 120 B and 161, IPC, as well as under section 5 (2) read with section 5(1)(a) of the Prevention of Corruption Act.
The second appellants conviction under section 5(2) read with section 5 (1) (d) of the Prevention of Corruption Act is sustained and for that offence the sentence of 18 months rigorous imprisonment and a fine of Rs. 200, 'in default further imprisonment of two months imposed by the High Court is affirmed.
The conviction of the first appellant is altered to one under section 5(2) of the Prevention of Corruption Act read with section 114, IPC and for that offence he is sentenced to suffer rigorous imprisonment for one year.
Y.P. Appeal partly allowed.
(1) Cr.
Appeal 177 of 1960, decided on 22 8 62.
| IN-Abs | On the allegation that the appellant Havaldar and the second appellant a Subedar in the Rajasthan Armed Constabulary. were demanding certain amount from a person accusing him of indulging in blackmarketing and constantly visiting Pakistan and unless he paid the amount demanded he would be beaten and prosecuted, a police trap was successfully laid, and the appellants convicted under sections 161 and 120B I.P.C. and under section 5(2) read with section 5(1)(a) and section 5(1)(d) of the Prevention of Corruption Act.
In appeal, this Court.
HELD : The conviction of the appellants under section 120B and 161 as well as under section 5 (2) read with section 5 (1) (a) of the Prevention of Corruption Act must be set aside.
The second appellant 's conviction under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act must be sustained.
The first appellant 's conviction be altered to one under section 5(2) of the Prevention of Corruption Act read with section 114 I.P.C.
The first appellant was a subordinate of 'second appellant.
From the evidence it is clear that both the appellants were acting together.
It is ' obvious that the second appellant was mainly responsible for the extortions complained of and the first appellant was aiding him in his activities.
Hence there was no need to charge the appellants under section 120 B. I.P.C.
The evidence clearly showed that neither the appellants intended to show any official favour to the Persons from whom they extorted money nor those persons expected any official favour from them.
The amounts in question were paid solely with a view to avoid being ill treated or haras sed.
Therefore, it is dffficult to hold that the acts complained can be held to constitute offences under section 161 I.P.C. State of Ajmer vs Shivji Lal, [1959] Supp. 2 S.C.R. 739 and State of Uttar Pradesh vs Kuljas Rai.
A. No. 177 of.
1960 dated 22 8 62, referred to.
Before an offence can be held to come within section 5(1)(a) Of the Prevention of Corruption Act, the requirements of section 161 I.P.C., have to be satisfied.
If an offence does not fall under section 161 I.P.C. it cannot come.
within section 5(1)(a) of the Prevention of Corruption Act.
[196 C] But so far as section 5(1) (d) of the Prevention of Corruption Act is concerned, that stands on a different footing.
To bring home an offence under section 5(1) (d), it is not necessary to prove that the acts complained of were done by the appellants in the discharge of their official duties.
Clause 5(1)(d) is much wider in scope than cl.
5(1)(a).
[196 D 197 B] 190 State of Uttar Pradesh vs Kuljas Rai, Cr.
A. No. 177 of 1960 dated 22 8 62 and Dhaneshwar Narain Saxena vs The Delhi Administration, ; , referred to.
|
Civil Appeal No. 1 of 1954, and Civil Appeal No. 7 of 1954.
Appeals under article 132(1) of the Constitution of India from the Judgment and Order dated the 12th September, 1952, of the High Court of Judicature at Bombay in Civil Application No. 880 of 1952 and Miscellaneous Application No. 212 of 1952 respectively.
N.C. Chatterjee and U. M. Trivedi (H. H. Dalal and I. N. Shroff with them) for the appellants in Appeal No., I of 1954.
Rajinder Narain for the appellants in Civil Appeal.
No. 7 of 1954.
M. C. Setalvad and C.K. Daphtary (G. N. Joshi and Porus A. Mehta, with them) for the respondents in both the appeals.
Mach 18.
The Judgment of the Court was delivered by MUKHERJEA J.
These two connected appeals are directed against a common judgment of a division Bench of the Bombay High Court, dated the 12th of September, 1952, by which the learned Judges dismissed two petitions under article 226 of the Constitution presented respectively by the appellants in the two appeals.
1057 The petitioners in both the cases assailed the consti tutional validity of the Act, known as the Bombay Public Trusts Act, 1950 (Act XXIX of 1950), which was passed by the Bombay Legislature with a view to regulate and make better provisions for the administration of the public and religious trusts in the State of Bombay.
By a notification, dated the 30th of January, 1951, the Act was brought into force on and from the 1st of March, 1951, and its provisions were made applicable to temples, maths and all other trusts, express or constructive, for either a public, religious or charitable purpose or both.
The State of Bombay figures as the first respondent in both the appeals and the second respondent is the Charity Commissioner, appointed by the first respondent under section 3 of the impugned Act to carry out the provisions of the Act throughout the State of Bombay.
In one of the appeals, namely, Appeal No. 1 of 1954, the Assistant Charity Commissioner for the region of Baroda has been impleaded as the third respondent.
The appellant in Appeal No. I of 1954 is a Swetamber Murtipujak Jain and a resident of Vejalpar in the district of Punchmahals within the State of Bombay.
He is a Vahivatdar or manager of a Jain public temple or Derasar situated in the same village and the endowed properties appertaining to the temple are said to be of the value of Rs. 5 lakhs.
The petition, out of which this appeal arises, was filed by the appellant on the 29th of May, 1952, before the High Court of Bombay, in its Appellate Side, against the three respondents mentioned above, praying for the issue of a writ in the nature of mandamus or direction ordering and directing the respondents to forbear from enforcing or taking any steps for the enforcement of the Bombay Public Trusts Act, 1950,,or of any of its provisions and parti cularly the provisions relating to registration of public and religious trusts managed by the appellant and payment of contributions levied in respect the same.
The grounds urged in support of the petition were that a number of provisions of the Act convicted with the fundamental rights of the petitioner guaranteed under articles 25 and 26 of the Constitution and that the 1058 contribution levied on the trust was a tax which it was beyond the competence of the State Legislature to impose.
A similar application under article 226 of the Consti tution and Praying for almost the identical relief was filed by the appellants, in the other appeal, namely, Appeal No. 7 of 1954 before the High Court in its Original Side on the 4th of August, 1952.
The petitioners in this case purport to be the present trustees of the Parsi Punchayet Funds and Properties in Bombay registered under the Parsi Public Trusts Registration Act of 1936.
These properties constitute one consolidated fund and they are administered by the trustees for the benefit of the entire Parsi community and the income is spent for specified religious and charitable purposes of a public character as indicated by the various donors.
The petitioners, challenged the validity of the Bombay Public Trusts Act, 1950, substantially on the grounds that they interfered with the freedom of conscience of the petitioners and with their right freely to profess, practise and propagate religion and also with their right to manage their own affairs in matters of religion and thereby contravened the provisions of articles 25 and 26 of the Constitution.
The levy of contribution under section 58 of the Act was also alleged in substance and effect to be a tax on public, religious and charitable trusts, a legislation upon which it was beyond the competency of the State Legislature to enact.
As practically the same questions were involved in both the petitions, the learned Chief Justice of Bombay directed the transfer of the later petition from the Original Side to the Appellate Side of the High Court and both of them were heard together by a Division Bench consisting of the Chief Justice himself and Shah J.
Both the petitions were disposed of by one and the same judgment delivered on the 12th of September, 1952, and the learned Judges rejected all the contentions put forward on behalf of the respective applicants and dismissed the petitions.
The petitioners in both the cases have now come before us in appeal on the strength of certificates granted 1059 by the High Court under article 132(1) of the Constitution.
To appreciate the points that have been canvassed before us by the parties to these appeals, it may be convenient to refer briefly to the scheme and salient features of the impugned Act.
The object of the Act, as stated in the preamble, is to regulate and make better provisions for the administration of public, religious and charitable trusts within the State of Bombay.
It includes, within its scope, all public trusts created not merely for religious but for purely charitable purposes as well and extends to people of all classes and denominations in the State.
The power of superintendence and administration of public trusts is vested, under the Act, in the Charity Commissioner, who is to be appointed by the State Government in the manner laid down in Chapter II.
The State Government may also appoint such number of Deputy and Assistant Charity Commissioners as.
it thinks fit and these officers would be placed in charge of particular regions or particular trusts or classes of trusts as may be considered necessary.
Section 9, with which Chapter III of the Act beigins, defines what 'charitable purposes ' are, and sections 10 and 11 lay down that a public trust shall not be void on the ground of uncertainty, nor shall it fail so far as a religious and charitable purpose is concerned, even if a non charitable or non religious purpose, which is includ ed in it,.
cannot be given effect to.
Chapter IV provides for registration of public trusts.
Section 18 makes it obligatory upon the trustee of every public trust to which the Act applies, to make an application for the registration of the trust, of which he is the trustee.
In case of omission on the part of a trustee to comply with this provision, he is debarred under section 31 of the Act from instituting a suit to enforce any right on behalf of such trust in a court of law.
Chapter V deals with accounts and audit.
Section 32 imposes a duty upon every trustee of a public trust, which has been registered under the Act, to keep regular accounts.
Under section 33, these accounts are to be audited annually, in such manner as may be prescribed.
1060 Section 34 proscribes it to be the duty of the auditor to prepare balance sheets and to report all irregularities in the accounts.
Section 35 lays down how trust money has to be invested, and section 36 prohibits alienation of immovable trust property except by way of leases for specified periods, Without the previous sanction of the Charity Commissioner.
Section 37 authorises the Charity Commissioner and his subordinate officers to enter on and inspect or cause to be entered on and inspected any property belonging to a public trust.
A proviso is added to the section laying down that in entering upon any such property, the officers making the entry shall give reasonable notice to the trustee and shall have due regard to the religious practices and usages of the trust.
Among other powers and functions of the Charity Commissioner, which are detailed in Chapter VII, section 44 enables a Charity Commissioner to be appointed to act as a trustee of a public trust by a court of competent jurisdiction or by the author of the trust.
Section 47 deals with the powers of the court to appoint new trustee or trustees and under clause (3) of this section, the court, after making enquiry, may appoint the Charity Commissioner or any other person as a trustee to fill up the vacancy.
Section 48 provides for the levy of administrative charges in cases where the Charity Commissioner is appointed a trustee.
Section 50 appears to be a substitute for section 92 of the Civil Procedure Code and contains provisions of almost the same character in respect to suits regarding public trusts.
One of the reliefs that can be claimed in such a suit is a declaration as to what proportion of the trust property or interest therein shall be allocated to any particular object of the trust.
Section 55 purports to lay down the rule of cy pres in relation to the administration of religious and charitable trusts; but it extends that doctrine much further than is warranted by the principles laid down by the Chancery Courts in England or recognised by judicial pronouncements in this country.
Section 56 deals with the powers of the courts in relation to the application of the cy pres doctrine.
Section 57 provides for the establishment of a fund to be called "The 1061 Public Trusts Administration Fund which shall vest in the Charity Commissioner and clause (2) lays down what sums shall be credited to this fund.
Section 58 makes it obligatory on every public trust to pay to this fund a contribution at such time and in such manner as may be Prescribed.
Under the, rules prescribed by the Government on this subject, the contribution has been fixed at the rate of 2 per cent.
per annum upon the gross annual income of every public trust.
Failure .to pay this contribution will make the trustee liable to the penalties provided for in section 66 of the Act.
Section 60 provides that the Public Trusts Administration Fund shall, subject to the provisions of the Act and subject to the general and special orders of the State Government, be applicable to the.
payment of charges for expenses incidental to the regulation of public trusts and generally for carrying out the provisions of the Act.
Sections 62 to 66, which are comprised in Chapter IX of the Act, deal with the appointment and qualifications of assessors.
The function of the assessors is to assist and advise the Charity Commissioner or his subordinate officers in the matter of making enquiries which may be necessary under the provisions of the Act.
Chapter X prescribes the penalties that will be inflicted on trustees in case of their violating any of the pro visions of the Act.
Chapter XI deals with procedural matters in connection with jurisdiction of courts and rights of appeal, and the twelfth or the last chapter deals with certain miscellaneous matters.
These, in brief, are the provisions of the Act which are material for our present purpose.
The contentions that have been raised by the learned counsel, who appeared in support of the appeals, may be considered under two heads.
In the first place, a number of provisions of the Act have been challenged as invalid on the ground that they conflict with freedom of religion and the right of the religious denominations or sects, represented by the appellants in each case, to manage their own, affairs in matter of religion guaranteed under articles 25 and 26 of the Constitution.
The sections of the Act, the validity of which has been challenged on this ground are sections 18, 31 to 37, 44, 1062 47, 48 50, clauses (e) and (g), 55, 58 and 66.
The second head of the appellants argument relates to the levy of contribution as laid down in sections 57 and 58 of the Act and the argument is that this being in substance the levy of a tax, it was beyond the competence of the State Legislature to enact such a provision.
As regards the first branch of the contention, a good deal of argument has been advanced before us relating to the measure and extent of the fundamental rights guaranteed under articles 25 and 26 of the Constitution.
It will be necessary to address ourselves to this question at the outset, because without a clear appreciation of the scope and am bit of the fundamental rights embodied in the two articles of the Constitution, it would not be possible to decide whether there has been a transgression of these rights by any of the provisions of the Act.
This identical question came up for consideration before this court in Civil Appeal No. 38 of 1953 (The commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Tirtha Swamiar(1) and it was discussed at some length in our judgment in that case.
It will be sufficient for our present purpose to refer succinctly to the main principles that this court enunciated in that judgment.
Article 25 of the Constitution guarantees to every person and not merely to the citizens of India the freedom of conscience and the right freely to profess practise and propagate religion.
This is subject, in every case, to public order, health and morality.
Further exceptions are engrafted upon this right by clause (2) of the article.
Sub clause (a) of clause (2) saves the power of the State to make laws regulating or restricting any economic financial, political or other secular activity which may be associated with religious practice; and sub clause (b) reserves the State 's power to make laws providing for social reform and social welfare even though they might interfere with religious practices.
Thus, subject to the restrictions which this article imposes, every person has a fundamental right under our Constitution not merely to entertain such religious belief as may be approved of by his judgment or conscience but to exhibit his belief and ideas in such (1) ; 1063 overt acts as are enjoined or sanctioned by his religion and further to propagate his religious views for the edification of others.
It is immaterial also whether the propagation is made by a person in his individual capacity or on behalf of any church or institution.
The free exercise of religion by which is meant the performance of outward acts in pursuance of religious belief, is, as stated above, subject to State regulation imposed to secure order, public health and morals of the people.
What sub clause (a) of clause (2) of article 25 contemplates is not State regulation of the religious practices as such which are protected unless they run counter to public health or morality but of activities which are really of an economic, commercial or political character though they are associated with religious practices.
So far as article 26 is concerned, it deals with a particular aspect of the subject of religious freedom.
Under this article, any religious denomination or a section of it has the guaranteed right to establish and maintain institutions for religious and charitable purposes and to manage in its own way all affairs in matters of religion.
Rights are also given to such denomination or a section of it to acquire and own movable and immovable properties and to administer such properties in accordance with law.
The language of the two clauses (b) and (d) of article 26 would at once bring out the difference between the two.
In regard to affairs in matters of religion, the right of management given to a religious body is a guaranteed fundamental right which no legislation can take away.
On the other hand, as regards administration of property which a religious denomination is entitled to own and acquire, it has undoubtedly the right to administer such property but only in accordance with law.
This means that the State can regulate the administration of trust properties by means of laws validly enacted but here again it should be remembered that under article 26 (d), it is the religious denomination itself which has been given the right to administer its pro perty in accordance with any law which the State may validly impose.
A law, which takes away the right of 138 1064 administration altogether from the religious denomination and vests it in any other or secular authority, would amount to violation of the right which is guaranteed by article 26 (d) of the Constitution.
The moot point for consideration, therefore, is where is the line to be drawn between what are matters of religion and what are not ? Our Constitution makers have made no attempt to define what 'religion ' is and it is certainly not possible to frame an exhaustive definition of the word 'religion ' which would be applicable to all classes of persons.
As has been indicated in the Madras case referred to above, the definition of religion given by Fields J. in the American case of Davis vs Beason(1), does not seem to us adequate or precise.
"The term 'religion" ', thus observed the learned Judge in the case mentioned above, "has refer ence to one 's views of his relations to his Creator and to the obligations they impose of reverence for His Being and character and of obedience to His Will.
It is often confounded with cultus or form of worship of a particular sect, but is distinguishable from the latter".
it may be noted that 'religion ' is not necessarily theistic and in fact there are well known religions in India like Buddhism and Jainism which do nor believe in the existence of God or of any Intelligent First Cause.
A religion undoubtedly has its basis in a system of beliefs and doctrines which are regarded by those who profess that religion to be conducive to their spiritual well being, but it would not be correct to say, as seems to have been suggested by one of the learned Judges of the Bombay High Court, that matters of religion are nothing but matters of religious faith and religious belief.
A religion is not merely an opinion, doctrine or belief.
It has its outward expression in acts as well.
We may quote in this connection the observations of Latham C. J. of the High Court of Australia in the case of Adelaide Company vs The Commonwealth(2), where the extent of protection given to religious freedom by section 116 of the Australian Constitution came up for consideration.
(1)133 U.S. 33 (2) ; , 124.
1065 "It is sometimes suggested in discussions on the subject of freedom of religion.
that, though the civil Government should not interfere with religious opinions, it nevertheless may deal as it pleases with any acts which are done in pursuance of religious belief without infringing the principle of freedom of religion.
It appears to me to be difficult to maintain this distinction as relevant to the interpretation of section 116.
The section refers in express terms to the exercise of religion, and therefore it is intended to protect from the operation of any Commonwealth laws acts which are done in the exercise of religion.
Thus the section goes far beyond protecting liberty of opinion.
It protects also acts done in pursuance of religious belief as part of religion.
, In our opinion, as we have already said in the Madras case, these observations apply fully to the provision regarding religious freedom that is embodied in our Constitution.
Religious practices or performances of acts, in pursuance of religious belief are as much apart of religion as faith or belief in particular doctrines.
Thus if the tenets of the Jain or the Parsi religion lay down that certain rites and ceremonies are to be performed at certain times and in a particular manner, it cannot be said that these are secular activities partaking of commercial or economic character simply because the involve expenditure of money or employment of priests or the use of marketable commodities.
No outside authority has any right to say that these are not essential parts of religion and it.
is not open to the secular authority of the State to restrict or prohibit them in any manner they like under the guise of administering the trust estate.
Of course, the scale of expenses to, be incurred in connection with these religious observances may be and is a matter of administration of property belonging to religious institutions; and if the expenses on these heads are likely to deplete the endowed properties or affect the stability of the institution,, proper control can certainly be exercised by State agencies as the law provides.
We may refer in this connection to the observation of 1066 Davar J. in the case of Jamshedji vs Soonabai(1), and although they were made in a case where the question was whether the bequest of property by a Parsi testator for the purpose of perpetual celebration of ceremonies like Muktad baj, Vyezashni, etc., which are sanctioned by the Zoroastrian religion were valid charitable gifts, the observations, we think, are quite appropriate for our present purpose.
"If this is the belief of the community" thus observed the learned Judge, "and it is proved undoubtedly to be the belief of the Zoroastrian community, a secular Judge is bound to accept that belief it is not for him to sit in judument on that belief, he has no right to interfere with the conscience of a donor who makes a gift in favour of what he believes to be the advancement of his religion and the ,Welfare of his community or mankind".
These observations do, in our opinion, afford an indication of the measure of protection that is given by article 26(b) of our Constitution.
The distinction between matters of religion and those of secular administration of religious properties may, at times, appear to be a thin one.
But in cases of doubt, as Chief Justice Latham pointed out in the case(2) referred to above, the court should take a common sense view and be actuated by considerations of practical necessity.
It is in the light of these principles that we will proceed to examine the different provisions of the Bombay Public Trusts Act, the validity of which has been challenged on behalf of the appellants.
We will first turn to the provisions of the Act which relate to registration of trusts.
Under section 18, it is incumbent on the trustee of every public, religious or charitable trust to get the same registered.
Section 66 of the Act makes it an offence for a trustee not to comply with this provision and prescribes punishment for such offence.
Section 31 provides for further compulsion by laying down that no suit shall lie on behalf of a public trust to enforce its right in any court of law unless the trust is registered.
A compulsory payment (1) (2) Vide Adelaide Company vs The commonwealth, 67 C.L.R. 116, i29. 1067 of a fee of Rs. 25 has also been prescribed by the rules framed by the Government for registration of a trust.
The provisions of registration undoubtedly have been made with a view to ensure due supervision of the trust properties and the exercise of proper control over them.
These are matters relating to administration of trust property as contemplated by article 26(d) of the Constitution and cannot, by any stretch of imagination be held to be an attempt at interference with the rights of religious institutions to manage their religious affairs.
The fees leviable under section 18 are credited to the Public Trust Administration Fund constituted under section 57 and are to be spent for meeting the charges incurred in the regulation of public trusts and for carrying into effect the provisions of the Act.
The penalties provided are mere consequential provisions and involve no infraction of any fundamental right.
It has been argued by the learned counsel for the appellants that according to the tenets of the Jain religion the property of the temple and its income exist for one purpose only, viz., the religious purpose, and a direction to spend money for purposes other than those which are considered sacred in the Jain scriptures would constitute interference with the freedom of religion.
This contention does not appear to us to be sound.
These expenses are incidental to proper management and administration of the trust estate like payment of municipal rates and taxes, etc., and cannot amount to diversion of trust property for purposes other than those which are prescribed by any religion.
The next group of sections to which objections have been taken comprises sections 32 to 37.
Section 32 compels a trustee of a public trust to keep accounts in such form as may be prescribed by the Charity Commissioner.
Section 33 provides for the auditing of such accounts and section 34 makes it the duty of the auditor to prepare balance sheets and to report irregularities, if any, that are found in the accounts.
These are certainly not matters of religion and the objection raised with regard to the validity of these provisions seem to be altogether baseless Section 35 relates to investment of money belonging to trusts.
It is a well 1068 settled principle of law that trustees in charge of trust properties should not keep cash money in their hands which are not necessary for immediate expenses; and a list of approved securities upon which trust money could be invested is invariably laid down in every legislation on the subject of trust.
There is nothing wrong in section 36 of the Act.
Immovable trust properties are inalienable by their very nature and a provision that they could be alienated only with the previous sanction of the Charity Commissioner seems to us to be a perfectly salutary provision.
Section 37 has been objected to on the ground that an unrestricted right of entry in any religious premises might offend the sentiments of the followers of that religion; but the section has expressly provided that the officers making the entry shall give reasonable notice of their intended entry to the trustees and shall have due regard to the religious practice and usages of the trust.
Objection has next been taken to sections 44 and 47 of the Act.
Section 44 lays down that the Charity Commissioner can be appointed to act as trustee of a public trust by a court of competent jurisdiction or by the author of the trust.
If the author of the trust chooses to appoint the Charity Commissioner a trustee, no objection can possibly be taken to such action; but if the court is authorised to make such appointment, the provisions of this section in the general form as it stands appear to us to be open to serious objection.
If we take for example the case of a religious institution like a Math at the head of which stands the Mathadhipati or spiritual superior.
The Mathadhipati is a trustee according to the provisions of the.
Act and if the court is competent to appoint the Charity Commissioner as a superior of a Math,.
the result would be disastrous and it would amount to a flagrant violation of the constitutional guarantee which religions institutions have under the@ Constitution in regard to the management of its religious affairs.
This is not a secular affair at all relating to the administration of the trust property.
The very object of a Math is to maintain a competent line of religious teachers for propagating and strengthening the religious 1069 doctrines of a particular order or sect and as there could be no Math without a Mathadhipati as its spiritual head, the substitution of the Charity Commissioner for the superior would mean a destruction of the institution altogether.
The evil is further aggravated by the provision of clause (4) of the section which says that the Charity Commissioner shall be the sole trustee and it shall not be lawful to appoint him as a truste along with other persons.
In our opinion, the provision of section 44 relating to the appointment of the Charity Commissioner as a trustee of any public trust by the court without any reservation in regard to religious institutions like temples and Maths is unconstitutional and must be held to be void.
The very same objections will apply to the provisions of clauses (3) to (6) of section 47.
The court can certainly be empowered to appoint a trustee to fill up a vacancy caused by any of the reasons mentioned in section 47(1), and it is quite a salutary principle that in making the appointment the court should have regard to matters specified in clause (4) of section 47 ; but the provision of clause (3) to the extent that it authorises the court to appoint .the
Charity Commissioner as the trustee and who according to the provisions of clause (5) is to be the sole trustee cannot be regarded as valid in regard to religious institutions of the type we have just indicated.
To allow the Charity Commissioner to function as the Shebait of a temple or the superior of a Math would certainly amount to interference with the religious affairs of this institution.
We hold accordingly that the provisions of clauses (3) to (6) of section 47 to the extent that they relate to the appointment of the Charity Commissioner as a trustee of a religious trust like temple and Math, are invalid.
If these provisions of section 47 are eliminated, no objection can be taken to the provision of section 48 as it stands.
This section will in that event be confined only to cases where the Charity Commissioner has been appointed a trustee by the author of the trust himself and the administrative charges provided by this section can certainly be levied on the trust.
1070 We now come to section 50 and exception has been taken to clauses (e) and (g) of that section.
It is difficult to see how these provisions can at all be objected to.
Section 50, as has been said above, is really a substitute for section 92 of the Civil Procedure Code and relates to suits in connection with public trusts Clause (e) of section 50 is an exact reproduction of clause (e) of section 92 of the Civil Procedure Code and clause (g) also reproduces substantially the provision of clause (g) of section 92 of the Civil Procedure Code.
There is no question of infraction of any fundamental right by reason of these provisions.
A more serious objection has been taken by the learned counsel for the appellants to the provisions of sections 55 and 56 of the impugned Act and it appears to us that the objections are to a great extent well founded.
These sections purport to lay down how the doctrine of cy pres is to be applied in regard to the administration of public trust of a religious or charitable character.
The doctrine of cy pres as developed by the Equity Courts in England, has been adopted by out Indian courts since a long time past.
The provisions of sections 55 and 56, however, have extended the doctrine much beyond its recognised limits and have further ,introduced certain principles which run counter to well established rules of law regarding the administration of charitable trusts.
When the particular purpose for which a charitable trust is created fails or by reason of certain circumstances the trust cannot be carried into effect either in whole or in part, or where there is a surplus left after exhausting the purposes specified by the settlor, the court would not, when there is a general charitable intention expressed by the settlor, allow the trust to fail but would execute it cy pres, that is to say, in some way as nearly as possible to that which the author of the trust intended.
In such cases, it cannot be disputed that the court can frame a scheme and give suitable directions regarding the objects upon which the trust money can be spent.
It is we 11 established, however, that where the donors intention can be given effect to, the court has no authority to sanction any deviation from the intentions expressed 1071 by the settlor on the grounds of expediency and the court cannot exercise the power of applying the trust property or its income to other purposes simply because it considers them to be more expedient or more beneficial than what the settlor had directed(1).
But this is exactly what has been done by the provision of section 55(c) read with section 56 of the Act.
These provisions allow a diversion of property belonging to a public trust or the income thereof to objects other than those intended by the donors if the Charity Commissioner is of opinion, and the court confirms its opinion and decides, that carrying out wholly or partially the original intentions of the author of the trust or the object for which the trust was created is not wholly or partially expedient, practicable, desirable or necessary; and that the property or income of the public trust or any portion thereof should be applied to any other charitable or religious object.
Whether a provision like this is reasonable or not is not pertinent to our enquiry and we may assume that the legislature, which is competent to legislate on the subject of charitable and religious trust, is at liberty to make any provision which may not be in consonance with the existing law; but the question before us is, whether such provision invades any fundamental right guaranteed by our Constitution, and we have no hesitation in holding that it does so in the case of religious trusts.
A religious sect or denomination has the undoubted right guaranteed by the Constitution to manage its own affairs in matters of religion and this includes the right to spend the trust property or its income for the religious purposes and objects indicated by the founder of the trust or established by usage obtaining in a particular institution.
To divert the trust property or funds for purposes which the Charity Commissioner or the court considers expedient or proper, although the original objects of the founder can still be carried out, is to our minds an unwarrantable encroachment on the freedom of religious institutions in regard to the management of their religious affairs.
It is perfectly true, as has been stated (1) Vide Halsbury, 2nd Edn., VOl.
IV, P. 228, 139 1072 by the learned counsel for the appellants, that it is an established maxim of the Jain religion that Divadraya or religious property cannot be diverted to purposes other than those which are considered sacred in the Jain scriptures.
But apart from the tenets of the Jain religion, we consider it to be a violation of the freedom of religion and of the right which a religious denomination has under our Constitution to manage its own affairs in matters of religion, to allow any secular authority to divert the trust money for purposes other than those for which the trust was created.
The State can step in only when the trust fails or is incapable of being carried out either in whole or in part.
We hold, therefore, that clause (3) of section 55, which contains the offending provision and the corresponding provision relating to the powers of the court occurring in the latter part of section 56(1), must be, held to be void.
The only other section of the Act to which objection has been taken is section 58 and it deals with the levy of contribution upon each public trust, at certain rates to be fixed by the rules, in proportion to the gross annual income of such trust.
This together with the other sums specified in clause (2) of section 57 makes up the Public Trusts Administration Fund, which is to be applied for payment of charges incidental to the regulation of public trusts and for carrying into effect the provisions of this Act.
As this contribution is levied purely for purposes of due administration of the trust property and for defraying the expenses incurred in connection with the same, no objection could be taken to the provision of the section on the ground of its infringing any fundamental rights of the appellants.
The substantial, contention that has been raised in regard to the validity of this provision comes, however, under the second head of the appellants ' arguments indicated above.
The contention is that the contribution which is made payable under this section is in substance a tax and the Bombay State Legislature was not competent to enact such provision within the limits of the authority exercisable by it under the Constitution.
This raises a point of some importance which requires to be examined carefully.
1073 It is not disputed before us that if the contribution that is levied under section 58 is a tax, a legislation regarding it would be beyond the competence of the State Legislature.
Entries 46 to 62 of List II in Schedule VII of the Constitution specify the different kinds of taxes and duties in regard to which the State Legislature is empowered to legislate and a tax of the particular type that we have here is not covered by any one of them.
It does not come also under any specific entry in List III or even of List I. The position, therefore, is that if the imposition is held to be a tax, it could come either under entry 97 of List I, which includes taxes not mentioned in Lists II and III or under article 248 (1) of the Constitution and in either case it is Parliament alone that has the competency to legislate upon the subject.
If, on the other hand, the imposition could be regarded as "fees", it can be brought under entry 47 of the Concurrent List, the Act itself being a legislation under entries 10 and 28 of that List.
The whole controversy thus centers round a point as to whether the contribution leviable under section 50 is a fee or tax and what in fact are the indicia and characteristics of a fee which distinguish it from a tax.
This identical question came up for consideration before this court in Civil Appeal No. 38 of 1953 referred to above, in, connection with the provision of section 76 of the Madras Religious and Charitable Endowments Act, and the view which we have taken in that case regarding the proper criterion for determining whether an imposition is a fee or tax is in substantial agreement with the view taken by the Bombay High Court in the present case.
As the matter has been discussed at some length in the Madras case, it will not be necessary to repeat the same discussions 'over again.
It will be enough if we indicate the salient principles that were enunciated by this court in its judgment in the Madras case mentioned above.
We may start by saying that although there is no generic difference between a tax and a fee and in fact they are only different forms in which the taxing power of a State manifests itself, our Constitution has, in fact, made a distinction between a tax and a fee for, 1074 legislative purposes.
While there are various entries in the three legislative lists with regard to various forms of taxation, there is an entry at the end of each one of these lists as regards fees ' which could be levied in respect of every one of the matters that are included therein .This distinction is further evidenced by the provisions of the Constitution relating to Money Bills which areembodied in articles 110 and 199.
Both these articles provide that a bill should not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or for the demand or payment of fees for licences or fees for services rendered, whereas a bill relating to imposition, abolition or regulation of a tax would always be recckoned as a Money Bill.
There is no doubt that a fee resembles a tax in many respects and the question which presents difficulty is, what is the proper test by which the one could be distinguished from the other? A tax is undoubtedly in the nature of a compulsory exaction of money by a public authority for public purposes, the payment of which is enforced by law.
But the other and equally important characteristic of a tax is, that the imposition is made for public purpose to meet the general expenses of the State without reference to any special advantage to be conferred upon the payers of the tax.
It follows, therefore, that although a tax may be levied upon particular classes of persons or particular kinds of property, it is imposed not to confer any special benefit upon individual persons and the collections are all merged in the general revenue of the State to be applied for general public purposes.
Tax is a common burden and the only return which the taxpayer gets is participation in the common benefits of the State.
Feees on the other hand, are payments primarily in the public interest, but for some special service rendered or some special work done for the benefit of those from whom the payments are demanded.
Thus in fees there is always an element of quid pro quo which is absent in a tax.
It may not be possible to prove in every case that the fees that are collected by the Government approximate to the expenses that are incurred by it in rendering any particular kind of services or in 1075 performing any particular work for the benefit of certain individuals.
But in order that the collections made by the Government can rank as fees, there must be co relation between the levy imposed and the expenses incurred by the State for the purpose of rendering such services.
This can be proved by showing that on the face of the legislative provision itself, the collections are not merged in the general revenue but are set apart and appropriated for rendering these services.
Thus two elements are essential in order that a payment may be regarded as a fee.
In the first place, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly and in the second place, the amount collected must be ear marked to meet the expenses of rendering these services and must not go to the general revenue of the State to be spent for general public purposes.
As has been pointed out in the Madras case mentioned above, too much stress should not be laid on the presence or absence of what has been called the Coercive element.
It is not correct to say that as distinguished from taxation which is compuslory payment, the payment of fees is always voluntary, it being a matter of choice with individuals either to accept the service or not for which fees are to be paid.
We may cite for example the case of a licence fee for a motor car.
It is argued that this would be a fee and not a tax, as it is optional with a person either to own a motor car or not and in case be does not choose to have a motor car, he need not pay any fees at all.
But the same argument can be applied in the case of a house tax or land tax.
Such taxes are levied only on those people who own lands or houses and it could be said with equal propriety that a man need not own any house or land and in that event he could avoid the payment of these taxes.
In the second place, even if the payment of a motor licence fee is a voluntary payment, it can still be regarded as a tax if the fees that are realised on motor licences have no relation to the expenses that the Government incurs in keeping an office or bureau for the granting of licences and the collections are not appropriated for that purpose but 1076 go to the general revenue.
Judging by this test, it appears to us that the High Court was perfectly right in holding that the contributions imposed under section 58 of the Bombay Public Trusts Act are really feEs and not taxes.
In the first place, the contributions, which are collected under section 58, are to be credited to the Public Trusts Administration Fund as constituted under section 57.
This is a special fund which is to be applied exclusively for payment of charges for expenses incidental to the regulation of public trusts and for carrying into effect the provisions of the Act.
It vests in the Charity Commissioner and the custody and investments of the moneY belonging to the funD and the disbursement and pAyment therefrom are to be effected not in the manner in which general revenues are disbursed, but in the way prescribed by the rules made under the Act.
The collections, therefore, are not merged in the general revenue, but they axe earmarked and set apart for this particular purpose.
it is true that under section 6A of the Act, the officers and servants appointed under the Act are to draw their pay and allowances from the Consolidated Fund of the State but we agree with what has been said by Mr. Justice Shah of the Bombay High Court that this provision is made only for the purpose of facilitating the administration and not with a view to mix up the fund with the general revenue, collected for Government purposes.
This would be clear from the provision of section 6B which provides that out of.
the Public Trusts Administration Fund all the costs, which the State Government may determine on account of pay, pension, leave and other allowances of all.
the officers appointed under this Act, shall ' be paid.
It is the Public Trusts Administration Fund, therefore, which meets all the expenses of the administration of trust property within the scheme of the Act, and it is to meet the expenses of this administration that these collections are levied.
As has been said by the learned Judges of the High Court, according to the concept of a modern State, it is not necessary that services should be rendered only at the request of particular people, it is enough that payments are demanded for 1077 rendering services which the State considers beneficial in the public interests and which the people have to accept whether they are willing or not.
Our conclusion, therefore, is that section 58 is not ultra vires of the State Legislature by reason of the fact that it is not a tax but a fee which comes within the purview of entry 47 of List III in Schedule VII of the Constitution.
The result, therefore, is that in our opinion the appeals are allowed only in part and a mandamus will issue in each of these cases restraining the State Government and the Charity Commissioner from enforcing against the appellants the following provisions of the Act to wit : (i) Section 44 of the Act to the extent that it relates to the appointment of the Charity Commissioner as a trustee of religious public trust by the court, (ii) the provisions of clauses (3) to (6) of section 47, and (iii) clause (c) of section 55 and the part of clause (1) of section 56 corresponding thereto.
The other prayers of the appellants stand dismissed.
Each party will bear hi own costs in both the appeals.
| IN-Abs | Held, that the provision of a. 44 of the Bombay Public Trust Act, 1950, relating to the appointment of the Charity Commissioner as a trustee of any public trust by the court without any reservation in regard to religious institutions like temples and Maths is unconstitutional and must be held to be void.
The provisions of el.
(3) to (6) of a. 47 of the Act to the extent that they relate to the appointment of the Charity Commissioner as a trustee of a religious trust like temple and Math are unconstitutional and must be held to be void.
A religious sect or denomination has.
the undoubted right guaranteed by the Constitution to manage its own affairs in matters of religion and this includes the right to spend the trust property or its income for religion and for religious purposes and objects indicated by the founder of the trust or established by ussage 137 1056 obtaining in a particular institution.
To divert the trust property or funds for purposes which the Charity commissioner or the court considers expedient or proper, although the original objectes of the founder can still be carried out, is an unwarrantable encroachment on the freedom of religious institutions in regard to the management of their religious affairs.
Therefore cl.
(3) of section 55, which contains the offending provision and the corresponding provision relating to the powers of the court occurring in the latter part of section 56(1), must be held to be void.
Section 58 of the Act is not ultra vires of the State Legislature because the contribution imposed under the section is not a tax but a fee which comes within the purview of entry 47 of List III in Schedule VII of the Constitution.
Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar, ( ; Davis vs Beason ; , Adelaide Company vs The Commonwealth ; , 124) and Tamshed Ji vs Soonabai [1919] (I.L.R referred to.
|
minal Appeal No. 175 of 1967.
Appeal by special leave from the judgment and order dated May 17, 1967 of the Allahabad High Court, Lucknow Bench in Criminal Appeal No. 72 of 1967 and Capital Sentence Reference No. 9 of 1967.
section P. Sinha.
and M. I. Khowaja, for the appellants.
G. N. Dikshit and O. P. Rana,, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave by Ram Charan, Duila rey and Ram Bux is directed against the judgment of the Allahabad High Court, Lucknow Bench, confirming the convictions under section 302, read with section 34, I.P.C. Ram Charan and Dularey were sentenced to death while Ram Bux was sentenced to imprisonment for life.
355 The relevant facts in brief are as follows : On December 24, 1965, at about 8 a.m. four persons started for Lucknow on two cycles; Shanker Singh and Radhey Shyam were on one cycle and Surat Singh and Bachchu Lal on another.
Radhey Shyam had some business in Lucknow, including consulting Sri Pal Singh, Advocate, P.W. 20, regarding the preparation of a reply to a notice received by him.
After the work was finished the four left Lucknow.
It appears that Radhey Shyam was sitting on the carrier of the cycle driven by Shankar Singh, and Bachchu Lal was sitting on the carrier of the cycle driven by Surat Singh.
Radhey Shyam carried a leather bag in which he had kept money which he had received as the sale proceeds of jau sold by him in Lucknow.
For some reasons which need not be detailed, Shankar Singh and Radhey Shyam went ahead of Surat Singh and Bachchu Lal, and the distance between them when they came near about the scene of occurrence was, according to Surat Singh, between 1 1/2 and 2 furlongs.
When Shankar Singh and Radhey Shyam reached near the drain of Rastogi, they met Ram Charan, accused.
Radhey Shyam got down from the cycle and started walking with Ram Charan, while Shankar Singh followed a little behind.
Then the attack on Radhey Shyam took place and is described thus by Shankar Singh : "When we reached the grove of Durga Maharaj ' then Ram Bux and Dularey accused were sitting at the well.
Then Ram Charan by extending his hands (Kantiya Kar) caught hold of Radhey Shyam and threw him down on his face and after drawing his hands towards his back sat down catching him.
Dularey and Ram Bux came up running.
Dularey had a Banka and Ram Bux had a lathi.
Ram Charan told Dularey, 'Bring the Banka, why are you delaying it. ' Thereupon I cried out.
Then Dularey gave 5 6 7 Banka blows to Radhev Shyam on his neck.
As I was crying so Ram Charan saia 'Beat Thakurwa.
He will go to the village and tell that such and such persons had hacked Radhey Shyam. ' At this Ram Bux gave 5 6 Lathi blows to me.
By that time Surat Singh and Bachoo Mahraj also came there and Rupan also came.
" Surat Singh corroborates this statement.
He says that he saw all this from a distance of 1 'i furlongs.
Bachchu Lal, P.W. 7, also corroborates this version.
He says that on seeing the attack he and Surat Singh ran towards the scene of occurrence.
He further adds that when they were at a distance of about 30 35 paces, the accused ran away.
The First Information Report was lodged at the police station four miles from the scene of the occurrence at 17.30 hours by Shanker Singh.
356 The learned counsel for the appellants says that the First Information Report was written much later than the time men tioned above.
He relies first on the fact that the first page of the First Information Report was written very closely and the second page written not so closely.
He suggests that the draft was prepared sometime later and then it was copied into the Register in which first information reports are written; the writer having left only two pages for the report to be transcribed wanted to be quite certain that the report would finish in two pages.
This suggestion is, however, denied by Liaqat Hussain, P.W. 6, who was posted as Head Moharrir at the police station Kakori in 1965.
He says that he wrote on the first page of the report closely because he wanted that the whole matter should be completed on that page and that there was no other reason; after finishing the first page when he started writing on the second page then he did not write closely as the report had come to an end.
He denied the suggestion that two pages were left for writing this report.
This explanation seems to be true.
The special report of this case was sent, according to this witness, on December 24, 1965, at 7.55 p.m. through Abdul Rashid, Constable, who was called as Court Witness.
He says that he delivered the special report at the place of S.S.P. I at 9.10 a.m. on December 25, 1965.
The special report was sent to S.S.P. D.M., Additional S.P.C.O., S.D.M., and D.C.R.R.S. on Invoice Book at No. 54 which was exhibited in Court.
The learned counsel criticizes his evidence on the ground that there is no reason why he should have slept on the way.
The reason given by Abdul Rashid for breaking his journey on the way is that the ekka drivers and riksha drivers were charging too much.
In our view, there is no force in this contention of the learned counsel for the appellants.
The second ground of attack against the First Information Report is that the report itself discloses that it could not have been dictated by Shanker Singh.
He says that Shanker Singh was literate and yet the First Information Report bears his thumb mark.
He further says that it mentions the names of the fathers of Radhey Shyam, Ram Charan, Mata Pershad, Dayal, Lallu and Ram Bux, but in cross examination Shanker Singh admitted that he did not know the names of Ram Charan 's father and Rain Dayal 's father, and also he did not know the name of Ram Bux 's father.
He, however, further added in cross examination that at the time he gave the First Information Report, the names of the fathers of Ram Charan and Ram Dayal were then in his memory.
Another fact relied on by the learned counsel is that the First Information Report contains the word "sazish" while in cross examination Shanker Singh admitted that he did not know the meaning, of this word.
He urges that looking at all these circumstances it is clear that the First Information Report was either 357 written at the scene of occurrence after the Investigating Officer had gone there or that a draft was first written on a piece of paper some people supplying the names of the fathers of the various persons and suggesting words.
We are, however, unable to accede to this contention.
It may well be that the chowkidar who accompanied Shanker Singh supplied the name of the father of a particular person and the Head Moharrir may have substituted a word or two of his own, without changing the meaning.
The Investigating Officer went straightaway to the scene of the occurrence and started investigation.
None of these facts, in our opinion, cast doubt on the prosecution story.
It may be that Shanker Singh is able to sign but he put his thumb impression not only on the First Information Report but on his statement under section 164, Cr.
P.C., and this statement before the Committing Magistrate.
It may be that It was felt safer to have his thumb impression which he could not effectively deny later.
But the fact that the special report 'was sent on December 24, 1965, in the evening, dispels any doubt about the fact that the First Information Report was lodged at 5.30 p.m. on December 24, 1965.
Dealing with the eye witnesses, the learned counsel drew our attention to the endorsement which was made by the Magistrate who took down the statements under section 164, Cr.
Below he statements is appended a certificate in the following form "Certified that the statement has been made voluntarily.
The deponent was warned that he is making the statement before the 1st class Magistrate and can be used against him.
Recorded in my presence.
There is no police here.
The witness did not go out until all the witnesses had given the statement.
" This certificate appears below the statements of Shanker Singh, Surat Singh and Bachchu Lal.
The learned counsel rightly suggests that the endorsement is not proper.
But we are unable to pay that it follows from this endorsement that any threat was given to these witnesses or that it necessarily makes the evidence given by the witnesses in Court suspect or less believable.
The learned counsel further relies on the following passage rom the judgment of Dhavle J., in Emperor vs Manu Chik(1) "There is yet another circumstance which calls for remark, and that is the examination, of Ladhu and Rebi among other witnesses under section 164, Criminal P.C. it was pointed out by Prinsep, J., in the well known case in Queen Empress vs Jadub Das(2) that a statement of a (1) A.I.R. 1938 Pat 290 295.
(2) 358 witness obtained under this section always raises a suspicion that it has not been voluntarily made, and that the section was not intended to enable the police, to obtain a statement from some person (in that case it was an incriminating statement) and as it were to put a seal on that statement by sending in that person to a Magistrate practically under custody, to be examined before the judicial inquiry or trial, and therefore compromised in his evidence when judicial proceedings are regularly taken.
" These observations were dissented from by the Andhra Pradesh High Court in In re : Gopisetti Chinna Venkata Subbiah(1) and Subba Rao, C.J., preferred the following observations of the, Nagpur High Court in Parmanand vs Emperor(1) "We are of the opinion that if a statement of a witness is previously recorded under section 164, Criminal Procedure Code, it leads to an inference that there was a time when the police thought the witness may change but if the witness sticks to the statement made by him throughout, the mere fact that his statement was previously recorded under section 164 will not be sufficient to discard it.
The Court, however, ought to receive it with caution and if there are other circumstances on record which lend support to the truth of the evidence of such witness, it can be acted upon.
" We agree with Subba Rao, C.J., that the observations of the learned Judges of the Nagpur High Court lay down the lay correctly.
In the result the appeal fails and is dismissed.
V.P.S. Appeal dismisses (1) I.L.R. (2) A.I.R. 1940 Nag. 340.
| IN-Abs | The statements of eye witnesses to a murder were recorded under section 164, Criminal Procedure Code, and a certificate was appended to each of the statements to the effect, that the deponent was warned that he was making the statement before a Magistrate and that it might be used against him.
On the question as to the weight to, be attached to the evidence given by the witnesses in court, HELD : It did not follow from the endorsement that any threat was given to the witnesses or that it necessarily made their evidence in court suspect or less believable.
[357 G] If a witness, in his evidence in court sticks to the version given by him in the statement under section 164, Cr.
P.C. the mere fact that the statement was previously recorded under the section is not sufficient to discard his .,evidence.
The only inference that can be drawn is that there, was a time when the police thought the witness may change his evidence.
The Court.
%however, ought to.
receive the evidence with caution.
[358 D] Observations in Parmanand vs Emperor, A.I.R. 1940 Nag. 340, 344 and In re : Gopisetti Chinna Venkatasubbialh.
, I.L.R. , 639.
approved.
Observations contra in Emperor vs Manu Chik, A.I.R. 1938 Patna 290, 295, disapproved.
|
Appeal No. 1943 of 1967.
Appeal from the judgment and order dated October 24, 1967 of the Patna High Court in Civil Writ Jurisdiction Case No. 283 of 1966.
Basudev Prasad and section N. Prasad, for the appellant.
M. C. Chagla, Saptmi Jha and B. P. Jha, for respondent No. 1.
U. P. Singh, for respondent No. 2.
The Judgment of the Court was delivered by Shah, J.
On January 15, 1965, the South Bihar Regional Transport Authority, Patna, ordered that a permit to ply a stage carriage on Dehri Bhabua route be granted to Arbind Kumar Singh hereinafter called 'the appellant on production of all valid documents of 1964 model bus along with clearance certificate of transport tax within one month from the date of order, failing which the sanction of permit in his favour would stand automatically revoked, and permit will then be given to the next deserving candidate Nand Kishore Prasad. . .
On application submitted by Nand Kishore Prasad who will .
hereinafter be referred to as 'the respondent that the appellant had failed to 324 carry out the condition relating to the grant of permit, the Chairman of the Regional Transport Authority by order dated February 20, 1965, cancelled the permit and directed that a permit be given to the respondent.
The order of the Chairman was reversed in appeal by the Appellate Board.
In the view of the Board "the clearance certificate" filed by the appellant showed that all the taxes due by him were paid.
The respondent then moved the State Government of Bihar under section 64 A of the as amended by the Bihar Motor Vehicles (Amendment) Act 17 of 1950.
The Minister of Transport who heard the petition reversed the order of the Appellate Board, holding that the appellant had failed to carry out the conditions subject to which the Regional Transport Authority had ordered that the permit be given to him.
A petition under article 226 of the Constitution moved by the appellant in the High Court of Patna against the order of the Minister of Transport was dismissed.
The appellant has appealed to this Court with certificate granted by the High Court.
The plea raised by counsel for the respondent that the appeal was liable to be dismissed because the High Court was incompetent to grant a certificate of fitness under article 133(1)(a) or article 1 3 3 ( 1 ) (b) of the Constitution against the judgment of the High Court exercising extraordinary original jurisdiction under article 226 of the Constitution is without substance.
This Court has held in section A. L. Narayan Row & Anr.
vs Ishwarlal Bhagwandas & Anr.
(1) that the words "civil proceeding" used in article 133 of the Constitution cover all proceedings which directly affect civil rights.
A proceeding under article 226 of the Constitution for a writ to bring up a proceeding for consideration concerning civil rights is therefore a civil proceeding.
This Court has further held in Ramesh and A nr.
vs Seth Gendalal Motilal Patni and Ors.
(2) that the High Court is competent to certify on appeal against an order passed by a Division Bench of a High Court in exercise of extraordinary original jurisdiction under article 226 of the Constitution if the dispute decided thereby concerns civil rights of the parties.
Hidayatullah, J., speaking for the Court observed at p. 203 "Mr. Gupta 's contention that under that article (article 133) an appeal can only lie in respect of a judgment or decree or final order passed in the exercise of appellate or ordinary original civil jurisdiction but not of extraordinary original civil jurisdiction, is not right.
Article 133 not only discards the distinction between appellate and original jurisdiction but deliberately used words which are as wide as language can (1) ; (2) [1966]3 S.C.R. 198 325 make them.
The intention is not only to include all judgments, decrees and orders passed in the exercise of appellate and ordinary original civil jurisdiction but also to make the language wide enough to cover other jurisdictions under which civil rights would come before the High Court for decision.
" The plea raised by counsel for the respondent that the High Court was not competent to grant the certificate must therefore be rejected.
The Bihar Legislature enacted Bihar Act 17 of 1950, imposing tax on passengers and goods carried by public service motor vehicles in Bihar.
Validity of this levy was upheld by the High Court of Patna.
But after the decision of this Court in Atiabari Tea Co. Ltd. vs State of Assam(1), the appeals filed by the operators who challenged the levy were allowed by this Court.
The State of Bihar thereafter issued Bihar Ordinance 11 of 1961 which was replaced by Bihar Act 17 of 1961 By that Act the tax was reimposed with effect from the 1st day of April, 1950.
That imposition of tax was again challenged in writ petitions filed before the High Court of Patna, but without success, and the order of the High Court was confirmed by this Court in Rai Ramkrishna and Ors.
vs State of Bihar(1).
Section 1(3) of Act 17 of 1961 declares that the Act shall be deemed to have come into forced on the first day of April, 1950.
By section 2(i) 'tax ' means tax payable under the Act and includes the fixed amount determined under section 8.
By section 3 charge of tax is imposed.
It provides by sub section
(1) : "On and from the date on which this Act is deemed to have come into force under sub section (3) of section 1, there shall be levied and paid to the State Government a tax on all passengers and goods carried by a public service motor vehicle; such tax shall be levied and paid at the rate of twelve and a half per centum of the fares and freights payable to the owner of such vehicles Provided. . ." Section 6 requires the owner of the vehicle to make prescribed return to the prescribed authority within such period as may be prescribed.
Section 7 prescribes the machinery for assessment of tax.
Section 9(1) provides that the amount of tax or penalty.
if any, payable by an owner under the Act shall be paid in the manner hereinafter provided.
Sub section (2) of section 9 provides that before any owner furnishes any return under the Act he shall.
in the prescribed manner pay into the Government Treasury the full amount of tax due from him under the Act according to such return and shall furnish along with the return a receipt from the (1) ; (2) A.I.R. 19463 S.C. 1667.
326 treasury showing payment of the said amount.
By section 22 power is conferred upon the State Government to make rules not inconsistent with the Act for all matters expressly required or allowed by the Act to be prescribed and generally for carrying out the purposes of The Act and regulating the procedure to be followed, forms to be adopted and fees to be paid in connection with proceedings under the Act and all other matters ancillary or incidental thereto.
In exercise of the power conferred by section 22, the State of Bihar has framed the Bihar Taxation on Passengers and Goods (Carried by Public Service Motor Vehicles) Rules, 1966.
Rule 11 provided that every owner shall furnish to the authority prescribed in r. 16, a monthly return, in Form V within a period of fifteen days of the close of the month to which such return relates.
Rule 18 provides that where any sum is payable by an owner under the Act or the rules or any amount due for which a notice is to be given under sub section (4) of section 9, the authority prescribed in r. 16 shall serve notice in Form XI, and shall also fix a date by which the owner shall produce a receipted challan in proof of such payment.
It is clear from the scheme of the Act and the rules that by section 3 a charge is imposed upon an owner of the vehicle to pay tax to the State Government on all passengers and goods carried by a public service motor vehicle at the rates fixed by the statute and the owner must make monthly returns within fifteen days from the expiry of the month to which the return relates The decision of the Madhya Pradesh High Court in Raipur Transport Co., Private Ltd., Raipur vs M. P. Singh and Ors.
(1) on which reliance was placed by counsel for the appellant has, in our judgment, no bearing on the question which falls to be determined in this appeal.
Section 10 of the Motor Vehicles (Taxation of Passengers) Act, 1959, passed by the State of Madhya Pradesh provided that in cases referred to in sections 7, 8 and 9, the Tax Officer shall serve on the operator a notice of demand for the sums payable to the State Government.
That in the view of the High Court pre supposes that an order of assessment has been made under the earlier provisions of the Act, and therefore an order of assessment was necessary not only for the validity of the notice of demand, but also for enabling the appellate authority to see whether the tax had been correctly assessed or not and the demand made against the operator was or was not justified.
We are in the present case not concerned to determine the validity of a notice of demand.
The liability to pay tax under Bihar Act 17 of 1961 clearly arises by statutory injunction and not from the order of assessment.
In terms section 3 says that there shall be levied and paid to the State Government a tax on all passengers and goods carried by a public service motor vehicle.
(1) A.I.R. 1968 M.P. 36.
327 The appellant plied his motor buses in 1950 51 and on the plea that the tax was invalid did not pay the tax levied under Act 17 of 1950.
After the reimposition of the tax by Act 17 of 1961, there survived no ground on which the liability to pay tax could be resisted.
On January 15, 1965, a condition had been imposed upon the appellant that a permit would be granted to him provided he produced a clearance certificate.
Liability to pay transport tax amounting to Rs. 1,675/ was outstanding against the appellant for nearly fifteen years and that liability was discharged by payment on March 5, 1965.
it cannot, in the circumstances, be contended that there was no liability to pay transport tax outstanding against the appellant on the date of the order granting him the permit.
Failure to produce the clearance certificate in respect of the transport tax clearly disentitled the appellant to the grant of a permit.
Counsel for the appellant, however, contended that the impo sition of a condition that the appellant shall produce a clearance certificate in respect of the transport tax was invalid and the condition was liable to be ignored by the appellant.
Section 47(1) of the , insofar as it is material provides : "A Regional Transport Authority shall, in considering an application for a stage carriage permit, have regard to the following matters, namely : (a) the interests of the public generally; (b) the advantages to the public of the service to be provided, including the saving of time likely to be effected thereby and any convenience arising, from journeys not being broken; (c) the adequacy of other passenger transport services operating or likely to operate in the near future, whether by road or other means, between the places to be served; (d) the benefit to any particular locality or localities likely to be afforded by the service; (e) the operation by the applicant of other transport services, including those in respect of which applications from him for permits are pending; (f) the condition of the roads included in the proposed route or area; and shall also take into consideration any representation made by persons already providing passenger transport facilities by any means along or near the proposed route sup.
Cl/68 8 328 or area, or by any association representing persons inte rested in the provision of road transport facilities recog nised in this behalf by the State Government, or by any local authority or police authority within whose juris diction any part of the proposed route or area lies Provided. . . . . " Sub section (2) of section 47 sets out the conditions under which the Regional Transport Authority may refuse to grant a stage carriage permit; and sub section
(3) provides for the conditions in which, having regard to the matters specified in sub section
(1), the Regional Transport Authority may limit the number of stage carriages generally or of any specified type for which stage carriage permit may be granted in the region or in any specified area or on any specified route within the region.
It was urged that under section 47 the Regional Transport Authority is bound to consider only the matters which are specified in cls.
(a) to (f) of sub section
(1) of section 47, Ind if the applicant is found qualified for a permit no conditions may be imposed by the Regional Transport Authority.
We need express no opinion on that argument.
If the argument raised by counsel for the appellant has any substance, and if it be held that the grant of a permit is to be subject only to such of the conditions as may be prescribed under section 48, the order made by the Regional Transport Authority must be deemed to be an order refusing the permit.
The appellant could, if so advised, have challenged the validity of the imposition of the condition relating to the payment of tax, but he could not ignore the conditions subject to which the permit was granted.
Finally, it was urged that the Minister of Transport acted illegally in taking into account evidence which was not on the record of the Regional Transport Authority, and alternatively, that the Minister violated the fundamental rules of natural justice in basin,, his judgment upon a document received from the Deputy Commmissioner of Commercial Taxes, intimating that the transport tax was due by the appellant without bringing it to the notice of the appellant and calling for an explanation.
Section 64 A of the , as amended by Bihar Act 17 of 195( authorises the State Government to call for, in the course of any proceedings taken under the Chapter, from any authority or office) subordinate to it, the records of such proceedings, and after exa, mining such records pass such order as it thinks fit.
The expressior "pass such order as it thinks fit" is not restricted to the passini of orders which are final in character.
If for the purposes of.
doing complete justice between the parties, the authority who heare the revision petition is satisfied that it is necessary to call for addi tional evidence, he may call for such evidence.
There, is no bar in the Act or the rules against an appellate or the revising authority 329 taking into consideration additional evidence brouaht on the record, if the authority requires additional evidence to be brought on the record or allows it to be brought on the record to do complete.
justice between the parties.
The evidence must undoubtedly be disclosed to the parties and they must be given an opportunity to meet an inference that may arise from such additional evidence.
We are unable to hold that the Minister of Transport in taking into consideration the report received from the Deputy Commi sioner of Commercial Taxes, Intelligence Branch, that an amount of Rs. 1,675/ was outstanding on February 16, 1965, against the appellant in respect of the two buses plied in the year 1950 51 acted in violation of the rules of natural justice.
The circumstance, , in which this document was brought on the file of the Minister are not clear on the record.
But, as stated by the Minister, the document was disclosed to counsel for the appellant and counsel was asked to give a reply thereto.
The Minister also recorded in his judgment that counsel for the appellant explained that since there was no demand for payment of the dues, it was not correct to say that the amount of Rs. 1,675/ was due against the appellant on February 16, 1965.
The Minister of Transport rejected that argument.
Before us it was contended that the document was never shown to the appellant 's counsel and he was never asked to render his explanation in that behalf.
If this were true, the appellant would, we have no doubt, have approached the Minister who was exercising quasi judicial functions, and would have asked him to review his order.
This admittedly has not been done.
Again, if the grievance now raised were true, the averments made in paragraph 19 of the petition before the High Court would not have taken the form which they have taken.
In paragraph 19 it is stated that "the so called report of the Deputy Commissioner, Commercial Taxes, Intelligence Branch, Patna, under Memo No. 8527 dated 24 7 1965 was never shown to the petitioner and the petitioner had no opportunity to meet the said report." Whereas the Minister of Transport had recorded that the report of the Deputy Commissioner, Commercial Taxes, was shown to counsel for the appellant and the counsel had given certain information the petition before the High Court merely stated that the appellant was not shown the report of the Deputy Commissioner.
The High Court on a consideration of the evidence has come to the conclusion that the claim made by the appellant that the document was not disclosed at the hearing before the Minister of Transport, and the Minister acted upon that document without informing the appellant, cannot be accepted, and we do not see any reason to disagree with the view expressed by the High Court.
The appeal fails and is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | In 1950 51, the appellant was plying his motor buses in Bihar.
Bihar Act 17 of 1950 imposed a tax on passengers and goods carried by public service motor vehicles.
As the imposition of the tax was found to be invalid the appellant did not pay the tax.
In 1961, the tax was reimposed by Act 17 of 1961 with effect from 1st April 1950 and the imposition was found to be valid.
Therefore, the appellant was liable to pay the transport tax for 1950 51.
This liability was outsanding on 15th January 1965, on which date, the Regional Transport Authority ordered that a permit to ply a stage carriage be granted to him on condition that he produced a clearance certificate of transport tax within one month from the date of the order failing which the grant will stand automatically cancelled and the permit will be granted to the first respondent.
As the appellant failed to carry out the condition the permit was cancelled and given to the first respondent.
The order was confirmed by the Government, in revision, under section 64A of the , as amended by the Bihar Motor Vehicles (Amendment) Act, 1950, after calling for and considering a report from the Dy.
Commissioner of Commercial Taxes, that the transport tax was due from the appellant for 1950 51.
The writ petition in the High Court to quash the Government order was dismissed.
The appellant appealed to this Court with certificate granted by the High COurt under article 133 of the Constitution.
The respondent contended that the High Court was not competent to grant the certificate in proceedings under article 226; and the appellant contended that : (1) on the date of the order granting the permit there was no liability to pay the tax as there was no assessment; (2) the condition regarding payment of tax was invalid; (3) the Minister of Transport who disposed of the revision to the Government had no right to call for any additional evidence; and (4) the report of the Dy.
Commissioner of Commercial Taxes should have been disclosed by the Minister to the appellant.
HELD : (1) The words 'civil proceedings ' in article 133 cover all proceedings which directly affect civil rights, and therefore the High Court was competent to grant the certificate in a proceeding under article 226 involving civil rights.
[324 E F] section A. L. Narayan Row vs Ishwar Lal Bhagwandas, ; and Ramesh vs Seth Gendalal Motilal Patni, ; , followed.
(2) Under the scheme of the Act the liability to pay tax arises by statutory injunction and not from any order of assessment.
Therefore, there was a liability to pay the transport tax outstanding, against the appellant, on the date of the order granting him the permit and failure to 323 produce the clearance certificate in respect of the tax disentitled him to the sant of a permit.
[326 H; 327 C] Raipur Transport Co. (P.) vs M. P. Singh, A.I.R. 1968 M.P. 36 distinguished (3) If it be held that the grant of a permit was to be subject only to such of the matters specified under section 47(1) (a) to (f) and to such of the conditions as may be prescribed under section 48, the order of the Regional Transport Authority in the present case must be deemed to be an order refusing the permit, and, the appellant should have challenged, by way of appeal, the validity of the imposition of the condition relating to payment of tax; he could not ignore the condition subject to which the permit was granted.
[328 D E] (4) The expression 'pass such order as it thinks fit ' in s 64A, as amended by the Bihar Act, is not restricted to the passing of final orders.
If for the purpose of doing complete justice between the parties, the authority who hears the revision petition is satisfied that it is necessary to call for additional evidence, he may do so.
There is no bar in the Act or the Rules against an appellate or revising authority taking into consideration the additional evidence brought on record.
[328 G H] (5) Such additional evidence must undoubtedly be disclosed to the parties and they must be given an opportunity to meet an inference that may arise from it.
In the present case, the High Court, on a consideration of the evidence came to the conclusion that the additional evidence called for by the Minister of Transport was disclosed by him, at the hearing, to the appellant 's counsel and there was no reason for this Court to disagree with that view.
[329 A B, H]
|
Appeal No. 455 of 1965.
Appeal by special leave from the judgment and order dated September 11, 1962 of the Gujarat High Court in Civil Revision Application No. 150 of 1960.
347 G. L. Sanghi, and B. R. Agarwala, for the appellant.
O. P. Malhotra and Ravinder Narain, for the respondents Nos. 1 to 4.
The Judgment of the Court was delivered by Mitter, J.
This is an appeal by special leave from a judg ment of the High Court of Gujarat passed in a Civil Revision Application arising out of a suit filed by the plaintiff respondent against the defendant appellant to recover possession of certain premises situate in Surat.
The facts are as follows.
The appellant became a tenant of the respondent under a rent note executed on February 27, 1947 whereby rent was fixed at Rs. 40 per month and the tenancy was to be for a period of one year from 22nd February, 1947.
After the expiry of the said period, the appellant continued as a monthly tenant on the same terms and conditions as were to be found in the rent note.
He fell into arrears of payment of rent and the respondent sued him for eviction some time in 1951.
The suit was eventually compromised by a petition put in court bearing date September 16, 1952.
Under the terms of the compromise, the defendant continued as a tenant from September 1, 1952 on the terms and conditions of the rent note dated February 27, 1947: the original conditions in respect of rent also continued excepting that the rate was lowered from Rs. 40/ to quote the words of the compromise to "standard rent of Rs. 27" and "in the matter of taxes and interest also the defendant was to act in accordance with the conditions of the aforesaid rent note.
" Paragraph 2 of the compromise petition contained an account of payments made by the defendant the final.
result thereof being that it was agreed between the parties that the defendant had paid Rs. 104 5 3 "which amount was to be rcmbursed by the plaintiff to the defendant when accounting the future payment of rent.
" It should be noted here that according to the rent note of 1947 the tenant had agreed to pay the monthly rent of Rs. 40 together with interest at Rs. 0 12 0 per cent per annum in respect of any balance due for rent.
Even after the compromise, the defendant fell in arrears again.
The only payments made thereafter up to the institution of the second suit out of which the present proceedings have arisen were a sum of Rs. 250 on July 19, 1954 and Rs. 200 on March 17, 1955.
The defendant did not make any payment to the plaintiff in rcspect of the permitted increases under the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 from the 1 st of April, 1954; neither did he pay the taxes agreed upon.
The plaintiff gave a notice to the defendant on April 18, 1955 demanding the arrears of rent and permitted increases in terms of the said Act and also terminating the tenancy of the defend 348 ant with effect from May 31, 1955 in terms of section 106 of the Transfer of Property Act.
The notice was received by the defeiidant on April 21, 1955.
No reply was sent thereto nor was any payment made to the plaintiff.
The suit for ejectment was filed on March 15, 1956 the ground thereof as laid in the plaint being that the defendant was in arrears of payment of rent and permitted increases and as such not entitled to the protection of the Act.
In paragraph 6 of the plaint the dues under various heads were specified showing the arrears of rent, increases permitted thereon, interest in terms of the rent note and taxes for three years.
It was pleaded by the defendant in the written statement that rent at Rs. 27 had been fixed by the court without going into the merits of the case and that standard rent or reasonable rent of the property in suit had to be fixed first and a preliminary issue in that respect should be framed.
The defendant did not admit the claim to the arrears as laid in paragraph 6 of the plaint.
He also pleaded that the notice of ejectment was not a valid one as the tenancy was to be reckoned in terms of the Gujarati calendar and not the Gregorian calendar.
The date fixed for settlement of issues was September 3, 1956 which can be taken to be the date of the first hearing of the suit for the purposes of the Act.
On that day the defendant deposited in court a sum of Rs. 1,000.
Thereafter the defendant made a deposit of a sum of Rs. 150 on February 25, 1957.
The suit was decreed by the trial Judge on March 25, 1957.
The trial Judge after considering the evidence on record determined the standard rent of the premises at Rs. 27, exclusive of the permitted increases and water tax and sanitary tax, payable by the defendant to the plaintiff.
Holding that the defendant had not complied with section 12(3)(b) of the Act he passed a decree for eviction.
The defendant went in appeal to the District Judge, Surat.
He raised no contention even at the hearin of the appeal either in regard to the standard rent of the premises or in regard to interest on arrears of rent or municipal taxes or permitted increases.
The finding of the trial Judge that the standard rent of the premises exclusive of permitted increases and water tax and sanitary tax was Rs. 27,1 per month was not challenged by the defendant.
Nor was any question raised as to the finding that the defendant was liable to pay the plaintiff a sum of Rs. 123 4 0 as and by, way of interest on arrears of rent, a sum of Rs. 81 as and by way of water tax and sanitary tax for a period of three years prior to the date of the suit and a sum of Rs. 2 1 9 per month as and by way of permitted increases from April 1, 1954.
The point regarding the validity of the notice of ejectment was however raised in the appeal.
According to the judgment of the High Court, "the only contention urged 349 before the learned Assistant Judge was, whether the defendant had or had not complied with the requirements of section 12(3)(b) of the Rent Act." The Assistant Judge concluded that there had been no compliance with that section and upheld the decree for eviction.
In revision three contentions were.
raised before the High Court, namely, (1) as to the validity of the notice of ejectment; (2) whether section 12(3)(a) or 12(3)(b) of the Act applied; and(3) whether the defendant was entitled to protection under section 12(1) of the Act.
The High Court held that it was not open to the tenant to raise the question of the validity of the notice in a revision application.
Moreover, there was no substance in it as the compromise petition expressly recorded that the tenancy in terms of it should commence on September 1, 1952.
With regard to the second question the High Court held that "it was common ground between the parties before the Assistant Judge that the case of the defendant fell within section 12(3) (b) of the Rent Act.
" The learned Judge of the High Court noted: (a) The trial Judge turned down the applicability of section 12(3) (a) of the Act holding that the defendant had disputed the municipal taxes and permitted increases; (b) The, conditions under section 12(3) (b) of the Act were not fulfilled; (c) No contention about the applicability of 12(3) (a) was raised before the Assistant Judge in appeal and he therefore did not go into the question at all; and (d) The conditions necessary for the applicability of section 12(3)(a) were not present, as besides the amount of Rs. 27 mentioned in the compromise petition, the tenant had to pay other sums not due from him every month.
The High Court further found that after the first date of hearing of the suit on September 3, 1956 rent of the premises which fell due on 1st October 1956, 1st November 1956, 1st December 1956, 1st January 1957, 1st February 1957 and 1st March, 1957 remained unpaid on March 25, 1957 when the suit was disposed of.
As the defendant did not pay or deposit in court regularly the amount of standard rent which became due on the aforesaid dates barring the 1st of March 1957 (taking into account the deposit of Rs. 150 on February 25, 1957) there was default on the part of the defendant attracting the operation of section 12(3)(b) of the Act.
350 The High Court turned down the contention based on section 12(1) of the Act.
At the hearing of the appeal before us, learned counsel for the appellant raised two points, namely: (1) The provisions of section 12(1) of the Act were applicable throughout the hearing of the suit and down to the date of the final hearing.
If at that stage it was found that the defendant had paid up all arrears due from him he could not be ejected.
(2) Even applying section 12(3)(b) there was no default on the part of the defendant which would render him liable to eviction.
In order to appreciate the first contention it is necessary to set out section 12 of the Act as it stood at the relevant time : "12(1)A landlord shall not be entitled to the recovery of possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any, and observes and performs the other conditions of the tenancy, in so far as they are consistent with the pro visions of this Act.
(2) No suit for recovery of possession shall be instituted by a landlord against a tenant on the ground of non payment of the standard rent or permitted increases due until the expiration of one month next after notice in writing of the demand of the standard rent or permitted increases has been served upon the tenant in the manner provided in section 106 of the .
(3) (a) Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted increases, if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section (2), the Court may pass a decree for eviction in any such suit for recovery of possession.
(b) In any other case, no decree for eviction shall be passed in any suit, if, on the first day of hearing of the suit or on or before such other date as the Court may fix, the tenant pays or tenders in Court the standard rent and permitted increases then due and thereafter conti 351 nues to pay or tender in court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the court.
(4) Pending the disposal of any such suit, the Court may out of any amount paid or tendered by the tenant pay to the landlord such amount towards payment of rent or permitted increases due to him as the Court thinks fit.
Explanation.
In any case where there is a dispute as to the amount of standard rent or permitted increases recoverable under this Act the tenant shall be deemed to be ready and willing to pay such amount if, before the expiry of the period of one month after notice referred to in sub section (2), he makes an application to the Court under sub section (3) of Section 11 and thereafter pays or tenders the amount of rent or permitted increases specified in the order made by the Court.
" Learned counsel drew our attention to a judgment of this Court in Shah Bhojraj Kuverji Oil Mills and Ginning Factory vs Subbash Chandra Yograj Sinha(1).
There the landlord had filed a suit for possession of the premises on April 25, 1957, the period of tenancy fixed under the rent note having expired on March 14, 1957.
Under section 6 of the Act a notification was issued applying Part II of the Act to the area where the property was situate.
The appellants claimed protection of section 12 of the Act and the main question which engaged the attention of this Court was, whether by virtue of the first proviso to section 50 of the Act, all the provisions in Part 11 including section 12 were made expressly applicable to all suits; and secondly, whether by virtue of section 12(1) of the Act the suit was rendered incompetent.
This Court turned down the contention of the respondent that the operation of section 12(1) was limited to suits filed after it came into force in a particular area and observed that under section 12(1) the landlord was not to be entitled to recover possession and the point of time when the sub section would operate was when the decree for recovery of possession would have to be passed, It appears to us that there is no substance in the contention put forward on behalf of the appellant.
Section 12(1) must be read with the Explanation and so read it means that a tenant can only be considered "to be ready and willing to pay" if, before the expiry of the period of one month after notice referred to in sub section (2), he makes an application to the court under sub section (3) of section 11 and thereafter pays or tenders the amount of (1) ; 352 rent or permitted increases specified by the court.
We have already noted that the tenant made no payment within the period of one month of the notice of ejectment and although in his written statement he raised a dispute about the standard rent he made no application in terms of section 1 1(3) of the Act.
The readiness and willingness to pay has therefore to be judged in the light of the facts of the case.
Where as here a suit is filed on the ground that the tenant was in arrears for a period of more than 6 months and although raising a dispute as to the standard rent or per mitted increases recoverable under the Act, the tenant makes no application in terms of section 11(3) he cannot claim the protection of section 12(1) by merely offering to pay or even paying all arrears due from him when the court is about to pass a decree against him.
In Vora Abbasbhai Alimahomed lv.
Hai; Gulamnabi Haji Safibhai(1) it was pointed out that section 12(1) of the Act applied to a tenant who continued to remain in occupation even after the expiry of the contractual tenancy so long as he paid or was, ready and willing to pay the amount of the standard rent and permitted increases.
The protection was howsoever available to a tenant subject to the provisions of section 13 and to the limitations contained in section 12(2) and section 12(3)(a) of the Act.
In Mrs. Manorama Masurekar vs Mrs. Dhanlaxmi G. Shah and another ( 2 ) rent was in arrears for a period of more than six months and the tenant neglected to make payment of the same within one month of the notice under section 12(2).
There the rent was payable by the month and there was no dispute regarding the amount of the rent.
It was held that if the conditions of sub section
(3)(a) of section 12 were satisfied the tenant could not claim any protection from eviction by tendering the arrears of rent after the expiry of one month from the service of notice under sub section
It was observed : "It is immaterial whether the tender was made before or after the institution of the suit.
In a case falling within sub section
(3)(a), the tenant must be dealt with under the special provisions of sub section
(3)(a), and he cannot claim any protection from eviction under the general provisions of sub section
(1)" As already noted, if sub section
(3)(a) is not attracted, the tenant, if he is in arrears, cannot sit quiet and offer to pay all the amount due from him at the time of the hearing of the suit so as to get the protection of section 12(1).
To be within the protection of subs.
(1) where he raises a dispute about the standard rent payable, he must make an application to the court under sub section
(3) of section 11 and thereafter pay or tender the amount of rent and permitted (1) ; (2) ; 353 increases, if any, specified in the order made by the Court.
If he does not approach the court under section 1 1(3), it is not open to him thereafter to claim the protection of section 12(1).
The case clearly does not come within section 12(3)(b).
To be within the protection of that provision, the tenant must not only pay all the arrears due from him on the first day of hearing of the suit, but he must thereafter continue to pay or tender in court regularly the rent and the permitted increases till the suit is finally decided.
Before the date of the suit, the appellant was entitled to a credit of Rs. 104 5 3; the total payments up to the date of the first hearing including the.
sum of Rs. 1,000 come to Rs. 1,554 5 3.
The amounts due from him, up to that date were : (a) rent at the rate of Rs. 27 per month for 48 months.
Rs. 1296 0 0 (b) permitted increases from 1 4 54 to 1 9 56.
61 3 9 (c) taxes.
81 0 0 (d) Interest on arrears at 9% p.a. 123 3 0 making a total ofRs.
1561 6 9 Moreover, there was failure on the part of the appellant to pay or tender in court the amounts which fell due from the 1st of October 1956 to the 1st of March, 1957.
Thus, leaving out of consideration the question of costs awarded against him under the decree, the appellant cannot get the protection under section 12(3)(b) of the Act.
A faint attempt was made to raise the point about the invalidity of the notice of ejectment on the plea that the same had to comply with section 12(2) of the Act.
This is clearly fallacious as the said section merely lays down the manner in which a notice of demand of standard rent and permitted increases has to be made.
The contentions raised on behalf of the appellants are therefore without any merits and the appeal is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | The appellant was a tenant of the respondent.
Having fallen into arrears of rent he was given a notice (a) demanding arrears of rent and permitted increases under the Bombay Rents.
Hotel and Lodging House Rat as Control Act, 1947, and (b) terminating his tenancy in terms of section 106 of the Transfer of Property Act, Receiving no response to the notice the respondent filed a suit against the appellant.
On the first day of the Heading of the suit and during its pendency the appellant deposited part of the arrears in Court but not the full amount due.
The trial Court passed a decree against him which was confirmed by the appellate Court.
The High Court dismissed his revision petition.
With special leave he appealed to this Court and urged that (i) he was entitled to the benefit of section 12 ( 1 ) of the Act and that (ii) even if section 12 (3) (b) was applied he was not liable to be eiected.
HElD : (i) Section 12(1) must be read with the Explanation and so read it means that a tenant can only be considered "to be ready and willing to pay" if, before the expiry of the period of one month after notice referred to in sub section
(2), he makes an application to the court under sub section
(3) of section 11 and hereafter pays or tenders the amount of rent or permitted increases specified by the court.
The readiness and willingness to pay has to be judged in the light of the facts of the case.
Where as in the present case a suit is filed on the ground that the tenant was in arrears for a period of more than six months and although raising a dispute as to the standard rent or permitted increases recoverable under the Act, the tenant makes no application in terms of section 11(3) he cannot claim the protection of section 12(1) by merely offering to pay or even paying aii arrears due from him when the court is about to pass a decree against him.
[351 H 352 B] Shah Bhojraj Kuverji Oil Mills and Ginning Factory vs Subbash Chandra Yograi Sinha; , , distinguished.
Vora Abbasbhal Alimahomed vs Haii Gulamnabi Haii Safibhai, ; , Mrs. Manordma Masurekar vs Mrs. Dhanlaxmi G. Shah and another.
; , applied.
(ii) The case did not come under section 12(3) (b).
To be within the protection of that provision, the tenant must not only pay all the arrears due from him on the first day of the hearing of the suit, but he must thereafter continue to 'pay or tender in court regularly the rent and the permitted increase till the suit is finally decided.
There was a failure on the part of the appellant to pay or tender in court all the amounts which fell due, and he could not therefore get the protection of section 12(3) (b) of the Act.
[353 B E]
|
Appeals Nos. 31 and 32 of 1968.
Appeals by special leave from the judgment and order dated January 25, 1967 of the Mysore High Court in Writ Petitions Nos. 774 and 2171 of 1965.
R. H. Dhebar, Shyamala Pappu and section P. Nayar, for the appellants (in both the appeals).
section section Javali and M. Veerappa for respondent No. (in both the appeals).
364 The Judgment of the Court was delivered by Bachawat, J.
On the reorganisation of States on November 1, 1956, the services of Syed Mahmood and Bhao Rao were allotted to the State of Mysore and they were employed there as junior statistical assistants.
On January 16, 1958 the Head of the Department of Statistics under the directions of the Government of State of Mysore prepared a tentative seniority list of nongazetted staff of that department treating junior statistical assistants and senior statistical inspectors of the former State of Hyderabad, junior statistical assistants and senior compilers of the former State of Mysore, statistical assistants and statistical inspectors from Bombay and the head compiler of Coorg as holding the equivalent posts of junior statistical assistants in the State of Mysore.
In 1959, before revising this tentative seniority list the State Government directed that all the statistical assistants and statistical inspectors of Bombay State and the head compiler of Coorg, should be treated and promoted as senior statistical assis tants.
As a result of this direction officers ranking below Syed Mahmood and Bhao Rao in the seniority list published on January 16, 1958 were promoted to the higher posts.
In makintheir promotions, the State Government did not consider the fitness of Syed Mahmood and Bhao Rao for promotion at all.
At a much later date, they were promoted as senior statistical assistants.
On May 3, 1963, the State Government published a revised seniority list placing inspectors from Bombay and head compilers from Coorg in the catecory of senior statistical assistants.
Syed Mahmood and Bhao Rao filed separate writ petitions in the High Court of Mysore asking for appropriate writs quashing the seniority list published on May 3, 1963, and directing the State Government to consider their case for promotion as senior statistical assistants with retrospective effect.
As the .objections to the seniority list published on May 3, 1963 were still under consideration by the State Government the High Court refused to quash this seniority list but it directed the State Government to promote Syed Mahmood and Bhao Rao as from the respective dates on which respondents junior to them were promoted as senior statistical assistants and to treat such promotions as effective up to May 3, 1963.
The State of Mysore has filed the present appeals from the orders directing the promotion of Syed Mahmood and Bhao Rao after obtaining special leave.
Promotion to the posts of senior statistical assistants is made from the cadre of junior statistical assistants and progress assistants.
Rule 4(3)(b) of the Mysore State Civil Services General Recruitment Rules, 1957 requires such promotions to be made by selection on the basis of seniority cum merit, that is seniority subject to the fitness of the candidate to discharge the duties of the post from among persons eligible for promotion.
In 1959 365 the seniority of junior statistical assistants was governed by the seniority list published on January 16, 1958.
Syed Mahmood and Bhao Rao were junior statistical assistants.
While making selections for promotion to the posts of senior statistical assistants from the cadre of junior statistical assistants in 1959, the State Government was under a duty to consider whether having regard to their seniority and fitness they should be promoted.
But without considering their case at all, the State Government promoted junior statistical assistants ranking below them in point of senio rity.
The promotions were irregularly made and they were, therefore , entitled to ask the State Government to reconsider their case.
In the circumstances, the High Court could issue a writ to the State Government compelling it to perform its duty and to consider whether having regard to their seniority and fitness they should have been promoted on the relevant dates when officers junior to them were promoted.
Instead of issuing such a writ, the High Court wrongly issued writs directing the State Government to promote them with retrospective effect.
The High Court ought not to have issued such writs without giving the State Government an opportunity in the first instance to consider their fitness for promotion in 1959.
Mr. Javali submitted that Syed Mahmood and Bhao Rao by virtue of their seniority were entitled to promotion at the time when persons junior to them were promoted.
The argument overlooks the fact that promotion to the post of senior statistical assistant was based on seniority cum merit.
In spite of their seniority officers junior to them could be promoted if they were unfit to discharge the duties of the post.
Promotion could not be claimed as a matter of right by virtue of seniority alone.
Mr. Javali argued that even in the case of promotion based ,on seniority cum merit, an officer is entitled to promotion by virtue of seniority alone, and he relied on the decision in State of Mysore vs H. M. Bellary(1).
In that cast, an officer of the Bombay Government was sent on deputation from his parent department to another department.
After long and satisfactory service and a number of promotions in the new department, he was reverted to his parent department and was posted in a lower grade though in the meantime an officer next below him in the parent department had been promoted to a higher grade.
The promotion to the higher grade was based on seniority cum merit.
The Court held that under r. 50(b) of the Bombay Civil Services Rules and the circular of the Government of Bombay dated October 31, 1950, an officer on deputation in another department on reversion to his parent department was entitled to be restored to the position he would have occupied in his parent department had he not been deputed.
Rule 50(b) treated the service of an (1) ; 366 officer on deputation in the new department as equivalent to service in the parent department.
As he rendered satisfactory service and was considered fit for obtaining increments and promotions in the new department, he should be deemed to be fit for promotion in the parent department and was entitled to promotion in that department when an officer next below him there was getting promotion based on seniority cum merit.
In official language, this is the "next below rule" under which an officer on deputation is given a paper promotion and shown as holding a higher post in the parent department if the officer next below him there is being promoted.
In our opinion, this case is entirely distinguishable.
It decided that under the relevant service rules the fitness for promotion of an officer on deputation in the new department was equivalent to fitness for promotion in the parent department and the officer was entitled to promotion in the parent department when the officer next below him there was obtaining promotion based on seniority cum merit.
But it is not an authority for the proposition that the officer on deputation is entitled to promotion in either the new or the parent department as a matter of right by virtue of his seniority alone, or that he should be deemed to be promoted whenever the officer next below him is being promoted.
Where the promotion is based on seniority cum merit the officer cannot claim promotion as a matter of right by virtue of his seniority alone.
If he is found unfit to discharge the duties of the higher post, he may be passed over and an officer junior to him may be promoted.
We are of the opinion that the State Government should be directed at this stage to consider the fitness of Syed Mahmood and Bhao Rao for promotion in 1959.
If on such examination the State Government arbitrarily refuses to promote them, different considerations would arise.
The State Government would upon such consideration be under a duty to promote them as from 1959 if they were then fit to discharge the duties of the higher post and if it fails to perform its duty, the Court may direct it to promote them as from 1959.
In the result, we allow the appeals and set aside the orders passed by the High Court.
We direct the State Government to consider whether Syed Mahmood and Bhao Rao should have been promoted to the posts of senior statistical assistants on the relevant dates when officers junior to them were promoted, and if so, what consequential monetary benefits should be allowed to them.
While granting special leave, this Court directed that the appellants shall pay the costs of the respondents in any event.
Accordingly, the appellants are directed to pay the costs of these appeals to the respondents.
One hearing fee.
Y.P. Appeals allowed.
| IN-Abs | Rule 4(3)(b) of the Mysore State Civil services General Recruitment Rules, 1957 requires promotion to be made by selection on the basis of seniority cum merit, that is seniority subject to the fitness of the candidate to discharge the duties of the Post from among persons eligible for promotion.
While making selections for promotions to the posts of senior statistical assistants from the cadre of junior statistical assistants, the State Government did not consider the case of the respondents who were junior statistical assistants, and published a list promoting persons ranking below them in point of seniority.
The respondents filed writ petitions, in which the High Court refused to quash the seniority list but directed the appellant State to Promote the respondents as from the dates on which their juniors were promoted and treat their promotion as effective from that date.
Allowing the appeal, this Court, HELD : While making selections for promotion to the posts of senior statistical assistants from the cadre of junior statistical assistants in 1959, the State Government was under a duty to consider whether having regard to their seniority and fitness they should be promoted.
The promotions were irregularly made and they were, therefore, entitled to ask the State Government to reconsider their case.
In the circumstances, the High Court could issue a writ to the State Government compelling it to perform its duty and to consider whether having regard to their seniority and fitness they should have been promoted on the relevant dates when officers junior to them were promoted.
Instead of issuing such a writ, the High Court wrongly issued writs directing the State Government to promote them with retrospective effect.
The High Court ought not to have issued such writs without giving the State Government an opportunity in the first instance to consider their fitness for promotion in 1959.
[365 B D] Promotion to the post of senior statistical assistant was based on seniority cum merit.
In spite of their seniority, officers junior to them could be promoted if they were unfit to discharge the duties of the post.
Promotion could not be claimed as a matter of right by virtue of seniority alone.
[366 C D] State of Mysore vs H. M. Ballary, [1964] 7 S.C .R. 471, distinguished.
|
minal Appeal 185of 1967.
Appeal by special leave from the judgment and order dated May 18, 1967 of the Punjab and Haryana High Court in Cri minal Appeal No. 247 of 1967 and Murder Reference No. 23 of 1967.
A.S.R. Charl, B. A. Desai, section C. Agarwal, A. K. Gupta, Shiva Pujan Singh and Virendra Verma, for the appellant.
Hans Rai Khanna and R. N. Sachthey, for the respondent.
The Judgment of the Court was delivered by Bhargava, J.
Bhupendra Singh has come up to this Court in appeal by special leave against a judgment of the High Court of Punjab and Haryana confirming the sentence of death awarded to him by the Sessions Judge of Jullundur for an offence, under section 302 of the Indian Penal Code and dismissing his appeal against the conviction and sentence.
The conviction of the appellant was recorded for committing the murder of one Gurdarshan Singh who was living in the same.
village Birpind as the appellant in the house adjoining the appellant 's house.
The appellant 's father, Ajit Singh, also lived with the appellant, while, with Gurdarshan Singh, were living his sons, Gurdial Singh and Sarvjit Singh, and his daughter Gian Kaur.
According to the prosecution, on the 6th November, 1965, at about 7.45 p.m., the two brothers, Gurdial Singh and Sarvjit Singh, happened to be standing in front of their house talking to each other, when the appellant came out of his house and asked them what they were talking about.
Gurdial Singh replied that he and Sarvjit Singh were brothers and were talking between themselves and it was no business of the appellant to interfere.
The appellant, thereupon, abused the two brothers and also slapped Sarvjit Singh on the face.
Gurdial Singh asked the appellant why he had beaten his brother and used abusive language against the appellant.
The appellant got enraged, ran into his house abusing the two boys, and return 406 ed with a double barrel 12 bore gun.
When he came out of his house this time, he was accompanied by his father, Ajit Singh.
Gurdial Singh and Sarvjit Singh then ran into the 'deorhi ' of their house.
In the meantime, their father, Gurdarshan Singh, and their sister, Gian Kaur, returned to the house from their fields.
When Gurdarshan Singh saw the appellant carrying the gun, he enquired what the matter was.
Thereupon, Ajit Singh raised a 'lalkara ' asking his son, the appellant, to finish off Gurdarshan Singh.
The appellant then fired two shots in quick succession from his gun hitting Gurdarshan Singh on vital parts of his body.
Gurdarshan Singh fell down dead on the ground.
One Malkiat Singh, who lived in a house nearby, had arrived and saw this occurrence, so that the four persons, who witnessed the occurrence.
were Malkiat Singh, Gurdial Singh, Sarvjit Singh and Gian Kaur.
Gurdial Singh, leaving others to look after the dead body of his father, went with Lal Singh, Lambardar, to the Police Station which was situated at a distance of about three miles and lodge the First Information Report at about 9.30 p.m. on the same day.
The ,case was then investigated.
A post mortem examination on the corpse of Gurdarshan Singh was performed and articles like pellets, blood stained cardboard pieces lying near the scene of occurrence were taken into their possession by the Police.
Both the appellant and his father, Ajit Singh, were thereafter prosecuted for this murder.
The appellant was charged with being the principal offender in committing the murder, while his father, Ajit Singh, was prosecuted for having participated in the murder with the common intention that Gurdarshan Singh should be killed.
However, before the trial could take place in the Court of Sessions, Ajit Singh was murdered and, for that murder, Gurdial Singh was prosecuted.
In the case, at the first stage before the Court of the Committing Magistrate, both Ajit Singh and the appellant took the plea that neither of them was responsible for committing the murder of Gurdarshan Singh and contented themselves with denying the correctness of the prosecution case.
In the Court of Sessions, when the appellant was examined under section 342 of the Code of Criminal Procedure, he came forward with the plea that it was his father, Ajit Singh, who actually fired and killed Gurdarshan Singh.
He pleaded that he himself was not present in this village at all and was, in fact, that day staying at Phillaur.
He, thus, put forward the plea of alibi.
The Sessions Judge believed the evidence of the four prosecution witnesses mentioned above, and, after discussing the defence evidence given on behalf of the appellant in support of his pleas.
rejected that evidence.
He did not accept the defence evidence that Gurdarshan Singh was fired at by Ajit Singh and he also, held that the evidence given on behalf of the appellant to prove 407 his alibi could not be relied upon.
On these findings, the Sessions Judge convicted the appellant and sentenced him to death for committing the murder of Gurdarshan Singh.
When the case came up before the High Court, the High Court briefly examined the evidence of the prosecution witnesses and held that their evidence was reliable.
The High Court did not, however, go into the defence evidence, because the counsel appearing for the appellant, according to the High Court, frankly admitted that there was no substance in it.
On this view, the High Court dismissed the appeal of the appellant and confirmed his sentence of death.
In this appeal, the principal question that was canvassed before us on behalf of the appellant was that the High Court, in not examining the defence evidence for itself on the simple ground that counsel for the appellant admitted that there was no substance in it, committed an error and did not properly discharge its duty.
It appears that there is substance in the submission made on behalf of the appellant.
Ordinarily, in a criminal appeal against conviction, the appellate Court, under section 423 of the Code of Criminal Procedure, can dismiss the appeal, if the Court is of the opinion that there is no sufficient ground for interference, after examining all the grounds urged before it for challenging the correctness of the decision given by the trial Court.
It is not necessary for the appellate Court to examine the entire record for the purpose of arriving at an independent decision of its own whether the conviction of the appellant is fully justified.
The position is, however, different where the appeal is by an accused who is sentenced to death, so that the High Court dealing with the appeal has before it, simultaneously with the appeal, a reference for confirmation of the capital sentence under section 374 of the Code of Criminal Procedure.
On a reference for confirmation of sentence of death, the High Court is required to proceed in accordance with sections 375 and 376 of the Code of Criminal Procedure and the provisions of these sections make it clear that the duty of the High Court, in dealing with the reference, is not only to see whether the order passed by the Sessions Judge is correct, but to examine the case for itself and even direct a further enquiry or the taking of additional evidence if the Court considers it desirable in order to ascertain the guilt or the innocence of the convicted person It is true that, under the proviso to section 376, no order of confirmation is to be made until the period allowed for preferring the appeal has expired, or, if an appeal is presented within such period, until such appeal is disposed of, so that, if an appeal is filed by a condemned prisoner that appeal has to be disposed of before any order is made in the reference confirming the sentence of death.
In disposing of such an appeal, however, it is necessary that the High Court should keep in view its duty under section 375 of the Code of Criminal Procedure and, consequently, the Court must examine the appeal record for itself,.
408 arrive at a view Whether a further enquiry or taking of additional evidence is desirable or not, and then come to its own conclusion on the entire material on record whether conviction of the condemned prisoner is justified and the sentence of death should be confirmed.
In Jumman and Others vs The State of Punjab( '), this Court explained this position in the following words: ". . but there is a difference when a reference is made under section 374, Criminal Procedure Code, and when, disposing of an appeal under section 423, Criminal Procedure Code, and that is that the High Court has to satisfy itself as to whether a case beyond reasonable doubt has been made out against the accused persons for the infliction of the penalty of death.
In fact the proceedings before ' the High Court are a reappraisal and the reassessment of the entire facts and law in order that the High Court should be satisfied on the materials about the guilt or innocence of the accused persons.
Such being the case, it is the duty of the High Court to consider the proceedings in all their aspects and come to an independent conclusion on the materials, apart from the view expressed by the Sessions Judge.
In so doing, the High Court will be assisted by the opinion expressed by the Sessions Judge, but under the provisions of the law above mentioned it is for the High Court to come to an independent conclusion of its own.
" The same principle was recognised in Ram Shankar Singh Others, vs
State of West Bengal (2) :_ ".
The High Court had also to consider what order should be passed on the reference under section 374, and to decide on an appraisal of the evidence, whether the order of conviction for the offences for which the accused were convicted was justified and whether, having regard to the circumstances, the sentence of death was the appropriate sentence." In Masalti V. State of U.p.(3) this Court was dealing with an appeal under Article 136 of the Constitution and, in that appeal, on behalf of the persons who; were under sentence of death, a point was sought to be urged which was taken before the trial Court and was, rejected by it, but wits not repeated before the High Court.
This Court held: ". . it may, in a proper case, be permissible to the appellants to ask this Court to consider (1) A.I.R. 1957 S.C. 469.
(2) [1962] Supp.
I S.C.R. 49 at p. 59.
(3) ; at P. 144. 409 that point in an appeal under Article 136 of the Constitution; after aft in criminal proceedings of this character where sentences of death are imposed on the appellants, it may not be appropriate to refuse to consider relevant and material pleas of fact and law only on the ground that they were not urged before the High Court.
If it is shown that the pleas were actually urged before the High Court and had not been considered by it, then, of course the party is entitled as a matter of right to obtain a decision on those pleas from this Court.
But even otherwise no hard and fast rule can be laid down prohibiting such pleas being raised in appeals under article 136.
" In view of these principles indicated by us above, and in view of the fact that, in this case, the ' High Court did not properly examine the defence evidence on the ground that the counsel for the appellant in that Court admitted that there was no substance in it, we permitted learned counsel for the appellant in this appeal to take us through the entire evidence on the record given by the prosecution and the defence so as to enable us to form our own judgment about the correctness of the conviction and sentence of the appellant.
We, however, find that, after examining the entire evidence, we are unable to hold that any grounds are made out for interference with the conviction.
The prosecution case, as already mentioned by us above, is supported by the evidence of four eye witnesses, Gurdial Singh, Sarvjit Singh, Gian Kaur and Malkiat Singh.
Three of these witnesses, Gurdial Singh, Sarvjit Singh and Gian Kaur are the sons and daughter of the deceased Gurdarshan Singh, but this circumstance, in our opinion, does not detract from the value to be attached to their evidence, because, naturally enough, they are interested in seeing that the real murderer of their father is convicted of the offence and they cannot be expected to adopt a course by which some innocent person would be substituted for the person really guilty of the murder.
None of these witnesses had any such enmity with the appellant as could induce him to give false evidence and to substitute him as the murderer in place of the person really guilty.
In fact, their feelings. would be strongest against the real culprit and, consequently, their evidence cannot be discarded on the mere ground of their close interest in the deceased.
Malkiat Singh has been held both by the Sessions Judge and the High Court to be an independent witness and we find no reason to differ from the view taken by the two Courts.
On behalf of the appellant, it was sought to be.
urged that Malkiat Singh bore a grudge against Ajit Singh, because Ajit Singh had been instrumental in the adoption of a son by Malkiat Singh 's real uncle, Veer Singh, with the result that Malkiat Singh was 410 deprived of the succession to the property of his uncle.
Malkiat Singh denied that he had any grievance against Ajit Singh on such a ground.
In support of the plea put forward on behalf of the appellant, one defence witness, Niranjan Singh was examined who claimed to be the son of another real uncle of Malkiat Singh.
Niranjan Singh came to depose that his son, Sadhu Singh, had been adopted by Veer Singh and this adoption took place because Ajit Singh had asked Veer Singh to take Sadhu Singh in adoption.
Niranjan Singh had, however, to admit that, in the deed of adoption, the person adopted is described as Mukhtiar Singh and not Sadhu Singh.
To explain this discrepancy, Niranjan Singh came forward with the assertion that his son, Sadhu Singh, bore an alias Mukhtiar Singh.
If Sadhu Singh was the real and principal name of the boy adopted by Veer Singh, there is no reason why that name was not mentioned in the deed of adoption and why the person adopted was described only as Mukhtiar Singh.
There is further the circumstance that, even according to Niranjan Singh, Malkiat Singh, witness, did not try to challenge the adoption, even though the adoption had taken place in April 1965, seven months before this incident.
Malkiat Singh had stated that he had no grievance against Ajit Singh and was in fact not interested in challenging the adoption.
In these circumstances, we do not think that Malkiat Singh can be said to be an interested witness and must hold that his evidence has been rightly relied upon.
The time of the murder was not only proved by the evidence of these four witnesses, but is also borne out by the circumstance that the First Information Report was lodged at the Police station three miles away at about 9.30 p.m. without any undue delay.
On behalf of the appellant, it was urged that the First lnformation Report was in fact recorded much later and not at 9.30 p.m. the same day, on the basis that the copy of that report sent to the Ilaqa Magistrate was received by him at 10.30 a.m. on 8th November, 1965.
The argument was that, if the report had been lodged at 9.30 p.m. on 6th November 1965, the copy should have reached the Magistrate the same night or early on the 7th November and not as late as 8th November.
We are unable to accept this submission.
The evidence of Gurdial Singh was perfectly clear that he reached the police station and lodged the report that very night at 9.30 p.m. and there is no reason to disbelieve him.
It appears that in this case, the investigating officer, Sub Inspector Ram Saran Dass was, to some extent, negligent.
In the report lodged by Gurdial Singh, the facts given clearly made out an offence of murder, and yet the Sub Inspector chose to register the case wrongly as for an offence under section 304 read with section 34 of the Indian Penal Code.
It may be that, having wrongly put down the offence as under 304 I.P.C. 'instead of section 102, the Sub Inspector did not consider it necessary to 411 send the report to the Ilaqa Magistrate the same night and delayed sending it, so that it was received at 10 30 a.m. on 8th November, 1965 by the Magistrate.
It is also not clear from the evidence whether, apart from the copy of the First Information Report sent to the Ilaqa Magistrate, any special report was also sent to the Magistrate by the Sub Inspector.
In any case, we do not think that this late receipt of the copy of the First Information Report by the Magistrate can lead to the inference that Gurdial Singh is not right in saying that he had the report recorded the same night at 9.30 p.m.
The evidence of the doctor who performed the post mortem examination and of the ballistic expert clearly establish that Gurdarshan Singh had died as a result of gun shot injury received by him from a gun.
The gun which the appellant possessed under a licence issued to him was examined by the ballistic expert and his evidence proved that the shots, which killed the deceased, were fired from that very gun.
In these circumstances, the Sessions Judge and the High Court were right in recording the conviction of the appellant for the murder of Gurdarshan Singh on the basis of this prosecution evidence.
So far as the defence put forward on behalf of the appellant is concerned, the first point to be noticed is that the plea that the shots, which killed Gurdarshan Singh, were fired by Ajit Singh, was not taken by the appellant until his father, Ajit Singh, had already died.
It seems to be clear that this plea, which was put forward for the first time in the Court of Sessions, was an afterthought which could be taken safely by the appellant after Ajit Singh had died and he could not be convicted for the murder.
When the appellant was examined in the court of the Committing Magistrate while Ajit Singh was alive, he did, not make any such statement.
This is an important circumstance that militates against the plea put forward in defence.
The appellant relied upon the evidence of two witnesses in support of the plea that the shots which killed Gurdarshan Singh were fired by Ajit Singh and not by the appellant.
The first of these witnesses is Uggar Singh who stated that he was in his house situated opposite to the house of the appellant and, when he came out on hearing the noise, he saw Ajit Singh quarelling with Gurdarshan Singh deceased and exchanging abuses.
Thereafter, Ajit Singh fired the gun shots towards Gurdarshan Singh killing him instantaneously.
According to him, neither Malkiat Singh nor the sons of Gurdarshan Singh were present at that time.
Even Shrimati Giano, according to him, was not there.
The evidence of this witness cannot be relied upon for several reasons.
According to this witness, his statement was recorded by the Police at about 10 a.m. the next day, i.e., the 7th November, 1965; but L7Sup.
C.l.68 2 412 the investigating officer 's statement is clear that no person residing in the neighbourhood had been examined by him or had come forward to give any statement to him.
Uggar Singh, thus, made a wrong statement that he was examined by the Police the next day.
It also appears that he was prosecuted in a murder case in which he was acquitted and Ajit Singh had assisted him in that trial.
The answers given by him in the cross examination also show that, in fact, his house is not in front of the house of the appellant but is situated in the same line as the house of the appellant and the deceased and at some distance.
He tried to get over this difficulty by stating that he has another house which is opposite to the house of the appellant, but it appears that that house belongs to his cousin, Ujagar Singh, and that is how the house is described in the site plan also.
In all these circumstances, the evidence of Uggar Singh cannot be accepted.
The second witness is Niranjan Singh, whose evidence we have noticed Above, and he also partially supported this part of the defence case by saying that he came rushing to the spot after the incident and found Gurdarshan Singh lying dead, while Ajit Singh was standing outside his house with something which appeared to be a gun.
It is clear that this is art another attempt by Niranian Singh to help the appellant and on this point also reliance cannot be ,placed on his evidence.
There remains to be considered the evidence given on behalf of the appellant to establish his plea of alibi.
One defence witness Kirpal Singh was examined to prove that the accused was on deputation in the Seed Corporation at Phillaur and was attached to the Tehsildar, Phillaur and that he was not suspended until 11th November, 1965.
His evidence is of no help, because it is obvious that the appellant could be suspended only after he surrendered in connection with this charge which happened on 11th November 1965.
The fact that he was in service on 6th November, 1965, does not necessarily prove that he could not have been present at the place of occurrence.
The Witness, on whose evidence reliance is primarily placed is Bunta Ram, Patwari.
Bunta Ram stated that on 6th Novem ber, 1965 he had come to the office of the Corporation at Phillaur in order to collect his pay and he also brought some files from Nakodar in order to consign those files.
In that connection.
he remained in the office of the Corporation throughout the day.
He saw the appellant also working in the said office throughout the day.
According to him, at about 6.30 p.m., he and the appellant went to the house of Inderjit Singh, Patwari and spent the night at his house.
It, 'however, I appears that this witness is a direct subordinate of the appellant and that is the reason why he has come forward to support the appellant 's case.
In this connec 413 tion, Jagdish Rai Batta, Tehsildar in the Seed Corporation, was examined as a court witness by the Sessions Judge and his evidence shows that Bunta Ram was one of the Patwaris working as a subordinate of the appellant who was a kanoongo in the Corporation.
Bunta Ram had stated that on that day he had himself appeared before the Tehsildar in connection with the consignment of the tiles and the Tehsildar had given him some directions in that behalf.
Jagdish Rai Batta stated that on that day Bunta Ram, Patwari did not appear before him nor did he produce any files.
He went further and stated that he did not point out any defects to Bunta Ram Patwari either orally or in writing.
Thus, Bunta Ram is proved to be an untruthful witness by the evidence of Jagdish Rai Batta, Tehsildar.
Bunta Ram, in his cross examination, purported to state that the appellant was living in a part of the house of Inderjit Singh at Phillaur.
On the face of it, it cannot be correct because the appellant did not belong to Phillaur and was not even posted there in connection with his employment.
His headquarters, according to Jagdish Rai Batta, was Nakodar and not Phillaur.
The evidence of Jagdish Rai Batta only shows that he saw the appellant working in his office at Phillaur on that day until about 5 p.m. Phillaur is connected with Nako dar by a metalled road along with which there is a bus service, and village Birpind,where the murder took place, is only three miles from Nakodar.
It is quite clear that the appellant could easily reach Birpind well before 7.45 p.m. even if he worked at Phillaur till 5 p.m. on that day.
It is also significant that the murder was committed with the gun belonging to the appellant.
If the appellant himself had not been at Birpind and had been at Phillaur or Nakodar, the gun should have been with him.
at one of these places and not at Birpind.
The gun could not, therefore, have been available for use by Ajit Singh, his father in his absence.
Considering all these circumstances and the nature of the evidence, we are unable to accept that there is any force in the defence plea of alibi put forward by the appellant, so that the conviction based on the prosecution evidence must be upheld.
A plea was put in for reduction of sentence.
Ordinarily, this Court, in exercise of its powers under article 1 36 of the Constitution, does not interfere with a sentence awarded by a Sessions Judge and upheld by the High Court; but, in this case, there are some special features which we cannot ignore.
Even according to the prosecution, the murder of Gurdarshan Singh by the appellant was not pre meditated.
The act of firing at him appears to be that of a hot headed person who was incited to do so by his father.
The murder was, not in any way cruel or brutal.
In all these circumstances, we think that the ends of justice would be met if the lesser penalty prescribed by law is awarded to the appellant.
414 Consequently, while upholding the conviction, we allow the appeal to the extent that the sentence of death is set aside, and, instead, the appellant is sentenced to imprisonment for life.
R.K.P.S. Appeal allowed.
| IN-Abs | The appellant lived with his father A in a house adjoining that of the deceased G who lived there with his two sons and a daughter.
An argument developed one evening between the appellant and one of the sons of G.
When G intervened, the appellant 's father A raised a 'lalkara ' asking the appellant to finish him off.
Thereupon the appellant shot and killed G. By this time G 's two sons, his daughter and one M who lived nearby had arrived and witnessed the occurrence.
At the trial the appellant 's defence was a pica of alibi but the Trial Court rejected the defence and convicted the appellant of G 's murder and sentenced him to death.
in appeal, the High Court did not go into the defence evidence because the counsel appearing for the appellant admitted that there was no substance in it.
The High Court accordingly dismissed the appeal and confirmed the sentence of death.
In appeal to this Court against the conviction and the sentence it was contended that the High Court in not examining the defence evidence for itself, committed an error and did not properly discharge its duties.
HELD : (i) Although ordinarily, in a criminal appeal against conviction, the appellate Court, under section 423 of the Code of Criminal Procedure, can dismiss the appeal if the Court is of the opinion that there is no sufficient ground for interference and it is not necessary for the appellate Court to examine the entire record for the purpose of arriving at an independent decision, the position is different where the appeal is by an accused who is sentenced to death, so that the High Court dealing with the appeal has before it, simultaneously with the appeal,a reference for .confirmation of the capital sentence under section 374 of the Code.
On a re ference for confirmation of sentence of death, the High Court is required to proceed in accordance with sections 375 and 376 of the Code of Criminal Procedure and the provisions of these sections make it clear that the duty of the High Court, in dealing with the reference, is not only to see whether the order passed by the Sessions Judge Is correct but to examine the case for itself and even direct a further enquiry or the taking of additional evidence if the Court considers it desirable in order to ascertain the guilt or the innocence of the convicted person.
[407 D G] Jumman and Others vs The State of Punjab, A.I.R. 1957, S.C. 469; Ram Shanker Singh & Ors.
vs State of West Bengal, [1962] Supp. 1 S.C.R. 49 at p. 59; applied.
(ii)(Upon an examination of the entire evidence by the Court) : No s had been made out for interference with, the appellants con[409 D E] 405 Maaslti vs State of U.P., ; at p. 144; referred to.
(iii) The sentence of death must be set aside and instead the appellant sentenced to imprisonment for life Although ordinarily this Court, in exercise of its power under Art 136, does not interfere with a sentence, in the present case there were some special features which had to be taken into account : even according to the prosecution, the murder of G by the appellant was not premeditated; the act of firing at him a to be that of a hot headed person who was incited to do so by his father; the murder was not in any way cruel or brutal.
In all these circumstances, the ends of justice would be met if the lesser penalty prescribed by law was awarded to the appellant.
[413 G H]
|
Appeal No. 1597 of 1967.
Appeal from the judgment and order dated March 31, 1967 of the Bombay High Court in Appeal No. 11 of 1967.
Jethmalani, N. H. Hingorani and K. Hingorani, for the appellant.
K. G. Khandalawala, H. R. Khanna and section P. Nayar, for the respondents.
The Judgment of the Court was delivered by Bachawat, J.
This is an appeal by certificate against an order of the Bombay High Court on Letters Patent appeal confirming an order of dismissal of a writ petition by which the appellant Tukaram G. Gaokar asked for a writ of prohibition restraining proceedings for imposition of a penalty on him for alleged complicity in the smuggling of gold in pursuance of a notice dated November 16, 1966 issued under section 112 of the Sea .
The appellant 's contention is that the threatened proceedings amount to contempt of the magistrate before whom hi. , trial for offences in connection with the smuggling of gold is imminent are and in violation of the constitutional protection of article 20(3) of the Constitution.
The High Court rejected these contentions.
The main facts may be stated briefly.
On September 14 and 17, 1966, the customs officers raided a number of premises in the city of Bombay and seized 65,860 tolas of foreign gold and some cold bangles worth about Rs. 1,14,20,270.
On September 14.
1966, the appellant was arrested on charges of complicity in the smuggling of (,old and other articles.
After several remands.
424 he was released on bail.
On October 6, 1966, the customs officers lodged a first information report charging the appellant, one John D 'Sa and other persons with offences in connection with the smuggling of gold under section 120B of the Indian Penal Code read with section 1 3 5 of the Sea , r. 1 3 1 B of the, Defence of India Rules and section 8 of the Foreign Exchange Regulation Act.
The trial of the appellant on these charges before a magistrate is imminent.
On November 16, 1966, the, Assistant Collector of Customs, Preventive Department, Bombay issued a notice to the appellant to show cause why the gold should not he confiscated under section 111 of the Sea and why a penalty should not be imposed on him under section 112 of the same Act.
The, notice alleged that he acquired possession of and was concerned in carrying removing, depositing, harbouring, keeping, concealing and dealing 'with gold which he knew or had reason to believe was liable to confiscation under section III and that in relation to such gold he was knowingly concerned in fraudulent evasion of customs duties and of the prohibitions imposed under the laws in force.
The notice relied on several documents and the statement of John D 'Sa.
The appellant disclaims any interest in the gold seized by the customs officers.
He resists the imposition of penalty on him for alleged complicity in the smuggling.
It is quite clear that identical issues arise in proceedings for imposition of penalty under section 112(b) of the Sea and in a trial for an offence punishable under section 135(b) of the same Act.
If any.
person acquires possession of or is in any way concerned in carrying, removing, depositing, harbouring.
keeping, concealing, selling or purchasing, or in any other manner ,dealing with any goods which he knows or has reason to believe are liable to confiscation under section 1 1 1, he may be proceeded against under section 1 1 2 ( b) and also, under section 135(b).
On the same set of facts, a penalty may be imposed on the offender under section II 2 (b) and he maybe punished with imprisonment and fine under section 135(b).
Similar issues arise in the trial of offences for contravention of r. 131 B of the Defence of India Rules and section 8 of the Foreign Exchange Regulation Act.
The customs officers will have to enquire into these issues, though the same issues will later be tried by the criminal court.
The Sea contemplates parallel proceedings of this kind Section 127 expressly provides that the award of a penalty under section 112 is not a bar to the infliction of punishment under section 135.
The offender may be punished under section 135 without prejudice to any other action that may be taken under the Act.
The customs officers are empowered to confiscate smuggled.
goods and to levy penalties on persons concerned with the smuggling.
They may initiate proceedings for confiscation of the goods and for imposition of the 425 penalty though the trial of those persons in a criminal court for connected offences is imminent.
The initiation and continuance of those proceedings in good faith cannot amount to contempt of the criminal court.
To constitute contempt of court, there must be involved some "act done or writing published calculated to bring a court or a judge of the court into contempt or to lower his authority" or something "calculated to obstruct or interfere with the due course of justice or the lawful process of the courts", see Reg v, Gray( '), Arthur Reginald Perera vs The King (2) .
The customs officers did nothing of this kind.
They are acting bone., fide and discharging their statutory duties under sections III and 112.
The power of adjudicating penalty and confiscation under those sections is vested in them alone, The criminal court cannot make this adjudication.
The, issue of the show cause notice and proceedings thereunder are authorised by the Act and are not calculated to obstruct the course of justice in any court.
We see no justifycation for holding that the proceedings amount to contempt of court.
The decided cases do not support the appellant 's contention.
In Saibal Kumar Gupta vs B. K. Sen (3), it was held that an enquiry by a special committee appointed by the Corporation of Calcutta to enquire in to the conduct of the Commissioner in the matter of appointment of municipal officers pending criminal proceedings against him in respect of certain offences did not amount to contempt of court.
The special committee could not be said to hold a parallel enquiry on matters pending before the court, though the enquiry might extend to those matters incidentally.
It may be noted that there was no express provision in the Calcutta Municipal Act authorising a special committee to hold an enquiry into any matter in issue before a Court.
In section section Roy vs State of Orissa (4) , a magistrate issued an order restraining the execution of a warrant of arrest issued by a civil court.
The order was in excess of his jurisdiction and was not warranted by section 144 of the Code of Criminal Procedure.
The court held that he could not be punished for contempt of court in the absence of wilful error proceeding from improper or corrupt motives In the present case also, the customs officers are not actuated by any oblique motive.
Moreover, their action is authorised by sections 111 and 112 and is not in excess of their jurisdiction.
The customs officers have, a discretion to stay the proceedings under sections 111 and 112 during the pendency Of the trial in the (1) [1900] 2Q.B.36.
(2) ,488.
(3) [1961] 3S.C.R.460.
(4) A.I.R. 1960 S.C. 190, 426 criminal court.
In the exercise of their discretion they have refused to stay the proceedings.
It is not shown that their action is mala fide or arbitrary.
The court will not issue a mandamus to control this exercise of their discretion.
The appellant then claims that the proceedings under sections 111 and 112 are in violation of article 20(3) of the Constitution.
He says that unless the proceedings are stayed he will be compelled to enter the witness box to rebut the evidence of John D 'Sa and will be forced in cross examination to give answers incriminating himself.
Article 20(3) affirms that "no person, accused of any offence shall be compelled to be a witness against himself.
first information report has been lodged and formal accusation has been made in it against the appellant charging him with offences in connection with the smuggling of gold.
The appellant is, therefore a person accused of an offence.
But it is not possible at this stage to say that he is compelled to be a witness against himself.
There is no compulsion on him to enter the witness box.
He may, if he chooses, not appear as) a witness in the proceedings under sections I I I and 1 12.
The necessity to enter the witness box for substantiating his defence is not such a compulsion as would attract the protection of Art,.
20(3).
Even in a criminal trial, any person accused of an offence is a competent witness for the defence under section 342 A of the Criminal Procedure Code and may give evidence on oath in disproof of the charges made against him.
n It may be very necessary for the accused person to enter the witness box for substantiating his defence.
But this is no reason for saying that the criminal trial compels him to be a witness against himself and is in violation of article 20(3).
Compulsion in the context of article 20(3) must proceed from another person or authority.
The appellant is not compelled to be a witness if he voluntarily gives evidence in his defence.
Different considerations may arise if he is.
summoned by the customs authorities under s i 108 to give evidence in the proceedings under sections I I 1 and 1 1 2.
But he has not yet been summoned to give evidence in those proceedings.
We express no opinion on the question whether in the event of his being summoned he can claim the protection under article 20(3) and whether in the event Of his being, then compelled to give incriminating answers he can invoke the protection of the proviso to section 132 of the Indian Evidence Act against the use of those answers in the criminal proceedings.
It may be noted that counsel for the customs authorities gave an undertaking in the High Court that they would not use in any criminal proceedings the statement, if any, that might be made by the appellant during the course of the adjudication proceedings.
Before the High Court, the appellant took the further point that the proceedings under sections Ill and 112 were in violation of 427 article 14 of the Constitution.
The High Court repelled this contention.
That point has now been abandoned by the appellant and does not survive.
In the result, the appeal is dismissed.
There will be no order as to costs.
G.C. Appeal dismissed.
| IN-Abs | In September 1966 the Customs authorities seized certain contraband . gold from the possession of the appellant.
Thereafter the appellant along with certain other persons was charged before.
a Magistrate for offences in connection with the smuggling of gold under section 120 B of the Indian Penal Code read with section 135 of the Sea , r. 131 B of the Defence of India Rules and section 8 of the Foreign Exchange Regulation Act.
Before the commencement of the trial the Assistant Collector of Customs issued a notice to the appellant to bow cause why the gold should not be confiscated under section III of the Sea and why a penalty should not be imposed on him under section 112 of the same Act.
Thereupon the appellant under article 226 of the Constitution asked the High Court for a writ of prohibition restraining proceedings for imposition of penalty on him in pursuance of the aforesaid notice.
The contention was that the threatened proceedings (i) amounted to contempt of the Magistrate before whom the trial was imminent and (ii) were in violation of article 20(3) inasmuch as he would be compelled to go into the witness box to rebut the evidence of an accomplice witness.
The High Court rejected these contentions, but granted a certificate to appeal to this Court.
HELD : (i) Identical issues arise in proceedings for imposition of penalty under section 112(b) of the Sea and in a trial for an offence punishable under section 135(b) of the same Act.
If a person incurs liability under section 1 1 1 he may be proceeded against under section 112(b) and also under section 135(b).
Similar issues arise in the trial for contravention of r. 131B of the Defence of India Rules and section 8 of the Foreign Exchange Regulation Act.
The customs officers will have to enquire into these issues though the same issues will later be tried by the criminal court.
Section 127 expressly provides that the award of a penalty under section 112 is not bar to the infliction of punishment under section 135.
The offender may be punished under section 135 without prejudice to any other action that may be taken under the Act.
[424 E H] The Customs Officers were acting bona fide and discharging their statutory duties under sections 111 and 112.
The power of adjudicating penalty and confiscation under those sections is vested in them alone.
The criminal court cannot make this adjudication.
The issue of the show cause notice and proceedings thereunder were authorised by the Act and were not calculated to obstruct the course of justice in any Court.
There was no justification for holding that the proceedings amounted to contempt of Court.
[425 C] 423 Reg vs Gray, , Arthur Reginald Perera vs the King, , Saibal Kumar Gupta vs B. K. Sen, ; and section section Roy vs State of Orissa, A.I.R. , referred to.
(ii) The customs officers have a discretion to stay the proceedings under sections III and 112 during the pendency of the trial in the criminal court.
In the exercise of their discretion they had refused to stay the proceedings.
It was not shown that their action was mala fide or arbitrary.
The Court would not issue a mandamus to control this exercise of their discretion.
[425 H] (iii) The proceedings under sections 111 and 112 could not be said to be in Violation of article 20(3) of ;he Constitution.
The possibility of having to enter the witness box to rebut the evidence of an accomplice was not such a compulsion as would attract the Provisions of proceedings from another person or authority.
If an accused voluntarily gives evidence in his defence he is not being compelled to be a witness against himself.
[The Court however observed that different considerations might arise if the appellant was summoned by the customs authorities under section 108 to give evidence in the proceedings under sections III and 112.1 [426 D F]
|
minal Appeal No. 134 of 1965.
Appeal by special leave from the judgment and order dated May 14, 1965 of the Patna High Court in Government Appeal No. 25 of 1962.
Nur ud din Ahmed and A. K. Nag, for the appellant.
D. P. Singh, Anil Kumar and Shivpujan Singh, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave is directed against the judgment of the Patna High Court allowing the appeal filed by the State Government, and convicting the appellant, Mohd. Usman, under section 5 (3) (a) of the Indian (IV of 1884) hereinafter referred to as the Act and sentencing him to undergo rigorous imprisonment for two years and also to pay a fine of Rs. 2,000, in default to undergo rigorous 429 imprisonment for a further period, of six months.
The High Court, however, agreed with the Magistrate that the appellant could not be held guilty under section 304A, IPC.
The High Court did not find the two other accused persons, Abdul.
Rahinan and Abdul Aziz, guilty, and State appeals against them were dismissed.
The prosecution case, in brief, is that an explosion occurred in appellant 's factory at Matkuria, PS Dhanbad, on April 28, 1960.
As a result of the explosion Kashi Bhokta, Gobardhan Bhokta and Mohan Bour died.
On that day, the appellant, who manufactures fireworks, had allowed minors (under 16 years of age), viz., Kashi Bhokta, Guhi Bhokta Gobardhan and Subhas Chamar to work in the manufacture of fireworks, thus contravening r. 16 of the Explosives Rules, 1940 hereinafter referred to as the Rules made under the Act, and had thereby committed an offence punishable under section 5 (3) (a) of the Act.
The High Court, disagreeing with the Magistrate who tried the case, held that "the three minor boys, Kashi, Guhi and Subhas, were employed and Gobardhan, in any event, was allowed to enter the premises licensed under the Rules for manufacture of explosives" in contravention of r. 16, and convicted the appellant as already stated.
Section 5(3) of the Act reads thus: "Any person contravening the rules made under this section shall be punishable (a) if he imports or manufactures any explosive in such contravention, with imprisonment for a term which may extend to three years, or with fine which may extend to five thousand rupees, or with both; (b) if he possesses, uses, sells or transports any explosive in such contravention with imprisonment for a term which may extend to two years, or with fine which may extend to three thousand rupees, or with both; and (c) in any other case, with fine which may extend.
to one thousand rupees.
" Rule 16 of the Explosives Rules provides: "16.
Children and intoxicated persons, No child under 16 years of age and no Person who is in a state of intoxication shall be employed on the loading, unloading or transport of explosives, or be employed in or allowed to enter any premises licensed under these rules.
" 430 The first question which arises is whether every breach of r. I6 falls under section 5 (3) (a), of the Act.
In our opinion, the answer is in the negative.
It will be noticed that cl.
(a) of section 5 (3) deals with a person who imports or manufactures in contravention of the; Rule, cl.
(b) deals with a person who posses uses, sells or transports any explosive in contravention of the Rules and cl.
(c) deals with contraventions of the Rules in other.
It seems to us that the scheme of this sub section is to divide the contravention of the Rules into three categories.
In the first category fall rules which person must observe while he imports or manufactures.
In other words, rules relatable to the import or manufacture.
of explosives would fall in the first category.
For example, clause 11 ' of the licence issued to the "Not more than four persons shall be allowed at any one time in any one building or tent in which the explosive is being manufactured and only persons actually employed in manufacturing or superintending manufacture shall be allowed inside the place of manufacture.
" Clause 12 of the Licence provides: "No iron or steel implements shall be used in the manufacture.
only copper gun metal or wooden tools are permissible.
" Now, if the appellant had infringed the provisions of the clauses it could be said that the contravention would fall under cl.
(a) of section 5(3).
We may mention that r. 81 provides that "no explosive shall be manufactured, possessed used or sold except under and in accordance with the conditions of a licence granted under these rules", and a breach of the, conditions would be contravention of r. 81.
But suppose the appellant had contravened clause 2 of the licence his licence is for the manufacture, possession and sale of 25 pounds of fireworks which prescribes the modes in which the explosives shall be kept in the premises, i.e. "(a) in a building, substantially constructed of brick stone or concrete or in a securely I constructed fire proof safe; or (b) in an excavation formed in solid rock or earth. he would be guilty under cl.
(b) 'of section 5(3) and not cl.
(a) of section 5(3).
Similarly, a contravention of clause 18, which provides that "all sales of explosives under this licence must be effected on the premises described on the face of the licence, and an explosive shall not be sold to 'any person under the age of 16 years" would fall under cl.
(b) of section 5 (3).
The learned counsel for the appellant contends that on the facts found by the High Court the conviction of the appellant 431 under cl.
(a) of section 5(3) cannot be sustained.
He says that there is no finding or evidence that the four minors were engaged to manufacture or were taking part in the manufacture of fireworks.
We have gone through the evidence and we find that no witness states that these minor boys were employed by the appellant to manufacture fireworks.
Subhas Chamar, P.W. 1, says that he "was working in the workshop of explosives at Matkuria owned by Usman .
We were working in the normal manner and in the same place at the time of occurrence.
" Puran Bhokta, P.W. 2, father of Kashi and Gobardhan, says that all his sons "worked in the explosive workshop of Matkuria owned by Usman.
" He does not enlighten us about the nature of work done by his sons.
Guhi Bhokta, P.W. 8, only states that "about 18 months ago, on a Thursday, I was working in the explosive shop in village Matkuria under the supervision of Rahman accused.
There is no other evidence bearing on this point.
From this evidence it cannot be definitely inferred that the four minors were actually employed in the manufacture of explosives on April 28, 1960.
In fact, there is no evidence at all that any fireworks were being manufactured that day.
It was for the prosecution to prove all the ingredients of the offence, and section 106 of the Evidence Act does not, as contended by the learned counsel for the State, absolve the prosecution from proving its case.
There is no doubt that there has been a contravention of r. 16, inasmuch as the four minors were employed in or allowed to enter the premises licensed under the Rules.
But r. 16 is, a comprehensive rule and applies to employment of minors in the premises for various purposes manufacture and sale of explosives it would also apply to employment of a minor to sweep floors and keep the premises clean.
If a minor is employed to keep clean the premises, would this contravention fall under cl.
(a) cl.
(b) or cl.
(c) of section 5(3)? It seems to us that if cl.
(a) and cl.
(b) are read widely so as to cover every activity which might take place on the premise cl.
(c) would be rendered redundant.
This is not a permissible way of reading statutes.
If will be noticed that the legislature regards an offence under cl.
(a) of section 5(3) to be more serious than one under cl.
(b) and an offence under cl.
(b) to be more serious than one under cl.
Further, the rules are many; some regulate minor matters, and if would be absurd to treat the breach of every rule to be a breach of cl.
(a) or cl.
In our opinion, if there is a breach of a rule, it has to be ascertained in each case whether the rule or part of it relates to activities mentioned in cl.
(a) of section 5(3) or cl.
(b) of section 5(3).
If it does not relate to any of the activities mentioned in cl.
(a) 432 or cl.
(b) of section 5 (3), the breach of the rule would fall under cl.
(c) of section 5 (3).
In this case the prosecution has not proved that the four minors were employed in any of the activities mentioned in cl.
(a) or cl.
(b) of section 5 (3).
Nor has it proved that any manufacture of fireworks was done on April 28, 1960.
It follows that the contravention of r. 16, on the facts found, can only come under cl.
(c) of section 5 (3).
We may mention that the learned counsel for the appellant challenged the findings of fact made by the High Court, but, in our opinion, they are not vitiated in any manner.
In the result, the appeal is partly :allowed.
The conviction is altered to one under cl.
(c) of section 5 (3) of the Act, and the.
appellant is sentenced to pay a fine of Rs. 1,000 and in default to undergo rigorous imprisonment for a period of three months.
Fine, if paid in excess, shall , be refunded.
Y.P. Appeal partly allowed.
| IN-Abs | The appellant, a manufacturer of fireworks was convicted under section 5 (3) of the Indian as he had allowed minors to work in the manufacture of fireworks thus contravening r. 16 of the Explosives Rules.
HELD: Clause (a) of section 5(3) deals with a person who imports or manufactures in contravention of the Rules; el.
(b) deals with a person who possesses, uses, sells or transports any explosive in contravention of the Rules; and el.
(c) deals with the contravention of the Rules in other cases.
If there is a breach of a rule, it has to be ascertained in each case whether the rule or part of it relates to activities mentioned in el.
(a) of section 5(3) or el.
(b) of section 5(3).
If it does not relate to any of the activities mentioned in el.
(a) or cl(3)(b) of section 5(3) the breach of the rule would fall under cl.
(c) of section 5(3) .
[430 A B; 431 H] In this case, though it was established that the minors were employed in or allowed to enter the premises, it was not proved that the minors were employed in any of the activities mentioned in el.
(a) or el.
(b) of section 5(3).
Nor it has been proved that any manufacture of fireworks was done on that day.
So the contravention of r. 16 on the facts found, could only be punishable under el.
(e) of section 5(3).
[432 B]
|
minal Appeal No. 162 of 1965.
Appeal by special leave from the judgment and order dated January 8, 1965 of the Gujarat High Court in Criminal Appeal No. 345 of 1964.
Urmila Kapur and section P. Nayar, for the appellant.
The respondent did not appear.
The Judgment of the Court was delivered by Hidayatullah C.J.
This is an appeal by special leave against the judgment and order of a learned Single Judge of the High 448 Court of Gujarat, January 8, 1965, by which an order confiscating 1500 and odd bottles said to contain intoxicating liquor by the City Magistrate, 8th Court, Ahmedabad, has been set aside.
The facts of the case are as follows.
On January 9, 1963, Sub Inspector, Benot of Ahmedabad City raided a godown con sisting of two rooms in Serial No. 151010 and Survey No. 324/0.
He found several deal boxes which were opened and each box was found to contain 144 bottles packed with grass, each bottle containing 4 oz. of some liquid.
Bottles were of two kinds, one containing yellow liquid and the other a red liquid.
The bottles containing Yellow liquid were labeled 'U. D. Colon Solvek Cosmetics Bombay, 28. , and the bottles containing red liquid were labeled 'Jasmine Batch No. 3.
Solvek Cosmetics Bombay.
From these bottles, two bottles, one of each kind, were selected and were sent to the Chemical Examiner.
Baroda for test.
Before sending them, the Panchas were allowed to seal the bottles with paper slips containing the signature of panchas pasted on them for identification.
On analysis, they were found to contain alcohol and the respondent Chinubhai Gopaldas was prosecuted under section 66(b) of the Bombay Prohibition Act.
The other bottles numbering 1584 containing 6336 oz. of alleged alcohol were kept intact.
Gopal Das 's prosecution failed.
He was, acquitted by the City Magistrate, because according to him, it was not proved beyond reasonable doubt that he was in possession of these bottles on his own.
It was found 'that he possessed them as agents of a wholesale merchant.
It is in evidence however that he did not possess a permit or licence for possessing alcohol.
The Magistrate while acquitting him ordered the confiscation of the remaining bottles under section 98 of the Prohibition Act.
The State Government did not appeal against the acquittal.
Gopaldas went to the High Court 'in appeal against the order of confiscation.
The learned Single Judge of the High Court ordered return of the bottles, because according to him it was not proved that the 1500 and odd other bottles also contained intoxicants.
He therefore held that the confiscation of the bottles was illegal as no order under section 98 of the Bombay Prohibition Act could be passed.
In this appeal by the State of Gujarat it is contended that section 98 applies to the case.
That section reads as follows : "Whenever any offence punishable under this Act has been committed, (a) any intoxicant, hemp, shora, flowers, molasses, materials.
still, utensil, implement or 449 apparatus in respect of which the offence has been committed, shall be confiscated by the order of the Court.
" The short question therefore is whether it can be said that in respect of the 1500 and odd bottles, an offence punishable under the Prohibition Act had been committed.
It is no doubt true that the person who was charged with committing an offence was found not guilty, but the question is not whether the accused has been successfully brought to book, but whether the offence in respect of the property has been committed or not.
There is distinction between the two.
An offence may be demonstrated to be committed although the accused who committed it may not be successfully prosecuted.
We may give an example.
Suppose in a house a vast quantity of contraband opium is found.
The householder may get off because the opium was found from a place which was open and had access to strangers.
He may get the benefit of doubt and be acquitted, but it is clear that in so far as the opium is concerned, an offence must be deemed to have been committed, and if it is proved that , the contraband article was opium, it would be remarkable that the order should be that the opium be returned to the householder.
In these circumstances, on proof that the contraband article in respect of which an offence has been committed is proved to exist, the obvious course would be to confiscate it to the State.
In the present case, the two bottles which were sent to the Chemical Examiner were said to contain alcohol although there was some doubt in the mind of the Magistrate as to whether there was no chance of any malpractice.
Be that as it may, there are the other bottles intact.
There is some evidence to show that they were in the original packing and were a proprietary product.
The manufacturer came as a witness and deposed that the liquids were bottled by him as a proprietary manufacture.
In these circumstances, it would be fair to assume that all of them were of the same kind as the ones which were sent for chemical examination.
However an examination of random samples can be made and if they satisfy the court that the bottles contain contraband articles the bottles can be confiscated.
The order of the High Court is thus set aside, but instead of restoring the order of confiscation we order that a few bottles at random should be, analysed and if contraband stuff against the Prohibition Act is found the whole stock shall be confiscated.
The appeal is allowed and the case is remanded as ordered.
G.C. Appeal allowed.
| IN-Abs | A stock of bottles apparently containing cosmetic preparations was found from the possession of the respondent.
On analysis the bottles which were taken as samples were found to contain alcohol and as the respondent did not have any licence for possessing alcohol he was Pro secuted under section 66(b) of the Bombay Prohibition Act.
The trying Magistrate acquitted him.
on the ground that he did not hold the bottles on his own but only as the agent of a wholesale dealer who acknowledged his ownership.
While acquitting the respondent the Magistrate ordered the confiscation of the remaining bottles under section 98 of the Prohibition Act.
The respondent went to the High Court against the order of confiscation.
The learned Single Judge ordered return of the bottles because according to him it was not proved that the 1500 and odd other bottles also con tained intoxicants, and therefore the order under section 98 of the Act was illegal.
The State appealed, HELD : Under section 98 what has to be seen is whether an offence under the Prohibition Act in respect of the property in question has been committed or not.
An offence may be demonstrated to be committed although the accused who committed it may not be successfully prosecuted.
On proof that there is a contraband article in respect of which an offence has been committed the obvious course is to confiscate, it to the State.
Therefore in the present case if the court was satisfied that the bottles contained contraband article the bottles could be confiscated.[449C E] [Order of the High Court set aside with the direction that a few bottles at random should be analysed and if contraband stuff against the prohibition act was found the whole stock should be confiscated.]
|
Appeal No. 613 of 1965.
Appeal from the judgment and decree dated March 25, 1960 of the Mysore High Court in Regular Appeal No. 155 of 1953.
V. Krishnamurthy and R. Gopdlakrishnan, for the appellant.
H. R. Gokhale, B. Subbiah and R. Thiagaraian, for, respondents Nos. 2 and 4.
The Judgment of the Court was delivered by Ramaswami, J.
The plaintiff G. Narayana Raju filed O.S. 34 of 1951 52 in the Court of District Judge, Mysore for partition and separate possession of suit properties mentioned in the various schedules of the plaint.
The first defendant is the brother 465 of the plaintiff.
The second defendant is the widow of Muniswami Raju, the eldest brother of the plaintiff.
The third defendant is the legal representative of the plaintiffs mother.
She is now the, appellant having been brought on record as the legal representative of the deceased plaintiff.
The case of the original plaintiff was that he, the first defendant and Muniswami Raju (husband of the second defendant) were the sons of one Gopala Raju and were all members of the joint family Gopalaraju died in May 1931 and after his death the plaintiff and his brothers continued to be members of the joint family.
The joint status of the, family was severed by the issue of a registered notice by the first defendant to the plaintiff in July 1951.
An ancestral house in Nazar bad belonging to the family was acquired by the City IuprovementTrust Board in or about the year 1909.
Out of the compensation paid for that house and supplemented by the earnings of the members of the joint family, the house item No. I of Schedule 'A ' to the plaint was purchased by Gopalaraju in or about the year 1910.
Subsequently item No. 2 of Schedule 'A ' was also purchased by Gopalaraju from the income of item No. I supple mented by the earnings of the members of the family.
All the other items of properties mentioned in Schedule 'A ' and other Schedules attached to the plaint were acquired out of the income from items 1 and 2 of Schedule 'A ', It was further alleged that the business known as "Ambika Stores" was also the joint family business and all the properties mentioned in the Schedules except items I and 2 of Schedule 'A ' were acquired out of the income of the members of the family including the income from the business of Ambika Stores.
The plaintiff accordingly claimed that he and the first defendant would each be entitled to get 5/14ths share and the second and third defendants would each be entitled to get 2/14ths.
share.
In the alternative the plaintiff pleaded that if for any reason the Court held that the properties stand in the name of Muniswami Raju and were not acquired with the aidof the joint familv nucleus, he and the second defendant were entitled to equal shares as co owners of the joint family business.
The suit was mainly contested by the second defendant who asserted that the properties mentioned in all the Schedules of the plaint were self acquisitions of Miiniswami Raju and constituted his separate properties.
It was alleged that Muniswami Raju was the only carniiig member of the family at the time of the acquisition of items 1 and 2 of Schedule operties and the plaintiff and the first defendant were emploved,in petty jobs in Wesley Press.
Muniswami Raju later on employed the plaintiff in his shop as a salaried servant and the latter had no proprietary right in the business of Ambika Stores.
After consideration of the oral and documentary evidence the District Judge held that the plaintiff, first defendant and Muniswami Raju were not divided and that the only property which was divisible was item No. I of Schedule 466 'A ' and there was not sufficient ancestral nucleus for acquisition of the other properties and that all properties except item No. 1 of Schedule 'A were the self acquisitions of Muniswami Raju, that Muniswami I Raju never blended his properties with that of the joint family that the plaintiff was only an employee under Muniswami Raju and therefore he was not entitled to the alternativ ' relief claimed by him.
Accordingly, the District Judge granted a preliminary decree holding that the plaintiff was entitled to 2/7ths share in item No. I of Schedule 'A '.
The plaintiff took the matter in appeal to the Mysore High Court.
By its judgment dated March 25, 1960 the High Court affirmed the decree of the trial court with the modification that besides item No. I of Schedule 'A ' item No. 2 also should be hold to be joint family property and the plaintiff was entitled to partition of his share in this item also.
The High Court cancelled the I direction of the District Judge that the plaintiff should account for the moneys and properties of Muniswami Raju in his hands before he is given possession of his share.
This appeal is brought by certificate on behalf of the plaintiff from the judgment of the Mysore High Court dated March 25, 1960 in R.A. No. 155 of 1953.
The first question to be considered in this appeal is whether the business of Ambika Stores was really the business of the joint family and whether the plaintiff was entitled.
to a partition of his share in the assets of that business.
: It was contended on behalf of the appellant that the business of Ambika Stores grew out of a nucleus of the joint family funds of at least by the efforts of the members of the joint family include the appellant.
The contention of the appellant has been negatived by both the lower courts and there is a concurrent finding that the Ambika Stores was the separate business of Muniswami Raju and it was neither the joint family business nor treated as joint family business, It is wellestablished that there is no presumption under Hindu law that a business standing in the name of any member of the joint family is a joint family business even if that member is the manager, of the joint family.
Unless, it could be shown that the business in the hands of the coparcener grew up with the assistance of the joint family property or joint family funds or that the earnings of the business were blended with the joint family estate, the business remains free and separate.
The question therefore whether the business was begun or carried on with the assistance of joint family property or joint family funds or as a family business is a question of fact. (See the decisions of the Judicial Committee in Bhwu Mal vs Jagannath (1) and in Pearey Lal vs Nanak Chand (1) and of this Court in Chattahatha Karayalar vs Ramachandra (1) A.T.R (2) A.T.R. 467 lyer) (1).
In the present, case there is a concurrent finding of both the lower courts that the business of Ambika Stores was a separate, business of Muniswami Raju and it, was neither a joint family business nor treated as joint family business.
The concurrent finding of the lower courts on this issue is upon a finding of fact and following the usual practice of this Court, it is not now open to further scrutiny by this Court under article 133 of the Constitution.
It was, however, contended on behalf of the appellant that the finding of the lower.
courts is vitiated in, law because of the circumstance that they have not taken into account three important documents, exhibit D, exhibit E and exhibit DDD.
We are unable to accept this argument as correct.
It is manifest on a perusal of the judgment of the High Court that all the documents have been examined, regarding the issue whether the business of Ambika Stores was a joint family business or whether it was p. separate, business of Muni swami Raju.
As regards exhibit D, the High ,Court has, after examining the evidence adduced, remarked that the, mere fact that item No. 2 of Schedule 'A was given as a security by Muniswami Raju did not result in any detriment to the joint family property and, it cannot therefore be held that the business of Ambika Stores grew out of the joint family funds or with the aid of the joint family funds.
On behalf of the appellant reliance was placed on the recitals in exhibit E, a deed of mortgage dated July 26, 1928 executed by Gopalaraju, Muniswamiraju and the appellant in favour of the Mysore Bank.
The property that had been mortgaged under this document is item No. 2 of Schedule 'A '.
The recital is that the borrowing from the Bank was for the business and trade of the executants and for the benefit and use of their family.
There is also a recital in an earlier portion of the document that the business, was being carried on for the benefit of the family, but it is not quite clear as to whether this related to the business carried on by Narayana Raju or whether it was intended to relate to some business carried on by all the three executants.
It is possible that the appellant had other business of his own carried on on his own.
account at that time and it cannot be, assumed that the borrowing under exhibit E must have been for the purpose of Ambika Stores.
It should be noticed that Muniswarni Raju has been described in the document as the proprietor of Ambika Stores which description is.
not consistent with the contention of the appellant that the business, was a joint family business.
The High Court has, in this connection, referred to exhibit I an application dated February 14, 1929, by the appellant to the City Co operative Bank, Mysore wherein, the appellant has said that he was getting a decent earning by doing; out of door commercial business with Ambika Stores.
There is also the, recital in exhibit I that Muniswami Raju was the proprietor of Ambika Stores.
Having regard to this recital in I it is not (1) ; 468 unlikely that the appellant had some business of his own at the material time and it cannot be assumed that borrowing under exhibit E, was for the purpose of Ambika Stores business only.
The High Court has also dealt with the effect of exhibit DDD, mortgage deed produced on behalf of the appellant.
It is true that in this document the appellant and Muniswami Raju have been described as proprietors of Ambika Stores.
The finding of the High Court is that this recital was made in the document for the purposes of borrowing from the Bank.
Reference was made in this context to a letter dated May 5, written by Muniswami Raju as proprietor of Ambika Stores to the Bank of Mysore.
In ' this letter, he has requested the Bank to take note of the fact that he has authorised the appellant to accept drafts, and sign letters etc.
on behalf of the firm ' There is another Letter, exhibit 76, dated April 14, 1934 written by Muniswami Raju to the Bank of Mysore wherein Muniswami Raju has been described as the proprietor of Ambika Stores and there is an intimation to the Bank, that the appellant Narayana Raju was authorised to sign for the firm.
In the context and background of these circumstances it is evident that though both the appellant and Muniswami Raju were described as proprietors of Ambika Stores the description was only for the purpose of borrowing money from the Bank, as contended for by the respondents.
In this connection the High Court has also taken into account exhibit 7 5 (b), a letter written by Muniswami Raju.
In this letter Muniswami Raju has described himself as the proprietor of Ambika Stores and has instructed the Bank that he has cancelled the authority given to the appellant to operate one his Current Account with the Bank.
It is therefore not possible for us to accept the contention of the appellant that the finding of the High Court that the business of Ambika Stores was the exclusive business of Muniswami Raju is vitiated in law.
On the other hand, it was contended on behalf of the respon dents that the finding of the High Court is supported by proper evidence.
The business of Ambika Stores was started by Muniswamiraju as the proprietor thereof at a time when Muniswamiraju himself was comparatively well off as a result of his partnership with Krishnaswamy Chetty & Co. In the year 1925 the partnership of Krishnaswamy Chetty & Co. was dissolved by a document exhibit D.
The entire business with 'all the assets ad liabilities was taken over by Muniswami Raju while the widow and son of Krishnaswamy Chetty were given a house estimated by the appellant himself at Rs. 3,000/ and furniture worth Rs. 400/ .
Muniswami Raju changed the name of the 'shop after taking it over into Ambika Stores and continued the business as is apparent from Exs.
XVIII, XXVI and XXVI(A).
There is also evidence that at the time when Ambika Stores was started other members of the family we 're not in a financial position to make any contribution to pur 469 such a business.
The appellant joined Wesley Press in 1912 on a salary of Rs. 8 or Rs. 9 p.m. and he was drawing Rs. 27 p.m. in 1927 when he resigned from the Press.
The first defendant joined Wesle Press in 1910 on a salary of Rs. 10 p.m. and he was continuing to work there till the institution of the present suit. 'Me income of the property item No. 2 of ' Schedule 'A ' was Rs. 15 p.m. and the income from pounding rice for which there is no satisfactory evidence was also negligible.
Therefore, the earnings of the members of the family other than Muniswami Raju were hardly sufficiently to maintain the family at the time when the business of Ambika Stores was started.
The High Court has found that the family did not have sufficient nucleus and that Muniswami Raju was not a partner of Krishnaswamy Chetty & Co. on behalf of the family but that he was a partner in his own right.
The High Court has observed that there is no evidence to show that the family supplied the money or that the family had enough means or that Muniswami Raju was representing the family when he started the business of Ambika Stores.
As we have already said, the finding of the High Court and of the District Judge is a concurrent finding on a question of fact and Counsel on behalf of the appellant has been unable to make good his argument that the finding is vitiated in law on any account.
We pass on to consider the alternative argument put forward on behalf of the appellant, namely, that even if the business of Ambika Stores was started as, a separate business of Muniswami Raju, it became converted at a subsequent stage into joint family business.
It was argued on behalf of the appellant that the business of Ambika Stores was thrown by Muniswami Raju into the common stock with the intention of abandoning all separate claims to it and therefore the business of Ambika Stores lost its character of a separate property and was impressed with the character of joint family property.
It is a well established doctrine of Hindu law that property which was originally self acquired may become joint property if it has been voluntarily thrown by the coparcener into the joint stock with the intention of abandoning all separate claims upon it.
The doctrine has been repeatedly recognized by the Judicial Committee [See Hurpurshad vs Shea Dayal(1) and Lal Bahadur vs 'Kanhaiya Lal( ).
But the question whether the coparcener has done so or not is entirely a question of fact to be decided in the light of all the circumstances of the case.
It must be established that there was a clear intention on the part of the copareener to waive his separate rights and such an intention will not be inferred merely from acts which may have been done, from kindness or affection [See the decision in Lata Muddun Gopat vs Khikhinda Koer (3).
For instance, in Naina Piltal vs Daiyanai (1) 3 I.A. 259.
(2) 34 I. A. 65.
(3) 18 I. A. 9.
470 Ammal, (1) where in a series of documents, self acouired property was described and dealt with as ancestral joint family it was held by the Madras High Court that the mere dealing with self acquisitions as joint family property was not sufficient but an intention of the coparcener must be shown to waive his claims with full knowledge of his right to it as his separate property.
The important point to keep in mind, is that the separate property of a Hindu coparcener ceases to be his separate property and acquires the characteristics of his joint family or ancestral property, not by mere act of physical mixing with his joint family or ancestral property, but by his own volition and intention, by his waiving or surrendering his special right it as separate prop".
A man 's intention can be discovered only from his words or from his acts I and conduct.
When his inention with regard to his separate property is not expressed in words, we must seek for it in his acts and conduct.
But it is the intention that we must seek in every case, I the acts and conduct being no more than evidence of the intention.
In the present case, the High Court has examined the evidence adduced by the parties and has reached the conclusion that there was no intention on the part of Muniswami Raju to throw the separate business of Ambika Stores into the common stock, nor was it his intention to treat it as a joint family business.
Counsel on behalf of the appellant referred to the recital, in exhibit E describing the properties being those of the executants and that the borrowings was for trade and benefit of the family and it was argued that there was a clear intention on the part of.
Muniswaini Raju to treat the business as joint family business.
We have already referred to this document and indicated that the recitals were probably made for the purpose of securing a loan and cannot be construed as consent on the part of the members of the joint family to treat the business as the joint family business.
Further, there is ample evidence to show that in all succeeding years before his death Muniswami Raju had always described himself and conducted himself as the sole proprietor of Ambika Stores, Such an attitude on the part of Muniswami Raju was not consistent with any intention on his part either to abandon his exclusive right to the business or to allow the business ' to be treated as joint family business.
Exhibits XXXV to XLVI are all documents executed by third parties in favour of Muniswami Raju in which Muniswami Raju has been described as the proprietor of Ambika Stores.
Exhibits III, XXIII, XXIV, 51, 52, 56, 58, ZZ, AAA series and BBB are all communications addressed by institutions like Banks etc., in which Muniswwni Raju has been described as the proprietor of Ambika Stores.
It may be stated that the appellant himself has admitted in his evidence that he was not drawing any moneys from the business of Ambika Stores and that whenever he wanted any_money, he would ask Muniswami Raju and obtain (1) A.I.R. 1936 Mad .177. 471 from him.
If really the appellant had considered himself to be I co owner equally with Muniswami Raju, such conduct on his part is not explicable.
it was urged on behalf of the appellant that there was no documentary evidence to show that the appellant was being paid any salary 'Muniswami Raju, and that prior to Muniswami Raju 's death, it was the appellant who was in the entire management of Ambike stores when Muniswami Raju was ill and after the death of Muniswami Raju also it was the appellant who had been in management.
Al, the books of account and other documents pertaining to the business of Ambika Stores had been admittedly entrusted to the appellant.
But it is not explained on behalf of the appellant as to why the documents were not produced on his behalf to disprove the Case of the respondents that he was a salaried servant.
It is therefore not unreasonable to draw an inference from the conduct of the appellant that the Account Books, if produced in court, would not have supported his case.
We accordingly reject the argument of the appellant that the business of Ambika Stores became converted into joint family business at any subsequent stage by the conduct of Muniswami Raju in throwing the business into the common stock or in blending the earnings of the business with the joint family income.
it was finally contended on behalf of the appellant that, in any event, the appellant became a co owner of the business along with Muniswami Raju by reason of contribution of his own labour towards the development of the business.
In our opinion, there is no substance in this argument.
It is evident that the appellant gave up his job in Wesley Press and joined Ambika Stores about 9 or 10 months after it was started by Muniswami Raju.
The appellant does not state in his evidence that he was a co owner when he joined Ambika Stores.
On the other hand, in exhibit 68 which is an application dated March 20, 1928 by the appellant to the City Co operative Bank, the appellant has described himself as a clerk in Ambika Stores and Muniswami Raju has been described as his proprietor.
There is no satisfactory evidence on behalf of the appellant to show as to when and under which circumstances his status of a clerk changed to that of a co owner.
In another application, exhibit I which is of the year 1929 the appellant has described Muniswami Raju as the Proprietor of Ambika Stores and he has described himself as doing out door commercial business with Ambika Stores.
Again, in exhibit C which is a loan application made in 1932 by both the brothers, Muniswami Raju has been described as the proprietor of Ambika Stores while the appellant has been described as a General Merchant of Mysore.
Reference was made on behalf of the appellant to recitals in exhibit DDD, a mortgage deed dated June 20, 1934 in which Muniswami Raju and the appellant have been described as proprietors of Ambika Stores.
We have already dealt with this, document and for the reasons already mentioned we hold that the description of the 472 executants was only given for the purpose of borrowing from the Bank and it had not the legal effect of making the appellant .
co owner of the partnership business.
There is no evidence of any assertion by the appellant during Muniswami Raju 's life time of his being a co owner of the partnership business, nor is there any evidence of recognition by Muniswami Raju of any such right of the appellant.
On the other hand, there is sufficient evidence to show that whatever the appellant did in connection with the business was only done with the Authority conferd by Muniswami Raju.
In our opinion the High Court has rightly rejected the claim of the appellant that he was a co owner of the partnership business.
For the reason expressed we hold that this appeal has no merit and it must be dismissed with costs.
R.K.P.S. Appeal dismissed.
| IN-Abs | There is no presumption under Hindu law that a business standing in the name of any member of the joint family is a joint family business even if that member is the manager of the joint family.
Unless it could be shown that the business in the hands of the coparcener grew up with the assistance of the joint family property or joint family funds or that the earnings of the business were blended with the joint family estate, the business remains free and separate.
[466 F H] Bhuru Mal vs Jagannath, A.I.R. 1943 P.C. 40, Pearey Lai vs Nanak Chand, A.I.R. 1948 P.C. 108, Chattanatha Karayalar vs Ramachandra Iyer; , , referred to.
The separate property of a Hindu coparcener ceases to be his separate property and acquires the characteristics of his joint family or ancestral property, not by mere act of physical mixing with his joint family or ancestral property but by his own volition and intention, by his waiving or surrendering his special right in it as separate property.
Mere recitals in deeds dealing with self acquisitions as ancestral joint family property is not by itself sufficient; but it must be established that there was a clear intention on the part of the coparcener to waive his separate property.[470 B c] Hurpurshad vs Sheo Dyal, 3 I.A. 219.
Lal Bahadur vs Kanhaiya Lai, 34.
I.A. 65, Lola Muddun Gopal vs Khikhinda Koeri 18 I.A. 9, Naina Pilla vs Daiyanai Ammal, A.I.R. 1936 Mad.
177, referred to.
where there is a concurrent finding of both the lower courts that the business is a separate business and it is neither a joint family business nor treated as joint family business, it is not open to further scrutiny by this Court under article 133 of the, Constitution.
[467 A B]
|
Subsets and Splits