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Appeals Nos.
651 to.
655 of 1967.
Appeals from the judgment and order dated March 2, 1966 of the Bombay High Court in Income tax Reference No,.
73 of 1962.
S.T. Desai, D. Dwarkadas and S.S. Javali, for the appellant.
C.K. Daphtary, Attorney General, R. Gopalakrishnan, R.N. Sachthey and B.D. Sharma for the respondent in all the appeals.
The Judgment of the Court was delivered by Ramaswami, J.
These appeals are brought by certificate from the judgment of the Bombay High Court dated March 2, 1966 in Income Tax Reference No. 73 of 1962.
The appellant company, hereinafter called the assessee company, was incorporated on July 29, 1924, as an investment company, the objects of which are set out in el.
III of the memorandum of association and more particularly in sub cls. 1, 2, 15 and 16 of that clause.
The assessment years in question are 1943 44 to 1948 49, excepting the year 1947 48.
According to its petition made in the High Court, the assessee company dealt with its assets as follows: "The petitioner company purchased during the period 1st July, 1925 to 30th June, 1928, shares of the value of Rs. 1,86,47,789 major portion of which was comprised of shares in the Sassoon Group of Mills.
During the year ended 30th June, 1929, the petitioner company promoted two companies known as Loyal Mills Ltd., and Hamilton Studios Ltd. and took over all their shares of the value of Rs. 101/2 lacs.
In the year 1930, the petitioner company purchased shares of Rs. 1,33,930.
During the period of 9 years from Ist July, 1930, to 30th July, 1939, no purchases. were made with the exception of a few shares of Loyal Mills Ltd. taken over from the staff of E.D. Sassoon & Co. Ltd., who retired from service.
In the year ended 30th June, 1940, reconstruction scheme of the Appollo Mills Ltd. 48 took place under which debentures held by the petitioner company in the Appollo.
Mills Ltd., were redeemed and the proceeds were .reinvested in the new issue of shares made by the Appollo Mills Ltd. Out of the purchases of the value of Rs. 2,794 made by the petitioner company during the year ended 30th June, 1941, Rs. 2,000 was the value of shares of the Loyal Mills.
Ltd., taken over from the retiring staff.
In the year ended 30th June, 1943, the petitioner company took over from the David Mills Co. Ltd., shares of the Associated Building Co., of the value of Rs. 56,700.
After this there were no purchases at all to this date excepting purchases.
of the value of Rs. 34,954 during the year ended 30th June, 1946.
" The sales are contained in paragraph 3(b) which states: "In relation to the purchases made by the petitioner company as stated above no appreciable sales of shares were made during the period 29th July, 1924 to 30th June, 1942, the sales made in the year ended 30th June, 1929, of the value of Rs. 1,29,333 included shares of the value of Rs. 45,000 in the Loyal Mills Ltd., sold to the members of the staff and shares of the value of Rs. 83,833 representing sterling investments handed over to the creditors of the petitioner company in part repayment of the loan taken from them in the year ended 30th June, 1931, shares of the value of Rs. 7,48,356 were handed over to the creditors in payment of the loan granted ' by them.
From the year ended 30th June, 1943, E.D. Sassoon & Co. Ltd., started relinquishing the managing agencies of the various mills under their agency and the shares held by the petitioner company in the Sassoon Group of Mills were handed over to the respective purchasers.
of the mills agencies.
" Prior to 1940 the assessee company made a claim every year being treated as a dealer in investments and properties but this contention was repelled by the Income Tax authorities and upto the assessment year 1939 40 the assessee company was assessed on the basis of being an investor but it appears that for the assessment years 1940 41, 1941 42 and 1942 43 the Income Tax department accepted the plea of the assessee company and treated it as a dealer in shares, securities and immovable properties and assessed it on that basis.
For these years and for the assessment year 1943 44 the assessee company made its return in that basis.
But after the return had been filed for the year 1943 44, the assessee company withdrew its return and filed a revised return on March 7, 1944, contending that it was not a 49 dealer but merely an investor.
Along with the return it filed a letter dated March 6, 1944 in which it stated: "The return of Total Income which was submitted with the Company 's letter of 25th May 1943 was prepared in conformity with the ruling of the Income tax Officer in the 1940 41 assessment that the company was to be assessed as a dealer in Investments.
Since that return was submitted the Central Board of Revenue has decided that the Company is an Investment Holding Company, and accordingly an amended Return of Total Income under Section 22( 1 ) of the Indian Income tax Act is submitted herewith on which the assessment for 1943 44 may be based, as on this particular question the company obviously cannot have one status for Excess Profits Tax and another for Income taX." It was contended by the assessee company that it never carried on any business in the purchase or sale of shares, securities or properties In support of this contention the assessee company relied on the order of the Central Board of Revenue dated August 18, 1943 passed under section 26(1) of the Excess Profits Tax Act.
The Income.
Tax Officer rejected the plea and held that the investments were held by the assessee company as the stock intrade of its business which it carried on during the previous year and also in the preceding years.
The assessee company took the matter in appeal to the Appellate Assistant Commissioner who dismissed the appeal and upheld the order of the Income Tax Officer.
The assessee thereafter appealed to the Income Tax Appellate Tribunal and the same contentions were urged on behalf of the assessee company.
The Appellate Tribunal rejected the assessee 's claim that it was showing itself as a dealer in shares, securities and immovable properties under a misapprehension and without appreciation of the correct facts.
The Appellate Tribunal held that in the case of the assessee company not only the Memorandum of Association gave the power to the company to deal in investments but the case of the company all along in the past was that it was a dealer in investments and properties.
Consequently, the Tribunal held that the assessee company was a dealer in shares, securities and properties and dismissed the appeals.
Thus the grounds on which the case was decided against the assessee company were (1) that the assessee claimed to.
be a dealer or an investor according as it incurred losses or made profits and (2) that because of the objects contained in the memorandum of association and because of its assertion made in the past as being a dealer the assessee company could not be held to be an investor.
The assessee company then applied to the Appellate Tribunal under section 66(1) of the Income Tax Act, 1922, 50 hereinafter called the 'Act ' for a reference of the following questions of law for the opinion of the High Court: "(i) Whether on the facts and in the circumstances of the case the assessee company can rightly be treated as a dealer in investments and properties; and (ii) Whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee company can be taxed as business profits.
" The application was rejected by the Appellate Tribunal on the ground that no question of law arose out of its order.
The assessee company then made an application under section 66(2) of the Act to the Bombay High Court which dismissed the application by its order dated June 15, 1952.
The assessee company thereupon obtained special leave to appeal to this Court.
The appeal was allowed by this Court by its judgment dated May 22, 1957 and the order of the Bombay High Court dated June 15, 1952 was set aside.
It was pointed out by this Court that the Appellate Tribunal in arriving at its finding that the assessee was a dealer and not an investor, had relied on two basic facts, viz., the objects set out in the Memorandum of Association and the previous assertion made by the assessee company that it was a dealer in investments and properties and not merely an investor.
It was observed that merely because the company had within its objects the dealings.
in investments, shares and properties the circumstance did not give it the characteristics of a dealer in shares.
The circumstance, though relevant, was not conclusive.
It was pointed out in the judgment of this Court that the question as to.
what were the characteristics of the business of dealing in shares or that of an investor was a mixed question of fact and law and what was the legal effect of the facts found by the Appellate Tribunal.
and whether as a result thereof the assessee could be termed a dealer or an investor was itself a question of law.
Accordingly the Court formulated the following two .questions of law as arising out of the order of the Tribunal: "( 1 ) Whether there are any materials on the record to support the finding of the Income Tax Officer that the assessee company was a dealer in shares, securities and immovable property during the assessment year in question? (2) Whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee company can be taxed as business profits. ?" The case was therefore remanded to the High Court for directing the Appellate Tribunal to state a case on the aforesaid questions of law under section 66(2) of the Act.
In accordance with the direc 51 tion of this Court the Appellate Tribunal made a statement of the case on June 12/13, 1962.
The reference being Income tax Reference No. 73 of 1962 was heard by the High Court which by its judgment dated March 2, 1966 answered both the questions.
against the assessee company and in favour of the Commissioner of Income Tax.
On behalf of the assessee company Mr. S.T. Desai argued that the question whether the assessee company was a dealer dealing in investments and properties or whether it was a mere investor will have to be judged on a proper scrutiny of the transactions themselves considered in the light of the Circumstances in which the transactions 'both of purchase and sale had .been brought about.
If it is found on an examination of the transactions themselves that the essential characteristics of the business of the assessee were of dealing in shares and investments, the assessee will undoubtedly be taken as a dealer.
If, on the other hand, the characteristics revealed by the transactions are those ' peculiar to mere investments in shares, securities and properties, the finding of the Court must be that the assessee is an investor and the profits made by it are only excess obtained on realisations of the investments and not liable to be taxed.
According to Mr. S.T. Desai, neither the Memorandum of Association nor the previous assertions made by the assessee company either under a misconception or even deliberately will not have the effect of changing the legal nature of the transactions as revealed by the transactions themselves and the circumstances in which the transactions have taken place.
In support of this argument reference was made on behalf of the appellant to the statements of the transactions, Annexures 'E ' and 'F ' of the statement of the case and detailed explanations, statements M 1 and M 2.
The substance of the argument of the appellant was that (1 ) most of the shares, securities and properties acquired by the assessee company were the properties of E.D. Sassoon & Co. and the family of Sassoons; (2) a large block of shares held by the company consisted of the shares of the Sassoon Group of Mills and the ' block was held all along since its acquisition before the year 1930 until E.D. Sassoon and Co. and the Sassoons continued to be interested in the said Group of Mills and they were realised by sale only when E.D. Sassoon & Co. and the Sassoons decided to relinquish their interest in the said Group of Mills, and (3) neither the mode of acquisition of these shares.
and properties nor the mode and manner of their disposal have any of the distinctive characteristics of business dealings.
On the questions actually formulated by this Court upon which the Appellate Tribunal has made a statement of the case it is not possible for us to entertain the argument advanced by Mr. S.T. Desai.
It was contended on the contrary by the Attorney General 52 that upon the questions actually referred, the answers must be against the asses.see company.
It was said that there were at least two materials on record to support the finding of the Appellate Tribunal that the assessee company was a dealer in shares, securities and immovable properties during the assessment year in question.
The first is that in its own memorandum dated October 2, 1942, the assessee company contended ' that it was a dealer in shares and investments and set out various reasons in support of its contention.
The second circumstance is that el. 3 of the Memorandum of Association gave the power to the assessee company to deal with investments.
The contention of the Attorney General was that there was material on the record to support the finding of the Appellate Tribunal that the assessee company was a dealer in shares, securities and immovable properties and the questions, as already framed, were rightly answered by the High Court in the affirmative and against the assessee company.
In answer to this contention Mr. S.T. Desai submitted that the real controversy in this case is not reflected in the two questions framed by this Court in its judgment dated May 22, 1957.
It was argued that the two questions up.on which the assessee company applied for a reference under section 66(1) of the Act were properly framed and were questions arising out of the order of the Appellate Tribunal.
Mr. S.T. Desai urged that we should modify the questions in a manner suggested by the assessee company in the application under section 66(1) of the Act and ask the Appellate Tribunal to make a fresh statement of the case.
In our opinion, the argument put forward on behalf of the appellant is well rounded and as we shall presently point out, it is necessary in the interest of justice that we should modify the questions framed by this Court on the last occasion and call upon the Appellate Tribunal to make a fresh statement of the case.
There is no doubt that the jurisdiction conferred on the High Court by section 66(1) of the Act is limited to entertain references involving questions of law.
If, fo.r instance, the point raised on reference relates to the construction of a document of title or interpretation of relevant provisions of a statute, it is a pure question of law.
In dealing with it, the High Court may have due regard for the view taken by the Tribunal, but its decision would not be lettered by that view.
In some cases, the point sought to be raised in a reference may turn out to be a pure question of fact and if that be so, the finding of fact recorded by the Appellate 'Tribunal must be regarded as conclusive in a proceeding under 'section 66(1).
But it would be open to challenge the conclusion of fact drawn by the Appellate Tribunal on the ground that it is not supported by any legal evidence or material or that the conclusion of fact drawn by the Appellate Tribunal 'is perverse and is not ration,ally possible.
It is within these narrow limits that the 53 conclusions of fact by the Appellate Tribunal can be challenged under section 66(1).
Such conclusions can never be challenged on the ground that they are based on misappreciation of evidence.
There is, however, a third class of cases in which the assessee or the department may seek to challenge the correctness of the conclusion reached by the Tribunal on the ground that it is a conclusion on a question of mixed ' law and fact.
Such a conclusion is no doubt based upon the primary evidentiary facts, but its ultimate form is determined by the application of relevant legal principles.
To put it differently, the proper construction of statutory language is always a matter of law and therefore the claim of the assessee that the profits and losses arising from the sale of shares, securities etc.
cannot be taxed as profits of a business involves the application of law to the facts found in the setting of the particular case.
In dealing with findings on such questions of mixed law and fact the High Court must no doubt accept the findings of the Tribunal on the primary questions of fact; but it is open to the High Court to examine whether the Tribunal had applied the relevant legal principles correctly or not in reaching, its final conclusion; and in that sense, the scope of enquiry and the extent of the jurisdiction of the High Court in dealing with such points is the same as in dealing with pure points of law.
(See the decision of this Court in G. Venkataswami Naidu & Co. v.C.I.T.(1)).
On the last occasion it was pointed out by this Court that the question as to what are the characteristics of the business in shares or that of an investor is a mixed question of fact and law.
To put it differently, the question as to what is the legal effect of the facts found by the Tribunal and whether as a result the assessee can be treated as a dealer or an investor is itself a question of law.
The final conclusion of the Tribunal can, therefore, be challenged on the ground that the relevant legal principles have been mis applied by the Tribunal in reaching its decision on the point; and such a challenge is open under section 66( 1 ) because it is a challenge on a ground of law.
It is because the question involved in this case was not a question of pure fact but was a mixed question of fact and law that this Court allowed the appeal on the last occasion and set aside the judgment of the Bombay High Court dated June 15, 1952 and directed the Appellate Tribunal to state a case, but owing possibly to some mistake or inadvertence the actual questions framed by this Court (quoted at page 676 of 32 I.T.R.) and the form in which the questions were framed by this Court seem to assume that the questions involved are questions of fact.
The reason is that it is only in regard to a finding of fact that the question can be properly framed "as to whether there was material to support the said finding".
We are accordingly of the opinion that the questions actually framed by this Court on the last occasion are not appropriate and (1) 54 do not reflect the real controversy between the parties.
It is therefore, expedient in the interest of justice that the questions should be modified as suggested by the assessee company in its .petition under section 66( 1 ) of the Act to the High Court and the Appellate Tribunal should be asked to make a fresh statement of the case.
For these reasons we allow these appeals and set aside the judgment of the Bombay High Court dated March 2, 1966 and direct the Appellate Tribunal to make a fresh statement of the case on the following questions of law: "( 1 ) Whether on the facts and in the circumstances of the case the assessee company can rightly be treated as a dealer in investments and properties; and (2) whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee company can be taxed as business profits." After the Appellate Tribunal has made a statement of the case the High Court will dispose of the reference in accordance with law.
The appellant must pay the costs of this appeal in this Court to the respondent.
We should like to add that we have not considered whether the High Court has in its judgment reached the correct conclusion on what the High Court assumed were 'the questions to be decided by it.
We are setting aside the judgment of the High Court only on the ground that the enquiry made by the High Court was, .on the view taken by us, not competent on the questions as framed at present.
We therefore express no opinion on the merits of the dispute.
We trust that the Tribunal will make the fresh reference with the least practicable delay.
G.C. Appeals allowed.
| IN-Abs | For the assessment years 1940 41 to 1943 44 the assessee company claimed to be an investor in shares and properties and not a dealer.
The contention was rejected by the Income tax Officer, the Appellate Assistant Commissioner and the Tribunal.
The company then applied to the Tribunal under section 66(1) of the Income tax Act, 1922 for a reference of the following questions of law for the opinion of the High Court: (i) whether on the facts and in the circumstances of the case the assessee company can rightly be treated as a dealer in investments and properties ? (ii) whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee company can be taxed as business profits.
The Tribunal refused to make the reference and the High Court dismissed the application under section 66(2).
On appeal by special leave this Court held that the question as to what were the characteristics of the business of dealing in shares or that of an investor was a mixed question of law and fact.
It remanded the case to the High Court for directing the Tribunal to state a case under section 66(2) on the following questions: (i) whether there are any materials on the record to support the finding of the Income tax Officer that the assessee company was a dealer in shares.
, securities and immovable property during the assessment year in question (ii) whether the profits and losses arising from the sale of shares, securities and immovable properties of the assessee company can be treated as business property ? On these questions being referred to the High Court by the Tribunal, the High Court decided them against the assessee company.
The company again appealed to this Court.
It was contended on behalf of the appellant that the questions as framed by this.
Court did not reflect the real controversy 'and therefore the questions as originally framed in the company 's application under section 66(1) should be referred to the High Court in a fresh statement of case to be made by the Tribunal.
HELD: (i) The questions framed by this Court and the form in which they were framed seemed to assume that the questions involved were questions of fact for it is only in regard to a question of fact that the question can properly be framed "as to whether there was material to support the said finding".
This Court had itself held that the questions involved in the present case were mixed questions of law and fact.
Therefore the questions framed by this Court were not appropriate and did not reflect the real controversy between the parties.
It was therefore appropriate that the questions should be modified as suggested by the appellant in its petition under section 66(1) to the High Court.
[53 G 54 B] (ii) The proper construction of statutory language is always a matter of law and therefore the claim of the assessee that the profits and losses arising from the sale of shares securities etc.
cannot be treated as profits 47 of a business involves the application of law to the facts found in the setting of the particular case.
In dealing with findings on such questions of law and fact the High Court must No. doubt accept the findings of the.
Tribunal on the primary questions of fact; but it is open to the High Court to examine whether the Tribunal had 'applied the relevant legal principles correctly or not in reaching its final conclusion; and in that sense, the scope of enquiry and the extent of the jurisdiction of the High Court in dealing with such points is the same as in dealing with pure questions of law.
[53 B D] G. Venkataswami Naidu & Co. vs
C.I.T., , relied on.
|
Appeal No. 972 of 1967.
Appeal from the judgment and order.
dated December 14, 15, 1964 of the Gujarat High Court in Special Civil Application No. 54 of 1964.
D. Narsaraju, S.K. Aiyar, S.P. Nayar and, B.D. Sharma, for the appellants.
S.T. Desai, M.C. Bhandare and K. Rajendra Chaudhuri, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by certificate against the judgment of the Gujarat High Court dated 14th/15th December 1964 in Special Civil Application No. 54 of 1964 whereby a writ of mandamus was issued to.
quash the notices issued under sections 147, 148 and 142(1) of the Income Tax Act, 1961 against the respondent.
The respondent was assessed by the, Income Tax Officer, Ward E, Circle 11, Ahmedabad for the assessment year 1947 48 by an assessment order dated 31 1 1952.
The Income Tax Officer thereafter received 'information that a certain profit made by the assessee in the name of Natwarlal Mardial Pandit who was a benamidar of the respondent had escaped assessment by reason of the respondent not having disclosed it at the time of the original assessment.
The Income Tax Officer, therefore, after obtaining the approval of the Commissioner of Income Tax issued a notice dated 27th March, 1956 under section 34(1)(a) of the Income Tax Act, 1922 (hereinafter referred to as the old Act).
The notice could not be served personally, and, therefore, was served by affixing on a conspicuous part of the respondents.
The respondent objected to the service of the notice and did not file a return stating that there had been no valid service.
When the Income Tax Officer threatened to proceed ex parte, a return was filed under protest on 16 1 19 '57 and in that return the respondent showed the same amount of income which was determined in the original assessment.
Despite the objection.
of the respondent that there was no proper service of notice under section 34( 1 ) (a), the Income Tax Officer proceeded to assess the income of the respondent for the assessment year 1947 48 and made an order 716 dated 29th March, 1957 determining the total income of the respondent at Rs. 89,000 by including the profit alleged to have been earned by Natwarlal Manilal Pandit.
The respondent preferred an appeal to the Appellate Assistant Commissioner who allowed the appeal and set aside the order of assessment on the ground that there was no valid service of the notice.
The ' decision of the Appellate Assistant Commissioner was given on 5 1 1963 by which time the Income Tax Act, 1922 had been repealed and the Income Tax Act, 1961 (hereinafter called the New Act) had come into force with effect from 1st April, 1962.
The time for taking action for assessment or reassessment in case of escaped income exceeding Rs. 50,000 but less than Rs. ,1,00,000/ was enlarged from 8 years to 16 years under the new Act.
On 4 1 1963 the Income Tax Officer, Circle IV, Ward G, Ahmedabad issued a notice calling upon the respondent to show cause why proceedings should not be taken under section 147(a) of the new Act for bringing to tax the escaped profit of the respondent.
The respondent protested against the new notice on the ground that action under the old Act had become time barred and the new Act had no application to his case.
Subsequently, a notice under section 148 of the new Act was issued on 13 11 1963 and this notice was followed by another notice dated 9 1 1964 issued under section 142(1).
The respondent, therefore, preferred Special Civil Application No. 54 of 1964 in the Gujarat High Court praying for a writ of certiorari to quash the notices dated 13 11 1963 and 9 1 1964 by the first appellant.
The High Court took the view that on a true construction of section 297(2)(d)(ii) of the new Act the Income Tax Officer could not issue a notice under section 148 in order to reopen the assessment in a case where the right to reopen the assessment was barred under the old Act at the date when the new Act came into force.
The High Court observed that the right of the Income Tax Officer to reopen the assessment of the resportdent in the present case was admittedly barred under section 34(1 )(a) of the old Act at the commencement of the new Act and it was, therefore, not competent to the Income Tax Officer to issue a notice under section 148 of the new Act in order to reopen the assessment of the ' respondent and to reassess the income of the respondent relying on the provisions enacted under section 297 (2)(d)(ii) of the new Act.
The High Court accordingly allowed the Special Civil Application preferred by the respondent and set aside the notices dated 13 11 1963 and 9 1 1964.
It is necessary at this stage to set out the relevant provisions of the two statutes.
Section 34 of the Income Tax Act, 1922 (No. 11 of 1922) as it stood immediately prior to its amendment by the Finance Act, 1956 is in the following terms : 717 "34.
(1) If (a) the Income Tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under section 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits or gains chargeable for that year or have been underassessed, or assessed at too low a rate, or have been made the subject of excessive relief under the Act or excessive loss or depreciation allowance has been computed, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income Tax Officer has m consequence of information in his possession reason to believe that income, profits or gains chargeable to income tax have escaped assessment for any year, or have been underassessed, or assessed at too ,low a rate, or have been made the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed, he may in cases falling under clause (a) at any time within eight years and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance and the provisions of this Act shall, so far as may be apply accordingly as if the notice were a notice issued under that sub section: Provided that : (1 ) the Income Tax Officer shall not issue a notice under this sub section, unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons recorded that it ' is a fit case for the issue of such notice.
Provided further that nothing in this section limiting the time within which any action may 'be taken, or any order, assessment or reassessment may be made shall app ly to a reassessment made under section 27 or to an assessment or reassessment made on the assessee 718 or any person in consequence of Or to give effect to any finding or direction contained in an order under section 31, section 33, section 33A, section 33B, section 66 or section 66A".
By the Finance Act, 1956 certain amendments were made in section 34 with effect from 1st April, 1956.
The time limit of 8 years in sub section (1 ) in respect of cases failing within clause (a) was removed and the following provisos were substituted for the existing proviso in sub section (1 ) : "Provided that the Income Tax Officer shall not issue a notice under clause (a) of sub section (1) (i) for any year prior to the year ending on the 31st day of March, 1941: (ii) for any year, if eight years have elapsed after the expiry of that year, unless the income, profits or gains chargeable to income tax which have escaped assessment or have been underassessed or assessed at too low a rate or have been made the subject of excessive relief under this Act, or the loss or depreciation allowance which has been computed in excess, amount to, or are likely to amount to, one lakh of rupees, or more in the aggregate, either for that year, or for that year and any other year or years after which or after each of which eight years have elapsed, not being a year or years ending before the 31st day of March, 1941; (iii) for any year, unless he has recorded his reasons for doing so, and, in any case falling under clause (ii), unless the Central Board of Revenue, and, in any other case, the Commissioner is satisfied on such reasons recorded that it is a fit case for the issue of such notice; The Income Tax Act, 1961 (No. 43 of 1961) came into force from 1st April, 1962.
Sub section ( 1 ) of section 297 of the new Act repealed the old Act and by sub section (2) of that section the new Act enacted certain saving provisions consequent upon the repeal of the old Act.
The material provision is set out in clause (d): "297.
Repeals and savings : (1). . (2) notwithstanding the repeal of the Indian Income Tax Act 11 of 1922 (hereinafter referred to as the repealed Act) : 719 (d) where in respect of any assessment year after the year ending on the 31st day of March, 1940 (i) a notice under section 34 of the repealed Act ' had been issued 'before the commencement of this Act, the proceedings in pursuance of such notice may be continued and disposed of as if this Act had not been passed; (ii) any income chargeable to tax had escaped assessment within the meaning of that expression, in section 1.47 and no proceedings under section 34 of the repealed Act in respect of any such income are pending at the commencement of this Act, a notice under section 148 may, subject to the provisions contained in section 149 or section 150, be issued with respect to that assessment year and all the provisions of this Act shall apply accordingly".
Sections 147 to 150 referred to in section 297(2)(d)(ii) and sections 151 to 153 were the provisions of the new Act corresponding to section 34 of the old Act.
In the new Act, section 34 of the old Act was split up into sections 147 to 153.
Section 147 empowered the Income Tax Officer to assess or reassess escaped income in the same kind of cases in which he could do so under section 34 but that right could be exercised subject to the provisions of sections 148 to 153.
Sub section (1) of section 148 provided that before making any assessment or reassessment under section 147, the Income Tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under section 139(2) and sub section (2) of that section imposed an obligation on the Income Tax Officer before issuing such notice, to record 'his reasons for doing so.
Section 149 laid down different time limits for issuing notices and in cases falling within clause ( a ) of section 14 7 corresponding to clause (a) of sub section (1 ) of section 34 the time limits.
were prescribed as follows : "149.
Time limit for notice : (a) No notice under section 148 shall be issued, (a) in cases failing under clause (a) of section 147 (i) for the relevant assessment year, if eight years have elapsed from the end of that year, unless the ease falls under sub clause (ii); (ii) for the relevant assessment year, where eight years, but not more than sixteen years, have elapsed from the end of that year, unless the income chargeable 720 to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year; Section 150(1) makes an exception in cases where assessment or reassessment is sought to be made in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under the Act by way of appeal, reference or revision and provided that in such cases there should be no time limit and notice under section 148 may be issued at any time unless of course the case fell within sub section (2) of section 150.
Section 151 made it a condition precedent to the issue of the notice under section 148 that the Income Tax Officer should obtain the previous sanction of the Central Board of Revenue or the Commissioner of Income Tax according as the notice is proposed to be issued after the expiry of 8 years from the end of the relevant assessment year or after the expiry of 4 years from the end of the relevant assessment year.
On behalf of the appellants Mr. Narasaraju stressed the argument that the High Court was in error in holding that the provisions of the new Act of 1961 were not applicable in cases where the time limit fixed in the old Act had expired before the coming into force of the new Act.
It was contended that section 297(2) (d)(ii) of the new Act was wide in its sweep and it took in all assessment years after the year ending on 31st March, 1940 irrespective of the question whether the right to reopen the assessment in respect of any such assessment years, was barred or not under the old Act at the date when the new Act came into force.
According to Mr. Narasaraju the legislative intention was that once the new Act came into force, the question whether the assessment in respect of any assessment year after the year ending on 31st March, 1940 was liable to be reopened or not should be decided with reference to the provisions of the new Act.
It was argued that the new Act authorised such assessment to be reopened whatever might be the position in regard to the right to reopen such assessment under the old Act.
In our opinion, the argument put forward by Mr. Narasaraju is not warranted.
It is admired in this case that the right of the Income Tax Officer to reopen the assessment for the year 1947 48 was barred under the old Act before the new Act came into force.
In our opinion, it not permissible to construe section 297(2)(d)(ii) of the new Act as reviving the right of the Income Tax Officer to reopen the assessment which was already barred under the old Act.
The reason is that such a construction of section 297(2)(d)(ii) would be tantamount to giving of retrospective operation to that section which is not warranted either by the express language of 721 the section or by necessary implication.
The principle is based on the well known rule of interpretation that unless the terms of the statute expressly so provide or unless there is a necessary implication, retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or to revive any remedy already lost by efflux of time.
On behalf of the appellants reference was made to the opening phrase "where in respect of any assessment year after the year ending on the 31st day of March 1940" occurring in section 297(2)(d)(ii) of the new Act, but these general words cannot take in their sweep assessment years subsequent to the year ending on 31st March, 1940 without regard to the question whether the right to reopen the assessment in respect of any assessment year was or was not barred under the repealed Act.
We consider that the language of the new section must be read as applicable only to those cases where the right of the Income Tax Officer to reopen the assessment was not barred under the repealed section.
In our view, the new statute does not disclose in express terms or by necessary implication that there was a revival of the right of the Income Tax Officer to reopen an assessment which was already barred under the old Act.
This view is borne out by the decision of this Court in S.S. Gadgil vs Lal & Company(1).
In that case, a notice was issued against the assessee as an agent of a non resident on 27th March, 1957 and that notice related to the assessment year 1954 55.
Under clause (iii) of the proviso to section 34( 1 ) as it stood prior to its amendment by the Finance Act, 1956, a notice of assessment or reassessment could not be issued against a person deemed to be an agent of a non resident after the expiry of one year from the end of the year of assessment.
The right to commence a proceeding for assessment against the assessee as agent of a non resident for the assessment year 1954 55 therefore ended on 31st March, 1956 under the new Act before its amendment in 1956.
This provision was, however, amended by the Finance Act, 1956 and under the amended provision the period of limitation was extended to two years from the end of the assessment year.
The amendment was made on 8th September, 1958 but was given effect from 1st April, 1956.
Since the time within which notice could be issued against a person deemed to be an agent of a non resident was extended to two years from the end of the assessment year, it was contended on behalf of the Income Tax Officer that the notice issued by him was within the terms of the amended provision and was; therefore, a valid notice.
Now the notice issued on 27th March, 1957 was clearly within a period of two years from the end of the assessment year 1954 55 and if the amended provision, applied, the! notice would be a valid notice.
It was, however, held by this Court that notice was (1) 722 not a valid notice inasmuch as the right of the Income Tax Officer to reopen the assessment of the assessee under the unmended provision became barred on 31st March, 1956 and the amended provision did not operate against him so as to authorise the Income Tax Officer to commence proceedings for reopening the assessment of the assessee in a case where before the amended provision came into force, the proceedings had become barred under the unamended provision.
At page 240 of the Report, Shah, J. speaking for the Court observed as follows : "As we have already pointed out, the right to commence a proceeding for assessment against the assessee an agent of a non resident party under the Income Tax Act before it was amended, ended on March 31, 1956.
It is true that under the amending Act by section 18 of the Finance Act, 1956, authority was conferred upon the Income Tax Officer to assess a person as an agent of a foreign party under section 43 within two years from the end of th e year of assessment.
But authority of the Income Tax Officer under the Act before it was amended by the Finance Act of 1956, having already come to an end, the amending provision will not assist him to commence a proceeding even though at the date when he issued the notice it is within the period provided by that amending ACt.
This will be so, notwithstanding the fact that there has been no determinable point of time between the expiry of the time provided under the old Act and the commencement of the amending Act.
The legislature has given to section 18 of the Finance Act, 1956, 'only a limited retrospective operation, i.e. up to April 1, 1956 only.
That provision must be read subject to the rule that in ' the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospective than is expressly mentioned, nor to authorise the Income Tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period provided become barred".
In our opinion, the principle of this decision applies in the present Case and it must be held that on a proper construction of section 297(2)(d)(ii) of the new Act, the Income Tax Officer cannot issue a notice under section 148 in order to reopen the assessment of an assessee ,in a ease where the right to reopen the assessment was barred under the old Act at the.
date when the new Act came into force.
It follows therefore that the notices dated 13 11 1963 and 9 1 1964 issued by the Income Tax 723 Officer, Ahmedabad were illegal and ultra vires and were rightly quashed by the Gujarat High Court by the grant of a writ.
For the reasons expressed, we hold that the judgment of the.
High Court of Gujarat dated 14th/15th December, 2964 is correct and this appeal must be dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | Under section 297(2)(d)(ii) of the Income tax Act, 1961.
dealing with repeals and savings, notwithstanding the repeal of the 1922 Act, where in respect of any assessment year after the year ending on 31st day of March, 1940, any income had escaped assessment and no proceedings under section 34 of the repealed Act are pending at the commencement of the 1961 Act, a notice under section 148 of the 1961 Act may be issued for reopening the assessment.
The respondent was assessed to income tax for the assessment year 1947 48.
Thereafter the Income Tax Officer issued a notice under section 34(1)(a) of the Income tax Act, 1922, for reassessment.
There was no proper service of the notice, and despite the respondent 's objection, the Income tax Officer determined the total income of the respondent at Rs. 89,000.
The Appellate Assistant Commissioner allowed the respondent 's appeal by order dated 5th January, 1963 on the ground that there is no valid service of the notice.
On 1st April, 1962 the1922 Act was repealed and the Income tax Act.
1961 came into force, and the time for taking action for reassessment was enlarged.
from 8 years to 16 years.
By that date, the right of the Income Tax Officer to reopen the assessment under section 34(1)(a) of the 1922 Act became barred.
The Income Tax Officer however, issued a notice under section 148 of the 1961 Act for reopening the assessment.
The respondent, thereupon filed a writ petitioning the High Court for quashing the notice and the petition was allowed.
In appeal to this Court.
HELD: On a proper construction of section 297(2)(d)(ii) the Income Tax Officer cannot issue a notice under section 148 in order to reopen the assessment of an assessee in a case where the right to reopen the assessment under the 1922 Act was barred at the date when the 1961 Act came into force.
The reason is that unless the statute expressly so provides or there is a necessary implication, retrospective operation should not be given to it so as to affect, alter or destroy any right already acquired or to revive any remedy ' already lost by effluviums of time.
The 1961 Act does not disclose in express terms or by necessary implication that there was a revival of the right of the Income Tax Officer to reopen an assessment which was already barred under the 1922 Act and if the section is construed as reviving such a right it would be tantamount to giving it retrospective operation which is not warranted by its language.
The words 'where in respect of any assessment year after the year ending on 31st day of March, 1940, ' in the section, cannot take in their sweep all assessment years subsequent to the year ending on 31st March, 1940 without regard 715 to the question whether the fight to reopen the assessment in respect of any assessment year was or was not barred under the repealed Act.
The section must he read as applicable only to those cases where the right of the Income Tax Officer to reopen the assessment was not barred under the repealed section.
[720 H; 721 A D; 722 G H] S.S. Gadgil vs Lal & Co. , followed.
|
Appeal No. 788 of 1968.
Appeal under section 116 A of the Representation of the People.
1951 from the judgment and order dated October 17, 18; 1967 of the Gujarat High Court in Election Petition No. 5 of 1967.
98 Bishan Narain and B. Datta, for the appellant, S.V. Gupte, M.l.
Patel, R.P. Kapur, M.N. Shroff for l. N. Shroff, for the respondent.
The Judgment of the Court was delivered by Hidayatullah, C.J.
This is an appeal from the judgment dated 17/18 October, 1967 of the High Court of Gujarat in an election petition filed by the present appellant.
The election petition was dismissed by the judgment under appeal.
The matter concerns the Petlad constituency in Kaira District from which election was to be held to the State Legislative Assembly Gujarat at the 4th General Election.
The appellant was a candidate for the Swatantra Party and the respondent a .candidate for the Congress Party.
The poll was held on February 21, 1967 and the result of the election was declared .on
February 24, 1967.
The appellant secured 23,795 votes and the respondent 23,981 votes.
1806 votes were declared invalid.
The respondent was therefore declared elected to the seat.
The election petition set out a number of grounds on which the election of the returned candidate was challenged as void under the Representation of People Act.
We are concerned in this appeal with only one such ground.
There is also a prayer in the appeal that a general re count was wrongly disallowed by the learned Judge who decided the election petition and that it should be ordered here.
We shall come to the second ground in due course.
As regards the first ground, the contention was that a car No. GJH 1.08 was hired or procured by the returned candidate and on the day of poll, it was used for free conveyance of three ladies to the polling booth.
In the election petition, the election petitioner had stated that the returned candidate had made extensive use of hired and procured vehicles for the purpose of free conveyance of voters to and from the various polling stations.
Although another instance was cited in the election petition, no evidence was led to support that or any other instance of the user of this or other vehicle.
The whole of the case therefore rested on the use of vehicle No. 108 and also its use on one occasion only, namely, when three lady voters were said to have been brought to the polling booth in it.
According to the election petitioner, he was in the Sayagi Hospital compound wherein two polling booths Nos. 8 and 9 were situated.
He was then accompanied by Suryakant Manilal Shah and Somabhai Chhotabhai Kachhia.
At about 12.30 P.M., a taxi bearing No. GTG 9021 came to.
the gate of the hospital compound, and a lady got out of it.
The election petitioner alleges that he immediately asked Suryakant Manilal Shah to request the Presiding Officer of 99 one of the booths to come out.
Presiding Officer B.M. Bhatt came to the gate and saw the lady who had got out of the taxi.
The lady had in her hand a voter 's identity card with the congress symbol and her No. was Serial No. 535 of Electoral Unit 26/100 belonging to Ward No. 1 of Petlad.
This part of the allegation in the election petition was not used as evidence of free conveyance of voters.
This incident was recited as furnishing the immediate background of what followed.
The allegation in regard to car No. 108 starts from this point.
The ellegation is that while the election petitioner was complaining to the Presiding Officer Bhatt about the other car, car No. 108 came to the gate of the compound and the petitioner along with his companion and Bhatt were standing there.
Three ladies got out of this car bearing identity cards from the congress party and their numbers were 426, 424 and 386 of electoral unit 28/100.
Bhatt then told the election petitioner that these voters would go to the other both and that he was not concerned with that both.
The election petitioner says that he followed the three voters to the next booth and called out the presiding officer K.D. Trivedi and pointed out the three voters to him stating that they were brought by car No. 108.
He asked him to.
verify this from Bhatt.
The complaint of the election petitioner was then recorded by Trivedi and it appears from the evidence that he also questioned Bhatt who endorsed the statement of the election petitioner that he had seen them get out of the car.
In support of this case witnesses were examined.
The net result of the examination of these witnesses established the fact that the ladies came by this car and that a complaint followed.
However no attempt was made to establish that these ladies had come in the car free.
We need not traverse the entire evidence to establish the above conclusions which in our opinion.
are quite clearly demonstrable from the evidence.
There is evidence to show that the car did come, that the three ladies did get out of the same and went to polling booth No. 9 and also that they were holding identity cards issued by the Congress party.
Presumably therefore they were brought in this car for voting on behalf of the Congress.
Attempt was then made to establish connection between the returned candidate and this car.
On this part of the case testimony of the returned candidate was extremely unsatisfactory.
He first said that three cars were placed at his disposal by the congress party between January 15 and January 31, 1967.
In another place he said that he had been given only two cars.
Later he said that two of the cars were withdrawn from him and that after the withdrawal of the cars he had no other car from the congress party.
He denied the use of the cars contrary to 100 the evidence of the purchase of petrol and also denied any connection between himself and one person by name H.I. Pathan, who had written requisition for petrol.
It was however proved by cross examination that this H.I. Pathan is probably one of his nephews, a fact which he denied also.
It appears that before this car was used, the returned candidate opened a new account in the name of Mahendra Electric Company C/o Anwarbeg and petrol was bought for this car along with other cars right upto 21st February in the.
account of this Mahendra Electric Company and that was the returned candidate himself.
Since the requisitions for petrol were issued by H.I. Pathan, the returned candidate was at great pains to deny any connection with him and even went to the length of denying the real names of his own nephews.
However, this only proved that he had procured the car No. 108 from the Congress party or somebody else for his own use during the election propaganda and at the time of the poll.
It also proved that he had purchased petrol not only previously but also.
on the day of poll because entries in respect of this car existed in the accounts of the petrol dealer 's firm on 18, 19, 20 and 21 February.
The evidence also proved that the three ladies did travel by this car on the date of poll and got out of it at the gate of the hospital compound where the polling booth was situated.
The question is whether all this evidence even taken in favour of the election petitioner goes to satisfy the requirement of the law under section 123(5) of the Representation of the People Act.
That section contains many ingredients and to them we shall come presently; one such ingredient is that the car must be used for the free conveyance of the voters to the poll.
The learned Judge who heard the case gave a finding that the car was so used, that is to say, the three Indies were carried free to the booths in this car.
There is no evidence to establish this.
The owner of the car, the driver and the electors namely the three ladies were not examined and there is nothing to show whether they had travelled free or had paid for the privilege.
Mr. Bishan Narain argues in the alternative, firstly, that an inference arises in the present case that the ladies must have been taken free and he refers to the findings given by the High Court on this part of the case.
Next, he argues that this is not the requirement of section 123(5) and he interprets the section so as to save his case from the operation of that section.
As regards the finding of the High Court that the ladies must have travelled free, we can only say that it is a mere surmise because there is no evidence whatever on this part of the case.
Mr. Bishan Narain stated that the best evidence could come from the returned candidate and that his client was not required to prove 101 a negative.
In our opinion, the burden was upon the election petitioner to establish this fact, if it was a requirement of law.
We do not think that it was an utter impossibility because the owner of the car, the driver or one of the ladies could have been questioned about it and something would have then come in evidence.
Since no such attempt was made there is nothing on which we can say whether the ladies were brought free or on payment and regard being had to the strictness of the law on the subject of corrupt practice we must hold in favour of the returned candidate that the requirements of the section have not been met.
This brings us to the examination of section 123(5) with a view to finding out what are its requirements.
We have already indicated that in our opinion the election petitioner must prove in addition to the other ingredients of the section that the vehicle was used for free conveyance of voters which ingredient we have stated was not attempted to be established in the case.
Section 123(5) of the Representation of People Act reads as follows: "The hiring or procuring, whether on payment or otherwise, of any vehicle or vessel by a candidate or his agent or by any other person with the consent of a candidate of his election agent, or the use of such vehicle or vessel for the free conveyance of any elector (other than the candidate himself, the members of his family or his agent) to or from any polling station provided under section 25 or a place fixed under subsection (1 ) of section 29 for the poll: Provided that the hiring of a vehicle or vessel by an elector or by several electors at their joint costs for the purpose of conveying him or them to and from any such polling station or place fixed for the poll shall not be deemed to.
be a corrupt practice under this clause if the vehicle or vessel so hired is a vehicle or vessel not pro pelled by mechanical power: Provided further that the use of any public transport vehicle or vessel or any tramcar or railway carriage by any elector at his own cost for the purpose of going to or coming from any such polling station or place fixed for the poll shall not be deemed to be a corrupt practice under this clause.
Explanation: In this clause, the expression "vehicle" means any vehicle used or capable of being used for the purpose of road transport whether propelled by mechanical power or otherwise and whether used for drawing other vehicles or otherwise.
" 102 This section defines one of the corrupt practices and it consists of the hiring and procuring whether on payment or otherwise of any vehicle.
This hiring and procuring must be by a candidate or his agent or by any other person with the consent of the candidate or his election agent and the hiring according to the section must be for the free conveyance of any elector other than the candidate himself or members of his family or his agent to and from any polling station.
It will, therefore, appear that the section requires three things, (1 ) hiring or procuring of a vehicle; (2) by a candidate or his agent etc.
and (3) for the free conveyance of an elector.
It will be noticed that the section also speaks of the use but it speaks of the use of such vehicle which connects the two parts, namely, hiring or procuring of vehicle and the use.
The requirement of the law therefore is that in addition to proving the hiring or procuring and the carriage of electors to and from any polling station, should also be proved that the electors used the vehicle free of cost to themselves.
The contention of Mr. Bishan Narain that the requirement of free conveyance is not necessary is therefore not borne out by the words of the section.
The two provisos also.
prove the same thing.
The first proviso provides that it would not be a corrupt practice for any elector to hire a vehicle for himself or even a group of electors to join in hiring a vehicle and the second proviso lays down that the use of any public transport vehicle or vessel or any tramcar or railway carriage by any elector at his own cost is not a corrupt practice.
In order words the electors, if they have to perform the journey by hired vehicle must pay for its hire themselves.
They cannot be taken in a hired vehicle free of costs to themselves.
In the same way if a procured vehicle is used, it must not be used for free conveyance of voters.
The journey of the elector must be paid for by him.
If a candidate hires or procures a vehicle for free conveyance of the electors that also is perhaps a corrupt practice but that aspect need not be considered here.
The language seems capable of that interpretation though we express no final opinion.
In the present case there is proof that the vehicles were procured; whether they were supplied by the Congress party or were procured from private parties makes no difference.
There is also proof that the vehicle numbered 108 was, in fact, used for the conveyance of three lady voters.
What is not proved is that there was free conveyance of the ladies in that vehicle.
Mr. Bishan Narain contends that this is very difficult of proof but as we stated earlier it is not impossible of proof because the owner of the car or the driver or the ladies could have been examined to show that the ladies had travelled free in the vehicle.
This is not proved and therefore the ingredients of the section have not been established.
In our opinion therefore there is no room for 103 interference although, our reasons are slightly different from those of the High Court.
was next contended that a general recount was demanded in the case and has been wrongly refused.
We have scrutinized the pleadings on this point carefully and we find that no plea on which it could be rested was made although in the relief clause there is mention of a general recount.
The pleas concerned the votes cast by impersonators and rejected votes.
These have been considered already and therefore there is no room for further count.
On the whole therefore we are of opinion that the judgment under appeal cannot be interfered with.
The appeal fail and will be dismissed.
In view however, of the prevarications of the returned candidate which were not attempted to be explained by his learned counsel we are of opinion that we should not allow him any costs either here or m the High Court and we order accordingly.
R.K.P.S. Appeal dismissed.
| IN-Abs | The appellant challenged the respondent 's election to the Gujarat State Legislative Assembly in February 1967, on the ground, inter alia, that he had committed corrupt practice under section 123(5) of the Representation of the People Act, 1951.
It was alleged that a car was hired or procured by the returned candidate and on the date of the poll it was used for free conveyance of three ladies to the polling booth.
The High Court dismissed the petition.
In the appeal to this Court it was contended that an inference arose in the present case that the ladies must have been taken free to the polling booth and reliance was placed in this respect on certain findings given by the High Court.
There was also a prayer that a general recount was wrongly disallowed by the High Court and that it should be ordered in the present appeal.
HELD: Dismissing the appeal: (i) section 123(5) requires three things, (1) hiring or procuring of a vehicle; (2) by a candidate or his agent etc. 'and (3) for the free conveyance of an elector.
[102 B C] In the present case there was proof that the vehicles were procured; there was also proof that a particular vehicle was in fact used for the conveyance of the three lady voters to the polling booth; what was not proved was that there was free conveyance of the ladies in that vehicle.
The burden of establishing that this fact was on the appellant petitioner and it was not impossible, of proof because the owner of the car or the driver or the ladies could have been examined to show that the, ladies had traveled free in the vehicle.
in the absence of this proof the ingredients of the section had not been established and there was therefore no room for interference with the High Court 's decision though based on slightly different reasons.
The High Court 's finding that the ladies must have travelled free was a mere surmise because there was no evidence whatever on this part of the case.
[100 H, 102 G, H] (2) A scrutiny of the pleadings showed that there was no plea on which the prayer for a recount could be rested though in the relief clause there was mention of a general recount.
The pleas concerned the votes caste by impersonators 'and rejected votes and as these had already been considered, there was no room for a further count.
[103 B]
|
Appeal No. 1948 of 1966.
Appeal from the judgment and decree dated March 22, 1965 of the Gujarat High Court in First Appeal No. 718 of 1960.
Purshottam Trikamdas, M.H. Chhatrapati and A.K. Varma, for the appellant.
G.L. Sanghi, Urmila Kapur and S.P. Nayar, for the respondent.
The Judgment of the Court was delivered by Bachawat, J.
The appellant was the owner of land bearing survey No. 910 situated on the Bhachau Rahapur Road in Kutch District.
In November 1949 the Government of Kutch took possession of the land under an arrangement that the Government would give to the appellant in exchange other suitable lands of equal value.
On that date Kutch was part of the territory of India and the Land Acquisition, Act, 1894 was in force there.
After taking possession of the land the Government constructed thereon the State Guest House and the Court House.
Thereafter the Government was neither willing to return the land nor to give other suitable land in exchange and instead it decided to acquire the land compulsorily.
On February 1, 1955 the Government issued a notification under sec.
6 (1 ) of the Land Acquisition Act declaring that the land was needed for public purposes stating that possession of the land had already been taken over and directing the Collector to take action under sec.
The necessary action was duly taken and in due course the Collector made his award on April 22, 1957.
The appellant objected to the amount of compensation and asked the Collector to make a reference to the Court under sec.
The Collector duly made the reference.
At the hearing of the reference before the District Judge, Kutch, the Government conceded that the appellant was entitled to the market value of the land as on February 1, 1955.
The District Judge awarded compensation accordingly.
The Government filed an appeal in the High Court.
At the hearing of the appeal the Government contended that in the absence of a notification under sec. 4( 1 ), no compensation could be awarded to the appellant.
The High Court accepted the contention and observed that the appellant would be at liberty to contend in other proceed 62 ings that the acquisition was bad in the absence of a notification under sec.
4( 1 ).
In this view of the matter the High Court allowed the appeal and set aside the order of the District Judge.
The present appeal has been filed after obtaining a certificate from the High Court.
The main question arising in this appeal is whether the Government can take up inconsistent positions in Court at successive stages of the same litigation to the detriment of its opponent and whether having conceded before the District Judge that the appellant was entitled to the market value of the land on February 1, 1955 it could at the appellate stage resile from that position and contend that there was no notification under sec.
4(1) on that date and that consequently its opponent was not entitled to any compensation.
The scheme of the Land Acquisition Act is well known.
If the Government desires to acquire land, it has to issue a preliminary notification under sec.
4( 1 ) declaring that the land is needed or is likely to be needed for any public purpose.
This notification has to, be issued in order to give an opportunity to all persons interested in the land under section 5A( 1 ) to object to the acquisition within 30 days after the issue of the notification.
After hearing the objections the Collector has to make a report under sec.
5A(2).
On considering this report the Government may issue a notification under sec.
6 (1 ) declaring that the land is needed for a public purpose.
In cases covered by see.
17(4) the Government may direct that the provisions of sec.
5A shall not apply and if it does so a declaration may be made under sec.
6( 1 ) at any time after the publication of the notification under sec.
4 (1 ).
When the Collector has made an award under sec.
11, he may under see.
16 take possession of the land which thereupon vests in the Government.
Section 18 requires the Collector to make a reference to Court on the application of any person interested in the land who has not accepted the award.
It is the market value of the land at the date of the publication of the notification under sec.
4( 1 ) that can be awarded as compensation by the Collector under sec.
11 and by the Court under sec.
These provisions show that the issue of the notification under sec.
4(1) is a condition precedent to the acquisition of the land.
Where the procedure under sec.
5A has to.
be followed, there must necessarily be an interval of time between the issue of the notification under sec.
4(1) and the notification under sec.
But where sec.
5A does not stand in the way, the prior publication of a notification under 4( 1 ) is not a condition precedent to the publication of a notification under sec.
6( 1 ).
For this reason this Court held in Somavanti vs State of Punjab(1) that where an order was passed [1963] 2, S.C.R. 775, 821 823. 63 under sec.
17(4) dispensing with the procedure Under sec.
5A, it was lawful for the Government to publish both the notifications on the same date.
The procedure under sec.
5A being entirely for the benefit of the persons interested in the land they may waive it, see Toronto Vol.
36, p. 444: "A statutory right which is granted a privilege may be waived either altogether or in a particular case.
" If all persons interested in the land waive the benefit of the procedure under sec.
5A the Government may lawfully issue a composite notification under secs.
4 ( 1 ) and 6 ( 1 ).
In this background let us examine ,the facts of the present case.
The Government having constructed buildings on the land was not in a position to restore it and had: no option but to acquire it compulsorily.
With a view to make the acquisition the Government published a notification under sec.
6( 1 ) on February 1, 1955.
On finding that there was no separate notification under sec.
4( 1 ) the Government had a choice between two courses of conduct.
It could say that in the absence of such a notification the acquisition was invalid and that no compensation could be awarded under sec.
If it did so it would be compelled to start fresh acquisition proceedings and pay a larger sum by way of compensation.
The other course was to treat the notification of February 1, 1955 as.
a composite one under secs.
4(1) and 6(1) with the consent of the appellant and to say that the market value of the land on that day could be awarded by way of compensation.
The Government elected to choose the latter course.
At the hearing of the reference, it conceded that the appellant was entitled to the market value of the land on February 1, 1955.
The appellant agreed to accept compensation on that footing.
Having regard to the consent of both parties, it could properly be assumed that the procedure of section 5A had1 been waived by the appellant and that the notification of February 1, 1955 could be treated as a composite one under sections 4 ( 1 ) and 6 ( 1 ).
The District Judge could therefore lawfully award the market value of the land that day.
Relying on the concession made by the Government, the appellant acted to its detriment.
It did not challenge the acquisition and took no steps to recover the land.
The result is that the Government has been in adverse possession of the land for more than 12 years since 1949 and has gained an advantage which it could not otherwise obtain.
In these.circumstances the Government cannot be permitted to resile from the election which it deliberately made and to say that the appellant is not entitled to the market value of the land on February 1, 1955.
A party litigant cannot be permitted to take up inconsistent positions in (1) 64 Court to the deteriment of his opponents [see Rama Charan Chakrabarty vs Nimai Mondal(1), Bigelow on Estoppel, 6th ed., page 783].
He cannot approbate or reprobate (see Halsbury 's Laws of England, 3rd, ed., vol.
15 article 340).
The concession cannot now be retracted.
The High Court should have disposed of the appeal before it on the footing that the appellant is entitled to the market value of the land on February 1, 1955.
As the High Court did not hear the appeal on the merits, the matter must be remanded to it for final disposal.
In the result, the appeal is allowed, the order of the High Court is set aside and the matter is remanded to the High Court for disposal on the merits.
The respondent shall pay to the appellant the costs of the appeal in this Court.
R.K.P.S. Appeal allowed.
(1) 15 C.L.J. 58.
| IN-Abs | In 1949 the Government took possession of certain land belonging to the appellant under an arrangement whereby the Government was to give to the appellant in exchange other suitable lands of equal value.
After the Government had constructed some buildings on the land, it decided to acquire the land compulsorily.
On February 1, 1959, the .Government issued a notification under section 6(1) of the Land Acquisition Act, 1894, declaring that the land was needed for public purposes and stating that possession of the land had already been taken.
The Collector made an award on April 22, 1957 but the appellant objected to the amount of compensation and the Collector, on his application, made a reference to the Court under section 18.
At the hearing of the reference before the District Judge, the Government concluded that the appellant was entitled to the market value of the land as on February 1, 1955 and the District Judge awarded compensation accordingly.
Thereafter the Government filed an appeal in the High Court and contended that in the absence of a notification under section 4(1); no compensation could be awarded to the appellant.
The High Court allowed the appeal and set aside the order of the District Judge.
On appeal to this Court, HELD: Allowing the appeal: The Government having constructed buildings on the land was not in a position to restore it and had no option but to acquire it compulsorily.
With a view to make the acquisition the Government published a notification under sec.
6(1) on February 1, 1955.
On finding that there was no separate notification under sec.
4(1) the Government had a choice between two courses.
It could say that in the absence of such a notification the acquisition was invalid and that no compensation could be awarded under sec.
If it did so it would be compelled to start fresh acquisition proceedings and pay a larger sum by way of compensation.
The other course was to treat the notification of February 1, 1955 as a composite one under sections 4(1) and 6(1) with the consent of the appellant and to say that the market value of the land on that day could be awarded by way of compensation.
The Government elected to choose the letter course and the appellant agreed to accept compensation on that footing.
Having regard to the consent of both parties, it could properly be assumed that the procedure of section 5A had been waived by the appellant and that the notification of February 1, 1955 could be treated as a composite one under sections 4(1) and 6(1).
The District Judge could therefore lawfully award the market value of the land on that day.
[63 C G] Somavanti.
vs State of Punjab, , 821 823 and Toronto Corpr.
vs Russell, ; referred to.
61 Furthermore, relying on the concession made by the Government the appellant had acted to its detriment in that it did not challenge the acquisition and the Government had come to be in adverse possession of the land for more than 12 years.
In these circumstances the Government could not be permitted to resile from the election which it deliberately made and to say that the appellant was not entitled to the market value of the land on February 1, 1955.
[63 G H] Rama Charan Chakrabarty vs Nimai Mondal, 15 C.L.J. 58; referred to,
|
ew Petition No. 54 of 1968.
(For the review of this Court 's judgment dated July 19, 1968 in Civil Appeal No. 1705 of 1967).
B.S. Patil, M. K. Ramamurthi, Vineet Kumar and Shyamala Pappu, for the petitioner.
S.V. Gupte, S.S. Javali and B. Datta, for respondent No. 2.
The Judgment of the Court was delivered by Shah, J.
Vishwanath Reddy was declared elected to the Mysore Legislative Assembly from the Yadgiri constituency at the poll held in February 1967.
Nadgouda who was a contesting candidate filed a petition before the High Court of Mysore for an order setting aside the election of Reddy on the ground that Reddy was disqualified from standing as a candidate for election and for an order declaring that he Nadgouda be declared elected.
The High Court rejected the petition.
In appeal, this Court held that at the date of nomination Reddy was disqualified from standing as a candidate and passed an order on July 19, 1968 that " . the appeal is therefore allowed, the election of the first respondent is declared void.
In this view of the matter the votes cast in favour ' of the first respondent be treated as thrown away.
As there was no other contesting candidate we declare the appellant (election petitioner) elected to the seat from the Yadgiri constituency.
" Reddy then applied for review of judgment and claimed, relying upon the decision of this Court in Keshav Laxman Borkar vs Dr. Devrao Laxman Anande(1), that in the circumstances of the case no order declaring Nadgouda could be made by this Court.
This Court granted review of judgment by order dated August 27, 1968, and the appeal is now before us for consideration of the question whether it is open to this Court on the finding recorded ' about the disqualification of Reddy to declare Nadgouda as duly elected to the Mysore Legislative Assembly.
(1) 92 Out of seven candidates who.
filed their nomination papers for election, five candidates withdrew their candidature, and Nadgouda and Reddy were the only two candidates remaining in the field.
Nomination of Reddy was challenged before the Returning Officer on the plea that Reddy was disqualified by virtue of section 9A of the Representation of the People Act from standing as a candidate for election to the Mysore .State Legislative Assembly, but that objection was overruled and his nomination was accepted.
Reddy secured at the poll 4000 more votes than Nadgouda and was declared elected.
This Court has declared the election of Reddy void on the ground disqualification under section 9A of the Representation of the People Act, and the question is no longer in issue at this stage.
The only question which remains to be determined is whether in the events which have transpired, Nadgouda could under the law be declared elected.
Section 53 of the Representation of the People Act provides that if the number of contesting candidates is more than the number of seats to be filled, a poll shall be taken, and if the number of such candidates is equal to the number of seats to be filled, the Returning Officer shall forthwith declare all such candidates to be duly elected to fill those seats.
"Disqualified" means "disqualified for being chosen as, and for being, a member of either House of Parliament or of the Legislative Assembly or Legislative Council of a State": section 7(b).
Section 9A of the Act provides: "A person shall be disqualified if, and for so long as, there subsists a contract entered into by him in the course of his trade or business with the appropriate Government for the supply of goods to, or for the execution of any works undertaken, by that Government.
Explanation.
Reddy was on the finding recorded by this Court incompetent to be chosen as a member of the Legislative Assembly.
Objection was raised before the Returning Officer that Reddy was disqualified, but no general notice was given to the electorate about the disqualification.
On the view that Reddy was not disqualified, the Returning Officer accepted his nomination and at the poll Reddy was declared duly elected.
Section 84 of the Representation of the People Act provides that petitioner may, in addition to claiming a declaration that the election of all or any of the returned candidates is void, claim a further declaration that he himself or any other candidate has been duly elected." 93 Nadgouda by his election petition did make a claim that the election of Reddy be declared void and that he Nadgouda be declared duly elected.
Section 100 sets out the grounds on which an election may be declared void, and section 101 sets out the grounds on which a candidate other than the returned candidate may be declared to have been elected.
That section provides: "If any person who has lodged a petition has, in addition to calling in question the election of the returned candidate, claimed a declaration that he himself or any other candidate has been duly elected and the High Court is of opinion (a) that in fact the petitioner or such other candidate received a majority of the valid votes; or (b) that but for the votes obtained by the returned candidate by corrupt practices the petitioner or such other candidate would have obtained a majority of the valid votes, the High Court shall after declaring the election of the returned candidate to be void declare the petitioner or such other candidate as the case may be, to have been duly elected." The expression "valid votes" used in section 101 has not been defined in the Act.
But this Court has held in Keshav Laxman Borkar 's case(1) that a candidate whose nomination paper is accepted after scrutiny, is a validly nominated candidate "at least for the purpose of receiving votes at the election", and that the candidate must be treated as a person for whom votes could be given.
The Court on that view held that where there are only two candidates.
for a seat and the election of the candidate declared elected is set aside on the ground that he was disqualified the defeated candidate cannot be declared elected, and there must be a fresh election.
In the opinion of the Court the votes cast in favour of the disqualified candidate cannot be said to be thrown away unless there is a "special pleading" that certain voters had cast their votes with the knowledge or notice that the candidate for whom they had voted was not eligible for election, and they had deliberately thrown away their votes in favour of the disqualified person: in the absence of such a plea it cannot be said that the votes cast in favour of a person who was by law disqualified from being nominated, but who was in fact nominated, were thrown away.
In the Court 's view a defeated candidate out of the two who contested the election may be declared elected under section 84 read with section 101 of the Act, if he proves that the voters had notice of the disqualification of the successful candidate.
Correctness of this view is challenged before us.
94 The rule enunciated by this Court was apparently adopted from certain cases decided by the Courts in the United .Kingdom.
In Drinkwater vs Deakin(1) it was held that bribing by a candidate at an election, though it renders his election void if he be found guilty of it on petition, does not incapacitate the candidate at that election in the sense that the votes given for him by voters with knowledge of it will be thrown away, and that no disqualification arises in that sense of the term until after the candidate has been found guilty of bribery on petition, and consequently, the petitioner was not entitled to the seat.
In Hobbs vs Morey(2) at a municipal election a person who had an outstanding contract with a municipality was nominated as a candidate and was declared duly elected.
The defeated candidate then claimed the seat on the plea that the successful candidate was disqualified.
It was held that the nomination of the successful candidate was invalid, and as the defeated candidate did not allege any notice to the electorate of the disqualification of the successful candidate, the votes given for him could not be treated as thrown away, and the defeated candidate was not entitled to claim the seat.
In Beresford Hope vs Lady Sandhurst(3) it was held by the Court of Appeal that an 'election of a woman candidate to a county council under the Local Government Act, 1888, being void, the defeated candidate could be declared elected, because it was common knowledge that women are incapacitated from being elected members of a county council and the votes given to the woman candidate were thrown away.
In a recent judgment of the Court of Appeal in Re. Bristol South East Parliamentary Election(4) at the parliamentary election Wedgwood Benn was declared duly elected member of the Parliament.
Prior to that date St. Clair a contesting candidate had sent out notices to all persons entitled to vote stating that by reason of his status as a peer of the United Kingdom Wedgwood Benn was disqualified from being elected a member of Parliament and that all votes given for him would be thrown away and, be null and void.
Similar notices were published in the newspapers circulating in the constituency and were posted at the entrance to.
polling stations.
The Court of Queen 's Bench held in that case that the facts which in law created the incapacity of Wedgwood Benn to be elected a member of Parliament were known to the electors before they cast their votes, and the Court was bound to declare that the votes cast for the successful candidate had been thrown away.
The petitioner (defeated candidate) was accordingly declared duly elected.
(1) [1874] L.R. 9 Court of Common Pleas 626.
(2) (3) (4) 95 The cases decided by the Courts in the United Kingdom appear to have proceeded upon some general rule of election law that the votes.
cast in favour of a person who is found disqualified for election may be regarded as thrown away only if the voters had notice before the poll of the disqualification of the candidate.
But in our judgment the rule which has prevailed in the British Courts for a long time has no application in our country.
Section 53 of the Representation of the People Act renders a poll necessary only if there are more candidates contesting the election man the number of seats contested.
If the number of candidates validly nominated is equal to the number of seats to be filled, no poll is necessary.
Where by an erroneous order of the Returning Officer poll is held which, but for that order, was not necessary, the Court would be justified in declaring those contesting candidates elected, who, but for the order, would have been declared elected.
The rule enunciated by the Courts in the United Kingdom has only the merit of antiquity.
But the rule cannot be extended to the trial of disputes under our election law, for it is not consistent with our statute law, and in any case the conditions prevailing in our country do not justify the application of that rule.
If the rule is applied in our country, the provisions of section 84 read with section 101 (a) would practically be nugatory.
Apart from the immense cost of intimating each voter in the vast electorate in the constituencies the rule that a defeated candidate may be declared elected only if he pleads and proves that the voters had notice of the disqualification would render the exception in the context of prevailing illiteracy and ignorance of large sections of the electorate in our country, a dead letter.
A very large percentage of the electorate in our country is, unfortunately illiterate and sections thereof not infrequently speak a language different from the language of the majority.
It would be well nigh impossible to give .information of the disqualification of a candidate in a medium which the illiterate electors understand.
We are again unable to see any logic in the assumption that votes cast in favour of a person who is regarded by the Returning Officer as validly nominated, but who is in truth disqualified, could still be treated as valid votes.
for the purpose of determining whether a fresh election should be held.
When there are only two contesting candidates, and one of them is under a statutory disqualification, votes cast in favour of the disqualified candidate may be regarded as thrown away, irrespective of whether the voters who voted for him were aware of the disqualification.
This is not to say that where there are more than two candidates in the field for a single seat, and one alone is disqualified, on proof of disqualification all the votes cast in his favour will be discarded and the candidate securing the next highest number of votes will be declared elected.
In such a case, question of notice to the 96 voters may assume significance, for the voters may not, if aware of the disqualification have voted for the disqualified candidate.
The view that we are taking is consistent with the implication of d. (b) of section 101.
When in an election petition which complies with section 84 of the Act it is found at the hearing that some votes were obtained by the returned candidate by corrupt practices, the Court is bound to declare the petitioner or another candidate elected if, but for the votes obtained by the returned candidate by corrupt practice, such candidate would have obtained a majority of votes.
In cases falling under cl.
(b) of section 101 the Act requires merely proof of corrupt practice, and obtaining votes by corrupt practice: it does not require proof that the voters whose votes are secured by corrupt practice had notice of the corrupt practice.
If for the application of the rule contained in cl.
(b) notice to, the voters is not a condition precedent, we see no reason why it should be insisted upon in all cases under cl.
The votes obtained by corrupt practice by the returned candidate, proved to be guilty of corrupt practice, are expressly excluded in the computation of total votes for ascertaining whether a majority of votes had been obtained by the defeated candidate, and no fresh poll is necessary.
The same rule should, in our judgment, apply when at an election there are only two candidates and the returned candidate is found to be under a statutory disqualification existing at the date of the filling of the nomination paper.
We are of the view that Keshav Laxamn Borkar 's case(1) was not correctly decided.
therefore, restore the order passed by this Court by judgment dated July 19, 1968.
Reddy will pay the costs of the review petition as well as of the appeal.
V.P.S. Review petition dismissed.
| IN-Abs | The appellant and respondent were the contesting candidates for a seat in the State Legislative Assembly.
The appellant challenged the respondent 's nomination before the Returning Officer on the ground that the respondent was disqualified under section 9A of the Representation of the People Act, 1951.
No general notice was given to the electorate about the disqualification.
The Returning Officer overruled the objection and accepted the respondent 's nomination.
After the respondent was elected, the appellant flied an election petition in the: High Court, on the same ground, but the petition was rejected.
In appeal, this Court declared the election of the respondent void, and on the question whether the appellant could, under law, be declared elected, HELD: The decision in Keshav Laxman Borkar vs Dr. Devrao Laxman Anande, that votes cast in favour of the disqualified candidate would be deemed to be thrown away only when the, voters had notice of the disqualification, and that in the absence of such notice, there can only be fresh election is wrong.
That rule.
was adopted from English decisions but it is not consistent with the Indian statute.
law and is inappropriate for Indian conditions.
[95 A B; 96 E] (a) Section 53 of the Act renders a poll necessary only if there 'are more candidates contesting the election than the number of seats contested.
If the number of candidates is equal to the number of seats to be filled, the Returning Officer shall forthwith declare all such candidate 's to be dully elected to fill those seats.
[92 D] (b) In cases falling under section 101(b), the Act requires merely proof of corrupt practice and obtaining votes by the corrupt practice: it does not require proof that voters had notice of the corrupt practice.
Therefore, in cases falling under cl.
(a) when there are only two candidates for one seat and the returned candidate is found to be under a statutory disqualification the other may be declared elected under section 84 read with section 101 ( 'a), even though the voters had no notice of the disqualification of the successful candidate.
[96 BE] (c) It would be almost impossible to give notice of the disqualification to the electorate in view of the immense cost involved and the general illiteracy of a large section of voters.
[95 E F] (d) There is no logic in the assumption that votes, cast in favour of person whose nomination was accepted by the Returning Officer but who was really disqualified, could still be: treated as valid votes for deter 91 mining whether a fresh election should be held.
While notice to voters may have significance when there are more than two candidates in the field for a single seat, where there are only two contesting candidates and one of them is under a statutory disqualification, votes cast in his favour may be regarded as thrown away irrespective of whether the voters were aware of the disqualification.
[95 F H] Therefore, where by an erroneous order of the Returning Officer poll is held which, but for that order, was not necessary, the Court would be justified in declaring the contesting candidate elected, who, but for the order of the Returning Officer would have been declared elected.
[19 C D]
|
Appeal No. 853 of 1968.
Appeal under section 116 A of the Representation of the People Act, 1951 from the judgment and order dated January 15, 1968 of the Delhi High Court, Himachal Bench in C.O.P. No. 4 of 1967.
C.B. Agarwala, S.K. Bagga and section Bagga, for the appellant.
Sarjoo Prasad and Naunit Lal, for the respondent.
The Judgment of the Court was delivered by Hidayatullah, C.J.
This is an appeal against the judgment, dated January 15, 1968, of the High Court of Delhi (Himachal Bench) setting aside the election of the appellant to the Santokhgarh Assembly Constituency of Himachal Pradesh.
The election has been set aside on the ground of corrupt practice under section 123(6) of the Representation of People Act read with section 98(b) of the Act.
By a notification dated January 13, 1967 the electors of this constituency were invited to elect a member to the Assembly.
The the last date of withdrawal was January 23, 1967.
Three candidates contested the election.
The appellant was an independent candidate opposed by the respondent who was a Congress nominee and one Shanti Swarup, Jansangh candidate.
The poll took place throughout the constituency on February 18, 1967.
Votes were counted four days later at Una and the result was declared at follows: Vidya Sagar Joshi (Appellant) 8437 votes Surinder Nath Gautam 7695 votes (Election Petitioner) Shanti Swarup 2067 votes 1267 ballots were rejected as invalid.
Thus the present appellant was returned with a margin of 742 votes.
The returned candidate filed his return of election expenses showing an expenditure of Rs. 1,862.05P.
The limit of expenditure in this constituency was Rs. 2,000/ .
One of the contentions of the election petitioner was that he had filed a false return of his election expenses, that he had spent .an amount exceeding Rs. 2,000/ in the aggregate and therefore contravened the provisions of section 77 (3) 86 of the Representation of People Act, 1951 and therefore committed corrupt practice under section l23(6) of the Act.
The election petitioner therefore asked that his election be declared void.
There were other grounds also on which the election was challenged, but we need not refer to them since no point has been made before us.
The main item on which the expenses were said to be false was a deposit of Rs. 500/ as security and Rs. 200/ as application fee which the returned candidate had made with the Congress party on or before January 2, 1967.
The fee was not returnable, but as this payment was, made before the notification calling upon the voters to elect a member to the Assembly nothing turns upon it.
The returned candidate was denied the Congress ticket on or about January 10, 1967.
This was also.
before the said notification.
According to the rules of the Congress party the security deposit was refundable to a candidate if he or she was not selected.
It was however provided in the same rules that if the candidate contested the election against the official Congress candidate, the security deposit would be forfeited.
The returned candidate chose to stand as an independent candidate against the official Congress nominee and incurred the penalty of forfeiture.
This was after the date for the filing of the nomination paper (January 20, 1967).
He had time till January 23, 1967 to withdraw from the contest.
If he had done so the deposit would have presumably been returned to him.
As he became a contesting candidate the forfeiture of the deposit became a fact.
The case of the election petitioner was that if this deposit were added to the election expenses, the limit of Rs. 2,000/ was exceeded and therefore this amounted to a corrupt practice under section 123(6) read with section 77(3) of the Representation of People Act.
The High Court held in favour of the election petitioner and hence the appeal.
Section 77 of the Representation of People Act provides as follows.
: Section 77.
Account of election expenses 'and maximum thereof (1 ) Every candidate at an election shall either by himself or by his.
election agent, keep a separate and correct account of all expenditure in connection with the election incurred or authorised by him or by his election agent between the date of publication of the notification calling the election and the date of declaration of the result thereof, both dates inclusive.
The account shall contain such particulars, as may be prescribed.
87 (3) The total of the said expenditure shall not exceed such amount as may be prescribed.
The third sub section creates a bar against expenditure in excess of the prescribed amount.
In this case the prescribed amount was Rs. 2,000/ .
Section 123(6) provides that "the incurring or authorising of expenditure in contravention of section 77 is a corrupt practice.
" Therefore, if the amount of Rs. 500/was added to the election expenses as declared by the returned candidate he would be guilty of a corrupt practice, under the two sections quoted above.
The question, therefore, is whether this amount can be regarded as an election expense.
The first sub section of section 77 discloses what the candidate has.
to declare as part of his election expenses.
It speaks.
of "all expenditure in connection with the election incurred or authorised by him or by his election agent between the date of publication of the notification calling the election and the date of declaration of the result thereof, both dates inclusive.
" In the present case, therefore, the critical dates were January. 13, 1967 and February 22, 1967.
The amount in question was paid before the first date.
It was liable for confiscation not on the date on which the Congress ticket was refused to the returned candidate but on January 23, 1967 when he did not withdraw from the ' contest and offered himself as a contesting candidate against the official Congress candidate.
In other words, the payment was made before the period marked out by section 77 ( 1 ) but the expenditure became a fact between the two.
dates.
The contention of the returned candidate was that this was not an expenditure within the meaning of section 77(1) of the Representation of People Act and this is the short question, which falls for consideration in the present case.
Section 77 as flamed now departs in language from the earlier provision on the subject which was rule 117.
It read: "117.
Maximum election expenses No expense shall be incurred or authorised by a candidate or his election agent on account of or in respect of the conduct and management of an election in any one constituency in a State in excess of the maximum amount specified in respect of that constituency in Schedule V." The words "conduct and management of election" are not as wide as the words.
"all expenditure in connection with election incurred or authorised by him, "which now find place in section 77".
The question thus is what meaning must be given to the words used in section 77.
The critical words of section 77 are 'expenditure ' 'in connection with election ' and 'incurred or authorized '. 'Expenditure ' means the amount expended and 'expended ' means to.
pay away, lay. out or spend.
It really represents money out of pocket, a going out.
88 Now the amount paid away or paid out need not be all money which a man spends on himself during this time.
It is money in connection with ' his election.
These words mean not so much as 'consequent upon ' as 'having to do with '.
All money laid out and having to do.
with the election is contemplated.
But here again money which is liable to be refunded is not to be taken note of.
The word 'incurred ' shows a finality.
It has the sense of rendering oneself liable for the amount.
Therefore the section regards everything for which the candidate has rendered himself liable and of which he is out of pocket in connection with his election that is to say having to do with his election.
The candidate here put out this money for his election since he was trying to obtain a congress ticket.
If he had got the ticket and the money was refunded to.
him, this would not have counted as an expenditure since the expense would not have been incurred.
When the candidate knowing that the money would be lost went on to stand as an independent candidate, he was willing to let the money go and take a chance independently.
The case of the appellant is that this money was not used in furthering the prospect of his election.
On the other hand, it was in fact used against him by the Congress Party as he was opposed to that party 's candidate.
He contends that such an expense cannot be regarded as expense in connection with the election.
According to him the connection must be a connection of utility and not something which is of no use but rather against the chances of victory.
In this connection the learned counsel draws our attention to Halsbury 's Laws of England, Third Edition Volume 14, at page 177 paragraph 314.
It is stated there as follows: "While no attempt has been made by judges to define exhaustively the meaning of expenses incurred in the conduct or management of an election, it has been said that if expenses are, primarily or principally, expenses incurred for the promotion of the interests of the candidate, they are election expenses.
" It will be seen that the above passage refers to expenses incurred in the conduct or management of an election.
The learned counsel for the appellant and respondent relied upon two decisions of this Court.
Reliance was also placed upon two decisions of the Election Tribunals.
The decisions of the Election Tribunal are of the same Bench and concern Rule 117.
They need not be considered.
The two cases of this Court may be noticed.
In Haji Aziz and Abdul Shakoor Bros. vs Commissioner of Income Tax, Bombay City(1) the question arose under the Indian (1) ; 89 Income tax Act.
A firm importing dates was found to have breached some law and a penalty was imposed on it under the Sea Customs Act.
The firm sought to treat the penalty as expenses and they were disallowed by this Court.
Learned Counsel for the appellant relied on this case and claimed that the same principle applies and this penalty cannot be said to be an expenditure in connection with the election.
The analogy is not apt because not only the prescriptions of the two laws are different but the underlying principle is different also.
In Income tax laws the expenditure must be laid out wholly or exclusively for the purpose of the business etc.
Breaking laws and incurring penalty is not carrying on 'business and therefore the loss is not for the purposes of business.
Here the expenditure is to be included if it is incurred in connection with the election and the payment to secure the seat is an expenditure in connection with the election.
The ruling therefore, does not apply.
In the second case a congress candidate had paid a sum of Rs. 500/ of which Rs. 100/ were subscription for membership and Rs. 400/ were a deposit.
Later he paid Rs. 500/ as donation to the Congress.
He failed to include the two sums of Rs. 500/ each in his return of expenses.
The Tribunal found that both the sums were spent in connection with the election and by including them the limit was exceeded.
This Court affirmed the decision of the Tribunal.
The case was decided under r. 117.
The two sums were considered separately.
The contention was that under section 123 (7) and r. 117 the candidate was nominated only on November 16, 1951 and the first sum was paid on September 12, 1951.
The question then arose when the candidate became a candidate for the application of the Rule and section 123(7).
It was held that the candidate became a candidate when he unequivocally expressed his intention by making the payment.
The question of commencement of the candidature is now obviated by prescribing the two terminii between which the expense is to be counted.
In so far as the case goes it supports our view.
It is risky to quote the decision because the terms of the law on which it was declared were entirely different.
We can only say that there is nothing in it which militates against the view taken by us here.
On the whole, therefore, the judgment under appeal is correct.
The appeal fails and will be dismissed with costs.
Appeal dismissed.
| IN-Abs | The appellant applied for a Congress ticket for election to the Legislative Assembly and deposited certain sums, which according to the rules of the Congress Party was refundable if the candidate was not selected but the deposit was to be forfeited if he contested the election against the official Congress candidate.
The appellant was denied the Congress ticket.
Thereafter the notification inviting electors to elect a member to the Assembly was issued, and the last date for filing nomination papers and for withdrawing from the contest was fixed.
The appellant contested the election against the respondent who was the official Congress nominee and incurred the penalty of forfeiture.
The appellant was declared elected and he filed his return of election expenses.
The respondent challenged the 'appellant 's election on the ground that he had committed corrupt practice under section 123(6) of the Representation of People Act, 1951, for not having included the sum deposited by him in seeking the Congress ticket in his return and by adding this sum to the return of election expenses filed the prescribed amount was exceeded, thereby contravening section 77(3) of Act.
The High Court held in favour of the election petitioner.
Dismissing the appeal, this Court, HELD: Section 77 as framed now departs in language from the earlier provision on the subject which was r. 117.
The words 'conduct 'and management of election ' are; not as wide as the words 'all expenditure in connection with election incurred or authorised by him ' which now find place in section 77 with 'election ' and 'incurred or authorised. ' 'Expenditure ' means the amount expended and 'expended ' means to pay away, lay out or spend.
It really represents money out of pocket, a going out.
The amount paid away or paid out need not be all money which a man spends on himself during this time.
It is money 'in connection with ' his election.
These words mean not so much as 'consequent upon ' as 'having to do with '.
All money laid out and having to do with the election is contemplated.
But here again money which is liable to be refunded is not to be taken note of.
The word 'incurred ' shows a finality.
It has the sense of rendering one self liable for the amount.
The words are not equivalent to 'conduct or management of an election ' and the expenses need not be for promotion of the; interest of the candidate.
Therefore the section regards everything for which the candidate has rendered himself liable and of which he is out of pocket in connection with his election, that is to say having to do with his election.
[87 G 88 B] (In this case, the appellant put out the money for his election since he was trying to obtain a Congress ticket.
If he had got the ticket and the money was refunded to him, this would not have counted as 'an expenditure since the expense would not have been incurred.
When the appellant knowing that the money would be lost went on to stand as an independent candidate, he was willing to let the money go and take a 85 chance independently.
So the 'amount was an expenditure within the meaning of the section.
[88 C D] Haji Aziz and Abdul Shakoor Bros. vs Commissioner of Income tax, Bombay City, ; , distinguished.
|
Appeals Nos. 660 and 811 of 1966.
Appeals by special leave from the award dated January 14, 1965 of the Industrial Tribunal, West Bengal in Case No. VIII260 of 1963.
H.R. Gokhale, B.P. Maheshwari and N.M. Shetye, for the appellant (in C.A. No. 660 of 1966) and respondent No. 1 (in C.A. No. 811 of 1966).
D.L. Sen Gupta, Janardan Sharma and S.K. Nandy, for the appellants in (C.A. No. 811 of 1966) and respondent No. 1 (in C.A. No. 660 of 1966).
A. S.R. Chari and D.N. Mukherjee, for respondent No. 2 (in both the appeals).
The Judgment of the Court was delivered by Vaidialingam, J.
In these two appeals, by special leave, the company and the workmen 's Union attack the award of the Industrial Tribunal, West Bengal, dated January 14, 1965, in so far as it is against each of them.
The Government of West Bengal, by its order dated November 5, 1963, referred for adjudication six issues, viz.: "1. Revision of dearness allowance.
Revision of the scheme of gratuity.
Age of superannuation.
Leave and holidays.
Canteen facilities; and 6.
Shift allowance for supervisors.
In both these appeals we are concerned only with issues nos.
1 to 3.
With regard to dearness allowance, the Tribunal had directed that it should stand revised from November 1963.
It provided a sliding scale for an increase or decrease of Re. 1/ for rise or fall of five points in the cost of living index, with retrospective operation from November 1963.
It further directed that the dearness allowance payable for each month from November 1963 shall be recalculated on that basis and additional amounts due to workmen should be paid in two monthly instalments after the date of publication of the award.
There was a further direction to the effect that the dearness allowance for any particular month shall be calculated on the basis of average cost of living index for three immediately preceding months.
Regarding gratuity, the Tribunal effected certain modifications to the then existing scheme of gratuity, under rules 1, 2 and 3.
The Tribunal increased the maximum gratuity payable to 15 months 116 salary, but deleted the provision contained in the scheme that the maximum should not exceed Rs. 4,000/ .
In rule 2, it further directed the deletion of the qualifying period of 10 years continuous and approved service.
It also modified the provisions of r. 3 by providing for payment of gratuity less any financial loss that has been caused to the employer as a result of misconduct which necessitated the termination of service.
It further provided that in case of a workman leaving service without notice or terminating his employment without the permission of the company, in order to enable him to get gratuity he should have put in service of ten completed years or more.
The Tribunal increased the existing age of superannuation from 55 years to 58 years.
The Union, in its appeal C.A. No. 811 of 1966, attacks the award in respect of all the above matters; but so, far as the company 's appeal C.A. No. 660 of 1966 is concerned, though it has challenged the award, again, in respect of all the above matters to the extent to which they are against it, this Court has granted special leave, by its order dated April 28, 1965, only on the question of dearness allowance.
Before we proceed to deal with the contentions of the parties regarding the award in question, we can straight away dispose of two applications filed by the company.
C.M.P. No. 329 of 1967 has been filed by the company for leave to.
urge additional grounds in the appeal.
By this application the appellant seeks permission to raise contentions regarding certain modifications effected by the Tribunal in the gratuity scheme.
That is, substantially, the company attempts to reopen the limited leave given by this Court on April 28, 1965.
The company has also filed C.M.P. 2860 of 1968 referring therein to certain subsequent proceedings and requesting this Court to take them into consideration in considering the question of dearness allowance.
Both these applications are opposed by the Union and we see no reason to grant the requests contained in each of them.
These two applications are accordingly dismissed.
We shall first take up the question of dearness allowance.
While, on the one hand, the appellant wants a substantial reduction in the dearness allowance granted by the Tribunal, the Union, in its appeal, seeks a substantial increase in the dearness allowance granted by the award.
We have already indicated the decision of the Tribunal in this regard.
Before we actually deal with the contentions of Mr. Gokhale, learned counsel for the company, and Mr. Chari and Mr. Sen Gupta, who followed him, for the Union, it is necessary to refer to certain previous awards, as well as agreements, with reference 117 to dearness allowance.
Though there have been certain awards prior to 1954, it is enough if we state the history, beginning from the agreement between the company and the Union, entered into on September 15, 1954.
Under clause 11 of this agreement it was provided that the then existing rate of dearness allowance would prevail, unless there was a substantial change in the working class cost of living index, in which case the rate would be suitably adjusted.
There is no controversy that the rate of dearness allowance, which was continued under this agreement, was Rs. 30/ .per month.
The issue relating to dearness allowance was referred, by the State of West Bengal, to Shri G. Palit, the Fifth Industrial Tribunal, West Bengal.
It is necessary to refer in some detail to the award of Shri Palit, dated August 26, 1957, because the Industrial Tribunal, in the present case, has not chosen to go behind the said award.
Shri Palit found that after the agreement of September 15, 1954, there had been a substantial increase in the cost of living index justifying the grant of an increased dearness allowance, as contemplated under cl. 11 of the agreement.
According to him, in August 1954 the working class cost of living index stood at 344.1 and in August 1955 it came down to 338.4; it again went up to 391.4 in August 1956.
Shri Palit has also stated that in May 1957 the cost of living index reached 400.6 points.
Accordingly he has noted that there has been a rise of 56 points, from 344.1 in August 1954 to 400.6 in May 1957 and that the said increase justifies a revision of the original rate of dearness allowance.
In considering the quantum of increase in dearness allowance that should be awarded, Shri Palit has again taken note of the fact that at 344 points in September 1954, at the time when the agreement was entered into, the dearness allowance was Rs. 30 per month, and that there is no dearness allowance up to 180 points of the cost of living index.
According to him, the dearness allowance of Rs. 30 per month, in September 1954, represented the dearness allowance for the points in excess of 180 points, viz., for 164 points and that this roughly worked out at Re. 1/ dearness allowance for every 51/2 points.
On this basis Shri Palit held that to cover 56 points ' rise (400 minus 344), the dearness allowance, which could be legitimately claimed by the Union, would be Rs. 10/ odd, as it in fact appears to have been claimed.
But, as normally only 75% neutralisation is granted and in view of the fact that the company, which was a chemical industry, was also in a tight corner, he held that full neutralisation should not be granted.
On this reasoning Shri Palit allowed Rs. 7/ as increase in dearness allowance on the pay scale up to Rs. 50/ and increased dearness allowance of Rs. 5/ , thereafter, for the next Rs. 50/in the pay scale.
In view of the fact that the company had 118 already allowed an increase of dearness allowance of Rs. 2/ , Shri Palit directed that the increase of dearness allowance, as ordered by him, should be adjusted against the amount already paid by the company.
Both the company and the Union appealed to this Court against this award of Shri Palit.
The decision of this Court is reported as Bengal Chemical & Pharmaceutical Works Ltd., Calcutta vs Their Workmen(1).
Referring to the agreement dated September 15, 1954, this Court.
observed that the rate of dearness allowance., continued under that agreement, was accepted by the parties as reasonable on the date of the agreement till there was a substantial change in the working class cost of living index.
This Court further stated that the findings given by Shri Palit were on facts and no permissible ground had been shown for interference with it in an appeal by special leave.
The award of Shri Palit was confirmed by this Court and the company 's appeal was dismissed with costs.
The Union did not press its appeal and that too.
was dismissed with costs.
On January 6, 1962 there was again a memorandum of settlement between the company and the Union, and under cl. 6 it was provided that the then existing slab of dearness allowance in relation to.
the basic pay of the employees would be increased by Rs. 3/ and that the increase was to have effect from November 1, 1961.
The Union made a demand, on May 21, 1962, for revision of the dearness allowance, scheme of gratuity and the age of superannuation.
It also.
presented its demands, on September 3, 1962, to the Assistant Labour Commissioner, West Bengal.
With reference to the revision of dearness allowance, the.
demand of the Union was that there should be hundred percent neutralisation.
As conciliation failed, a reference was made, by the State Government, on November 5, 1963.
We have already indicated the nature of the directions given in the award, in respect of dearness allowance.
The Tribunal, in the award in question, has, after elaborately referring to the agreement of September 15, 1954 as well as the award of Shri Palit and the settlement dated January 6, 1962, rejected the contention of the company that no, case had been made out for a revision of the dearness allowance.
In this connection the: Tribunal referred to.
the chart, filed by the Union, regarding the cost of living index during the years 1961 to 1964 and has noted that the correctness of the chart had not been disputed by the company.
It is of opinion that in January 1962, when the settlement was arrived at on January 6, 1962, the index number was 402 and, after referring to the index numbers in the various months between 1962 and 1964, it concluded that there (1) [1959] Supp. 2 S.C.R. 136. 119 had been a substantial increase in the cost of living index and hence a revision of the dearness allowance was necessary.
The Tribunal no doubt took the view that the financial ability of the company to bear the additional burden, did not come in for consideration because by cl. 10 of the settlement dated January 6, 1962, the company had agreed to.
a modification of the dearness allowance if there was a substantial change in the working class cost of living index.
Regarding the rate of variation that had to.
be fixed, the company appears to have pressed for the acceptance of the principle laid down by this.
Court in The Hindustan Times Ltd., New Delhi vs Their Workmen(1) providing for the linking of the dearness allowance with the cost of living index.
It also appears to have urged that the provision made in the said decision regarding dearness allowance that it should be increased or decreased by Re. 1/ for a rise or fall in the cost of living index by 10 points should be adopted; that is, the appellant pressed that the variation should be linked to a variation of 10 points.
On the other hand, the Union appears to.
have pressed for the acceptance of the method adopted by this Court in a case from West Bengal in Workmen of Hindusthan Motors vs Hindusthan Motors(") viz. o.f providing a sliding scale of an increase or decrease of Re. 1/ for a rise or fall of every five points in the cost of living index.
The Tribunal has, after holding that it cannot go behind the award of Shri PaIit as the said award had been confirmed by this Court, accepted the Union 's contention that there should be an increase or decrease of dearness allowance by Re. 1/ for an increase or decrease of every 5 points in the cost of living index.
It has also held that the cost of living index at the time when the agreement of January 6, 1962 was entered into was 402 and the dearness allowance of Rs. 3/ fixed under the said settlement could be referred only to the said figure of 402.
The Tribunal then considered the question as to from what date the revision of dearness allowance should be given effect to.
Though the company contended that the award should become operative only from the date when it was given and the Union, on the.
other hand, contended that it should be given effect to from the date when the demand for revision was made by it, the Tribunal ultimately held that the increased dearness allowance granted by it should take effect from the month when the reference was made by Government, viz., November 1963.
Mr. Gokhale, learned counsel for the company, has urged that the linking of dearness allowance at the rate provided in the [1964] 1 S.C.R. 234.
(2) [1962] II L.L.J. 352.
120 award is not justified as it departs from the past practice evidenced by the various awards, as well as the agreements and settlements, entered into by the parties.
The Tribunal, counsel urges, has given no special reason to depart from the method adopted on previous occasions According to the learned counsel, the dearness allowance, if any, should have been given on an adhoc or lump sum basis as had been done on prior occasions.
Mr. Gokhale also urges that the financial position, or capacity to bear the additional burden, that will be cast on the company by the grant of increased dearness allowance, which has been held by decisions of this Court to be a relevant factor to.
be taken into account, has not been considered at all by the Tribunal.
In the alternative, counsel urges that even assuming that the method of linking, adopted by the Tribunal, was correct, a very serious mistake has been committed by the Tribunal when it has proceeded on the basis that the increase should be granted on the basis that there has been a rise over the cost of living index of 402.
According to Mr. Gokhale, the evidence clearly shows that on the date of the settlement, viz. January 6, 1962, the cost of living index for January 1962 could not have been available and the parties had before them only the cost of living index for the month of November 1961, which was 421 points and it is on that basis that an increase of Rs. 3/ was fixed in the settlement of January 6, 1962.
Therefore any dearness allowance that is granted must have reference to a rise of the cost of living index above 421 points.
Counsel also attacks the direction regarding effect being given to the award from November 1963.
While contesting the appeal of the company, Mr. Chaff, and Mr. Sen Gupta, learned counsel for the Unions concerned, have urged that at no stage has the dearness allowance been fixed, in this ,company, on any scientific basis.
According to the learned counsel, the agreement, entered into between the parties, should not be taken as indicative of the fact that complete neutralisation has been effected in the matter of fixing dearness allowance.
According to them, Shri Palit has committed a fundamental error in assuming that in the 1954 agreement full neutralisation has been given.
Counsel also point out that the extent or degree of neutralisation to be granted is not rigid and that though hundred per cent neutralisation is not normally given, nevertheless in the case of the lowest paid employees such neutralisation is permissible.
Counsel also urged that the Tribunal has committed a mistake in not accepting the claim of the Union that the question of dearness allowance will have to be considered entirely on the materials placed before it.
without in any manner being influenced by the award of Shri Palit.
It is also, pointed out that even the appellant wanted a sliding scale to be attached to the dearness allowance and provision made for the rate of dear 121 ness allowance being liable to be increased or decreased by Re. 1/ for a rise or fall in the cost of living index by every 10 points, as will be seen from the fact that it pressed for the acceptance of the 'principle laid down by this Court in the Hindustan Times Case(1).
It is further urged that the Tribunal was justified in granting dearness allowance for an increase over the cost of living index of 402, as that was the price .index in the month of January 1962 when the settlement between the parties was effected.
In the appeal, by the Union, regarding dearness allowance, Mr. Sen Gupta, learned counsel, urges that there should have been cent per cent neutralisation in the award of dearness allowance and that there should have been a complete de novo examination of the claim made by the Union for revision of dearness allowance, without being influenced by the award of Shri Palit.
In this connection counsel refers to the decision of this Court in Remington Rand of India vs Its Workmen(2) where it has been held that when a rise.
in the cost of living index has been established, the claim for a revision of dearness allowance cannot be rejected without examining its merits solely on the ground that because a provision has been made for adjustment from time to time, by agreement of parties in a scheme, that scheme ought to remain in force for all time and cannot be reopened or re examined.
Counsel further urges that in any event, the Tribunal should have given effect to its award from May 1962, when the Union had made the.
demand for revision of dearness allowance.
Before we deal with the contentions of the learned counsel, it will be desirable to refer to a few decisions of this Court laying down the principles that have to be borne in mind when a claim for dearness allowance or revision of dearness allowance is considered.
In Clerks of Calcutta Tramways vs Calcutta Tramways Co. Ltd.(3) it is observed: " 'We can now take it as settled that in matters of the grant of dearness allowance except to the very lowest class of manual labourers whose income is just sufficient to keep body and soul together, it is impolitic and unwise to neutralise the entire rise in the cost of living by dearness allowance.
More so in the case of the middle classes.
" (1) [1964] 1 S.C.R. 234.
(2) [1962] 1 L.L.J. 287.
(3) ; , 779.
C.I./69 9 122 In the Hindustan Times Case(1) it is stated at p. 247: "As was pointed out in Workmen of Hindusthan Motors vs Hindusthan Motors (2), the whole purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase on rise in the cost of living and a decrease on a fall in the cost of living." In Greaves Cotton & Co. vs Their Workmen(a), after referring to the Hindusthan Motors Case(2) and French Motor Car Co. 's Case(4), this Court laid down that the basis of fixation of wages and dearness allowance is industry cum region and observed, at p. 368: "The principle therefore which emerges from these two decisions is that in applying the industry cum region formula for fixing wage scales the Tribunal should lay stress on the industry part of the formula if there are a large number of concerns in the same region carrying on the same industry; in such a case in order that production cost may not be unequal and there may be equal competition, wages should generally be fixed on the basis of the comparable industries, namely, industries of the same kind.
But where the number of industries of the same kind in a particular region iS small it is the region part of the industry cum region formula which assumes importance particularly in the case of clerical and subordinate staff, for, as pointed out in the French Motor Car Co 's Case(4), there is not much difference in the work of this class of employees in different industries. ' ' Again, at p. 374, it is stated: "Time has now come when employees getting same wages should get the same dearness allowance irrespective of whether they are working as clerks, or members of subordinate staff or factory workmen.
" In Ahmedabad Mill owners Association vs The Textile Labour Association(5) it has been emphasised that in trying to recognize and give effect to the demand for a fair wage, including the payment of dearness allowance to provide for adequate neutralisation, industrial adjudication must always take into account the problem of the additional burden which such wage structure would impose upon the employer and ask itself whether the employer can reasonably be called upon to bear such burden.
(1) [1964] 1 S.C.R. 234.
(2) [1962] II L.L.J. 352.
(3) ; (4) [1963] Supp.
(5) [1966] I S.C.R. 382.
123 In Kamani Metals & Alloys Ltd. vs 'Their Workmen(1) it has been noted that one hundred per cent neutralisation is not advisable as it will lead to inflation and therefore dearness allowance is often a little less than one hundred per cent neutralisation.
The following principles broadly emerge from the above decisions: 1.
Full neutralisation .is not normally given, except to the very lowest class of employees.
The purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase on the rise in the cost of living and a decrease on a fall in the cost of living.
The basis of fixation of wages and dearness allowance is industry cum region. ' 4.
Employees getting the same wages should get the same dearness allowance, irrespective of whether they are working as clerks or members of subordinate staff or factory workman.
The additional financial burden which a revision of the wage structure or dearness allowance would impose upon an employer, and his ability to bear such burden, are very material and relevant factors to be taken into account.
Having due regard to the above principles, we are satisfied, in the instant case, that the Tribunal has made substantially a correct approach in considering the claim for revision of dearness allowance.
We are not impressed with the contention of either the company or the Union that the Tribunal has committed an error in the matter of revising the dearness allowance.
The company appears to have been more intent upon pressing that there has been no substantial increase in the cost of living since the settlement, dated January 6, 1962 and that, m any event, the Union, n view of cl. 10 of the settlement, was not entitled to ask for a division of dearness allowance before the expiry of three years.
The Tribunal has referred to the rise in the cost of living index after the date of the settlement of January 6, 1962, and it has also, in our opinion, quite rightly held that cl.
10 of the settlement is no bar for entertaining the claim; therefore, its decision hat a revision of the dearness allowance should be made iS perfectly correct.
(1) ; 124 The Tribunal is also.
justified in rejecting the contention of the Union that the revision of the dearness allowance must be made de novo, ignoring the previous award of Shri Palit.
Though, normally, when a claim for revision of dearness allowance is made and a rise in the cost of living index has been established, such a claim has to be considered on its merits, as held by this Court in the Remington Rand Case(1), it cannot be lost sight of, in this case, that the decision of Shri Palit was affirmed by this Court and the appeals, filed by the company and the Union, were dismissed on the ground that the agreement of 1954 was reasonable ,and the findings of Shri Palit were all on facts.
In view of this, the Tribunal, in our view, was perfectly justified in proceeding on the basis that the award of Shri Palit should form the basis for considering the nature of the revision of dearness allowance that would be permissible.
We have already referred to the various matters, adverted to by Shri Palit in his award.
If really the case of the Union was, as is now sought to be put before us, that the dearness allowance on prior occasions had not been fixed on any scientific basis and that Shri Palit erred in proceeding on such an assumption with reference to previous agreements, the proper stage when these questions should have been canvassed was in the Union 's appeal, before this Court, against the award of Shri Palit.
Having allowed that appeal to be dismissed as not pressed, it is no longer open to the Union to raise those contentions now.
We are therefore satisfied that the Tribunal 's view that Shri Palit 's award should form the basis for further reconsideration of the claim for revision of dearness allowance is correct.
The Tribunal has no doubt stated that the financial ability of the company does not come in for consideration, as the company agreed, by the settlement of January 6, 1962, to pay increased dearness allowance if there was a substantial change in the cost of living index.
It is true that the additional financial burden that will be thrown on the company by reason of the revision of dearness allowance is a very material and relevant factor to be taken into account in such circumstances; but, in this case, we do.
not find in the written statement, filed by the company, am plea taken that if the claim of the Union, as made in its charte of demands in respect of dearness allowance is accepted, it will cast a very.
heavy financial burden on the resources.
of the corn pany.
In the absence of any such plea having been taken, w consider it unnecessary to pursue this contention of the appellan any further.
There is the additional circumstance of the provision for modification, as contained in the settlement of January 1962 (1) [1962] II.L.J. 287.
125 The appellant, so far as we can see, has not placed any material before the Tribunal regarding the comparable industries in the region.
As pointed out by the Union, the company seems to have pressed for the grant of dearness allowance being liable to be increased or decreased by Re. 1/ , as was done by this.
Court in the Hindusthan Times Case ( 1 ).
The Union appears to have pressed for an increase or decrease of Re. 1/ in dearness allowance with a rise or fall of every 5 points in the cost of living index.
It is therefore obvious that the appellant also wanted linking of Re. 1/ for every 10 points.
It must also be borne in mind that the alternative way, propounded by the Union, for grant of dearness 'allowance has been rejected by the Tribunal.
Under these circumstances, it cannot be stated that the Tribunal has committed any error in accepting the claim of the Union, supported as it was by the decision of this Court in the Hindusthan Motors Case(2).
Mr. Gokhale next urged that the view of the Tribunal that the increase of Rs. 3/ as.
dearness allowance, given in the settlement dated January 6, 1962, must have been on the basis that the index number was 402, was erroneous.
The settlement was made on January 6, 1962, on which date the index number for January 1962 could not have been available to the parties.
The last month for which the index number was available was for the month of November 1961 and it was 421.
The index number at the time when the award was given by Shri Palit was about 400 and it was really for an increase of 21 points that Rs. 3/ as increment was provided in the settlement.
Though when the Tribunal gave the present award the index number for January 1962 was already available, that figure could not have formed the basis of the settlement, and it is inconceivable that for a rise of only 2 points, i.e., from 400 in 1957 to 402 in 1962, a rise of Rs. 3/ in the dearness allowance would have been provided for.
Therefore the increase or decrease provided for by the Tribunal must really relate to the cost of living index of 421 points, and not to 402 points.
Mr. Sen Gupta, learned counsel for the Union, found considerable difficulty in supporting that reasoning in the award on this matter.
We are in agreement with the contentions of Mr. Gokhale in this regard.
Chart, Exhibit 4, furnished by the Union, clearly shows that the index number in November 1961 was 421 points.
It also shows that the index for January 1962 was 402 points, but the index for that month was not available till the end of January 1962 and it could not have been before the parties when the settlement was made on January 6, 1962.
Therefore, the index number of 421 must have been taken into (1) [1964] I S.C.R. 234.
(2) [1962] II I.L.J. 352.
126 account on the date of the settlement and it must have been really for the increase of 21 points, after the date of Shri Palit 'section award, that the additional sum of Rs. 3/ was fixed as dearness allowance.
If on the other hand, the Tribunal 's view is correct, there would have been only an 'increase of 2 points, from 400 to 402, and for that increase of 2 points, the sum, of Rs. 3/ was fixed, as dearness allowance.
In our opinion, that reasoning of the Tribunal cannot be accepted.
Therefore the award of the Tribunal will have to be modified, in this regard, by directing that the sliding scale providing for an increase or decrease of Re. l/for a rise or fall of every 5 points, must be related to the cost of living index of the base of 421 (that being the cost of living index for November 1961 ) and not of the base of 402, as.
directed by the Tribunal.
The last contention of Mr. Gokhale, bearing upon dearness allowance, is that the direction that the award will have retrospective effect from November 1963 is erroneous.
In this connection: Mr. Gokhale referred us to el.
10 of the settlement of January 6, 1962 stating that the settlement was to remain operative for three years.
According to learned counsel, any rise in dearness allowance should have effect only after the expiry of three years from January 6, 1962, or, at any rate, from the expiry of three years from November 1, 1961, the date on which the increase in the settlement had been given effect to.
Mr. Sen Gupta, in the Unions appeal, pressed for the award being given effect to from May 1962 when the Union had made a demand on the company for revision of dearness allowance, especially when the Tribunal had itself found that there had been a substantial rise in the price index after the date of the settlemeat.
It will be seen that both the parties have a grievance regarding the date from which the revision of dearness allowance should be given effect to, We are not impressed with the contentions of both the parties, in this regard.
The Tribunal has taken note of the rise in the cost of living index, as well as the demand having been made by the workmen, as early as May 21,.
It has also adverted to the fact that the reference, by the State Government, was made on November 5, 1963.
It has further adverted to.
the fact that though ' the cost of living index had increased considerably, the company did not choose to adjust the dearness allowance suitably.
It was, after having regard to all the circumstances that the Tribunal felt that the workmen should get dearness allowance commensurate with the cost of living index, at least from the month of reference, viz., November 1963.
As laid down by this Court in the Hindusthan Times Case(1), no general formula can be laid down as to the date from which a (1) [1964] 1 S.C.R. 234. 127 Tribunal should make its award effective and that that question has to be decided by the Tribunal On a consideration of the circumstances of each case.
In the said decision this Court declined to interfere with the Tribunal 's direction that reliefs given by it would become effective from the date of reference.
In Kamani Metals Ltd. Case(1) the workmen had made demands on July 1, 1961.
The Conciliation Board was moved on September 8, 1962 and, when conciliation failed, a reference was made on December 14, 1962.
The Tribunal made an award, retrospective from October 1, 1962, a date between the reference to conciliation and the reference to the Tribunal.
That decision of the Tribunal was accepted by this Court.
Recently, in Hydro (Engineers) Pvt. Ltd. vs The Workmen(2) this Court declined to interfere with the direction given by a Tribunal that its award should take effect from the date of demand made by the workmen.
It has also been pointed out, in the said decision, that it is a matter of discretion for the Tribunal to decide, from the circumstances of each case, from which date its award should come into operation, and no general rule can be laid down as to the date from ' which a Tribunal should bring its award into force.
Therefore it will be seen that when a Tribunal gives a direction regarding the date from which it has to become effective, no question of principle, as such, is involved.
From the above decisions of this Court, it will also be seen that this Court has declined to interfere with an award having effect from either the date of demand, or the date.
of reference, or even a date earlier than the date of reference but after the date of demand.
In fact, the direction given by the Tribunal, in the case before us, giving effect to its award from the date of reference, squarely comes within the decision of this Court in the Hindusthan Times Case(3) and, as such, that direction is correct.
To conclude, on this aspect of dearness allowance, excepting for the direction that the rate of increase or decrease awarded by the Tribunal should be related to the cost of living index of 421 and not 402 (as directed by the Tribunal), in all other respects the decision of the Tribunal on this point will stand.
This closes ' the discussion on the appeal of the company and the appeal of the Union, in so far as they relate to dearness allowance.
There are two further points, taken by the Union, in its appeal, one relating to the modifications effected to the gratuity scheme, and the other relating to the age of superannuation.
The provisions in the gratuity scheme, which came up for consideration before the Tribunal, were as follows: (1) ; (2) [1969] 1 S C.R. 156.
(3) [1964] 1 S.C.R. 234. 128 "1.
On the death of an employee while in the service of the company, one month 's salary for each completed year of service subject to a maximum of 12 months salary not exceeding Rs. 4,000 on the average of the last three years salary to be paid to his heirs or dependants as the Board may in their discretion decide.
On voluntary retirement due to illness or termination of service by the company after 10 years continuous and approved service one month 's pay for each year of service subject to a maximum of 12 months pay not exceeding Rs. 4,000.
No employee shall be entitled to claim any gratuity if he is dismissed for dishonesty or misconduct or if he will have left service without notice or terminated his employment without the permission of the Company.
" The Tribunal has effected certain modifications.
to r. 3 which, in our opinion, are quite consistent with the decision of this Court in Management of Wenger & Co. vs Workmen(1).
Therefore the Union cannot have any grievance regarding the Tribunal 's directions, in this 'regard.
So far as rr. 1 and 2 are concerned, the Tribunal modified them by increasing the ceiling from 12 months ' salary to 15 months ' salary and deleted the pecuniary limit of Rs. 4,000.
In r. 2, the Tribunal further directed the deletion of 10 years ' continuous and approved service, to enable a workman to get gratuity in the circumstances mentioned therein.
Mr. Sen Gupta, learned counsel for the Union, urged that the Tribunal committed an error in prescribing the ceiling of 15 months ' basic wages and that the Tribunal should have modified r. 1 by providing that the average last one year 's salary should be taken into account for the purpose of calculating gratuity, instead of the three years ' period provided in the rule.
Mr. Gokhale, learned counsel for the company, pointed out that his client has been prejudiced by the modifications effected by the Tribunal, but the company had now been precluded from raising these objections because of the limited leave given by this Court.
Nevertheless, the counsel pointed out, inasmuch as the Tribunal was increasing the ceiling from 12 months to.
15 months and deleting the further pecuniary limit of Rs. 4,000/ , as well as the qualifying period to enable a worker to earn gratuity, the Tribunal must have felt that no further modifications were necessary.
In our opinion no case has been made out by the Union for interfering with the directions given by the Tribunal and we are also satisfied that there has been no improper exercise of discretion by the Tribunal in this regard.
It has effected certain modifications in favour of the (1) [1953] supp.
2 S.C.R. 862.
129 workmen and obviously it did not think it necessary to make any further .modifications as pressed by the Union.
Therefore, the objections to the: modifications, raised on behalf of the Union have to be rejected.
The last point that has been agitated by the Union, in its appeal, is regarding the age of.
superannuation.
The provision regarding age of superannuation, as obtaining then in the company, was as follows : "The age of retirement as mentioned in the Company 's Standing Orders under r. 9 will henceforth be strictly followed in case of all employees.
The employees.
henceforth shall retire at the age of 55.
Extension, if any, will depend on Company 's discretion.
" The Tribunal increased the age of superannuation to 58 years from 55 years.
It has relied upon two circumstances in coming to this conclusion: (a) that this Court has raised the age of retirement from 55 to 58 years in Jessop 's Case(1) which was a case from West Bengal, with regard to clerical and subordinate staff, other than those who.
were workers under the Factories Act.
The appellant 's industry, which is of a different nature, being a chemical and pharmaceutical industry, all the workmen of such a company factory workers or non factory workers should have the same age of superannuation.
(b) The fixation of the age of retirement for its employees, by the Government of West Bengal, at 58 years.
Mr. Sen Gupta urged that the age of superannuation should have been raised to 60 years.
It is not necessary to refer to the earlier decisions of this Court, on this point.
Recently, in The Management of Messrs. Burmah Shell Oil Storage and Distributing Co. Ltd. vs Its Workmen(2), this Court, after a review of the prior decisions, held that in fixing the age of superannuation the most important factor that has to be taken into consideration is the trend in a particular area.
Applying this test, we are satisfied that the Tribunal 's fixing of the age of retirement at 58 years is justified.
As already noted, it has relied upon Jessop 's Case(1) which related to West Bengal and the age of retirement fixed by the State Government.
Therefore the Tribunal has taken note of the trend in the particular area, viz., West Bengal, when it increased the age of superannuation from 55 to 58 years.
Therefore the Union 's claim that it should be further increased to 60 years cannot be sustained.
(1) [1964] I L.L.J. 451.
(2) Civil Appeal No. 44 of 1968, decided on May 1, 1968.
130 In the result, excepting for the modification indicated by us with regard to the cost of living index in respect of dearness allowance, in all other respects we confirm the award.
The appeal, by the company, is therefore partly allowed to the extent of the modification noted above.
The appeal of the Union is dismissed.
Parties will bear their own costs.
G.C. C.A. No. 660/66 partly allowed.
No. 811 / 66 dismissed.
| IN-Abs | In 1954 the Bengal Chemical and Pharmaceutical Works Ltd. entered into an agreement with its workmen about dearness allowance.
In 1957 dearness allowance was again fixed by an award of the Fifth Industrial Tribunal, Bengal on the basis of the cost of living index in May 1957 which stood at 400.6.
The company as well as the workmen 'appealed against the said award to this Court.
The company 's appeal was dismissed and the workmen did not press their appeal.
On January 6, 1962 there was a fresh settlement between the company and the workmen whereby dearness allowance was raised by Rs. 3.
On a fresh industrial dispute arising in May 1962 the State Government made a reference to the Industrial Tribunal which gave its award on January 14, 1965.
In respect of dearness allowance the award provided a sliding sale for an increase or decrease of Re. 1/ for rise or fall of five points in the cost of living index, with retrospective operation from November 5, 1963 i.e. the date when the reference was made.
It further made certain modifications in the company 's gratuity scheme and raised the age of superannuation from 55 years to 58.
The company as well as the workmen appealed to.
this Court against the Tribunal 's award.
HELD: (1) (i) The following broad principles relating to fixation of dearness allowance emerge from the earlier decisions of this Court: 1.
Full neutralisation is not normally given, except to the very lowest class of employees, 2.
The purpose of dearness allowance being to neutralise a portion of the increase in the cost of living, it should ordinarily be on a sliding scale and provide for an increase in the rise in the cost of living and decrease on a fall in the cost of living.
The basis of fixation of wages and dearness allowance is industry cum region.
Employees getting the same wages should get the same dearness allowance, irrespective of whether they are working as clerks or members of subordinate staff or factory workmen.
The additional financial burden which a revision of wage structure or dearness allowance would impose upon an employer, and his ability to bear such burden, are very material and relevant factors to be taken into account.
[123 B E] Clerks of Calcutta Tramways vs Calcutta Tramways Co. Ltd. ; , 779, The Hindustan Times Ltd. New Delhi vs Their Workmen, [1964] 1 S.C.R. 234, Greaves Cotton & Co. vs Their Workmen ; , French Motor Car Co. Ltd. vs Workmen,.
[1963] Supp. , Ahmedabad Mill Owners ' Association v, The Textile Labour Association; , and Kamani Metals & Alloys Ltd. vs Their Workmen, ; , referred to.
Having regard to the above principles, in the present case, the Tribunal had made a substantially correct approach in considering the claim for revision of dearness allowance.
[123 E F] 114 (ii) The Tribunal rightly held that cl. 10 of the settlement of January 6, 1962 providing that the union was not entitled to ask for a revision of dearness allowance before the expiry of three years, was not a bar for entertainment of the claim.
Its decision that in view of the rise in the cost of living a revision of the dearness allowance should be made was perfectly correct.
[123 G H] (iii) The Tribunal was also justified in rejecting the contention of the ' union that the revision of the dearness allowance must be made de novo, ignoring the previous award of the Fifth Industrial Tribunal.
It could not be lost sight of that the said award had been challenged in this Court and the appeals filed by the company 'as well as the workmen were dismissed.
[124 A B] Remington Rand of India vs Its Workmen, [1962] I L.L.J. 287 distinguished.
(iv) The additional financial burden that would be thrown on the company by reason of the revision of dearness allowance was a very material and relevant factor to be taken into account but the contention of the company in this respect could not be considered in the absence of a plea in its written statement to the effect that it would not be able to bear the burden.
[124 F G] (v) In view of the Hindustan Motors Case it could not be said that the Tribunal had committed 'any error in accepting the claim of the union for increase or decrease of Re. 1/ for every rise or fail of five points in the cost of living index.
[125 B C] Workmen of Hindusthan Motors vs Hindusthan Motors , followed.
(vi) The Tribunal was in error in holding that the cost of living index for January 1962 which was 402 was the basis of the settlement of January 6, 1962.
On the facts of the case the settlement must be taken to have been based on the index for November 1961 which was 421.
[126 A C] (vii) From the decisions of the Court it is seen that this Court has declined to interfere with an 'award having effect from either the date of demand, or the, date of reference or even a date earlier than the date of reference but after the date of demand.
The direction given by the Tribunal in the present ease giving effect to its award from the date of reference, squarely came within the decision of this Court in the Hindustan Times Case.
1127 E F] The Hindustan Times Ltd. New Delhi vs Their Workmen [1964] 1 S.C.R. 234, Karoant Metals & Alloys Ltd. vs Their Workmen; , and Hydro (Engineers) Pvt. Ltd. vs The Workmen, ; referred to.
(2) There was no improper exercise of discretion by the.
Tribunal in making modifications in the company 's gratuity scheme, 'and there was no ground for interfering with its directions in this regard.
[128 G] Management of Wenger & Co. vs Workmen, [1963] Supp.
2 S.C.R. 862, applied.
(3) In fixing the age of superannuation the most important factor that has to be taken into consideration is the trend in a particular case.
Applying this test the fixation of the age of superannuation of 58 years was justified.
[129 G] Jessop 's case, and Management of M/S. Burmah Shell Oil Storage and Distributing Co. Ltd. vs Its Workmen, C.A. No. 44/68 dated 1 5 68, applied. 115
|
Appeals Nos. 586588 of 1967.
Appeals from the judgment and order dated April 20, 1965 of the Rajasthan High Court in D.B. Civil Writ Petitions Nos.
51 F of 1964, and 26 and 67 of 1965.
M.C. Chagla, Bishambar Lal, H.K. Puri, M.K. Garg and K.K. Jain, for the appellants.
S.T. Desai, N.D. Karkhanis, R.N. Sachthey and B. D. Sharma, for the respondents.
The Judgment of the Court was delivered by Shah, J.
Jaipur Udyog Ltd. a Company registered under the Indian Companies Act, 1913, established in 1953 a cement factory at Sawai Madhopur in the State of Rajasthan.
From time to time the Company filed its returns under the Income tax Act, 1922, and after the repeal of that Act under the Act of 1961.
The following chart sets out the income or loss returned by the Company for the years 1954 55 to 1964 65 and the 195 income or loss computed for the years by the Income tax Officer on assessment: Year of Income or loss returned Income or loss compu Assessment by the Companyted by the1.
ted bythe T.0.
1954 55 61,24,270 (Loss)22,53,457(LOSS) 1955 56 14,59,963(Profit)19,84,447(Profit) 1956 57 12,92,958(Profit)16,88,480(Profit) 1957 58 23,05,305(Loss)12,53,222(Loss) 1958 59 46,44,779(Loss)31,48,707(Loss) 1959 60 28,77,487(Loss)20,62,180(Loss) 1960 61 11,35,365(Loss)Assessmentpending.
1961 62 66,086 (Loss) 1962 63 44,93,236 (Profit) 1963 64 7452402 (Profit) 1964 65 59,89,757 (Profit) Against the orders of assessment made by the Income tax Officer for the years 1954 55 to 1959 60 determining its net income or loss as set out in the chart the Company appealed to the Appellate Assistant Commissioner, and the appeals were pending at the dates of commencement of the petition, in the High Court of Rajasthan which give rise to the proceedings in this Court.
Assessments for the years 1960 61, 1961 62, 1962 63, 1963 64 and 1964 65 were however then not completed.
In its return of income for the assessment year 1963 64 the Company claimed to set off against the income returned Rs. 1,03,03,935 being the aggregate amount of loss which it claimed it had suffered in the previous years and was entitled to set off against the income of that year.
The Income tax Officer made a provisional assessment of tax under section 141 of the Incometax Act, 1961, and against the income returned by the Company he allowed deduction of Rs. 39,89,731 as loss carried forward from the earlier years, and made a demand for Rs. 8,73,873 as tax provisionally due and Rs. 87,387 as penalty for default in compliance with the demand.
The Company moved petition No. 51 of 1964 in the High Court of Rajasthan and challenged the order claiming that the Income tax Officer was bound to accept the return made by the Company and could not assess it to tax on income not admitted.
For the assessment year 1964 65 the Company returned a net income of Rs. 59,89,757 as profit, and claimed to set off against that amount Rs. 36,01,735 as loss of the previous years and paid Rs. 12,12,596 65 as tax due by it in accordance with section 140A (1) of the Act.
But the Income tax Officer made a provisional assessment and computed the tax on the total income of Rs. 59,89,757 returned by the Company without allowing any deduction claimed and ordered the Company to pay an additional amount of Rs. 17,32,768 60.
Against that order the Company moved petition No. 26 of 1965, for an order quashing the demand 196 of tax and for an injunction restraining the Income tax Officer from enforcing the demand.
For the assessment year 1965 66 the Income tax Officer relying upon section 210(3) of the Act called upon the Company to pay Rs. 29,45,365 25 as advance tax.
The Company moved petition No. 67 of 1965 in the High Court of Rajasthan, for an order quashing the demand.
The High Court rejected the three petitions.
Against the orders passed by the High Court, these three appeals have been preferred by the Company.
Section 141 of the Income tax Act, 1961, authorises the Income tax Officer to make a provisional assessment of the income of the assessee on the basis of the return made under section 139 and the accounts and documents, if any, accompanying the return.
The assessment so made is summary and is based only on the return and the accounts and documents filed by the assessee.
The Income tax Officer is not bound to make any enquiry before making a provisional assessment: he is not bound even to give to the assessee any notice of his intention to make a provisional assessment, nor to hear the assessee.
He may, if he desires, call upon the assessee to elucidate the return or the entries posted in the accounts and documents, but he is not obliged to do so.
Section 141 has been enacted with the object of expediting collection of tax on the basis of the return made by the assessee.
The Act contains several provisions for collection of tax before regular assessment, e.g. payment of advance tax, deduction of tax at source from salary and dividends, provision for self assessment etc.
The object of these provisions is to collect tax on certain classes of income before regular assessment.
The provisional assessment does not bind the assessee nor the Department: the quantum of tax computed and levy thereof are not binding upon the assessee and the Revenue.
Tax paid pursuant to provisional assessment is liable to be adjusted in the light of the final order in the regular assessment.
An appeal against the order is expressly prohibited.
The Income tax Officer must, however, apply the rate operative in the assessment year by virtue of the Finance Act and give effect to the allowances mentioned in sub section
(2) of section 141 whether the assessee has claimed them or not.
But the assessee has no right to be heard or to explain or elucidate and has no right of appeal against the computation or the levy of tax.
The Company claimed that it was entitled to deduct the aggregate of losses which it had suffered since the year 1954 55 year after year from the profits of the year 1963 64.
It is true that the loss returned by the Company year after year was in excess 197 of the amount of loss determined by the Income tax Officer.
But in respect of the orders of assessment appeals were pending.
Counsel for the Revenue concedes that assessment under section 141 being provisional, the Income tax Officer cannot make an enquiry into disputed questions of fact or law, but he submits, relying upon sub section
(2) of section 141, that the assessee cannot claim, and the Income tax Officer cannot allow, loss in respect of previous years in excess of the loss certified by the Income tax Officer.
That he says is the effect of sections 72 and 80 of the Income tax Act, 1961.
Section 72 provides: "( 1 ) Where for any assessment year, the net result of the computation under the head "Profits and gains of business or profession" is a loss to the assessee, . and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been so set off or, . or where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and (i) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year: Provided that the business or profession for which the loss was originally computed continued to be carried on by him in the previous year relevant for that assessment year; and (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on.
(2) (3) No loss shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.
" Section 80 of the Act provides: "Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed under section 139, shall be carried forward and set off under sub section (1 ) of section 72 or " Under section 72(1) read with section 80 loss of a previous year under the head of income from profits and gains of business, profession 198 or vocation may be carried forward to the next succeeding year only if it has been determined in pursuance of a return filed under section 139.
If it is not so determined in the assessment of the subsequent year the loss cannot be carried forward and set off against the profit of the subsequent year or years.
By sub section
(2) of section 141 the Income tax Officer is enjoined to give effect to the loss so certified and carried forward.
But it does not follow therefrom that when the assessee claims that out of the income of the year returned by him certain amounts are liable to be deducted in computing the taxable total income, the Income tax Officer may adjudicate upon the validity of the claim in making a provisional assessment.
In our judgment, if it be granted that the Income tax Officer has jurisdiction to hold an enquiry into disputed matters, the expression "provisional assessment" may lose all significance: the income tax Officer may under a summary assessment without giving an opportunity to the assessee to explain his claim negative it and the assessee has no redress under the Act against any erroneous or arbitrary action.
The Court would not, unless compelled by the phraseology of the statute or by the clear implication arising therefrom, be justified in accepting that view.
The clearest implication of section 141 bars an enquiry at the stage of making a provisional assessment into disputed questions of law and fact: it is a matter of no moment that the dispute raised is complicated or is easy of solution.
In our judgment, once a dispute is raised by the assessee the Income tax Officer has no discretion.
By sub section (2) of section 141 the Income tax Officer is enjoined to give effect to the provisions of section 32(2), 72(1), 73(2) and 74(1) of the Act: sub section
(2) does not enlarge his jurisdiction under sub section
The High Court was of the view that the basic scheme of the Act is that tax is to be charged at the rate or rates prescribed for the year on the total income of the assessee and in accordance with the provisions of the Act, and that this basic scheme applies alike to a provisional assessment as to a regular assessment.
Consequently in construing the provisions of section 141 of the Act, assessment of tax must also be made in accordance with and subject to the provisions of the Act, i.e. in making u provisional assessment the "necessary facts" about the income of the assessee must be taken by the Income tax Officer from the return and the documents accompanying it and he should not travel beyond, but in making the provisional assessment he cannot ignore the other statutory provisions: he must apply the law correctly to the admitted facts as per return.
The High Court proceeded to observe: "The combined effect of the two sections, namely, sections 72 and 80 of the Act, is that a business loss can be carried forward to the subsequent assessment years 199 only when it has been determined in pursuance of a return filed under section 139 of the Act.
" The claim of the Company that it was entitled to the benefit of carry forward losses of previous years, merely because it had shown such losses in the returns, could not, in the view of the High Court, be accepted: to give effect to the claim of the Company, in the view of the High Court, will be to ignore the provisions of section 80 which apply both to a regular assessment and a provisional assessment under section 14].
We are unable to accept the opinion of the High Court.
If it be assumed that provisional assessment has to be made in accordance with and subject to the provisions of the Act, distinction between a provisional assessment and a regular assessment gets completely blurred.
The scheme of section 141 is to call upon the assessee to pay tax provisionally at the appropriate rate on what he admits is his taxable income, subject to the benefit of the allowances under sub section
The section does not permit an enquiry to be made whether the total income returned by the assessee exceeds the amount admitted by him, nor whether the allowances or deductions claimed are admissible.
If there be a discrepancy between the return made and the accounts and documents accompanying the return, the Income tax Officer may ask the assessee to explain the discrepancy, but he must make a provisional assessment on the basis of the return initially made or clarified and the accounts and documents filed.
He cannot make a provisional assessment by holding that certain claims made by the assessee are in law unjustified.
If it transpires that the assessee has without reasonable cause concealed particulars of his income or has furnished inaccurate particulars of his income, it may be open to the Income tax Officer to impose penalty upon him after the regular assessment is completed.
But it is not open to him to determine whether there has been any concealment of particulars of income or to decide whether claims which have been made are unwarranted.
In the view we have expressed, the Income tax Officer was not justified in holding that the claim made by the Company for carrying forward and seeking to debit against Rs. 74 lakhs odd an amount of Rs. 103 lakhs odd was liable.
to be rejected.
For the same reasons in making the provisional assessment for the year 1964 65 the Income tax Officer was not entitled to ignore the claim made by the Company that against the income of Rs. 59,89,757 returned, Rs. 36,01,735 should be permitted to be debited.
The order demanding tax of Rs. 17,32,768 60 for the year 1964 65 also was, in our view, erroneous.
For the year 1965 66 the Income tax Officer demanded payment of advance tax on the provisional assessment for the year 1964 65.
It is true that under subs.
(3) of section 210 as inserted by of 1963 and later modified by Act 31 of 1964 the Income tax Officer is entitled to make an order for payment of advance tax on the basis of provisional assessment made under section 141, and he is not obliged to demand advance tax only for the amount provisionally assessed by way of regular assessment in respect of any previous year.
Sub section (3) of section 210, however, predicates a valid provisional assessment on the basis of which advance tax may be demanded.
But the provisional assessment for the year 1964 65 made by the Income tax Officer was invalid, and tax could not be demanded on that invalid assessment.
No order for payment of advance tax for the year 1965 66 could then be made, relying upon the provisional assessment for the year 1964 65.
The appeals will be allowed and the orders passed by the High Court set aside.
The orders of provisional assessment made by the Income tax Officer in respect of the years 1963 64 and 1964 65 will be set aside and the order for payment of advance tax for the year 1965 66 is also set aside.
There will be no order as to costs in these appeals.
The order of penalty in respect of the year 1963 64 is also quashed.
V.P.S. Appeals allowed.
| IN-Abs | The appellant filed its returns for the assessment years 1954 55 to 1964 65.
The Income tax Officer passed orders of assessment for the years 1954 55 to 1959 60.
While the appeals to the Appellate Assistant Commissioner for those years, and the, assessment proceedings before the Income tax Officer for the years 1960 61 to 1962 63, were still pending, for the assessment year 1963 64 (the return for which was flied under section 139 of the Income tax Act, 1961), the Income tax Officer made a provisional assessment under section 141.
He held that the appellant was not entitled to deduct the aggregate amount of losses as claimed by it during the previous years and allowed only a much smaller sum as loss which could be carried forward from the earlier years.
For the assessment year 1964 65, the Income tax Officer made a provisional assessment without allowing any deduction of loss claimed by the appellant; and for the assessment year 1965 66 the Income tax Officer called upon the appellant to pay a certain sum as advance tax under section 210(3).
The appellant filed writ petitions in the High Court for quashing the orders of the Income tax Officer for each of the three years, but the petitions were dismissed.
The High Court held: (1) that under section 141 the provisional assessment of tax must also be made in accordance with and subject to the provisions of the Act, and that the combined effect of sections 72 and 80 was that a business loss can be carried forward to subsequent assessment years only when it has been determined in pursuance of a return flied under section 139; and (2) that under section 210(3) as inserted by Act 13 of 1963 and modified by Act 31 of 1964, the Income tax Officer was entitled to make an order for payment of advance tax for 1965 66 on the provisional assessment for the year 1964 65.
In appeal to this Court, HELD: (1) Section 141 bars an enquiry, at the stage of making a provisional assessment, into disputed questions of law and fact: it is immaterial that the dispute raised is complicated or easy.
Therefore the Income tax Officer was not justified.
in ignoring the appellant 's claim.
[198 D F] Under section 80 loss of a previous year under the head of income from profits and gains may be carried forward only if it has been determined in pursuance of a return filed under section 139; that is, if it is not so determined it cannot be carried forward and set off against the profit of the subsequent year or years.
But the section applies only to a regular assessment.
In the case of 'a provisional assessment under section 141, if there has been such a determination of the allowances mentioned in sub section 2 in a regular assessment for an earlier year, then under section 141(2) 194 the income tax officer must whether the assessee has claimed or not give effect to the allowances so determined.
But he has no power to adjudicate upon a claim for deduction made by the assessee when making a provisional assessment.
[196 G; 197 A 198 B; 199 B C] The section has been enacted with the object of expediting collection of tax on the basis of the return made by the assessee.
The assessment so made is summary and is based only on the return and the accounts and documents filed by the assessee.
If there be discrepancy between the return made and the accounts and documents accompanying the return the Income tax Officer may ask the assessee to explain the discrepancy but he must make a provisional assessment on the basis of the return initially filed or clarified, but cannot hold that certain claims made by the assessee are in law unjustified.
The provisional assessment does not bind the assessee nor the department and the tax paid pursuant to such provisional assessment is liable to be adjusted in the light of the final order in the regular assessment, and it is open to the Income tax Officer to impose a penalty in appropriate cases after the regular assessment is completed.
If it is held that the Income tax Officer has jurisdiction to hold an enquiry into disputed matters, the expression 'provisional assessment ' loses all significance: the Income tax Officer.
may, under such a summary assessment, without giving an opportunity to the assessee to explain his claim negative it and the assessee has no redress under the Act against any erroneous or arbitrary action because, the Income tax OffiCer is not bound to give notice to the assessee or hear witnesses and an appeal against a provisional assessment is expressly barred.
[196 D E; 198 B C; B C;199 (2) Under section 210(3) the Income tax Officer is entitled to make an order for payment of advance tax on the basis of provisional assessment under section 141, but it predicates a valid provisional assessment.
Since the provisional assessment in the present case, for the year 1964 65 is invalid, an order for payment of advance tax or the year 1965 66 could not be made.
[200 A C]
|
No. 1 of 1968.
Petition under article 32 of the Constitution of India for the enforcement of the fundamental rights.
M.C. Setalvad and R. Gopalakrishnan for the petitioners.
C.K. Daphtary, Attorney General and U.P. Singh, for respondents No. 1 and 4.
P.K. Chatterjee, for respondent No. 3.
R. Gopalakrishnan, for the interveners.
The Judgment of the Court was delivered by Hidayatullah, C.J.
The Principal and the Rector of St. Xavier 's Co,liege, Ranchi and two parents of students have filed the present petition under article 32 of the Constitution.
The petition also purports to be filed on behalf of St. Xavier 's College, Ranchi and the Association of St. Xavier.
The petitioners challenge section 48 A of the ' Bihar State Universities (University of Bihar, Bhagalpur and Ranchi) Act, 1960 as amended by Second Amendment Act, 1961 as ultra vires articles 29 and 30 of the Constitution.
St. Xavier 's College was established by the Jesuits of Ranchi.
It was affiliated to Patna University in 1944.
The management of the college vests in a Governing Body consisting of 11 members.
They are: "(i) The Superior Regular of Ranchi Jesuit Mission President ex officio.
75 (ii v) Four Counsellors to the Superior Regular to be nominated by the Jesuit Mission authorities.
(vi) The Principal of the College Vice President and Secretary ex officio.
(vii) One representative of the teaching staff of the college elected by the members of the staff.
(viii) One representative of the Patna University.
(ix xi) Three persons to represent Hindu, Muslim and Aboriginal interests.
" The terms of service of Religious staff are determined by the Jesuit ' Mission Authorities, but those of the members of the Lay staff including their appointment are determined by the Governing Body.
All appointments to.
the teaching staff, both Religious and Lay are reported to the Syndicate of the Patna University.
The object of rounding the college inter alia is 'to give Catholic youth a full course of moral and liberal education, by imparting a thorough religious instruction and by maintaining a Catholic atmosphere in the. institution. ' The college is, however, open to all non catholic students.
All non catholic students receive a course of moral science.
The College was thus rounded by a christian minority and the petitioners claim they have a right to.
administer it, a constitutional right guaranteed to minorities by article 30.
The petitioners ' complaint is that the Bihar Legislature passed an amending Act and introduced in the Bihar Universities Act section 48 A to come into force from March 1, 1962, which deprives them of this protection and is, therefore, ultra vires.
The provisions of this section are as follows: "48~A. Establishment of a University Service Commission for affiliated colleges not belonging to the State Government and.
its powers and functions : (1 ) With effect from such date as the State Government may, by notification in the Official Gazette, appoint, there shall be established a Commission by the name of the University Service Commission.
(2) The said Commission shall be a body corporate having perpetual succession.
and a common seal, and shall by the said name sue and be sued.
(3) The commission shall consist of a Chairman and two other members to be appointed by the State Government who shah be whole time officers, 76 and shall hold office for a term of three years from the date of assumption of charge of office, on the expiration of which term they, or any of them, may be reappointed for only one more term which shall not exceed three years.
(4) There shall be a Secretary to the Commission who shall also be a whole time officer to be appointed by the State Government.
(5) Other terms and conditions of service of the Chairman members and the Secretary shall be determined by the State Government.
(6 ) Subject to the approval of the University, appointments, dismissals, removals termination of service or reduction in rank of teachers of an affiliated college not belonging to the State Government shall be made by the governing body of the college on the recommendation of the Commission.
(7) (i)In making recommendations for appointment to every post of teacher of any such affiliated college, the Commission shall have the assistance of two experts in the subject for which an appointment is to be made, of whom one shall whenever possible be a teacher of the University to be nominated by the Syndicate and the other shall be a person, other than a teacher of the University, to be nominated by the Academic Council.
(ii) The experts shall be associated with the Commission as assessors whose duty it shall be to give expert advice to the Commission but who shall have no right to vote.
(8) The Commission shall, wherever feasible, recommend to the governing body of a college for appointment to every post of teacher of the college names of two persons arranged in order of preference and considered by the Commission to be the best qualified ' therefore.
(9) In making appointment to a post of teacher of a college, the governing body of the college shall, within three months from the date of the receipt of the recommendation under sub Section (8), make its selection out of the names recommended by the Commission, and in no ease shall the 77 governing body appoint a person who is not recommended by the Commission.
(10) Notwithstanding anything contained in the preceding sub sections, it shall not be necessary for the governing body to consult the Commission if the appointment to a post of teacher is not expected to continue for more than six months and cannot be delayed without detriment to the interest of the College: Provided that if it is proposed to retain the person so appointed in the same post for a period exceeding six months or to appoint him to another post in the college the concurrence of the Commission shall be necessary in the absence of which the appointment shall be deemed to have been terminated at the end of six months.
(11) (ii) The Commission shall be consulted by the governing body of a college in all disciplinary matters affecting a teacher of the college and no memorials or petitions relating to such matters shall be disposed of nor shall any action be taken against, or any punishment imposed on, a teacher of the college otherwise than in conformity with the finding of the Commission: Provided that it shall not be necessary to consult the Commission where only an order of censure, or an order withholding increment, including stoppage at an efficiency bar, or an order of suspension pending investigation of charges is passed against a teacher of a college.
(12) It shah be the duty of the Commission to present annually to the University a report as to the work done by the Commission in relation to such colleges affiliated to the University and a copy of the report shall be placed before the Senate at its next meeting, and the University shall further prepare and submit to the State Government a memorandum explaining, as respects the cases, if any, where the advice of the Commission was not accepted, the reasons for such non acceptance and the State Government shall cause the same to be laid before the Legislature of the State".
This provision completely.
takes away the autonomy of the Governing Body of the College and virtually vests the control of 78 the college in the University Service Commission.
Long correspondence ensued into.
which it is not necessary to go because of what followed.
The University began enforcing Article 178(2) of the New Statutes.
That Article provides: "178(1) All appointments of teachers in admitted colleges shall be made by the Governing Body of the college concerned on the recommendation of the University Service Commission, and shall be subject to the approval of the Syndicate.
No such appointment shall be approved unless: (a) the post exists or the Vice Chancellor is satisfied and its creation is necessary; (b) the claims of teachers, possessing the requisite qualifications and serving in a lower grade in the college, for promotion have been examined and rejected; (c) the vacancy was duly advertised, except where promotion was recommended; (d) the person appointed possesses the minimum qualifications prescribed for the post; and (e) the appointment was made by the Governing Body at its meeting.
(2) Within a fortnight of the appointment of any teacher or teachers.
made by the Governing Body of any admitted college on the recommendation of the University Service Commission, the Secretary of the College shall forward to the University, along with a copy of the advertisement for the post, the following information: (a) Names of the candidates recommended by the University Service Commission together with the name or names of the candidates appointed by the Governing Body; (b) Age; (c) Home address; (d) Previous appointment held by them, if any; (e) Whether they are qualified to teach through the medium of Hindi; (f) Nature of the appointment and the vacancy against which the appointment has been made; (g) If the order of preference indicated by the University Service Commission has not been followed by the Governing Body, the reason for not 79 following the order of preference shall be indicated.
If no appointments were made against the recommendation received from the University Service Commission, the reason for not making the appointments shall also be indicated.
" More correspondence followed.
The University asked for an explanation under article 179 of the Statutes, how the Governing Body had by passed the University Service Commission and some teachers were appointed without prior consultation.
Finally the University by a letter, September 26, 1967, communicated to the College that the Senate had decided on September 24, 1967 to withdraw the affiliation of the College under Article 171 of the Statutes for violating the said provisions of the Act and the Statutes With effect from the session of 1969 70.
The Senate, however, was: generous enough to put on record its appreciation of the good work done by the college in the field of education.
The petition was then filed to.
impugn the offending section 48 A.
While this petition was pending in this Court, the Governor of Bihar promulgated an Ordinance o.n July 16, 1968.
It amended the Bihar State Universities Act, 1960 by inserting section 48 B after section 48 A.
The new section read: "48 B. College established and administered by a minority entitled to make appointments etc.
with approval of the Commission and the, Syndicate.
Notwithstanding anything contained ' in sub section (6), (7), (8), (9), (10) and (11) of Section 48 A, the Governing Body of an affiliated college established by a minority based on religion or language, which the minority has the right to administer, shall be entitled to make appointments, dismissals, removals, termination of service or reduction in rank of teachers.
or take other disciplinary measures subject only to the approval of the Commission and the Syndicate of the University".
Simultaneously the Magadh University Act, 1961 was also similarly amended.
The petitioners, therefore, claim the protection of section 48 B and submit that as an affiliated college established by a minority based on religion or language, they are exempt from the operation of section 48 A (6), (7), (8), (9), (10) and (11).
They say that if this position is accepted, they will withdraw the petition which has become superfluous.
The learned Attorney General while conceding that the Jesuits answer the description of minority based on religion, argues that the protection is available only if the institution was rounded to conserve 'language, script or culture ' and since the college is open to all sections of the people and there 80 is no programme of this kind, the protection of Article 30(1) is not available.
In our opinion, this argument cannot be accepted.
Before we give our reasons we may read articles 29 (1 ) and 30 ( 1 ), which are involved: "29.
Protection of interests of minorities.
(1 ) Any section of the citizens residing in the territory of India or any p:art thereof having a distinct language, script or culture of its own shall have the right to conserve the same.
(2) "30.
Right of minorities to establish and administer educational institutions.
(1) All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice.
The learned Attorney General seeks to read into the protection granted by article 30(1) a corrollary taken from article 29(1).
He concedes that the Jesuits community is a minority community based on religion and that, therefore, it has a right to establish and administer educational institutions of its choice.
But he contends that as the protection to minorities in article 29 (1 ) is only a right to conserve a distinct language, script or culture of its own, the college does not qualify for the protection 'of article 30(1) because it is not rounded to conserve them.
The question, therefore, is whether the college can only claim protection of section 48 B of the Act read with article 30(1) of the Constitution if it proves that the college is furthering the rights mentioned in article 29 (1 ).
In our opinion, the width of article 30(1) cannot be out down by introducing in it considerations on which article 29 (1 ) is based.
The latter article is a general protection which is given to minorities to conserve their language,, script or culture.
The former is a special right to minorities to establish educational institutions of their choice.
This choice is not limited to institution seeking to conserve language, script or culture and the choice is not taken away if the minority community having established an educational institution of its choice also admits members of other communities.
That is a circumstance irrelevant for the application of article 30( 1 ) since no such limitation is expressed and none can be implied.
The two articles create two separate rights, although it is possible that they may meet in a given case.
81 The learned Attorney General refers to two cases of this.
Court which he thinks support his contention.
What we find in, them does not bear out this submission.
On the other hand, they point the other way.
In In re the Kerala Education Bill, 1957(1),1 articles 29 and 30 were considered in relation to an Education Bill referred by the President of India to the Supreme Court for its advisory opinion.
The points that arose in the case were different but certain passages from the opinion were brought to our notice.
The Court after pointing out that articles 29 and 30 are grouped together under the heading "Cultural and Educational Rights" points out that the articles are intended to confer certain fundamental rights on certain sections of the community which constitute minority communities.
Explaining clause (1 ) of article 29.
this Court observed at p. 1047: " .
It is obvious that a minority community can effectively conserve its language, script or culture by and through educational institutions and, therefore, the right to establish and maintain educational institutions of its choice is a necessary concomitant to the right to conserve its distinctive language, script or culture and that is what is conferred on all minorities by article 30(1) which has hereinbefore been quoted in full . ".
The learned Attorney General arguesues that here the two articles were read together.
But the other side relies on two other passages.
The first is at page 1050.
The argument on behalf of the State there appears to be that there are three conditions.
before the protection and privileges of article 30( 1 ) may be claim "( 1 ) there must be a minority community, (2) one or more of the members of that community should, after the commencement of the Constitution, seek to exercise the right to establish an educational institution of his or their choice, and ( 3 ) the educational institution must be established ' for the members of his or their own community." This Court repelled the contention that the protection and privilege of article 30(1) extended only to the educational institutions established after the Constitution.
Dealing with article 29 (1 ) this Court observed: "The real import of article 29(2) and article 30(1) seems to us to be that they clearly contemplate a minority institution with a sprinkling of outsiders admitted into it.
By admitting a non member into it the minority institution does not shed its character and cease to be (1) [1959] S.C.R. 995. 82 a minority institution.
Indeed the object of conservation of the distinct language, script and culture of a minority may be better served by propagating the same amongst non members of the particular minority community.
In our opinion,t it is not possible to read this condition into article 30(1) of the Constitution.
" While one side considers that the observation suggests that the two articles go together, the other side contends that mixing of the other communities with the minority community in the benefits of educational institution shows that the real test is not that there must be an institution purely of one community.
The learned Attorney General places great importance on the word 'sprinkling ' and says that the minority must found the institution for itself and not for others and the aim or object must be to conserve distinct language, script or culture.
In our opinion both sides are attempting to read far too.
much into.
these observations.
They are not intended to be read in every context.
On the other hand, in Rev, Sidhaibhai Sabhai and others vs State of Bombay and Another(1), there is the following passage : " .
The fundamental freedom is to establish and to administer educational institutions: it is a right to establish and administer what are in truth educational institutions, institutions which cater to the educational needs of the citizens, or sections thereof.
" The emphasis here was rightly placed not upon the needs of the community exclusively but .upon the educational needs of the citizens or sections thereof.
In other words, the suggestion that article 30( 1 ) is limited to the needs of a single community or that only its own culture, language or script need to be provided for is not the right approach.
Here too if we may say so, the point decided was different but the observation does make article 30 (1 ) much wider than the learned Attorney General would have us hold.
In our judgment the language of article 30(1 ) is wide and must receive full meaning.
We are dealing with protection of minorities and attempts to whittle down the protection cannot be allowed.
We need not enlarge the protection but we may not reduce a protection naturally flowing from the words.
Here the protection clearly flows from the words and there is nothing on the basis of which aid can be sought from article 29 (1 ).
We are, therefore, quite clear that St. Xavier 's College was rounded by a Catholic Minority Community based on religion and that this educational institution has the protection of article 30( 1 ) (1) ; , 850. 83 of the Constitution.
For the same reason it is exempted under section 48 B of the Act.
The petition will therefore be allowed with this declaration but in the circumstances of the case we make no order about costs.
R.K.P.S. Petition allowed.
| IN-Abs | The St. Xavier 's College was established by the Jesuits of Ranchi and was affiliated to Patna University in 1944.
The management of the College was in the hands of a governing body consisting of 11 members.
The terms of service of the religious staff of the College were determined by the Jesuit Mission authorities and those of the lay staff, including their appointment, were determined by the governing body of the College.
The object of rounding the college inter alia was "to give Catholic youth .a full course of moral and liberal education, by imparting a thorough religious instruction and by maintaining a Catholic atmosphere in the Institution".
However, the college was open to non Catholics and all non catholic students received a course of moral science.
The petitioners in the present petition under Article 32 contended that the college was rounded by a Christian minority and claimed the right to administer it as a constitutional right guaranteed to minorities by article 30.
The petitioner 's complaint was that the Bihar Legislature, by introducing section 48 A in the Bihar Universities Act with effect .from
March 1, 1962, deprived them of the right under article 30 in that Its provisions required, inter alia: that appointments, dismissals, reduction in rank, etc.
, of staff must be made by the Governing body on the recommendation of the University Service Commission for affiliated colleges; in no case could the Governing body appoint a person not recommended by the Commission; the Commission had to be consulted in all disciplinary matters and any punishment imposed on a teacher only in accordance with the findings of the Commission, etc.
Subsequent to the introduction of section 48 A, in view of differences arising between the University and the college, the University withdrew the affiliation of the college on September 26, 1967 for violating the provisions of the Act and the statute of the University.
While the present petition under article 32 of the Constitution was pending section 48 B was inserted into the Bihar Universities Act whereby it was provided that the Governing body of affiliated colleges established by a minority based on religion or language which .the minority had a right to administer, would be entitled to make appointments, dismissals, termination of service or reduction in rank of teachers or take other disciplinary measures subject only to the approval of the Commission and the Syndicate of the.
University.
The petitioners therefore also claimed the protection of section 48 B.
On behalf of the respondents it was conceded that the Jesuits answered the description of a minority based on religion; but it was contended that as the protection to minorities in article 29(1) is only a right to conserve a distinct language, script or culture of its own, the college did not qualify for the protection of article 30(1) because (i) it was not bounded Sup.
CI/69 6 74 to conserve them and (ii) it was open to all sections of the people.
The question therefore was whether the college: could only claim protection of section 48 B of the Act read with article 30(1) of the Constitution if it proved.
that it was furthering the rights mentioned in article 29(1).
HELD: The protection claimed by the petitioners clearly flowed from the words of Article 30(1).
The width of article 30(1) cannot be cut down by introducing in it considerations on which article 29(1) is based.
The latter article is a general protection which is given to.
minorities to, conserve their language, script or culture.
The former is a special right to minorities to establish educational institutions of their choice.
This choice is not limited to institutions seeking W conserve language, script or culture and the choice is not taken away if the minority community having established an educational institution of its choice also admits members of other communities.
This is a circumstance irrelevant for the application of article 30(1) since no such limitation is expressed and none can be implied.
The two.
articles create two separate rights, although it is possible that they may meet in a given case.
[80 G, H] In re the Kerala Education Bill, 1957, [1959] S.C.R. 995, Rev. Sidhajbhai Sabhai and Ors.
vs State of Bombay and Anr.
; , 850; considered.
|
Civil Appeal No. 69 of 1952.
Appeal from the Judgment and Decree dated the 27th April, 1950, of the High Court of Judicature at Calcutta (Sen & Chunder JJ.) in Appeal from Original Decree No. 19 of 1948 arising out of the Judgment and Decree dated the 27th September, 1947, of the Court of the Subordinate Judge, Third Court of Zillah, 24Parganas at Alipore in Miscellaneous Judicial Case No. 31 of 1947.
Sukumar Ghose for the appellants.
Bankim Chandra Banerji and R. R. Biswas for respondents Nos. 1, 2, 8 & 9. 1954.
April 26.
The Judgment of the Court was delivered by BAAGWATI J.
This is an appeal against the judgment and decree of the High Court of Judicature at Calcutta reversing the order of the Third Subordinate Judge, Alipore, dismissing the respondents applications for re restoration of certain immovable properties.
One Romesh Chandra Acharji Choudhury (deceased) predecessor in interest of the appellants borrowed on the 16th August, 1918, Rs. 1,60,000 and Rs, 73,000 from the predecessors in interest of the respondents under two deeds of mortgage.
There being default in payment of the mortgage amounts a suit to realise the mortgage securities was filed on the 10th March, 1926, 152 in the Third Subordinate Judge 's Court, Alipore.
A preliminary mortgage decree for Rs. 4,21,851.1 6 was passed on the 4th April, 1929, and a decree absolute for sale was passed on the 13th September, 1929.
The mortgaged properties were put up for sale in execution proceedings in 1930 and the decree holders purchased the properties at auction sales on the 29th February, 1932, and the 23rd April, 1935, for an aggregate amount of Rs. 2,35,200.
These sales were duly confirmed and the auction purchasers took delivery of possession of different items of property on different dates between the 25th June, 1933, and the 9th March, 1936.
The aecree holders obtained on the 13th December, 1937, a personal decree under Order XXXIV, rule 6, of the Civil Procedure Code for the balance due to them, viz., Rs, 3,30,903.
This personal decree was also executed and some properties of the mortgagors were purchased by the decree holders on the 8th August, 1939, for Rs. 3,899 and delivery of possession of these properties was duly given to them on the 6th July, 1940.
Kshitish Chandra Acharji Choudhury, since deceased, the predecessor in interest of the appellants Nos.
1 to 3 and Jyotish Chandra Acharya Choudhury, the appellant No. 4, sons of the mortgagor filed on the 9th December, 1940, a petition under section 36 of the Bengal Money Lenders Act (Act X of 1940) for reopening the mortgage decree and the personal decree.
By an order dated the 25th August, 1941, the learned Subordinate Judge reopened the decrees and on the 10th May, 1943, passed a new decree for a sum of Rs. 3,76,324 12 4.
The said sum was directed to be paid by the judgment debtors to the decree holders in fifteen equal annual instalments.
He also directed the restoration of the properties purchased by the decree holders.
The present respondents preferred, on the 19th June, 1943, an appeal to the High Court of Judicature at Calcutta and cross objections were filed by the said Kshitish Chandra Acharji Choudhury and appellant No. 4.
By their judgment and decree dated the 29th June, 1944, the High Court affirmed the decree of the Court below with some substantial variations and 153 passed a new decree in favour of the mortgagors.
The mortgagees were ordered to put the mortgagors in possession of all the properties they had purchased in ' execution of the reopened decrees and render to them an account of the mesne profits of those properties from the 15th September, 1941, till they restored or relinquished possession to the mortgagors of the collection papers of those properties.
The sum of Rs. 3,76,324 12 6 was declared to be due by the mortgagors to the mortgagees and the mortgagors were to pay the same in twenty equal annual instalments the first of such instalments to be paid on or before the first anniversary of the date on which the mortgagees restored or relinquished possession of all the properties purchased by them in execution to the mortgagors or of the date on which they delivered to the mortgagors the collection papers as therein mentioned, whichever date was later.
The mortgagors were to pay to the mortgagees the successive annual instalments on or before the same date of the succeeding years on which the first instalment became payable and they were also to pay the annual revenue of the aforesaid properties that would become payable after they were restored to possession kist by kist, as they fell due, at least three days before the kist dates and file the challans in the Court below in proof of payment within ten days of the payments.
The road, public works and education cesses and rent due to the superior landlords were also to be paid similarly by the mortgagors and in default of payment of any one instalment or cesses or rent within the time prescribed, the mortgagors were entitled to get back possession of the said properties from the mortgagors and in that event the sum of Rs. 2,39,099 at which the mortgagees had purchased those properties would be balanced against the amount then due to them under the decree.
If thereafter any amount still remained due to the mortgagees under the decree they were entitled to apply in the Court below for a decree for the balance under Order XXXIV, rule 6, of the Civil Procedure Code.
An enquiry was ordered into the mesne profits for the period between the 15th September, 1941, till the restoration of possession to the mortgagors and 20 154 the mortgagors were at liberty to set off the amount that might be decreed in their favour for mesne profits towards the instalment that fell due in the year in which the amount was declared by the Court below and the next succeeding years till the said amount was wiped off.
Possession was delivered to the mortgagors on the 5th October, 1944.
The delivery of the collection papers was however given on the 28th March, 1945.
The mortgagors were alleged to have committed default in the payment of the second instalment which was due in any event on the 28th March, 1947, and also in the payment of the revenue kist and the cesses which were due on or about that date.
The mortgagees therefore made applications in the Court of the Third Subordinate Judge at Alipore on the 6th September, 1946, and the 18th April, 1947, asking for re restoration of the properties.
Several defaults were alleged but only two defaults were pressed, one in regard to the payment of the second instalment which was due on the 28th March, 1947, and the other in regard to the payment of the revenue and the cesses of the Noakhali properties due also on the same date.
The learned Subordinate Judge rejected these applications by his order dated the 27th September, 1947, holding that there was no default in the payment of revenue and cess and that the default in payment of the second instalment though it had accrued was due to the wrongful acts of the decree holders themselves and that the, decree holders were not entitled to take advantage of their own wrong.
An appeal was preferred to the High Court of Judicature at Calcutta.
The appeal was allowed on the 27th April, 1950.
The High Court held that a default had been committed by the mortgagors and ordered rerestoration of the properties.
This appeal has been filed against that order of the High Court with certificate under article 133(1)(a) of the Constitution.
Shri section Ghosh appearing for the appellants before us urged that the bulk of the properties which were the subject matter of the new decree had gone to Pakistan after the 26th January, 1950, being situated in East Pakistan and the High Court at Calcutta had 155 after the 26th January., 1950, no jurisdiction and power to determine the appeal and to pass an order relating to the immovable properties situated in foreign territories.
He further urged that the order of rerestoration of the properties was not appealable and that in any event no default had been committed by the mortgagors.
In support of his first contention reliance was placed on paragraph 4(2) of the Indian Independence (Legal Proceedings) Order, 1947, which ran as under: "4.
Notwithstanding the creation of certain new Provinces and the transfer of certain territories from the Province of Assam to the Province of East Bengal by the Indian Independence Act, 1947. . . . (2) Any appeal or application for revision in respect of any proceedings so pending in any such Court shall lie in the Court which would have appellate, or as the case may be revisional jurisdiction over that Court if the proceedings were instituted in that Court after the appointed day;. . " The applications for re restoration of the properties were pending before the Third Subordinate Judge at Alipore on the 15th August., 1947, and they were saved by the provisions of paragraph 4(1) which provided for the continuance in the same Court of these proceedings as if the said Act that is, Indian Independence Act, 1947, had not been passed.
But he contended that paragraph 4(2) did not save the appeal which had been filed by the mortgagees after the 15th August, 1947.
We cannot accept this contention of the appellant.
Paragraph 4(2) provided for appeals or applications for revision in respect of proceedings which were pending in the Courts after the 15th August, 1947, and laid down that these proceedings by way of appeal or applications for revision could lie in the Courts which would have appellate or revisional jurisdiction over that Court if the proceedings were instituted in that Court after the 15th August, 1947.
It was contended that for the purpose of this provision the words "if the proceedings were instituted in that Court" should be read as meaning "if the proceedings could have been 156 instituted in that Court.
" This certainly could not be the meaning, because by reason of the transfer of the territories no proceedings in respect of the properties which had gone to Pakistan ' could ever have been maintained after the 15th August, 1947, in the Courts concerned.
The only construction which could be put upon this provision was that the Court having appellate or revisional jurisdiction over that Court would have such jurisdiction as if the proceedings had been instituted in that Court after the 15th August, 1947.
For the purpose of the appellate or the revisional jurisdiction that Court had to be treated as the Court in which the proceedings could and should have been instituted and it goes without saying that if the pro ceedings could be treated as having been properly instituted in that Court the only Court to which the appeal or the application for revision could lie was the Court which then had appellate or revisional jurisdiction over that Court.
In the case before us no proceedings could have been instituted in the Third Subordinate Judge 's Court at Alipore in respect of the properties which had gone to East Pakistan after the 15th August, 1947.
But by reason of the fact that these proceedings were pending in that Court on the 15th August, 1947, the High Court of Calcutta which had appellate or revisional jurisdiction over that Court was prescribed to be the Court in which the appeal or the application for revision in respect of such procedings would lie, because that Court, that is the Third Subordinate Judge 's Court at Alipore, was treated as the Court in which such proceedings could and should have been instituted after the 15th August, 1947.
Learned counsel for the respondents drew our attention to the case of Tirlok Nath vs Moti Ram and Others(1).
In that case a suit for possession of land at place X was filed in Court at B in 1943.
On the 15th August, 1947, the suit was pending before the Court at B which dismissed the suit in 1948.
An appeal from the decision was filed in the East Punjab High Court as the place B was included in the East Punjab.
On (1) A.I.R. 1050 East Punjab I49. 157 objection regarding jurisdiction of the High Court being taken on the around that the land in suit was at A, now included in Pakistan, the High,Court held that the suit being pending at place B on 15th August, 1947, appeal from the decision of that Court lay to the East Punjab High Court and not to Lahore High Court under paragraph 4(2) of the Indian Independence (Legal Proceedings) Order, 1947.
This decision is on all fours with the case before us and we are of the opinion that the contention urged on behalf of the appellants is untenable.
The next contention of the appellants is equally untenable.
The Calcutta High Court considered these applications as applications in the suit for a special remedy given under a special law and held that the rules of the Code of Civil Procedure applied and an appeal lay against the orders because they were decrees within the definition of section 2(2) of the Civil Procedure Code.
We cannot accept this reasoning.
These applications were in truth and in substance applications for execution of the new decrees which had been passed in favour of the mortgagors by the High, Court on the 29th June, 1944.
The only thing competent to the mortgagees under the terms of the new decree was to apply for execution of the decrees on default committed by the mortgagors and the applications made by the mortgagees in the Court of the Third Subordinate Judge at Alipore were really applications for execution of the decree though not couched in the proper form and could be treated as such.
If they were treated as such it is clear that the orders passed on such applications for execution were appealable and no objection could be sustained on the ground that no appeals law against these orders.
Treating these applications therefore as applications for execution we see no substance in this contention of the appellants.
if the matter is approached in this way no objection could be urged by the appellants against the decision of the High Court.
The executing Court could not go behind the decree and it is clear on the facts that default was committed by the mortgagors both in 158 regard to the payment of the revenue and the cess as also the second instalment under the new decree.
The contention which was therefore urged on behalf of the appellants that there was no default committed by the mortgagors also could not be sustained.
The High Court of Judicature at Calcutta was therefore rightly seized of the appeal and it had jurisdiction to decide whether the mortgagors had committed default in carrying out the terms of the new decree.
The appeal being a mere rehearing the appellate Court was entitled to review the judgment of the trial Judge and declare that it was wrong and that the decree holder was entitled to re restoration.
The question whether he would be able to obtain possession of the immovable properties in fact was foreign to such an enquiry.
By appropriate proceedings in another jurisdiction he may be able to do so; but this difficulty could not be a deterrent to the High Court passing the necessary orders for re restoration of the properties.
The appeal therefore fails and must stand dismissed.
There will be no order as to costs.
| IN-Abs | 4(2) of the Indian Independence (Legal Proceedings) Order, 1947, runs as under: " 4.
Notwithstanding the creation of certain new Provinces and the transfer of certain territories from the Province of Assam to the Province of East Bengal by the Indian Independence Act, 1947. . . (2)Any appeal or application for revision in respect of any proceedings so pending in any such Court shall lie in the Court which would have appellate, or as the case may be, revisional jurisdiction over.
that Court if the proceedings were instituted in that Court after the appointed day. . .
An application by the decree holder for re restoration of properties by reason of the default made by the judgment debtor after a new decree had been passed under section 36 of the Bengal Money Lenders Act, 1940, was pending in the Court of the Subordinate Judge, Alipore, on 15th August, 1947, when the bulk of the properties, which were the subject matter of the new decree, went to East Pakistan as being situated there.
The application was saved by the provisions of para.
4(1) which provided for the continuance in the same Court of these proceedings as if the said Act (Indian Independence Act) had not been passed.
It was con tended that the appeal to the High Court filed by the decreebolder was not saved by para.
4(2) as it was filed after 15th August, 1947, as the words "if the proceedings were instituted in this Court" in the said para.
should mean "if the proceedings could have been instituted in that Court.
" Held, that the appeal from the Court of the Subordinate Judge was competent to the Calcutta.
High Court because the only construction that could be put upon this provision was that the Court having appellate or revisional jurisdiction over that Court would 151 have such jurisdiction as if the proceedings had been instituted in that Court after the 15th August, 1947.
An application by the decree holder was in substance an application for the execution of the new decree which had been passed under section 36 of the Bengal Money Lenders Act, 1940.
Orders passed on such applications for execution would be clearly appealable.
The reasoning of the High Court that such an application was an application in the suit for a special remedy given under a special law and that the rules of Civil Procedure Code applied and an appeal lay against such orders because they were deerees within the definition of section 2(2) of the Civil Procedure Code was not sustainable and could not be accepted.
Tirlok Nath vs Moti Ram and Others (A.I.R. 1950 East Punjab 149) referred to.
|
ivil Appeal No. 549 of 1966.
Appeal by special leave from the order dated October 23, 1964 of the Punjab High Court, Circuit Bench at Delhi in Civil Revision No. 438 D of 1964.
V.A. Seyid Muhammad and S.P. Nayar, for the appellant.
S.V. Gupte and A.K. Nag, for respondents Nos. 1 and 2.
A.G. Ratnaparkhi, for respondent No. 5.
225 The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by Special leave against the judgment of the Punjab High Court in Civil Revision No. 438 D of 1964 by which the revision petition of the appellant against the order of Shri D.R. Khanna, Subordinate Judge, 1st Class, Delhi dated 20th April, 1964 in Suit No. 128 of 1 '963 was dismissed in limine.
Suit No. 128 of 1963 was an application by the Union of India under sections 5, 12(2),31(3), 32 and 33 of the for obtaining a declaration that the reference of the claim of the respondent firm in respect of excess quantity of timber alleged to have been delivered and certain other matters was not covered by the arbitration agreement and for leave to revoke the authority of the Arbitrators and Umpire.
The petition was rejected by the Subordinate Judge by his order dated 20th April, 1964.
By a savingram dated 21st December, 1953 the Union of India (hereinafter called the appellant) entered into a contract of purchase of '1,01,750 cubic feet of teak logs at Rs. 9/12/ Vet c.ft.
to be delivered F.O.R. Halisahaar and Lillooah, both in West Bengal near Calcutta.
The consignee was the District Controller of Stores, Eastern Railway.
The formal acceptance of tender confirming the savingram and containing the other terms of the contract was issued on 13th January, 1954.
Besides the quantity of teak logs originally contracted to be supplied, the respondent firm subsequently supplied a quantity of 1676.95 c.ft.
Burma teak squares at the same rate and the contract was accordingly amended on 13th December, 1957.
It was provided in clause 17(c) of the acceptance of tender that the respondent firm was to offer the timber for inspection at its own premises at Halisahaar and Lillooah.
Although the delivery time was extended from time to time, upto 26th January, 1958.
the respondent firm supplied only 77,21/.89 cubic feet of timber and the contract in respect of the unsupplied quantity was cancelled on 20th june, 1958 and that the supplied quantity was repurchased by Government from third party at a loss of Rs. 1,54,541.36 on 23rd July, 1958.
Including this item the appellant made a claim of Rs. 3,50.085.99 against the respondent firm out of which it recouped Rs. 1,79.366 from the sums due to the respondent firm leaving a balance of Rs.1.70,719.99.
The contract in question is governed by the arbitration agreement contained in clause 21 of the form W.S.B. 133 which states as follows : "Arbitration: In the event of any question or dispute arising under these conditions or any special conditions of contract or in connection with this contract (except as to any matters the decision of which is specially provided for 226 by these conditions) the same shall be referred to the award of an arbitrator to be nominated by the Purchaser and an arbitrator to be nominated by the Contractor, or in case of the said arbitrators not agreeing then to the award of an Umpire to be ,appointed by the arbitrators in writing before proceeding on the reference and ' the decision of the arbitrators, or in the 'event of their not agreeing, of the Umpire appointed by them, shall be final and conclusive and the provisions of the Indian , and of the Rules thereunder and any Statutory modification thereof shall ' be deemed to apply to and be incorporated in this contract.
Upon every and any such reference, the assessment of the costs incidental to the reference and award respectively shah be in the discretion of the arbitrators or in the event of their not agreeing of the Umpire appointed by them." In pursuance of the arbitration .clause the respondent firm appointed one Mr. T.R. Sharma as its arbitrator and the appellant appointed Mr. R.R. Desai, Deputy Legal Adviser, Ministry of Law, Government of India as its nominee.
Mr. P.S. Bindra, a retired District Judge was appointed as the Umpire by order of the Sub Judge dated 2 8 1961.
Both the parties filed their respective claims before the arbitrators.
The respondent firm claimed a sum of Rs. 73,50,000 while the appellant contended that the respondent committed breach of the contract by not supplying the stipulated quantity of timber under the contract and as such claimed damages to the extent of Rs. 3,00,000.
The case of the respondent firm was that in order to cover up possible rejection, a quantity of timber much in excess of the contracted quantity was despatched to the consignees and the excess quantity measuring 3,400 tons i.e. 1,70,000 cubic feet was still lying with the Lillooah consignnee and 1,500 tons i.e. 75,000 cubic feet with the Halisahaar consignee and had not been returned despite repeated requests.
The respondent firm claimed return of this quantity of timber and compensation for its deterioration.
It was alternatively contended that in case the Government failed to return the whole or part of the excess timber, then payment for that quantity at the market rate should be made.
The appellant in its reply denied the allegation relating to the delivery and retention of excess quantity.
It was specifically denied that 4,900 tons or any quantity was due to be returned to the respondent firm or that it was entitled to recover Rs. 73,50,000 or any amount as claimed.
It was contended that in terms of the contract the respondent firm was to offer inspection of the store at its own premises 'at Lillooah and Halisahaar but instead doing so, the respondent firm started to despatch the logs to the DCO 's Lillooah and Halisahaar to be 227 inspected at the consignees ' premises.
This was done for its own convenience and at its own risk.
The inspected stores were retained by the consignee while the rejected stores were to be removed by the respondent firm from the consignee 's premises at their own expense.
It was submitted that the dispute raised by the respondent firm was outside the scope of the arbitration agreement and that the arbitrators had no jurisdiction to entertain such a claim.
After hearing the parties, the Subordinate Judge rejected the application of the appellant by his order dated 20th July, 1964.
It is necessary at this stage to quote the relevant clauses of the contract.
Clause 13 ( 1 ) provides: "Inspection and Rejection: Facilities for Test and Examination: The Contractor shall afford at his own expense the Inspector all reasonable accommodation and facilities for satisfying himself that the stores are being or have been manufactured in accordance with the particulars and for this purpose the Inspector shall have full and free access at any time during the contract to the Contractor 's work and may require the Contractor to make arrangements for anything to be inspected at his premises or at any other place and the Contractor shall reserve a similar right as regards any sub contract he may make.
The Contractor shall pay all costs connected with such tests and provide, without extra charge, all materials, tools, labour and assistance of every kind which the Inspector may consider necessary for any test and examination other than special or independent tests which he shall require to be made on the contractor 's premises, and shall pay all the costs attendant thereon,failing these facilities (in regard to which the inspector will be the sole judge) at his own premises for making the tests, the Contractor shall bear the cost of Carrying out such tests elsewhere".
Clause 13(4) reads as follows : "Inspection and rejection: The whole of a consignment may be rejected, if, on inspection, a portion upto 4 per cent of the consignment (at the sole discretion of the Inspector) is found ' to be unsatisfactory.
" Clause 13(5) states: "Rejection: If any stores are rejected as aforesaid then, without prejudice to the foregoing provisions, the Secretary, Department of Supply shall be at liberty to : 228 (a) allow the contractor to resubmit stores in replacement of those rejected within a time specified by the Secretary, Department of Supply, the contractor bearing the cost of freight in such replacement without being entitled to any extra payment, or (b) buy the quantity of the stores rejected or others of a similar nature elsewhere at the risk and cost of the contractor without affecting the contractor 's liability as regards supply of any further consignment due under the contract, or (c) terminate the contract and recover from the con tractor the loss the purchaser thereby incurs".
On behalf of the appellant Dr. Seyid Mohammad presented the argument that the dispute regarding the respondent 's claim in respect of the excess quantity of timber measuring 4,900 tons said to have been tendered but not inspected was not a dispute 'arising under the contract" 0r 'in connection with the contract ' and hence the arbitrators had no jurisdiction to adjudicate upon that claim.
It was stated that the terms of contract did not require the respondent firm to tender for inspection any quantity in excess of the contracted quantity of timber and the alleged placing of unlimited stocks of timber at the disposal of the Government officials far in excess of the quantity ordered was beyond the scope of the contract.
It was argued that the claim should be treated as a claim relating to a transaction of involuntary bailment and not to anything done in the performance.
implementation or execution of the contract.
It was said that the claim for return of these goods and damages for deterioration or in the alternative for their market value was a claim in detinue and the dispute was not hence a dispute "arising out of the contract" or 'in connection with the contract ' but was a dispute relating, to a tort of wrongful detention.
We do not think that there is any justification for the argument put forward on behalf of the appellant.
In our opinion.
the claim made by the respondent firm was a claim arising out of the contract.
The test for determining the question is whether recourse to the contract by which both the parties are bound is necessary for the purpose of determining whether the claim of the respondent firm iS justified or otherwise.
If it is necessary to take recourse to the terms of the contract for the purpose of deciding the matter in dispute.
it must be held that the matter is within the scope of the arbitration clause and the arbitrators have jurisdiction to decide this case.
In Herman & lint.
vs Darwins Ltd.(1) the law on the point is very clearly stated in the following passage: (1) at 365. 229 "An arbitration clause is a written submission agreed to by the parties to the contract, and, like other written submissions to arbitration, must be construed according to its language and in the light of the circumstances in which it is made.
if the dispute is whether the contract which contains the clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission.
Similarly, if one party to the alleged contract is contending that it is void ab initio (because, for example, the making of such a contract is illegal), the arbitration clause cannot operate, for on this view the clause itself also is void.
But, in a situation where the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them whether there has been a breach by one side or the other, or whether circumstances have ,arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen 'in respect oF or "with regard to", or "under" the contract, and an arbitration clause which uses these, or similar expressions should be construed accordingly".
In Stebbing vs Liverpool & London and Globe Insurance Company Ltd. (1) the policy of insurance contained a clause referring to the decision of an arbitrator "all differences arising out of this policy".
It also contained a recital that the assured had made a proposal and declaration as the 'basis of the contract, and a clause to the effect that compliance with the conditions indorsed upon the policy should be a condition precedent to any liability on the part of the insurers.
One of the conditions provided that if any false declaration should be made.
e or used in support of a claim all benefit under the policy should be forfeited.
In answer to a claim by the assured, the insurers alleged that statements in the proposal and declaration were false.
When the matter came before tire arbitrator, the assured objected that this was not a difference in the arbitration and that the arbitrator had no power to determine whether the answers were true or not, or to determine any matters which called in question the validity of the policy.
In holding that the arbitrator had jurisdiction to decide the matter, Viscount Reading, C.J. observed: "If the company were seeking to avoid the contract in the true sense they would have to rely upon some matter outside the, contract, such as a misrepresentation (1) 230 of some material fact, inducing the contract, of which force and effect are not declared by the contract itself.
In that case the materiality of the fact and its effect in inducing the contract would have to be tried.
In the present case the company are claiming the benefit of.
a clause in the contract when they say that the parties have agreed that the statements in question are material and that they induced the contract.
If they succeed in escaping liability that is by reason of one of the clauses in the policy.
In resisting the claim they are not avoiding the policy but relying on its terms.
In my opinion, therefore, the question whether or not the statement is true is a question arising out of the policy".
The principle has been reiterated by this Court in Ruby General Insurance Co '.
Ltd. vs Pearey Lal Kumar & Anr.(1).
In that case the appellant company insured a car belonging to respondent No. 1 and issued the policy which contained, inter alia, the following terms : "All differences arising out of this policy shall be referred to the decision of an arbitrator to be appointed by the parties .
If the company shall disclaim liability to the insured for any claim hereunder and such claim shall not within twelve calendar months from the date of such disclaimer have been referred to arbitration then the claim shall have been deemed to have been abandoned and shall not be recoverable".
The car was lost and company through its Branch Manager dis claimed liability on three different dates.
The insured did not take any action in regard to the appointment of an arbitrator until more than twelve months after the last disclaimer by the company.
The case of the company was that the insured must be deemed to have abandoned his claim by virtue of the contract of insurance policy while the respondent averted that there was never any valid disclaimer by the company of its liability as the Branch Manager had no authority to disclaim the liability and it could have been disclaimed only by the resolution of the company.
The company made an application under section 33 of the Indian praying for a declaration that the reference to arbitration was illegal and the award if made by the arbitrator would not bind the company.
It was contended on its behalf that the arbitration clause had ceased to be operative and the question as to the existence and validity of the arbitration agreement was triable by the court under section 33 of the and not by the arbitrator.
The argument was rejected by this Court.
It was held that the point on which the parties were in dispute was a difference (1) [1952] 3.C.R. 501.
231 arising out of the policy, because recourse to the contract by which both the parties were bound was necessary for the purpose of determining the matter in dispute between them.
As there was no contention raised by either of the parties that there was no contract entered into at all or that it was void ab initio the arbitrator had jurisdiction to decide the matter referred to him.
In our opinion, the principle applies to the present case and it follows that the dispute between the parties falls within the scope of the arbitration clause.
On behalf of the appellant reliance was 'placed upon the decision of Court of Appeal in Percy vs Young(1) in which it was held that the clause "that any differences or disputes that may arise between the partners shah be settled by an arbitrator" does not include a dispute whether the partnership has been terminated, or whether certain shares have been paid on account to the partnership or to one partner alone.
In our opinion, the principle does not apply in the present case where the question presented for determination is quite different.
Counsel for the appellant also referred to Turnock vs Sartoris(2).
In that case the lessor was under a covenant to supply his lessee with a specific quantity of water.
The lease contained a comprehensive arbitration clause.
Dispute having arisen as to the supply of water, an agreement was subsequently entered into, binding the lessor to take certain steps to secure the supply and varying the rights of the parties in respect of the supply.
The lessee brought an action alleging that the steps agreed upon had not been taken and that he had not been fully supplied with water and asking for an action of the .damages to be taken.
The lessor moved to have the action stayed.
lit was held that the disputed matters arose partly under the agreement and were outside the arbitration clause in the lease and that even if all the matters for which damages were claimed could be brought within the arbitration clause it would not be proper to refer them to an arbitration who would not have the authority to construe the agreement to determine its effect upon the lease.
It is manifest that the decision has no bearing upon the question p.resented for determination in the present case.
For the reasons.
already expressed, we hold that the claim of the respondent firm was within the scope of the arbitration clause and the application made by the appellant in Suit No. 128 of 1963 was.
rightly dismissed by the Subordinate Judge.
Accordingly, the appeal fails and is dismissed with costs.
V.P.S. Appeal dismissed.
(1) 14 oh. D. 200.
(2) 43 Cn. D. 150.
| IN-Abs | There was a dispute between the appellant and respondent regarding the supply of timber.
In pursuance of the clause in the contract which provided that in the event of any question or dispute arising under the. contract or in connection with the contract it should be referred to arbitration, the dispute was so referred.
One of the items in dispute was a 'claim by the respondent that there was an excess supply of timber to cover up possible rejection, which should be returned by the appellant with compensation for deterioration, or that payment should be made for it at the market value.
The appellant contended that the terms of the contract did not require the respondent to tender for inspection an,of quantity in excess of the contracted quantity, that the claim was in detinue relating to an involuntary bailment and not in relation to anything done in the performance, implementation or execution of the contract; and therefore.
, it was not a dispute arising out of the contract or in connection with the contract.
On the question whether the arbitrators had jurisdiction to adjudicate upon the claim, HELD: The test for determing the question is whether recourse to the contract, by which both the parties are hound, was necessary for the purpose of determining whether the claim of the respondent was justified or otherwise.
Since it was necessary to have recourse to the terms of the, contract for the purpose of deciding the matter in dispute, the matter was within the scope of the arbitration clause and the arbitrators had jurisdiction to decide it.
Ruby General Insurance Co. Ltd. vs Peary Lal Kumar, [1952] 5.C.R. 501, followed.
Piercy vs Young, and Turnock vs Sartoris 43 Ch.
D.150, explained.
|
Appeal No. 2354 of 1966.
Appeal from the judgment and order dated July 1963 of the Punjab High Court in Civil Writ No. 1559 of 1962.
M.C. Chagla and Janardan Sharma, for the appellants.
B.C. Misra, S.K. Mehta and K.L. Mehta, for respondent No. 3. 211 The Judgment of the Court was delivered by Sikri, J.
This appeal by certificate granted to the appellants by the High Court of Punjab under article 133(1)(c) of the Constitution raises one point, namely, whether a sub tenant is entitled to purchase the land from the land owner under section 18 of the Punjab Security of Land Tenures Act (Punj.
Act X of 1953) hereinafter referred to as the Act.
It would be sufficient to give few facts.
The appellants, Jaimal and Ram Singh, applied under section 18 of the Act to.
the Assistant Collector, 1st Grade, Hissar, to purchase 280 kanals 4 marlas of land situate in village Mehnda, Tehsil Hansi, District Hissar.
The land was originally owned by respondents.
4 to 10, who had given this land on lease to Sheo Parshad, respondent No. 3.
It is not in dispute that the appellants and their fathers had been in occupation of the land in dispute for the last 30 years, as sub tenants under Sheo Parshad, respondent No. 3.
During the pendency of the application, respondents Nos. 4 to.
10 sold the land in dispute, on October 25, 1957, to.
Sheo Parshad, and also in favour of his two.
The Assistant Collector, by his order dated November 30, 1959, accepted the application of the appellants and allowed them to purchase 274 kanals of land for Rs. 6,730/ .
On appeal, the Collector varied the order but the variation is not material for the purpose of this appeal.
appellants then preferred an appeal to the Commissioner and Sheo Parshad filed Revision Petition to him against the order of the.
Collector.
The Commissioner upheld the claim of the appellants to purchase the land under section 18 of the Act at the price assessed by the Assistant Collector, but he modified the order in respect of 85 kanals 8 marlas which had been sold to the sons of Sheo Parshad.
The final order in the proceedings was passed by the Financial Commissioner who, by his order dated August 27, 1962, held that the appellants.
were not entitled to purchase the land under section 18 of the Act.
Thereupon the appellants filed a petition under article 226 of the Constitution, seeking to quash the order of the Financial Commissioner.
The High Court was also of the opinion that the appellants being sub tenants were not entitled to apply under section 18 of the Act.
The answer to the question whether the appellants are entitled to apply under section 18 of the Act depends upon the interpretation.
of section 18, which reads as follows: "18.
Right of certain tenants to purchase land.
(1) Notwithstanding anything to the contrary contained in any law, usage or contract, a tenant of a land owner other than a small land owner 121 (i) who has been in continuous occupation of the land comprised in his tenancy for a minimum period of six years, or (ii) who has been restored to his tenancy under the provisions of this Act and whose periods of continuous occupation of the land comprised in his tenancy immediately before ejectment and immediately after restoration of his tenancy together amount to six years or more, or (iii) who was ejected from his tenancy after the 14th day of August, 1947, and before the commencement of this Act who was in continuous occupation of the land comprised in his tenancy for a period of six years or more immediately before his ejectment, shall be entitled to purchase from the land owner the land so held by him but not included in the reserved area of the land owner, in the case of a tenant falling within clause (i) or clause (ii) at any time, and in the case of a tenant falling within clause (iii) within a period of one year from the date of commencement of this Act: Provided that no tenant referred to in this subsection shall be entitled to.
exercise any such right in respect of the land or any portion thereof, if he had sublet the land or the portion, as the case may be, to any other person, during any period of his continuous occupation, unless during that period the tenant was suffering from a legal disability or physical infirmity, or if a woman, was a widow or was unmarried; Provided further that if the land intended to be purchased is held by another tenant who is entitled to preempt the sale under the next preceding section, and who is not accepted by the purchasing tenant, the tenant in actual occupation shall have the right to pre empt the sale.
(2) A tenant desirous of purchasing land under sub section (1) shall make an application in writing to an Assistant Collector of the First Grade, having jurisdiction over the land concerned, and the Assistant Collector, after giving notice to the landlord and to all other persons interested in the land and after making such inquiry as he thinks fit, shall determine the value of the land which shall be the average of the price obtaining for similar land in the locality during 10 years 213 immediately preceding the date on which the application is made.
(3) The purchase price shall be three fourth of the value of land as so determined.
(4) (a) The tenant shall be competent to pay the purchase price either in a lump sum or in six monthly instalments not exceeding ten in the manner prescribed.
(b) On the purchase price or the first instalment thereof, as the case may .be, being deposited, the tenant shall be deemed to have become the owner of the land, and the Assistant Collector shall, where the tenant is not already in possession, and subject to the provisions of the Punjab Tenancy Act (XVI of 1887), put him in possession thereof.
(c) If a default is.
committed in the payment of any of the instalments, the entire outstanding balance shall on application by the person entitled to receive it, be recoverable as arrears of land revenue.
(5) If the land is subject to a mortgage at the time the purchase, the land shall pass to the tenant unencumbered by the mortgage but the mortgage debt shall be a charge on the purchase money.
(6) If there is no such charge as aforesaid the Assistant Collector shall, subject to any 'direction which he may receive from any court, pay the purchase money to the landowner.
(7) If there is such a charge, the Assistant Collector shall, subject as aforesaid, apply in the discharge of the mortgage debt so much of the purchase money as is required for that purpose and pay the balance, if any, to the land owner, or retain the purchase money pending the decision of a civil Court as to the person or persons entitled thereto." "Land owner" is defined in section 2( 1 ) of the Act to mean person defined as such in the Punjab Land Revenue Act, 1887 (Act XVII of 1887) and shall include an "allottee" and "lessee".
as defined in clauses (b) and (c) respectively, of section 2 of the East Punjab Displaced Persons (Land Resettlement)Act, 1949 (Act XXXVI of 1949), hereinafter referred to as the "Resettlement Act".
The explanation to section 2 (1) reads: "In respect of land mortgaged with possession, the mortgagee shall be deemed to be the land owner.
" The word "tenant" is defined in section 2 (6) as follows: 214 "Tenant" has the meaning assigned to it in the Punjab Tenancy Act, 1887 (Act XVI of 1887) and includes a sub tenant and self cultivating lessee, but shall not include a present holder, as defined in section 2 of the Resettlement Act." In the Land Revenue Act, 1887, "land owner" has been defined as follows,in s.3 (2) "land owner" does not include a tenant or an assignee of land revenue, but does include a person to whom a holding has been transferred, or an estate or holding has been let in farm, under this Act for the recovery of an arrear of land revenue or of a sum recoverable as such an arrear and every other person not hereinbefore in this clause mentioned who is in possession of an estate or any share or portion thereof, or in the enjoyment of any part of the profits of an estate.
" It will be noticed that before a person can apply under section 18 of the Act he must be a tenant of a land owner other than a small land owner.
There is no dispute that the land owner in this case is not a small land owner.
The only question is whether the appellants, who were sub tenants, can be said to be tenants of the land owner within the meaning of section 18.
If we look at the definitions of the words "tenant" and "land owner", it seems clear that a tenant of a tenant cannot be a tenant of the land owner, because the definition expressly says that a land owner does not include a tenant.
Apart from this, the first proviso to sub section
( 1 ) of section 18 makes it clear that a tenant who has sublet the land or a portion, as the case may be, to any other person during the period of his continuous occupation is disabled from applying under section 18 unless during the period of his continuous occupation the tenant was suffering from legal disability or physical infirmity or if a woman was a widow or was unmarried.
In other words, for example, a tenant who is a widow would be entitled to apply under section 18 even though she had sublet the land which she desired to purchase.
No satisfactory answer was given by the learned counsel for the appellants as to what would happen if both the sub tenant and the widow applied to purchase.
Both sides have relied on the scheme of the Act, but it seems to us that the scheme of the Act and the objects underlying the Act do not assist us in determining this question.
It is well known that the main objects of the Act were to provide security to the tenants.
settle tenants on land declared surplus and fix a ceiling on the total holding of land owners and tenants.
It is also well known that it was a measure of agrarian reform.
But these matters do 215 The answer must depend upon the language of section 18, fairly construed.
If it was intended that a sub tenant should be entitled to purchase under section 18, we would have expected some provision in the Act to solve the difficulties which would arise if there was competition between the tenant and the sub tenant.
There was some debate before us whether a tenant who has sublet would be treated to be in continuous occupation of the land during the period of sub tenancy within section 18 ( 1 ) (i), but we think that the proviso to section 18 (1 ) proceeds on the basis that the tenant is in continuous occupation even though he has sublet the land.
It will again be noticed that under sub section
(4)(b) of section 18 on the purchase price being deposited, the tenant becomes owner of the land.
If the contention of the appellant was correct, the subtenant would become the owner under sub section
(4)(b); but what will happen to the rights of the tenant ? No satisfactory answer was given to this question.
Again it will further be noticed that sub section
(5) of section 18 talks of the mortgage of the land but it does not speak of the mortgage the rights of a tenant.
It seems to us that the High Court was right in holding that the legislature did not intend to confer any rights under section 18 on the sub tenant.
The fact that by sub letting the tenant is also not able to apply under section 18 by virtue of the first proviso to sub section
(1 ) cannot confer rights on the sub tenant because he must himself be a tenant of land owner within section 18 of the Act.
Mr. Chagla says that it is a very hard case for the appellants have been in possession for over 30 years, but if it is a hard case it is for the legislature to intervene and provide for such hard cases.
In the result the appeal fails and is dismissed.
There will be no order as to costs.
Y.P. Appeal dismissed.
| IN-Abs | The appellants, who had been in occupation of certain agricultural lands for more than 30 years as sub tenants., applied under section 18 of the Punjab Security of Land Tenures Act, 1953 to purchase the lands.
The final authority under the Act, held that the 'appellants were not entitled to purchase the land.
The appellants flied a writ petition in the High Court.
The High Court held that the appellants being sub tenants were not entitled to apply under section 18 of the Act.
Dismissing the appeal, this Court, HELD: The Legislature did not intend to confer any rights under section 18 on the sub tenant.
The word 'landowner ' is defined in section 2(1) of the Act to mean a person defined as such in the Punjab Land Revenue Act, 1887.
Under the latter Act, a landowner does not include a tenant.
The definitions of the words 'tenant ' and 'land owner ', make it clear that 'a tenant of a tenant cannot be a tenant of the land owner, Further, [213 G; 214 E] (a) The first proviso to sub section
(1) of section 18 makes it clear that a tenant who has sublet the land or a portion, as the case may be.
to any other person during the period of his continuous occupation is disabled from applying under section 18 unless during the period of his continuous occupation the tenant was suffering from legal disability or physical infirmity or if a woman was a widow or was unmarried; [214 E F] (b) If it was intended that a sub tenant should be entitled to purchase under section 18, some provision in the Act would have been there to solve the difficulties which would arise if there was competition between the tenant and the sub tenant; [215 A B] (c) If the contention of the appellant was correct, the sub tenant would become the owner of the land under section 18(4)(b) on the purchase price being deposited.
No satisfactory answer was given 'as to what will then happen to the rights of the tenant; and [215 C] (d) Section 18(5) refers to mortgage of the land but it does not refer to the mortgage of the rights of a tenant.
[215 D]
|
: Criminal Appeal NO. 32 of 1965.
Appeal by special leave from the ,judgment and order dated April 5, 1963 of the Madhya Pradesh High Court, Indore Bench in Criminal Misc., Case No. 135 of 1962.
Niren De, Solicitor General, H.L. Anand, 1. M. Bhardwaj and K.B. Mehta, for the appellant.
B.C. Mishra and C.P. Lal, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought from the order of the High Court of Madhya Pradesh dated 5th April, 1963 in Criminal Miscellaneous Case No. 135 of 1962 under section 520 of the Code of Criminal Procedure directing the return of 21 currency notes of the denomination of Rs. 1,000 each to respondents Rajendra Kumar Singh and Virendra Singh.
The currency notes of the total value of Rs, 21,000 were seized by the Madhya Pradesh Police from the Beawar Branch of the State Bank of India in the course of an investigation of a case under sections 420, 406 and 120B of the Indian Penal Code registered in P.S. Thuko Ganj, Indore City as Crime No. 113 of 1961 against Kishan Gopal, the third respondent.
It appears that the third respondent had come into possession of a sum of Rs. 1,50,000 in Government currency notes by cheating the first and second respondents.
The currency notes seized from the appellant were said to be part of the property obtained by Kishan Gopal by the commission of the said offence.
The case of the appellant was that it had come into possession of the said currency notes in the usual course of its business partly through the Bank of Rajasthan Limited and partly through the Mahalaxmi L2SuP CI 69 15 218 Mills Company Limited without any knowledge that the said currency notes had been the subject matter of an offence.
In the proceedings that followed on the investigation of the said case, the accused persons including the third respondent were acquitted by the Court of the Fourth Additional Sessions Judge, Indore in Sessions Case No. 3 of 1962 by an order made on 24th April, 1962.
In the course of the trial, the appellant made an application under section 517 (1 ) of the Code of Criminal Procedure asking for delivery of the aforesaid 21 currency notes to it on the ground that the said currency notes had been seized by the police from the appellant and that the appellant was an innocent third party who had received the said notes without any knowledge or suspicion of their having been involved in the commission of an offence.
By his order dated 24th April, 1962 the 4th Additional Sessions Judge, Indore allowed the application and directed that the currency notes should be returned to the appellant.
Subsequently, an appeal was filed to the High Court by the State of Madhya Pradesh being Criminal Appeal No. 205 of 1962.
The appeal was allowed and the High Court set aside the order of acquittal of the third respondent and ' convicted him under sections 420, 406 and 120B of the Indian Penal Code and sentenced to undergo imprisonment.
The first respondent, Rajendra Kumar Singh, made an application to the High Court asking for delivery of the currency notes as they belonged to him and the second respondent and as they had been deprived of the said property by the third respondent by the commission of the aforesaid offence.
The application was allowed by the High Court by its order dated 5th April, 1963 and the currency notes were ordered to be handed over to the first and the second respondents.
The relevant portion the order of the High Court reads as follows : "Now the bulk of the recovered property consists of Government currency notes either of the denomination of rupees one thousand each or money obtained after the tender of one thousand rupee notes by Kishan Gopal.
The position of the recovered money in short is this : 1.37, one thousand rupee notes were recovered from the pillow of accused Kishan Gopal after his arrest amounting to: 37,000 2.
Money directly traceable to one thousand rupee notes recovered from Dayabhai P.W.52, with whom it was deposited by accused Kishan Gopal and Mst.
Tulsabai.
59,500 3.
Money recovered from Mst.
Tulsa bai the sister of accused 's cuncubine 10,000 219 4.
Money in Beawar Bank consisting of two drafts of ten thousand each; on in the name of accused Kishan Gopal and the other in the name of Rukmanibai, his witness for which the accused ten dered twenty one thousand rupee notes and one thousand rupee notes.
with which he opened an account with his Bank.
21,000 Total : 1,27,500 This amount (Rs. 1,27,500) is directly traceable to the conversion of one thousand rupee notes.
We, therefore, direct it be given to Virendra Singh P.W. 1, and Rajendra Kumar P.W. 73, who shall proportionately divide it between themselves.
No other order is made in respect of other property and., the parties are left to establish their claim in Civil Court".
Section 517 o.f the Code ' of Criminal Procedure states: "517.
(1) When an inquiry or a trial in any Criminal Court is concluded, the Court may make such order as it thinks fit for the disposal by destruction, confiscation, or delivery to any person claiming to be entitled to possession thereof or otherwise of any property or document produced before 'it or in its custody or regarding which any offence appears to have been committed, or which has been used for the commission of any offence.
(2) When a High Court or a Court of Session makes such order and cannot through its own officers conveniently deliver the property to the person entitled thereto, such Court may direct that the order be carried into effect by the District Magistrate. . .
Section 520 provides as follows : "Any Court of appeal,confirmation, reference or revision may direct any order under section 518, section 518 or section 519 passed by a Court subordinate thereto, to be stayed pending consideration by the former Court, and may modify, alter or annul such order and made any further orders that may be just".
220 In Support of this appeal, it was contended in the first place that the High Court had ' reversed the order of the Sessions Judge directing the return of the currency notes without giving a notice to the appellant and without giving an opportunity to it for being heard.
The argument was stressed that there was a violation of the principle of natural justice and the order of the High Court dated 5th April, 1963 was illegal.
It was, however, contended on behalf of the respondents that there was no provision in section 520 of the Code of Criminal Procedure for giving notice to the affected parties and the order of the High Court cannot be challenged on the ground that no hearing was given to the appellant.
In our opinion, there is no warrant or justification for the argument advanced on behalf of the respondents.
It is true that the statute does not expressly require a notice to be issued, or a hearing to be given to the parties adversely affected.
But though the statute is silent and does not expressly require issue of any notice there is in the eye 'of law a necessary implication that the party adversely affected should be heard before the Court makes an order for return of the seized property.
The principle is clearly stated in the leading case of Cooper vs Wandsworth Board of Works(x).
In that ease section 76 of the Metropolis Local Amendment Act, 1855 authorised the District Board to demolish the building if it had been constructed by the owner without giving notice to the Board of his intention to build.
The statute laid down no procedure for the exercise of the power of demolition, and, therefore, the Board demolished the house in exercise of the above power without issuing a notice to the owner of the house.
It was held by the Court of Common Pleas that ' the Board was liable in damages for not having given notice o,f their order before they proceeded to execute it.
Erie, C,J. held that the power was subject to a qualification repeatedly recognised that no man is to be deprived of his property without his having an opportunity of being heard and that this had been applied to "many exercises of power which in common understanding would not be at all a more judicial proceeding than would be the act of the district board in ordering a house to be pulled down".
Willes, J. said that the rule was "of universal application and rounded upon the plainest principles of justice" and Byles, J. said that "although there are no positive words in a statute requiring that the party shall be heard, yet the justice of the common law will supply the omission of the legislature." The same principle has been reaffirmed in a recent case Ridge vs Baldwin(2).
In that case, section 191 of the Municipal Corporations Act, 1881 provided that a watch committee may at any time suspend or dismiss any borough constable whom they think negligent in the discharge of his duty, or otherwise unfit for the same.
The appellant, who was the chief constable of a (1) ; (2) ; 221 borough police force, was dismissed by the watch committee on the ground that he was negligent in the discharge of his duties as thief constable.
He brought an action against the members of the watch committee by stipulating that his dismissal was illegal and ultra vires the powers.
It was held by the House of Lords that the decision of the watch committee was ultra vires because they dismissed the appellant on the ground of neglect of duty and as such they were bound to observe the principles of natural justice by informing him of the charges made against him and giVing him an opportunity of being heard.
The same principle was applied by this Court in Board of High School and Intermediate Education.
U.P. Allahabad vs Ghanshvam Day Gupta and Ors.
It was held in that case that an examination committee of the Board of Secondary Education in Uttar Pradesh was acting quasi judicially when exercising its Dower under rule 1 (1) of Chapter VI of the Regulations dealing with cases of examinees using unfair means in examination hall and the principle of natural justice which require that the examinee must be heard.
will apply to the proceedings before the Committee.
Though there was nothing express one way or the other in the Act or the Regulations casting a duty on the committee to act judicially, where no opportunity whatever was given to the examinee to give an explanation and present their case before the Committee.
the Resolution of the committee cancelling their results and depriving them from appearing at the next examination was defective.
Applying the Principle to the present case it is manifest that the High Court was bound to give notice to the appellant before reversing the order of the Sessions judge directing the disposal1 of the property under section 517 of the Code of Criminal Procedure.
As no such notice was given to the appellant.
the order of the High Court dated 5th April, 1963 is vitiated in law.
The next question which arises in this appeal is whether the High Court was justified on merits in ordering the currency notes to be returned to respondents 1 and 2.
It was argued by Mr. Mishra that the High Court hat a discretion under the statute as to whom the property was to be returned and there was no reason why this Court should interfere with such exercise of discretion by the High Court.
We are unable to accent the argument.
It iS true that sections 517 and 520 of the Code of Criminal Procedure confer a discretion on the High Court as regards the disposal of the property seized or produced before it or regarding which any offence was said to have been committed.
But as we shall presently show the High Court has not exercised its discretion according to proper legal principle and its order is hence liable to be set aside.
It was stated by Mr. Mishra that the question involved in (1) ; 222 this case is whether as to which out of two innocent parties should suffer, viz.; the person who lost the property due to the criminal, act of another or the person to whom the property (currency notes) had been delivered in the normal course of its business.
It is not, however, correct to say that respondents 1 and 2 are equally innocent because respondents 1 and 2 had admittedly handed over the currency notes to respondent No. 3 "for the criminal purpose of duplication".
It was indeed urged on behalf of the appellant that respondents 1 and2 had entered into a criminal conspiracy with respondent No. 3 for 'duplicating ' the currency notes.
In any event, we are satisfied that the High Court was in error in directing the return of the currency notes to respondents 1 and 2.
The reason is that the property in coins and currency notes passes by mere delivery and it is the clearest exception to the rule Nemo dat quod non habat.
This exception was engrafted in the interest of commercial necessity.
But the exception only applies if the transferee of the coin.
or currency notes takes in good faith for value and without notice of a defect in the title of the transferor.
The rule is stated by Wills J. in Whistler vs Forster(1) as follows : "The general rule of law is undoubted, that no one can transfer a better title than he himself possesses: Nemo dat quod non habat.
To this there ,are some exceptions; one of which arises out of the rule of the law merchant as to negotiable instruments.
These, being part of the currency, are subject to.
the same rule as money: and if such an instrument be transferred in good faith, for value, before it is overdue, it becomes available in the hands of the holder, notwithstanding fraud which would render it unavailable in the hands of a previous holder.
" In the present case the appellant asserted that it had obtained 'the currency notes in the normal course of its business and without any knowledge or suspicion of their having been involved in the commission of any offence.
The respondents have not alleged fraud or lack of good faith on the part of the appellant.
The appellant hence contended that the property in the currency notes, passed in its favour by mere delivery and the appellant "had a right to possess ' the currency notes within the meaning of section 517 of the Code of Criminal Procedure.
We do not wish to express any concluded opinion in this case on the ultimate question of liability for payment of the money as between the appellant on the one hand and respondents 1 and 2 on the other.
But we are of opinion that in the circumstances of this case the High Court should have directed the return of the said currency notes to the (1) 223 appellant which had the "right to possess" the currency notes within the language of section 517 of the Code of Criminal Procedure.
we accordingly allow this appeal, set aside the order of the High Court dated April 5, 1963 and direct that the 21 currency notes of the denomination of Rs. 1000 each seized by the Madhya Pradesh Police should be returned to the appellant.
R.K.P.S. Appeal allowed.
| IN-Abs | 21 currency notes of Rs. 1,00.0 each were seized from the Appellant Bank by the police in the course of an investigation of a case against the third respondent of cheating the first and second respondents.
The seized currency notes were said to be part of the property obtained by the third respondent from the other two respondents.
The third respondent was acquitted by the trial court of the offence charged.
In the course of the trial the appellant made an application under section 517(1) of the Code of Criminal Procedure asking for the delivery of the currency notes to it on the ground that the appellant was an innocent third party who had received the said notes without any knowledge or suspicion of their having been involved in the commission of an offence.
By its order of 24th April 1962, the trial court allowed the application and directed that the currency notes 'should be returned to the appellant.
Subseqently an appeal filed by the State was allowed by the High Court which set aside the trial court 's order of acquittal of the third respondent and convicted him of the offence charged.
On an application made by the first respondent asking for delivery of the currency notes to him as they belonged to.
him and the second respondent, the High Court, by an order of April 5, 1963 directed that the notes be handed over to the first and second respondents.
In the appeal to this Court, it was contended, inter alia, on behalf of the appellant that the High Court had reversed the order of the trial court directing the return of the currency notes to the appellant without giving a notice to the appellant.
and without giving an opportunity of being heard; and that the order of April 5, 1963 was therefore violative of the principles of natural justice and was illegal.
The contention on behalf of the respondents was that there was no provision in section 520 of the Code of Criminal Procedure for giving notice to the affected parties and the order of the High Court could not be challenged on the ground that no hearing was given to the appellant.
It was also contended that the High Court had a discretion under the statute as to whom.
the property was to be returned and there was no reason why this Court should interfere with the exercise of discretion by the High Court.
HELD: The appeal must be allowed and the order of the High Court dated April 5, 1963 set 'aside.
The seized currency notes must be directed to be returned to, the appellant.
(1) It is mainfest that the High Court was bound to.
give notice to the 'appellant before reversing the order of the trial court directing the disposal of the property under section 517 of the Code of Criminal Procedure.
As no such notice was given to the appellant, the order of the High Court dated 5th April 1963 is vitiated in law.
Although the statute does not expressly require a notice to be issued, or a hearing to be given to the 217 parties adversely affected.
there is in the eye of law a necessary implication that the parties adversely affected should be heard before the Court makes an order for return of the seized property.
[220 C D, 221 E] Cooper vs Wandsworth Board of Works. ; , Ridge vs Baldwin, ; and Board of High School and Intermediate Education, U.P. Allahabad vs Ghanshyam Das Gupta and Ors, A.I.R. 1962 S.C. 1110, referred to.
(2) The appellant asserted that it had obtained the currency notes in the normal course of its business and without any knowledge or suspecion of their having been involved in the commission of any offence and that the respondents had not alleged fraud or lack of good faith on the part of the appellant.
In the circumstances the High Court should have directed the return of the currency notes to the appellant which had the "right to possess" the notes within the language of section 517 of the Code of Criminal Procedure.
Property in coins and currency notes passes by mere delivery and it is the clearest exception to the rule Nemo dat quod non habet.
[222 B. C] Whistler vs Forster, , referred to.
|
iminal Appeal No. 73 of 1966.
105 Appeal from the judgment and order dated March 31, 1965 of the Calcutta High Court in Criminal Revision No. 921 of 1963.
P.K. Chatterjee, for the appellants.
B.K. Bhattacharya, G.S. Chatterjee for P.K. Bose, for the respondent.
The Judgment of the Court was delivered by Bachawat, J.
The complainant Sarajit Kumar Bose was a forest ranger having his headquarters at Bara Bazar range in the district of Purulia.
Bibhuti Bhusan Dasgupta was the editor and Ram Chandra Adhikari was the printer and publisher of "Mukti" a local Bengali weekly journal with its registered office at Purulia town.
At the instance of Sripati Gope, a resident of Bhuni, P.S. Patanda, district Singhbhum they published a letter in the weekly issue of Mukti dated the 4th Asar, 1388 B.S. corresponding to June 19, 1965.
The letter which bore the caption "Wild law in the land of the Nags (barbarians)", contained several defamatory statements concerning Sarajit Bose.
On his complaint, Sripati Gope and Bibhuti Dasgupta were charged with an offence punishable under sec.
500 of the Indian Penal Code and Ram Adhikari was charged with an offence punishable under sec.
501 I.P.C. They were tried jointly by Shri S.M. Chatterjee, Magistrate, First Class, Purulia.
The Magistrate convicted all of them of the offences with which they were respectively charged, and passed appropriate sentences.
The appeals filed by them against the order were dismissed by the Sessions Judge, Purulia.
The order concerning the conviction and sentence of Sripati Gope has now become final.
The two courts rejected his claim for protection under the first exception to section 499 I.P.C. A revision petition filed by Bibhuti Dasgupta and Ram Adhikari was dismissed by the High Court.
They have filed the present appeal after obtaining a certificate under Article 134(1 ) (c) of the Constitution.
All the courts concurrently found that the publication was not made by the appellant in good faith for the public good and that they were not entitled to the protection of the ninth exception to sec.
499 as claimed by them Mr. Chatterjee attacked this finding.
The ninth exception to section 499 provides that "it is not defamation to make an imputation on the character of another provided that the imputation be made in good faith for the protection of the interests of the person making it, or any other person, or for the public good.
" Section 52 provides that "nothing is said to be done or believed in "good faith" which is done or believed without due care and attention.
" The appellants ' case is that on their L2Sup C[169 8] 106 behalf one Dol Gobinda Chakravarty made enquiries and was satisfied about the truth of the defamatory statements.
It appears that Dol Govinda did not make any report to the appellants in writing.
The enquiries made by him did not reveal that all the defamatory imputations in the publication were true.
On the materials on the record it is impossible to say that the appellants published the statements in good faith or with due care and attention.
In Harbhajan Singh vs State of Punjab (1) the Court held that the accused person was entitled to the protection of the ninth exception to sec.
499 if he.
succeeded in proving a preponderance of probability that the case was within the exception.
We do not find that the courts below placed upon the appellant any heavier burden of proof.
Mr. Chatterjee next contended that the trial of Bibhuti Dasgupta was illegal as he was not personally examined under sec. '342 of the Code of Criminal Procedure.
To appreciate this argument it is necessary to refer to the following facts.
On September 27, 1961 the Magistrate examined the complainant and issued summons to.
the three accused.
On the application of Bibhuti Dasgupta the Magistrate passed an order o.n December 12, 1961 dispensing with his personal appearance and permitting him to appear by his pleader.
On September 17, 1962 the examination of prosecution witnesses was concluded.
On the same day Ram Adhikari was examined under sec.
On December 21, 1962 the lawyer representing Bibhuti Dasgupta flied a petition stating that he was undergoing an operation in Calcutta and that the lawyer may be examined on his.
behalf under sec.
On the same date the Magistrate allowed the application and examined his lawyer.
On April 17, 1963 the Magistrate delivered judgment.
The plea that the trial of Bibhuti Dasgupta was vitiated on account of his non examination under section 342 was not taken before the Magistrate or the Sessions Judge or at the hearing of the revision petition in the High Court.
It was taken for the first time in the petition for grant of the certificate under article 134( 1 )(c).
In this background let us examine the contention.
As a general rule save where the magistrate dispenses with the personal attendance of the accused person the first step in a criminal proceeding is to bring him before the magistrate.
The attendance of the accused is secured if necessary by summons or by warrant of arrest.
Thereafter the inquiry or trial proceeds in his presence.
Section 205 of the Code of Criminal Procedure empowers the Magistrate whenever he issues a summons to dispense with the personal attendance of the accused and permit him to appear by a pleader.
The section runs as follows : (1) ; 107 "205.
(1) Whenever a Magistrate issues a summons, he may, if he sees reason to do so, dispense with the personal attendance of the accused and permit him to appear by his pleader.
(2) But the Magistrate inquiring into or trying the case may, in his discretion at any stage of the proceedings, direct the personal attendance of the accused, and, if necessary, enforce such attendance in the manner hereinabove provided.
" The form of summons issued to the accused runs as follows "Whereas your attendance is necessary to answer to a charge of (state shortly the offence charged) you are hereby required to appear in person (o.r by pleader, as the case may be) before the (Magistrate) of. on the . day . of .
Herein fail not.
" Section 540A empowers the magistrate at any stage of an inquiry or trial to dispense with the personal attendance of the accused if he is represented by a pleader.
The section is as follows : "540A (1) At any stage of an inquiry or trial under this Code, if the Judge or Magistrate is satisfied, for reasons to be recorded, that the personal attendance of the accused before the Court is not necessary in the interests of justice, the Judge or Magistrate may, if the accused is represented by a pleader, dispense with his attendance and proceed with such inquiry or trial in his absence, and may, at .any subsequent stage of the proceedings, direct the personal attendance of such accused.
(2) If the accused in any such case is not represented by a pleader, or if the Judge or Magistrate considers his personal attendance necessary, he may if he minks fit, and for reasons to be recorded by him, either adjourn such inquiry or trial, or order that the case of such accused be taken up or tried separately.
" The point in issue is whether the pleader can represent the accused for purposes of sec.
342 and whether the examination of the pleader in place of the accused is sufficient compliance with the section in a case where the magistrate has dispensed with the personal attendance of the accused and permitted him to appear by a pleader.
On this question there is a sharp conflict of judicial opinion.
Most of the decisions upto 1962 are referred to in Prova Devi vs Mrs. Fernandes(1).
In that case a Full Bench of Calcutta High Court by a majority decision held that the magistrate may in his discretion examine the pleader on behalf of the (1) A.I.R. 1962 Cal.
108 accused under sec.
This view is supported by numerous decisions of other High Courts, but from time to time many judges expressed vigorous dissents and came to the opposite conclusion.
The two sides of the question are ably discussed in the majority and minority judgments of the Calcutta case.
After a full examination of all the decided cases on the subject, we are inclined to agree with the minority opinion.
The main arguments in favour of the view that the examination of the pleader is sufficient compliance with the provisions of section 342 may be summarized as follows.
The pleader authorised to appear on behalf of the accused can do all acts which the accused can do.
The representation of the pleader extends throughout the trial except as provided in section 366(2).
The form .of the summons shows that the pleader may answer to charge on behalf of the accused at every stage of the proceedings.
He may even plead guilty under secs.
242, 243, 251A, 255 and 271.
There is no reason why he cannot be examined under section 342. 'That section is subject to and controlled by.
section 205.
The accused can refuse to answer questions under sec.
342 and there is no point in insisting on his personal attendance if he has no intention to answer them.
Accused persons will suffer harassment and inconvenience if the magistrates have no discretion to dispense with their personal examination under section 342.
Having considered all these arguments we are not convinced that pleader can be examined in place of the accused under section 342.
Section 342 reads as follows : "342.
( 1 ) For the purpose of enabling the accused to explain any circumstances appearing in the evidence against him, the Court may, at any stage of any inquiring or trial without previously warning the accused, put such questions to him as the Court considers necessary, and shall, for the purpose aforesaid, question him generally on the case after the witnesses for the prosecution have been examined and before he is called on for his defence.
(2) The accused shall not render himself liable to punishment by refusing to answer such questions, or by giving false answers to them; but the Court and the jury (if any) may draw such inference from such refusal or answers as it thinks just.
(3) The answers given by the accused may be taken into consideration in such inquiry.
or trial, and put in evidence for or against him in any other inquiry into or trial for, any other offence which such answers may tend to show he has committed.
(4) No oath shall be administered to the accused when he is examined under sub section (1 ).
" 109 Sub section (1 ) of sec.
342 consists of two parts.
The first part gives a discretion to the Court to question the accused at any stage of an inquiry or trial without previously warning him.
Under the second part the Court is required to question him generally on the case after the witnesses for the prosecution have been examined and before he is called for his defence.
The second part is mandatory and imposes upon the Court a duty to examine the accused at the close of the prosecution case in order to give him an opportunity to explain any circumstances appearing against him in the evidence and to say in his defence what he wants to say in his own words.
He is not bound to.
answer the.
questions but if he refuses to answer or gives false answers, the consequences may be serious, for under sub section (2) the Court may draw such inference from the refusal or the false answers as it thinks fit.
Under sub sec.
(3) the answers given by the accused may be taken into consideration in the inquiry or trial.
His statement is material upon which the Court may act, and which may prove his innocence, (see State of Maharashtra vs Laxman Jairam(1).
Under sub sec.
(4) no oath is administered to him.
The reason is that when he is examined under sec.
342, he is not a witness.
Before sec.
342A was enacted, he was not a competent witness for the defence.
His statement under sec.
342 was intended to take the place of what he could say in his own way in the witness box.
(see Hate Singh vs State of Madhya Bharat(2).
Under sec.
342A, he is now a competent witness.
But the provisions of sec.
342A does not affect the value of his examination under sec.
Under sub section (3) of section 342 his answers may be put in evidence for or against him in other inquiries or trials for other offences.
For instance, if in a trial for murder he says that he concealed the dead body and did not kill the victim his statement may be used as evidence against him in a subsequent trial for an offence under sec.
The privilege of making a statement under sec.
342 is personal to the accused.
The clear intention of the section is that only he and nobody else can be examined under it.
This conclusion is reinforced if we look at sec.
The whole of his examination including every question put to him and every answer given by him must be recorded in full and interpreted to him in a language which he understands, and he is at liberty to explain or add to his answers; and when the whole is made conformable to what he declares is the truth the record has to be signed by him and the Magistrate.
The idea that the pleader can be examined on his behalf is foreign to the language of secs.
342 and 364.
It was well observed by Rankin J. in Promotha Nath vs Emperor(3) that: (1) [1962] Supp. 3 S.C.R. 230.
(2) A.I.R. 1953 S.C. 468, 470.
(3) A.I.R. 1923 Cal.
470, 481. 110 ". the intention of the statute iS that at a certain stage in the case, the Court itself shall put aside all Counsel, all 'pleaders, all witnesses, all representatives, and shall call upon an individual accused with the authority of the Court 's own voice, to take advantage of the opportunity which then arises to.
state in his own way anything which he may be desirous.
of stating. what is necessary is.
that the accused shall be brought face to face solemnly with an opportunity given to him to make a statement from his place in the dock in order that the Court may have the advantage of hearing his defence if he is willing to make one with his own lips? ' The proposition that a pleader authorised to appear on behalf of the accused can do all acts which the accused himself can do at the trial is too wide.
If the statute gives the accused a personal privilege or imposes upon him a personal duty, only he can exercise the privilege or perform the duty.
Thus under sec.
366(2) the accused must hear the judgment in person unless the sentence is one of fine only or unless, he is acquitted.
Under sec.
342A only the accused can give evidence in person and his pleader 's evidence cannot be treated as his.
The answers of the accused under section 342 is intended to be a substitute for the evidence which he can give as a witness under sec.
The privilege and the.
duty of answering questions under sec.
342 cannot be delegated to a pleader.
No doubt the form of the summons show that the pleader may answer the charges against the accused, but in so answering the charges, he cannot do.
what only the accused can do personally.
The pleader may be permitted to represent the accused while the prosecution evidence is being taken.
But at the close of the prosecution evidence the accused must be questioned and his pleader cannot be examined in his place.
Sections 205 and 540A do not expressly mention that the pleader cannot be examined under sec.
342, but this does not lead to the inference that the pleader can be so examined.
On the other hand, secs.
353, 360, 361 and 366 expressly provide that the pleader may represent the accused for certain purposes, but from this fact alone no inference can be drawn that the pleader cannot represent the accused for purposes of section 342 or other sections.
It is from, the scheme, purpose and language of sec.
342 that we are driven to the conclusion that the examination under the section must be of the accused person and not his pleader.
In Dorabshah vs Emperor(1) the Bombay High Court held that where the accused is permitted to appear by his pleader (1) A.I.R. 1926 Bom.
111 under sec.
205 the pleader may on his behalf be examined and may plead guilty under secs.
242 and 243.
Whether the Court can act upon an admission of guilt by the pleader under secs.
242, 243, 251A, 255 and 271 does not directly arise in this case and we express no opinion on it.
It is sufficient to say that the language of those sections and the effect of admissions under them are entirely different.
We are not impressed with the argument that an accused person will suffer inconvenience and harassment if the Court cannot dispense with his attendance for purposes of sec.
The examination under the section becomes necessary when at the close of the prosecution evidence the magistrate finds.
that there are incriminating circumstances requiring an explanation by the accused.
If there is.
no evidence implicating the accused, no explanation from him is necessary and he need not be examined under section 342.
If there is evidence implicating him, it is in his interest that he should be examined personally.
There are exceptional cases when an examination of the accused personally under sec.
342 is not necessary or possible.
Where the accused is a company or other juridical person it cannot be examined personally.
It may be that the Court may then examine a director or some other agent on its behalf [see Express Diary Ltd. vs Corporation of Calcutta(1)].
Exceptional cases apart, only the accused in person can be examined under section 342.
We therefore hold that the Magistrate should have examined Bibhuti Dasgupta personally and the examination of his pleader was not sufficient compliance with sec.
This conclusion does not dispose of Bibhuti Dasgupta 's appeal.
Under sec.
537 the conviction and sentence are.
not reversable on account of any error, omission or irregularity in any proceedings during the trial unless the error, omission or irregularity has ' in fact occasioned a failure of justice.
Mere non examination or defective examination under sec.
342 is not a ground for interference unless prejudice is established.
[see Tilakeshwar Singh vs The State of Bihar(2) K.C. Mathew vs The State of Travancore Cochin(3), Ram Shankar Singh vs State West Bengal (4)].
Looking at the facts of this case we do not find that any prejudice was caused to Bibhuti Dasgupta by his non examination under sec.
The prosecution evidence was closed on September 17, 1962.
Ram Adhikari appeared in Court and was examined personally.
Bibhuti Dasgupta did not appear in Court on that date.
After 3 months o.n December 21, 1962 his pleader was examined on his behalf at his express request.
The Magistrate delivered judgment on April 17, 1963.
(1) I.L.R. (2) (3) ; , 1061 2.
(4) [1962] Supp. 1.
S.C.R. 49, 64 112 On that date Bibhuti Dasgupta was.
present in Court.
He made no complaint at any time before the Magistrate or the Sessions Judge or the High Court that he had suffered any prejudice.
Even in this Court Mr. Chatterjee could not point out what further explanation could have been given by Bibhuti Dasgupta if he had been examined personally.
We are satisfied that the omission to examine him under sec.
342 did not cause him any prejudice and has not in fact occasioned a failure of justice.
We are, therefore, not inclined to interfere with his conviction and sentence.
In the result, the appeal is dismissed.
Y.P. Appeal dismissed.
| IN-Abs | In a defamation case, at the instance of the accused his personal appearance.
was dispensed .with by the Magistrate under section 540 A Cr.
His advocate was examined under section 342 at the close of the trial and the accused was convicted.
On the questions: (i) whether the pleader can represent the accused for purposes of section 342 and whether the examination of the pleader in place of the accused is sufficient compliance with the section in a case where the Magistrate has dispensed with the personal attendance of the accused 'and permitted him to appear by a pleader; and (ii) whether mere non examination of the accused or defective examination under section 342 vitiates the trial, HELD: (i) The privilege of making a statement under section 342 is personal to the accused and the scheme, purpose and language of the section lead to the conclusion that only he and no body else can be examined under it.
If the statute gives the accused a personal privilege or imposes upon him a personal duty only he can exercise the privilege or perform the duty.
The second part of section 342 is mandatory and imposes upon the court a duty to examine the accused at the close of the prosecution case in order to give him 'an opportunity to explain any circumstances appearing against him in the evidence and to say in his defence what he wants to say in his own words.
The answers of the accused under section 342 is intended to be a substitute for the evidence which he can give under section 342 A and the privilege and duty of 'answering questions under section 342 cannot be delegated to a pleader.
Though sections 205 and 540 A which empower a Magistrate to dispense with the personal appearance of the accused do not expressly mention that the pleader cannot be examined under section 342, it does not lead to the inference that the pleader can be so examined.
G H, 109 B; 110 C D, 109 E; 110 F H] Dorabshah vs Emperor, A.I.R. 1926 Bom.
218, disapproved.
(ii) Under section 537 the conviction and sentence are not reversible on account of any error, omission or irregularity in 'any proceedings during the trial unless the error, omission or irregularity has in fact occasioned a failure of justice.
Therefore the mere non examination of the accused in the present case, under section 342 was not a ground for interference since no prejudice was established.
[111 F] Tilakeshwar Singh vs The State of Bihar, [1955] 2 S.C.R. 105, K.C. Mathew vs The State of Travancore Cochin, [1955] 2 S.C.R. 1057 and Ram Shankar Singh vs State of West Bengal, [1962] Supp. 1 S.C.R. 49, 64, referred to.
|
Appeal No. 1164 of 1966.
66 Appeal by special leave from the judgment and order dated September 27, 1965 of the Kerala High Court ' in O.P. No. 688 of 1965.
D. Narsaraju, S.A.L. Narayana Rao, R.N. Sachthey and B.D. Sharma, for the appellant.
The respondent did not appear.
The Judgment of the Court was delivered by Grover, J.
The short but important question which is involved in this appeal 'by special leave from a judgment of the Kerala High Court is whether the Appellate Income tax Tribunal has the power, under the relevant provisions of the Income tax Act, 1961, (hereinafter called the Act) to stay the recovery of the realization of the penalty imposed by the departmental authorities on an assessee during the pendency of an appeal before it.
The assessee, who is the respondent, was imposed penalties in the sum of Rs. 18,000/ , 1,700/ and 14,000/ respectively in respect of the assessment years 1954 55, 1960 61 and 1961 62.
These penalties were imposed .under section 271(1)(c) read with section 274(2) of the Act for concealment of particular income and furnishing inaccurate particulars.
The assessee preferred appeals to the Income tax Appellate Tribunal and made an interim prayer for stay of collection of the penalties imposed.
The Tribunal declined to order any stay holding that it had no power to grant such a prayer.
The assessee then moved the High Court under article 226 of the Constitution.
The High Court held that the Tribunal had the power to stay the proceedings as also the collection of the penalties pending the appeal since that power was incidental and ancillary to its appellate jurisdiction.
The Tribunal was consequently directed to dispose of the stay application in accordance with law.
The relevant provisions.
of the Act may be first noticed.
Section 156 provides that when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under the Act, the Income tax Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable.
Under section 220( 1 ) any amount specified in the notice of demand under section 156 has to be paid within 35 days of the service of the notice or within such lesser period as may be specified under the proviso to sub section
If the amount is not paid within the period limited or extended (the assessee can ask for an extension) the assessee shall be deemed to be in default.
Sub section (6) of section 220 provides that where an assessee has presented an appeal under section 246 the Income tax Officer may, in his discretion and subject to such conditions as he may think fit, treat the assessee as not being in default so long as the appeal .remains pending.
67 Section 221 provides for the imposition of penalty when the assessee is in default.
Sections 222 to 224 relate to the issuance of a certificate to the Tax Recovery Officer.
Under section 225 the Income tax Officer can order stay of proceedings, even after the certificate has been issued to the Tax Recovery Officer.
It may be mentioned that the last four sections in terms relate to recovery of tax, but by virtue of section 229 any penalty imposed is also recoverable in the same manner.
Section 246 to which reference has been made in section 220(6) gives the appealable orders against which an assessee may appeal to the Appellate Assistant Commissioner.
Appeals to the Tribunal are dealt with by sections 252 to 255.
Section 252 provides merely for constitution of the Tribunal.
Section 253 says that any assessee aggrieved by the orders set out in cls.
(a), (b) and (c) of sub section
(1) may appeal to the Tribunal.
The Commissioner is also entitled to direct the Income tax Officer to file an appeal against the order of an Appellate Assistant Commissioner made under section 250.
Section 254 specifies the orders which the Tribunal can make.
Sub section (1 ) which is material may be reproduced below : "254.
Orders of Appellate Tribunal. ( 1 ) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.
" Section 255 gives the procedure of the Appellate Tribunal.
Subsections (5) and (6) of this section need alone be noticed.
"255 (1) . . . . . (2) (3) (4) (5) Subject to the provisions of this Act, the Appellate Tribunal shall have power to regulate its own procedure and the procedure of Benches thereof in all matters arising out of the exercise of its powers or of the discharge of its functions, including the places at which the Benches shall hold their sittings.
(6) The Appellate Tribunal shaH, for the purpose of discharging its functions, have all the powers which are vested in the Income tax authorities referred to in section 131, and any proceeding before the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 68 228 and for the purpose of section 196 of the Indian Penal Code (XLV of 1860) and the Appellate Tribunal shall be deemed to be a civil court for all the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898 (V of 1898).
" Section 131 may at this stage be referred to.
It gives to the Income tax Officer, the Appellate Assistant Commissioner and the Commissioner the same powers as are vested in the court under the Code of Civil Procedure when trying a suit in respect of the matters specified in the section.
But these powers relate to discovery and inspection; enforcing the attendance of witnesses; compelling production of books of account etc.; issuing commissions and allied matters.
There can be no manner of doubt that by the provisions of the Act or the Income tax Appellate Tribunal Rules, 1963 powers have not been expressly conferred upon the Appellate Tribunal to stay proceedings relating to the recovery of penalty or tax due from an assessee.
At the same time it is significant that under section 220 (6) the power of stay by treating the assessee as not being in default during the pendency of an appeal has been given to the Income tax Officer only when an appeal has been presented under section 246 .which will be to the Appellate Assistant Commissioner and not to the Appellate Tribunal.
There is no provision in section 220 under which the Income tax Officer or any of his superior departmental officers can be moved for granting stay in the recovery of penalty or tax.
It may be that under section 225 notwithstanding that a certificate has been issued to the Tax Recovery Officer for the recovery of any tax (the position will be the same with regard to penalty) the Income tax Officer may grant time for the payment of the tax.
In this manner he can probably keep on granting extensions until the disposal of the appeal by the Tribunal.
It may also be that as a matter of practice prevailing in the department the Commissioner or the Inspecting Assistant Commissioner in exercise of administrative powers can give the necessary relief of staying recovery to the assessee but that can hardly be put at par with a statutory power as is contained in section 220(6) which is confined only to the stage of pendency of an appeal before the Appellate Assistant Commissioner.
The argument advanced on behalf of the appellant before us that in the absence of any express provisions in sections 254 and 255 of the Act relating to stay of recovery during the pendency of an appeal it must be held that no such power can be exercised by the Tribunal, suffers from a fundamental infirmity inasmuch as it assumes and proceeds on the premise that the statute confers such a power on the Income tax Officer who can give the necessary 69 relief to an assessee.
The right of appeal is a substantive right and the questions of fact and law are at large and are open to review by the Appellate Tribunal.
Indeed the Tribunal has been given very wide powers under section 254(1) for it may pass such orders as it thinks fit after giving full hearing to both the parties to the appeal.
If the Income tax Officer and the Appellate Assistant Commissioner have made assessments or imposed penalties raising very large demands and if the Appellate Tribunal is entirely helpless in the matter of stay or recovery the entire purpose of the appeal can be defeated if ultimately the orders of the departmental authorities are set aside.
It is difficult to conceive that the Legislature should have left the entire matter to the administrative authorities to make such orders as they choose to pass in exercise of unfettered discretion.
The assessee, as has been pointed out before, has no right to even move an application when an appeal is pending before the Appellate Tribunal under section 220 (6 ) and it is only at the earlier stage of appeal before the Appellate Assistant Commissioner that the statute provides for such a matter being dealt with by the Income tax Officer.
It is a firmly established rule that an express grant of statutory.
power carries with it by necessary implication the authority to use all reasonable means to make such grant effective (Sutherland Statutory Construction, Third Edition, articles 5401 and 5402).
The powers which have been conferred by section 254 on the Appellate Tribunal with widest possible amplitude must carry with them by necessary implication all powers and duties incidental and necessary to make the exercise of those powers, fully effective.
In Domat 's Civil Law Cushing 's Edition, Vol. 1 at page 88, it has been stated: "It is the duty of the Judges to apply the laws, not only to what appears to be regulated by their express dispositions, but to all the cases where a just application of them may be made, and which appear to be comprehended either within the consequences that may be gathered from it." Maxwell on Interpretation of Statutes, Eleventh Edition, contains a statement at p. 350 that "where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution.
Cui jurisdiction data est, ea quoque concessa esse videntur, sine quibus jurisdiction explicari non potuit.
" An instance is given based on exhibit parte Martin(x) that "where an inferior court is empowered to grant an injunction, the power of punishing disobedience to it by commitment is impliedly conveyed by the enactment, for the power would be useless if it could not be enforced." (1) , 491. 70 The High Court in the present case has referred to certain decisions under the Motor Vehicles Act in which the question arose whether an interim order of stay could be passed although section 64(2) of the Motor Vehicles Act as amended did not expressly confer a power on the authority to pass such an order.
It was held in those cases that the power to stay was a necessary corollary to the power to entertain an appeal or revision: Swarnambikar Motor Service vs Wahite Motor Service(D; Themmalpuram Bus Transport Ltd. vs The Regional Transport Officer, Malabar(2).
The full bench decision in Dharmadas vs State Transport Appellate Tribunal(3) related to the question whether a remand could be ordered in exercise of appellate jurisdiction under section 64 of the Motor Vehicles Act in the absence of any express power to that effect existing in the statute.
It was held that the power to remand was incidental to and implicit in the appellate jurisdiction created by section 64.
According to the decision in the Burhanpur Tapti Mill Ltd. vs The Board of Revenue, Madhya Pradesh & Ors.
(4), since the Board of Revenue had the power to adjudge the correctness of an order passed by the Commissioner under section 22B reopening an assessment the Board had also the power to stay the fresh assessment proceedings started by the Assistant Commissioner in pursuance of that order.
It was said that the general principle was that in a taxing statute there was no room for what could be called the equitable construction, but that principle applied only to the taxing part of the statute and not to the procedural part.
It has further been observed that "where the legislature invests an Appellate Tribunal with powers to prevent an injustice, it impliedly empowers it to stay the proceedings which may result in causing further mischief.
" It is well known that an Income tax Appellate Tribunal is not a court but it exercises judicial powers.
The Tribunal 's powers in dealing with appeals are of the widest amplitude and have in some cases been held similar to and identical with the powers of an appellate court under the Civil Procedure Code.
(See Commissioner of Income tax, Bombay City vs Hazarimal Nagji & Co.(5) and New India Assurance Co. Ltd. vs Commissioner of Income tax, Excess Profits, Bombay City(6).
In Polini vs Grey(7), this is what Jessel M.R. said about the powers of the Court of Appeal to.
grant stay at page 443: "It appears to me on principle that the Court ought to possess that jurisdiction, because the principle which underlies all orders for the preservation of property pending litigation is this, that the successful party, is to Shortnotes (1956) 2M.L.J. 12.
(2) A.I.R. 1957 Kerala.
(3) [1962] Kerala L.J. 1133.
(4) (1955) 6 S.T.C. 670.
(5)46 I.T.R. 1168.
(6) 31 I.T.R. 844.
(7) 71 reap the fruits of that litigation, and not obtain merely a barren success.
That principle, as it appears to me, applies as much to the Court of first instance before the first trial, and to the Court of Appeal before the second trial, as to.
the Court of last instance before the hearing of the final appeal".
There are certain decisions, however, in which difficulty was felt that the Appellate Tribunal did not possess the power to stay recovery during the pendency of an appeal.
In Vetcha Sreeramamurthy vs The Income tax Officer Vizianagram & Another(1), the assessee had to file a writ petition because the realisation of the tax assessed had not been stayed during the pendency of an appeal before the Tribunal.
The controversy centred in that case mainly on the scope of the discretionary power conferred by section 45 of the Indian Income tax Act, 1922, on the Income tax Officer.
It was held that a writ petition to compel the Income tax Officer to exercise his discretion under section 45 or to exercise it honestly and, objectively was not barred.
But on the merits the Court declined issue a writ.
Viswanatha Sastri J., in his separate judgment made the following observations at page 271: "Lastly it has to 'be observed that section 45 of the Income tax Act is somewhat cryptic in its terms and merely gives the Income tax Officer power to declare a person to be not in default pending the appeal.
There is no provision for stay similar to Order XLI, Rules 5 & 6, of the Civil Procedure Code.
There is no conferment of an express power of granting a stay of realisation of the tax, though the effect of an order in favour of the assessee under section 45 of the Act is a stay.
Nor is there a provision for allowing the tax to be paid in instalments or for taking security for deferred payment.
Neither the Appellate Assistant Commissioner nor the Appellate Tribunal is given the power to stay the collection of tax.
Whether the law should not be made more, liberal so as to enable an assessee who has preferred an appeal, to obtain from the appellate forum, a stay of collection of the tax, either in whole or in part, on furnishing suitable security, is a matter for the legislature to consider.
" It is interesting that in another case Pollisetti Narayana Rao vs Commissioner of Income tax, Hyderabad(2), the same High Court held that stay could be granted by it pending reference of a case by the Appellate Tribunal to the High Court.
This power the High Court had under section 151 of the Civil Procedure Code and under article 227 of the Constitution.
(1) (2) 72 The High Court, in the present case, referred to a passage from Halsbury 's Laws of England, 3rd Edition, Vol. 20, p. 705 where it is stated that "no tax is payable while the assessment is the subject matter of an appeal except such part of the tax assessed as appears to the Commissioners seized of the appeal not to be in dispute.
" This statement is apparently based on the provisions of the English Statutes and it is not possible to derive any assistance from it.
Section 255(5) of the Act does empower the Appellate Tribunal to regulate its own procedure, but it is very doubtful if the power of stay can be spelt out from that provision.
In our opinion the Appellate Tribunal must be held to have the power to grant stay as incidental or ancillary to its appellate jurisdiction.
This is particularly so when section 220(6) deals expressly with a situation when an appeal is pending before the Appellate Assistant Commissioner, but the Act is silent in that behalf when an .appeal is pending before the Appellate Tribunal.
It could well be said that when section 254 confers appellate jurisdiction, it impliedly grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution and that the statutory power carries with it the duty in proper cases to make such orders for staying proceedings as will prevent the appeal if successful from being rendered nugatory.
A certain apprehension may legitimately arise in the minds of the authorities administering the Act that if the Appellate Tribunals proceed to stay recovery of taxes or penalties payable by or imposed on the assessees as a matter of course the revenue will be put to great loss because of the inordinate delay in the disposal of appeals by the Appellate Tribunals.
It is needless to point out that the power of stay by the Tribunal is not likely to be exercised in a routine way or as a matter of course in view of the special nature of taxation and revenue.
It wilt only be when ' a strong prima facie case is made out that the Tribunal will consider whether to stay the recovery proceedings and on what conditions and the stay will be granted in most deserving and appropriate cases where the Tribunal is satisfied that the entire purpose of the appeal will be frustrated or rendered nugatory by allowing the recovery proceedings to continue during the pendency of the appeal.
For all the reasons given above, the appeal fails and it is hereby dismissed.
But in view of the entire circumstances the parties are left to bear their own costs.
V.P.S. Appeal dismissed.
| IN-Abs | Certain amounts were imposed as penalty upon the assessee (respondent) under sections 271(1)(c) and 274(2) of the Income tax Act, 1961, for concealment of particulars of income and for furnishing inaccurate particulars.
The assessee preferred appeals before the Appellate Tribunal and prayed for stay of recovery of the penalties pending disposal of the appeals, but the Tribunal declined to stay on the ground that it had no power to do so.
The assessee moved the High.
Court under article 226 and the High Court held that the Tribunal had the power to stay and directed the Tribunal to dispose of the stay application in accordance with law.
In appeal to this Court, HELD: The Tribunal has the power to order the stay of recovery of the penalty as an incidental and ancillary power to its appellate jurisdiction.
[72 C] Under section 220(6) the Income tax Officer has a power not to treat an assessee as being in default, when an appeal under section 246 before the Appellate Assistant Commissioner is pending.
But neither the Income tax Officer nor any other departmental officer has the power to stay the recovery of penalty when an appeal is pending before the Tribunal.
The Act is silent in that behalf, and there is no provision in the Act or the Income tax Appellate Tribunal Rules, 1963, granting expressly such a power to the Tribunal.
That is because, the Tribunal, though not a court, exercises in its appellate jurisdiction under section 254 judicial powers of an appellate court of the widest possible amplitude 'and such a statutory power impliedly grants the power of doing all such acts, or employing such means as are essentially necessary to the execution of such jurisdiction and carries with.
it the power to stay proceedings in proper cases.
In view of the special nature of taxation 'and revenue laws.
such power can be exercised after imposing conditions for safeguarding the revenue only in deserving and appropriate cases where the appeal will be otherwise frustrated or rendered nugatory.
The general principle that in a taxing statute there is no room for what could be called equitable construction applies only to the taxing part of the statute and not to its procedural part.
[68 C E; 69 E; 70 D E; 72 F G] Burhanpur Tapti Mills Ltd. vs Board of Revenue, Madhya Pradesh, (1955) 6 S.T.C. 670, referred to.
Observations in Vatcha Sreeramamurthy vs I.T.O. Vizianagaram, at p. 271, disapproved.
|
Appeal No. 776 of 1966.
Appeal by special leave from the judgment and order dated April 26, 1965 of the Madras High Court in A.A.O. No. 1 of 1962.
S.C. Manchanda and T. A. Ramachandran, for the appellant.
B. Sen, M. Srinivasan and R. Thiagarajan for the respondent.
The Judgment of the Court was delivered by Bachawat, J.
The respondent is the owner of premises No. 8, Brahmin Street, Saidapet, Madras.
By a registered lease dated November 21, 1952 he let to the appellant the backyard of the 160 premises for a term of 5 years.
The backyard consisted of vacant land.
The lease deed authorized the appellant to use land for boiling ,and drying paddy, to use the gate in the western compound wall for ingress and egress, to erect an opening in the wall for bringing in and taking out the paddy, and to erect a temporary shed for keeping the Daddy on condition that while vacating the land he would dismantle the same.
The deed specifically provided that the appellant "should not.erect any kind of permanent super.structures on the said vacant site so as to entitle him to claim in future the value thereof," except such facilities as were necessary for drying Daddy at his own expense.
In contravention of this stipulation and without any authority from the respondent, the appellant erected permanent super structures on the land.
On the expiry of the lease the appellant refused to vacate the land.
On March 12, 1959 the respondent filed a suit for his eviction.
The appellant c1aimed protection under the Madras City Tenants, Protection Act.
1921 (Act III off 1922).
Before filing his written statement on February 15, 1960.
he filed an application under sec.
9 of the Act asking for an order that the respondent be directed to sell the land for a price to be fixed by the Court.
The trial Court decreed the suit on August 25, 1960.
The first appellate Court reversed the decree and dismissed the suit.
The High Court on second appeal restored the decree of the trial Court.
The present appeal has been filed after obtaining special leave.
The Courts below concurrently found that the appellant had constructed permanent super structures on the vacant land after November 21, 1952 without any authority from the respondent and in contravention of the stipulation in the registered lease.
This finding is not challenged before us.
In view of the fact that the construction was in contravention of the stipulation in the lease, the Trial Court and the High Court held that the appellant was not entitled to the protection of section 9 of the Act; but the first appellate Court held ' that the appellant was nevertheless entitled to such protection.
The Trial Court and the High Court held that the vacant site in the backyard being appurtenant to a house was building and not land, and the appellant not being a tenant of land was not protected by the Act; but the first appellate Court held that the vacant site was land and the tenancy was within the purview of the Act.
The appellant challenges the findings of the High Court on both points.
The following two questions arise for determination in this appeal.
(1) Is the tenant of a vacant site in the backward of a residential house a tenant of land within the purview of the Madras City Tenants ' Protection Act, 1921 ? (2) Having regard to the proviso to sec.
12 is such a tenant entitled to the protection sections 3 and 9 of the Act in a case where he has erected buildings on the land in contravention of an express stipulated in a registered lease ? 161 To appreciate the points arising in this case it is necessary to refer to the relevant provisions of the Madras City Tenants Protection Act, 1921.
The Act was passed with a view to give protection to tenants who in certain areas had constructed buildings on others ' lands in the hope that they would not be evicted so long as they paid fair rent for the land.
The Act was amended from time to time.
It extends to the city of Madras and other notified areas and applies only to tenancies of land created before certain specified dates.
(section 1).
It is common case before us that the Act extends to the area where the disputed land is situated.
Section 2 is the definition section.
"Building" is defined in section 2( 1 ) to include any building, hut or other structure whether of masonry, bricks, wood, metal or any other material whatsoever used (i) for residential or non residential purposes in certain specified areas and (ii) for residential purposes only, in any other area and includes the appurtenances thereto.
It may be mentioned that ."building" was not defined to include the appurtenances thereto in any area under see.
2( 1 ) before its amendment on July 27, 1960 by Madras Act III of 1960.
"Land" does not include buildings, Is. 2(2)].
"Landlord" means any person owning any land, Is.
2(3)].
"Tenant" in relation to any land means a person liable to pay rent in respect of such land under a tenancy express or implied and includes any such person who continues in possession of the land after the determination of the tenancy agreement, Is. 2( 4)].
Section 3 provides that every tenant shall on ejectment be entitled to be paid as compensation the value of any building which may have been erected by him and for which compensation has not already been paid.
Section 9 ( 1 ) provides that a tenant who is entitled to compensation under sec.
3 and against whom a suit in ejectment has been instituted may within the prescribed time apply to the Court for an order that the landlord should be directed to sell the whole or part of the land for a price .to be fixed by the Court.
Section 10 provides that sec.
9 shall apply to suits in ejectment which are pending before certain specified dates.
Section 11 requires 3 months notice in writing before the institution of a suit in ejectment against a tenant.
Section 12 provides that "nothing in any contract made by a tenant shall take away or limit his rights under this Act, provided that nothing herein contained shall affect any stipulations made by the tenant in writing registered as to the erection of buildings, in so far as they relate to buildings erected after the date of the contract.
" Section 13 provides that in its application to the city of Madras and to other notified areas the Transfer of Property Act shall to the extent necessary to give effect to the provisions of ' the Act be deemed to have been repealed or modified.
The first question is whether the appellant is a tenant of land as contemplated by the Madras City Tenants Protection Act, 1921.
162 Before the execution of the lease deed dated November 21, 1952 the land in the backyard was occupied with and was appurtenant to the residential house at.
No. 8, Brahmin Street.
It may be conceded that if the respondent had let the residential building together with its appurtenant land, the tenancy would not be a tenancy of land within the purview of the Act.
But the respondent did not let the building with the land appurtenant thereto.
He retained the building and let the land separately.
The letting was of land and nothing else.
The appellant is not a tenant of a building as defined in sec.
2( 1 ) either before or after its amendment by Madras Act XIII of 1960.
He is a tenant of land as defined in section 2(2).
The High Court was in error in holding that he was a tenant of building.
The next question is whether having regard to the proviso to see.
12, the appellant is entitled to the benefits of sees.
3 and 9 in view of the fact that he constructed buildings in contravention of the express stipulation in the registered lease.
Under sec.
3 a tenant on ejectment is entitled to be paid as compensation the value of any building erected by him.
A tenant entitled to compensation under sec.
3 and against whom a suit for ejectment has been instituted is entitled to purchase the whole or part of the land by invoking the procedure under sec.
The effect of the main part of sec.
12 is that nothing in any contract made by a tenant takes away or limits his rights under sees.
3 and 9.
The proviso to sec.
12 saves stipulations as to the erection of buildings made by a tenant in a registered writing.
But a stipulation as to the erection of buildings made orally or in an unregistered writing is not protected by the proviso and a tenant erecting a building in breach of the covenant is entitled to the benefits of sees.
3 and 9.
In R.V. Naidu vs Naraindas(1) a piece of vacant land was let under an unregistered instrument of lease which provided that the tenants would not raise any building in the vacant site.
The tenants erected a building on the land in breach of the covenant.
This Court held reversing the decision of the High Court in Naraindas vs V. Naidu(2) that the tenants against whom a suit for ejectment had been instituted was entitled to the benefits of sees.
3 and 9.
The Court pointed out that as the covenant not to build was contained in an unregistered lease.
the proviso to sec.
12 had no application and the landlord could not rely on the covenant.
In the present case a registered lease contains a stipulation by the tenant that he would not build any permanent structure on the land so as to entitle him to claim in future the value thereof.
The point in issue is whether this is a stipulation as to the erection building within the proviso to see.
In Vajrapuri vs New [1966] I S.C.R. 1107 (2) [1963] 1 M.L.J. 140, 163 Theatres Carnatic Talkies Ltd.(1) the tenants obtained a lease of land for constructing a building suitable for use as a theatre.
The registered lease deed provided that on the expiry of the lease the tenants would surrender possession of the land after dismantling and removing the building constructed by him. 'The Madras High Court held that this stipulation was not one as to the erection of buildings and was not protected by the proviso to sec.
12 and that the tenants against whom a suit for ejectment had been instituted could claim the protection of sees.
3 and 9.
Ganapatia Pillai J. observed: "In our opinion, the application of the Proviso should be limited to those cases where the stipulations in the contract relate to erection of the building, such as the size of the building, the cost of the building and the design of the building or other cognate matters." He added : "We are not concerned here with a case of erection of buildings contrary to the stipulations contained in the written contract, to which the tenant was a party.
How far, in such a case, the tenant would be protected from foregoing his rights under the impugned Act does not arise for our consideration. " This decision was affirmed by this Court by a majority.
decision in Vajrapani Naidu vs New Theatre Carnatic Talkies(a).
Shah J. speaking for the majority said at pp.
1022 23 : "A covenant in a lease which is duly registered that the tenant shall on expiry of the lease remove the building constructed by him and deliver vacant possession, is undoubtedly a stipulation relating to the building, but it is not a stipulation as to the erection of building .
Having regard to the object of the Act, and the language used by the legislature, the exception must be strictly construed, and a stipulation as to the erection of buildings would not, according to the ordinary meaning of the words used, encompass a stipulation to vacate and deliver possession of the land on the expiry of the lease without claiming to enforce the statutory rights conferred upon the tenant by section 9.
The stipulations not protected in section 12 are only those in writing registered and relate to erection of buildings such as restrictions about the size and nature of the building constructed, the building materials to be used ' therein and the purpose for which the building is to be utilised." (1) 477 8.
(2) ; 164 The minority was of the opinion that the stipulation was protected by the proviso to sec.
Ayyangar 1.
speaking for the minority said at p. 1032 : "If a stipulation forbidding erection of buildings and requiting their removal before surrendering possession of the site is conceded to.
be one in respect of erection of building as has to be conceded it is not possible to accept the construction that stipulation for the removal of buildings which the lessee is permitted to erect and keep in the site only for the duration of the tenancy is any the less one in respect of erection of buildings." Having regard to this decision it must be held that a stipulation for giving vacant possession of the land after demolition of the building which the tenant has been authorised to construct thereon is not one as to the erection of buildings within the proviso to section 12.
In the present ease the registered lease deed authorised the appellant to erect a temporary shed on condition that while vacating the land he would dismantle the same.
The stipulation for vacating the land after dismantling the temporary shed is not protected by the proviso to section 12.
Had the appellant constructed a temporary shed he could in spite of the stipulation claim the protection of sections 3 and 9.
In the present case, the registered lease deed also contained an express stipulation that the appellant would not erect permanent structures of any kind on the land so as to entitle him to claim in future the value thereof.
This stipulation is dearly one as to the erection of buildings.
In common parlance a stipulation forbidding erection of building is understood to be one in respect of the erection of building.
The popular meaning furnishes the key to the interpretation of the proviso to sec.
If a stipulation concerning the size and .nature of the building to be erected on the land ' is one as to the erection of buildings, a fortiori a stipulation forbidding the erection of buildings of a particular kind altogether is one as to the erection of buildings within the proviso to sec.
In contravention of the stipulation, as to the erection of buildings, in the registered lease deed the appellant erected permanent structures on the land after the date of the lease.
The question is whether the appellant is entitled to compensation for the structures under see.
3 and to the benefits of see.
The effect of the proviso to see.
12 is that nothing in the Act affects the stipulation Sections 3 and 9 are subject to and controlled by the proviso to see.
Section 3 provides that a tenant shall on ejectment be entitled to be paid as compensation the value of any building erected by him.
The right conferred on the tenant by see.
3 is 165 controlled by the stipulation in the registered lease deed that he shall not erect permanent structures of any kind on the land so as to entitle him to claim in future the value thereof.
The stipulation overrides the tenant 's rights under section 3.
If the tenant erects a permanent structure in contravention of the stipulation he is not entitled to any compensation under sec.
As he is not entitled to any compensation under sec.
3 he cannot claim the benefit of sec.
The High Court rightly held that the appellant was not entitled to the protection of Sec. 9.
In the result, the appeal is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | The respondent, by a registered lease deed, let to the appellant for a period of five years the backyard of a residential house in Madras.
The backyard consisted of vacant land.
According to the lease deed the appellant was allowed inter alia to boil and dry paddy on the said land and he was also allowed to erect a temporary shed for keeping the paddy on condition that while vacating the land he would dismantle the same.
The deed also specifically provided that the appellant "should not erect any kind of permanent super structure on the said vacant site so as to entitle him to claim in future the value thereof." In continuation of his stipulation the appellant erected permanent super structures on the land.
On the expiry of the lease of the appellant refused to vacate the land.
The respondent thereupon filed a suit for his eviction.
The appellant claimed protection under the Madras City Tenants ' Protection Act, 1921, Within the prescribed time he flied an application under section 9 of the Act asking for an order that the respondent be directed to sell the land for a price to be fixed by the court.
The trial court decreed the respondent 's suit.
The first appellate court reversed the decree of the trial court but the High Court restored it.
In appeal by special leave to this Court the questions that fell for determination were: (i) Is the tenant of a vacant site in the backyard of a residential house a tenant of land within the purview of section 2(2) of the Madras City Tenants ' Protection Act, 1921 ? (ii) Having regard to the proviso to section 12 is such a tenant entitled to the protection of sections 3 and 9 of the Act in a case when he has erected buildings on the land in contravention of an express stipulated in a registered deed ? HELD: (i) If the respondent had let the residential building together with its appurtenant land the tenancy would not be a tenancy of land within the meaning of the Act.
But the respondent did not let the building with land appurtenant thereto.
He retained the building and let the land separately.
The letting was of land and nothing else.
The appellant was not a tenant of a building as defined in section 2(1) either before or after its amendment by Madras Act XIII of 1960.
He was a tenant of land as defined in section 2(2).
[162 A C] (ii) (a) Under section 3 a tenant on ejectment is entitled to he paid as compensation the value of any building erected by him.
A tenant entitled to compensation under section 3 and against whom a suit for ejectment has been instituted is entitled to purchase the whole or part of the land by invoking the procedure under section 9.
The effect of the main part of section 12 is that nothing in any contract made by a tenant takes away or limits his rights under sections 3 and 9.
The proviso to 159 however, saves stipulations as to erections of buildings made by a tenant in a registered writing.
[162 D E] (b) A stipulation as to the erection of buildings made orally or in an unregistered writing is not protected by the proviso and a tenant erecting a building in breach of the covenant is entitled to the benefits of as. 3 and 9.
[162 E F] R.V. Naidu vs Naraindas, [1966] 1 S.C.R. 110 and Naraindas vs Naidu, referred to.
(c) A stipulation for giving vacant land after demolition of the building which the tenant has been authorised to construct thereon is not one as to the erection of buildings within the proviso to section 12.
Therefore in the present case the stipulation that the appellant could erect a temporary shed on condition that while vacating the land he would dismantle the same was not protected by the proviso to section 12.
[164 C D] Vajrapani Naidu vs New Theatre Carnatic Talkies, ; , relied on.
Vajrapuri vs New Theatres Carnatic Talkies, , 477 8, referred to.
(d) But in the present case the lease deed also contained an express stipulation that the appellant would not erect permanent structures of any kind so as to entitle him to claim the future value thereof.
This stipulation was clearly one as to the erection of buildings.
[164 E] In contravention of the stipulation as to the erection of buildings in the registered deed the appellant erected permanent structures on the land after the date of the lease.
The effect of the proviso to section 12 is that nothing in the Act affects the stipulation.
Sections 3 and 9 are subject to and controlled by section 12.
The stipulation overrides the tenant 's right under section 3.
If the tenant erects a permanent structure in contravention of the stipulation he is not entitled to any compensation under section 3.
As he is not entitled to any compensation under section 3 he cannot claim the benefit of section 9.
The High Court rightly held that the appellant was not entitled to the benefit of section 9.
[164 C 165 B]
|
No. 118 of 1968.
Petition under article 32 of the Constitution of India for enforcement of the fundamental rights.
B. Datta, for the petitioner.
C.K. Daphtary, Attorney General, B.D. Sharma and R.H. Dhebar, for respondents Nos. 1 to 5.
The Judgment of the Court was delivered by Ramaswami, J.
In this case the petitioner has obtained a rule from tiffs Court asking the respondents to show cause why a writ in the nature of certiorari should not be issued under Art 32 of the Constitution for calling up and quashing the proceedings before the General Court Martial No. JAG 26/66 67/AA of 1965 from the Judge Advocate General (Army branch), Army Headquarters whereby the petitioner was found guilty of charges under section 304 and section 149 of the Indian Penal Code and sentenced to a period of 6 years rigorous imprisonment and cashiering.
Cause has been shown by the Attorney General on behalf of the Union of India and other respondents to whom notice of the rule was ordered to be given.
The petitioner was commissioned in the Indian Army in February, 1964 and was posted as Second Lt.
(E.C. 55461) and was attached to 397 Engineering Construction Equipment Company in December, 1964.
In August, 1965 the petitioner was posted as a Quarter Master and was transferred to Madras along with the Company.
It appears that Wednesday, September 1, 1965 was to be celebrated as the Raising Day of the Unit when Games and Sports, entertainment and Bara Khana (evening dinner) were to be arranged.
In this celebration, all officers and other ranks of the Unit had to take some part and a number of other Army officers were to be received and entertained on behalf of the Unit.
At the variety entertainment Punjabis and Garhwalis took part and each party was given free one bottle of rum.
But it is alleged that the Purbias were not given an opportunity to put up their show and were not given free a bottle of rum.
They were consequently aggrieved for this reason.
The variety entertainment concluded at about 1900 hours at the end of which rum was issued to the jawans.
The bara khana was to commence at 2000 hours.
As there was a delay in the assembly of the men at the dining hall, Maj.
Agarwal sent the petitioner to the lines to find out the cause for the delay and to get the men quickly.
The petitioner went to the lines and it is alleged that the accused used filthy language while addressing the men.
Some of the Purbias including the deceased Spr.
Bishwanath Singh protested 180 against the use of such language.
Though the petitioner expressed regret, the men were not satisfied.
A few of the Sikh jawans, including some of the accused, sided with the petitioner and there was a heated argument between the two groups on their way to the dining hall.
The bara khana was served in two sittings.
The petitioner did not join the first sitting but joined the second sitting which consisted of about 30 to 40 men.
The quarrel which started between the two groups earlier was continued in the dining hall.
The lights went off for a few minutes and when the lights came on, it was observed that a scuffle was going on in the middle of the hall between the petitioner and other Sikh jawans and the deceased.
As the scuffle progressed, the deceased was surrounded by petitioner No. 1 and the other accused persons and the group moved towards the service counter.
The lights went off for a second time.
In the darkness tables, benches and plates were hurled about.
Most of the men ran out of the dining hall.
It is alleged that accused No. 6 was seen stabbing with a knife Spr.
Bishwanath Singh and the latter slumped to the ground.
Accused No. 3 hit him with a soot rake.
When the lights came on after a few minutes, the petitioner and the other accused were found standing near the place where Spr.
Bishwanath Singh had fallen.
Consequently, Maj. Agarwal arrived at the scene and took Spr.
Bishwanath Singh to.
the MI room where he was found dead by Maj.
Koley, the Medical Officer.
It appears that on September 2, 1965 at about 0400 hours the matter was reported to the Civil Police by Second Lt. F.D.A. Jesudian.
A case under section 302, Indian Penal Code was registered as crime No. 726/1965 at Pallavaran Police Station, Madras.
Sri Bashyam, Inspector of Police reached the place of occurrence at 0430 hours on the same date.
He inspected the dining hall and seized certain exhibits produced by Maj. Agarwal.
He also held inquest on the deadbody of Spr.
Bishwanath Singh and sent the dead body for postmortem examination to.
the mortuary, Madras General Hospital through Police Constable No. 1407, Ratnam.
He sent the exhibits seized to the State Forensic Science Laboratory, Madras for chemical examination.
At 1330 hours on the same date Sri Bashyam stopped further investigations as Lt. Col. Bajpai wanted the case to be handled by the Military authorities.
On September 2, 1965, a Court of Enquiry_ under the provisions of Ch.
of the Army Rules was ordered by the Commander, Mysore and Kerala Sub Area.
After the Court of Inquiry had concluded the proceedings, a Court Martial was constituted by an order, dated August 11, 1966 by Major General.
S.J. Sathe, General Officer Commanding, Madras, Mysore and Kerala area to try the petitioner and other accused persons.
The Court Martial assembled on August 18, 1966 and conducted its proceedings on several subsequent dates.
In support of the case of the prosecu 181 tion 30 witnesses were examined.
At the Court Martial, the defended by an Advocate of the Madras High Court, petitioner was Sri Natarajan and he was also as by assisted a friend of the accused Major T.B. Narayanan.
At the trial the Counsel for the petitioner cross examined the witnesses for the prosecution and after the prosecution evidence was concluded, the petitioner said that he did not intend to call any defence witnesses.
The petitioner, how ever, submitted a written statement.
He was also put various questions by the Court Martial to which he replied.
After the Counsel for the defence was heard and after the Judge Advocate summed up the case, the Court Martial came to the finding that the petitioner was guilty of culpable homicide not amounting to murder and that he was a member of an unlawful assembly and the petitioner was sentenced to cashiering and 6 years rigorous imprisonment.
Against the decision of the Court Martial the petitioner field a petition under section 164 of the Army Act but the petition was dismissed by the confirming authority and the finding and sentence by the Court Martial was confirmed so far as the petitioner was concerned.
The petitioner thereafter filed an appeal under section 165 of the Army Act to the Central Government but the appeal was dismissed.
The first question to be considered in this case is whether the Court Martial had jurisdiction to try and convict the petitioner of the offences under sections 304 and 149, Indian Penal Code.
It was contended by Mr. Dutta on behalf of the petitioner that the Court Martial had no jurisdiction having regard to the mandatory provisions contained in section 125 of the Army Act and having also regard to the fact that Maj.
Agarwal had, in the first instance, decided to hand over the matter for investigations to the Civil Police.
In order to test whether this argument is valid it is necessary to scrutinize the provisions of the Army Act in some detail.
Section 2 of the (Act 46 of 1950), hereinafter called the ' ', describes the different categories of army personnel who are subject to the .
Section 3 (ii) defines a "civil offence" to mean "an offence which is triable by a criminal court"; section 3(vii) defines a "court martial" to mean "a court" to mean "a court of ordinary criminal justice in any part of India other that the state of Jammu and Kashmir" ; section 3(xvii) defines "offence" to mean "any act or omission punishable under this act and includes a civil offence"; and section 3 (xxv) declares that "all words and expressions used but not defined in this Act and defined in the Indian Penal Code shall be deemed to have the meanings assigned to them in that code.
" chapter is "Offences".
As we have already noticed, the word "offence" is defined to mean not only any act or omission punishable under the , but also a 182 civil offence.
Sections 34 to 68 define the offences against the Act triable by court martial and also indicate the punishments for the said offences.
Section 69 states as follows: "69.
Subject to the provisions of sect.ion 70, any person subject to this Act who at any place in or beyond India commits any civil offence shall be deemed to be guilty of an offence against this Act and, if charged therewith under this section, shall be liable to be tried by a court martial and, on conviction, be punishable as follows, that is to say, (a) if the offence is one which would be punishable under any law in force in India with death or with transportation, he shall be liable to suffer any punishment, other than whipping, assigned for the offence, by the aforesaid law and such less punishment as is in this Act mentioned; and (b) in any other case, he shall be liable to suffer any punishment, other than whipping, assigned for the offence by the law in force in India, or imprisonment for a term which may extend to seven years, or such less punishment as is in this Act mentioned.
" Section 70 provides: "A person subject to this Act who commits an offence of murder against a person not subject to military, naval or air force law, or of culpable homicide not amounting to murder against such a person or of rape in relation to such a person, shall not be deemed to be guilty of an offence against this Act and shall not be tried by a court martial, unless he commits any of the said offences (a) while on active service, or (b) at any place outside India, or (c) at a frontier post specified by the Central Government by notification in this behalf.
Explanation.
In this section and in section 69, "India" does not include the State of Jammu and Kashmir.
" Shortly stated , under this Chapter there are three categories of offences, namely, (1 ) offences committed by a person subject to the Act triable by a court martial in respect whereof specific punishments have been assigned; (2) civil offences committed by the said person at any place in or beyond India, but deemed to 183 be offences committed under the Act and, if charged under section 69 of the Act, triable by a court martial; and (3) offences of murder and culpable homicide not amounting to murder or rape committed by a person subject to the Act against a person not subject to the military law.
Subject to a few exceptions, they are not triable by court martial, but are triable only by ordinary criminal courts.
The legal position therefore is that when an offence is for the first time created by the , such as those created by sections 34, 35, 36, 37 etc., it would be exclusively triable by a court martial; but where a civil offence is also an offence under the Act or deemed to be an offence under the Act, both an ordinary criminal court as well as a court martial would have jurisdiction to try the person committing the offence.
Such a situation is visualized and provision is made for resolving the conflict under sections 125 and 126 of the which state: "125.
When a criminal court and a court martial have each jurisdiction in respect of an offence, it shall be in the discretion of the officer commanding the army, army corps, division or independent brigade in which the accused person is serving or such other officer as may be prescribed to decide before which court the proceedings shall be instituted, and, if that officer decides that they should be instituted before a court martial, to direct that the accused person shall be detained in military custody.
(1 ) When a criminal court having jurisdiction is of opinion that proceedings shall be instituted before itself in respect of any alleged offence, it may, by written notice, require the officer referred to in section 125 at his option, either to deliver over the offender to the nearest magistrate to be proceeded against according to law, or to postpone proceedings pending a reference to the Central Government.
(2) In every such case the said officer shall either deliver over the offender in compliance with the requisition or shall forthwith refer the question as to the court before which the proceedings are to be instituted for the determination of the Central Government, whose order upon such reference shall be final.
" Section 125 presupposes that in respect of an offence both a criminal court as well as a court martial have each concurrent jurisdiction.
Such a situation can arise in a case of an act or omission punishable both under the aS well as under any law in force in India.
It may also arise in the case of an offence deemed to be an offence under the .
Under the scheme of the two sections, in the first instance, it is left to the 184 discretion of the officer mentioned in section 125 to decide before which court the proceedings shall be instituted, and, if the officer decides that they should be instituted before a court martial, the accused person is to be detained in military custody; but if a criminal court is of opinion that the said offence shall be tried before itself, it may issue the requisite notice under section 126 either to deliver over the offender to the nearest magistrate or to postpone the proceedings pending a reference to the Central Government.
On receipt of the said requisition, the officer may either deliver .over the offender to the said court or refer the question of proper court for the determination of the Central Government whose order shall be final.
These two sections of the provide a satisfactory machinery to resolve the conflict of jurisdiction, having regard to the exigencies of the situation in any particular case.
In the present case, we are unable to accept the contention of the petitioner that merely because Maj. Agarwal had directed that the First Information Report should be lodged with the Civil Police through Second Lt. Jesudian, it means that the competent authority under section 125 of the had exercised its discretion and decided that the proceedings should be instituted before the criminal court.
The reason is that Maj. Agarwal was not the competent authority under section 125 of the to exercise the choice under that section.
The competent authority was the General Officer Commanding, Madras, Mysore and Kerala Area and that authority had decided on September 2, 1965 that the matter should be tried by a Court Martial and not by the Criminal Court.
On the same date, the General Officer Commanding, Madras, Mysore & Kerala Area had ordered the constitution of the Court Martial under Ch.
VI of the Army Rules to investigate into the case of the petitioner and the other accused persons.
There was admittedly No. direction by the Commander of that area to hand over the proceedings to the Criminal Court.
It is true that Maj.
Agarwal had directed a report to be lodged with the Civil Police at 4.00 a.m. on September 2, 1965.
It is also true that Sri Bashyam, Inspector of Police had inspected the place of occurrence, seized certain exhibits and held inquest of the deadbody of Spr.
Bishwanath Singh.
Sri Bashyam has admitted that he stopped investigations on the same date as directed by the military authorities.
Merely because Sri Bashyam conducted the inquest of the dead body of Spr.
Bishwanath Singh or because he seized certain exhibits and sent them to the State Forensic Science Laboratory, Madras for chemical examination, it cannot be reasonably argued that there was a decision of the competent military authority under section 125 of the for handing over the inquiry to the Criminal Court.
On the other hand, the action of the General Officer Commanding in constituting the Court of 185 Inquiry on September 2, 1965 indicates that there was a decision taken under section 125 of the that the proceedings should be instituted before the Court Martial.
The second branch of the argument of the petitioner is based upon section 549 of the Criminal Procedure Code which states: "(1) The Central Government may make rules consistent with this Code and the , the Naval Discipline Act and the Indian Navy (Discipline) Act, 1934, and the Air Force Act and any similar law for the time being in force as to the cases in which persons subject to military, naval or air force law, shall be tried by a Court to which this Code applies, or by Court martial, and when any person is brought before a Magistrate and charged with an offence for which he is liable, to be tried either by a Court to which this code applies or by a Court martial, such Magistrate shall have regard to such rules, and shall in proper cases deliver him, together with a statement of the offence of which he is accused, to the commanding officer of the regiment, corps, ship or detachment, to which he belongs, or to the commanding officer of the nearest military, naval or air force station, as the case may be, for the purpose of being tried by Court martial.
The Central Government has made rules in exercise of powers conferred on it under this section.
The Rules were published at p. 690 in section 3 of Part H of the Gazette of India, dated April 26, 1962, under Ministry of Home Affairs, S.R.O. 709, dated April 17, 1962.
Rules 3, 4, 5 and 8 are to the following effect: "3.
Where a person subject to military, naval or Air Force law is brought before a Magistrate and charged with an offence for which he is liable to be tried by a court martial, such Magistrate shall not proceed to try such person or to issue orders for his case to be referred to a Bench, or to inquire with a view to his commitment for trial by the Court of Sessions or the High Court for 'any offence friable by such Court, unless (a) he is of opinion, for reasons to be recorded, that he should so proceed without being moved thereto by competent military, naval or Air Force authority, or (b) he is moved thereto by such authority.
Before proceeding under clause (a) of rule 3 the Magistrate shall give written notice to the Com Sup C1/69 13 186 manding Officer of the accused and until the expiry of a period of seven days from the date of the service of such notice he shall not (a) convict or acquit the accused under sections 243, 245, 247 or 248 of the Code of Criminal Procedure, 1898 (V of 1898), or hear him in his defence under section 244 of the said Code; or (b) frame in writing a charge against the accused under section 254 of the said Code; or (c) make an order committing the accused for trial by the High Court or the Court of Sessions under section 213 of the said Code." "5.
Where within the period of seven days mentioned in rule 4, or at any time thereafter before the Magistrate has done any act or issued any order referred to in that rule, the Commanding Officer of the accused or competent military, naval or Air Force authority, as the case may be, gives notice to the Magistrate that in the opinion of such authority, the accused should be tried by a court martial, the Magistrate shall stay proceedings and if the accused is in his power or under his control, shall deliver him, with the statement prescribed in sub section (1) of section 549 of the said Code to the authority specified in the said sub section." "8.
Notwithstanding anything in the foregoing rules, where it comes to the notice of a Magistrate that a person subject to military, naval or Air Force law has committed an offence, proceedings in respect of which ought to be instituted before him and that the presence of such person cannot be procured unless through military, naval or Air Force authorities, the Magistrate may by a written notice require the Commanding Officer of such person either to deliver such person to a Magistrate to be named in the said notice for being proceeded against according to law, or to stay the proceedings against such person before the court martial, if since instituted, and to make a reference to the Central Government for determination as to the Court before which proceedings should be instituted.
" It was argued on behalf of the petitioner that there was no notice given by the Commanding Officer to the Magistrate under Rule 5 that the petitioner should be tried by a Court Martial and hence the criminal court alone had jurisdiction under Rule 3 to conduct proceedings against the petitioner for the offences charged.
In our opinion, the argument on behalf of the petitioner 187 is mis conceived.
The rules framed by the Central Government under section 549 of the Criminal Procedure Code apply to a case where the proceedings against the petitioner have already been instituted in an ordinary criminal court having jurisdiction to try the matter and not at a stage where such proceedings have not been instituted.
it is clear from the affidavits filed in the present case that the petitioner was not brought before the Magistrate and charged with the offences for which he was liable to be tried by the Court Martial within the meaning of Rule 3 and so the situation contemplated by Rule 5 has not arisen and the requirements of that rule are therefore not attracted.
It was pointed out by Mr. Dutta that after the First Information Report was lodged at Pallavaran police station a copy thereof should have been sent to the Magistrate.
But that does not mean that the petitioner "was brought before the Magistrate and charged with the offences" within the meaning of Rule 3.
It is manifest that Rule 3 ,only applies to a case where the police had completed investigation and the accused is brought before the Magistrate after submission of a charge sheet.
The provisions of this rule cannot be invoked in a case where the police had merely started investigation against a person subject to.
military, naval or air force law.
With regard to the holding of the inquest of the dead body of Spr.
Bishwanath Singh it was pointed out by the Attorney General that Regulation 527 of the Defence Services Regulations has itself provided that in cases of unnatural death that is death due to suicide, violence or under suspicious circumstances information should be given under section 174, Criminal Procedure Code to the Civil authorities, and the conduct of Maj. Agarwal in sending information to the Civil Police was merely in accordance with the provisions of this particular regulation.
For these reasons we hold that Counsel for the petitioner is unable to make good his argument on this aspect of the case.
We proceed to consider the next argument presented on behalf of the petitioner, namely, that even if the Military Court Martial had jurisdiction, it could not give a finding of guilt against the petitioner with regard to culpable homicide not amounting to murder unless the charge was .altered and amended in accordance with sub rule 2 of Rule 50 of the Army Rules, 1954.
It was also contended on behalf of the petitioner that the procedure contemplated by Rule 121(4) of the Army Rules was not followed by the Court Martial and the finding of the Court Martial must therefore be held to be defective.
In our opinion, there is no warrant or justification for this argument since rules 50(2) and 121 (4) have no application to the present case.
Rules 50 and 121 provide as follows: "50.
Amendment of charge. ( 1 ) At any time during the trial, if it appears to the court that there is 188 any mistake in the name or description of the accused in the charge sheet, the court may amend the chargesheet so as to correct that mistake.
(2) If, on the trial of any charge, it appears to the court at any time before it has begun to examine the witnesses, that in the interests of justice any addition to, commission from, or alteration in, the charge is required, it may report its opinion to the convening authority, and may adjourn, and the convening authority may either direct the new trial to be commenced, or amend the charge, and order the trial to proceed with such amended charge after due notice to the accused." "121.
Form and record of finding. (1) The finding on every charge upon which the accused is arraigned shall be recorded, and except as mentioned in these rules, such finding shall be recorded simply as a finding of "Guilty" or of "Not guilty".
(2) When the court is of opinion as regards any charge that the facts proved do not disclose the offence charged or any offence of which he might under the Act legally be found guilty on the charge as laid, the court shall acquit the accused of that charge.
(3) When the court is of opinion as regards any charge that the facts found to be proved in evidence differ materially from the facts alleged in the statement of particulars in the charge, but are nevertheless sufficient to prove the offence stated in the charge, and that the difference is not so material as to have prejudiced the accused in his defence, it may, instead of a finding of "Not guilty" record a special finding.
(4) The special finding may find the accused guilty on a charge subject to the statement of exceptions or variations specified therein.
(5) The court shall not find the accused guilty on more than one of two or more charges laid down in the alternative, even if conviction upon one charge necessarily connotes guilt upon the alternative charge or charges.
" In the present ease there was no necessity for amending the charge by the Court Martial under Rule 50(2) because that subrule only relates to an alteration of charge before the examination of witnesses.
The Court Martial has also not contravened the provisions of Rule 121 (4) because that sub rule is not attracted to the present ease.
On the contrary, the finding of the Court 189 Martial is justified in view of the language of section 139(6) of the which states : "139.
(6) A person .charged before a court martial with an offence punishable under section 69 may be found guilty of any other offence of which he might have been found guilty if the provisions of the Code of Criminal Procedure., 1898, were applicable.
" We accordingly reject the argument of learned Counsel for the petitioner on this part of the case.
Finally it was contended on behalf of the petitioner that the order of the Chief of the Army Staff confirming the proceedings of the Court Martial under section 164 of the was illegal since no reason has been given in support of the order by the Chief of the Army Staff.
It was also pointed out that the Central Government has also not given any reasons while dismissing the appeal of the petitioner under section 165 of the and that the order of the Central Government must therefore be held to be illegal and ultra vires and quashed by the. grant of a writ in the nature of certiorari.
In this context it is necessary to reproduce sections 164 and 165 of the which are to the following effect: "164.
(1) Any person subject to this Act who considers himself aggrieved by any order passed by any court martial may present a petition to the officer or authority empowered to confirm any finding or sentence of such court martial, and the confirming authority may take such steps as may be considered necessary to satisfy itself as to the correctness, legality or propriety of the order passed or as to the regularity of any proceeding to which the order relates.
(2) Any person subject to this Act who considers himself aggrieved by a finding or sentence of any court martial which has been confirmed, may present a petition to the Central Government, the Chief of the Army Staff or any prescribed officer superior in command to the one who confirmed such finding or sentence, and the Central Government, the Chief of the Army Staff or other officer, as the case may be, may pass such order thereon as it or he thinks fit." "165.
The Central Government, the Chief of the Army Staff or any prescribed officer may annul the proceedings of any court martial on the ground that they are illegal or unjust.
" In contrast to these sections, section 162 of the expressly provides that the Chief of the Army Staff "for reasons based on 190 the merits of the case" set aside the proceedings or reduce the sentence to any other sentence which the court might have passed.
Section 162 reads as follows: "The proceedings of every summary court martial shall without delay be forwarded to the officer commanding the division or brigade within which the trial was held, or to the prescribed officer; and such officer, or the Chief of the Army Staff, or any officer empowered in this behalf by the Chief of the Army Staff, may, for reasons based on the merits of the case, but not any merely technical grounds, set aside the proceedings or reduce the sentence to any other sentence which the court might have passed.
" It is necessary in this context to refer to Rules 61 and 62 of the Army Rules which prescribe the standard form of recording the opinion of the Court Martial on each charge and of announcement of that finding.
These rules omit all mention of the evidence or the reasoning by which the finding is reached by the Court Martial.
Rules 61 and 62 are to the following effect: 61.
Consideration of finding. (1) The court shall deliberate on its finding in closed court in the presence of the judge advocates.
(2) The opinion of each member of the court as to the finding shall be given by word of mouth on each charge separately.
Form, record and announcement of finding. (1) The finding on every charge upon which the accused is arraigned shall be recorded and, except as provided in these rules, shall be recorded simply as a finding of 'Guilty ' or of 'Not guilty '.
(10) The finding on each charge shall be announced forthwith in open court as subject to confirmation.
" In the present case it is manifest that there is no express obligation imposed by section 164 or by section 165 of the on the confirming authority or upon the Central Government to give reasons in support of its decision to confirm the proceedings of the Court Martial.
Mr. Dutta has been unable to point out any other section of the Act or any of the rule made therein from which necessary implication can be drawn that such a duty is cast upon the Central Government or upon the confirming authority.
Apart from any requirement imposed by the statute or statutory rule either expressly or by necessary implication, we are unable to accept the contention of Mr. Dutta that there is 191 any general principle or any rule of natural justice that a statutory tribunal should always and in every case give reasons in support of its decision.
In English law there is no general rule apart from the statutory requirement that the statutory tribunal should give reasons for its decision in every case.
In Rex vs Northumberland Compensation Appeal Tribunal(1) it was decided for.the first time by the Court of Appeal that if there was a "speaking order" a writ of certiorari could be granted to quash the decision of an inferior court or a statutory tribunal on the ground of error on the face of record.
In that case, Denning, L.J. pointed out that the record must at least contain the document which initiates the proceedings; the pleadings, if any; and the adjudication, but not the evidence, nor the reasons, unless the tribunal chooses to incorporate them in its decision.
It was observed that if the tribunal did state its reasons and those reasons were wrong in law, a writ of certiorari might be granted by the High Court for quashing the decision.
In that case the statutory tribunal under the National Health Service Act, 1946 had fortunately given a reasoned decision; in other words, made a 'speaking order ' and the High Court could hold that there was an error of law on the face of the record and a writ of certiorari may be granted for quashing it.
But the decision in this case led to an anomalous result, for it meant that the opportunity for certiorari depended on whether or not the statutory tribunal chose to give reasons for its decision; in other words, to make a 'speaking order '.
Not all tribunals, by any means, were prepared to do so, and a superior court had no power to compel them to give reasons except when the statute required it.
This incongruity was remedied by the Tribunals and Inquiries Act, 1958 (section 12), [6 & 7 Elizabeth 2 c. 66], which provides that on request a subordinate authority must supply to .a party genuinely interested the reasons for its decision.
Section 12 of the Act states that when a tribunal mentioned in the First Schedule of the Act gives a decision it must give a written or oral statement of the reasons for the decision, if requested to do so on or before the giving or notification of the decision.
The statement may be refused or the specification of reasons restricted on grounds of national security, and the tribunal may refuse to give the statement to a person not principally concerned with the decision if it thinks that to give it would be against the interests of any person primarily concerned.
Tribunals may also be exempted by the Lord Chancellor from the duty to give reasons but the Council on Tribunals must be consulted on any proposal to do so.
As already stated, there is no express obligation imposed in the present case either by section 164 or by section 165 of the Indian on the confirming (1) ; 192 authority or on the Central Government to give reasons for its decision.
We have also not been shown any other section of the Army.
Act or any other statutory rule from which the necessary implication can be drawn that such a duty is cast upon the Central Government or upon the confirming authority.
We, therefore, reject the argument of the petitioner that the order of the Chief of the Army Staff, dated May 26, 1967 confirming the finding of the Court Martial under section 164 of the or the order of the Central Government dismissing the appeal under section 165 of the are in any way defective in law.
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 and is dismissed.
R.K.P.S. Petition dismissed.
| IN-Abs | The petitioner, a Second Lieutenant in the army, was involved in a quarrel between two groups of soldiers on September 1, 1965 which led to an altercation and the stabbing and death of a soldier.
On September 2, 1965, the matter was reported to the Civil Police at the local police station.
The Inspector o.f Police inspected the place: of occurrence on the same day, seized certain exhibits produced by an Army Officer, held an inquest on the dead body of the deceased soldier and sent it for postmortem examination through a police constable.
Later on the same day, he stopped further investigation as the Army Officer incharge wanted the case to be handled by the Military authorities.
On September 2, 1965, a Court of Inquiry under the provisions of Ch.
VI of the Army Rules was ordered by the Commander for the area.
After the Court of Inquiry had concluded its proceedings, a Court Martial was constituted by an order dated August 11.
1966, by the General Officer Commanding for the area to try the petitioner and other accused persons.
The Court Martial came to the finding that the petitioner was guilty of culpable homicide not amounting to murder, and that he was a member of an unlawful assembly; it sentenced him to cashiering and six years rigorous imprisonment.
The petitioner filed a petition under section 164 of the Army Act, but this was dismissed by the confirming authority and the finding and sentence of the Court Material was confirmed.
The petitioner 's appeal under section 165 of the Army Act to the Central Government was also dismissed.
In the present petition under Article 32 of the Constitution, the petitioner sought a writ of certiorari to quash the proceedings of the Court MartiaL It was contended on his behalf (i) that the Court Martial had no jurisdiction to try and convict him of offences under sections 304 'and 149 I.P.C. having regard to the mandatory provisions of section 125 of the Army Act and having also regard to the fact that the Army Officer incharge had in the first instance decided to hand over the.
matter for investigation to the Civil Police; (ii) that no notice was given by the Commanding Officer to the Magistrate under Rule 5 of the Rules framed by the Central Government under section 549 of the Criminal Procedure Code, that the petitioner should be tried by a Court Martial; the Criminal Court alone 178 therefore had jurisdiction under Rule 3 to try the petitioner for the offence charged; (iii) that even if the Court Martial had jurisdiction, it could not give a finding of guilt against the petitioner with regard to culpable homicide not amounting to murder unless the charge was altered and amended in accordance with sub rule 2 of Rule 50 of the Army Rules, 1954; the procedure contemplated by Rule 121(4) 'of the Army Rules was not followed by the Court Martial and its finding must therefore be held to be defective; and (iv) that the orders of the Chief of the Army Staff confirming the proceedings of the Court Martial under section 164 of the Army Act and of the Central Government dismissing the petitioners appeal under section 165 were illegal since no reasons had been given in support of the decisions contained in them.
HELD: Dismissing the petition: (i) Merely because the First Information Report was lodged with the civil police on September 2 and the Inspector of Police inspected the place of occurrence, seized certain exhibits and held an inquest on the body of the deceased, it could not reasonably be said that there was a decision of the competent military authority under section 125 of the Army Act to hand over the inquiry to the criminal court.
On the other hand the action of the General Officer Commanding the area, who was the competent authority under section 125 constituting the Court of Inquiry on September 2, 1965 indicates that there was a decision taken under section 125 that the proceedings should be instituted before the Court Martial.
[184 H] (ii) Rule 3 of the Rules framed by the Central Government under section 549 Criminal P.C. only applies to a case where the police has completed the investigation and the accused is brought before the Magistrate after submission of a charage sheet.
The provisions of Rule 3 cannot be invoked in the present case where the police had merely started investigation against a person subject to military law.
The situation contemplated by Rule 5 had not arisen and the requirements of that rule were not attracted.
Furthermore, Regulation 527 of the Defence Services Regulations itself provides that in cases of unnatural death, information should be given under section 174 Criminal Procedure Code to the civil authorities.
The action of the Army Officer in sending information to the civil police was merely in accordance with the provisions of this particular Regulation.
[187 D] (iii) There Was no necessity for amending the charge by the Court Martial under Rule 50(2) because that sub rule only relates to an alteration of charge before the examination of witnesses.
The Court Martial had also not contravened the provisions of Rule 121(4) because that sub rule was not attracted in the present case.
On the contrary, the finding of the Court Martial was justified in view of the language of section 139(6) of the Army Act.
[188 H] (iv) There is no express obligation imposed by section 164 or by section 165 of the Army Act on the confirming authority or upon the Central Government to give reasons in support of its decision to confirm the proceedings of the Court Martial.
No other Section of the Act or any Rule had been shown from which a necessary implication could be drawn that such a duty is cast upon the Central Government or upon the confirming authority.
Furthermore, there was no force in the contention that there is any general principle or any rule of natural justice that a statutory tribunal should always and in every case give reasons in support of its decision.
[190 H; 192 A B] 179 Rex.
vs Northumberland Compensation Appeal Tribunal, ; , considered.
|
il Appeal No. 1049 of 1968.
167 Appeal by special leave from the order, dated August 11, 1967 of the Delhi High Court in L.P.A. No. 85 of 1967.
Niren De, Solicitor General, B.P. Maheshwari and R.K. Maheshwari, for the appellant.
M.C. Chagla and Urmila Kapoor, for the respondents.
The Judgment of the Court was delivered by Vaidialingam, J.
This appeal, by the Municipal Corporation of Delhi, by special leave, is directed against the judgment and order, dated August 11, 1967 passed by the High Court of Delhi High Court, dated May 10, 1967 whereby a writ of manda Patent Bench had confirmed an order of the learned Chief Justice, Delhi High Court, dated May 10, 1967 whereby a writ of Mandamus had been issued to the appellant to approve the plans submitted by the respondents and grant the sanction asked for.
The circumstances leading up to the issue of the writ of mandamus against the appellant may be briefly adverted to.
The respondents are the owners and are.
in possession of the building bearing municipal door Nos. 3766 to 3776, situated in the main Chawri Bazar, Delhi.
As the building was an old construction and required urgent and extensive repairs, on October 16, 1965 the respondents submitted to the appellant plans for its sanction for execution of work consisting of repairs, additions as well as alterations to the said building.
The Commissioner of the appellant Corporation, by letter, dated February 4, 1966 informed the respondents that their application for execution of construction work in respect of house Nos.
3766 to 3776 had been refused on the grounds "that the proposal was under acquisition and also effected in the ROW and the land was residential against proposal of commercial".
A controversy appears to have been raised by the appellant before the High Court that the application, by the respondents, related also.
to certain other municipal door numbers, but as that is not material for the present purpose, we do not refer to the same.
Attempts made by the respondents to satisfy the Commissioner that their application was quite legal and that there was no violation of any law or rules having failed, they filed Civil Writ Petition No. 410 D of 1966 in the Circuit Bench of the Punjab High Court at Delhi, under article 226 of the Constitution praying for the issue of an order or direction in the nature of mandamus directing the appellant to accord sanction to the plan for execution of work in respect of the building.
as per their application of October 16, 1965.
According to the respondents it was.
incumbent on the Commissioner of the appellant, under section 336 of the Delhi Municipal Corporation Act, 1957 (Act LXVI of 1957) (hereinafter referred to as the Corporation Act), to sanction the plans of a building or 168 execution of a work unless such a building or work contravened any of the provisions, of sub section
(2) of section 336 or section 340 of the Corporation Act.
It was further stated that the plan submitted by them did not contravene any of the provisions of sub section
(2) of section 336 or section 340 of the Corporation Act.
The reasons given for rejection, by the Commissioner, were also challenged as being vague and unintelligible apart from being extraneous to the provisions of the Act.
The respondents further averred that the build Lags required extensive repairs.
as was clear from the notice, dated March 3, 1966, issued by the Commissioner of the appellant stating that the building posed a danger to the residents of the area and that the necessary repairs had to be carried out immediately, after obtaining sanction from the building department, and threatening penal consequences if the respondents did not comply with the notice.
On these grounds.
they urged that the order, dated February 4, 1966 passed by the Commissioner refusing to accord sanction was illegal and ultra vires and in consequence they prayed for the issue of a writ of mandamus directing the appellant to accord sanction, as asked for by them.
On behalf of the appellant, the Assistant Engineer had filed a counter affidavit.
The material averments, relevant for the present purpose, are that the respondents are the owners of the premises and that the construction was old and required repairs; but the plans submitted by the respondents did not conform to bye laws and contravened section 336(2) (a) in respect of land use and section 340(2) with respect to requisitioning of land by the Delhi Development Authority for their Scheme and that the plans were also affected by road widening.
In their reply affidavit the respondents controverted the averments of the Assistant Engineer that the plans did not conform to bye laws or the provisions of section 336(2) or any other law in respect of land use.
They stated that according to.
the Master Plan prepared under the Delhi Development Act, 1957 certain areas, including Chawri Bazar, would be the Central Business District of Delhi and that the proposed user, mentioned by them in the plan sent for sanction was not in contravention of the Master Plan.
They also denied that the Delhi Development Authority had any scheme for road widening.
They further referred to a letter, dated April 30, 1966 of the Delhi Development Authority stating that the Zonal Development Plan has not been prepared for the area in question.
They finally reiterated the plea that the order refusing sanction was not based on any of the grounds envisaged by section 336(2) or section 340 or any other provision of the Corporation Act or of any other Act.
The learned Chief Justice of the Delhi High Court, who heard the writ petition in the first instance, by his judgment and order 169 dated May 10, 1967 accepted the writ petition filed by the respondents and issued a mandamus to the appellant to approve the plans and grant the sanction asked for '.
The learned Chief Justice has expressed the view that the Commissioner could decline the sanction only if there was a contravention of sub section
(2) of section 336 or section 340 of the Corporation Act.
In this case, according to the learned Chief Justice, there was no such contravention established by the appellant and if that were so the Commissioner had no power to refuse to accord the sanction asked for by the respondents.
He was of the further view that the grounds on which the Commissioner refused sanction were wholly irrelevant and not germane to the sanction asked for.
Taking the further view that the Commissioner had a statutory duty to grant the sanction asked for, the learned Chief Justice directed the issue of a writ of mandamus.
This judgment of the learned Chief Justice as mentioned earlier, was affirmed by the judgment of the Letters Patent Bench of the Delhi High Court, dated August 11, 1967.
The learned Solicitor General, on behalf of the Corporation, has urged that the order of the Commissioner refusing sanction is legal and is justified by the provisions, of cl.
(a) of sub section
(2) of section 336 of the Corporation Act.
Even at the outset he has made it clear that he is relying upon only one of the grounds given in the order, dated February 4, 1966 of the Commissioner, viz., that the plan submitted was affected by the proposals contained in the Master Plan in respect of widening of the read in the area in question.
The expression 'ROW ' used in the order refers to 'right of way ' which is with reference to the road proposed under the Master Plan.
The Master Plan has been prepared under section 7 of the Delhi Development Act, 1957 (Act LXI of 1957 ) (hereinafter referred to as the Development Act) and it has come into operation, under section 11, in the area concerned.
The building operation proposed by the respondents as per the plans submitted by the:m will be contrary to.
the Master Plan and, as such, will be hit by section 14 of the Development Act.
In short, the contention of the ]earned Solicitor General is that the Master Plan prepared by the Authority for Delhi, which has statutory force, has come into effect under the Development Act.
Under section 336(2)(a) of the Corporation Act, the Commissioner is entitled to refuse sanction of a building or work if the building or work or use of the site for building or work would contravene 'any other law '.
As the proposed construction would not be in conformity with the Master Plan, section 14 of the Development Act will be violated, in which case there will be a contravention of 'any other law '.
Hence the order of rejection passed by the Commissioner is legal and valid.
In this connection the learned Solicitor General referred us to the Master Plan wherein it is stated that the proposed road (in Chawri Bazar, which is the area with which we are concerned) CI 69 12 170 from Hauz Kazi to Jama Masjid is recommended to have a width of 60 feet.
The width of the existing road is only 48 feet.
The object of the Development Act is to freeze new building constructions which will be inconsistent with the Master Plan; and, if the Master Plan mentions the width of a proposed road and the width of an existing road is less, no new construction will be permissible on either side of the road till the excess area required for the road is found.
The Solicitor General has further urged that though a Zonal Development Plan for each of the Zones in which Delhi will have to be divided will have also to be prepared and has not come into operation for the zone concerned, nevertheless, till such a Zonal Development Plan comes into operation, the Master Plan will hold the field.
If a Zonal Development Plan comes into force and has made any alteration, the Zonal Development Plan will then have effect and the Master Plan will stand abridged or modified.
At present, it is the Master Plan that holds the field and, as according to it an excess area of 12 feet for the proposed road will have to be found, all building operations on either side of the proposed road will have to come to a standstill.
That is, the learned Solicitor General was prepared to take the stand that, so to say, there is a freezing of all building operations, on either side of the existing road which, according to him, is warranted by section 14 of the Development Act.
In support of his contentions, the learned Solicitor General drew our attention to certain provisions contained in the Corporation Act and the Development Act.
The stand taken by the learned Solicitor General has been very strenuously controverted by Mr. M.C. Chagla, learned counsel for the respondents.
Mr. Chagla, apart from criticising the order, dated August 11, 1967 as laconic and unintelligible and not containing any valid reasons has urged that the Master Plan, so strongly relied on by the learned Solicitor General, does not, as such, refer to the survey numbers in respect of which the respondents had asked for sanction.
Before the High Court the appellant has not relied upon the Master Plan nor did it place any material to show that any part of the proposed road shown in the Master Plan will pass through any of the properties of the respondents.
The Master Plan prepared under the Development Act is nothing but a broad outline of what Delhi would look like, in future.
The plan, which may probably give more accurately the lands in the area which are reserved for roads, is the Zonal Development Plan, the preparation of which is mandatory under section 8 of the Development Act.
Admittedly no such plan has been prepared, much less has come into operation in the concerned zone.
So long as the Master Plan does not state that any part of the property belonging to the respondents will be covered by the proposed road, it cannot be stated that when the respondents are attempting to renovate the building they are using the land in the zone otherwise than in conformity with the Master Plan.
Mr. Chagla further points out 171 that if the contentions advanced on behalf of the appellant are accepted, the entire building operations in Delhi will have to come to a standstill for an indefinite number of years and, according to him, that position is not envisaged either by the Master Plan or the provisions of the Development Act.
He finally urged that section 14 of the Development Act has no application at all.
From the contentions of both the parties set out above, it will be noticed that according to the appellant ii building operations are allowed to be carried on, there will be a violation of the Master Plan, and in consequence of the provisions of section 14 of the Development Act; whereas, according to the respondent, there is no violation of either the Master Plan or any provisions of the Development Act or of any other law.
A reference to the material provisions of the Corporation Act and the Development Act, which will be made by us presently, will clearly establish that the contentions of the learned Solicitor General cannot be accepted.
We shall first take up the provisions of the Corporation Act.
Section 332 prohibits the erection or commencement of the erection of any building, or execution of any of the works specified in section 334, except with the previous sanction of the Commissioner.
Section 333 makes its mandatory on a person intending to erect a building to apply to the Commissioner in that behalf.
Section 334 makes it obligatory on a person, who intends to execute any of the works mentioned therein, to apply for sanction to the Commissioner.
Section 336 deals with sanction or refusal of building or work.
It is only necessary to refer to sub section
(1) and cl.
(a) of sub section
(2) of this section, because, as we have already stated, the order of rejection by the Commissioner is sought to be justified under this provision.
These provisions are:, "336.
( 1 ) The Commisioner shall sanction the erection of a building or the execution of a work unless such building or work would contravene any of the provisions of sub section (2) of this section or the provisions of section 340.
(2) The grounds on which the sanction of a building or work may be refused shall be the following, namely : (a) that the building or work or the use of the site for the building or work or any of the particulars comprised in the site plan, ground plan, elevation, section or specification would contravene the provisions of any byelaw made in this behalf or of any other law or rule, byelaw or order made under such other law; 172 Sub section
(3) of section 336 provides for the Commissioner communicating the sanction to the person who has given the notice; and in cases where he refuses sanction on any of the grounds specified in subs.
(2) of section 336 or under section 340, to record a brief statement of his reasons for such refusal and communication of the refusal along with the reasons to the party concerned.
It will be clear, from a perusal of section 336, that the Commissioner has to give sanction for the erection of a building or the execution of a work, unless such building or work would contravene any of the provisions of sub section
(2) of section 336 or the provisions of section 340.
Therefore, in order to sustain the validity of the order of rejection passed by the Commissioner the appellant has to establish, as it seeks to, that the proposed building or the use of the site for the building, by the respondents, would contravene the provisions of 'any other law '.
If the proposed building or use of the site for the building would contravene the provisions of any other law ', the Commissioner has ample powers under cl.
(a) of section 336(2) to refuse sanction.
Section 340 gives power to the Commissioner to refuse sanction for erection of any building on either side of a new street, under the circumstances mentioned therein.
We shall now refer to some of the provisions of the Development Act in order to appreciate the scheme of that statute.
The Development Act is an Act to provide for the development of Delhi according to plan and for matters ancillary thereto.
Section 2, clauses (d) and (e), define the expressions 'development ' and 'development area ' respectively.
Chapter II deals with the Delhi Development Authority and its objects.
Section 3, therein, provides for the Central Government constituting for the purposes of the Act an authority to be called the Delhi Development Authority.
It is referred to in the Act as the Authority.
Section 5 provides for the Authority constituting an Advisory Council for the purpose of advising the Authority on the preparation of the Master Plan and the Zonal Development Plans and on such other matters in connection with the administration of the Act.
Such Advisory Council also has been duly constituted.
Section 6 provides that the object of the Authority shall be to promote and secure the development of Delhi according to plan and clothes the Authority with the various powers mentioned therein.
Chapter III deals with Master Plan and Zonal Development Plans.
Section 7, therein, provides for the Authority carrying out a civic survey of and preparing a Master Plan for Delhi.
Under sub section
(2), the Master Plan shall (a) define the various zones into which Delhi may be divided for the purposes of development and indicate the manner in which the land in each zone is proposed 173 to be used (whether by the carrying out thereon of development or otherwise) and the stages by which any such development shall be carried out; and (b) serve as a basic pattern of frame work within which the zonal development plans of the various zones may be prepared '.
Section 8 provides for the preparation by the Authority of a zonal development plan for each of the zones into which Delhi may be divided and also refers to the various matters which are to be indicated in the same.
The material provisions of section 8 which, according to us, will have a vital bearing in considering the soundness of the stand taken by the appellant are as follows: "8.
(1 ) Simultaneously with the preparation of the master plan or as soon as may be thereafter, the Authority shall proceed with the preparation of a zonal development plan for each of the zones into which Delhi may be divided.
(2) A Zonal Development Plan may (a) contain a site plan and use plan for the development of the zone and show the approximate locations and extents of land uses proposed in the zone for such things as public buildings and other .public works and utilities, roads, housing, recreation, industry, business, markets, schools, hospitals and public and private open spaces and other categories of public and private uses; (d) in particular, contain provisions regarding all or any of the following matters, namely : (ii) the allotment or reservation of land for roads, open spaces, gardens, recreation grounds, schools, markets and other public purposes; Section 9 (1 ) states that the expression 'plan ' in that section and in sections 10, 11, 12 and 14 means the Master Plan as well as the Zonal Development Plan for a zone.
Sub section
(2) provides for the plan which means the Master Plan as well as the Zonal Development Plan being submitted after preparation by the Authority to the Central Government for approval and it also gives power to the Government to approve the plan, without modification or with such modifications as it may consider necessary, or reject the plan with directions to the Authority to prepare a fresh plan.
174 Section 10 provides for the procedure to be followed in the preparation and approval of plans.
A perusal of that section shows that ample opportunity has to be provided for persons and every local authority to submit objections at the stage of the draft, and it also requires the authority to consider any objections, suggestions and representations that may have been made, before the final plan is prepared and submitted to the Central Government for its approval.
It also empowers the Central Government to call for any information that it thinks necessary from the Authority for the purpose of approving any plan submitted to it.
Section 11 provides for the date of operation of the plan.
There is no controversy, in this case, that the Master Plan has been prepared under section 7 by the Authority on September 1, 1962 and it has also come into force, as contemplated by section 11.
Though section 8 contemplates the preparation of a Zonal Development Plan simultaneously with the preparation of the Master Plan, or as soon as may be thereafter, no Zonal Development Plan for the zone concerned has been prepared up to now.
It may also be pointed out that if and when such a Plan is prepared, containing the various matters referred to in sub section
(2) of section 8, before it is finalized and sent to the Central Government for approval, parties and local authorities will have to be given an opportunity of sending their objections and suggestions and representations, which have all to be duly and properly considered by the Authority concerned.
Chapter III A deals with modifications to the Master Plan and the Zonal Development Plan.
Section 1 I A, therein, provides for the Authority and the Central Government making modifications in the Master Plan or the Zonal Development Plan under the circumstances and after following the procedure, mentioned therein.
Chapter IV deals with development of lands.
Sub section
(1 ) of section 12 gives power to the Central Government, by notification in the Official Gazette, to declare any area in Delhi to be a development area for the purposes of the Act.
Sub section
(2) prohibits the Authority, except as otherwise provided for in the Act, to undertake or carry out any development of land in any area which is not a development area.
Sub section
(3) provides that after the commencement of the Act no development of land shall be undertaken or carried out in any area by any person or body (including a department of Government) except in the manner provided therein.
Section 14, on which considerable reliance has been placed, on behalf of the appellant, is as follows: "14.
After the coming into operation of any of the plans in a zone no person shall use or permit to be 175 used any land or building in that zone otherwise than in conformity with such plan: Provided that it shall be lawful to continue to use upon such terms and conditions as may be prescribed by regulations made in this behalf any land or building for the purpose and to the extent for and to which it is being used upon the date on which such plan comes into force.
" A copy of the Master Plan for Delhi has been placed before us by the learned Solicitor General.
Chapter I deals with the Land Use Plan under various sub heads.
Chapter II deals with Zoning and Sub division Regulations.
There are certain maps annexed to this Plan.
Under the heading 'Proposed rights of way in Old City ', in paragraph 11 of Chapter I, item 7 refers to the area concerned, viz., Chawri Bazar.
Against that it is stated that the road from Hauz Kazi to Jama Masjid, which is approximately 1,800 feet long is recommended to have a road width of 60 feet.
There is no controversy that the existing .road is only 48 feet wide.
Our attention has also been invited to two of the maps annexed to this Master Plan, viz. the Zonal Map and the Proposed Circulation Pattern of Walled City and it was stated that the area marked 'A ' in the Zonal Map refers to the Walled City which is divided into 27 zones.
The second map viz. the Proposed Circulation Pattern of Walled City, is an enlargement of the area 'A ' shown in the Zonal Map and the Chawri Bazar is shown there.
As stated earlier, considerable reliance has been placed by the learned Solicitor General on the statement in the Master Plan that the road in Chawri Bazar is to have a width of 60 feet and on the two maps annexed to the Master Plan which, according to him, will show the lay out of the proposed road.
The Master Plan and the two maps relied on by the appellant do not give any indication that any part of the land belonging to the respondents will be covered by any portion of the proposed road.
The provisions of section 7 of the Development Act clearly indicate and that is borne out by the various matters mentioned in the Master Plan that the Master Plan will only give a very broad outline of DeLhi as it will look in future.
Though there is an obligation on the Authority to prepare the Zonal Development Plan simultaneously with the preparation of the Master Plan, or as soon as there may be thereafter, no such Zonal Development Plan has been prepared.
That assumes considerable importance in this case because it is the Zonal Development Plan, under section 8(2)(a) which will show the approximate locations and extents of land uses proposed in a zone for roads; further, under sub cl.
(ii) of cl.
(d) of sub section
(2) of section 8, the said Zonal Development Plan will also contain provision regarding the allotment or reservation of land for roads.
It is only when such allotment or reservation of land for roads is made that it will be possible to know clearly as to which part of 176 a person 's land and what portion thereof is allotted or reserved for a road.
If such an indication is made available by the Zonal Development Plan, then section 14 will quite naturally stand attracted, because any user of a land or building otherwise than in conformity with the Zonal Development Plan will be hit by that section.
In the absence of any indication in the Master Plan, in this case, that any part of the land of the respondents will be covered by a road, or portion of a road it is not possible to accept the contention of the learned Solicitor General that there will be any violation of section 14 of the Development Act if the respondents be permitted to use the land, as.
asked for by them.
To attract section 14, the appellant will have to establish that any land or part of a land or a building in a Zone has been dealt with in a particular manner by the Master Plan and that it is proposed to be used in a different manner.
If a Zonal Development Plan is prepared for the area, before it comes into operation in the Zone, the procedure indicated in section 10 will have to be followed and parties will have to be given an opportunity of placing any objections or making any representations or offering any suggestions.
So far as we can see, it is certainly not the scheme of the Development Act that the moment a Master Plan has come into operation and if it contains a proposal regarding the width that a road should have, all use of land adjoining that road is prohibited for an indefinite period.
The reasonable interpretation to be placed on section 14 will be that if any particular and definite use of land is indicated in a Master Plan, a different use of that land cannot be permitted.
Similarly, if a Zonal Development Plan provides for a particular use of any land or any building in that zone, it cannot be put to a different use.
If neither of the plans provide for the particular use of any land or building in the area or Zone, section 14 will have No. application whatsoever.
We have already stated that the respondents ' lands are not in any manner indicated as being taken up by any part of the proposed road, mentioned in the Master Plan and, if that is so, there is no violation of section 14 of the Development Act.
It .also follows that there is no violation of 'any law ' under cl.
(a) of sub section
(2) of section 316 of the Corporation Act.
The High Court was perfectly justified, in the circumstances, in issuing the writ of mandamus.
The result is that the appeal fails, and is dismissed.
The appellant will pay the costs of the respondents.
Appeal dismissed.
| IN-Abs | The Commissioner of the appellant (Municipal Corporation of Delhi) issued notice to the respondents stating that the building owned by them posed a danger to the residents of the area and that necessary repairs may be carried out immediately after obtaining sanction.
The respondents thereupon submitted plans to the Corporation but the Commissioner of the Corporation refused the sanction on the ground that the land belonging to me respondents would be covered by a road proposed in the Master Plan prepared .by.
the Delhi Development Authority.
The respondents filed a writ petition in the High Court praying for a direction to the Corporation to accord the sanction.
The High Court allowed the petition, holding that the Commissioner could decline the sanction only if there was a contravention of section 336(2) or section 340 of Delhi Municipal Corporation Act, 1957 and that in this case there was no such contravention.
In appeal to this Court, the appellant contended that the Commissioner was, trader section 336(2) (a), entitled to refuse sanction of a building or work if the building or work or use of the site for building or work contravened any other law ', that the Master Plan prepared had come into effect under the Development Act and that as the proposed construction would not be in conformity with the Master Plan it would contravene section 14 of the Development Act.
HELD: The appeal must fail.
The provisions of section 7 of the Development Act indicate that the Master Plan will only give a very broad outline of the Development Act that the moment a Master Plan has come into operation and if it contains a proposal regarding the width that a road should have, all use of land adjoining that road is prohibited for an indefinite period.
Under section 14, if any particular and definite use of land is indicated in a Master Plan, different use of that land cannot be permitted.
Similarly, if a Zonal Development Plan, the preparation of which is mandatory under section 8, provides for a particular use of any land or any building in that Zone, it cannot be put to a different use; if neither of the plans provide for the particular use of any land or building in the area or Zone, section 14 will have no application whatsoever.
The respondents ' lands were not in any manner indicated as being taken up by any part of the proposed road mentioned in the Master Plan, nor was a Zonal Development Plan prepared, in the present case.
Therefore, there was no violation of section 14 of the Development Act and hence there was no violation of 'any other law ' under section 336(2)(a) of the Corporation Act.
[175 F 176G]
|
Appeal No. 681 of 1966.
sup CI/69 14 202 Appeal by special leave from the judgment and order dated April 22, 1965 of the Punjab High Court in Civil Writ No. 719 of 1964.
B.P. Maheshwari and Sobhag Mal Jain, for the appellant.
W.S. Barlingay, Brij Mohan Lal and Ganpat Rai, for respondents Nos. 1 and 3.
Hardev Singh, R.N. Sachthey, and B.D. Sharma, for respondents Nos. 2, 4 and 5.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by special leave from the judgment of the Punjab High Court in which the sole question involved is whether the Additional District Magistrate, Gurdaspur who had been invested with all the powers of the District Magistrate under section 10(2) of the Code of Criminal Procedure could make an order under section 29(1) of the Defence of India Act, 1962, hereinafter called the "Act", requisitioning a shop belonging to Batala Engineering Co. Ltd. which was in occupation of the appellant as.
a tenant.
The facts may be shortly stated.
The appellant claims to have been carrying on the business of a Commission Agent in machines in the said shop at Batala for the last 10 years as a tenant on a monthly rental of Rs. 20.
According to the allegations made by the appellant herein in the petition which he filed in the High Court under articles 226 and 227 of the Constitution, Batala Engineering Co. Ltd. (respondent No. 1 herein) had filed an application for his ejectment in January 1964 before the Rent Controller, Batala but realising the weakness of its case the said respondent resorted to the device of getting the shop requisitioned at the instance of the Labour Commissioner who wrote to the Additional District Magistrate that the shop was required for setting up a Cooperative Consumer Store.
On March 24, 1964, the Additional District Magistrate (respondent No. 2 herein) issued a requisitioning order purporting to be under section 29 of the Act requisitioning the shop in question and directing the tenant to surrender and deliver possession thereof to the Manager, Cooperative Consumer Store, Batala, within two days of the service of the order.
The requisitioning order was challenged by means of a writ petition on two grounds; the first was that it had been made mala fide and the second was that the notification which had been issued under section 40 (1 ) of the Act by the Central Government empowering among others the District Magistrate to exercise powers which were exercisable by the Central Government under section 29 in addition to other sections (which it is unnecessary to mention) was illegal and invalid.
The petition was resisted by respondents 1 and 2 and the assertions and contentions of the appellant were controverted.
203 The Division Bench of the High Court (the writ petition had been referred by a learned Single Judge to a Division Bench) held that the allegation of mala fides had not been proved.
It further held that the Additional District Magistrate was competent to make the requisitioning order since he had been empowered to exercise the powers of a District Magistrate under section 10(2) of the Cr. P. Code.
The writ petition was consequently dismissed.
It is necessary first to notice certain provisions of the Act.
Section 29 empowers the Central Government or the State Government to requisition any immoveable property in the circumstances mentioned in the section by an order in writing.
Section 40 which provides for the power to delegate may be set out in entirety: "section 40( 1 ) The Central Government may, by order, direct that any power or duty which by this Act or by any rule made under this Act is conferred or imposed upon the Central Government shall, in such circumstances and under such conditions, if any, as may be specified in the direction, be exercised or discharged also (a) by any officer or authority subordinate to the Central Government, or (b) whether or not the power or duty relates to a matter with respect to which a State Legislature has power to make laws, by any State Government or by any officer or authority subordinate to such Government, or (c) by any other authority.
(2) The State Government may, by order, direct that any power or duty which by this Act or by any rule made under this Act is conferred or.
imposed on the State Government or which, being by this Act or any such rule conferred or imposed on the Central Government, has been directed under sub section (1) to be exercised or discharged by the State Government, shall, in such circumstances and under such conditions, if any as may be specified in the direction, be exercised or discharged by any officer or authority not being (except in the case of a Union territory) an officer or authority subordinate to the Central Government." On December 13, 1962 the Central Government promulgated a notification delegating its power under certain sections of the Act including section 29.
This notification need not be set out in extensor.
Its material part is as follows : 204 "G.S.R. 1716 In exercise of the powers conferred by sub section (1) of section 40 of the Defence of India Act 1962 (5 of 1962) and of all other powers enabling it in this behalf, the Central Government hereby directs that the powers exercisable by it under the provisions the said Act specified in column (2) of the Schedule hereto annexed shall also he exercisable by each of the authorities mentioned in the corresponding entry in column (3) of the said schedule in respect of any immovable property situated within its jurisdiction.
Schedule S.No.
Provision of the Act Authorities.
1 2 3 1.Section 29,30(ex All collectors, District Mag cept the provise the istrates and Deputy Commission reto),31,32,33,35, and ers in the State and all politi 36 and sub ss.(1)and (3) officers in Nefa.
of section 37.
It is necessary now to turn to.
the relevant provisions of the Criminal Procedure Code in order to.
determine whether the Additional District Magistrate would be one of the authorities mentioned in column 3.
In Part II which is headed 'Constitution and Powers of Criminal Courts and Offices ', section 6 gives the classes of criminal courts and section 7 deals with Sessions, divisions and districts.
Section 9 provides for establishment of court of Session.
Section 10 lays down that in every district outside the presidency towns the State Government shall appoint a Magistrate of the first class who shall be called the District Magistrate.
It is further provided that the State Government may appoint any Magistrate of the first class to be an Additional District Magistrate and such Additional District Magistrate shall have all or any of the powers of a District Magistrate under the Code or under any other law for the time being in force as the State Government may direct.
It may be mentioned that in the State of Punjab after the separation of judiciary from the executive by the Punjab Separation of Judicial & Executive Functions Act, 1964 (Act XXV of 1964) certain amendments were made in section 10 but in the present case we are not concerned with them because the impugned order requisitioning the shop in question was made before the said Act (XXV of 1964) came into force.
It is well known that the object of appointing an Additional District Magistrate is to relieve the District Magistrate of some 205 of his duties and that he is subordinate to the District Magistrate to the extent specified in sub section
(3) of section 10.
It is equally well known that the District Magistrate occupies a very important position in the district and is the head of the Executive there and he exercises powers of superintendence and control over the other Magistrates in the district.
Apart from the powers which have been conferred by the Code of Criminal Procedure on him the District Magistrate is also.
known as the Collector for purposes of revenue laws.
He is variously called Collector in some States and Deputy Commissioner in other States.
Under section 11 of the Code whenever in consequence of the office of District Magistrate becoming vacant, any officer succeeding temporarily to the Chief executive administration of the district such officer also exercises all the powers and performs all the duties conferred and imposed by the Code on the District Magistrate.
The Additional District Magistrate as has previously been noticed, can similarly exercise all or any of the powers of a District Magistrate if the State Government makes a direction under section 10(2) of the Code but even an officer who heads the chief executive administration of the district temporarily under section 11, exercises all the powers of a District Magistrate.
The scheme of section 10 of the Code leaves no, room for doubt that the District Magistrate and the Additional District Magistrate are two different and distinct authorities and even though the latter may be empowered under sub section
(2) to exercise all or any of the powers of a District Magistrate but by no stretch of reasoning can an Additional District Magistrate be called the District Magistrate which are the words employed in sub section
(1) of section 10.
The argument which prevailed in the High Court and which the appellant has had to seriously meet in this Court, is that the Additional District Magistrate when invested by the State Government under section 10 (2) of the Code with all or any of the powers of the District Magistrate under the Code or under any other law for the time being in force, would squarely fall within the expression "District Magistrate" employed in column 3 of the notification dated December 13, 1962 by means of which the Central Government delegated its power under certain sections of the Act including section 29.
The reasoning of the High Court was that on a proper construction of the notification it was clear that the "Central Government was desirous of delegating its power in favour of the officers in fact and actually discharging duties and functions in exercising the powers of Collectors, District Magistrates and Deputy Commissioners.
The High Court also looked at the other provisions in respect of which the powers had been delegated and drew the conclusion that the delegation was not confined only to officers appointed as such under section 10(1 ) of the Code of Criminal Procedure.
Learned counsel for the appel 206 lant has assailed the decision of the High Court principally on two grounds for which he has sought support from a decision of the Nagpur High Court in Prabhulal Ramlal Kabra vs Emperor(1).
In that case an order had been made under Rule 26 of the Defence of India Rules by the Additional District Magistrate of Raipur directing the detention of one Bharatchandra Kabra.
That Rule conferred power of detention on the Central Government and the Provincial Government but by virtue of the provisions relating to delegation the District Magistrate had been empowered by the Provincial Government to exercise those powers.
The Additional District Magistrate who made the order of detention had been conferred powers under section 10(2) Cr.
Code almost in similar terms as are to be found in the present case.
In other words he could exercise all the powers of a District Magistrate under the Code or under any other law for the time being in force.
Two points were agitated before the Nagpur court; the first was that the word "law" in "any other law" occurring .in section 10(2) of the Code was not meant to include an executive order but only legislative enactments, and rules, regulations or orders which had the force of law.
The second was that the Act and the Rules made thereunder were special laws enacted to meet an emergency and they conferred extraordinary and drastic powers on the executive and it was precisely for that reason that it was imperative that those powers must be exercised with due sense of responsibility and with circumspection by an officer or authority of a certain status and experience and, therefore, that power had been delegated to the District Magistrate.
Both these contentions prevailed with the Nagpur High Court and it was held that the Additional District Magistrate could not exercise powers under Rule 26 of the Defence of India Rules simply by virtue of the notification under section 10(2) of the Code of Criminal Procedure.
There is an exhaustive discussion on the first point in the Nagpur judgment but it is altogether unnecessary to examine its correctness because we are of the opinion that most of the reasons given in support of the determination of the second point are clear and cogent and must be accepted as correct.
These reasons may be summarised as follows (i) very wide, 'almost autocratic, powers are conferred on the Government in the matter of detention .and therefore they must be exercised with a due sense of responsibility and circumspection by an officer of a certain status and experience; (ii) when the Government delegates its power to an officer or authority subordinate to it, is not unreasonable to assume that it fully considers the fitness of the delegate before making the order in respect of delegation: (iii) the Additional District Magistrate who is invested with the powers of a District Magistrate does not thereby attain the status of a District Magistrate as there can be only one person (1) A.I.R. 1944 Nag.
207 in the district who can be a District Magistrate and (iv) the Government when it conferred the power on the District Magistrate conferred it on the officer actually holding the office of the District Magistrate and no one else.
It has not been disputed that the powers of requisitioning are of a very drastic nature and involve the fundamental rights in respect of property guaranteed under article 19(1)(f) of the Constitution.
The Central Government while making the delegation of its power under section 29 of the Act must ordinarily be presumed to be fully conscious of this aspect of the matter and it was for that reason that an officer or authority of the high status of a District Magistrate in the district was empowered to exercise that power.
Apart from these considerations we see no reason to deviate from the normal rule that the expressions or words which have been used in the notification must be read as such and not in any other manner unless the context requires that the latter course should be followed.
In the present case the words "District Magistrate" could not possibly be read as Additional District Magistrate and it is only by resorting to the notification issued under section 10(2) of the Code that the Additional District Magistrate can be said to have empowered to exercise the powers of the District Magistrates.
The reasons which prevailed with the Nagpur court and which have already been summarised adequately meet the contrary view that the Additional District Magistrate should be held to be competent to act under section 29 of the Act even though the Nagpur case was one of detention.
Coming to.
the decisions of this Court not much assistance can be derived from them.
In Ajaib Singh vs State of Punjab(1) the Additional District Magistrate of Amritsar who had been invested with the powers of a District Magistrate under section 10(2) of the Code was incharge of the office of the District Magistrate when the latter was transferred.
He passed an order detaining a person under Rule 30(1)(b)of the Defence of India Rules 1962.
It was held that the Act and the Rules showed unmistakably that the powers of detention could be exercised only by the State Government or by an officer or authority to whom it might be delegated but who.
shall, in no case, be lower in rank than a District Magistrate.
The Additional District Magistrate was below the rank of a District Magistrate and even though he had been invested with all the powers under the Code and also under any other law for the time being in force he was still not the District Magistrate unless the Government appointed him as such under section 10(1).
This case would have been most apposite for the present case but for the clear distinction that in provisions (1) ; 208 under which the detention was made it was provided that the powers could be delegated to no one who.
was lower in rank than a District Magistrate.
There is no such provision in the matter of delegation in the present case.
One rule, however, emerges quite clearly which is even otherwise unexceptionable that unless a person has been appointed under section 10( 1 ) of the Code he cannot be called a District Magistrate and that an Additional District Magistrate is below the rank of a District Magistrate.
The Central Talkies Ltd. Kanpur vs Dwarka Prasad(1) on which reliance was placed by the counsel for the respondents related to interpretation of certain provisions of the U.P. (Temporary) Control of Rent and Eviction Act 1947.
Section 3 of that Act enabled a landlord to file a suit for eviction of the tenant with the permission of the District Magistrate.
Section 2(d) defined District Magistrate as including an officer authorised by the District Magistrate to perform any of his functions under the Act.
By a notification issued under section 10(2) of the Code of Criminal Procedure one Mr. Seth was appointed as an Additional District Magistrate with a, Il the powers of the District Magistrate.
The landlord applied to the District Magistrate for permission to file a suit for ejectment against the tenant.
The District Magistrate transferred that application to the Additional District Magistrate who granted permission.
The tenant challenged the same on the ground that the permission granted by the Additional District Magistrate was invalid as the District Magistrate mentioned in section 3 of the aforesaid Act was persona designate.
This contention was repelled by this Court and it was observed that a persona designate was a person selected as an individual in his private capacity, and not in his capacity as filling a particular character or office.
This case is clearly distinguishable on the ground that under section 3 of the U.P. Act the District Magistrate himself could authorise any officer to perform any of his functions.
That showed that the legislature did not intend that the functions to be performed under section 3 must be performed by the District Magistrate alone and by no one else.
Counsel for the appellant has called attention to a Bench decision of the Punjab High Court in Guru Datt vs Sohan Singh & Another(2) in which a question arose whether the Deputy Commissioner for the purposes of an election petition under the Punjab Panchayat Samities and Zila Parishads.
Act 1961 and the Rules framed thereunder was a persona designate and it was held that it was the Deputy Commissioner alone who could perform the functions which the statute and the rules conferred on him even though the Governor had made an order declaring the ex cadre posts of Additional Deputy Commissioners to be equivalent in (1) ; (2)I.L.R. 1969 Punj.
134. 209 status to the cadre posts of Deputy Commissioners.
This decision may be open to some criticism owing to the observations made in Central Talkies ' case(1).
However, in the present case we are not basing .our decision by taking into consideration the line of argument of persona designata.
For the reasons which have already been stated the appeal is allowed with costs, with the result that the writ petition filed in the High Court succeeds and the impugned order shall stand quashed.
G.C. Appeal allowed.
| IN-Abs | By notification under section 40(1) of the Defence of India Act, 1962 the powers of the Central Government in respect of certain sections of the Act including section 29 thereof were conferred on Collectors, District Magistrates, Deputy Commissioners and political officers in Nefa.
The Additional District Magistrate of Batala in the Punjab acting under section 29 of the Act passed an order requisitioning a shop belonging to the respondent which was occupied by the appellant as a tenant.
The appellant challenged the order of requisition in a writ petition to the High Court without success.
In appeal before this Court the question that fell for consideration was whether an additional District Magistrate was empowered under section 10(2) of the Code of Criminal Procedure to exercise the powers under section 29 of the Defence of India Act delegated by the Central Government to District Magistrates.
HELD: The powers of requisitioning are of a very drastic nature and involve the fundamental rights in respect of property guaranteed under article 19 ( 1 ) (f) of the Constitution.
The Central Government while making the delegation of its power under section 29 of the Act must ordinarily be presumed to be fully conscious of this aspect of the matter and it was for that reason that an officer or authority of the high status of a District Magistrate in the District was empowered to exercise that power.
There was also No. reason in the present case to deviate from the normal rule that the expressions or words used in the notification must be read as such and not in any other manner unless the context requires that the latter course should be followed, and the words "District Magistrate" could not be possibly read as "Additional District Magistrate".
[207 B D] The notification issued under section 10(2) of the Code of Criminal Procedure could not serve to confer on the Additional District Magistrate the powers of the District Magistrate under section 29 of the Defence of India Act for the same reasons as prevailed with.
the Nagpur High.
Court in Prabhulal Ramlal Kabras case in denying to the Additional District Magistrate the power of the District Magistrate under R. 26 of the Defence of India Rules.
[207 E, 206 E F] Prabhulal Ratnlal Kabra vs Emperor, A.I.R. 1944 Nag. 84, approved and applied.
Ajaib Singh vs State of Punjab, ; , Central Talkies Ltd. Kanpur vs Dwarka Prasad, ; and Guru Dutt vs Sohan Singh & Ant.
I.L.R. 1965 Punj.
134, referred to.
|
Appeal No. 27 of 1968.
Appeal by special leave from the order dated October 27, 1967 of the Chief Labour Commissioner (Central) and Appellate Authority, New Delhi in No. I.E. 1 ( 11 )/7/66 H.R. Gokhale, B. Parthasarathy: O.C. Mathut, J.B. Dadachanji and Ravinder Narain, for the appellant.
R.K. Garg, S.C. Agarwala and Anil Kumar Gupta, for the respondent.
The Judgment of J.M. SHELAT and C.A. VAIDIALINGAM, JJ., was delivered by SHELAT, J. BHARGAVA, J. delivered a dissenting Opinion.
Shelat, J.
This appeal, by special leave, is by the employer and raises the question as to the scope of sec.
10(2) of the , 20 of 1946, as amended by Act 36 of 1956 (referred to hereinafter as the Act).
134 The Standing Orders of the Appellant company were certified on August 7, 1962 by the Regional Labour Commissioner, Central, under section 4 of the Act.
Both the company and the workmen filed appeals against the said order which were disposed of by the Appellate authority under section 6.
Sometime thereafter the respondent union applied for certain modifications, some of ' which were certified by the Regional Labour Commissioner by his order dated December 28, 1963.
The Appellant company filed an appeal against the said order which was disposed of by the Chief Labour Commissioner in April 1964.
On April 25, 1965 the respondent union made a further application for modifications.
The Regional Labour Commissioner by his order dated September 2, 1965 allowed certain modifications but rejected the rest.
The union thereupon appealed against the said order.
After hearing the parties the Chief Labour Commissioner passed his impugned order dated October 27, 1967 ordering certification of certain modifications.
Though the Appellant company objected at first to all the modifications, counsel pressed the appeal in respect of four modifications only.
The first modification challenged is in Standing Order 9, clause (a)which, as unamended, read as follows: "The railway under the terms of employment has the right to terminate the services of a permanent Workman on giving him one month 's notice in writing or one month 's pay may be paid in lieu of notice.
" The union claimed that the management should give reasons even when they terminated the services of an employee by a discharge simpliciter.
The modification allowed directed reasons to be recorded in writing and communicated to the workman if he so desires at the time of discharge but not if the management considers it inadvisable.
The second modification is in Standing Order 12, clause (A), which, in its unamended form, read as follows: "When any of the penalties specified in Order 9 is imposed upon a workman an appeal shall lie to the authority next above that imposing the penalty.
An appeal shall lie to the Managing Agents only on original orders passed by the General Manager . . " The union 's plea was that some time limit was necessary for the disposal of the appeals as the managing agents who are the appellate authority against the orders of the General Manager took months to dispose of such appeals thereby delaying the workman from raising an industrial dispute in time and seek timely relief.
The modification allowed was that every such appeal shall be disposed, of by the appellate authority within 60 days from the date of its receipt.
The third modification is in Standing Order 11 ( 'vii) which read as follows: 135 "Removal from service: A workman shall be liable to be removed from service in the following circumstances: (a) Inefficiency.
The modification allowed was as follows: "In case of inefficiency due to physical unfitness the workman whom the management considers suitable for some alternative employment shall be offered the same on reasonable emoluments having regard to his former emoluments.
" The modification contains, it will be noticed, four limitations: (1 ) it applies only to cases of removal on the ground of physical unfitness, (2) the consideration of suitability for an alternate employment is left to the management, (3 ) the existence of alternative post, and (4) the question as to what reasonable emoluments should be is left to the management.
The fourth modification is in Standing Order 11 (vii) (c) which, in its unamended form, was as follows.
"Every person against whom departmental enquiry is being made shall be supplied with a copy of the findings in connection with his dismissal and removal from ser vice.
The workman shall also be supplied with a copy of the proceedings of the enquiry committee as soon as possible after the conclusion of the enquiry proceedings in his case and be allowed to defend his case through union 's representative.
" The modification allowed was as follows: "In case the management propose to remove the workman from service they shall serve on the workmen separate show cause notice to that effect.
" Counsel for the company challenged the impugned order in its two facets: the scope of the power of modification under section 10(2), and on merits on the ground that the modifications did not stand the test of reasonableness and fairness.
On the first question his contention was that the jurisdiction and powers of the authorities under the Act to certify modifications of the existing standing orders are limited to cases where a change of circumstances is established.
In the course of his argument, counsel, however, qualified the contention by conceding that if at the time of the last certification certain circumstances were, for one reason 136 or the other, omitted from consideration they would constitute a Valid reason for modification and the modification would be granted even though in such a case a change of circumstances has not occurred.
He next contended that in any case though section 11 of the Code of Civil Procedure did not apply, principles analogous to res judicata would apply to an application for modification unless such application is occasioned by new circumstances having arisen or is based on new facts.
Briefly, the argument was that the object of the Act is to have conditions of service of workmen in an establishment defined with precision, and therefore, to have standing orders dealing with such conditions certified.
For industrial harmony and peace it is necessary that those conditions are stable and do no.t remain undefined or fluctuating.
In pursuance of this object the Act confers finality to such certified standing orders or modifications thereof under section 6.
The contention was that if modifications were allowed without any restraint, there would be multiple applications specially as individual workman have been given the right to apply for modifications.
Therefore, the word 'final ' in section 6, it ' was argued, must be so read as to mean that an application for modification under s, 10(2) can only be maintainable if it is justified on the ground of a change of circumstances having occurred after the fast certification, which of course, according to the concession made by counsel, also would include cases where certain circumstances were not taken into account at the time of the last certification.
The relevant provisions of the Act requiring consideration in this appeal are sections 4, 6, 10, 11 and 12.
Section 4 provides that standing orders shall be certified under the Act if (a) a provision is made therein for every matter set out in the Schedule, and (b) they are otherwise in conformity with the provisions of the Act.
The section further provides that it shall be the function of the certifying officer or the appellate authority to adjudicate upon the fairness or reasonableness 'of the ' provisions of the standing orders.
Section 6 provides that any person aggrieved by the order of the certifying officer passed under section 5(2) may appeal to the appellate authority and the appellate authority, "whose decision shall be final", shall by an order confirm the standing orders in the form certified under section 5 (2) or amend or add thereto to render them certifiable under the Act.
Section 10, whose interpretation is in question, provides by sub section 1 as follows: "Standing orders finally certified under this Act shall not, except on agreement between the employer and the workmen, be liable to modification until the expiry of 6 months from the date on which the standing orders or the last modifications thereof came into operation." 137 Sub section
2 runs as follows: "Subject to the provisions of sub section (1), an em ployer or workman may apply to the certifying officer to have the standing orders modified . .
Sub section
3 provides that the foregoing provisiOnS of the Act shall apply in respect of an application for modification as they apply to the certification of the first standing orders.
Section 11 empowers the certifying officer and the appellate authority to correct clerical or arithmetical mistakes in an order passed by them or errors arising from any accidental slip or omission.
Lastly, section 12 provides that no oral evidence having the effect of adding to or otherwise varying or contradicting standing orders as finally certified under the Act shall be admitted in any court.
Counsel conceded, and did so rightly, that there is no express provision in any one of these sections restricting the right to apply for modification or the power of the authorities to allow modification only on proof of a change of circumstances.
The only limitations to the power are the reasonableness or fairness which of course must be established and the expiry of six months after the date of the standing orders or their last modifications coming into operation.
In the absence of any such express restriction we should then ask ourselves whether there is in any of these sections anything which would indicate such a restriction by necessary implication.
In that connection the only word which can point to such a restriction, according to.
counsel, is the word 'final ' in sec.
6, so that the contention reduces itself to this that by making the order of the appellate authority final under sec.
6, Parliament intended by necessary implication that the bar of finality can only be removed if new circumstances arise which necessitate or justify modification.
But the intention of the legislature, as observed by Lord Watson in Salomon v.A. Salomon & Co. Ltd.(1) "is a common but very slippery phrase, which popularly understood, may signify anything from intention embodied in positive enactment to speculative opinion as to what the legislature probably would have meant, although there has been an omission to enact".
It is well settled that the meaning which words ought to be understood to bear is not to be ascertained by any process akin to speculation and the primary duty of a court is to find the natural meaning of the words used in the context in which they occur, that context including any other phrase in the Act which may throw light on the sense in which the makers of the Act used the words in dispute.
In R.v. Wimbledon Justices(2) Lord Goddard said: "Although in construing an Act of Parliament the court must always try to give effect to the intention of the Act and must look (1) ; , 38.
(2) 2 Sup.
C.l./69 10 138 not only at the remedy provided but also at the mischief aimed at, it cannot add words to a statute or read words into it which are not there . "Similarly, in R.v.
Mansel Jones(1) Lord Coleridge said that it was me business of the courts to see what Parliament had said, instead of reading into an Act what ought to have been said.
So too, in Latham vs Lafone(2), Martin B. said: "I think the proper rule for construing this statute is to adhere to its words strictly; and it is my strong belief that, by reasoning on long drawn inferences and remote consequences, the courts have pronounced many judgments affecting debts and actions in a manner that the persons who originated and prepared the Act never dreamed of." In the light of these principles we ought, therefore, to give a literal meaning to the language used by Parliament unless the language is ambiguous or its literal sense gives rise to an anomaly or results in something which would defeat the purpose of the Act.
The Act was passed because the legislature thought that in many industrial establishments the conditions of service were not uniform and sometimes were not even reduced to writing.
This led to conflicts resulting in unnecessary industrial disputes.
The object of passing the Act was thus to require employers to define with certainty the conditions of service in their establishments and to require them to reduce them to writing and to get them compulsorily certified.
The matters in respect of which the conditions of employment had to be certified were specified in the schedule to the Act.
As the Act stood prior to its amendment in 1956, sec.
3 required the employer to submit to the certifying.
officer draft standing orders proposed by him for adoption in his establishment.
Section 4 provided that standing orders shall be certifiable if (a) provision is made therein for every matter set out in the Schedule, and (b) that they were otherwise in conformity with the provisions of the Act.
The section, however, expressly provided that it shall not be the function of the certifying officer or the appellate authority to adjudicate upon the fairness or reasonableness of the standing orders.
Under section 5, the certifying officer was required to send a copy of the draft standing orders to the union, if any, or in its absence to the workmen in the manner prescribed together with a notice calling for objections by them, if any, and to give opportunity to the employer and the workmen of being heard and then to decide whether or not any modification of or addition to the draft standing orders was necessary to render them certifiable under the Act.
Section 6 provided for an appeal by any person aggrieved by the order passed under section 5.
The appellate authority, whose decision was made final, had the power to confirm or amend or add to the standing orders passed by the certifying officer to render them certifiable under the Act.
Though the [1889] 23Q.B.D. 29,32.
(2) [1867] L.R. 2 exhibit 115,121.
139 order passed by the appellate authority was made final under section 6, sec. 10 provided for modification.
Sub section 1 of section 10 provided that standing orders finally certified under this Act shall not, except on agreement between the employer and the workmen, be liable to modification until expiry of six months from the date on which they or the last modification thereof came into operation.
Sub section
2 read as follows: "An employer desiring to modify his standing orders shall apply to the Certifying Officer in that behalf Sub section 3 provided that the foregoing provisions of the Act shall apply in respect of an application under sub sec.
2 as they apply to the certification of the first standing orders.
As the Act stood prior to 1956, there was thus a prohibition against the certifying officer going into the question of reasonableness or fairness of the draft standing orders submitted to him by the employer.
His only function was to see that the draft made provisions for all matters contained in the Schedule and that it D was otherwise certifiable under the Act.
Therefore though the workmen through the union or otherwise were served with the copy of the draft and had the right to raise objections, the objections could be of a limited character, namely, that the draft did not provide for all matters in the Schedule or that it was not otherwise certifiable under the Act.
Even in an appeal under section 6, the E only objections they could raise were limited to the two aforesaid questions.
The workmen thus could not object that the draft standing orders were not reasonable or fair.
Under section 10, the right to apply for modification was conferred on the employer alone and in view of sub section 3 the only consideration which the certifying authority could apply to such modification was the one which he F could apply under sections 4 and 6.
Therefore, no question whether the modification was fair or reasonable could be raised.
It is thus clear that the workman had very little say in the matter even if he felt that the standing orders or their modifications were either not reasonable or fair.
They could, of course, raise an industrial dispute.
But that remedy was hardly satisfactory.
Such a dispute had to be first sponsored by a union or at least a substantial number of workmen; it bad next to go through the process of conciliation and lastly the appropriate Government may or may not be prepared to refer such a dispute to industrial adjudication.
Even if it did, the entire process was a protracted one.
In 1956, parliament effected radical changes in the Act widening its scope and altering its very complexion.
Section 4, as amended by Act 36 of 1956, entrusted the authorities under the Act with the duty to adjudicate upon fairness and reasonableness of the standing orders.
The enquiry when such standing ' orders 140 are submitted for certification is now two fold: (1 ) whether the standig orders are in consonance with the model standing orders, and (2) whether they are fair and reasonable.
The workmen, therefore, can raise an objection as to the reasonableness or fairness of the draft standing orders submitted for certification.
By amending section 10(2) both .the workmen and the employer are given the right to apply for modification and by reason of the change made in section 4 a modification has also now to be tested by the yardstick of fairness and reasonableness.
The Act provides a speedy and cheap remedy available to the individual workman to have his conditions of service determined and also for their modifications.
By amending sections 4 and 1 O, Parliament not only broadened the.
scope of the Act but also.
gave a clear expression to the change in its legislative policy.
Parliament knew that the workmen, even as the unamended Act stood, had the right to raise an industrial dispute, yet, not satisfied with such a remedy, it conferred by amending sections 4 and 10 the right to individual workmen to contest the draft standing orders submitted by the employer for certification on the ground that they are either not fair or reasonable, and more important still, the right to apply for their modification despite the finality of the order of the appellate authority under section 6.
Parliament thus deliberately gave a dual remedy to the workmen both under this Act and under the Industrial Disputes Act.
This fact has in recent decisions been recognised by this Court.
(of Bangalore Woollen, Cotton & Silk Co. Ltd. vs Their Workmen(1), Buckingham & Carnatic Co. Ltd. vs Workmen(2) and Hindustan Brown Boveri Ltd. vs The Workmen(a).
It will be pertinent, while examining the question whether there is a restriction, as suggested by counsel, to the right to apply for modifications, to bear in mind the change in the legislative policy reflected in the amendments of sections 4 and 10.
It will be noticed that section 10 does not state that once a standing order is modified and the modification is certified, no further modification is permissible except upon proof that new circumstances have arisen since the last modification.
As a matter of fact the legislature has not incorporated any words in the sub sec.
restricting the right to apply for modification except of course the time limit of six months in sub section
Section 6 no doubt lays down that the order of the appellate authority in an appeal against the order of the certifying officer under section 5 is final but that finality is itself subject to the right to apply for modification under section 10(2).
Even so, it was urged that the finality of the order under section 6 was indicative of a condition precedent to the jurisdiction under sec.
10(2) to entertain an application for modification on a new set (1) (2) C.A. No. 674 of 1968 decided oft 25th July, 1968.
(3) C.A. No. l631 ofl966 decided on 31st July, 1967.
141 circumstances having arisen in the meantime.
The question is whether such is the position.
The finality to the order passed under section 6 really means that there is no further appeal or revision against that order and no more.
This view finds support from section 12 which lays down that once the standing orders are finally certified, no oral evidence can be led in any court which has the effect of adding to or otherwise varying or contradicting such standing orders.
Section 6, when read with section 12, indicates that the finality given to the certification by the appellate authority is against a, challenge thereof in a civil court.
But the finality given to the appellate authority 's order is subject to the modification of those very standing orders certified by him.
As already stated, section 10 itself does not lay down any restriction to the right to apply for modification Apart from the right to apply for modification under the Act, the workmen ,can raise an industrial dispute with regard to the standing orders.
There is nothing in the Industrial Disputes Act restricting the right to raise such a dispute only when a new set of circumstances has arisen.
If that right is unrestricted, can it be possible that the very_ legislature which passed both the Acts could have, while conferring the right on the workmen individually, restricted that right as suggested by counsel ? To illustrate, a new industrial establishment is set up and workmen are engaged therein.
Either there is no union or if there is one it is not yet properly organised.
The standing orders of the establishment are certified under the Act.
At the time of certification, the union or the workmen 's representatives had raised either no objections or only certain objections.
If subsequently the workmen feel that further objections could have been raised and if so raised the authority under the Act would have taken them into consideration, does it mean that because new circumstances have since then not arisen, the workmen would be barred from applying for modification ? Let us take another illustration.
Where, after the standing orders or their modifications are certified, it strikes a workman after they have been in operation for some time that a further improvement in his conditions of service is desirable, would he be debarred from applying for a further modification on the ground that no change of circumstances in the meantime has taken place? Where the standing orders provide 10 festival holidays, if counsel were right, the workmen can never apply for an addition in their number as they would be faced with the contention that the festivals existed at the time of the last certification and there was therefore no change of circumstances.
The Act is a beneficent piece of legislation and therefore unless compelled by any words in it we would not be justified in importing in section 10 through inference only a restriction to the right conferred by.
it on account of a supposed danger of multiplicity 153 for the purpose of ensuring that conditions of service, which the employer laid down, became known to the workmen and the liberty of the employer in prescribing the conditions of service was only limited to the extent that the Standing Orders had to be in conformity with the provisions of the Act and, as far as practicable, in conformity with Model Standing Orders.
The Certifying Officer or the Appellate Authority were debarred from adjudicating upon the fairness or the reasonableness of the provisions of the Standing Orders.
Then, as noticed in the case of Rohtak Hissar District Electricity Supply Co. Ltd.(1), the Legislature made a drastic change in the policy of the Act by amending section 4 and laying upon the Certifying Officer the duty of deciding whether the Standing Orders proposed by the employer were reasonable and fair, and also by amending section 10(2) so as to permit even a workman to apply for modification of the certified Standing Orders, while, in the original Act, the employer alone had the right to make such an application.
It is, however, to be noticed that the preamble of the Act was no.t altered, so that the purpose of the Act remained as before.
While the Act was in its unamended form, if the workmen had a grievance, they could not apply for modification of certified Standing Orders and, even at the time of initial certification, they could only object to a Standing Order on the ground that it was not in conformity with the provisions of the Act or Model Standing Orders.
After amendment, the workmen were given the right to object to the draft Standing Orders at the time of first certification on the ground that the Standing Orders were not fair and reasonable and, even subsequently, to apply for modification of the certified Standing Orders after expiry of the period of six months prescribed under section 10( 1 ) of the Act.
These rights granted to the workmen and the powers conferred on the Certifying Officer and the Appellate Authority, however, ,still had to be exercised for the purpose of giving effect to the object of the Act as it continued to remain in the preamble, which was not altered.
Before the amendment of the Act, if the workmen had any grievance on the ground of unfairness or unreasonableness of the Standing Orders proposed by the employer, their only remedy lay under the Industrial Disputes Act.
By amendment in 1956, a limited remedy was provided for them in the Act itself by conferring on the Certifying Officer the function of judging the reasonableness and fairness of the proposed Standing Orders.
These amendments cannot, however, affect the alternative remedy which the workmen had of seeking redress under the Industrial Disputes Act if they had grievance against any of the Standing Orders certified by the Certifying Officer [See Bangalore Woollen, Cotton and Silk Mills Company Ltd. vs Their Workmen and Another(2), and the (1) ; (2) 2 Sup.
C1169 11 143 of applications.
The policy of section 10 is clear that a modification should not be allowed within six months from the date when the standing orders or the last modifications thereof came into operation.
The object of providing the time limit was that the standing orders .or their modifications should be allowed to work for sufficiently long time to see whether they work properly or not.
Even that time limit is not rigid because a modification even before six months is permissible if there is an agreement between the parties.
The ground for urging that a restriction should be read in section 10 was the apprehension that since workmen individually have the right to apply for modifications there would be multiple applications which an employer would have to face.
Secondly, that an application without a change of circumstances would be tantamount to a review by the same authority of his previous order of certification.
It was said that if no restriction is read in section 10 it would mean that the same authority.
on satisfaction of the fairness and reasonableness of a standing order or its last modification had certified it would be called upon to review his previous decision on reasonableness and fairness.
Such a review, it was argued, is permissible only on well recognised grounds, namely, discovery of new and important matter or evidence, a mistake or an error apparent on the face of the record or any other sufficient reason.
An application for modification would ordinarily be made where (1) a change of circumstances has occurred, or (2) where experience of the working of the standing orders last certified results in inconvenience bardship anomaly etc.
or (3) where some fact was lost sight of at the t;me of certification, or (4) where the applicant feels that a modification will be more beneficial.
In category (1) there would be no difficulty as a change of circumstances has taken place.
But in cases falling, under the rest of the categories there will be no change of circumstances.
Does it mean that though the implementation of the standing orders has resulted.
in hardship.
inconvenience or anomaly no modification can be asked for because there is no change of circumstances ? As to multiplicity of applications we think that there is no justification for any such apprehension.
unless there in a justification for modification the authorities under the Act would reject them on the ground that they are frivolous and therefore neither fair nor reasonable.
Lastly as to such an application being a review of the last certifying order an application under section 10 is not a review.
An application for review would be made in the proceedings in 'which the ' judgment or order sought to be reviewed is passed That would not be s0 in the case of an application under section '10(2); Such an application is independent of the proceedings in which the ' last.certifying order was passed and. is made in 'the 143 exercise of an independent right conferred upon the applicant by section ]0(2).
In an application for modification, the issue before the authority would be not as to the reasonableness or fairness of the standing orders or their last modification, but whether the modification now applied for is fair and reasonable.
Therefore, the contention that a change of circumstances is a condition precedent to the maintainability of an application under section 10(2) or that an application for modification without proof of such a change amounts to review by the same authority of its previous order is not correct .
It was then argued that assuming that a modification without a change of circumstances is permissible though section 11 of the Code of Civil Procedure does not apply to industry matters, sound policy dictates that principles analogous to res judicata must be applied and it must be held that unless circumstances have changed an application for modification would be ,barred.
For this, counsel relied on Burn & Co. vs Their Employees(x).
There the demand was for wage scales fixed in an award by the Mercantile Tribunal instead of the scales in accordance with the scheme of the Bengal Chamber of Commerce.
In a dispute previously raised by labour an award was made in 1950 which accepted the wage scales according to the scheme of the Bengal Chamber of Commerce and rejected the demand for the scales according to those awarded by the Mercantile Tribunal which were more favourable.
It was in these circumstances that this Court expressed the view that an award fixing wage scales should have fairly long range operation and should not be unsettled unless a change of circumstances has occurred justifying fresh adjudication.
But with the constant spiralling of prices the principle would appear to have lost much of its efficacy.
The trend in recent decisions is that application of technical rules such as res judicata.
acquiescence, estoppel etc.
are not appropriate to industrial adjudication.
In Guest, Keen, Williams Private Ltd. vs
P.J. Sterling(2) a modification of a standing order relating to the age of superannuation was sought by raising an industrial dispute.
It was contended that the reference of that dispute was barred by acquiescence and laches.
That contention was rejected, the Court observing that industrial tribunal should be slow and circumspect in applying technical principles such as acquiescence and estoppel.
In Workmen of Balmer Lawrie & Co. vs Balmer Lawrie & Co.(3) also it was observed that the question as to revision of wage scales must be examined on the merits of each individual case and technical considerations of res judicata should not be allowed to hamper the discretion of industrial adjudication therefore.
doubtful whether principles analogous to res judicata can properly be applied to industrial adjudication.
(1) S.C.R.781, 789.
(2) [1960] l S.C.R. 348.
(2) ; 144 On merits, Mr. Gokhale argued that the four modifications to which he objected were neither fair nor reasonable and that therefore we should set them aside, The ,question is, whether in an appeal under article 136 we would be justified in interfering with conclusions as to reasonableness and fairness by authorities empowered by the Act to arrive at such conclusions.
In Rohtak Hissar District Electricity Supply Co. Ltd. vs State of Uttar Pradesh & Ors.(1) this Court prevented counsel for the employer from canvassing such a question on the Found that the matter of fairness and reasonableness was left by the legislature to the authorities constituted under the Act.
In Hindustan Antibiotics Ltd. vs The Workmen & Ors.(2) this Court repeated what it had earlier stated in Bengal Chemical & Pharmaceutical Workers vs Their Workmen(3) that though article, 136 is couched in widest terms, it is necessary to, exercise discretionary jurisdiction of this Court only in cases where awards are made in violation of the principles of natural justice or axe made in a manner causing grave injustice to parties or raise an important principle of industrial law requiring elucidation by this Court or disclose exceptional or Special circumstances which merit consideration by this Court.
As aforesaid, the modifications objected by the appellant company are: (1 ) giving reasons and communicating them to the workman concerned even in eases of discharge simpliciter, (2) insertion of lime limit of 60 days in the disposal of appeals, (3) insertion in standing order 11 of a clause that where a workman is re.
moved on the ground of inefficiency due to physical unfitness, the management should offer to such a workman alternative employment on reasonable emoluments and (4) insertion of the clause requiring a_ second show cause notice at time stage when the decision of suitable punishment is to be made.
So far as modifications (2), and (3) are concerned, clearly no principle is involved and there would be no justification for us to interfere with the conclusion of the appellate authority on the question of their being fair and reasonable.
As regards the first modification, the contention was that an employer has under the law of master and servant the right to terminate the service`s of his: employee by a discharge simpliciter after giving a month 's notice or a month 's wages in.
lieu thereof, and is not required to give reasons for such an order.
The Industrial Disputes Act also does not lay down any fetter to that right by requiring him to give reasons to the employee concerned and industrial adjudication has so far recognized such a right.
To impose such a fetter by a change in orders is therefore not warranted by any statute, and, therefore, cannot be said to be either fair or reasonable.
It must, however, be borne.
in mind that the right to contract in industrial S.C.R. 863.
(2) ; , supp.
2 S.C.R. 136, 140.
145 matters is no longer an absolute right and statutes dealing with industrial matters abound with restrictions on the absolute fight to contract.
The doctrine of hire and fire, for instance, is now completely abrogated both by statutes and by industrial adjudication, and even where the services of an employee are terminated by an order of discharge simpliciter the legality and propriety of such an order can be challenged in industrial tribunals.
These restrictions on the absolute right to contract are imposed evidently because security of employment is.
more and more regarded as one of the necessities for industrial peace and harmony and the contentment it brings about a prerequisite of social justice.
During the last decade or so statutes have been passed such as the Bihar Shops and Establishments Act, 1953 which require a reasonable cause for dispensing with the services of an employee by an order of discharge simpliciter.
If reasons for discharging an employee are furnished to the employee concerned, he not only has the satisfaction of knowing why his services are dispensed with but it becomes easy for him in appropriate cases to challenge the order on.
the ground that it is either not legal or proper which in the absence of knowledge of those reasons it may be difficult, if not impossible for him to do.
In these circumstances, if the authorities under the Act have come to the conclusion that such a modification is fair and reasonable we would hardly be justified in interfering with such a decision.
As regards the modification requiting a second show cause notice, neither the ordinary law of the land nor the industrial law requires an employer to give such a notice.
In none of the decisions given by courts or the tribunals such a second show cause notice m case of removal has ever been demanded or considered necessary.
The only class of cases where such a notice has been held to be necessary are those arising under article 311.
Even that has now been removed by the recent amendment of that Article.
To import such a requirement from article 311 in industrial matters does not appear to be either necessary.
or proper and would be equating industrial employees with civil servants.
In our view, there is no justification on any principle for such equation, Besides, such a requirement would unnecessarily prolong disciplinary enquiries which in the interest of industrial peace should be disposed of in as short a time as possible.
In our view it is not possible to consider this modification as justifiable either on the ground of reasonableness or fairness and should therefore be set aside.
The appeal, therefore, is partly allowed to the extent aforesaid and the impugned order to that extent is set aside.
There v,ill be Bhargava, J.
The management of the Shahdara (Delhi) Saharnpur Light Railway Co., Ltd. (hereinafter referred to as 146 "the Company") has riffled this appeal, by special leave, against an order passed by the Chief Labour Commissioner (Central) under section 6 ,of the (hereinafter referred to as "the Act") as an appellate authority, granting partially an application made under section 10 of the Act presented on behalf of the respondent, Shahdara Saharanpur Railway Workers ' Union.
The first draft Standing Orders submitted by the Company to the Certifying Officer under section 4 of the Act were certified by him on 7/8 8 1962, after deciding objections that had been filed on behalf of the workmen In appeal, the Chief Labour Commissioner (Central), New Delhi, modified those Standing Orders to some extent by his order dated 12th February, 1963.
Subsequently, these certified Standing Orders were modified by the order dated 28th December, 1963 passed by the Certifying Officer, and the appeal against his orders of modification was dismissed on the 23rd April, 1964.
Then, on 25th April, 1965, an application was presented under section 10(2) of the Act on behalf of the respondent seeking modifications in a number of Standing Orders as they stood after original certification and first modification.
The Certifying Officer passed his orders on this application and, against those orders, the respondent filed an appeal before the Chief Labour Commissioner (Central), New Delhi.
The Chief Labour Commissioner, by his order dated 27th October, 1967, allowed modifications in a number of Standing Orders.
The present appeal is directed against this order and challenges the modifications granted in Standing Orders Nos. 9(a), 12(A), 11(ix), 11(vii) and 13.
The main ground urged by the Company before this Court in support of this appeal was that the Chief Labour Commissioner was not justified in directing modifications in the Standing Orders, already certified, in the absence of fresh material or fresh facts on the basis of which alone he was entitled to grant modifications under section 10 of the Act.
Learned counsel appearing on behalf of the Company in the alternative, also put forward the plea that on principles analogous to the rule of res judicata it should be held that the Chief Labour Commissioner had no jurisdiction to grant these modifications under section 10 in view of the previous decisions given when the Standing Orders were originally certified and modified for the first time.
So far as the argument of learned counsel based on the applicability of principles analogous to the rule of res judicata is concerned, learned counsel conceded that there is no direct ruling of any Court laying down that such principles are applicable when a Certifying Officer is dealing with an application for modification of Standing Orders under section 10 of the Act, or when an appeal against such an order is being heard by the Appellate Authority under section 6 of the Act.
Reliance was, however, placed on the decision of this Court in Burn & Co., Calcutta vs Their Emplo 147 yees(1), where this Court was dealing with the applicability of the principle analogous to the rule of res judicata to proceedings before an Industrial Tribunal dealing with a reference under the Industrial Disputes Act.
In that case, an earlier award had been given in an industrial dispute and the question arose whether, in the subsequent dispute for adjudication, the decisions given in the earlier award should be held as binding, unless it was shown that there had been a change of circumstances.
In the appeal before this Court, it was urged that the Appellate Tribunal was in error in brushing aside the earlier award and in deciding the matter afresh as if it arose for the first time for determination; and it was argued that, when once a dispute is referred to a Tribunal and that results in an adjudication, that must be taken as binding on the parties thereto, unless there was a change of circumstances, and, as none such had been alleged or proved, the earlier award should have been accepted, as indeed it was accepted by the Adjudicator.
This Court held: ' "In the instant case, the Labour Appellate Tribunal dismissed this argument with the observation that that was 'a rule of prudence and not of law '.
If the Tribunal meant by this observation that the statute does not enact that an award should not be re opened except on the ground of change of circumstances, that would be quite correct.
But that is not decisive of the question, because there is no provision in the statute prescribing when and under what circumstances an award could be re opened.
Section 19(4) authorises the Government to move the Tribunal for shortening the period during which the award would operate, if 'there has been a material change in the circumstances on which it was based '.
But this has reference to the period of one year fixed under section 19 (3) and if that indicates anything, it is that that would be the proper ground on which the award could be re opened under section 19(6), and that is what the learned Attorney General contends.
But we propose to consider the question on the footing that there is nothing in the statute to indicate the grounds on which an award could be reopened.
What then is the position ? Are we to hold that an award given on 'a matter in controversy between the parties after full hearing ceases to have any force if either of them repudiates it under section 19(6), and that the Tribunal has no option.
when the matter is again referred to it for adjudication, but to proceed to try it de novo, traverse the entire ground once again, land come to a fresh decision.
That would be contrary (1) [1956]S.C.R 781 148 to the well recognised principle that a decision once rendered by a competent authority on a matter in issue between the parties after a full enquiry should not be permitted to be re agitated.
It is on this principle that the rule of res judicata enacted in section 11 of the Civil Procedure Code is based.
That section is, no doubt, in terms inapplicable to the present matter, but the principle underlying it, expressed in the maxim 'interest rei publica ut sit finis litium ', is rounded on sound public policy and is of universal application. 'The rule of res judicata is dictated ', observed Sir Lawrence Jenkins, C.J., in Sheoparsan Singh vs Ramnandan Prasad Singh(1), 'by a wisdom which is for all time. ' And there are good reasons why this principle should be applicable to decisions of Industrial Tribunals also.
Legislation regulating the relation between Capital and Labour has two objects in view.
It seeks to ensure to the workmen, who have not the capacity to treat with capital on equal terms, fair returns for their labour.
It also seeks to prevent disputes between employer and employees, so that production might not be adversely affected and the larger interests of the society might not suffer.
Now, if we are to hold that an adjudication loses its force when it is repudiated under section 19(6) and that the whole controversy is at large, then the result would be that far from reconciling themselves to the award and settling down to work it, either party will treat it as a mere stage in the prosecution of a prolonged struggle, and far from bringing industrial peace, the awards would turn out to be but truces giving the parties breathing time before resuming hostile action with renewed vigour.
On the other hand, if we are, to regard them as intended to have long term operation and at the same time hold that they are liable to be modified by change in the circumstances on which they were based, both the purposes of the legislature would be served.
That is the view taken by the Tribunals themselves in The Army & Navy Stores Ltd., Bombay vs Their Workmen(2), and Ford Motor Co. o] India Ltd. vs Their Workmen(a) and we are of opinion that they lay down the correct principle, and that there were no grounds for the Appellate Tribunal for not following them".
As against this view expressed by this Court, learned counsel for the respondent relied on the remarks made by this Court in (1) [1916].
L.R. 43 I.A., 91.
(2) 119511 , (3) , 149 a subsequent case Workmen of Balmer Lawrie and Co. vs Balmer Lawrie and Co. (1).
In that case, the Court was dealing with the question of alteration in wage structure and had to consider the effect of an earlier award.
The Court held: "When a wage structure is framed, all relevant factors are taken into account and normally it should remain in operation for a fairly long period; but it would be unreasonable to introduce considerations of res judicata as such, because for various reasons which constitute the special characteristics of industrial adjudication, the said technical considerations would be in admissible.
As the Labour Appellate Tribunal itself has observed, the principle of gradual advance towards the living wage which industrial adjudication can never ignore, itself constitutes such a special feature of industrial adjudication that it renders the application of the technical rule of res judicata singularly inappropriate.
If the paying capacity of the employer increases or the cost of living shows an upward trend, or there are other anomalies, mistakes or errors in the award fixing wage structure, Or there has.
been a rise in the wage structure in comparable industries in the region, industrial employees would be justified in making a claim for the re examination of the wage structure and if such a claim is referred for industrial adjudication, the Adjudicator would not normally be justified in rejecting it solely on the ground that enough time has not passed after the making of the award, or that material change in relevant circumstances had not been proved.
It is, of course, not possible to lay down any hard and fast rule in the matter.
The questio n as to revision must be examined on the merits in each individual case that is brought before an adjudicator for his adjudication." Further support was sought by learned counsel from the remarks made by this Court in Associated Cement Staff Union and Another vs
Associated Cement Company and.
Others(a).
The judgment in this case was given only about a month after the judgment in the case of Workmen of Balmer Lawrie & Co. (1) by the same Bench of this Court which held: "It is true that too frequent alterations of conditions of service by industrial adjudication have been generally deprecated by this Court for the reason that it is likely to disturb industrial peace and equilibrium.
At the same time, the Court has more than once pointed (1) ; (2) 150 out the importance of remembering the dynamic nature , of industrial relations.
That is why the Court has, specially in the more recent decisions, refused to apply to industrial adjudications principles of res judicata that are meant and suited for ordinary civil litigations.
Even where conditions of service have been changed only a few years before, industrial adjudication has allowed fresh changes if convinced of the necessity and justification of these by the existing conditions and circumstances.
Where, as in the present case, in a previous reference the tribunal has refused the demand for change.
, there is even less reason for saying that that refusal should have any such binding effect.
It is important to remember in this connection that working hours remained unchanged for many years in this concern and during these years, considerable changes have taken place in the country 's economic position and expectations.
With the growing realization of need for better distribution of national wealth has also come an understanding of the need for increase in production as an essential prerequisite of which greater efforts on the part of the labour force are necessary.
That itself is sufficient reason against accepting the argument against any change in working hours if found justified on relevant considerations that have been indicated above.
" These three decisions, which have been brought to our notice prima facie indicate that the Court has expressed conflicting views ' on the question of applying the principle underlying the rule of res judicata to proceedings for adjudication of industrial disputes by an Industrial Tribunal under the Industrial Disputes Act.
In the circumstances, I have felt some hesitation in applying this principle in the present case as urged on behalf of the Company consider that, in the present case, it would be much more appropriate to examine the scheme of the Act itself to find out the intention of the legislature and to arrive at a decision on thin basis on the question whether a modification on an application under section 10 of the Act should only be allowed on the basis of facts or circumstances appearing subsequent to the previous certification of the Standing Orders, or whether, in dealing with the application for modification, the Certifying Officer and the Appel late Authority can re examine the entire position even as it existed at the time of the previous orders and arrive at a differed decision.
The scheme of the Act was examined by this Court in Rohtak Hissar District Electricity Supply Co. Ltd. vs State of Uttar Pradesh and Others(1), where this, Court held: .
(1) ; ' "The Act was passed on the 23rd April, 1946, and the Standing Orders framed by the U.P. Government under section 15 of the Act were published on the 14th May, 1947.
The Central Act (the Industrial Disputes Act No. 14 of 1947 ) came into force on the I st April, 1947, whereas the U.P. Act (U.P. Industrial Disputes Act No. 28 of 1947) came into force on the 1st February, 1948.
It will thus be seen that the Act came into force before either the Central Act or the U.P. Act was passed.
The scheme of the Act originally was to require employers in industrial establishment to define with sufficient precision the conditions of employment under them and to make the said conditions known to the workmen employed by them.
The Legislature thought that, in many industrial establishments, the conditions of employment were not always uniform, and sometimes, were not even reduced to writing, and that led to considerable confusion which ultimately resulted in industrial disputes.
That is why the Legislature passed the Act making it compulsory for the establishments, to which the Act applied, to reduce to writing conditions of employment and get them certified as provided by the Act.
The matters in respect of which conditions of employment had to be certified were specified 'in the schedule appended to the Act.
This Schedule contains 11 matters in respect of which Standing orders had to be made.
In fact, the words "Standing orders" are defined by section 2(g) as meaning rules relating to matters set out in the Schedule.
The "Certifying officer" appointed under the Act is defined by section 2(c), whereas "Appellate Authority" is defined by section 2(a).
Originally, the jurisdiction of the Certifying officer and the Appellate Authority was very limited; they were called upon to consider whether the Standing orders submitted for certification conformed to the Model Standing orders or not.
Section 3(2) provides that these Standing orders shall be, as far as practicable, in conformity with such Model Standing orders.
Section 15, which deals with the powers of the appropriate Government to make rules, authorises, by cl.
(2)(b), the appropriate Government to set out Model Standing Orders for the purposes of this Act.
That is how the original jurisdiction of the certifying authorities was limited to.
examine the draft Standing Orders submitted for certification and cOmPare them with the Model.
Standing Orders.
152 In 1956, however, a radical change was made in the provisions of the Act.
Section 4, as amesded by Act 36 of 1956, has imposed upon the Certifying Officer or the Appellate Authority the duty to adjudicate upon the fairness or the reasonableness of the provisions of any Standing Orders.
In other words, after the amendment was made in 1956, the jurisdiction of the certifying authorities has become very much wider and the scope of the enquiry also has become correspondingly wider.
When draft Standing Orders are submitted for certification, the enquiry now has to be two fold; are the said Standing Orders in conformity with Model Standing Orders; and are they reasonable or fair ? In dealing with this latter question, the Certifying Officer and the Appellate Authority have been given powers of a Civil Court by section 11 (1 ).
The decision of the Certifying Officer is made appealable to the Appellate Authority under section 6 at the instance of either party.
Similatly, by an amendment made in 1956 in section 10(2), both the employer and the workmen are permitted to apply for the modification of the said Standing Orders after the expiration of 6 months from the date of their coming into operation.
It will thus be seen that when certification proceedings are held before the certifying authorities, the reasonableness or the fairness of the provisions contained in the draft Standing Orders falls to be examined.
" It is in the fight of this scheme of the Act explained by this Court that the decision has to be arrived at as to how, in what manner, and under what circumstances the Certifying Officer or the Appellate Authority should grant modifications when an application under section 10(2) of the Act is validly made after the expiry of the period of six months laid down in section 10 (1 ) of the Act.
The purpose of the Act, as it was originally passed in 1946, was merely to require employers in industrial establishments to define with sufficient precision the conditions of employment under them and to make the said conditions known to the workmen employed by them.
give effect to this purpose, section 3 of the Act gave the power exclusively to the employers to submit draft Standing Orders for certification.
The Certifying Officer had to certify the Standing Orders, if provision was made in them for every matter set out in the Schedule and the Standing Orders were otherwise in conformity with the provisions of the Act.
In addition, sub section
(2) of section 3 also laid down that the provision to be made was to.
be, as far as practicable, in conformity with Model Standing Orders prescribed by the appropriate State Government.
Thus, the Act, in its original form, was designed only 153 for the purpose of ensuring that conditions (A service, which the employer laid down, became known to the workmen and the liberty of the employer in prescribing the conditions of service was only limited to the extent that the Standing Orders had to be in conformity with the provisions of the Act and, as far as practicable, in conformity with Model Standing Orders.
The Certifying Officer or the Appellate Authority were debarred from adjudicating upon the fairness or the reasonableness of the provisions of the Standing Orders.
Then, as noticed in the case of Rohtak Hissar District Electricity Supply Co. Ltd.(1), the Legislature made a drastic change in the policy of the Act by amending section 4 and laying upon the Certifying Officer the duty of deciding whether the Standing Orders proposed by the employer were reasonable and fair, and also by amending section 10(2) so as to permit even a workman to apply for modification of the certified Standing Orders, while, in the original Act, the employer alone had the right to make such an application.
It is, however, to be noticed that the preamble of the Act was not altered, so that the purpose of the Act remained as before.
While the Act was in its unamended form, if the workmen had a grievance, they could not apply for modification of certified Standing Orders and, even at the time of initial certification, they could only object to a Standing Order on the ground that it was not in conformity with the provisions of the Act or Model Standing Orders.
After amendment, the workmen were given the right to object to the draft Standing Orders at the time of first certification on the ground that the Standing Orders were not fair and reasonable and, even subsequently, to apply for modification of the certified Standing Orders after expiry of the period of six months prescribed under section 10(1) of the Act.
These rights granted to the workmen and the powers conferred on the Certifying Officer and the Appellate Authority, however, still had to be exercised for the, purpose of giving effect to the object of the Act as it continued to remain in the preamble, which was not altered.
Before the amendment of the Act, if the workmen had any grievance on the ground of unfairness or unreasonableness of the Standing Orders proposed by the employer, their only remedy lay under the Industrial Dis putes Act.
By amendment in 1956, a limited remedy was pro vided for them in the Act itself by conferring on the, Certifying Officer the function of judging the reasonableness and fairness of the proposed Standing Orders.
These amendments cannot, however, affect the alternative remedy which the workmen had of seeking redress under the Industrial Disputes Act if they had grievance against any of the Standing Orders certified by the Certifying Officer [See Bangalore Woollen, Cotton and Silk Mills Company Ltd. vs Their Workmen and Another(2), and the (1) ; (2) 2 Sup.
CI/69 11 154 Buckingham and Carnatic Co. Ltd. vs Their Workmen(1).
It is, therefore, clear that, after the amendment in 1956, the workmen have now two alternative remedies for seeking alterations in the Standing Orders proposed or ,already certified.
They can object to the proposed Standing Orders at the time of first certification, or can ask for modification of the certified Standing Orders under section 10(2) on the limited ground of fairness or reasonableness.
But, for the same purpose, they also have the alternative remedy of seeking redress under the Industrial Disputes Act, in which case the scope of their demand would be much wider.
If the proceedings go for adjudication under the Industrial Disputes Act, the workmen can claim alterations of the Standing Orders not merely on the ground of fairness or reasonableness, but even on other grounds, such as further, liberalisation of the terms and conditions of service, even though the certified Standing Orders may be otherwise fair and reasonable.
The remedy provided by the Act has, therefore, a limited scope only.
In this background, the effect of section 6, which lays down that when the Appellate Authority gives its decision confirming the Standing Orders either in the form certified by the Certifying Officer or after amending the Standing Orders by making modifications, thereof or additions thereto, his decision shall be final, has further to be considered.
On the face of it, this provision means that, if the Appellate Authority confirms the Standing Orders at the time of first certification, that order is not to be subsequently questioned before any authority.
There is, of course, the provision in section 10(2) permitting either an employer or a workman to apply for modification of the Standing Orders after the expiry of six months from the date of certification.
It appears to me that, on the language of section 6, it must be held that this request for modification under section 10(2) can only be made on the basis of fresh facts or fresh circumstances arising subsequent to the passing of the order by the Appellate Authority under section 6 confirming the Standing Orders for the first time.
If, on receiving an application for modification under section 10(2) the Certifying Officer is held to be authorised to reconsider the reasonableness or fairness of a Standing Order already certified and confirmed under section 6 the finality envisaged under that section in respect of the decision of the Appellate AuthOrity will be nullified.
Cases may arise where, on first application for certification of the Standing Orders, an objection may be raised by the workmen and a modification sought on the ground that the proposed Standing Order is not fair or reasonable.
Such an objection may be dismissed both by the Certifying Officer and the Appellate Authority.
Six months after the certification, a workman may apply for the same modification of the same Standing Order without any fresh facts or circumstances.
If it be held that the power of the (1) Civil Appeal No. 674 of 1968 decided on 25 7 1968.
155 Certifying Officer on an application for modification is not limited at all and can be exercised even on the material which was originally before the Certifying Officer and the Appellate Authority, the Certifying Officer may, on the same material, come to a conclusion different from the conclusion arrived at by the Appellate Authority at the first stage under section 6 of the Act.
In that case, the Certifying Officer may allow the modification which was previously rejected by the Appellate Authority.
The wide interpretation, urged by learned counsel for the workmen in this appeal that the power of a Certifying Officer on an application for modification is not limited at all, can thus result in orders being made which completely negative the finality of the decision given by an Appellate Authority under section 6 at an earlier stage.
In fact, if tins interpretation is accepted and it is held that an order of modification can be made on the identical material which was available to the Appellate Authority at the time of its earlier order, it would mean that merely because a period of six months has elapsed,, a Certifying Officer would be competent to re appraise the same facts and circumstances, take a different view and set aside the order passed by his superior authority and, thus, in effect, sit in judgment over an order made by a superior authority.
of course, a Certifying Officer, being junior to the Appellate Authority, may hesitate to do so; but a successor Appellate Authority may very well hold views different from his predecessor and may come to a decision on identical material that a Standing Order held to be fair and reasonable by his predecessor at the stage of appeal under section 6 was not fair and reasonable; and that a modification should be allowed on the ground of being fair and reasonable, even though that modification was disallowed by his predecessor.
It is also to be noted that the right to apply for modification is not confined to workmen alone, but that right is granted to the employers also.
There can, therefore, be reverse ' cases where the draft Standing Order submitted by an employer may be modified by the Appellate Authority under section 6 and, six months later, the employer may again apply for modification so as to result in restoration of his original draft in the hope that the successor Appellate Authority would hold the opinion that the original draft Standing Order proposed by the employer was fair and reasonable and that the modification made by his predecessor under section 6 was not justified.
Considering these circumstances, I am of the view that, when an application under section 10(2) of the Act is made, the Certifying Officer can modify Standing Orders already certified, only if the request is not made on the basis of the same material which existed at the earlier stage when the Standing Orders were certified.
I am unable to accept an interpretation which will completely do away with the finality of orders made under section 6 of the Act by an Appellate Authority.
156 This interpretation, of course, does not affect the right of the workmen to seek an amendment of the Standing Orders, even if certified as reasonable and fair by the Appellate Authority under section 6 by appropriate proceedings .under the Industrial Disputes Act.
In fact, it appears to me that the power of a Tribunal dealing with an industrial dispute under that Act relating to a Standing Order will, of course, be wide enough to permit the Tribunal to direct alteration of a Standing Order held to be reasonable and fair by the Appellate Authority under section 6 of the Act, in case a dispute about it is referred to the Tribunal; and that is the only remedy available if either the workman or the employer desires to have modification without any fresh grounds, material or circumstances.
The validity of the order of the Appellate Authority in the present appeal has to be judged on this basis.
I have already mentioned earlier the various Standing Orders in respect of which modifications allowed by the Appellate Authority were sought to be challenged in this appeal.
The objections in respect of some of these modifications, which were originally challenged, were not pressed by counsel during the hearing of the appeal and, consequently, those modifications need not be interfered with.
At the stage of final hearing, learned counsel only pressed for setting aside four modifications mentioned by the Chief Labour Commissioner in his.
appellate order as items Nos. 1, 3, 5 and 6 relating to modifications .of Standing.
Orders 9(a), 12(A) and 11(vn).
It may be mentioned that items 5 and 6 are both modifications in Standing Order 11 (vii).
In each of these cases, the order passed by the Chief Labour Commissioner now impugned shows that he did not rely on any fresh facts, material or circumstances which were not available at the earlier stage when the Standing Orders were first certified or first modified.
In effect, therefore, the present order amounts to passing orders, different from earlier orders passed by the Appellate Authority, on a reconsideration of the same material which was available to both the Authorities.
In fact, the modification at item No. 1 in Standing Order 9(a) had been specifically disallowed in appeal by the Chief Labour Commissioner in his order dated 12th February, 1963, when he first heard the appeal under section 6 and confirmed the certification of the original Standing Orders.
Thus, in respect of item No. 1, what the present Chief Labour CommisSioner has done is to permit the modification because he considered it reasonable and fair, even though, on the same material, his predecessor had disallowed this very modification on the basis that, in his opinion, the original.
draft Standing Order was fair and reasonable.
On the principle enunciated above, it is clear that the order of the Chief Labour Commissioner, allowing all these four modifications, which is not based on any fresh facts, material or circumstances, is liable to be set aside.
As a result, I would partly allow the appeal and set aside the order of the Chief Labour Commissioner (Central), permitting modifications mentioned by him in his Order at item Nos. 1, 3, 5 and 6 relating to Standing Orders 9(a), 12(A) and Il(vii).
In the circumstances of this case, I would direct parties to bear their own costs of this appeal.
V.P.S. Appeal allowed in part.
| IN-Abs | Six months after the, appelIant 's Standing Orders as modified had come into operation, the respondent applied for further modification of the Standing Orders, under section 10(2) of the , 'as amended in 1956.
The certifying officer allowed some of the modifications and on appeal by the respondent, the Appellate Authority allowed some more modifications.
In appeal, to this Court under article 136 of the Constitution, the appellant objected to four modifications, namely: (i) that the appellant should give reasons and communicate them to the workmen even in cases of discharge simpliciter; (ii) that appeals against penalties imposed should be disposed of within 60 days; (iii) that when a workman is removed on the ground of inefficiency due to physical unfitness, the appellant should offer to such workman alternative; employment on reasonable emoluments; and (iv) that a second show cause notice should be served on the workman at the stage of taking a decision on the suitable punishment.
The grounds urged were: (1 )The authorities under the Act can certify modifications of existing Standing Orders under section 10(2) only when a change of circumstances is established, because, section 6 of the Act confers finality on certified Standing Orders or modifications thereof; (2).
On principles analogous to res Judicata, the authorities had no jurisdiction to grant the modifications in the present case; and (3) the modifications were not reasonable or fair.
HELD: (1) [Per Shelat and Vaidialingam, JJ.]: A change of circumstances is not a condition precedent to the maintainability of an application for modification under section" 10(2).
Under the Act before its 'amendment in 1956, a workman could not object that the Standing Orders were not reasonable or fair.
His only remedy was to raise an industrial dispute, but that remedy was unsatisfactory, since the dispute had to be sponsored by a union or at least a substantial number of workmen and even then, the process was a protracted one.
Parliament knew that the workmen had the right to raise an industrial dispute and also the defects in that remedy and so amended sections 4 and 10 of the Act by Act 36 of 1956.
The amendment conferred on individual workman the right to object to draft Standing Orders submitted by an employer on the ground that they are either not fair or not reasonable, and also gave the right to apply for their modification.
Under section 6, a person aggrieved by the order of the certifying officer certifying or modifying Standing Orders, may appeal to the Appellate Authority whose decision shall be final.
But the finality only means that there is no further appeal or revision against the order and that the order cannot be challenged in 'a civil court.
It can, however.
be modified under section 10(2).
The only limitations on the power are, (a) reason. 132 ableness and fairness of the modification and (b) except on agreement between employer and the workmen six months must have elapsed from the date on which the Standing Orders or the last modifications thereof, came into operation, the object being that Standing Orders or the modifications should be allowed to work for some time to see if they are satisfactory.
In an application for modification the issue before the authority would be not as to reasonableness or fairness of the existing Standing Orders.
but whether the modification 'applied for is fair and reasonable.
Such an application is an independent application and merely because it could be made on the ground that the existing Standing Orders are discovered to be unsatisfactory even without any change in circumstances, it would not amount to a review of an earlier order.
Further, there will not be a multiplicity of applications because the workmen individually have the right to apply for modifications.
For, unless there is some justification for the modification, the authorities under the Act would reject the applications.
[139 G H; 140 C D; 141 A C; 142 A C; G H; 143 A C] Bangalore Woollen Cotton & Silk Co. Ltd. vs The Workmen [1968] l L.L.J. 555, Buckingham and Carnatic Co. Ltd. v Workmen C.A. No. 674 of 1968 dt.
25th July 1968 and Hindustan Brown Boveri Ltd. vs The Workmen C.A. No. 1631 of 1966 dt.
31st July 1967, referred to.
[Per Bhargava, J. dissenting]: When an application under section 10(2) is made, the certifying officer can modify Standing Orders already certified, only if the request is not made on the basis of the same material which existed at the earlier stage when they were certified.
[155 G H] Before the amendment in 1956 if the workmen had any grievance on the ground of unfairness or unreasonableness of the Standing Orders, their only remedy lay under the Industrial Disputes Act.
By amendment in 1956, a limited remedy was provided for them in the Act itself by conferring on the certifying officer the power of judging the reasonableness and fairness of the Standing Orders and of modifying them under section 10(2).
Therefore, after 1956 the workmen have two alternative remedies for seeking alteration in the Standing Orders proposed or certified.
Under section 10(2) a request for modification can only be made on the basis of fresh facts or fresh circumstances arising subsequent to the passing of the order by the Appellate Authority under section 6 on the limited ground of reasonableness and fairness.
The Industrial Tribunal, however.
can direct the alteration of a Standing Order held to be reasonable and fair, without any fresh grounds, material, or change in circumstances if an industrial dispute, in 'relation to it is raised, and this is the only remedy available if a modification is desired without a change of circumstances.
If it is held that even the certifying officer can reconsider the reasonableness or fairness of a Standing Order already certified and confirmed under section 6 the finality envisaged by the section would be nullified.
After a period of six months had elapsed, the certifying officer could set aside an order passed earlier by his superior, or a succeeding Appellate Authority may interfere with his predecessor 's order, merely because the certifying officer or Appellate Authority considers the modification to be reasonable and fair even though there was no change in the circumstances.
[153 F G; 154 A B, D F; 155 C F; 156 A C] (2) [Per Shelat and VaidiaIingam, JJ.]: It is doubtful whether principles analogous to res judicata can property be applied to industrial adjudication.
[143 H] Burn & Co. vs Their Employees, ; , Guest, Keen, Williams (P) Ltd. vs Sterling, ; and Workmen of Balmer Lawrie & Co. vs Balmer Lawrie & Co. , referred to, 133 [Per Bhargava, J.]: This Court bas expressed conflicting views on the question of 'applying the principle underlying the rule of res judicata to industrial adjudication.
[150 E] Burn & Co. 's case; , , Balmer Lawrie Co. 's case; , and Associated Cement Staff Union vs Associated Cement Co. referred to.
(3) [Per Shelat and Vaidialingam, JJ.]: So far as modifications (ii) and (iii) are concerned, in an appeal under article 136, this Court would not interfere with the conclusion of the authorities under the Act since no principle is involved.
[144 F] As regards modification (iv), the authorities under the Act held that it was fair and reasonable, and there is no justification for this Court to interfere with the decision.
In Industrial matters, at present, the doctrine of hire and fire is completely abrogated, because, security of employment is one of the necessities for industrial peace and harmony.
If reasons for discharging an employee are furnished tO him he not only has the satisfaction of knowing why his services are dispensed with, but in appropriate cases he can challenge it, as even when the services of an employee are terminated by an order of discharge simpliciter, its legality and propriety can be challenged before an industrial tribunal.
[145 A E] As regards modification (iv) the requirement of a second show cause notice is peculiar to cases coming under article 311 of the Constitution and neither the ordinary law nor the industrial law requires an employer to give such a notice.
Even in article 311, the requirement is now removed and so, it is not necessary to import it into industrial matters.
[145 E F] [Per Bhargava J. dissenting]: The order must be set aside because the four modifications were not based on any fresh facts, material or change of circumstances.
In fact, modification (i) was, specifically disallowed by the Appellate Authority at an earlier stage and merely because his successor considered it reasonable and fair it was permitted without any change in the circumstances.
[156 E F, H]
|
Appeal No. 48 of 1954.
Appeal from the Judgment and Order dated the 1 1 th January, 1954, of the High Court of Judicature of Mysore in Civil Petition No. 29 of 1953, quashing the Order of the Election Tribunal, Shimoga, dated the 15th January, 1953, in Shimoga No. I of 1952 53.
K. section Krishnaswami Iyengar (K. section Venkataranga Iyengar and M. section K. Iyengar, with him) for the appellant.
Dr. Bakshi Tek Chand (R. Ganapathy Iyer and M. section K. Sastri, with him) for respondent No. 1.
C. K. Daphtary, Solicitor General for India (Jindra Lal, Porus A. Mehta and P. O. Gokhale, with him) for respondent No. 3. 1954.
May 5.
The Judgment of the Court was delivered by MUKERGEA J.
This appeal is directed against a judgment of a Division Bench of the Mysore High Court, dated the 11th January, 1954, by which the learned Judges granted an application, presented by the respondent No. I under article 226 of the Constitution, and directed a writ of certiorari to issue quashing the,, proceedings and order of the Election Tribunal, Shimoga, dated the 15th January, 1953, in Shimoga Election Case No. 1 of 1952 53.
The facts material for purposes of this appeal may be briefly narrated as follows: The appellant and respondent No. 1, as well as eight other persons, who figured as respondents Nos. 2 to 9 in the proceeding before the High Court, were duly nominated candidates for election to the Mysore Legislative Assembly from Tarikere Constituency at the general election of that State held in January , 1952.
Five of these nominated candidates withdrew their candidature within the prescribed period and the actual contest at the election was between the remaining five candidates including the appellant and respondept No. 1.
The polling took place on the 4th January, 1952, and the votes were counted on the 26th of January following.
As a result, of the counting the respondent No. 1 was found to have secured 8,093 votes which was the largest in number and the appellant followed him closely having obtained 8,059 votes.
The remaining three candidates, who were respondents Nos. 2, 3 and 4 before the High Court, got respectively 6,239, 1,644 and 1,142 votes.
The Returning Officer declared the respondent No. 1 to be the successful candidate and this declaration was published in the Mysore Gazette on the 11th February, 1952.
The respondent No. 1. lodged his return of election expenses with the necessary declaration sometime after that and notice of this return was published on the 31st March, 1952.
The appellant thereafter filed a petition before the Election Commission, challenging the validity of the election, inter alia, on the grounds that there was violation of the election rules in regard, to certain matters and that the respondent No. I by himself or through his agents were guilty of a number of major corrupt practices which materially affected the result of the election.
The petitioner prayed for a declaration that the election of respondent No. I was void and that he himself was duly elected.
This petition, which bears date, 10th of April, 1952, was sent by registered post to the Election Commission and was actually received by the latter on the 14th of April,; following.
The Election Commission referred the matter for determination by the Election Tribunal at 253 Shimoga and it came up for hearing before it on the 25th of October, 1952.
On that date the appellant filed an application for amendment of the petition, heading it as one under Order VI, rule 17, of the Civil Procedure Code, and the only amendment sought for was a modification of the prayer clause by adding a prayer for declaring the entire election to be void.
It was stated at the same time that in case this relief could not be granted, the petitioner would, in the alternative pray for the relief originally claimed by him, namely, that the election of respondent No. I should be declared to be void and the petitioner himself be held to be the elected candidate at the election.
Despite the objection of respondent No. 1, the Tribunal granted this prayer for amendment.
The hearing of the case then proceeded and on the averments made by the respective parties, as many as 27 issues were framed.
Of them, issues Nos. 1, 5, 6, 11, 12 and 14 are material for our present purpose and they stand as follows : (1) Has there been infringement of the rules relating to the time of commencement of poll by reason of the fact that the polling at Booth No. I for Ajjampur fixed at Ajjampur to take place at 8 A.m did not really commence until about half an hour later as alleged in paragraph 4 of the petition ? (5) Did the 1st respondent hire and procure a motor bus which was a service bus running between Tarikere and Hiriyur, belonging to one Ahmed Jan, as alleged in paragraph I of the particulars and thereby commit the corrupt practice referred to in it ? (6) Did the 1st respondent take the assistance of a number of Government servants to further the prospects of his election as alleged in paragraph 2 of the list of particulars ? (11) Is the return of election expenses lodged by the 1st respondent false in material particulars and has the 1st respondent omitted to include in the return of election expenses, expenses incurred by him in connection with the election which would easily exceed the sanctioned limit of, Rs. 5,000 as per particulars stated in paragraph 7 of the list of particulars 254 (12) Has the election of the 1st respondent been procured and induced by the said corrupt practices with the result that the election has been materially affected ? (14) Would the petitioner have obtained a majority of votes had it not been for the aforesaid corrupt and illegal practices on the part of the first respondent? The Tribunal by a majority of 2 to 1 found all these issues in favour of the petitioner and against the respondent No. 1 and on the strength of their findings on these issues, declared the election of respondent No. 1 to be void and the petitioner to have been duly elected.
The judgment of the Tribunal is dated the 15th of January, 1953.
On the 5th February, 1953, the respondent No. I presented an application before the Mysore High Court under article 226 of the Constitution praying for a writ or direction in the nature of certiorari calling for the records of the proceeding of the Election Tribunal in Election Petition No. I of 195253 and quashing the same including the order pro nounced by the Tribunal as mentioned above.
This application was heard by a Division Bench consisting of Medappa C.J. and Balakrishnaiya J. and by their judgment dated the 11th January, 1954, the learned Judges allowed the petition of respondent No. 1 and directed the issue of a writ of certiorari as praved for.
It is against this judgment that the appellant has come up to this Court on the strength of a certificate granted by the High Court under articles 132(1) and 133(1) (c) of the Constitution.
The substantial contention raised by Mr. Ayyangar, who appeared in support of the appeal, is, that the learned Judges of the High Court misdirected themselves both on facts and law, in granting certiorari in the present case to quash the determination of the Election Tribunal.
It is urged, that the Tribunal in deciding the matter in the way it did did not act either without jurisdiction or in excess of its authority, nor was there any error apparent on the face of the proceedings which could justify the issuing of a writ to quash the same.
It is argued by the learned counsel 255 that, what the High Court has chosen to describe as errors of jurisdiction are really not matters which affect the competency of the Tribunal to enter or adjudicate upon the, matter in controversy between the parties and the reasons assigned by the learned Judges in support of their decision proceed upon a misreading and misconception of the :findings of fact which the Tribunal arrived at.
Two points really arise for our consideration upon the contentions raised in this appeal.
The first is, on what grounds could the High Court, in exercise of its powers under article 226 of the Constitution, grant a writ of certiorari to quash the adjudication of the Election Tribunal ?
The second is, whether such grounds did actually exist in the present case and are the High Court 's findings on that point proper findings which should not be disturbed in appeal ?
The principles upon which the superior Courts in England interfere by issuing writs of certiorari are fairly well known and they have generally formed the basis of decisions in our Indian Courts.
It is true that there is lack of uniformity even in the pronouncements of English Judges, with regard to the grounds upon which a writ, or, as it is now said, an order of certiorari, could issue, but such differences of opinion are unavoidable in judge made law which has developed through a long course of years.
As is well known, the issue of the prerogative writs, within which certiorari is included, had their origin in England in the King 's prerogative power of superintendence over the due observance of law by his officials and Tribunals.
The writ of certiorari is so named because in its original form it required that the King should be " certified of " the proceedings to be investigated and the object was to secure by the authority of a superior Court, that the jurisdiction of the inferior Tribunal should be properly exercised (1).
These principles were transplanted to other parts of the King 's dominions.
In India, during the British days ' the three chartered High Courts of Calcutta, Bombay and Madras were alone competent to issue (1) Vide Ryots of Garbandho v, Zemindar of Parlkime 70 I,A. 129 at page 140 256 writs and that too within specified limits and the power was not exercisable by the other High Courts at all.
" In that situation " as this Court observed in Election Commission, India vs Saka Venkata Subba Rao (1), " the makers of the Constitution having decided to provide for certain basic safeguards for the people in the new set up, which they called fundamental rights, evidently thought it necessary to provide also a quick and inexpensive remedy for the enforcement of such rights and, finding that the prerogative writs, which the Courts in England had developed and used whenever urgent necessity demanded immediate and decisive interposition, were peculiarly suited for the purpose, they conferred, in the States ' sphere, new and wide powers on the High Courts of issuing directions, orders, or writs primarily for the enforcement of fundamental rights, the power to issue such directions " for any other purpose " being also included with a view apparently to place all the High Courts in this country in somewhat the same position as the Court of King 's Bench in England.
" The language used in articles 32 and 226 of our Constitution is very wide and the powers of the Supreme Court as well as of all the High Courts in India extend to issuing of orders, writs or directions including writs in the nature of habeas corpus, mandamus, quo warranto, prohibition and certiorari as may be 'considered necessary for enforcement of the fundamental rights and in the case of the High Courts, for other purposes as well.
In view of the express provisions in our Constitution we need not now look back to the early history or the procedural technicalities of these writs in English law, nor feel oppressed by any difference or change of opinion expressed in particular cases by English Judges.
We can make an order or issue a writ in the nature of certiorari in all appropriate cases and in appropriate manner, so long as we keep to the broad and fundamental principles that regulate the exercise of jurisdiction in the matter of granting such writs in English law.
One of the fundamental principles in regard to the issuing of a writ of certiorari is, that the writ can be (I at 1150, 257 of judicial acts.
The expression " judicial acts " includes the exercise of quasi judicial functions by administrative bodies or other authorities or persons obliged to exercise such functions and is used in contrast with what are purely ministerial acts.
Atkin L. J. thus summed up the law on this point in Rex vs Electricity Commissioners (1) : " Whenever any body or persons having legal authority to determine questions affecting the rights of subjects and having the duty to act judicially act in excess of their legal authority they are subject to the controlling Jurisdiction of the King 's Bench Division exercised in these writs."
The second essential feature of a writ of certiorari is that the control which is exercised through it over judicial or quasi judicial Tribunals or bodies is not in an appellate but supervisory capacity.
In granting a writ of certiorari the superior Court does not exercise the powers of an appellate Tribunal.
It does not review or reweigh the evidence upon which the determination of the inferior Tribunal purports to be based.
It demolishes the order which it considers to be without jurisdiction or palpably erroneous but does not substitute its own views for those of the inferior Tribunal.
The offending order or proceeding so to say is put out of the way as one which should not be used to the detriment of any person(2).
The supervision of the superior Court exercised through writs of certiorari goes on two points, as has been expressed by Lord Sumner in King vs Nat.Bell Liquors Limited (3).
One is the area of inferior jurisdiction and the qualifications and conditions of its exercise ; the other is the observance of law in the course of its exercise.
These two heads normally cover all the grounds on which a writ of certiorari could be demanded.
In fact there is little difficulty in the enunciation of the principles; the difficulty really arises in applying the principles to the facts of a particular case.
(I) (1924] I K.B. 17I at 205.
(2) Vide Per Lord Cairns in Walshall 's Overseers vs London and North Western Railway Co., 4 A.C. 30, 39.
(3) [1922) 2 A.C. 128, 156, 33 258
Certiorari may lie and is generally granted when a Court has acted without or in excess of its jurisdiction.
The want of jurisdiction may arise from the nature of the subject matter of the proceeding or from the absence of some preliminary proceeding or the Court itself may not be legally constituted or suffer from certain disability by reason of extraneous circumstances(1).
When the jurisdiction of the Court depends upon the existence of some collateral fact, it is well settled that the Court cannot by a wrong decision of the fact give it jurisdiction which it would not otherwise possess (2).
A Tribunal may be competent to enter upon an enquiry but in making the enquiry it may act in flagrant disregard of the rules of procedure or where no particular procedure is prescribed, it may violate the principles of natural justice.
A writ of certiorari may be available in such cases.
An error in the decision or determination itself may also be amenable to a writ of certiorari but it must be amanifest error apparent on the face of the proceedings, e.g., when it is based on clear ignorance or disregard of the provisions of law.
In other words, it is a patent error which can be corrected by certiorari but not a mere wrong decision.
The essential features of the remedy by way of certiorari have been stated with remarkable brevity and clearness by Morris L. J. in the recent case of Rex vs Northumberland Compensation Appellate Tribunal(3).
The Lord Justice says: It is plain that certiorari will not issue as the cloak of an appeal in disguise.
It does not lie in order to bring up an order or decision for re hearing of the issue raised in the proceedings.
It exists to correct error of law when revealed on the, face of an order or decision or irregularity or absence of or excess of jurisdiction when shown."
In dealing with the powers of the High Court under article 226 of the Constitution this Court has expressed itself in almost similar terms(1) and said (I) Vide Halsbury, 2nd edition, Vol.IX, page 88o (2) Vide Banbury vs Fuller, 9 Exch.III ; R. vs Income Tax Special Purposes Commissioners, (3) [19521 1 K.B. 338 at 357.(4) Vide Veerappa Pillai v, Ramon & Raman Ltd., [1952] S.C.R. at 594.
"Such writs as are referred to in article 226 are obviously intended to enable the High Court to issue them in grave cases where the subordinate Tribunals or bodies or officers act wholly without jurisdiction, or in excess of it, or in violation of the principles of natural justice, or refuse to exercise a jurisdiction ,vested in them, or there is an error apparent on the face of the, record, and such act, omission, error or excess has resulted in manifest injustice.
However extensive the jurisdiction may be, it seems to us that it is not so wide or large as to enable the High Court to convert itself into a Court of appeal and examine for itself the correctness of the decision impugned and decide what is the proper view to be taken or the order to be made."
These passages indicate with sufficient fullness the general principles that govern the exercise of jurisdiction in the matter of granting writs of certiorari under article 226 of the Constitution.
We will now proceed to examine the judgment of the High Court and see whether the learned Judges were right in holding that sufficient and proper grounds existed for the issue of certiorari in the present case.
The grounds upon which the High Court has granted the writ have been placed in the judgment itself under three heads.
The first head point; out in what matters the Election Tribunal acted without jurisdiction.
It is said, in this connection, that the Tribunal had no jurisdiction to extend the period of limitation for the presentation of the election petition and it had no authority also to allow the petitioner 's prayer for amendment and to hear and dispose of the case on the basis of the amended petition.
The second head relaters to acts in excess of jurisdiction.
The Tribunal, it is said ' acted in excess of jurisdiction in so far as it went into and decided questions not definitely pleaded and put in issue, and not only did it set aside the election of respondent No. 1 but declared the petitioner to have been duly elected, although there was no definite finding and no proper materials for arriving at 260 a finding, that the petitioner could secure more votes than respondent No. 1 but for the corrupt practices of the latter.
The third head purports to deal with errors apparent on the face of the record.
These apparent errors, according to the High Court,, vitiated three of the material findings upon which the Tribunal based its decision.
These findings relate to the commencement of polling at one of the polling booths much later than the scheduled time, the respondent No. 1 's obtaining the services of a Government servant to further his prospects of election and also to his lodging a false return of expenses.
We will take up these points for consideration one after another.
As regards absence of jurisdiction the High Court is of opinion that the Tribunal acted without jurisdiction, first in extending the period of limitation in presentation of the election petition and secondly in allowing the petitioner 's prayer for amendment and dealing with the case on the basis of the amended petition.
The view taken by the High Court seems to be that under the Representation of the People Act (hereinafter called "the Act"), no power is given to the Election Tribunal to condone the delay, if an election petition is presented after the period prescribed by the rules, nor is it competent to allow an amendment of the petition after it is presented, except in the matter of supplying further and better particulars of the illegal and corrupt practices set out in the list annexed to the petition, as contemplated by section 83(3) of the Act.
Assuming, though not admitting, that the propositions of law enunciated by the learned Judges are correct, we do not think that they at all arise for consideration on the actual facts of the present case.
As regards the first matter, the election petition, as stated above, was despatched bythe petitioner by registered post to the Election Commission on the II th of April, 1952, and it reached the Commission on the 14th of April following.
We may take it therefore that 14th of April was the date when the election petition 261 could be deemed to have been presented to the Election Commission under section 81(2)(b) of the Act.
Under rule 119 of the Election Rules framed under the Act, an election petition against a returned candidate is to be presented at any time after the publication of the name of such candidate under section 67 of the Act, but not later than 14 days from the date of publication of the notice in the official gazette under rule 113, that the return of election expenses of such candidate and the declaration made in respect thereof have been lodged with the Returning Officer.
It is not disputed that this notice of the return of election expenses was published in the Mysore Gazette on the 31st of March, 1952, and the petition therefore was just in time as it was presented within and not later than 14 days from that date.
The High Court seems to think that in computing the period of 14 days the date of publication is to be included.
This seems to us to be an unwarrantable view to take which is opposed to the ordinary canons of construction.
Dr. Tek Chand appearing for the respondent No. 1 plainly confessed his inability to support this view and we must hold therefore that there is no question of the Tribunal 's entertaining the election petition after the prescribed period in the present case.
Coming now to the question of amendment, the High Court, after an elaborate discussion of the various provisions of the Act, came to the conclusion that the Election Tribunal which is a special Court endowed with special jurisdiction has no general power of allowing amendment of the pleadings, and that the express provision of section 83(3) of the Act, which empowers the Tribunal to allow amendments with respect to certain specified matters, impliedly excludes the power of allowing general amendment as is contemplated by Order VI, rule 17, of the Civil Procedure Code.
Here again the discussion embarked upon by the High Court seems to us to be unnecessary and uncalled for.
The only amendment applied for by the petitioner was a modification in the prayer clause by insertion of an alternative prayer to the original prayer in the petition.
No change whatsoever was sought to 262 be introduced in the actual averments in the petition and the original prayer which was kept intact was repeated in the application for amendment.
The alternative prayer introduced by the amendment was not eventually allowed by the Tribunal which granted the prayer of the petitioner as it originally stood.
In these circumstances the mere fact that the Tribunal granted the petitioner 's application for amendment becomes altogether immaterial and has absolutely no bearing on the actual decision in the case.
We are unable to hold therefore that the Tribunal acted without jurisdiction in respect to either of these two matters.
The High Court has held that the Tribunal acted in excess of its jurisdiction in entering into certain questions which are not covered by the pleadings of the parties and not specifically put in issue.
The other act in excess of its authority committed by the Tribunal, according to the High Court, is that it declared the petitioner to be a duly elected candidate, on a mere speculation although it did not find and had no materials to find that the petitioner could secure more votes than the respondent No. 1.
On the first point the learned Judges have referred only to the allegation of corrupt practice made by the appellant, regarding the hiring and procuring by the respondent No. 1 of a motor bus belonging to Ahmed Jan for transporting his voters to the polling booths.
The issue framed on this point is issue No. 5 which is worded as follows: "Did the first respondent hire and procure a motor bus which was a service bus running between Tarikere and Hiriyur, belonging to one Ahmed Jan, as alleged in paragraph 1 of the list of particulars and thereby commit the corrupt practice referred to in it?" The Tribunal found that the hiring of the bus by respondent No. 1 was not proved, but it was proved that the first respondent did procure the service bus of Ahmed Jan, who was acting as his agent, for conveying his voters.
The Tribunal further found that even if Ahmed Jan was not an agent of the first respondent, as he was actually carrying the voters of the latter 263 from Gowrapur to Sollapur in a bus, which bore the first respondent 's election symbol, with his knowledge and connivance, the first respondent must be held guilty of the corrupt practice in question.
The High Court says that as it was nowhere alleged in the petition that Ahmed Jan was an agent of respondent No. I or that he was carrving the voters with his connivance, the Tribunal must be held to have acted 'in excess of its jurisdiction in going into matters which were not definitely pleaded.
We do not think that this view of the High Court can be supported.
In paragraph 8 of the petition the appellant definitely stated that the first respondent by himself and through his agent committed major corrupt practices, one of which was the hiring or procuring of Ahmed Jan 's motor bus.
The Tribunal found, on a consideration of the evidence adduced in the case, that the motor bus was procured by the first respondent and his conduct in this respect, as disclosed by the evidence, showed that his voters were being carried by Ahmed Jan with his knowledge and connivance.
It may be pointed out that in paragraph 9 of the petition the petitioner clearly stated that the corrupt practices were committed by respondent No. 1, or his agents, or by several persons with his knowledge and connivance.
The finding of the Tribunal arrived at on this point is a finding of fact based on evidence adduced by the parties and it is not in any way outside the pleadings or inconsistent therewith.
The other ground put forward by the High Court that the Tribunal exceeded its jurisdiction in declaring the appellant to be the duly elected candidate, although it had no materials to come to the conclusion that he could have secured more votes than respondent No. 1 but for the corrupt practices committed by the latter, seems to us to be without substance.
It appears that the learned Judges did not properly advert to the findings arrived at on this point by the Election Tribunal.
The petitioner, it may be noted, got only 34 votes less than the respondent No. 1.
The Tribunal has found that the bus of Ahmed Jan, which was procured by respondent No. 1, did carry to the polling booths about 60 voters in two trips and in the, circumstances of the case it could 264 be legitimately presumed that the majority of them did vote for respondent No. 1.
If the votes of at least 40 or 50 of these persons be left out of account as being procured by corrupt practice of the first respondent, the latter 's majority by 34 votes would be completely wiped out and the petitioner would gain an undisputed majority.
In paragraph 33 of its judgment the Tribunalstates as follows: "Hence on the 14th issue we hold that the petitioner would have obtained a majority of votes had it not been for the aforesaid corrupt practices on the part of the first respondent." Thus the finding is there and there is evidence in support of it.
Whether it is right or wrong is another matter and it may be that the view taken by the dissenting member of the Tribunal was the more proper; but it cannot be said that the Tribunal exceeded its jurisdiction in dealing with this matter.
We now come to what the High Court has described as errors apparent on the face of the record.
These errors, according to the High Court, appear in respect of three of the findings arrived at by the Tribunal.
The first of these findings relates to the time when the polling at Booth No. I at Ajjampur commenced on the date of election.
The Tribunal has held that the time fixed by notification was 8 A.M. in the morning but the polling did not commence till 25 minutes after that and the result was that a number of voters went away.
It is said that some of these voters would in all probability have voted for the appellant and as there was a difference of only 34 votes between him and the respondent No. 1 the results of the election have been materially affected by this irregularity or violation of the election rules.
There was evidence undoubtedly to show that some of the voters went away as the polling did not commence at the scheduled time; but the exact number of these persons is not known and there could not be any positive evidence to show as to how many of them would have voted for the appellant.
If the Tribunal had on the basis of these facts alone declared the appellant to be the duly elected candidate holding 265 that he could have secured more votes than respondent No. 1, obviously this would have been an error apparent on the face of the record, as such conclusion would rest merely on a surmise and nothing else.
The Tribunal however discussed this matter only in connection with the question as to whether the violation of any statutory rule or order in the holding of election did materially affect the result of the election which would entitle the Tribunal to declare the election of the returned candidate to be void under section 100(2) (c) of the Act.
This, the Tribunal *as competent to do under the provisions of the Act and in doing so it could take into consideration the circumstances And probabilities of the case.
But as we have stated already, the Tribunal declared the appellant to be duly elected upon the specific finding that, but for the corrupt ' practice of respondent No. I in the matter of procuring the service bus of Ahmed Jan, the appellant would have got majority of the votes.
We cannot say that this is an error apparent on the face of the record which would entitle the High Court to interfere by writ of certiorari.
As regards the other two findings, one relates to the receiving of assistance from Paramessh warappa, who is a Patel, by respondent No. 1, in furtherance of his prospects of election.
The High Court does not dispute the facts alleged by the appellant that Paramesshwarappa accompanied the first respondent and actually canvassed at several places and that he openly canvassed at one polling booth on the polling day.
The ]earned Judges say that even if these facts are believed, they only establish that Paramessh warappa canvassed for the petitioner but that would not amount to respondent No. 1 's taking assistance from him.
This does not seem to us to be a proper view to take.
There was allegation by the appellant of the respondent No. 1 's taking assistance from a Government servant within the meaning of section 123(8) of the Act.
In proof of the allegation evidence was given of the facts mentioned above.
If from these facts, which were found to be true, the Tribunal drew the conclusion that there )lad been an assistance taken from a Government 266 servant which would come within the purview of section 123(8) of the Act, it is impossible to say that this is an error apparent on the face of the record.
The remaining finding relates to the allegation of the petitioner that the respondent No. 1 in his return of election expenses omitted to include several items and if they had been taken into account the election expenses would have exceeded the sanctioned limit.
The Tribunal has held that the respondent No. 1 omitted to include, in his return of expenses, the petrol charges, the hiring charges in respect of some cars and vans hired by him and also the dinner expenses incurred in the hotels.
The High Court has observed that as regards the first item the finding of the Tribunal is based on no evidence and rests on mere speculation.
We do not think that we can accept this view as correct.
The first respondent stated that he had used two cars which were his own and incurred petrol expenses to the extent of Rs. 1,083 3 0.
The Tribunal has found in paragraph 29 of its order on the basis of both documentary and oral evidence that the respondent No. I had used six other cars and had purchased petrol for them for the purpose of his election campaign.
The Tribunal held that the first respondent must have spent not less than the sum of Rs. 1,250 on this account which was not included in the list of expenses.
We are unable to say that this finding rests on no evidence.
As regards the omission to include hiring charges the High Court has observed that the Tribunal did not record any finding that such hiring was proved.
The Tribunal has in fact found that as regards some cars they were hired, while others had been taken on loan, the money value for their use having been paid by the first respondent which is tantamount to saying that he had to pay the hiring charges.
The matter has been dealt with in paragraph 29(d) of the Tribunal 's order and the entire evidence has been gone through.
We are unable to say that the finding of the Tribunal that the respondent No. 1 had omitted to include in his return of election expenses the dinner and hotel charges is a finding unsupported by any evidence.
Reference may be made in this connection to paragraph 29(f) of the 267 Tribunal 's order which deals with the matter in detail.
On the whole our opinion is that the so called apparent errors pointed out by the High Court are neither errors of law nor do they appear on the face of the record.
An appellate Court might have on a review of this evidence come to a different conclusion but these are not matters which would justify the issue of a writ of certiorari.
In our opinion the judgment of the High Court cannot be supported and this appeal must be allowed.
The writ issued by the High Court will therefore be vacated.
We make no order as to costs of this appeal.
Appeal allowed.
| IN-Abs | The issue of prerogative writs in the nature of habeas corpus, mandamus, quo warrantto, prohibition and certiorari had their origin in England in the King 's prerogative power of superintendence over the due observance of law by his officials and Tribunals.
The powers of the Supreme Court as well as of all the High Courts in India under articles 32 and 226 of the Constitution respectively are very wide.
The Supreme Court as well as the High Courts in India can make an order or issue a writ in the nature of certiorari in all appropriate cases and in appropriate manner so long as the broad and fundamental principles of English law regulating the exercise of jurisdiction in the matter of granting such writs are adhered to.
A writ of certiorari can be availed of only to remove or adjudicate upon the validity of judicial acts, which expression includes the exercise of quasi judicial functions by administrative bodies or other authorities or persons obliged to exercise such functions but does not include purely ministerial acts.
In granting a writ of certiorari the superior Court does not exercise the power of an appellate Tribunal, the control exercised through it being merely in a supervisory and not appellate capacity.
It does not review or reweigh the evidence upon which the determination of the inferior Court is based nor does it substitute its own views for those of the inferior Tribunal.
A writ of certiorari is generally granted when a Court has acted without or in excess of its jurisdiction.
The want of jurisdiction may &rise from the nature of the subject matter of the proceeding or from the absence of some preliminary proceeding or the Court itself may not be legally constituted or may suffer from a certain disability by reason of extraneous circumstances.
If the jurisdiction of the Court depends upon the existence of some collateral fact the Court cannot by a wrong decision of the fact assume jurisdiction which it would not otherwise possess.
A writ of certiorari is available in those cases where a Tribunal though competent to enter upon an enquiry acts in flagrant disregard of the rules of procedure or violates the principles of natural justice where no particular procedure is prescribed.
251 A mere wrong decision cannot be corrected by a writ of certiorari as that would be using it as the cloak of an appeal in disguise but a manifest error apparent on the face of the proceeding based on a clear ignorance or disregard of the provisions of law or absence of or excess of jurisdiction, when shown, can be so corrected.
Held, that in view of the facts and circumstances of the case the High Court was not right in holding that sufficient and proper grounds existed for the issue of certiorari in the present case.
Ryots of Garabandho vs Zemindar of Parlakimedi (70 I.A. 129, 140); Election Commission, India vs Saka Venkata Subba Rao ([1953] S.C.R. 1144, 1150).
Rex vs Electricity Commissioners ([1924] 1 K.B. 171, 205); Walshall 's Overseers vs London and Northern Western Railway Co. (4 A.C. 30, 39); King vs Nat Bell Liquors Limited ([19221 2 A.C. 128, 156); Banbury vs Fuller, ; ; Queen vs Commissioners for Special Purposes of the Income Tax ; Rex vs Northumberland Compensation Appellate Tribunal ([1952] 1 K.B. 338, 357); Veerappa Pillai vs Raman & Raman Ltd., ([19521 S.C.R. 583, 594); and Halsbury, Vol.
IX, 2nd edition, page 880, referred to.
|
vil Appeal No. 2347 of 1966.
Appeal from the judgment and decree, dated June 3, 1966 of the Calcutta High Court in Appeal No. 251 of 1965.
M.C. Chagla and S.N. Mukherjee, for the appellant.
section V. Gupte, M.G. Poddar and D.N. Mukherjee, for the respondent.
Clause 3(c) of the deed provided for a renewal of the lease and was in the following terms : "3 (c).
The lessor will on the written request of the lessees made two calendar months before the expiry of the term hereby created and if there shall not at the time of such request be any existing breach or non observance of any of the covenants on the part of the lessees hereinabove contained grant to it one renewal of 10 years from the expiry of the said term at the same rent and containing the like convenants and provisos as are herein contained except that as regards the clause for renewal for further period the rent shall be as may be agreed between the lessor and the lessees.
" On December 1, 1963, the time fixed for applying for the renewal of the lease expired.
On December 13, the appellant made a written request for the renewal.
On December 23, 1963 the respondent 's solicitors replied stating that the request being out of time was ineffective and asking the appellant to, vacate the land on the expiry of the lease.
The appellant had erected structures on the land for the purpose of running a petrol delivery station and was a Thika tenant within the meaning of the Calcutta Thika Tenancy Act, 1949.
In February 1964 the respondent filed an application before the Controller asking for eviction of 240 the appellant under sections 3(vi) and 5 of the Calcutta Thika ,,Tenancy Act.
The Controller allowed the application.
An appeal from this order was dismissed by the appellate Authority.
A revision petition against the order was dismissed by the High Court.
While dismissing the revision petition, the High Court stayed the execution of the order of eviction for a month and observed that the authorities under the Calcutta Thika Tenancy Act had no power to decide whether the appellant was entitled to a renewal of the lease.
Thereafter the appellant filed the present suit on the Original Side of the Calcutta High Court asking for a declaration that it was entitled to a renewal of the lease, specific performance of the covenant for renewal, an injunction restraining execution of the order of eviction passed by the Controller and for other reliefs.
In paragraphs 13 and 14 of the plaint the appellant alleged that the delay in giving notice of renewal should be excused in view of the following special circumstances: (a) the delay was due to oversight; (b) the respondent had not altered her position for the worse or to her detriment within the space of 12 days; (c) neither party had treated the matter of time as being as the essence of the transaction; (d) the appellant had constructed a service station for petroleum products of immense utility to the public of the locality; (e) the appellant was in possession of the land.
The respondent contended that the application for renewal being made out of time was ineffective and that there was no ground for excusing the delay.
S.P. Mitra, J. accepted the respondent 's contention and dismissed the suit.
An appeal under clause 15 of the Letters Patent was dismissed by a Divisional Bench of the High Court.
Both the courts concurrently held that the letter, dated December 13, 1963 was not a proper exercise of the option by the ,appellant under the lease, dated February 17, 1954 and that there were no special circumstances for excusing the delay in ,giving the notice.
The appellant has filed the present appeal after obtaining a certificate from the High Court under article 133 ( 1 ) (a) and (b) of the Constitution.
The appellant neglected to make the application for renewal of the lease within the stipulated time.
Mr. Chagla has submitted that the time is not of the essence of the contract having regard to sec.
55 of the Indian Contract Act, 1877 as interpreted in the case of Jamshed Khodaram Irani vs Durjorji Dhunjibhai(1).
Section 55 of the Indian Contract Act provides that "when a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified time, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the (1) L.R. 43 I.A. 26.
241 parties was that time should be of the essence of the contract.
" In Jemshed 's case(1) Viscount Haldane observed that the section did not lay down any principle as regards contracts to sell land in India different from those which obtained under the law of England.
It is well known that in the exercise of its jurisdiction to decree specific performance of contracts the Court of Chancery adopted the rule, especially in the case of contracts for the sale of land, that stipulations .as to time were not to be regarded as of the essence of the contract unless they were made so by express terms or unless a clear indication of a contrary intention appeared from the nature of the contract or the surrounding circumstances.
In his well considered judgment Viscount Haldane carefully refrained from saying that time was not to be regarded as of the essence in all contracts relating to land.
At common law stipulations as to time in a contract giving an option for renewal of a lease of land were considered to be of the essence of the contract even if they were not expressed to be so and were construed as conditions precedent.
Equity followed the common law rule in respect of such contracts and did not regard the stipulation as to time as not of the essence of the bargain.
As stated in Halsbury 's Laws of England, 3rd ed., vol. 3, article 281, p. 165 "An option for the renewal of a lease, or for the purchase or re purchase of property, must in all cases be exercised strictly within the time limited for the purpose, otherwise it will lapse.
" This passage was quoted with approval by Danckwerts L.J. in Hare vs Nicoll(2).
A similar statement of law is to be found in Foa 's General Law of Landlord and Tenant, 8th article 453, p. 310, and in Hill and Redman 's Law of Landlord and Tenant, 14th ed., p. 54.
The reason is that a renewal of a lease is a privilege and if the tenant wishes to claim the privilege he must do so strictly within the time limited for the purpose.
With regard to equitable relief against the failure of the tenant to give notice of renewal within the stipulated time.
the law is accurately stated in Halsbury 's Laws of England, 3rd ed.
,vol. 23, p. 626, article 1329, footnote (u) thus : "Relief will not be given in equity against failure to give notice in time, save under special circumstances.
The decided cases show that in such cases relief is not given in equity save upon the ground of unavoidable accident, fraud, surprise, ignorance not wilful or inequitable conduct on the part of the lessor precluding him from refusing to give the renewal.
The limits of the equitable interference in such cases were clearly stated by the Master of the Rolls (Sir R.P.Arden) in Eaton vs Lyon.(3) He observed : "At law a covenant must be strictly and literally performed; in equity it must be really and substantially (1) L.R.43 I.A.26 (2) 145.
(3) ; , 692 3=695 6 30 E.R. 1223, 1224,1225 6. 242 performed according to the true intent and meaning of the parties so far as circumstances will admit; but if unavoidable accident, if by fraud, by surprise or ignorance not wilful, parties may have been prevented from executing it literally, a Court of Equity, will interfere; and upon compensation bei ng made, the party having done everything in his power, and being prevented by means, I have alluded to, will give relief .
I decide this case upon the principles on which, Lord Thurlow decided (Bayley vs The Corporation of Leominster , and I hope now, it will be known, that it is expected, these covenants shall be literally performed where it can be done; and that Equity will interpose, and go beyond the stipulations of the covenant at law, only where a literal performance has been prevented by the means, I have mentioned, and no injury is done to the lessor? ' We are of the opinion that the stipulation as to time in clause 3 (c) of .the indenture of lease dated February 17, 1954 should be regarded as of the essence of the contract.
" The appellant not 'having exercised the option of renewal within the time limited by the 'clause is not entitled to a renewal.
The appellant claims relief against the consequences of its default on the grounds enumerated in paragraphs 13 and 14 of the plaint.
Grounds (b) and (e) cannot be regarded as special circumstances.
to ground (d), it is.
not shown that the service station is of immense public utility.
The fact that the appellant constructed a service station is an irrelevant consideration.
Ground (c) is not established and it is not 'shown that the time is not of the essence of the bargain.
As to ground (a) there is some evidence to show that the delay in giving the notice of renewal was due to oversight.
But it is not shown that the delay was due to any unavoidable accident, excusable ignorance, fraud or surprise.
The delay arose from mere neglect on the part of the appellant and could have been avoided by reasonable diligence.
As observed 'by the Master of the Rolls in Reid & Anr.
vs Grave & Others(1): "The rule is now well established, that no accident will entitle a party to renew unless it be unavoidable.
I am of opinion, that nothing but accident, which, could not have been avoided by reasonable diligence, will entitle the plaintiff to a renewal in this Court.
" We may add that where no time is fixed for the purpose, an application for renewal for the lease may be made within a reasonable time before the expiry of the term (see Foa 's General Law of Landlord & Tenant, 8th ed., article 455, pp.
311 12, Ram Lal (1) , 248.
243 Dubey vs Secretary of State for India (1), Maharani Hemanta Kumari Devi vs Safatulla Biswas & Ors.(2).
In the present case, the lease fixes a time within which the application for renewal is to be made.
The time so fixed is of the essence of the bargain.
The tenant loses his right unless he makes the application within the stipulated time.
Equity will not relieve the tenant from the consequences of his own neglect which could well be avoided with reasonable diligence.
The appeal is dismissed with costs.
Y.P Appeal dismissed.
| IN-Abs | The respondent leased to the appellant a plot of land for a certain period and stipulated in the lease deed that the appellant would give notice of renewal of the lease within a certain time.
The appellant made the request for renewal of the lease 12 days after the time fixed.
The respondent asked the appellant to vacate the premises stating, that the request being made out of time, was ineffective.
The appellant flied a suit for a declaration that he was entitled to the renewal, and stated that the delay in making the request he excused as (a) it was due to oversight; (b) the respondent had not altered her position for the worse or to her detriment within the space of 12 days; (c) neither party had treated the matter of time as being as the essence of the transaction; (d) the appellant had constructed a service station for petroleum products of immense utility to the public of the locality; and (e) the appellant was in possession of the land.
The Court dismissed the suit, and this decision was affirmed in appeal.
Dismissing the appeal, this Court, .
HELD: The lease fixed a time within which the application for renewal was to be made.
The time so fixed was of essence of the bargain.
The tenant lost his right unless he made the 'application within the stipulated time.
Equity will not relieve the tenant from the consequences of his own neglect which could well be avoided with reasonable diligence.
At common law stipulations as to time in a contract giving an option for renewal of a lease of land were considered to be of the essence of the contract even if they were not expressed to be so and were construed conditions precedent.
Equity followed the common law rule in respect of such contracts and did not regard the stipulation as to time as not of the essence of the bargain, the reason being that a renewal of a lease is a privilege and if the tenant wishes to claim the privilege; he must do so strictly within the time limited for the purpose.
[241 D, E] With regard to equitable relief against a failure of the tenant to give notice of renewal within the stipulated time the relief cannot be given in equity save under special circumstances such as unavoidable accident, fraud, surprise, ignorance,, not wilful or inequitable conduct on the part of the lessor precluding him refusing to give the renewal.
[241 F] Grounds (b) *and (e) stated for the delay could not be regarded as special circumstances.
As to ground (d) it was not shown that the service station was of immense public utility.
The fact that the appellant constructed a service station was an irrelevant consideration.
Ground (c) was not established and it was not shown that the time was not the essence of the bargain.
As to ground (a) there was some evidence to show that the delay in giving the notice of renewal was due to oversight.
But it was not shown that the delay was due to any unavoidable 239 accident, excusable ignorance, fraud or surprise.
The delay arose from mere neglect on the part of the appellant and could have been avoided by reasonable diligence.
[242 E] Jamshed Khodaram Irani vs Durjorji Dhunjibhai, L.R. 43 I.A. 26, PIrate vs Nicoll , 145; Eaton vs Lyon ; ,692; Reid & Anr.
vs Grave & Ors. , 248, Ram Lal Dubey vs Secretary of State for India,, 39 C.L.J. 314 and Maharani Hemanta Kumari Devi vs Safatulla Biswas & Ors. , referred to.
|
Civil Appeal No. 14 of 1968.
Appeal from the judgment and decree, dated December 12, 1964 of the Allahabad High Court in F.A.F.O. No. 401 of 1963.
R.M. Hazarnavis, K.L. Hathi and Atiqur Rehman, for the respondent.
The Judgment of the Court was delivered by Bachawat, J.
By a contract, dated March 8, 1945, the appellant agreed to supply meat to the Government of India.
The contract contained an arbitration clause for reference of disputes arising out of the contract to the officer named in the contract.
The appellant claims that a sum of Rs. 8,38,994/10/6/ is due to him in respect of the supplies of meat made by him during the period between April 1, 1945 and March 31, 1946.
He made representations to.
the Government for payment and for arbitration of the disputes.
On or about July 10, 1958 the Government refused to.
refer the matter to.
arbitration.
On July 11, 1961 the appellant filed an application in the Court of the District Judge, Jhansi, under sections 8 and 20 of the for filing the arbitration agreement and for an order of reference of the disputes to an arbitrator appointed by the Court.
The respondent contended that the application was barred by limitation.
The District Judge allowed the application.
He held that there was no period of limitation for making an application under sections 8 and 20.
The defendant filed an appeal against the order.
The High Court dismissed the appeal as incompetent in so far as it challenged the order under section 8, and allowed it in so far as it challenged the order under section 20.
The High Court held that the application was governed by article 181 of the Indian Limitation Act, 1908 and was barred by limitation as it was made more than three years after the disputes had arisen.
The appellant has filed this appeal after obtaining a certificate from the High Court.
The point in issue is whether an application under section 20 of the is governed by article 181 of the Indian L2Sup.
CI 69 16 234 Limitation Act.
Since the decision in Bai Manekbai vs Manekli Kavasji(1) it is well settled that the operation of article 181 is limited to applications under the Code of Civil Procedure.
In that case Westropp, C.J. after referring to the corresponding article 178 in the second schedule to the Limitation Act of 1877 observed: "An examination of all the other articles in the second schedule relating to "applications", that is to say of the Third division of that schedule, shows that the applications therein contemplated are such as are made under the Code of Civil Procedure.
Hence it is natural to conclude that the applications referred to in Article 178 are applications ejusdem generis, i.e., applications under the Code of Civil Procedure.
The preamble of the Act, moreover, purports to deal with 'certain applications ' only, and not with all applications.
" This decision was followed in numerous cases and was approved in Hansraj Gupta vs Official Liquidator Dehra Dun, Mussourie Electric Tramway Company(2).
Having regard to these decisions, Das, J. said in Shah Mulchand & Co., vs Jawahar Mills Ltd. (3): "This long catena of decisions may well be said to have as it were, added the word 'under the Code ' in the first column of that Article=." The Court held that the amendment of articles 15 8 and 178 and the insertion of the words "under the " in place of the words "under the Code of Civil Procedure, 1908" did not alter the settled meaning of article 181.
To the same effect is the decision in Bombay Gas Ca.: vs Gopal Bhiva.(4) Following these decisions the Court held in Wazirchand Mahajan & Anr.
vs Union of India(5) that an application under section 20 of the not being an application under the Code of Civil Procedure was not governed by article 181.
The High Court has come to the conclusion that an application under section 20 of the is governed by article 181 for the following reasons: Article 181 should be construed as if the words "under the Code" were added in it.
The repealed paragraph 17 of the second schedule to the Code and re enacted it in section 20 with minor modifications.
That being so, section 8(1) of the applied and the implied reference in article 181 to paragraph 17 of the second schedule to the Code should be construed as a reference to section 20 of the .
No different intention is to be found in the and there is nothing to indi (1) Bom.
213, 214.
(2) [1933] L.R. 60 I.A.13, 20.
(3) ; ,371.
(4) ; (5) ; 235 cate that an application under section 20 can be made at any time without any limitation.
The argument that the implied reference in article 181 to paragraph 17 of the second schedule to the Code should be construed as a reference to section 20 of the and not raised and considered in Wazirchand Mahalan 's case(1).
It is, therefore, our duty to examine this contention.
Section 8 (1) of the corresponds to the Interpretation Act, 1889 (52 & 53 vict.
c. 63) and runs as follows: "Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals and re enacts, with or without modification, any provision of a former enactment, then references in any other enactment or in any instrument to the provision so repealed, shall, unless a different intention appears, be construed as references to the provision so reenacted.
" The section embodies the rule of construction that where the provision of an Act is repealed and re enacted with or without modification, a reference to the repealed provision in any other enactment should be regarded as a reference to the provision re enacted in the new form unless it appears that the legislature had a different intention.
The was passed with a view to consolidate and amend the law relating to arbitration.
Formerly the general law relating to arbitration was to be found in the Indian Arbitration Act, 1899 and the Code of Civil Procedure, 1908.
Paragraphs 1 to 16 of the second schedule to the Code applied to all arbitrations in suits.
As to arbitrations otherwise than in suits, the Indian Arbitration Act, 1899 applied to cases where, if the subject matter submitted to arbitration were the subject of a suit, the suit could be instituted in a Presidency town; in other cases, the Code of Civil Procedure, 1908 applied The repealed both the enactments.
It extends to the whole of India except the State of Jammu and Kashmir, and save as provided in section 47 applies to all arbitrations.
As to the provisions of the new Act under which applications can be made to Court, sections 8, 14, 16, 28 and 30, correspond to provisions which are found in both the repealed enactments, sections 5 and 9 correspond to similar provisions in the Indian Arbitration Act, 1899, and sections 15 and 20 correspond to similar provisions in the second schedule to the Code and some sections such as sec.
11, are entirely new.
In the circumstances, a question may arise whether the provisions of the new Act can be regarded as reenactments of the repeated provisions of the Indian Arbitration Act, 1899 or of the Code.
But for the purpose of this case we shall ,assume that section 20 of the new Act is a re enactment with (1) ; 236 modification of paragraph 17 of the second schedule to the Code.
We shall also assume that article 181 of the Limitation Act as construed by the Courts should be regarded as containing a reference to the Code of Civil procedure including paragraph 17 of the second schedule thereof.
Even after making those two assumptions it appears to us that the implied reference in article 181 to the Code of Civil Procedure cannot be construed as a reference to the .
Before their amendment by the Indian , article 158 of the Limitation Act applied to applications "under the Code of Civil Procedure, 1908 to set aside an award" and article 178 applied to applications.
"under the same Code for the filing in Court of an award".
The amended articles 158 and 178.
The amended article 158 applies to applications "under the to set aside an award or to get an award remitted for consideration", that is to say, to application under sections 16 and 30 of the Act.
The amended article 178 applies to applications "under the for the filing in Court of an award", that is to say to applications under section 14 of the Act.
In amending articles 158 and 178 the legislature acted upon the view that the references to the Code of Civil Procedure, 1908 in the second schedule t9 the Limitation Act could not in the absence of the amendment be construed as references to.
At the same time the legislature refrained from amending article 181 and providing that the article will apply to other applications under the .
It is manifest that the legislature intended that save as provided in articles 158 and 178 there would not be any limitation for other applications under the Act, Take the case of an application under section 28 of the Act for enlargement of the time for making the award.
A similar application under paragraph 8 of the second schedule to the Code was governed by article 181,but a like application under section 12 of the Indian Arbitration Act,1899 was not subject to any period of limitation.
There is nothing to indicate that for the purpose of limitation section 20 of the new Act should be regarded as a re enactment of the corresponding provision of the.
Code and not of the Indian Arbitration Act, 1899.
An application under section 8 of the new Act corresponding to paragraph 5 of the second schedule to the Code and section 8 of the Indian Arbitration Act, 1899 stand on the same footing.
In the circumstances, it is not possible to construe the implied reference in article 181 to the Code of Civil Procedure as a reference to the , or to hold that article 181 applies to applications under that Act.
The rule of construction given in section 8 (1) of the cannot be applied, as it appears that the legislature had a different intention.
It follows that an application under sections 8 and 20 of the is not 237 governed by article 181.
The Limitation Act does not prescribe any period of limitation for such an application.
It follows that the present application under sections 8 and 20 is not barred by limitation.
In conclusion we must observe that the appellant 's claim relates to supplies during the period between April 1, 1945 and March 31, 1946.
There is a serious contention whether the claim is barred by limitation.
It will be the duty of the arbitrator to consider this matter carefully and to decide whether or not the claim is so barred.
In the result, the appeal is allowed, the order of the High Court is set aside and the order of the District.
Judge, Jhansi, is restored.
In the circumstances of the case, there will be no order as to costs in this Court.
G.C. Appeal allowed.
| IN-Abs | The appellant entered into a contract with the Government of India.
The contract contained an arbitration clause.
For certain supplies made under the contract the appellant made representations to the Government or payment and for arbitration of disputes.
On or about July 10, 1958 Government refused to refer the matter for arbitration.
On July 11, 1961 the appellant flied an application in the Court of the District Judge under sections 8 and 20 of the , for filing the arbitration agreement and for an order of reference of the disputes to an arbitrator appointed by the court.
The respondent contended that the application was barred by Limitation.
The District Judge allowed the application, holding that there was no limitation for making an application under sections 8 and 20.
The defendant 's appeal was dismissed by the High Court as incompetent in so far as it challenged the order under section 8 but was allowed in so far as it challenged the order under section 20.
The High Court held that an application under section 20 is governed 'by article 181 of the Indian Limitation Act, 1908.
In coming to this conclusion the High Court took into account the settled judicial view that the.
operation of article 181 is limited to applications under the Code of Civil Procedure.
and reasoned as follows: Article 181 should be construed as if the words 'under the Code ' were added in it.
The repealed paragraph 17 of the second schedule to the Code and re enacted it in section 70 with minor modifications.
That being so section 8(1) of the applied and the implied reference in article 181 to paragraph 17 of the second schedule to the Code should be construed as a reference to section 20 of the .
Appeal against the High Court 's judgment was filed with certificate.
HELD: The 'appeal must be allowed.
By the the Legislature amended articles 158 and 178 of the Limitation Act and made them applicable to the relevant proceedings under the but no similar change was made in article 181.
It is manifest that save as provided in articles 158 and 178 there would not be any limitation for other applications under the Act.
Further there is nothing to indicate that for the purpose of limitation section 20 of the 1940 Act should be regarded as a re enactment of the corresponding provision of the Code and not of the Indian Arbitration Act, 1899.
[236 D G] In the circumstances it is not possible to construe the implied reference in article 181 to the Code of Civil Procedure as a reference to the or to hold that article 181 applies to applications under that Act.
The rule of construction given in section 8(1)of the cannot be applied, as it appears that the legislature had a 233 different intention.
It follows that an application under sections 8 and 20 of the is not governed by article 181.
The Limitation Act does not prescribe any period of limitation for such an application.
[236 G H] The present application under sections 8 and 20 was therefore not barred by limitation.
[237 A] Bai Manekbai vs Manekji Kavasji, Born.
213, 214 Hansraj Gupta vs Official Liquidator Dehra Dun Mussourie Electric Tramway Company, (1933) L.R. 60 I.A. 13, 20, Shah Mulchand & Co. vs Jawahar Mills Ltd. ; , 371, Bombay Gas Co. vs Gopal Bhiva, ; and Wazirchand Mahajan & Anr.
vs Union of India, ; , referred
|
Civil Appeal No. 793 of 1966.
Appeal by special leave from the judgment and order dated August 21, 1964 of the Bombay High Court, Nagpur Bench in Special Civil Application No. 353 of 1963.
M.N. Phadke, Naunit Lal and B.P. Singh, for the appellant.
D.D. Verma and Ganpat Rai, for respondent No. 1.
The Judgment of the Court was delivered by Shelat, J.
This appeal, by special leave, is directed against the order of the High Court of Bombay (Nagpur Bench) which set aside the orders of the Assistant Commissioner of Labour and the Industrial Court, Nagpur and remanded the case to the Assistant Commissioner.
The appellant firm conducts a number of bidi factories at various places in Vidharba including the one at Kamptee.
Its head office is also situate there.
The factory at Kamptee and the head office have always been treated as separate entities though owned by the same firm.
Consequently, the head office was registered under the Central Provinces & Berar Shops and Establishment Act, 1947 and the factory at Kamptee was registered under the Factories Act.
The factory has also its own standing orders certified under the Central Provinces & Berar Industrial Disputes Settlement Act, 1947.
Respondent 1 was originally employed in the factory at Kamptee.
Two or three years thereafter he was directed to work at the head office and worked therein for about six years prior to the impugned order of dismissal passed against him by the munim of the head office.
Aggrieved by the order he flied 274 an application under section 16 of the C.P. & Berar Industrial Disputes Settlement Act alleging that the said order was incompetent and illegal.
The appellant firm contended that at the material time Respondent 1 was employed as a clerk in the head office, that the head office was a separate entity, that the dismissal order had not been passed 'by the appellant firm as the owner of the said factory, that the firm, as such owner, was wrongly impleaded and that the application was misconceived.
The Assistant Commissioner dismissed the application holding that Respondent 1 at the material time was not the employee in the factory, but was employed in the firm 's head office.
He relied on the fact that the head office and the factory had separate rules, that Respondent 1 used to sign his attendance in the register of the head office, that he was being paid his salary by the head office, and lastly, that his name was not on the muster roll of the factory.
He also found that whereas the staff of the head office was governed by the C.P. & Berar Shops & Establishments Act, the factory was governed by the C.P. & Berar Industrial Disputes Settlement Act.
Against the dismissal of his ,application, Respondent 1 filed a revision application before the Industrial Court, Nagpur.
The Industrial dismissed the application holding that the only question raised before it was whether Respondent 1 was the employee of the head office and that that being purely a question of fact, he could not interfere with the finding of fact arrived at by the Assistant Commissioner.
Respondent 1 thereafter filed a writ petition in the High Court challenging the said orders.
The High Court held that it was possible in law for an employer to have various establishments where different kinds of work would be done, in which case an employee in one establishment would be liable to be transferred to another establishment.
But the High Court observed that unless it was established that the employment of Respondent 1 in the factory was legally terminated it could not be assumed, merely because he was directed to work in the head office, that his employment was changed and the head office was substituted as his employer in place of the said factory.
As the order passed by the Assistant Commissioner was not clear on this question, the High Court remanded the case for disposal according to law.
Mr. Phadke for the appellants, raised the following contentions against the High Court 's order: (1) that the High Court made out a new case for Respondent 1, in that Respondent 1 had never challenged the validity of the order of dismissal on the ground that there was no change of employment, and that therefore, the head office was incompetent to order his dismissal, (2) that the facts of the case justified the conclusion that Respondent 1 had ceased to be the employee of the factory, and (3) that in any event he must be held to have given an implied consent to 275 his being treated as the employee of the head office.
In support of these contentions he relied upon the fact that Respondent 1 had worked at the.
head office for the last six years without any protest, that his name was on the attendance register of the head office, that it was the head office which paid his salary, and lastly, that he worked in the head office under the direction and control of the munim of that office.
As to the first contention, it would not be correct to say that the High Court made out a new case for the first time for Respondent 1 which was not pleaded by him before the Assistant Commissioner.
In para 1 of his application he had expressly averred that about three years after his employment in the factory he had been ordered to work in the head office.
In reply to the application the appellants conceded that though Respondent 1 was first employed in the factory and had worked there for about three years, he had thereafter been transferred to and been working as a clerk in the head office.
There was, however, no averment in that reply that the contract of service of Respondent 1 with the said factory was at any time put an end to or that when he was directed to work in the head office a fresh contract of service was entered into.
between.
him and the head office.
The Assistant Commissioner in his said order held that the head office and the factory were two separate establishments registered under two different Acts, and, therefore, subject to different provisions of law.
He further held that since Respondent 1 was not actually working in the factory and his name did not figure in the factory 's muster roll and was not paid his wages by the factory, the applicant could not be said to be an employee of the said factory.
In his revision application before the Industrial Court, Respondent 1 made an express plea that when he was directed to work in the head office, he had received no notice from the factory that his services were terminated there or that he had henceforth become the employee of the head office.
It is clear from these pleadings that it was not for the first time in the High Court that Respondent 1 contended as to the incompetence of the head office to take disciplinary action against him and to pass the order of dismissal.
The first contention of Mr. Phadke, therefore, cannot be accepted.
As regards the second and the third contentions, there is no dispute that though the head office and the said factory belong to the same proprietors, they were always treated as two distinct entities registered under two different Acts, that Respondent 1 was employed first in the factory where he worked for 2 or 3 years and was thereafter ordered to work at the head office where admittedly he worked for about six years before the impugned order terminating his services was passed.
The question, therefore, which the Assistant Commissioner and the Industrial Court had to decide, in view of the pleadings of the parties, was whether 276 Respondent 1 had ceased to be the employee of the factory and was in the employment of the head office at the time when the impugned order was passed, or whether his services were simply lent to the head office and he continued all along to be the employee of the factory ? The general rule in respect of relationship of master and servant is that a subsisting contract of service with one master is a bar to service with any other master unless the contract otherwise provides or the master consents.
A contract of employment involving personal service is incapable of transfer.
Thus, where a businessman joins a partnership firm and takes his personal staff with him into the firm, his staff cannot be made the staff of the firm without the consent of the other partners.
Mersey Docks and Harbour Board vs Coggins & Griffith (Liverpool) Ltd.(1).
In certain cases, however, it is.
possible to say that an employee has different .employers, as when the employer, in pursuance of a contract between him and a third party, lends or hires out the services of his employee to that third party for a particular work.
Such an arrangement, however, does not effect a transfer of the contract of service between the employer and his employee, but only amounts to a transfer of the benefit of his services.
Century Insurance Co. Ltd. vs Northern Ireland Road Transport Board(").
In such cases where a third party engages another person 's employee it is the general employer who is normally liable for the tortuous acts committed by the employee and his liability is not affected by the existence of a contract between him and the third party under which the services of the employee are lent or hired out for a temporary period to such third party.
In order to absolve the employer from the liability and to make the person who.
temporarily engages the employee or hires his services it is necessary to prove that the relationship of master and servant was temporarily constituted between such third party and the employee, and that it existed at the time when the tortuous act was committed by the employee.
There is, however, a presumption against there being such a transfer of an employee as to make the hirer or the person on whose behalf the employee is temporarily working and a heavy burden rests on the party seeking to establish that the relationship of master and servant has been constituted pro hac vice between the temporary employer and the employee of.
Mersey Docks and Harbour Board vs Coggins & Griffith (Liverpool) Ltd.(1).
In cases where an employer has hired out or lent the services of his employee for a specific work and such an employee has caused damage to another person by his tortuous act, the question often arises as to who of the two, i.e. the employer or the person to whom such services are hired out or lent, is ; at 17.
(2) ; 277 vicariously responsible for such damage.
In cases commonly known as cranes and carriage cases, courts in England evolved the rule of the employee being temporarily the employee of such third party to impose the responsibility on him if it was established that in the matter of the act, in the performance of which the tortuous act was committed, such third party had exercised control and direction over the performance of the act in question and the manner in which it was to be performed.
The classic case commonly cited and in which this rule was applied is Quarman V. Burnett (1) of.
also Jones vs Scullard(2) where Lord Russel applied the test of the power to, direct and control the act in performance of which damage was caused to another person.
The position in law is, therefore, clear that except in the case of a statutory provision to the contrary, a right to the service of an employee cannot be the subject matter of a transfer by an employer to a third party without the employee 's consent.
Thus, in Nokes vs Doncaster Amalgamated Collieries, Ltd. (3) where an order was made under section 154 of the Companies Act, 1929 transferring all the assets and liabilities of a company to another company.
Viscount Simon held that such an order did not mean that contracts of service between the appellant and the transferer company also stood transferred.
The principle that even in cases where the services of an employee are lent to a third party temporarily for a particular work, the employee still remains the employee of the employer is illustrated in Denham vs Midland Employees Mutual Assurance Ltd.(4).
There Eastwoods Ltd. employed Le Grands to make test borings on their property.
Le Grands provided two skilled drillers with plant and tackle to carry out the borings and Eastwoods Ltd. agreed to provide one of the labourers, one Clegg to assist those skilled men free of charge to Le Grands.
While the said work .was being carried out, Clegg was killed in circumstances in which Le Grands were liable to pay damages to his widow on the ground that his death was caused on account of the negligence of Le Grands or their servants.
Le Grands sought to be indemnified by their insurers against their said liability.
They were covered by two policies, one with the Midland Employers Mutual Assurance Ltd. in respect of their liability to the employees and the other with Lloyds in respect of their liability to the public in general.
The policy issued by the Midland Employers Mutual Assurance Ltd. provided that if any person "under a contract of service" with the insured were to sustain any personal injury by accident caused during the period of employment, and if the insured became liable to pay damages for such injury the association would indemnify the insured against all sums for which he would be so liable.
The policy issued by the Lloyds indemnified Le Grands for any sums for which they might become liable to (1) ; (2) (3) [1940] 3 All England Law Reports 549.
(4) [1955] 2 Q.B.437.
278 pay in respect of death or accidental bodily injury to persons and loss or damage to.
property arising in or out of the business of borings carried out by Le Grands.
The question was whether at the time of his death Clegg was the servant of Le Grands and under "a contract of service" with them as provided in their policy with the Midland Assurance Ltd. Dealing with that question, Denning, L.J. observed that the difficulty which surrounded such a subject arose because of the concept that a servant of a general employer may be transferred to a temporary employer so as to become for the time being his .servant.
Such a concept was, he said, a very useful device to place liability on the shoulders of the one who should properly bear it, but did not affect the contract of service itself.
No contract of service can be transferred from one employer to another without the servant 's consent and such consent is not to be raised by operation of law but only by the real consent in fact of the man express or implied.
He further observed: "In none of the transfer cases which has been cited to us had the consent of the man been sought or obtained.
The general employer has simply told him to go and do some particular work for the temporary employer and he has gone.
The supposed transfer, when it takes place, is nothing more than a device a very convenient and just device, mark you to put liability on to the temporary employer; and even this device has in recent years been very much restricted in its operation.
It only applies when the servant is transferred so completely that the temporary employer has the right to.
dictate, not only what the servant is to do, but also how he is to do it.
" Applying these principles to the facts before him, he observed that he had no doubt that if a third person had been injured by the negligence of Clegg in the course of his work, Le Grands and not Eastwoods would be liable to such third person.
also, when Clegg himself was killed, Le Grands were liable to his widow on the same footing that they were his masters and not merely invitors.
These results were achieved in law by holding that Clegg became the temporary servant of Le Grands.
He further observed that there was no harm in thus describing him so long as it was remembered that it was a device designed to cast liability on the temporary employer.
However, on the question whether Clegg was "under a contract of service" with Le Grands, he held that he was not, for his contract of service was with Eastwoods.
They had selected him and paid his wages and they alone could suspend or dismiss him.
Clegg was never asked to consent to a transfer of the contract of service and he never did so.
If he was not paid his wages or if he was wrongfully dismissed from 279 the work, he could sue Eastwoods for the breach of contract and no one else.
If he failed to turn up for work, Eastwoods alone 'could sue him.
He could, therefore, see no trace of a contract of service with Le Grands except the artificial transfer raised by law so as to make Le Grands liable to others for his faults or liable to him for their own faults and that the artificial transfer so raised cannot be said to be a contract of service within the said policy of assurance.
Le Grands, therefore, were not entitled to 'be indemnified by the Midland Assurance Company under the employers ' liability policy but were entitled to be indemnified by Lloyds under their public liability policy.
A contract of service being thus incapable of transfer unilaterally, such a transfer of service from one employer to another can only be affected by a tripartite agreement between the employer, the employee and the third party, the effect of which would be to terminate the original contract of service by mutual consent and to make a new contract between the employee and the third party.
Therefore, so long as the contract of service is not terminated, a new contract is not made as aforesaid and the employee continues to be in the employment of the employer.
Therefore, when an employer orders him to do a certain work for another person the employee still continues to be in his employment.
The only thing that happens in such a case is that he carries out the orders of his master.
The employee has the right to claim his wages from the employer and not from the third party to whom his services are lent or hired.
It may be that such third party may pay his wages during the time that he has hired his services, but that is because of his agreement with the employer.
That does not preclude the employee from claiming his wages from the employer.
The hirer may also exercise control and direction in the doing of the thing for which he is hired or even the manner in which it is to be done.
But if the employee fails to carry out his directions he cannot dismiss him and can only complain to the employer.
The right of dismissal vests in the employer.
Such being the position in law, it is of the utmost importance in the present case that the appellants at no time took the plea that the contract of employment with the factory was ever terminated or that the respondent gave his consent, express or implied, to his contract of service being transferred to the head office, or that there was a fresh contract of employment so brought about between him and the head office.
Unless, therefore, it is held from the circumstances relied upon by Mr. Phadke that there was a transfer of the contract of service or that Respondent 1 gave his consent, express or implied, to such a transfer, Respondent 1 would continue to be the servant of the factory.
Since the case has been remanded to the Assistant Commissioner, we refrain from making any observations as regards the effect of the admissions 280 said to have been made by Respondent 1 and relied on by the Assistant Commissioner.
Mr. Phadke, however, relied on Jestamani Gulabrai Dholkia vs The Scindia Steam Navigation Company(1) in support of his contention that there was a transfer of the contract of employment and that it was not a mere transfer of the benefit of the services of Respondent 1.
In that case the appellants were originally in the service of the Scindia Steam Navigation Company.
In 1937 Air Services of India Ltd. was incorporated.
In 1943, the Scindias purchased the ASI and by 1946 ASI became a full fledged subsidiary of the Scindias.
Between 1946 to 1951 the Scindias transferred several of their employees including the appellants to the ASI.
The Scindias had a number of such subsidiary companies and it was usual for them to transfer their employees to such companies and also to recall them whenever necessary.
In 1953, the Government of India decided to nationalise the airlines operating in India with effect from June 1953.
On April 6, 1953 the appellants wrote to the Scindias to recall them to their original posts but the Scindias refused to do so as they were not in a position to absorb them.
They pointed out that a Bill, called the Air Corporation Bill, 1953, was pending before Parliament, that under cl. 20 thereof persons working with ASI on the appointed day would become the employees of the Corporation, that under that clause they had the option to resign if they did not wish to join the Corporation and that if the appellants exercised that option.
the Scindias would treat them as having resigned from their service.
The Act was passed on May 28, of the Act provided that every employee of an existing air company employed by such company prior to July 1, 1952 and still in its employment immediately before the appointed day, shall, in so far as such employee is employed in connection with the undertaking which has vested in the Corporation by virtue of the Act, become, as from the appointed date, the employee of the Corporation in which the undertaking has vested.
On june 8, 1953 the appellants made a demand that if the Corporation were to retrench any persons from the staff loaned to ASI within the first five years, the Scindias should take them back.
The Scindias refused.
None of the appellants had exercised the option provided by section 20 (1 ).
On August 1, 1953 ASI became vested in the Corporation and section 20( 1 ) came into force as from that date.
The appellants contended inter alia that the contract of service between them and the Scindias was not transferable.
The contention was rejected on the ground that by reason of section 20(1) the contract of service of the appellants stood transferred to the Corporation and that though the appellants were not originally recruited by ASI and were transferred by the Scindias to the said company, (1) ; 281 they were the employees of ASI and were such employees on the appointed day and since they had not exercised the option under section 20( 1 ) they became the employees of the Corporation by operation of that provision.
The Scindias, therefore, were no longer concerned with them.
It is true that the appellants were transferred to ASI on condition that they would receive the same remuneration and other benefits as they were getting in the Scindias and further that it was possible to contend that Scindias alone could dismiss them.
But the learned Judges explained that these were special terms applicable to the appellants.
But in spite of them they still had become the employees of the ASI and were such employees on the appointed day.
It seems that this conclusion was reached on the footing that since ASI was the subsidiary company of the Scindias like several other subsidiary companies, and it was.
usual for the Scindias to transfer any of their employees to such subsidiary companies, the appellants on their transfer were deemed to have consented to become the employees of ASI in spite of the right of the Scindias to recall them whenever necessary and further that the appellants continued to be and were the employees of the ASI on the appointed day and were, therefore, governed by section 20(1 ) if the Act.
It is clear that this was a case of employees becoming the employees of the Corporation by virtue if the operation of a statute.
The decision, therefore, is not an authority for the proposition that an employer can transfer his employee to a third party without the consent of such employee or ' without terminating the contract of employment with him.
That being the position, the case of Jestamani vs The Scindia Steam Navigation(x) cannot assist Mr. Phadke.
In our view the High Court was, right in setting aside the order of the Assistant Commissioner and the Industrial Court on the ground that unless a finding was reached on the facts of the case that the contract of service with the said factory came to an end and a fresh contract with the head office came into being Respondent 1 continued to be in the employment of the factory and the head office, therefore, was not competent to dismiss him.
The appeal, therefore, fails and is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | The appellant firm had a number of factories including one at Kamptee in Vidharba.
Its head office was also situated there,.
The factory at Kamptee and the head office were treated as separate establishment.
the factory being registered under the Factories Act and the Head Office under the C.P. and Berar Shops and Establishments Act, 1947.
Respondent No. 1 was originally employed at the aforesaid factory but later he was directed to work at the head office.
When the Head Office dismissed him from service he challenged the order of dismissal by an application under section 16 of the C.P. & Berar Industrial Disputes settlement Act.
The Assistant Commissioner dismissed the application holding that Respondent No. 1 at the material time was not an employee of the factory but was employed in the Head Office.
The Industrial Court refused, in revision, to interfere with the Assistant Commissioner 's order.
Respondent No. 1 filed a writ petition under article 226 of the Constitution.
The High Court observed that unless it was established that the employment of Respondent No. 1 in the factory was legally terminated it could be assumed merely because he was direct to work in the head office, that his employment was changed and the head office was substituted as his.
employer in place of the said factory.
, As the order passed by the Assistant Commissioner was not clear on this question the High Court remanded the case for disposal according to law.
The firm appealed to this Court.
HELD: (i) A contract for service is incapable of transfer unilaterally.
Such a transfer of service from one employer to another can only be effected by a tripartite agreement between the employer, the employee and the third party, the effect of which would be to terminate the original contract of service by mutual consent and to.
make a new contract between the employee and the third party.
So long as the contract of service is not terminated, a new contract is not made as aforesaid, and the employee continues to be in the employment of the employer.
Therefore, when an employer orders him to: do certain work for another person the employee still continues to be i.n his employment.
The only thing that happens in such a case is that he carries out the orders of his master.
employee has the right to claim his wages from the employer and not from the third party to whom his services are lent or hired.
It may be that such a third party may pay his wages during the time that he has hired his services, but that is because of his agreement with the employer.
that does not preclude the employee from claiming his wages from the employer.
the hirer may also.
exercise control and direction in the doing of the thing for which he is hired or even the manner in which it is to be done.
But if the employee fails to.
carry out his direction he cannot 273 dismiss him and can only complain to the employee.
The 'right of dismissal vests with the employer.
[279 &F] Such being the position in law, in the present case the High Court was right in setting aside the order of the Assistant Commissioner and the Industrial Court on the ground that unless a finding was reached on the facts of the case that the contract of service with the said factory came to an end and a fresh contract with the head office came into being, Respondent No. 1 continued to be in the employment of the factory and the head office therefore was not competent to dismiss him.
[281 F] Mersey Docks and Harbour Board vs Coggins & Griffith (Liverpool) Ltd. ; at 17, Century Insurance Co. Ltd. vs Northern Ireland Road Transport Board, [1942] A.C. 509, Quarman vs Burnett, ; , Jones vs Scullard, , Nokes vs Doncaster Amalgamated Collieries, Ltd. [1940] 3 All England Law Reports 549 and Denham vs Midland Employees Mutual Assurance Ltd., , referred to.
Jestamani Gulabrai Dholkia vs The Scindia Steam Navigation Company ; , distinguished.
|
ivil Appeal No. 1617 of 1968.
Appeal by special leave from the judgment and decree dated March 19, 1968 of the Allahabad High Court in Second ' Appeal No. 2296 of 1961.
1. P. Goyal and A. G. Ratnaparkhi, for the appellant.
C.B.Agarwala and R. Mahalingier, for the respondent.
The Judgment of the Court was delivered by Hegde, J.
The question of law that arises for decision in this appeal by special leave is not free from difficulty.
That question is whether a decree for eviction obtained in a suit instituted after obtaining the permission of the Commissioner under sub section
3 of section 3 of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 (to be hereinafter referred to as the Act) becomes unenforceable if the State Government acting under section 7(F) of that Act revokes the permission granted by the Commissioner after the decree is passed ? The appellant was a tenant of the respondent in respect of a shop in Balugani in Agra.
On January 2, 1959, the respondent applied to the District Magistrate under section 3(1) of the Act for permission to institute a suit against the appellant for evicting him from the shop in question.
That application was rejected by the District Magistrate as per his order of July 9, 1959.
The respondent took up the matter in revision to the Commissioner under sub section 2 of section 3.
The Commissioner reversed the order of the District Magistrate and granted the permission asked for on October 16, 1959.
As against that order the appellant moved the State Government under section 7(F) on November 17, 1959.
On January 299 1, 1960, the respondent served on the appellant a notice under section 106 of the Transfer of Property Act.
The appellant replied to that notice on January 6, 1960.
In that reply he informed the respondent that he had already moved the State Government to revoke the permission granted by the Commissioner.
On February 13, 1960 the respondent instituted suit No. 115 of 1960 in the Court of Munsiff, Agra seeking the eviction of the appellant from the suit premises.
The appellant filed his written statement in that case on May 7, 1960.
Therein again he took the plea that the permission granted by the Commissioner is not final as he had moved the Government to revoke the same.
The suit was decreed by the learned Munsiff on November 2, 1960.
The appellant went up in appeal as against that order to the Civil Judge, Agra.
On January 27, 1961, the State Government revoked the permission granted by the Commissioner during the pendency of the appeal.
Relying on this order the Civil Judge of Agra allowed the appeal of the appellant on February 9, 1961.
As against that decision the respondent went up in second appeal to the High Court.
The High Court allowed the second appeal on 19th March 1968 following the Full Bench decision of the Court in Bashi Ram vs Mantri Lal(1).
This appeal is directed against that decision.
The Act was intended as a temporary measure as could be gathered from its title as well as the preamble.
It is deemed to have come into force on the 1st day of October 1946 though it was passed in 1947.
Under the Act as originally stood, the decision of the District Magistrate under section 3 was neither appealable nor revisable.
As per the amendments effected in 1952 a Limited power of revision was conferred on the Commissioner.
By the Amending Act 17 of 1954, the power conferred on the Commissioner was enlarged and section 7(F) was incorporated in the Act which says that: "the State Government may call for the records of any case granting or refusing to grant permission for the filing of a suit for eviction referred to in section 3 . . and make such order as appears to it necessary for the ends of justice.
" The only sections in the Act material for the purpose of this appeal are sections 3 and 7(F).
Section 3 reads thus.
: "Restrictions on evictions.
Subject to any order passed under sub section ( 3 ), no suit shall: without the permission of the District Magistrate, be filed in any civil court against a tenant for his eviction from any accommodation, except on one or more of the following grounds: (1) (1965) 1 A11.
300 (a) that the tenant is in arrears of rent for more than three months and has ,failed to pay the same to the landlord within one month of the service upon him of a notice of demand; (b) the at the tenant has wilfully caused or permitted to be caused substantial damage to the accommodation; (c) that the tenant has, without the permission in writing of the landlord, made or permitted to be made any such construction as, in the opinion the court, has materially altered the accommodation or is likely substantially to diminish its value; (d) that the tenant has created a nuisance or has done any act which is inconsistent with the purpose for which he was admitted to the tenancy of the accommodation, or which is likely to affect adversely and substantially the landlord 's interest therein; (e) that the tenant has on or after the 1st day of October, 1946, sub let the whole or any portion of the accommodation without the permission of the landlord; (f) that the tenant has renounced his character as such or denied the title of the landlord and the latter has not waived his right or condoned the conduct of the tenant; (g) that the tenant was allowed to occupy the accommodation as a part of his contract of employment under the landlord and his employment has been determined.
Explanation.
For the purposes of sub section (e) lodging a person in a hotel or a lodging house shall not be deemed to be sub letting.
(2) Where any application h:as been made to the District Magistrate/or permission to sue a tenant for eviction from any accommodation and the District Magistrate grants or refuses the permission, the party aggrieved by his order may within 30 days from the date on which the order is communicated to him, apply to the Commissioner to revise the order.
(3) The Commissioner shall hear the application made under sub section (2), as far as may be, 301 within six weeks from the date of making it, and he may, if he is not satisfied as to the correctness, legality or propriety of the order passed by the District Magistrate or as to the regularity of proceedings held before him, alter or revise his order, or make such other order as may be just and proper.
(4) The order of the Commissioner under subsection (3) shall, subject to any order passed. ' by the State Government under section 7 (F) be We have earlier quoted the relevant portion of section 7 (F).
Conflicting opinions were expressed by different Benches of the Allahabad High Court as to the scope of section 3, till the decision of the Full Bench in Bashi Ram 's case(x).
The Full Bench held that a decree obtained in a suit for eviction instituted after obtaining the requisite permission will not become unenforceable even if the State Government revoked, after the decree is passed, the permission granted, in exercise of its powers under section 7(F).
Majority of the Judges in that case further held that once a suit is instituted after obtaining the permission of the District Magistrate, any further order made either by the Commissioner or the State Government cannot affect the course of that suit or the decree passed therein.
Dwivedi J. the other Judge did not express any opinion on that question but even according to him in the appeal filed against the decree, the appellate court cannot receive in evidence the order made by the State Government which means that the decree cannot be reversed on the ground that the State Government had revoked the permission granted.
The correctness of the Full Bench decision is challenged by the appellant in this appeal.
In support of his interpretation of sections 3 and 7(F) he placed reliance on the decision of a Division Bench of the High Court of Allahabad in Dr. S.L. Khoparji vs State Government(a).
He also sought support from the decision of a Single Judge of that Court in Basant Lal Sah vs Bhagwan Prasad Sah(3).
It is not necessary to refer to the various decisions of the Allahabad High Court on this question.
Suffice it to say that in that Court there was serious cleavage of opinion on the question that we are considering in this appeal till the decision of the Full Bench in Bashi Ram 's case(x).
We were given to understand that Dhavan, j. had doubted the correctness of the decision of the Full Bench and had requested the Chief Justice to constitute a larger Bench to consider the correctness of the decision in Bashi Ram 's case(1) but in view of the pendency of this appeal, the constitution of a larger bench was not considered necessary.
(1) (1965) 1 All.
(3) A.I.R. 1964 All p. 210.
(2) 302 The contention of Mr. Goyal, the learned Counsel for the appellant was that the Act generally speaking, ' has restricted the right of the landlord to evict his tenant, to one or other of the grounds mentioned in cls.
(a) to.
(g) of section 3(1 ); but in order to meet any exceptional case, it is provided in section 3 (1 ) that a suit for eviction may be instituted on any ground other than those mentioned in cls.
(a) to (g) if the permission of the District Magistrate is obtained; the order made by the District Magistrate is revisable both by the Commissioner as well as the State Government; the only order that is final is that made by the State Government.
If a landlord chooses to institute a suit on the basis of the permission granted by the District Magistrate or the Commissioner without waiting for the decision of the State Government he takes the risk; if the State Government revokes the permission granted by the District Magistrate or the Commissioner then the suit must be deemed to have been instituted without permission and consequently not maintainable.
Mr. Goyal urged that if the decision in Bashi Ram 's case(1) is accepted as correct then so far as the tenant is concerned, generally speaking, he cannot invoke the powers of the State Government under section 7(F) because immediately after the decision of the Commissioner, if the same is in his favour, the landlord is likely to institute a suit for eviction and thus nullify the power of the State Government under section 7(F).
He urged that as section 7(F) empowers the State Government to revise the order made by the subordinate authorities whether the same is in favour of the landlord or the tenant we should not place an interpretation on section 3 which would affect the power of the State Government to do justice to the tenants for whose benefit the Act has been enacted.
On the other hand it was urged by Mr. C.B. Aggarwal, learned Counsel for the respondent that the landlord has a right to sue for the eviction of his tenant under the provision of the Transfer of Property Act subject to the restrictions stipulated therein.
That is a statutory right.
The provisions contained in the Act to the extent they encroach upon the rights of the landlord either specifically or by necessary implication further control the rights of the landlord.
In other respects the landlord 's rights under the Transfer of Property Act remain unaffected.
According to him the only restriction placed on the landlord in the matter of instituting a suit for eviction on grounds other than those mentioned in cls.
(a) to (g) of section 3(1) is to obtain the prior permission of the District Magistrate subject to the order made under sub section
(3) of section 3 by the Commissioner; once a suit is validly instituted in accordance with those provisions, no order of the State Government can either interfere with the course of that suit or invalidate the decree obtained therein.
He urged that if the position is as (1) 1965) 1 Ali.
545 303 contended by the.
learned Counsel for the appellant, curious results are likely to follow.
Section 7 (F) does not fix any period within which the State Government must act.
It can exercise its power under that provision at any time it pleases may be after 10 years or 20 years; the power conferred on the State Government is extremely wide as observed by this Court in Shri Bhagwan and anr.
vs Ram Chand and anr.(1).
Therefore it can revoke the permission granted after the decree for eviction is confirmed by the High Court or even the Supreme Court and thus make a mockery of the judicial process; this could not have been the intention of the legislature.
According to Mr. Aggarwal from the very scheme of the Act and from the very nature of the power conferred on the State Government, it cannot be exercised after a suit is instituted after complying with the requirements of subs.
(1 ) of section 3.
His further contention was that on a proper construction of sub section
( 1 ) of section 3, it would be seen that the suit instituted after obtaining the required permission being a validly instituted suit, its progress cannot be interrupted; the permission required under section 3 (1 ) is the permission of the District Magistrate subject to any order under section 3(3) by the Commissioner; in other words the permission given by the District Magistrate is not final till affirmed by the Commissioner; till then it remains tentative; once the Commissioner affirms the same or grants the permission asked for it becomes final and thus amounts to a valid permission to sue; hence a suit filed on the basis of that permission is a validly instituted suit unless the permission granted was revoke by the State Government before the institution of the suit.
Proceeding further he stated that it is true that the order of the Commissioner though final yet it is subject to any order that may be passed by the State Government; but section 3 (1 ), the provision dealing with the permission to file a suit for eviction does not refer to the order under section 7(F); it only speaks of the permission granted by the District Magistrate subject to the order of the Commissioner and not further subject to any orders made by the State Government.
In this connection he invited our attention to the fact that as against the order passed by the District Magistrate under subs.
( 1 ) of section 3, a revision petition can be filed before the Commissioner within 30 days of that order and not thereafter.
The Commissioner has not even the power to condone the delay in filing the revision petition.
Further under subs.
(3) of section 3, the Commissioner is required to hear the application made under sub section
(2) of section 3, as far as may be, within six week from the date of making it.
All these provisions indicate that the legislature was of the opinion that the proceedings under section 3 should be carded_on expeditiously and the decision of the Commissioner should be considered as final.
According to Mr. Aggarwal the question of granting or refusing to grant the permission under s, 3 are primarily to be (1) [1965] 3 S.C.R.218, 304 dealt with only by the District Magistrate and the Commissioner.
They are the only tribunals in the hierarchy of the tribunals constituted for that purpose.
The power given to the Government under section 7(F) is merely a supervisory power.
That is why no limitation is imposed on the exercise of that power either in the matter of time within which it should be exercised or the circumstances under which it can be exercised.
Such a power according to him is a reserve power and therefore has to be exercised before the court 's jurisdiction is invoked, He particularly laid emphasis on the fact that sub section
(1) of section 3, the compliance of which is necessary before validly instituting the suit does not at all refer to an order under section 7(F).
After examining the provisions of this Act, we are constrained to observe that the drafting of this Act leaves considerable room for improvement despite the fact that it was amended twice over.
Though it was intended to be a temporary measure when it was originally enacted it has now reminded in the statute book for over 20 years and there is no knowing how long the same will continue to be in force.
Therefore it is but appropriate that the provisions of this Act should be clear and unambiguous.
From sub section
(1 ) of section 3 it is not possible to find out the contents of the powers of the District Magistrate.
No guide lines are laid down therein to regulate the exercise of the powers of the District Magistrate.
It is not possible to find out from that provision under what circumstances the District Magistrate can grant the permission asked for and under what circumstances he can refuse the same.
It is likely that different District Magistrates are exercising that power in different ways.
One consideration may appeal to one District Magistrate and a totally different consideration may influence another District Magistrate.
It would have been appropriate if the legislature had defined the scope of the powers of the District Magistrate or at least laid down certain guide lines for regulating his discretion.
Sub section
(3 ) of section 3 says that if the Commissioner is not satisfied as to the correctness, legality or propriety of the order passed by the District Magistrate, he may alter or reverse the order of the District Magistrate or make such other order as may be just and proper.
It is not possible to find out on what basis the Commissioner can determine the correctness, legality or propriety of the order made by the District Magistrate.
As seen earlier, no restrictions are placed on the powers of the District Magistrate in granting or refusing to grant the permission asked for under section 3 (1 ).
Therefore the only thing the Commissioner can do is to exercise his discretion in preference to the discretion exercised by the District Magistrate.
Now coming to the power conferred on the State Government under section 7 (F), it would be seen that it is a power of wide amplitude.
It can be exercised by it in any way it pleases.
No restriction either as to the time 305 within which it can be exercised or as to the circumstances under which it can be exercised is placed on the State Government.
Under these circumstances the anomalies pointed out by Mr.Goyal as well as by Mr. Agarwal are inevitable.
Therefore in construing this Act, no useful purpose will be served by taking into consideration the hardship to the parties.
In whatever way we may construe sections 3 and 7(F) hardship to one party or the other is inevitable.
Neither Counsel suggested to us any interpretation which could steer clear of the anomalies pointed out at the bar.
Therefore we have to fall back on the grammatical construction of sub section
(1 ) of section 3 and leave out of consideration all other rules of construction for finding out the intention of the legislature.
Section 3(1) does not.
restrict the landlord 's right to evict his tenant on any of the grounds mentioned in cls.
(a ) to (g) of that sub section.
But if he wants to sue his tenant for eviction on any ground other than those mentioned in those clauses then he has to obtain the permission of the District Magistrate whose discretion is subject to any order passed under sub section
(3) of section 3 by the Commissioner.
These are the only restrictions placed on the power of a landlord to institute a suit for eviction of his tenant.
If a landlord files a suit for the eviction of his tenant without obtaining the permission of the District Magistrate that suit is not maintainable but if he files a suit after obtaining the permission of the District Magistrate and if the Commissioner revokes the permission granted by the District Magistrate in a properly instituted application under section 3(2) then the suit instituted by him will be considered as having been filed without the permission of the District Magistrate because section 3 (1 ) in specific terms says that the permission given by the District Magistrate is subject to any order passed under sub section
In other words the permission given by the District Magistrate does not acquire any finality until either the period fixed for filing an application under sub section (2) of section 3 expires and no application under that section was filed within that time or if an application had been filed within that time, the same had been disposed of by the Commissioner.
The permission to file a suit for eviction assumes finality under section 3 (1 ) once the Commissioner decides the revision petition pending before him.
In fact sub section
(4) of section 3 says that the order of the Commissioner is final.
It is true that that order despite the fact that it is final is subject to any order passed by the State Government under section 7(F).
There is no provision in the Act providing that a suit validly instituted after getting the required permission under section 3 (1 ) ceases to be maintainable because of any order made by the State Government under section 7(F).
Similarly there is no provision in the Act invalidating a decree passed after the Act came into force in a validly instituted suit.
Section 14 provides : 306 "no decree for the eviction of a tenant from any accommodation passed before the date of commencement of this Act shall, in so far as it relates to the eviction of such tenant be executed against him 'as long as this Act remains in force except on any of the grounds mentioned in section 3: Provided that the tenant agrees to pay to the landlord "reasonable annual rent" or the rent payable by him before the passing of the decree whichever is higher ." This provision applies only to decrees passed before the date of the commencement of the Act.
A decree of a Court in a suit validly instituted is binding on the parties to.
the same.
It is true that the finality or the force of a decree can be taken away by a statute, but the Court will not readily infer that a decree passed by a competent Court has become unenforceable unless it is showy that a provision of law has specifically or by necessary implication made that decree unenforceable.
No such provision was brought to our notice.
On an examination o/the relevant provisions of the Act our conclusion is that when the Commissioner sets aside the order passed by the District Magistrate granting permission to file a suit for ejecting a tenant, the order of the Commissioner prevails.
If he cancels the permission granted by the District Magistrate there is no effective permission left and the suit instituted by the plaintiff without awaiting his decision must be treated as one filed without any valid permission by the District Magistrate.
To this extent we are in agreement with the decision of Upadhyaya, J. in Munshi Lal and anr.
vs Shambhu Nath Ram Kishan(1).
From this it follows that the Full Bench decision in Bashi Ram 's case(2) to the extent it held that a suit filed by the landlord after obtaining the permission of the District Magistrate cannot become infructuous even if the Commissioner revokes the permission, is incorrect.
But we agree with the Full Bench that a suit validly instituted after obtaining a permission as required by section 3 (1 ) does not cease to be maintainable even if the State Government revokes after the institution of the suit, the permission granted.
If the State Government revokes the permission granted before the institution of the suit then there would be no valid permission to sue.
In other words the State Government 's power to revoke the permission granted under section 3(1) gets exhausted once the suit is validly instituted.
For the reasons mentioned above, this appeal fails and the same is dismissed.
But in the circumstances of the case, we make no order as to costs.
R.K.P.S. Appeal dismissed.
| IN-Abs | The appellant was a tenant of the respondent in respect of a shop in Agra, Uttar Pradesh.
The respondent applied to the District Magistrate under section 3(1) of the U.P. (Temporary) Control of Rent and Eviction Act, 1947 for permission to institute a suit against the appellant for evicting him from the shop.
The application was rejected by the District Magistrate, but the Commissioner, by order under section 3(3 ), granted the permission.
The appellant thereupon moved the State Government under section, 7(F) of the Act, but it was only after the respondent had flied a suit and ,obtained a decree that the State Government passed an order revoking the permission granted by the Commissioner.
The first Appellate Court, in view of the order under 7(F) act aside the decree of the trial Court.
However in second appeal the High Court, relying upon a Full Bench decision of that Court in Bashi Ram vs Mantri Lal (1965) 1 All 545, decided in favour of the respondent.
In appeal before this Court by.
special leave, the question for consideration was whether a decree for eviction obtained in a suit instituted after obtaining the permission of the Commissioner under section 3(3) of the Act becomes unenforceable if the State Government acting under section 7(F) of the Act revokes the permission granted by the Commissioner after the decree is passed.
HELD: The order of the District Magistrate is by section 3(1) specifically made subject to the order of the Commissioner in revision under section 3(3 ), but the Commissioner 's order according to section 3 (4 ) is final though subject to the order of the State Government under section 7(F).
There is no provision in the Act providing that a suit validly instituted after getting the required permission under section 3 (1 ) ceases to be maintainable because of any order made by the State Government under section 7(F).
[305 G H] Similarly there is no provision in the Act invalidating a decree passed after the Act came into force in a validly instituted suit.
The finality or the force of a decree can be taken away by a statute, .but the Court will not readily infer that a decree passed by a competent Court has become unenforceable unless it is shown that a provision of law has specifically or by necessary implication made that decree unenforceable.
[305 H 306 C D] On an examination of the relevant provisions of the Act the conclusion must be that when the Commissioner sets aside the order passed by the District Magistrate granting permission to file a suit for ejecting a tenant, the order of the Commissioner prevails.
If he cancels the permission granted by the District Magistrate, there is no effective permission left and the suit instituted by.
the plaintiff without awaiting his decision must be treated as one filed without any valid permission by the District Magistrate.
To this extent the decision in Munshi Lal and ant.
Shambhu Nath Ramkishan, was correct.
[305 D F] Sup.
C1/69 2 298 It follows that the Full Bench decision in Bashi Ram 's case to the extent it held that a suit filed by the landlord after obtaining the permission of the District Magistrate cannot become infructuous even if the Commissioner revokes the permission, was incorrect.
[306 F] Bashi Ram 's case was however correctly decided in so far as it held that a suit validly instituted after obtaining a permission as required by section 3(1) does not cease to be maintainable even if the State Government revokes, after the institution of the suit, the permission granted.
if the State Government revokes the permission granted before the institution of the suit, then there would be no valid permission to sue.
In other words the State Government 's power to revoke the permission granted under section 3(1) gets exhausted once the suit is validity instituted.
[306 G] Bashi Ram vs Mantri Lal, (1965) 1, All. 545 and Munshi Lal and ant.
vs Shambhu Nath Ram Kishan, (1958) A.L.J., p. 584; considered.
Dr. S.L. Khoparji vs State Government, (1958) A.LJ., p. 724; Basant Lal Sah vs Bhagwan Prasad Sah, A.I.R. 1964 All.
p. 210 and Shri Bhagwan and ant.
vs Ram Chand and anr.
; , ; referred
|
Criminal Appeal No. 130 of 1966.
Appeal by special leave from the judgment and order dated April 24, 1985 of the Madhya Pradesh High Court, Gwalior Bench in Criminal Appeal No. 55 of 1964.
290 R.L. Kohli, for the appellant.
I. N. Shroff for the respondent.
The Judgment of the Court was delivered by Mitter, J.
This is an appeal by Special Leave from the judgment and order of the Madhya Pradesh High Court, Gwalior Bench on April 24, 1965 in Criminal Appeal No. 55 of 1964.
The said appeal was heard and disposed of along with two other appeals Nos. 44 and 45 of 1964.
The appellant before us, Harnath Singh, was the appellant in Appeal No. 55 of 1964 while Narayan Singh and Chhotelal were the appellants in the other two appeals.
Narayan Singh and Harnath Singh were, convicted by the Additional Sessions Judge, Morena, under section 395 of the Indian Penal Code while Chhotelal was convicted in the same trial under section 395 read with section 75 of the Indian Penal Code.
The prosecution case was as follows.
There was a dacoity at the house of one Dhudilal in village Chhota Kheda on the night of December 10, 1962 in which the inmates of the house were beaten and property, to wit, Rs. 350 in currency notes, some silver ornaments etc., belonging to one Raghunath were taken away by the dacoits from the said house.
Ramkumar (P.W. 1 ) raised an alarm which brought the neighbours on the scene and one of the dacoits, Chhotelal, was caught on the spot and handed over to the police.
The first information report was lodged by Dhudilal at about 9 a.m. on the following morning.
During investigation Rs. 335 in currency notes besides some silver articles and small change were found on the person of Chhotelal.
Some articles were also produced by Narayan Singh on December 12, 1962.
On the same day, on a personal search of the appellant Harnath Singh, four George V silver rupee coins, one Victoria silver rupee coin, one silver half rupee coin and one old square coin with vermillion on them were found and seized.
On December 25, 1962 there were test identification parades of the accused and all the appellants were identified by some of the eye witnesses The appellant, Harnath Singh, was identified by Ramkumar (P.W. 1), Panabai (P.W. 13) and Hari Shankar (P.W. 15).
The articles seized from the accused were also identified.
Chhotelal admitted his presence in the village of the night of the incident and the seizure of Rs. 335 from his person but claimed them as his own.
He denied the seizure of the other articles from his possession.
Narayan Singh denied the recovery of any articles from his house while the appellant Harnath Singh, admitted the seizure of the five rupee coins and the square coin from his person but claimed them as his own.
The Sessions Judge found all the accused guilty and sentenced them as stated.
291 So far as the appellant Harnath Singh is concerned, the High Court held that he had been "identified as one of the dacoits by Ramkumar (P.W. 1), Panabai (P.W. 13) and Hari Shankar (P.W. 15)" and they had also "identified him earlier in a test identification parade.
" Discussing the question as to whether the evidence with regard to the test identification parade was admissible in view of the fact that it was conducted by a Magistrate of the Third Class who was not empowered to record statements under section 164 of the Criminal procedure Code, the High Court was of the view that "the test identification parade . cannot be disregarded as of no value under the circumstances of the case.
" The High Court then went on to consider the evidence against the appellant as to his being concerned in the dacoity.
It relied the testimony of Ramkumar, P.W. 1, that the appellant was standing near his sister, Tulsabai and had a Gajkundi and was firing crackers.
Ramkumar had also given a description of the appellant to the police and stated in his evidence that he was able to identify him from his facial features.
Panabai, another of the identifying witnesses, had stated that the appellant was wearing a black coat and was flashing a torch.
The third identifying witness, Hari Shankar, could give no special reason for identifying the appellant but stated that he was standing near his aunt, Tulsabai.
All these witnesses stated that they had identified the appellant in the identification parade.
Tulsabai did not identify the appellant but had stated that the person standing near her had a black coat on.
The High Court held on the evidence that there was no sufficient reason to discard the testimony of these persons on the point of their identifying the appellant as one of the dacoits although there were some minor discrepancies in their statements.
The High Court also found that the evidence of the witnesses was amply corroborated from other evidence on record.
One of the circumstances which corroborated the testimony of the witnesses, according to the High Court, was the unexplained possession of the appellant of some of the articles taken away by the dacoits from the scene after the incident.
In the first information report there had been specific mention of the loss of four George V rupee coins, one Victoria rupee coin and a gilt half rupee piece.
These correspond with the recovery from the appellant along with one square coin probably of brass all bearing marks of vermillion.
This mark was explained by Raghunath, the claimant of the coins as having been used in the Diwali pooja.
The High Court did not accept the appellants version of his having carried them on his person because they used to be worshipped by his father and grand father.
The High Court held that the 292 presence of the square piece in his possession showed his complicity in the offence.
According to Raghunath this coin was kept separately from the other coins but all bore vermillion mark because of their use in the pooja.
The second circumstance incriminating the appellant as found by the High Court was his unexplained absence from duty in the Chambal Canal Project from December 9, 1962.
While the appellant admitted his absence from duty he tried to account for it by saying that he was ill but offered no independent witness to establish his statement.
Accordingly, the High Court found itself unable to disturb the conviction of the appellant under section 395 and dismissed the appeal.
Before us learned counsel for the appellant contended that the conviction of the appellant could not stand in view of the reliance of the High Court on the record of the test identification parade.
In our opinion, the learned Judges of the High Court did not affirm the conviction relying merely or mainly on the said report.
The elaborate discussion on this point appears to have been prompted by the two judgments in Appeal No. 218/1963 and Appeal No. 35/1964 of the same High Court on which reliance was placed by counsel for the accused.
As noted already, the view of the High Court was that the test identification parade could not be discarded as of no value in the circumstances of the case.
It was only after recording the said view that the High Court proceeded to consider the evidence of the witnesses and the circumstances which corroborated their testimony.
These were only two as discussed above.
It appears therefore that although the High Court did not reject the testimony of the Naib Tehsildar, Dinkar Rao who presided at the parade, it really upheld the conviction of the appellant on other evidence on the record.
Relying principally on the judgment of the Judicial Committee of the Privy Council in Nazir Ahmad vs King Emperor(1) and to certain observations of this Court in Ramkrishan Mithanlal Sharma vs The State of Bombay(2) counsel for the appellant attacked the identification proceedings as being without jurisdiction and as such inadmissible in evidence.
It was further argued that if the High Court had rejected the said evidence, it would not have maintained the conviction of the appellant.
In order to appreciate the foundation for this argument, it is necessary to take a brief note of the reason for holding identification proceedings and the scope thereof.
During the investigation of a crime the police has to hold identification parades for the purpose of enabling witnesses to identify the properties which are the subject matter of the offence or to identify the persons who are concerned therein.
They have thus a two fold object: first, to satisfy the investigating (1) A.I.R. 1936 P.C. 253.
(2) ; 293 authorities that a certain person not previously known to the witnesses was involved in the commission of the crime or a particular property was the subject of the Crime.
It is also designed to furnish evidence to corroborate the testimony which the witness concerned tenders before the court.
The process of identification proceedings and the legal basis of evidence adduced thereat were considered ' by this Court in Ramkrishan Mithanlal Sharma vs The State of Bombay(1).
It was there said (at p. 920): ". it is clear that the process of identification by the identifying witnesses involves the statement by the identifying witnesses that the particular properties identified were the subject matter of the offence or the persons identified were concerned in the offence.
This statement may be express or implied.
The identifier may point out by his finger or touch the property or the person identified, may either nod his head or give his assent in 'answer to a question address to him in that behalf or may make signs or gestures which are tantamount to saying that the particular property identified.
was the subject matter of the offence or the person identified was concerned in the offence.
All these statements express or implied including the signs and gestures would amount to a communication of the fact of identification by the identifier to another person. .The distinction. between the mental act of identification and the communication thereof by the identifier to another person is quite logical and such communications are tantamount to statements made by the identifiers. .The physical fact of identification has thus no separate existence apart from the statement involved in the very process of identification . ." On the above logic the Court pointed out that identifications by a police officer would be hit by section 162 of the Code of Criminal Procedure.
It being hardly practicable to have identification proceedings conducted by private citizens they are as a rule held by Magistrates at the request of the investigating police 'authorities.
Usually the record of the proceedings is made on certain forms and one such, exhibit P 1, was used in this case.
This form contains 9 columns, the first being for the serial number, the second for the names of the witnesses who identified the accused, the third for names of the accused who are to be identified, ' the fourth for the number of persons who were mixed in the identification parade, the fifth being headed "correctly identified"; the sixth reading "wrongly identified", the seventh for "statement of the witnesses (1) ; 294 about identification", the eighth for the signature of the identifying witnesses and the ninth and last being for remarks.
The note at the end of the form shows how the parade was conducted, where it was held, how many persons were mixed up with the accused in the case, what precautions were taken so that the witnesses could not see the steps being taken for mixing the accused persons etc.
The last sentence of the form reads: "From their gestures it appeared that the witnesses had correctly identified the accused persons.
" In Nazir Ahmad 's case(1), the appellant .was convicted mainly, if not entirely, on the strength of a corffession said to have been made by the appellant to a Magistrate who was examined at the trial.
The Magistrate however did not record the confession under section 164 of the Criminal Procedure Code which provides that a Magistrate of the class therein mentioned may record any statement or confession made to him in the course of an investigation in the manner prescribed and after complying with the formalities therein laid down.
The Judicial Committee found that though the Magistrate was manifestly acting under Part V of the Criminal Procedure Code, he neither purported 'to follow nor in fact followed the procedure of sections 164 and 364 of the Code.
To quote the words of the judgment to show absence of non 'compliance with secs.
164 and 364 of the.
Criminal Procedure Code: ". there was no record in existence at the material time (at the time the alleged confession was made), there was nothing to be shown or to be read to the accused, and nothing he could sign or refuse to sign.
" The Magistrate gave no explanation as to why he adopted this procedure.
It was argued on behalf of the appellant that by necessary implication in the Code of Criminal Procedure the Magistrate must either proceed under section 164 of the Code or not at all.
Considering the position of the accused persons and the position of the magistracy, the Judicial Committee observed that it was most undesirable that Magistrates and Judges should be in the position of witness insofar it could be avoided.
According to the Judicial Committee: ". it would be particularly unfortunate if Magistrate were asked at all generally to act rather as police officers than as judicial persons; to be by reason of their position freed from the disability that attaches to police officers under section 162 of the Code; and to be 'at the same time freed, notwithstanding their position as Magistrates, from any obligation to make records under section 164.
In the result they would indeed be relegated to the ,position of ordinary citizens as witnesses and then would be.
(1) A.I.R. 1936 P.C. 253.
295 required to depose to matters transacted by them in their official capacity unregulated by any statutory rules of procedure or conduct whatever," In the result it was held that the Code of Criminal procedure did not sanction any departure from the mode in which the confeSsions were to be dealt with by.
the Magistrates when made during an investigation.
This decision of the Judicial Committee was considered by this Court in Deep Chand vs The State of Rajasthan(1) and the ' above observations were adopted In this case, one Suraj Bhan had been abducted by certain persons and according to the prosecution case he was taken first to the house of Deep Chand and kept blind folded and confined in a small room for 17 days.
During this period after temporary removal of the bandage over his eyes he was made to write letters to his father asking for moneys to be paid for releasing him.
He was thereafter removed to the house of one Lachman.
As regards the identification of Deep Chand 's house, the High Court accepted the evidence of Suraj Bhan that he had been able to note certain features of it through a chink in the wall of his room.
Suraj Bhan 's evidence was corroborated by the evidence of one Devi Singh, a Magistrate who had taken Suraj Bhan along with him to the house of Deep Chand.
The Magistrate had inspected the house and got a plan prepared under his supervision and recorded a memorandum in which his observations and the statements made by Suraj Bhan were noted down.
The Magistrate gave evidence at the trial describing the building of Deep Chand and proved the memorandum prepared by him.
Objection was taken by the appellant to the verification proceedings conducted by the Magistrate on the strength of Nazir Ahmad 's case(9) and it was argued that the High Court had gone wrong in acting upon the memorandum are the Magistrate.
It was pointed out by this Court prep by . that the decision in Nazir Ahmad 's case(a) did not preclude a Magistrate from deposing to relevant facts if no statute precluded him from doing so either expressly or impliedly.
It was also said that neither the evidence Act nor the code of Criminal procedure prohibited a Magistrate from deposing to relevant facts within the meaning of section 9 of the.
Evidence Act.
Reference was made by this Court to the observation in Amiruddin Ahmad vs Emperor(a) in relation to identification proceedings that "the main concern of the Court would seem to be to ensure that evidence not strictly admissible is not admitted.
" In that case, the High Court had further observed that the verifying Magistrate should not be permitted to speak to statements said to have been made to.
him in the course of the proceedings.
The High Court observed that (1) (1962) 1 S.C.R.662 (2) A.I.R. 1936 P.C. 253.
(3) I.L.R. 45 Calcutta 557.
296 "additional statements being statements made in the course of an investigation, when not recorded in the manner provided in section 164 of the Code of Criminal Procedure. are inadmissible.
" According to this Court, the above decision was "an authority for the position that the evidence given by a Magistrate on the basis of the verification proceedings conducted by him is relevant evidence, though he could not speak to statements made by the accused or a witness recorded by him in contravention of section 164 of the Code of Criminal Procedure.
" Deep Chand 's case(1) goes to show that a Magistrate when called upon in a case like this to conduct verification proceedings should confine his attention only to the steps to be taken to ensure that the witnesses were able to identify certain persons alleged to have been concerned in the commission of the crime or to identify certain things which were said to be the subject matter thereof.
The Code of Criminal Procedure does not sanction his transgression of this limit and recording of other statements which may have a bearing in establishing the guilt of the accused except in accordance with section 164 of the Code.
In this case the Magistrate gave evidence to the effect that he was a Naib Tehsildar at Sirpur on 26th December 1962 on which date he had executed the proceedings of identification parade of the three accused including the appellant.
He also stated that he had the power of a Third Class Magistrate.
After stating how the parade was conducted he recorded statements in support of the identification of the three accused by different persons.
He also surported to give evidence of what the witnesses had said after identifying a particular accused.
Learned counsel for the appellant contended that as he had purported to record statements made in the course of investigation, the entire evidence of the Magistrate including the record of the identification proceedings became inadmissible because he was a Third Class Magistrate not empowered to proceed under section 164 Cr.
P.C. We find ourselves unable to accept this argument.
The Magistrate was called upon only to conduct the identification proceedings.
He was not required to record any confession or to interrogate witnesses to elicit any other facts or call upon them to make any statement beyond mere identification.
The statements in column 7 would therefore be inadmissible in evidence.
This would not however be applicable to the record under column 5.
The High Court did not refer to the statements in column 7 at all.
It would therefore be clear that the judgment does not suffer from the infirmity complained of and the appeal must fail.
It is therefore dismissed.
G.C. Appeal dismissed.
| IN-Abs | The appellant who was suspected of having taken part in a dacoity was put .up 'for identification by the witnesses in a test identification parade which was conducted by a Magistrate of the Third Class.
The Magistrate noted in Co1.
5 of the prescribed form the fact of identification by a witness, in Co1. 7 he recorded further statements made by the witness after he had purported to identify the accused.
Later the appellant was tried for the offence under section 395 at the Indian Penal Code, and convicted.
His appeal to the High Court failed.
In this Court it was urged on behalf of the appellant that the record of the test identification parade was inadmissible in evidence as the statements the rein were recorded by a Magistrate of the Third Class who was not empowered under section 164 of the Code of Criminal Procedure to record such statements.
HELD: A Magistrate when called upon to conduct verification proceedings should confine his attention only to the steps to he taken to ensure that the witnesses were able to identify certain persons alleged to have been concerned in the commission at the crime or to identify certain things which were said to be the subject matter thereof.
The Code of Criminal Procedure does not sanction his transgression of this limit and recording at other statements which may have a bearing in establishing the guilt of the accused except in accordance with section 164 of the Code.
[296 C D] In the present case the Magistrate was called upon only to conduct the ' identification proceedings.
He was not required to record any confession or to interrogate witnesses to elicit any other facts or call upon them to make any statement beyond mere identification.
The statements in Co1. 7 would therefore be inadmissible in evidence.
This would however not be applicable to the record under Col. 5 [296 G] As the High Court had not taken into consideration the statements in Col. 7 its judgment could not be said to suffer 'from the infirmity of having relied on inadmissible evidence.
[296 H] Deep Chand vs State of Rajasthan, ; , applied.
Nazir Ahmad vs King Emperor, A.I.R. 1936 P.C. 253 and Ramkrishan Mithanlal Sharma vs State o/Bombay; , , referred to.
|
ivil Appeal No. 1049 of 1965.
Appeal from the judgment and order dated July 31, 1964 of the Gujarat High Court in Special Civil Application No. 1054 of 1963.
Soli Sorabjee, D.M. Damodar, B. Datta and J.B. Dadachanji, for the appellant.
V. A. Seyid Muhammad and S.P. Nayar, for the respondents.
P.R. Mridul, Janendra Lal and B.R. Agarwala, for intervener No. 1.
J.B. Dadachanji, for interveners Nos. 2 and 3.
Ramaswam, J.
This appeal is brought by certificate from the judgment of the High Court of Gujarat, dated July 31, 1964 in Special Civil Application No. 1054 of 1963.
The appellant is the sole proprietor of Messrs Gordhandas and Co. carrying on business as a dealer in textiles in Bombay.
Under an agreement between the appellant on the one hand and the Gandevi Vanat Udhoog Sahkari Mandli Ltd. (hereinafter referred to as the 'Society ') the Society manufactured cotton fabrics during the period between June, 1959 and September 1959 and from October 1, 1959 to January 31, 1961 for the appellant on certain terms and conditions which were later reduced to writing on October 12, 1959.
Under these terms, the Society agreed to carry out weaving work on behalf of the appellant on payment of weaving charges fixed at 19 nP. per yard which included expenses the Society would have to incur in transporting yarn from Bombay and cotton fabrics woven by the Society to Bombay.
The appellant was to supply yarn to be delivered at Bombay to the Society and the Society was to made its own arrangement to bring the yarn to its factory at Gandevi.
Clause 11 provided that the yarn supplied by the appellant, remaining either in stock or in process or in the form of ready made pieces would be in the absolute ownership of the appellant and the Society, as the bailee of the yarn, undertook to 255 take such care of it as it would normally take if the yarn belonged to it.
The Society also undertook to have the yam insured against fire, theft and all other risks including transit risks and further undertook to reimburse the appellant in case it failed to do so.
The terms of the agreement though recorded on October 12, 1959 were to be deemed to be effective as from April 21, 1959 and the agreement was terminable by either party by giving one month 's notice.
The Society was a cooperative society carrying on its work at Gandevi and was registered on or before May 31, 1961 and consisted of members who owned powerlooms.
The Society started the weaving work for the appellant some time in May or June 1959 and supplied to the appellant between June 1, 1959 and January 3, 1961 cotton fabrics measuring 3,19,460 yards.
The Society had obtained L 4 licence as required by the (hereinafter referred to as the 'Act ').
By letters, dated August 29, 1959 and October 27, 1961 the Excise Department had granted exemption from excise duty payable on cotton fabrics manufactured by the Society under the notification issued by the Central Government.
On November 10, 1961 the excise authorities issued a notice.
the appellant demanding a sum of Rs. 1,69,263.44 payable as excise duty.
It was alleged that the duty was.
payable by the appellant as it had got the goods manufactured through the Society and had got them removed from the Society 's factory at Gandevi without payment of duty.
On January 10, 1962 the Superintendent of Central Excise:, Bulsar sent another notice to show cause why penalty should not be imposed upon the appellant for contravention of rule 9 and why duty should not be charged for the cotton fabrics so removed by the appellant.
The appellant showed cause and on November 26, 1962 the Assistant Collector of Central Excise and Customs, Surat held that the appellant was liable to pay excise duty to.
the extent of Rs. 2,20,574.74, being the total amount of basic duty and a penalty of Rs. 250 was levied for contravention of rule 9.
The appellant preferred an appeal to the Collector of Central Excise Baroda but the appeal was dismissed.
Thereafter the appellant moved the High Court of Gujarat for grant of a writ under article 226 of the Constitution.
The High Court dismissed the writ petition by its judgment, dated July 31, 1964 but gave a direction that the: respondent was to work out the excise duty on the footing that the appellant was entitled to exemption from duty altogether in respect of goods supplied for the period from June 1, 1959 to September 30, 1959.
As regards the two other periods i,e., October 1, 1959 to April 30, 1960 and from May 1, 1960 to January 31, 1961, the High Court dismissed the writ petition and directed the respondent to charge duty at the rate of 29.3 nP per square meter.
256 Clause (d) of section 2 of the Act defines "excisable goods" as meaning goods specified in the First Schedule as being subject to a duty of excise.
Item 19 in the First Schedule provides for excise duty at different rates depending upon the variety of cotton fabrics.
Section 3 which is the charging section, provides for the levy.
and collection of duties specified in the First Schedule on all excisable goods which are produced or manufactured in India.
Rule 8 authorises the Central Government to exempt any excisable goods from the whole or any part of duty payable on such goods.
Clause (1) of rule 9 provides that no excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed.
Clause (2) of that rule provides that if any excisable goods are, in contravention of sub rule (1 ), deposited in, or removed from any place specified therein, the producer or manufacturer thereof shall pay the duty leviable on such goods upon written demand made by the proper officer and shall also be liable to a penalty which may extend to two thousand rupees and such goods shall be liable to confiscation.
In pursuance of the power under rule 8, the Central Government issued notifications from time to time granting exemptions on cotton fabrics, though such goods were excisable goods under tariff item 19.
The first relevant notification is dated January 5, 1957.
By this notification certain classes of cotton fabrics were exempt from payment of excise duty.
of the items exempted the seventh item is as follows: "Cotton fabrics manufactured by or on behalf of the same person in one or more factories commonly known as powerlooms (without spinning plants) in which less than 5 powerlooms in all are installed;" The next relevant notification is notification No. 74/59, dated July 31, 1959 which reads.
as follows: "G.S.R. 899 In pursuance of sub rule (1) of rule 8 of the Central Excise Rules, 1944, as in force in India and as applied to the State of Pondicherry, ' the Central Government hereby exempted cotton fabrics produced by any cooperative society formed of owners of cotton powerlooms, which is registered or which may be registered on or before the 31st March, 1961 under any law relating to co operative societies from the whole of the duty leviable thereon, subject to the following conditions : 257 (a) that every member of the co operative society has been exempt from excise duty for three years immediately preceding the date of his joining such society; (b) that the total number of cotton powerlooms owned by the co. operative society is not more than four times the number of members forming such society; (c) that a certificate is produced by each member of the co operative society from the State Government concerned or such officer as may be nominated by the State Government that he is a bona fide member of the society and that the number of cotton powerlooms in his ownership and actually operated by him does not exceed four and did not exceed four at any time during the three years immediately preceding the date of his joining the society, and that he would have been exempt from excise duty even if he had not joined the co operative society;. . .
The Central Government issued another notification, dated April 30, 1960 by which the earlier notification, dated July 31, 1959 was superseded.
By this notification the Central Government exempted cotton fabrics produced on power looms owned by any co operative society or owned by or allotted to the members of the society from the whole of the duty leviable thereon subject .to the four conditions.
therein set out.
The notification,dated April 30, 1960 is to the following effect: "In pursuance of sub rule (1 ) of rule 8 of the Central.
Excise Rules, 1944, as in force in India and as applied to the State of Pondicherry, and in supersession of the Notification of the Govt.
of India, Ministry of Finance (Department of Revenue) No. 74/59 Central Excise, dated the 31st July 1959, the Central Government hereby exempts cotton fabrics produced on powerlooms owned by any cooperative society or owned by or allotted to the members of the society, which is registered or which may be registered on or before the 31st March, 1961 under any law relating to cooperative societies, from the whole of the duty leviable thereon subject to the following conditions : (a) that every member of the cooperative society who has been a manufacturer of cotton fabrics on powerlooms, has been exempt from excise duty for three years immediately preceding the date of his joining such society.
258 (b) that the total No. of cotton powerlooms owned by the cooperative society or owned by or allotted to its members is not more than four times the number of members forming such society.
(c) that each member of the cooperative society produces a certificate from the State Government concerned or such officer as.
may be nominated by the State Government that he is a bona fide member of the society and that the number of cotton power looms owned by or allotted to him and actually operated by him does not exceed four and did not exceed four at .any time during that three years immediately preceding the date of his joining the society and that he would have been exempt from excise duty even if he had not joined the cooperative society and. . . . . " The main contention on behalf of the appellant is.
that the ,case fell within the language of the two notifications, dated July 31, 1959 and April 30, 1960 and the appellant was entitled to ,exemption from payment of excise duty on the cotton fabrics.
The argument was stressed that the exemption applied to.
all cotton fabrics which were produced on power looms owned by the Cooperative Society or on powerlooms.
allotted to its members and it was not a relevant consideration as to who.
produced or manufactured such fabrics, whether it was the Society itself or its members or even outsiders.
It was conceded by the appellant that it was the owner of the cotton fabrics.
But even upon that assumption the claim of the appellant is that it was entitled to exemption from excise duty as it was covered by the language of the two notifications already referred to.
In our opinion, the argument of the appellant is well founded and must be accepted as.
correct.
The notification, dated July 31, 1959 grants exemption to "cotton fabrics produced by any Co operative Society formed of owners ,of cotton powerlooms which is registered or which may be registered on or before March 31, 1961" subject to four conditions set out in the notification.
In the next notification, dated April 30, 1960 exemption was granted to "cotton fabrics.
produced on powerlooms owned by any cooperative society or owned by or allotted to the members of the society, which is registered or which may be registered on or before March 31, 1961" subject to, the conditions specified in the notification.
It was contended on behalf of the appellant that under the contract between the appellant and the 'Society there was no relationship of master and servant but.
the appellant supplied raw material and the contractor i.e., the Society produced the goods.
But even on the assumption that the appellant had manufactured the goods by employing hired labour and was therefore a manufacturer, still the appellant was entitled to 259 exemption from excise duty since the case fell within the language of the two notifications, dated July 31, 1959 and April 30, 1960, and the cotton fabrics.
were produced on power looms owned by the co operative society and there is nothing in the notifications to suggest that the cotton fabrics should be produced by the Cooperative Society "for itself" and not for a third party before it was entitled to claim exemption from excise duty.
It was contended on behalf of the respondent that the object of granting exemption was to encourage the formation of co operative societies which not only produced cotton fabrics but which also consisted of members, not only owning but having actually operated not more than four power looms during the three years immediately preceding their having joined the society.
The policy was that instead of each such member operating his looms on his own, he should combine with others by forming a society which, through the cooperative effort should produce cloth.
The intention was that the goods produced for which exemption could be claimed must be goods produced on its own behalf by the society.
We are unable to accept the contention put forward on behalf of the respondents as correct.
On a true construction of the language of the notifications, dated July 31, 1959 and April 30, 1960 it is clear that all that is.
required for claiming exemption is that the cotton fabrics must be produced on power looms owned by the cooperative society.
There is no further requirement under the two notifications that the cotton fabrics must be produced by the Co operative Society on the powerlooms "for itself".
It is well established that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words.
The entire matter is governed wholly by the language of the notificatlon.
If the tax payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority.
If such intention can be gathered from the construction of the words of the notification or by necessary implication therefrom, the matter is different, but that is not the case here.
In this connection we may refer to the observations of Lord Watson in Salomon vs Salomon & Co.(1): "Intentlon of the legislature is a common but very slippery phrase, which, popularly understood may signify anything from intention embodied in positive enactment to speculative opinion as to what the legislature probably would have meant, although there has been an omission to enact it.
In a Court of Law or Equity, what the Legislature intended to be done or not to be done can only be legitimately ascertained from that which it has chosen to enact, either in express words o.r by reasonable and necessary implication." (1) ; , 38.
260 It is an application of this principle that a statutory notification may not be extended so as to meet a casus omissus.
As appears in the judgment of the Privy Council in Crawford vs Spooner(1). ". we cannot aid the legislature 's defective phrasing of the Act, we cannot add, and mend, and, by construction, make up deficiencies which are left there.
" Learned Council for the respondents is possibly right in his submission that the object behind the two notifications is to encourage the actual manufacturers of handloom cloth to switch over to power looms by constituting themselves into Cooperative Societies.
But the operation of the notifications has to be judged not by the object which the rule making authority had in mind but by the words which it has employed to effectuate the legislative intent.
Applying this principle we are of opinion that the case of the appellant is covered by the language of the two notifications, dated July 31, 1959 and April 30, 1960 and the appellant is entitled to exemption from excise duty for the cotton fabrics produced for the period between October 1, 1959 to April 30, 1960 and from May 1, 1960 to January 3, 1961.
It follows therefore that the appellant is entitled to the grant of a writ in the nature of certiorari to quash the order of the Assistant Collector of Central Excise of Baroda, dated November 26, 1962 and the appellate order of the Collector of Central Excise, dated November 12, 1963.
For the reasons expressed we hold that the judgment of the High Court of Gujarat, dated July 31, 1964 should be set aside, that Special Civil Application No. 1054 of 1963 should be allowed and that a writ in the nature of certiorari should be granted to quash the order of the Assistant Collector of Excise and Customs dated November 26, 1962 and the order of the Collector of Excise dated November 12, 1963.
This appeal is accordingly allowed with costs.
R.K.P.S. Appeal allowed.
| IN-Abs | The appellant who was a dealer in textiles in Bombay entered into an agreement with a registered cooperative society for weaving yarn supplied by him into cotton fabrics on powerlooms owned by its members.
The Society had obtained L 4 licence as required by the .
Under Rule 8 of the Rules made under the Act.
the Central Government was empowered to exempt any excisable goods from the whole or any part of duty payable on such goods.
In exercise of the power under Rule 8, the Central Government by a notification dated July 31, 1959 ' granted exemption to "cotton fabrics produced by any Cooperative Society/formed of owners of cotton powerlooms which is .registered or which may be registered on or before March 31, 1961" subject to certain conditions set out in the notification.
A subsequent notification dated April 30, 1960 granted exemption to "cotton fabrics produced on powerlooms owned by any Cooperative Society or owned by or allotted to the members of the Society which is registered on or before March 31, 1961".
On the strength of these notifications the appellant sought exemption from excise duty in respect of ' the cotton fabrics which were manufactured for it on powerlooms by the Cooperative Society.
The excise authorities did not accept the claim for exemption and in a writ petition filed by the appellant, the High Court gave only partial relief.
In appeal before this Court the question was whether the exemption granted under the; notifications in question could be claimed only when the cotton fabrics were manufactured by a Cooperative Society 'for itself.
HELD: On a true construction of the language of the notifications dated July 31, 1959 and April 30, 1960, it is clear that all that is required for claiming exemption is that the cotton fabrics must be produced on powerlooms owned by the Cooperative Society.
There is no further requirement under the two notifications that the cotton fabrics must be produced by the cooperative society on powerlooms "for itself '.
The appellant was therefore entitled to the exemption claimed.
[259 D E] It is well established that in a taxing statute there is no room for any intendment but regard must be had to the dear meaning of words.
A statutory notification may not be extended so as to meet a casus omissus.
It could be that the object behind the two notifications in question was to encourage the actual manufacturers of handloom cloth to switch over, to powerlooms by constituting themselves into Cooperative Societies.
But, the. operation of the notifications had to be judged not by the object which 254 the rule, making authority had in mind but by the words which it had employed to effectuate the legislative intent.
Applying this principle, the case of the appellant was covered by the language of the: two notifications and the appellant was entitled to exemption from excise duty for the cotton fabrics.
[259 E; 260 A D)] Salomon vs Salomon & Co. ; , 38 and Crawford vs Spooner, , referred to.
|
Civil Appeal No. 822 of 1966.
Appeal by special leave from the judgment and order, dated April 27, 1965 of the Punjab High Court in Civil Revision No. 841 of 1964.
Sarjoo Prasad, D.N. Mishra and Ravinder Narain, for the appellants.
A.K. Sen, S.V. Gupte, B.P. Maheshwari and R.K. Maheshwari, for respondent No. 1 The Judgment of S.M. SIKRI and R.S. BACHAWAT was delivered by SIKRI, J.K.S. HEGDE, J., delivered a separate Opinion.
Sikri, J.
This appeal by special leave is directed against the judgment, dated April 27, 1965, of the High Court of Punjab at Chandigarh (section B. Capoor, J.) dismissing Civil Revision No. 841 of 1964.
The Civil Revision arose out of the following facts.
The following pedigree table shows the relationship between the parties: Sohan Lal (Decd.) Husband of Gujri Harbans Lal (D) Sudarshan L(D) husband of Kamla Wati husband of Lachmi Devi (Resp.6) Satish Rakeah Jatindar Kaka Chand Surinder Kumar Kumar Kumar Kumar (Minor) Rani (Resp.
6) App.
1 App.
2 App.
3 App. 4 (Minor) Smt.
Smt Nirmal Kanda Lajya Devi Devi Devi Reap.
3 Reap.4 Reap.5 On the death of Sohan Lal, Behari Lal was appointed as arbitrator by Harbans Lal, Surinder Kumar (then a minor through his mother Smt.
Lachmi Devi) and Smt.
Gujri, widow of Sohan Lal, for partition of the joint property.
Behari Lal, by his award dated October 21, 1956, divided the property into two equal 246 shares, between Harbans Lal and Surinder Kumar.
Harbans Lal and Surinder Kumar signed the award.
Harbans Lal died on May 20, 1960, upon which Surinder Kumar filed a suit for partition of the properties, the subject matter of the award.
This suit was dismissed as withdrawn on March 13, 1962.
On March 11, 1962, Behari Lal, arbitrator, filed an application under section 14 of the Indian (X of 1940) hereinafter referred to as the Act for filing the award in Court and for making the same a rule of the Court.
Surinder Kumar entered appearance and filed objections under section 30 of the Act.
One of the objections was that the award dated October 21, 1956, was not admissible in evidence for want of proper stamp and registration and could not, 'therefore, be made a rule of the Court.
On January 31, 1963, the objections were dismissed by Miss Harmohinder Kaur, Subordinate Judge, First Class, Ludhiana, as time barred, but she did not make the award a rule of the Court as there was a further objection to the effect that the award not having been executed on a properly stamped paper and not having been registered, was not admissible in evidence.
This objection was dealt with by Shri Om Parkash Saini, Subordinate Judge, First Class, Ludhiana, who, by his order, dated June 5, 1963, held that the award in question was not admissible in evidence as it was executed on deficiently stamped paper and was not registered.
He accordingly dismissed the application.
An appeal was taken to the District Judge, and the Additional District Judge by his order, dated November 23, 1964, upheld the order of the Subordinate Judge.
A revision was then taken to the High Court.
Capoor, J., held that the award actually effected a partition and required registration under section 17(1)(b) of the Indian .
The learned Judge dissented from the decision of & Full Bench of the Patna High Court in Seonarain Lal vs Prabhu Chand(1), and preferred to follow the view expressed by the Bombay High Court in Chimanlal Girdhar Ghanchi vs Dahyabhai Nathubhai Ghandhi,(2) by the Nagpur High Court in M .A. M. Salamullah Khan vs
M. Noorullah Khan,(3) by the Rangoon High Court in U. Keltaha vs
U. Pannawa,(4) and by the Calcutta High Court in Nani Bela Saha vs Ram Gopal Saha(5).
He accordingly dismissed the revision petition.
The decision of the Patna High Court was, however, later followed by a Full Bench of the Punjab and Haryana High Court in Sardool Singh vs Hari Singh(6), judgment, dated November 8, 1966.
(1) I.L.R. 37 Pat.
(2) A.I.R. 1938 Bom.
(3) A.I.R. 1939 Nag. 233, 235.
(4) A.I.R. 1940 Rang.
(5) A.I.R. 1945 Cal.
19, 21 22.
(6) I.L.R. [1967] 1 Pun.
& Hat.
247 The question which arises before us is whether an award given under the Act on a private reference requires registration under section 17(1) (b) of the Indian , if the award effects partition of immovable property exceeding the value of Rs. 100.
The main reason given by Sinha, J. speaking for the Patna Full Bench in Seonarain Lal vs Prabhu Chand(1), for holding that such an award does.
not require registration is that under the scheme of the Act a private award, unless a decree is passed in terms of the award, has no legal effect.
this, according to him, follows from the conclusion that once a matter has been referred to arbitration, it comes within the immediate control of the Court under the Act, and no other authority has any jurisdiction to deal with the matter except as provided for in section 35 of the Act.
He thought that what distinguishes the provisions in the from the provisions in the Second Schedule in the Code of Civil Procedure is that the Act bars jurisdiction of all Courts to Pronounce upon the validity, effect or existence of an award or arbitration agreement except the Court under the Act itself.
Sinha, J., looking at it from another point.
of view, namely, that an award is only effective when a decree follows the judgment upon the award, observed that such an award may be covered by the exception mentioned in section 17(2)(vi) (any decree or order of a Court) of the .
The Punjab Full Bench has followed this reasoning, and indeed reproduced paras 5 to 15 of the Patna Full Bench judgment in its own judgment.
Mahajan, J., with whom the two other Judges agreed, observed: "I am in respectful agreement with the entire line of reasoning in the Patna case barring the underlined observations : ". an award is only effective when a decree follows the judgment on the award such an award may be covered by the exception mentioned in section 17(2) (vi) (any decree or order of a Court) of the ." If these.
observations are meant to convey that award as such is covered by the exception (vi) of section 17 (2) of the , I am unable to agree.
But the decree that follows the award when it is made a rule of the Court, no exception can be taken to the view that such a decree is covered by the exception.
" The Punjab Full Bench gave two additional reasons: "(1) If an award is registered, it is still a waste paper unless it is made a rule of the Court.
Thus registration does not, in any manner, add to its efficacy or give it any added competence.
Section 32 of the (1) I.L.R. 37 Pat.252.
248 is specific for no right can be rounded on an award as such after coming into force of the 1940 ; (2) It is not disputed and indeed it could not be that the Court has the power, under section 16, to remit the award from time to time.
If registration of an award is an essential pre requisite before it could be made a rule of the Court under section 17, every time an award is remitted and a new award is made, the new award will require registration.
The result would be that, in the same controversy, there can be not only one registration but a number of registrations regarding the same title, a situation which is not even envisaged by the .
" It seems to us that the main reason given by the two.
Full Benches for their conclusion is contrary to.
what was held by this Court in its unreported decision in M,Is.
Uttam Singh Dugal & Co. vs The Union of India(1).
The facts in this case, shortly stated, were that M/s. Uttam Singh Dugal & Co. filed an application under section 33 of the Act in the Court of the Subordinate Judge,Hazaribag.
The Union of India, respondent No. 1, called upon respondent No. 2, Col. S.K. Bose, to adjudicate upon the matter in dispute between respondent No. 1 and the appellant company.
The case of M/s. Uttam Singh Dugal & Co. was that this purported reference to respondent No. 2 for adjudication on the matters alleged to be in dispute between them and respondent No. 1 was not competent because by an award passed by respondent No. 2 on April 23, 1952, all the.
relevant disputes between them had been decided.
The High Court held inter alia that the first award did not create any bar against the competence of the second reference.
On appeal this Court after holding that the application under section 33 was competent observed as follows: "The true legal position in regard to the effect of an award is not in dispute.
It is well settled that as a general rule, all claims which are the subject matter of a reference to arbitration merge in the award which is pronounced in the proceedings before the arbitrator and that after an award has been pronounced, the rights and liabilities of the parties in respect of the said claims. can be determined only on the basis of the said award.
After an award is pronounced, no action can be started on the original claim which had been the subject matter of the reference.
As has been observed by Mookerjee, J. in the case of Bhajahari Saha Banikya vs
Behary Lal Basak(2) "the award is, in fact, a final (1) Civil Appeal No. 162 of 1962 judgment delivered on October 11, 1962.
(2) at p. 898.
249 adjudication of a Court of the 'parties ' own choice, and until impeached upon sufficient grounds in an appropriate proceeding, an award, which is on the fact of it regular, is conclusive upon the merits of the controversy submitted, unless possibly the parties have intended that the award shall not be final and conclusive. in reality, an award possesses all the elements of vitality, even though it has not been formally enforced, and it may be relied upon in a litigation between the parties relating to the same subjectmatter.
" This conclusion, according to the learned Judge, is based upon the elementary principle that, as between the parties and their privies, an award is entitled to that respect which is due to the judgment of a court of last resort.
Therefore, if the award which has been pronounced between the parties has, in fact, or can, in law, be deemed to have dealt with the present dispute, the second reference would be incompetent.
This position a lso has not been and cannot be seriously disputed." ' This Court then held on the merits "that the dispute in regard to overpayments which are sought to be.
referred to the arbitration of respondent No. 2 by the second reference are not new disputes; they are disputes in regard to.
claims which the Chief Engineer should have made before the arbitration under the first reference.
" This Court accordingly allowed the appeal and set aside the order passed by the High Court.
This judgment is binding on us.
In our opinion this judgment lays down that the position under the Act is in no way different from what it was before the Act came into force, and that an award has some legal force and is not a mere waste paper.
If the award in question is not a mere waste paper but has some legal effect it plainly purports to or affects property within the meaning of section 17(1)(b) of the .
We may mention that an appeal was filed in this Court against the decision of the Division Bench of the Patna High Court, which had referred the case of Sheonarain Lal vs Prabhu Chand(1) to the Full Bench for opinion on certain questions and which decided the case in accordance with that opinion, and the same was dismissed by this Court in Sheonarain Lal vs Rameshwari Devi(2) in which the judgment was delivered by the same Bench which decided the case of M/s. Uttam Singh Dugal vs The Union of India(a).
It is true that this Court in Sheonarain Lal vs Rameshwari Devi(2) did not expressly rule on the validity (1) I.L.R. 37 Pat.
(2) Civil appeal No. 296 of 1960 judgment delivered on December 6, 1962.
(3) Civil Appeal No. 162 of 1962 judgment delivered on October 11, 1962.
C1/69 17 250 of the answer given by the Patna Full Bench in Sheonarain Lal vs Prabhu Chand(1) that such awards did not require registration, but decided the case on the point whether the award in dispute in that case in fact purported or operated to create a right, title or interest of the value of more than Rs. 100 in immovable properties.
But, after holding that the document did not operate to create or extinguish any right in immovable property, this Court observed: "The position would have been otherwise if the arbitrators had directed by t he award itself that tiffs shop would go to Prabhu Chand without any further document.
In that case the award itself would have created in Prabhuchand a right to these properties.
That is not, however, the provision in the award.
In the absence of a registered document, Prabhu Chand would get no title on the award and Sheonarain 's title would remain in the shop.
" In this connection we may mention two other decisions of this Court.
In Champalal vs Mst.
Samarath Bai(2), Kapur, 1., speaking for the Court, observed as follows: "The second question that the award required registration and would not be filed by the arbitrators before it was registered is equally without substance.
The filing of an unregistered award under section 49 of the is not prohibited; what is prohibited is that it cannot be taken into evidence so as to affect immovable property falling under section 17 of the Act.
That the award required registration was.
rightly admitted by both parties.
" Again in Kashtinathsa Yamosa Kabadi vs Narsingsa BhctsKarsa Kabadi(3) Shah J., speaking for the Court observed: "The records made by the Panchas about the division of the properties, it is true, were not stamped nor were they registered.
It is however clear that if the record made by the Panchas in so far as it deals with immovable properties is regarded as a non 'testamentary instrument purporting or operating to create, .declare, assign, limit or extinguish any right, title or interest in immovable property, it was compulsorily registerable under section 17 of the , and .would not in the absence of registration be admissible in evidence." (1) I.L,R. 37 Pat. 252.
(2) ; , 816 (3) ; , 806. 251 In view of the above decisions it is not necessary to refute the other reasons given by both the Full Benches, but out of respect for the learned Judges we will deal with them.
We may mention that no comment was made in these cases on the provisions of para 7 of Schedule 1 to the Act.
This para provides: "7.
The award shall be final and binding on the parties and persons claiming under them respectively.
" If the award is final and binding on the parties it can hardly be said that it is.
a waste paper unless.
it is made a rule of the Court.
We are unable to.
appreciate why the conferment of exclusive jurisdiction on a court under the Act makes an award any the less binding than it was under the provisions of the Second Schedule of the Code of Civil Procedure.
The Punjab Full Bench held that the registration does not in any manner add to its efficacy or give it any added competence.
We cannot concur with these observations.
If an award affects immovable property over the value of Rs. 100, its registration does get rid of the disability created by section 49 of the .
Regarding the difficulty pointed out by the Punjab Full Bench that there may be many registrations we are not called upon to decide whether these difficulties would arise because the language of section 17 of the is plain.
It may be that no such difficulties will arise because under section 16(2) of the Act what the arbitrator submits to the Court is his decision and it may be that the decision may not be registerable under section 17 of the .
But as we have said before we are not called upon to decide this point.
In our opinion, Capoor, J., was right in dissenting from the Patna Full Bench in Sheonarain Lal vs Prabhu Chand(1) and holding that the award in dispute required registration.
In the result the appeal fails and is.
dismissed with costs.
We may make it clear that we are dealing only with an award made on a reference by the parties without the intervention of court.
Hegde, J. I agree.
But I would like to add few words.
Arbitration proceedings, broadly speaking may be divided into two stages.
The first stage commences with arbitration agreement and ends with the making of the award.
And the second stage relates to the enforcement of the award.
Paragraph 7 of the First Schedule to the lays down that, "the award shall be final and binding on the parties and persons claiming under them respectively".
Therefore it is not possible to agree with the Full Bench decisions of the Patna High Court (1) I.L.R. 37 Part.
252. 252 and that of the Punjab and Haryana High Court that an award Which is not made a decree of the Court has no existence in law.
The learned Judges ' who decided those cases appear to have proceeded on the basis that an award which cannot be enforced is not a valid award and the same does not create any rights in the property which is the subject matter of the award.
This in my opinion is not a correct approach.
The award does create rights in that property but those rights cannot be enforced until the award is made a decree of the Court.
It is one thing to say that a right is not created, it is an entirely different thing to say that the right created cannot be enforced without further steps.
For the purpose of section 17(1)(b) of the , all that we have to see is whether the award in question purport or operate to create or declare, assign, limit or extinguish whether in present or future any right, title or interest whether vested or contingent of the value of one hundred rupees and upwards to or in immovable property.
If it does, it is compulsorily registerable.
In the aforementioned Full Bench decisions sufficient attention has not been given to section 17 of the .
The focus was entirely on the provisions of the and there again on the enforcement of the award and not in the making of the award.
A document may validly create rights but those rights may not be enforceable for various reasons.
Section 17 does not concern itself with the enforcement of rights.
That Section is attracted as soon as its requirements are satisfied There is no gainsaying the fact that the award with which we are concerned in this case, at any rate, purported to creat rights in immovable property of the value of rupees more than one hundred.
Hence it is compulsorily registerable.
Y.P. Appeal dismissed.
| IN-Abs | An arbitrator appointed by the appellants and respondent partitioned their immovable property exceeding the value of Rs. 100.
The arbitrator applied under section 14 of the Indian to the Court for making the award a rule of the court.
On the question whether the award was admissible in evidence as it was not registered, HELD:(per Full Court.) The award required registration.
(Per Sikri and Bachawat, JJ.) All claims which are the subject matter of a reference to arbitration merge in the award which is pronounced In the proceedings before the arbitrator and after an award has been pronounced, the rights and liabilities of the parties in respect of the said claims can be determined only on the basis of the said award.
After an award is pronounced, no action can be started on the original claim which had been the subject matter of the reference.
The position under the Act is in no way different from what it was before the Act came into force.
Therefore.
the conferment of exclusive jurisdiction on 'a court under the does not make 'an award any less binding than it was under the provisions of the Second Schedule of the Code of Civil Procedure.
The filing of an unregistered award under section 49 of the Registration Act is not prohibited: what is prohibited is that it cannot be taken into evidence so as to affect immovable property falling under section 17 of the Registration Act.
It cannot be said that the registration does not in any manner add to its efficacy or give it added competence.
If an award affects immovable property order the value of Rs. 100 its registration does get rid of the disability created by section 49 of the Registration Act.
The award in question was not a mere waste paper but had some legal effect and it plainly purports to affect or affects property within the meaning of section 17(1)(b) of the Registration Act [248 F H; E] M/s. Uttam Singh Dugal & Co. vs Union of India, C.A. No. 162 of 1962 dated 11 10 1962, Champalal vs Mst.
Samarath Bai; , 816 and Kashinathsa Yamosa Kabadi vs Narsingsa Baskarsa Kabadi, [1961] 3 S.C.R. 792, 806, followed.
Sheonarain Lal vs Prabhu Chand, I.L.R. 37 Pat.
252 and Sardooll Singh vs Hari Singh I.L.R. [1967] 1 Punj.
& Har. 622 disapproved.
Chamanlal Girdhat Ghanchi vs Dhayabhai Nathubhai Ghandi A.I.R. 1938 Bom.
422, M.A. M. Salamullah Khan vs
M. Noorullah Khan, A.I.R. 1939 Nag. 233, Keltaha vs
U. Pannawa A.I.R. 1940 Rang.
228, Nani Bela Saha vs Ram Gopal Saha.
A.I.R. 1945 Cal.
19 and Bhajahari Saha Banikya vs Behary Lal Basak, , approved.
(Per Hegde.
J. concurring): It is one thing to say that a right is not created.
it is an entirely different thing to.
say that the right created can 245 not be enforced without further steps.
An award does create rights in that property but those rights cannot be enforced until the award is made a decree of the Court.
For the purpose of section 17(1)(b) of the Registration Act, all that had to be seen is whether the award in question purport or operate to create or declare, assign, limit or extinguish whether in present or future any right, title or interest whether vested or contingent of the value of one hundred rupees and upwards to or in immovable property.
Since it does, it is compulsorily registerable.
[252 B D]
|
ivil Appeal No. 463 of 1966.
Appeal by special leave from the judgment and order, dated March 30, 1964 of the Punjab High Court in Letters Patent.
Appeal No. 24 of 1963.
E. C. Agrawala and Champat Rai, for the appellant.
Harbans Singh and R.N. Sachthey, for the respondents.
The Judgment of the Court was delivered by Hegde, J.
Though several questions of law were raised in this appeal by special leave, after hearing the Counsel for the parties on one of those questions, namely on what date section 32 (KK) of the Pepsu Tenancy and Agricultural Lands Act 1955 (Act No. XIII of 1955) (to be hereinafter referred to as the Principal Act) should be deemed to have come into force, we did not think it necessary to hear the.
Counsel for the parties on the other questions raised in the appeal.
Before examining the question of law referred to hereinbefore it is necessary to set out the material facts.
The second appellant is the son of the first appellant.
The appellants alongwith Charanjit Singh and Darshan, the two other sons of the first appellant were members of a joint Hindu family.
That family owned agricultural lands in the village Hathoa, Tehsil Malerkotla, District Sangrur.
The principal Act came into force on March 6, 1955.
The preamble to that Act says that it is an Act to amend and consolidate the law relating to tenancies of agricultural lands and to provide for certain measures of land reforms.
That Act provided that: "subject to the provisions of section 5 every land .owner owing land exceeding thirty standard acres shall be en 349 titled to select for personal cultivation from the land held by him in.the State as a land owner 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.
" The permissible limit is thirty standard acres.
Under that Act, there was no provision for Government taking over the lands that were in excess of the permissible limits.
The appellants ' family divided their family properties as per a registered partition deed on September 6, 1956.
Thereafter necessary changes in the mutation register were made.
The principal Act was amended in 1956 as per Amendment Act 15 of 1956 which came into force, it appears several alienations were effected by to the principal Act Chapter 4A which provides for Government 'taking over the surplus lands in the hands of a land owner i.e. the lands in excess of the permissible limit.
After that amendment came into force, it appeals several alienations were effected by the land owners to get out of the reach of the law.
Neither the principal Act nor the Amendment effected in 1956 prohibited any alienation.
Then came the Pepsu Tenancy and Agricultural Lands (Amendment) Act, No. HI of 1959 which was made operative from January 19, 1959.
Among other provisions that Amendment Act incorporated into the Act section 32(FF) which says: "Save in the case of land acquired by the State Government under any law for the time being in force or by an heir by inheritance or up to 30th July 1958 by a landless person or a small landowner not being a relation as prescribed of the person making the transfer or disposition of land, for consideration up to an area which with or without the area owned or held by him does not in the aggregate exceed the permissible limit, no transfer or other disposition of land effected after 21st August, 1956, shall affect the right of the State Government under this Act to the surplus area to which it would be entitled but for such transfer or disposition :" This Section has a proviso which reads: "Provided that any person who has received any advantage under such transfer or disposition of land shall be bound to restore it, or to make compensation for it, to the person from whom he received it." In 1962 the Pepsu Tenancy and Agricultural Lands (Amendment and Validation) Act, No. XVI of 1962 was passed.
It 350 crone into force on July 20, 1962.
two sections in that Act which are relevant for our present purpose are sections 7 and 1 Section 7 reads: "Insertion of new section 32 KK in Pepsu Act 13 of 1955.
After section 32 KK of the principal Act,the following section shall be inserted, namely : "32 KK.
Land owned by Hindu undivided family.
to be deemed land of one landowner.
Notwithstanding anything contained in this Act or in any other law for the time being in force, (a) where, immediately before the commencement this Act, a landowner and his descendants constitute a Hindu undivided family, the landowned by such family shall, for the purposes.
of this Act, be deemed to.
be the land of that landowner and no descendant shall, 'as.
member of such family, be entitled to claim that in respect of his share of such land he is a landowner in his own right; and (b) a partition of land owned by a Hindu undivided family referred to in clause (a) shall be deemed to be a disposition of land for the purposes of section 32 FF.
" Explanation : In this section, the expression "descendant" includes an adopted son.
" Section 1 sets out the short title and commencement of that Act.
That Section reads: "This Act may be called the Pepsu Tenancy and Agricultural Lands (Amendment and Validation) Act, 1962.
(2) Section 2, section 4, section 5, section 7 and section 10 shall be deemed to have come into force on the 30th day of October 1956 and the remaining provisions of this Act shall come into force at once.
" After the Pepsu Tenancy and Agricultural Lands (Amendment) Act No. III of 1959 came into force, the Collector of Sangrur started proceedings under Chapter 4A of the Act for determining the surplus lands in the hands of the appellants.
In those proceedings despite the representations of the appellants, the Collector ignored the partition effected in the family of the appellants in determining the surplus lands in the hands of the members of the family.
He considered them as one unit and on that basis held that eighteen standard acres and 51/2 units of lands are surplus in their hands.
There is no dispute that if the partition entered into in the family had been taken into consideration, the lands 351 held by the different sharers are within permissible limit.
The appellants unsuccessfully went up in appeal against that order to the Commissioner, Patiala Division.
Against the order of the Commissioner, the appellants appealed to the State Government but that appeal was rejected on September 1, 1961.
Thereafter the appellants filed Civil Writ No. 1418 of 1961 in the High Court of PUnjab at Chandigarh under article 226 of the Constitution challenging the decisions of respondents 1 to 3.
The learned Single Judge who heard that petition dismissed the same on November 27, 1962.
He held that as section 32(KK) had become a part of the principal Act the words "this Act" in that section must refer to the principal Act.
and not to section 7 of the Amendment Act.
The decision of the learned Single Judge was affirmed by a Division Bench of that Court.
That bench followed an earlier decision of that Court in Bit Singh and Ors.
vs The State of Punjab and Ors.(1).
At this stage we may mention that in the Punjab High Court at one stage there were conflicting decisions on the question of law under consideration.
It is not necessary to refer to those decisions as grounds on which they differed are referred to in Bit Singh 's case(1).
The decisions which have taken the same view as taken by the High Court in this case have ignored the significance of section 1 (2) of the 1962 Amendment Act.
They have exclusively focussed their attention on section 32(KK) and the supposed reasons for its enactment.
It is, a well settled rule of construction that No. provision in a statute should be given retrospective effect unless the legislature by express terms or by necessary implication has made it retrospective and that where a provision is made retrospective, care should be taken not to extend its retrospective effect beyond what was intended.
To accept the line o.f reasoning adopted by the learned Judges of the High Court who decided this case is to completely ignore sub section
(2) of section 1 of the 1962 Amendment Act.
That Section in specific terms says that section 32(KK) (section 7 of the Amendment Act) shall be deemed to have come into force on the 30th day of October 1956.
We fail to see how we can ignore this mandate of the legislature.
That provision clearly brings out the intention of the legislature.
There is no ambiguity in it.
It is not possible to adopt any rule of construction which would necessitate the Court to ignore that provision.
It is not possible to accept the conclusion of the High Court that section 32(KK) must be deemed to have come into force on the date the principal Act came into force namely on March 6, 1955.
That is not even the case of the respondents.
Clause (b) of section 32(KK) which is the clause relevant for our present purpose would be a meaningless provision unless the same is read along with section 32(FF) which was for (1) 352 the.
first time incorporated into the principal Act in 1959 though it affects all transfers and other dispositions of land effected after August 21, 1956.
It is not the case of the respondents that the transfers effected or the .partitions made before August 21, 1956.
,are within the mischief of section 32(FF) or section 32(FF) read with section 32(KK).
Therefore there is no basis for saying that section 32(KK) has been given retrospective effect as from the date the principal Act came into force.
On a reading of the various provisions of the Pepsu Tenancy and Agricultural Lands (Amendment and Validation) Act, 1962, it appears to us that the legislature intended that section 7 of that .Act which introduced into the principal Act section 32(KK) should be deemed to.
have come into force on the 30th October 1956.
Evidently the draftsman when he drafted section 7 of that Act had in his mind the Amendment Act and not the principal Act.
The words "this Act" in section 7 of the Amendment Act (section 32 KK of the principal Act) in our opinion were intended to refer to the Amendment Act and not to the principal Act.
It is true that ordinarily when a Section is incorporated into the principal Act by means of an amendment, reference in that Section to "this Act" means the principal Act.
But in view of sub section
(2) of section 1 of the Amendment Act of 1962 that construction has become impermissible.
Every statute has to be construed as a whole and the construction given should be a harmonious one.
It may be that the legislature intended that section 32(KK) should be deemed to have come into force on the 30th day of October 1956, on which day section 32(FF) became a part of the principal Act.
It is possible that the legislature did.
not intend to give to that Section the same retrospective effect as it had given to section 32(FF).
It is not permissible for us to proceed on the basis that the legislature had enacted subs.
(2) of section 1 of the Amendment Act 1962 by oversight.
If any mistake had crept into that Section it is for the legislature to correct the same and it is not for this Court to proceed on the supposition that the same was enacted by oversight.
For the reasons mentioned above this appeal is allowed and the orders impugned in the Writ Petition are quashed.
The respondents shall pay the costs of the appellants both in this Court as well as in the High Court.
R.K.P.S. Appeal allowed.
| IN-Abs | The Pepsu Tenancy and Agricultural Lands Act XIII of 1955 came into force on March 6, 1955, whereby it was provided that every land owner would be entitled to select any parcel or parcels of land not exceeding the permissible limit, which was fixed at 30 standard acres.
The principal Act was amended in 1956 by the inclusion of Chapter 4A which provided for the Government taking over the surplus lands in the hands of a land owner.
Another Amendment Act III of 1959 which was made operative from January 19, 1959 incorporated into the principal Act section 32(FF) which provided that except in certain specified cases no transfer or other disposition of land effected after 21st .August 1956 could affect the rights of the State Government under the Act.
In 1962 the Pepsu Tenancy and Agricultural Lands (Amendment and Validation) Act XVI of 1962 was passed.
Section 7 of this Act introduced a new section 32KK into the principal Act whereby it was provided that land owned by a Hindu undivided family would be deemed to be land of one land owner and, a partition of land owned by such a family shall be deemed to.
be a disposition of land for the purposes of section 32 FF.
Section 1(2) of 'the Amendment Act provided that Sections 2, 4, 5, 7 and 10 "shall be deemed to.
have come into force on the 30th day of October, 1956 and the remaining provisions of this Act shall come into force at once,".
The first Appellant together with his son the second Appellant and two other sons were members of a joint Hindu family which owned agricultural lands in Punjab.
The Appellant 's family divided their family property by a Registered Partition Deed on September 6, 1956 and necessary changes were thereafter made in the mutation register.
After Act III of 1959 ' came into force, the Collector of Sangrur started proceedings under Chapter 4A of the Act for determining the surplus lands in the hands of the appellant.
Despite the representations of the Appellants, the Collector ignored the partition effected in the family 'and held that about 18 standard acres were surplus in their hands.
Appeals filed by the Appellants before the Commissioner, Patiala Division and the State Government were rejected.
The Appellants then challenged the orders of these authorities by a writ petition under article 226 of the Constitution, but this was dismissed ' by a Single Judge of the High Court who took the view that as section 32 KK had become a part of the principal Act, the words "this Act" in that section must refer to the principal Act and not to Section 7 of the Amendment Act.
A Division Bench of the High Court dismissed an appeal following an earlier decision of the Court in Bir Singh and Ors.
vs The State of Punjab and Ors.
In the appeal to this Court there was no dispute that if the partition entered into in the family was.
taken into consideration, the lands held by the different sharers would ' be within the permissible limits.
348 HELD: The orders impugned in the writ petition must be quashed.
A reading of the various provisions of the 1962 Act show that the legislature intended that section 7 of that Act which introduced section 32 KK into the principal Act should be deemed to have come into force on the 30th October 1956.
The words "this Act" in section 7 of the Amendment Act (section 32 KK of the principal Act) were intended to refer to the Amendment Act 'and not to the principal Act.
It is true that ordinarily when a section is incorporated into the principal Act by 'means of an amendment, reference in that section to "this Act" means the principal Act.
But in view of sub section
(2) of section 1 of the Amendment Act of 1962 that construction had become impermissible.
Every statute has to be construed as a whole and the construction given should be 'a harmonious one.
It was not permissible for the Court to.
proceed on the basis that the legislature had enacted sub section
(2) of section 1 of the Amendment Act 1962, by oversight.
If any mistake had crept into that section it was for the legislature to correct the same.
[352 C F]
|
ivil Appeal Nos. 2168, 2569, of 1966, 76, 123 and 560 of 1967.
Appeals by special leave from the Award dated June 30, 1966 of the Industrial Tribunal, Delhi in I.D. No. 70 of 1958.
S.T. Desai, Rameshwar Nath and Mahinder Narain, for the appellant (in C.A. No. 2168 of 1966) and respondents Nos. 1 and 2 (in C.As.
Nos. 123 and 560 of 1967).
311 H.R. Gokhale, A.K. Sen, R.P. Kapur and 1.
N. Shroff, for the appellant (in C.A. No. 256,9 of 1966) and respondent No. 3 (in C.As.
Nos. 123 and 560 of 1967).
B. Sen, 1.
D. Gupta, M.N. Shroff for 1.
N. Shroff, for the appellant (in C.A. No. 76 of 1967).
M.K. Ramamurthi, Madan Mohan, Shyamala Pappu and Vineet Kumar, for the appellant (in C.A. No. 123 of 1967), respondents Nos. 1 (a) and 4(a) (in C.A. No. 2168 of 1966), respondent No. 1 (in C.A. No. 2569 of 1966), respondent No. 1 (in C.A. No. 76 of 1967) and respondent No. 5 (in C.A. No. 560 of 1967).
V.C. Parashar and O.P. Sharma, for the appellant (in C.A. No. 560 of 1967) respondents Nos. 1 (b) and 4(b) (in C.A. No. 2168 of 1966) respondent No. 2 (in C.A. No. 2569 of 1968) and respondent No. 2 (in C.A. No. 76 of 1967).
The Judgment of the Court was delivered by Shah, J.
These appeals arise out of an award made by the Industrial Tribunal, Delhi, in I.D. Reference No. 70 of 1958.
The first three appeals are filed by the employers, and the last two by the employees.
By its award the Industrial Tribunal (Delhi, has framed two schemes relating to payment of gratuity to the workmen employed in four textile units in the Delhi region.
The employers and the workmen are dissatisfied with the schemes and they have filed these appeals challenging certain provisions of the schemes.
In the Delhi region there are four textile units; the Delhi Cloth Mills which will be referred to.
as D.C.M.; Swatantra Bharat Mills which will be referred to as S.B.M.; Birla Cotton Mills which will be referred to as B.C.M. and Ajudhia Textile Mills which will be referred to as A.T.M. The D.C.M. and S.B.M. are under one management.
On March 4, 1958, the Chief Commissioner of Delhi made a reference under sections 10(1)(d) and 12(5) of the , relating to four matters in dispute, first of which is as follows: "Whether a gratuity for retirement benefit scheme should be introduced for all workmen on the following lines and what directions are necessary in this respect ? 1.
for service less than 5 years Nil.
for service between 5 10 years 15 days ' wages for every year of service.
for service between 10 15 years 21 days ' wages for every year of service.
312 4.
for service over 15 years one month 's wages for every year of service.
" The reference related to workmen only and did not apply to the clerical staff or mistries.
There are two workmens ' Unions in the Delhi region the Kapra Mazdoor Ekta Union hereinafter called 'Ekta Union ', and the other, the Textile Mazdoor Union.
The Ekta Union made a claim principally for fixation of gratuity in addition to the benefit of provident fund admissible to the workmen under the Employees Provident Fund Act, to be computed on the consolidated wages inclusive of dearness allowance.
The Ekta Union submitted by its statement of claim that a gratuity scheme based on the region cum industry principle i.e. a uniform scheme applicable to all the four units be framed.
The Textile Mazdoor Union also supported the claim for the framing of a gratuity scheme on the basis of the consolidated wages of workmen but claimed that the scheme should be unit wise.
At the trial, it appears that both the Unions pressed for a unit wise scheme of gratuity.
The Tribunal entered upon the reference in respect of the fixation of gratuity scheme in February 1964 and made an award on June 30, 1966, operative from January 1, 1964.
The award was published on August 4, 1966.
By the award two schemes were framed one relating to the D.C.M. and S.B.M., and another relating to the B.C.M. and A.T.M.
Under the second scheme the digit by which the number of completed year of service was to be multiplied in determining the total gratuity was smaller than the digit applicable in the case of the D.C.M. and the S.B.M.
The distinction was made between the two sets of units, because the D.C.M. and S.B.M. were, in the view of the Tribunal, more prosperous units than the D.C.M. and A.T.M. The A.T.M., it was found, was a newcomer in the field of textile manufacture, and had for many years been in financial difficulties.
The D.C.M. employs more than 8,000 workmen in its textile unit; the S.B.M. has on its roll 5,000 workmen; the B.C.M. has 6,271 workmen and the A.T.M. has 1,500 workmen.
The D.C.M. and S.B.M. have a common retirement benefit scheme in operation since the year 1940.
Under the scheme gratuity payable to workmen is determined by the length of service before retirement.
The scheme of gratuity in operation in the D.C.M. and S.B.M. is as that, "In case of retirement from service of the Mills as a result of physical disability, due to over age or on account of death after a minimum of seven years '.
313 service in the concern: 7 years .
Rs. 350/ 8 years .
Rs. 425/ 9 years .
Rs. 500/ 10 years .
Rs. 575/ 11 years .
Rs. 650/ 12 years .
Rs. 725/ 13 years .
Rs. 800/ 14 years .
Rs. 875/ 15 years .
Rs. 950/ 16 years .
Rs. 1,050/ 17 years .
Rs. 1,150/ 18 years .
Rs. 1,250/ 19 years .
Rs. 1,350/ 20 years .
Rs. 1 '500/ The scale of gratuity, it is clear, is independent of the individual wage scale of the workman.
In the B.C.M. and A.T.M. units there are no such schemes.
Till the year 1958 there were no standardised wages in the textile industry.
According to the Report of the Central Wage Board for the Cotton Textile Industry which was published on November 22, 1959, there were in India 39 regions in which the textile industry was located.
The basic monthly wages of the workmen in the year 1958 varied between Rs. 18/ in Patna and Rs. 30/ in various centers like Bombay, Indore, Madras, Coimbatore, Madurai, Bhiwani, Hissar, Ludhiana, Cannanore and certain regions in Rajasthan and Delhi.
The Wage Board recommended in Paragraph 106 of its Report: "The Board has come to the conclusion that an increase at the average rate of Rs. 8 per month per worker shall be given to all workers in mills of category I from 1st January 1960, and a further flat increase of Rs. 2 per month per worker shall be given to them from 1st January 1962.
Likewise an increase at the average rate of Rs. 6 per month per worker shall be given to all the workers in mills of category 11 from 1st January 1960, and a further flat increase of Rs. 2 per month per worker shall be given to them from 1st January 1962.
These increases are subject to the condition that the said sums of Rs. 8 and Rs. 6 shall ensure not less than Rs. 7 and Rs. 5 respectively to the lowest paid, and that the increase of Rs. 2 from 1st January 1962 shall be flat for all." Category I included the Delhi region.
Since January 1, 1962, the basic minimum wage in the Delhi region is, therefore Rs. 40/Sup.
CI/69 3 314 according to the recommendations of the Wage Board.
In Bombay City and Island (including Kurla), the basic wage, according to the Report of the Wage Board, was also Rs. 30/and by the addition of Rs. 10 the basic wage of a workman came to Rs. 40/ .
The workmen in other important textile centres also get the same rates.
The Tribunal was of the view that the average basic wage of the workmen is Rs. 60/ since the implementation of the Wage Board in the Delhi region.
No argument was advanced before this Court challenging the correctness of that assumption, by the employers or the workmen.
It was also common ground that practically uniform basic wage levels prevail in all the large textile centres like Bombay, Ahmedabad, Coimbatore and Indore.
Besides the basic wage the workmen receive dearness allowance under diverse awards made by the Industrial Tribunals which "seek to neutralize the cost of living index.
" There is also a provident fund scheme under the Employees.
Provident Fund Act, 1962, whereunder 8 1/3% of the basic wage and the dearnear allowance and the retaining allowance for the time being in force is contributed by the employee.
Besides, there is a right to retrenchment compensation under the (section 25 FFF) and the Employees Insurance Scheme.
In view of the observations of this Court in Burhanpur Tapti Mills Ltd. vs Burhanpur Tapti Mills Mazdoor Sangh(1), that "It is no longer open to doubt that a scheme of gratuity can be introduced in concerns where there.
already exist other schemes such as provident fund or retrenchment compensation.
This has been ruled in a number of cases of this Court and recently again in Wenger & Co. and others vs Their Workmen(2), and Indian Hume Pipe Company Ltd. vs Their Workmen(3).
It is held in these cases that although provident fund and gratuity are benefits available at retirement they are not the same ,and one can exist with the other", no serious argument was advanced that the existence of these additional benefits disentitled the workmen to obtain benefits under a gratuity scheme if the employer is able to meet the additional burden.
But on behalf of all the employers it was, urged that (1) in determining the quantum of gratuity, basic wage alone could be taken into account and not the consolidated wage; and (2 ) it was necessary for the Tribunal to fix when introducing a gratuity scheme the age of superannuation.
On behalf of the D.C.M., S.B.M. and B.C.M. it was urged in addition, that a uniform scheme applicable to the entire industry on the region cumindustry basis should have been adopted and not a scheme or schemes applicable to individual units.
On behalf of the A.T.M. (1) , (2) [1963] II L.L.J. 403.
(3) [1959] II L.L.J. 830. 315 it was urged that its financial condition is not and has never been stable and the burden of payment of gratuity to workmen dying or disabled or on voluntary retirement from service or when their employment is terminated is excessive and the Unit was unable, to bear that burden.
It was also urged on behalf of the A.T.M. that in view of a settlement which was reached between the management and workmen it was not open to the Tribunal to ignore the settlement and to impose a scheme for payment of gratuity in favour of the workmen in this reference.
While broadly supporting the award of the Tribunal the workmen claim certain modifications.
They claim that a shorter period of qualifying service for workmen voluntarily retiring should be provided, and gratuity should be worked out by the application of a larger multiple of days for each completed year of service; that the ceiling of gratuity should be related to a larger number of months ' wages; that gratuity should be awarded for dismissal even for misconduct; that provision should be made for payment of gratuity to Badli workmen irrespective of the number of days for which they work in a year; that the expression "average of the basic wage" should be appropriately clarified to avoid disputes in the implementation of the gratuity scheme, and that the award should be made operative not from January 1, 1964, but from the date of the reference to the Tribunal.
The two schemes which have been flamed may be set out: ANNEXURE 'A ' "Gratuity scheme applicable to the Delhi Cloth Mills and the Swatantra Bharat Mills. ' Gratuity will be payable to the employees concerned, in this reference, on the scale and subject to the conditions laid down below: 1.
On the death of an employee while in the service of the mill company or on his becoming physically or mentally incapacitated for further service: (a) After 5 years continuous service and less than 10 years ' service 12 days ' wages for each.completed year of service.
(b) After continuous service of 10 years 15 days ' wages for each completed year of service.
The gratuity will be paid in each case under clauses 1(a) and 1(b) to the employee, his heirs or executors, or nominee as the case may Provided that in no case will an employee, who is in service on the date on which this scheme is brought 316 into operation be paid an mount less than what he would have been entitled to under the pre existing scheme of the Employees ' Benefit Fund Trust.
(ii) Provided further that the maximum payment to be made shall not exceed the equivalent of 15 months wages.
(iii) Provided further that gratuity under this scheme will not be payable to any employee who has already received gratuity under the preexisting scheme of the Employees ' Benefit Fund Trust.
On voluntary retirement or resignation after 15 years ' service 15 days ' wages for each completed year of service.
Provided that the maximum payment to be made shall not exceed the equivalent of 15 months ' wages.
On termination of service on any ground whatsoever except on the ground of misconduct As in clauses 1 (a) and 1 (b) above.
Provided that the maximum payment to be made shall not exceed the equivalent of 15 months ' wages.
Definitions: (a) 'Wages ' The term "wages" in the scheme will mean the average of the basic wage plus the dearness allowance drawn during the 12 months next preceding death, incapacitation, voluntary retirements, resignation or termination of service and will not include overtime wages.
(b) "Basic wages" The term "basic wage" will have the meaning as defined in paragraph 110 of the Report of the First Central Wage Board for Cotton Textile Industry.
(c) "Continuous service" means un interrupted service and includes service which may be interrupted on account of sickness, authorised leave, strike which is not illegal, lock out or cessation of work which is not due to any fault on the part of the employee: Provided that interruption in service upto six months ' duration at any one time and 18 317 months duration in the aggregate of the nature other than those specified above shall not cause the employee to lose the credit for previous service in the Mills for the purpose of calculation of gratuity, but at the same time shall not entitle him to claim benefit of gratuity for the period of such interruption.
Service for the purposes 'of gratuity will include service under the previous management whether in the particular mill or other sister mill under the same management.
(d) "Resignation" The word "resignation" will include abandonment of service by an employee provided he Submits his resignation within a period of three months from the first day of absence without leave.
(e) "Length of service" For counting "length of service: ', fraction of a year exceeding six months shall count as one full year, and six months or less shah be ignored.
"Application for gratuity" Any person eligible to claim payment of gratuity under this scheme shall, so far as possible, send a written application to the employer within a period of six months from the date its payment becomes due.
"Payment of gratuity" The employer shall pay the amount of gratuity to the employee and in the event of his death before payment to the person or persons entitled to it under clause 1 above within a period of 90 days of the claim being presented to the employer and found valid.
"Claims by persons who are no longer in service" Claims by persons who are no longer in service of the Company on the date of the publication of this award shall not be entertained unless the claims are preferred within six months from the date of publication of this award.
"Badli service" Gratuity shall be paid for only those years of Badli service in which the employee has worked for not less than 240 days.
318 9.
"Proof of incapacity" In proof of physical or mental incapacity, it will be necessary to produce a certificate from any one of the Medical Authorities out of a panel to be jointly drawn up by the parties.
"Nomination" (a) Each employee shall, within six months from the date of the publication of this award, make a nomination conferring the right to receive the amount of gratuity that may be due to him in the event of his death, before payment has been made.
(b) A nomination made under sub clause (a) above may, at any time, be modified by the employee after giving a written notice of his intention of doing so.
if the nominee pre deceases the employee, the interest of the nominee shall revert to the employee who may make a fresh nomination in respect of such interest.
" ANNEXURE 'B ' "Gratuity scheme applicable to the Birla Cotton Spg.
& Wvg.
Mills and the Ajudhia Textile Mills.
Gratuity will be payable to the employees concerned in this reference, on the scale and subject to the conditions laid down below: 1.
On the death o/an employee while in the service of the Mill company or on his becoming physically or mentally incapacitated for further service: (a) After 5 years continuous service and less than 10 years service One fourth month 's wages for each competed year of service.
(b) After continuous service of 10 years One third month 's wages for each completed year of service.
The gratuity will be paid in each case under clauses 1(a) and 1(b) to the employee, his heirs or executors, or nominee, as the case may be.
Provided that the maximum payment to be made shah not exceed the equivalent of 12 months ' wages.
On voluntary retirement or resignation after 15 years service On the same scale as in 1 (b) above.
Provided that the maximum payment to be made shall not exceed the equivalent of 12 months ' wages.
On termination of service by the employer for any reason whatsoever eXcePt on the ground of misconduct As in clauses 1(a) and 1(b) above.
319 provided that the maximum payment to be made shall not exceed the equivalent of 12 months ' wages." [Clauses 4 to 10 of Annexure 'B ' are the same I as in Annexure 'A ' and need not be repeated.] Whether against the A.T.M. the Tribunal was incompetent to make an award framing a .scheme for payment of gratuity may first be considered.
Counsel for the A.T.M. urged that there was a settlement between the workmen and the management of the A.T.M. in consequence of which the Tribunal was incompetent to make an award.
The facts on which reliance was placed are these: After ,the dispute was referred .to the Industrial Tribunal, there were negotiations between the management of the A.T.M. and workmen represented by the two Unions and an agreement was reached, the terms whereof were recorded in writing.
Clauses 6 and 11 (4) of the agreement relate to the claim for gratuity: "6.
The workmen agree not to claim any further increase in wages, basic or dearness, or make any other demand involving financial burdens on the Company either on their initiative or as a result of any award, till such time as the Working of the mills results in profits.
The parties hereto agree to jointly withdraw in terms of this settlement, the following pending cases and proceedings before the Courts, Tribunals and Authorities and ' more especially . . . . . (4) With regard to I.D. No. 70 of 1958 the workers agree not to claim any benefits that ,may be granted under the above reference by the Hon 'ble Industrial Tribunal in case the award is.
given in favour of the workmen, subject to clause 7 above." (It is common ground that reference to el. 7 is erroneous: it should be .to cl. 6.) The workmen and the management of the unit submitted an application before the Tribunal on December 28, 1959, admitting that there had been an "overall settlement" of all the pending disputes between the management of A.T.M. and its workmen represented by the two Unions, and requested that an interim award be made in terms of the agreement insofar as the dispute related to the A.T.M. No order was passed by the Tribunal on that application.
On June 4, 1962, the Manager of the A.T.M. applied to the Tribunal that an interim award be pronounced in terms of the agreement.
The workmen had apparently changed their attitude by that time and filed a written statement and requested that the ,prayer contained in paragraph 3 of the application "be rejected 320 as impermissible in law".
The Tribunal made an order on November 26, 1962, and observed: ". the only interpretation that can be given to clause 11(4) of the settlement read with clause 7 is, that the workers of the Ajudhia Textile Mills had bound themselves not to claim any benefits that might be granted by the Tribunal in the award on the present reference, if it turns out to be in favour of the workmen unless and until the working of the Mills results in profit.
The fact that the passing of an award on the demands was envisaged under the settlement goes to show that the demands were to be adjudicated upon in any case.
The main case will now proceed in respect of all the mills and the effect of the settlement and of the application dated 28th December, 1959, and of the 5th July 1962 will be considered at the time of the final award.
" But in making the final award the Tribunal did not specifically refer to the settlement.
The terms of cl. 6 of the settlement clearly show that if it be found that the A.T.M. had acquired financial stability, it will be liable to pay gratuity to the workmen.
We are unable to agree with the contention of counsel for the A.T.M. that it was intended by the parties that the adjudication proceedings against the A.T.M. should be dropped, and after the A.T.M. became financially stable a fresh claim should be made by the workmen on which a reference may be made by the Government for adjudication of the claim for gratuity against the A.T.M.
The contention by the management of the A.T.M. that the Tribunal was incompetent to determine the gratuity payable to the workmen of the A.T.M. must therefore fail.
The other contention raised on behalf of the A.T.M. that its financial position was "unstable" need not detain us.
The Tribunal has held that the A.T.M. was working at a loss since the year 1953 54 and the losses aggregated to Rs. 6.22 lakhs in the year 1958 59, but thereafter the financial position of the Unit improved.
The trading account for the period ending March 31, 1960, showed profits amounting to Rs. 3.10 lakhs.
In 1960 61 there was a surplus of Rs. 11.18 lakhs out of which adjusting the depreciation, development rebate reserve and reserve for bad and doubtful debts, there was a balance of Rs. 7.10 lakhs.
In 1961 62 the net profits of the Unit amounted to Rs. 7.48 lakhs and the A.T.M. distributed Rs. 52,500/ as dividend.
In 1962 63 there was a gross profit of Rs. 4.18 lakhs and after adjusting depreciation and development rebate reserve there was a net deficit of Rs. 30,517/ .
In 1963 64 there was a gross profit of Rs. 14.29 lakhs and after adjusting depreciation, reserve for doubtful debts, bonus to employees and development rebate reserve, there re 321 mained a net profit of Rs. 4.71 lakhs.
The Tribunal observed that by 1961 62 all previous losses of the Unit were wiped out and that even during the year 1962 63 in which there was labour unrest the gross profits were substantial and taking into consideration the reserves built by the Company "the picture was not disheartening and from the great progress that had been made since 1959 60 there was every reason to think that the Mill had achieved stability and reasonable prosperity and that it had an assured future", and the Company was in a position to meet the burden of a modest gratuity scheme.
We see no reason to disagree with the finding recorded by the Tribunal on this question.
On behalf of the D.C.M., S.B.M., and B.C.M. it was urged that normally gratuity schemes are framed on the region cum dustry principle, i.e., a uniform scheme applicable to all Units in an industry in a region is framed, and no ground for departure from that rule was made out.
It was urged that this Court has accepted invariably the region cum industry principle in fixing the rates at which gratuity should be p.aid.
In our judgment no such rule has been enunciated by this Court.
In Bharatkhand Textile Mfg. Co. Ltd. vs Textile Labour Association, Ahmedabad(1), this Court in dealing with the question whether the Industrial Court had committed an error in dealing with the claim for gratuity on industry wise basis negatived the contention of the employers that the unit wise basis was the only basis which could be adopted in fixing the rates of gratuity.
It was observed at p. 345: "Equality of competitive conditions is in a sense necessary from the point of view of the employers themselves; that in fact was the claim made by the Association which suggested that the gratuity scheme should be framed on industry wise basis spread over the whole of the country.
Similarly equality of benefits such as gratuity is likely to secure contentment and satisfaction of the employees and lead to industrial peace and harmony.
if similar gratuity schemes are framed for all the units of the industry migration of employees from one unit to another is inevitably checked, and industrial disputes arising from unequal treatment in that behalf are minimaised.
Thus, from the point of view of both employers and employees industry wise approach is on the whole desirable.
" It is clear that the Court rejected in that case the argument that rates of gratuity should be determined unit wise: the Court did not rule that in all cases the region cum industry principle should be adopted in fixing the rates of gratuity.
That was made explicit in a later judgment of this Court: Burhanpur Tapti Mills Ltd. vs (1) ; 322 Burhanpur Tapti Mills Mazdoor Sangh(x).
This Court observed at p. 456: ". it has been laid down by this Court that 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 axe 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." In Garment Cleaning Works vs Its Workmen(1) this Court observed at p. 713: ". it is one thing to hold that the gratuity scheme can, in a proper case, be flamed on industry cum region basis, and another thing to say that industry cum region basis is the only basis on which gratuity scheme can be framed.
In fact, in a large majority of cases gratuity schemes are drafted on the basis of the units and it has never been ,suggested or held that such schemes are not permissible.
" The Tribunal in the award under appeal observed: "There are . . certain peculiar features in the textile industry in this region which militate against an indnstry cum region approach.
Apart from the fact that one of the four units, namely, the Ajudhia Textile 'Mills is a much weaker unit than the rest and has passed through a chequered career during its existence, it has to be borne in mind that two of the units namely D.C.M. and S.B.M. which axe sister concerns, already have some sort of a gratuity scheme providing for two important retiral benefits, namely, death and physical disablement on a scale which is independent of wage variations and is not unsubstantial at least for categories in the lower levels.
" The Tribunal further observed: "if a common scheme is framed for the entire textile industry at Delhi i.e. for all the four units the quantum of benefits under that scheme will naturally have to be much lower in consideration of the financial condition of the Ajudhia Textile Mill, than if a unit wise scheme is framed.
Moreover in a common scheme of gratuity the quantum of benefits to be provided will have to be (1) (2) ; [1961] I L.L.J. 513.
323 lower than the benefits already available to workmen in the D.C.M. and S.B.M. units for the most important contingencies for which gratuity benefits are meant, namely, death and retirement on account of physical or mental incapacity.
Such a lowering of the quantum of benefits would not in my view be desirable as it would create legitimate discontent.
" In our judgment, no serious objection may be raised against the reasons set out by the Tribunal in support of the view that unitwise approach should be adopted in the reference before it and not the region cum industry approach.
No case is there/ore made out for interference with the award made determining the rates of gratuity unit wise.
We also agree with the Tribunal that on the terms of the reference it was incompetent to fix the age of superannuation forworkmen.
We are unable to hold that a gratuity scheme may be implemented only if the age of superannuation of the workmen is determined by the award.
Support was sought to be derived by counsel for the employers in support of his plea from the observations made by this Court in Burhanpur Tapti Mills Ltd. 's case(D, where in examining the nature of gratuity, it was observed: "The voluntary retirement of an inefficient or old ' or worn out employee on the assurance that he is to get a retiral benefit leads to the avoidance of industrial disputes, promotes contentment among those who look for promotions.
, draws better kind of employees and improves the tone and morale of the industry.
It is beneficial all round.
It compensates the employee who as he grows old knows that some compensation for the gradual destruction of his wage earning capacity is being built up.
By inducing voluntary retirement of old and worn out workmen it confers on the employer a benefit akin to the replacing of old and worn out machinery.
" There is, in our judgment, nothing in these observations which justifies the view that a gratuity scheme cannot be effective unless it is accompanied by the fixation of the age of superannuation for the workmen in the industry.
There is another objection to the consideration of this claim made on behalf of the employers.
By the express terms of reference the Tribunal is called upon to adjudicate on the question of fixation of gratuity: there is no .reference either expressly or by implication to the fixation of the age of superannuation and in the absence of any reference relating to the fixation of the age of (1) [1965] 1 LL.J. 453.
324 superannuation, the Tribunal was not competent to fix the age of superannuation.
A gratuity scheme may, in our judgment, be implemented even without fixing the age of superannuation.
The gratuity scheme in operation in the D.C.M. and S.B.M. has been effectively in operation without any age of superannuation for the workmen in the two units.
An enquiry into the question of fixing the age of superannuation did not arise out of the terms of reference.
No such claim was made by workmen and ' even in the written statement filed by the employers no direct reference was made to the fixation of the age of superannuation, nor was there any plea that before framing a gratuity scheme the Tribunal should provide for the age of superannuation.
We agree with the Tribunal that fixation of the age of superannuation was not incidental to the ,framing of the gratuity scheme 'and it was neither necessary nor desirable that it should be fixed.
Counsel for the employers urged that the Tribunal committed a serious error in relating the computation of gratuity payable to the workmen on retirement on the consolidated monthly wage and not on the basic wage.
"Gratuity" in its etymological sense means a gift especially for services rendered or return for favours received.
For some time in the early stages in the adjudication of industrial disputes, gratuity was treated as a gift made by the employer at his pleasure and the workmen had no right to claim it.
But since then there has been a long line of precedents in which it has been ruled that a claim for gratuity is a legitimate claim which the workmen may make and which in appropriate cases may give rise to an industrial dispute.
In Garment Cleaning Works ' case(1) it was observed that gratuity is not paid to the employees gratuitously or merely as a matter of boon.
It is paid to him for the service rendered by him to the employer.
The same view was expressed in Bharatkhand Textile Mfg. Ltd. 's case(2) and Calcutta Insurance Ltd. vs Their Workmen(a).
Gratuity paid to workmen is intended to help them after retirement on superannuation, death, retirement, physical incapacity, disability or otherwise.
The object of providing a gratuity scheme is to provide a retiring benefit to workmen who have rendered long and unblemished service to the employer and thereby contributed to the prosperity of the employer.
It is one of the 'efficiency devices ' and is considered necessary for an 'orderly and humane elimination ' from industry of superannuated or disabled employees who, but for such retiring benefits, would continue in employment even though they function inefficiently.
It is not paid to an employee .gratuitously or merely as a matter of boon; it is paid to him for long and meritorious service rendered by him to the employer.
(1) (2) ; (3) [1967] II L.L.J. 1.
325 On the findings recorded by the Tribunal all the textile units in the Delhi region are able to meet the additional financial burden, resulting from the imposition of a gratuity scheme.
The D.C.M. and S.B.M. have their own schemes which enable the workmen to obtain substantial benefit on determination of employment.
The B.C.M. though a weaker unit is still fairly prosperous and is able to bear the burden: so also the A.T.M.
But the important question is whether these four units should be made liable to pay gratuity computed on the consolidated wage i.e., basic wage plus the dearness allowance.
The Tribunal was apparently of the view that in determining the question the definition of the word "wages.
" in the industrial Disputes Act, 1947, would come to the aid of work men.
The expression "wages" as defined in section 2(rr) of the means all remuneration, capable of being expressed in terms of money, which would, if the terms of employment, expressed or implied, were fulfilled, be payable to a workman in respect of his employment or of work done in such employment and includes among other things, such allowances (including dearness allowance) as the workman is for the time being entitled to.
But we are unable to hold that in determining the scope of an industrial reference, words used either in the claim advanced or in the order of reference made by the Government under section 10 of the must of necessity have the meaning they have under the .
Merely because the expression "wages" includes dearness allowance within the meaning of the , the Tribunal is not obliged to base a gratuity scheme on consolidated wages.
The Tribunal has observed that the basic average wage of a workman in the textile industry in the Delhi region may be taken at Rs. 60/ per month, and the dearness allowance at Rs. 100/per month, and even if full one month 's basic wage is adopted as the minimum quantum of benefits to be allowed in the case of wage group with service of 5 years and more the scale of benefit would be very much lower than the present scale in the two contingencies provided in the Employees Benefit Fund Trust Scheme in operation in the D.C.M. and S.B.M. And observed the Tribunal: "In view of the limitations of the terms of reference, the quantum cannot exceed 15 days ' wages for every year of service from 5 to 10 years and 21 days ' wages for every year of service from 10 15 years.
Any schemes framed within the limitations of the terms of reference on the basis of basic wage alone will therefore mean a scale of benefits much lower than even the present scheme under the Employees Benefit Fund Trust.
Such 326 a scheme cannot, therefore, be framed without causing grave injustice and acute discontent, because it will mean the deprivation of even the present scale of benefits in the case of a large body of workers.
In order to maintain, so far as possible, the present level of benefits I have, therefore, no alternative but to frame for these two units a scheme based on basic wage plus dearness allowance.
" A scheme of gratuity based on consolidated wages was also justified in the view of the Tribunal because it "was also necessary to compensate for the ever diminishing market value of the rupee".
The Tribunal did however observe that normally gratuity is based not on the consolidated wage but on basic wage.
But since 13,000 workmen out of a total of 20,000 workmen in the region would stand to lose the benefits granted to them under a voluntary scheme introduced by the D.C.M. and S.B.M. a departure from the normal pattern should be made and gratuity should be based on the consolidated monthly wage.
In our judgment, the conclusion of the Tribunal cannot be supported.
The primary object of industrial adjudication is, it is said, to adjust the relations between the employers and employees or between employees inter se with the object of promoting industrial peace, and a scheme which deprives workmen of what has.
been granted to them by the employer voluntarily would not secure industrial peace.
But on that account the Tribunal was not justified in introducing a fundamental change in the concept of a benefit granted to the workmen in the textile industry all over the country by numerous schemes.
, The appropriate remedy is to introduce reservations protecting benefits already acquired and to frame a scheme consistent with the normal pattern prevailing in the industry.
We consider it fight to observe that in adjudication of industrial disputes settled legal principles have little play: the awards made by industrial tribunals are often the result of ad hoc determination of disputed questions, and each determination forms a precedent for determination of other disputes.
An attempt to search for principle from the law built up on those precedents is a futile exercise.
To the Courts accustomed to apply settled principles to facts determined by the application of the judicial process, an essay into the unsurveyed expanses of the law of industrial relations with neither a compass nor a guide, but only the pillars of precedents is a disheartening experience.
The Constitution has however invested this Court with power to sit in appeal over the awards of Industrial Tribunals which are, it is said, rounded on the somewhat hazy background of maintenance of industrial peace, which secures the prosperity of the industry and improvement of the conditions of workmen employed in the industry, and in 327 the absence of principles precedents may have to be adopted as guides some what reluctantly to secure some reasonable degree of uniformity of harmony in the process.
But the branch of law relating to industrial relations the temptation to be crusaders instead of adjudicators must be firmly resisted.
It would not be out of place to remember the statement of the law made in a different context but nonetheless appropriate here by Douglas, J., of the Supreme Court of the United States in United Steel Workers of America vs Enterprise Wheel and Car Corporation(1): ". as arbitrator does not sit to dis pense his own brand of industrial justice.
He may of course look for guidance from many sources, yet his award.
is legitimate only so long as it draws its essence from the collective bargaining agreement.
When the arbitrator 's words manifest an infidelity to this obligation, courts have no choice but to refuse enforcement of the award.
" We may at once state that we are not for a moment suggesting that the law of industrial relations developed in Our country has proceeded on lines parallel to the direction of the law in the United States.
One of the grounds which appealed to the Tribunal in relating to the rate of gratuity to the consolidated wage was the existence of a gratuity scheme in the D.C.M. & S.B.M. and the assumption that the Tribunal in adjudicating a dispute is always, in exercise of its jurisdiction, limited when determining the rate of gratuity to the multiple number of days of service in the order of reference, and cannot depart therefrom.
We are unable to hold that Industrial Tribunal is subject to any such restriction.
Its power is to adjudicate the dispute.
It cannot proceed to adjudicate disputes not referred: but when called upon to adjudicate whether a certain scheme "on the lines indicated" should he framed, the basic guidance cannot be deemed to impose a limit upon its jurisdiction.
As already stated, gratuity is not in its present day concept merely a gift made by the employer in Iris own discretion.
The workmen have in course of time acquired a right to gratuity on determination of employment provided the employer can afford having regard to his financial condition, to pay it.
There is undoubtedly no statutory direction for payment of gratuity as it is in respect of provident fund and retrenchment compensation.
The conditions for the grant of gratuity are, as observed in Bharatkhand (1) ; 325 Textile Mfg. Co. Ltd. 's case(1), (i) financial capacity of the employer; (ii) his profit making capacity; (iii) the profits earned by him in the past; (iv) the extent of his reserves; (v) the chances of his replenishing them; and (vi) the claim for capital invested by him.
But these are not exhaustive and there may be other material considerations which may have to be borne in mind in determining the terms and conditions of the gratuity scheme.
Existence of other retiring benefits such as provident fund and retrenchment compensation or other benefits do not destroy the claim to gratuity: its quantum may however have to be adjusted in the light of the other benefits.
We may repeat that in matters relating to the grant of gratuity and even generally in the settlement of disputes arising out of industrial relations, there are no fixed principles, on the application of which the problems arising before the Tribunal or the Courts may be determined and often precedents of cases determined adhoc are utilised to build up claims or to resist them.
It would in the circumstances be futile to attempt to.
reduce the grounds of the decisions given by the Industrial Tribunals, the Labour Appellate Tribunals and the High Courts to the dimensions of any recognized principle.
We may briefly refer to a few of the precedents relating to the grant of gratuity.
In May and Baker (India) Ltd. vs Their Workmen(2) the claim of the workmen to fix gratuity on the basis of gross salary was rejected by the Industrial Tribunal and the quantum was related to basic salary i.e., excluding dearness allowance.
The view taken by the Tribunal was affirmed by this Court.
In British India Corporation vs Its Workmen(3) the existing gratuity scheme directed payment of gratuity in terms of consolidated wages.
The Tribunal however modified the scheme while retaining the basis of consolidated wages which was held to be justified and reasonable.
This Court observed that prima facie gratuity is awarded not by reference to consolidated wages but on basic wages and the Tribunal had made a departure from that.
But in the view of the Court no interference with the scheme framed by the Tribunal was called for.
In British Paints (India) Ltd. vs Its Workmen(4) the Court followed the judgment in May and Baker (India) Ltd.(a) that it would be proper to follow the usual pattern of fixing the quantum of gratuity on basic wage excluding dearness allowance.
But the same principle was not adhered to in all cases.
For instance in Hindustan Antibiotics Ltd. vs Their Workmen(5), it was observed: (1) ; (2) [1961] II L.L.J. 94 (S.C.).
(3) [1965] II L.L.J. 556 (S.C.).
(4) [1966] I L.L.J. 407.
(5) [1967] I L.L.J. 114 (S.C.)==A.I.R. 329 "The learned counsel for the Company then argued that there is a flagrant violation or departure from the accepted norms in fixing the wage structure and the dearness allowance and therefore, as an exceptional case, we should set aside the award of the Tribunal and direct it to.
re fix the wages.
" In that case the Tribunal had awarded gratuity related to consolidated wages and without any contest the order of the Tribunal was confirmed.
In Remington Rand of India vs The Workmen(1) it was contended on behalf of the employer that the Tribunal was not justified in awarding gratuity on the basis of consolidated wages and should have awarded it on the basic wages alone.
In dealing with that plea this Court Observed that the Tribunal was on the facts of the case justified in proceeding in that way.
It is not easy to extract any principle.from these cases; as precedents they are conflicting.
If the matter rested there, we could not interfere with the conclusion of the Tribunal, but the Tribunal has failed to take into account the prevailing pattern in the textile industry all over the country.
The textile industry is spread over the entire country, in pockets some large other small.
There are large and concentrated pockets in certain regions and smaller pockets in other regions.
Except in two or three of the smaller States, textile units are to be found all over the country.
It is a country wide industry and in that industry, except in one case to be presently noticed, gratuity has never been granted on the basis of consolidated wages.
Out of 39 centres in which the textile industry is located there is no centre in which gratuity.
payable to workmen in the textile industry pursuant to awards or settlements is based on consolidated wages.
In the two principal centres viz., Bombay and Ahmedabad, schemes for payment .of gratuity to workmen in the textile industry the rates of gratuity are related to basic wages.
The B.C.M. have tendered before the Tribunal a chart setting out the names of textile units in which the gratuity is paid to the workmen on basic wages.
These are the Textile Units, Bhavnagar (Gujarat) Shahu Chhatrapati Mills, Kolhapur (Maharashtra); Jivajirao Cotton Mills, Gwalior (Madhya Pradesh); Madhya Pradesh Mill owners Association, (Indore), Bombay, Ahmedabad (Gujarat); New Sherrock Spg.
& Wvg.
Co. Ltd. Nadiad (Gujarat); Raja Bahadur Motilal Mills, Poona (Maharashtra); Shree Gajanan Wvg.
Mills, Sangli (Maharashtra); T.I.T. Bhiwani (Haryana); Jagatjeet Cotton Mills, Phagwada (Punjab); 36 Textile Mills in West Bengal; and Umed Mills (Rajasthan).
It is true that the chart does not set out the gratuity schemes, if any, in all the 39 centres referred to in the Report of the First Wage Board, but the chart relates to a fairly representative segment of the industry.
No evidence has been (1) [1968] I L.L.J. 542.
Cl/69 4 330 placed before the Court to prove that in determining gratuity payable under any other scheme in a textile unit the rate is related to consolidated wages.
The two large centres in which the industry is concentrated are Bombay and Ahmedabad.
In Rashtriya Mill Mazdoor Sangh, Bombay, vs Millowners Association Bombay(1), a scheme was framed by the Industrial Court, exercising power under the Bombay Industrial Relations Act 11 of 1947, in which the quantum of gratuity was related to the basic wages alone.
In paragraph 27 at p. 583 the Tribunal rejected the argument advanced by counsel for the workmen that since benefits like provident fund, retrenchment compensation, State Insurance Scheme, are granted in terms of monthly wages, gratuity should also be related to consolidated wages.
They observed that in a large majority of awards of the Labour Appellate Tribunals and Industrial.
Tribunals gratuity had been awarded in terms of basic wages, and that, "The basic wages reflect the differentials between the workers more than the total wages, as dearness allowance to all operatives is paid at a flat rate varying with the cost of living index.
The gratuity schemes for the supervisory and technical staff as well as for clerks are also in terms of basic wages.
" They accordingly related gratuity with the average basic wage earned by the workman during the twelve months preceding death, disability, retirement, resignation or termination of service.
The scheme in the Bombay region was adopted in the dispute between the Textile Labour Association and the Ahmedabad Mill Owners Association.
The award is reported in the Textile Labour Association, Ahmedabad vs Ahmedabad Millowners ' Association(2).
The question whether gratuity should be fixed on the basis ,of consolidated wages was apparently not mooted, but it was accepted on both the sides that gratuity should be related to basic wages.
An appeal against that decision in the Ahmedabad Millowners ' Association case(2) was brought before this Court in Bharatkhand Textile Manufacturing Co. Ltd. 's case(3), but no objection was raised to the award relating gratuity to basic wages.
In the report of the Central Wage Board for the Cotton Textile Industry, 1959, in paragraph 110 gratuity was directed to be given on the basis.
of wages plus the increases given under paragraph 106, but excluding the dearness allowance.
The only departure from the prevailing pattern to which our attention is invited was made by the Labour Appellate Tribunal in regard to the textile units in the Coimbatore Region: Rajalakshmi Mills Ltd. vs Their Workmen(4).
There was apparently (1) [1967] Industrial Court Reporter 561.
(2) [1958] I L.LJ. 349.
(3) ; (4) [1957] II L.L.J. 426.
331 no discussion on the question about the basis on which gratuity should be awarded.
The Labour Appellate Tribunal observed: 2. "In all the appeals there is a contest by the mills on the subject of gratuity, and it is contended that the gratuity as awarded is too high.
Both sides had much to say on the subject of the gratuity scheme as given by the adjudicator.
During the course of the hearing we indicated to the parties the lines on which the gratuity scheme could be suitably altered to meet their respective points of view.
We accordingly give the following scheme in substitution of the scheme at Para 85 of the award: 'All persons with more than five years and less than ten years ' continuous service to their credit, on termination of their service by the company, except in cases of dismissals for misconduct involving moral turpitude, shall be p.aid gratuity at the rate of ten days ' average rate of pay inclusive of dearness allowance for each completed year of service. ' . . . . . ." But this award was modified later by the Industrial Tribunal in Coimbatore District Mill Workers ' Union and Others vs Rajalakshmi Mills Co. Ltd.(1) The earlier award made in 1957 was sought to be reviewed before the Industrial Tribunal.
The Tribunal observed that it would be the duty of the Tribunal to modify a gratuity scheme based upon some agreement or settlement if the terms of that agreement are found to be onerous and oppressive.
The Tribunal stated that the original scheme was not applicable to all the units and taking into consideration the statutory provident fund scheme and "the fact that recently basic wages and dearness allowance have leaped up", there was No. justification for including the dearness allowance in any new scheme that might be framed for the new Mills; and that it would be most undesirable to have two sets of gratuity schemes in the same region with varying rates.
In the view of the Tribunal there should be a uniform scheme for all the Mills, old and new, and on that ground also the retention of the dearness allowance under the old scheme must be refused.
Counsel for the workmen relied upon an award made by the Industrial Tribunal in the Chemical Unit belonging to the D.C.M. which is published in D.C.M. Chemical Works vs Its Workmen(2).
In that case gratuity was related to consolidated wages.
The unit though belonging to the D.C.M. is entirely independent of the tex (1) [1964] I L.L.J. 638.
(2) [1962] 1L.L.J. 388.
332 tile unit.
The Company was treating that unit as separate from the textile unit and distinct for the purpose of recruitment of lab.our, sales and conditions of service for the workmen employed therein.
The Chemical Unit had separate muster rolls for its employees and transfers from one unit to.
the other, even where such transfers were possible, considering the utterly different kinds of businesses carried on in the different units, usually took place with the consent of the employee concerned.
In upholding the gratuity scheme which was based on the consolidated wages, this Court observed: "As to the burden of the scheme, we do not think that, looking at it from a practical point of view and taking into account the fact that there are about 800 workmen in all in the concern, the burden per year would 'be very high, considering that the number of retirements is between three to four per centum of the total strength." The gratuity scheme was in a chemical unit, and not in a textile unit.
The judgment of this Court merely affirmed the award of the Tribunal and sets out no reasons why gratuity should be related to consolidated wages.
We do not regard the affirmance by this Court of the award of the Industrial Tribunal as an effective or persuasive precedent justifying a variation from the normal pattern of gratuity schemes in operation in the textile industry all over the country.
It is clear that in the gratuity schemes operative at present to which our attention has been invited, in force in the textile industry payment of gratuity is related not to consolidated wages but to basic wages.
It is true that under the scheme which is in operation in the D.C.M. and S.B.M. payment which is related to the length of service may in some cases exceed the maximum awardable under a scheme of gratuity benefit related to basic wages.
That cannot be a ground for making a vital departure from the prevailing pattern in the other textile units in the country.
But it may be necessary to protect the interest of the members governed by the original scheme.
Determination of gratuity is not based on any definite rules.
In each case it must depend upon the prosperity of the concern, needs of the workmen and the prevailing economic conditions, examined in the light of the auxiliary benefits which the workmen may get on determination of employment.
If all over the country in the textile centres payment of gratuity is related to the basic wages and not on consolidated wages any innovation in the Delhi region is likely to give rise to serious industrial disputes in other centres all over the country.
The award if confirmed would not ensure industrial peace: it is likely to foment serious unrest in 333 other centres.
If maintenance of industrial peace is a governing principle of industrial adjudication, it would be wise to maintain a reasonable degree of uniformity in the diverse units all over the country and not to make a fundamental departure from the prevailing pattern.
We are, therefore, of the view that the Tribunal 's award granting gratuity on the basis of consolidated wage cannot be upheld.
Tiffs modification will not, however, affect the existing benefits which are available under the schemes framed by the D.C.M. and S.B.M. insofar as those two units are.
concerned.
Mr. Ramamurthi for the workmen also.
contended that in the matter of relating gratuity to wages consolidated or basic the principle of region cum industry should be applied and an "overall view of similar and uniform conditions in the industry ' in different centres" should not be adopted.
It was also urged that the basic wage is very low and the class of wage to which gratuity was related played a very important part in the determination of gratuity.
The basic wage is however low in all the centres and if it does not play an important part in other centres, we see no reason why it should play only in the Delhi region a decisive part so as to make a vital departure from the scheme in operation in the other centres in the country.
We are strongly impressed by the circumstance that acceptance of the award of the Tribunal in the present case is likely to create conditions of great instability all over the country in the textile industry.
In that view, we decline to uphold the order of the Tribunal fixing gratuity on the basis of consolidated wages inclusive of dearness allowance.
We may refer to the contentions advanced by counsel for the workmen in the two appeals filed by them.
It was urged,, that the Tribunal was in error in denying to the workmen gratuity when employment is determined on the ground of misconduct.
It was urged that it is now a rule settled by decisions of this Court that the employer is bound to pay gratuity notwithstanding termination of employment on the ground of misconduct.
It may be noticed that in the Rashtriya Mill Mazdoor Sangh 's case(1) and in the Ahmedabad Millowners ' Association case(2) provision was expressly made denying gratuity to the workmen dismissed for misconduct.
But in later cases a less rigid approach was adopted.
In Garment Cleaning Works case(3) tiffs Court observed: "On principle, if gratuity is earned by an employee for long and meritorious service, it is difficult to understand why.
the benefit thus earned by long and meritorious service should not be available to the employee even though at the end of such service he may have been found guilty of misconduct which entails his dismissal.
Gratuity is not paid to the employee gratui (1) [1957] Industrial Court Reporter, 561.
(2) [1958] I L.L.J. 349.
(3) 334 tously or merely as a matter of boon.
It is paid to him for the service rendered by him to the employer, and when it is once earned, it is difficult to understand why it should necessarily be denied to him whatever may be the nature of misconduct of his dismissal.
" In later judgments also the Courts upheld the view that the denial of the right to gratuity is not justified even if employment is determined for misconduct.
In Motipur Zamindari (P) Ltd. vs Their Workmen ( 1 ), this Court opined that the workmen should not be wholly deprived o.f the benefit earned by long and meritorious service, even though at the end of such service he may be found guilty of misconduct entailing his dismissal, and therefore the condition in a gratuity scheme that no gratuity should be payable to a workman dismissed "for misconduct involving moral turpitude" should be held unjustified.
The Court therefore modified the condition and directed that while paying gratuity to a workman who was dismissed for misconduct only such amount should be deducted .from the gratuity due to him in respect of which the employer may have suffered loss by the misconduct of the employee.
A similar view was expressed in Remington Rand of India Ltd. 's case (2).
In Calcutta Insurance Company Ltd. 's case(3) however protest was raised against acceptance of this rule without qualification.
Mitter, J., observed at p. 9 that it was difficult to concur in principle with the opinion expressed in the Garment Cleaning Works case(4).
Mitter, J., observed: "We are inclined to think that it (gratuity) is paid to a workman to ensure good conduct throughout the period he serves the employer. 'Long and meritorious service must mean long and unbroken period of service meritorious to the end.
As the period of service must be unbroken, so must the continuity of meritorious service be a condition for entitling the workman to gratuity.
If a workman commits such misconduct as causes financial loss to his employer, the employer would, under the general law, have a right of action against the employee for the loss caused, and making a provision for withholding payment of .gratuity where such loss was caused to the employer does not seem to aid to the harmonious employment of labourers or workmen.
Further, the misconduct may be such as to undermine the discipline in the workers a case in which it would be extremely difficult to assess the financial loss to the employer.
" (1) [1965] II L.L.J. 139.
(2) [1968] I L.L.J. 542.
(3) [1967] II L.L.J. 1.
(4) 335 "Misconduct" spreads over a wide and hazy spectrum of industrial activity: the most seriously subversive conduct rendering an employee wholly unfit for employment to mere technical default are covered thereby.
The parliament enacted the , which by section 15 has authorised the appropriate Government to make rules to carry out the purposes of the Act and in respect of additional matters to be included in the Schedule.
The Central Government has framed certain model standing rules by notification dated December 18, 1946, called 'The Industrial Employment (Standing Orders) Central Rules, 1946 '.
In Sch.
I Model Standing Orders cl. 14 provides: (1) . . . . . . (2) A workman may be suspended for a period not exceeding four days at a time, or dismissed without notice or any compensation in lieu of notice, if he is found to be guilty of misconduct.
(3) The following acts and omissions shall be treated as misconduct : (a) wilful insubordination or disobedience, whether alone or in combination with others, to any lawful and reasonable order of a superior, (b) theft, fraud or dishonesty in connection with the employer 's business or property, (c) wilful damage to or loss of employer 's goods or property, (d) taking or giving bribes.
or any illegal gratification, (e) habitual absence without leave or absence without leave for more than 10 days, (f) habitual late attendance, (g) habitual breach of any law applicable to the establishment, (h) riotous or disorderly behaviour during working hours at the establishment or any act subversive of discipline, (i) habitual negligence or neglect of work, (j) frequent repetition of any act or omission for which a fine may be imposed to a maximum of 2 per cent of the wages in a month, (k) striking work or inciting.
others to strike work in contravention of the provisions of any law, or rule having the force of law." ' 336 A bare perusal of the Schedule shows that the expression "misconduct" covers a large area of human conduct.
On the one hand are the habitual late attendance, habitual negligence and neglect of work: on the other hand are riotous or disorderly behaviour during working hours at the establishment or any act subversive of discipline, wilful insubordination or disobedience.
Misconduct falling under several of these latter heads of misconduct may involve no direct loss or damage to the employer, but would render the functioning of the establishment impossible or extremely hazardous.
For instance, assault on the Manager of an establishment may not directly involve the employer in any loss or damage which could be equated in terms of money, but it would render the working of the establishment impossible.
One may also envisage several acts of misconduct not directly involving the establishment in any loss, but which are destructive of discipline and cannot be tolerated.
In none of the cases cited any detailed examination of what type of misconduct would of would not involve to the employer loss capable of being compensated in terms of money was made: it was broadly stated in the eases which have come before this Court that notwithstanding dismissal for misconduct a workman will be entitled to gratuity after deducting the loss occasioned to the employer.
If the cases cited do not enunciate any broad principle we think that in the application of those cases as precedents a distinction should be made between technical misconduct which leaves no trail of indiscipline, misconduct resulting in damage to the employer 's property, which may be compensated by forfeiture of gratuity or part thereof, and serious misconduct which though not directly causing damage such as acts of violence against the management or other employees or riotous or disorderly behaviour, in or near the place of employment is conducive to grave indiscipline.
The first should involve no forfeiture: the second may involve forfeiture of an amount equal to the loss directly suffered by the employer in consequence of the misconduct and the third may entail forfeiture of gratuity due to ' the workmen.
The precedents of this Court e.g. Wenger & Co. vs Its Workmen(1), Remington Rand of India Ltd. case(2) and Motipur Zamindari (P) Ltd. 's case(a) do not compel us to hold that no misconduct however grave may be visited with forfeiture of gratuity.
In our judgment, the rule set out by this Court in Wenger & Co. 's case(1) and Motipur Zamindari (P) Ltd. 's case(3) applies only to those cases where there has been by actions wilful or negligent any loss occasioned to the property of the employer and the misconduct does not involve acts of violence against the management or other employees, or riotous or dis (1) [1963] II L.L.J. 403.
(2) [1968] I L.L.J. 542 (S.C.).
(3) [1965] II L.L.J. 139 (S.C.).
337 orderly behaviour in or near the place of employment.
In these exceptional cases the third class of cases the employer may exercise the right to forfeit gratuity: to hold otherwise would be to put a premium upon conduct destructive of maintenance of discipline.
It was urged on behalf of the workmen that the minimum period of 15 years fixed for voluntary retirement is too long and it should be reduced to 10 years.
In Hume Pipe Co. Ltd. vs Their Workmen(1) and Hydra (Engineers) Private Ltd. vs The Workmen(2) the minimum period for qualifying for gratuity on voluntary retirement was fixed at 15 years.
In other cases a shorter period of 10 years was adopted: Garment Cleaning Works(a); British Paints (India) Ltd.(4); Calcutta Insurance Co. Ltd.(5), and Wengel & Company(x).
Counsel for the employers have accepted that qualifying length of service for voluntary retirement should be reduced to 10 years.
Counsel for the employers have also accepted that having regard to all the circumstances, notwithstanding the direction given by the Tribunal and the schemes prevailing in the other parts of the country in the textile industry, the maximum gratuity should not exceed 20 months ' basic wages and not 15 months ' as directed by the Tribunal.
Further counsel for the D.C.M. and S.B.M. have agreed that in case of termination of employment on voluntary retirement one full months basic wages for each completed year of service not exceeding 20 months ' wages should be granted to workmen.
Counsel for the B.C.M. has agreed that gratuity at the rate of 21 days ' wages for each completed year of service in case of voluntary retirement or resignation after 10 years ' service may be awarded as gratuity to the workmen.
Counsel for the A.T.M. has shown no disinclination to fall in line with this suggestion.
Counsel for the A.T.M. has also not objected to appropriate adjustments in view of the concessions made by the management of the D.C.M., S.B.M. and B.C.M.
It was urged by counsel for the workmen that in providing that gratuity shall be paid to Badli workmen for only those years in which a workman has worked for 240 days, the Tribunal has committed an error.
It was urged that a Badli workman has to register himself with the management of the textile unit and is required every day to attend the factory premises for ascertaining whether work would be provided to him, and since a Badli workman has to remain available throughout the year when the factory is open, a condition requiring that the Badli workman has worked for not less than 240 days to qualify for gratuity is unjust.
We (1) [1959] II L.L.J. 830.
(2) C.A. No. 1934 of 1967 decided on April 30, 1968.
(3) (4) [1966] I L.L.J. 407 (S.C.) (5) [1967] II L.L.J. 1 (S.C.).
(6) [1963] II L.L.J. 403 (S.C.) 338 are unable to agree with that contention.
If gratuity is to be paid for service rendered, it is.
difficult to appreciate the grounds on which it can be said that because for maintaining his name on the record of the Badli workmen, a workman is required to attend the Mills he may be deemed to have rendered service and would on that account be entitled also to claim gratuity.
The direction is unexceptionable and the contention must be rejected.
It was also urged by Mr. Ramamurthi that the expression "average of the basic wage" in the definition of "wages" in cl. 4 of the Schemes is likely to create complications in the implementation of the Schemes.
He .urged that if the wages earned by a workman during a month are divided by the total number of working days, the expression "wages" will have an artificial meaning and especially where the workman is old or disabled or incapacitated from rendering service, gratuity payable to him will be substantially reduced.
We do not think that there is any cause for such apprehension.
The expression "average of the basic wage" can only mean the wage earned by a workman during a month divided by the number of days for which he has worked and multiplied by 26 in order to arrive at the monthly wage for the computation of gratuity payable.
Counsel for the employers agree to this interpretation.
It was then urged that whereas the reference to.
the Industrial Tribunal was made by the Delhi Administration sometime in March 1958, the award is .given effect to from January 1, 1964, and for a period of nearly six years the workmen have been deprived of gratuity, when the delay in the disposal of the proceedings was no.t due to.
any fault or delaying tactics on the part of the workmen.
The reference was made in the first week of March, 1958.
The Textile Mazdoor Union then applied to be impleaded on September 15, 1958, the D.C.M. and S.B.M. moved the High Court of Punjab at Delhi and obtained an order for stay of proceedings in writ petition filed against the order of the Tribunal impleading the Textile Mazdoor Union.
That writ petition was dismissed in February 1961 and the proceedings were resumed on December 12, 1962.
Thereafter preliminary issues were decided and on December 3, 1963, ,an interim award relating to other disputes was made.
It must, however, be noticed that there were four claims and the claim relating to gratuity was taken in hand by the Tribunal after disposal of the other claims.
Neither party was dilatory in the prosecution of any claim before the Tribunal.
It has also to be noticed that in the D.C.M. and S.B.M. there was in fact a gratuity scheme already in operation.
The liability of the A.T.M. to pay gratuity arises after that unit acquired sufficient financial stability and it is not suggested that the unit had acquired financial stability before January 1, 1964.
The is.sue remains a live issue only in respect of the B.C.M.
It is true that the gratuity 339 scheme of the D.C.M., and S.B.M. was related only to the length of service and did not take into account the varying rates of wages received by the workmen.
But the question if at all would, be one of making minor adjustments in the liability of the two units to pay gratuity in the event of gratuity being payable under this award at a higher rate than the gratuity awardable under the scheme already in operation in the two units.
If in respect of the A.T.M. which had no scheme gratuity for all practical purposes becomes operative from January 1, 1964, we do not see any reason why in respect of the B.C.M. any different rule should be provided for.
Again, the Tribunal has fixed January 1, 1964, as the date for the commencement of the schemes.
Giving the schemes effect before January 1, 1964, may rake up cases.
in which the workmen have left the establishments many years ago.
It would not be conducive to industrial peace to allow such questions to be raised after this long delay.
The question is not capable of solution on the application of any principle and must be decided on the consideration of expediency.
We do not think that any ground is made out for altering the award of the Industrial Tribunal in this behalf.
It was then urged that in any event the workmen of the D.C.M. and S.B.M. should not be deprived of the right to gratuity under the scheme of the two u,nits, if gratuity at a higher rate is payable to them under the voluntary scheme.
This contention must be accepted.
We direct that in respect of all workmen of the D.C.M. and S.B.M. who were employed before January 1, 1964, and continued to remain employed till that date, gratuity at the higher of the two rates applicable to each workman when he becomes entitled to gratuity either computed under the Employees Benefit Fund Trust scheme of the D.C.M. and S.B.M. or under the terms of this award shall be paid.
Workmen employed after January 1, 1964, will be entitled to the benefit of this award alone.
Industrial disputes have given rise to considerable strife holding up development of industry and the economic welfare of the nation.
Awards have been made by the Tribunals often on considerations adhoc and based on no principle and Courts have upheld or modified those awards without enunciation of any definite or generally accepted principle.
In the present case we have been largely guided b37 the consideration of securing a reasonable degree of uniformity in the fixation of gratuity in the textile industry, for, in our view, a departure made from the prevailing pattern in one region is likely to give rise to claims all over the country for modification of the gratuity schemes in operation, and have been accepted as fixing the basis.
of gratuity schemes.
If having regard to the deteriorating value of the rupee, it is thought necessary that more generous benefits should be available to the 340 workmen by way of gratuity, the remedy lies not before the adjudicators or the Courts, but before the legislative branch of the State.
In respect of the bonus, provident fund, retrenchment compensation, State Insurance Schemes as well as medical benefits, legislation has been introduced bringing a reasonable degree of certainty in the laws governing the various benefits available to the workmen and we are of the view that even in respect of gratuity a reasonably uniform scheme may be evolved by the Legislatures which could prevent resort to the adjudicators in respect of this complicated matter of dispute between the employers and the employees.
It may no.t be difficult to evolve a scheme which would meet the legitimate claims.
of both the employers and the employees and which might, while eliminating cause for friction, ' simultaneously conduce to greater certainty in the administration of the law governing industrial disputes, and secure benefits to the employers as well as the employees and conduce to the prosperity of the industry as well as of the workmen.
We propose to summarise the effect of our judgment: (1) A unit wise approach in framing the gratuity scheme for the four units was appropriate, and on the terms of the reference the plea of the employers to fix the age of superannuation was beyond the scope of reference.
The financial condition of the D.C.M., S.B.M. and B.C.M. justifies imposition of gratuity schemes as from January 1, 1964.
Even the A.T.M. which is the weakest of the four units is financially stable from the date on which the award becomes operative; (2) The settlement between the workmen and the A.T.M. did not operate to bar the jurisdiction of the Tribunal to make the scheme of gratuity payable to the workmen of the A.T.M.; (3) That the Tribunal was in error in relating gratuity awardable to the workmen to the consolidated wage; (4) That the minimum period for .
qualifying for voluntary retirement should be reduced to 10 years and one months basic wage in the case of D.C.M. and S.B.M. and 21 days ' basic wage in the case of B.C.M. and A.T.M. for each completed year of service should be paid but not exceeding 20 months wages in the aggregate.
(This direction is made with the consent of the Advocates of the employers); 341 (5) That workmen dismissed or discharged from service for misconduct will not be entitled to gratuity if guilty of conduct involving acts of violence against the management or other employees, or riotous or disorderly behaviour in or near the place of employment; (6) No modification need be made with regard to Badli workmen; (7) The award needs no modification with regard to the date of operation of the award; and (8) The workmen of the D.C.M. and S.B.M. who commenced service and continued to serve till January 1, 1964, and thereafter will be entitled to elect at the time when gratuity becomes due to claim gratuity either on the scheme in force under the Employees Benefit Fund Trust of the employers or under this award.
We have made some incidental changes to streamline the scheme.
On the view we have taken of the schemes, Annexure 'A 'relating to the D.C.M. and S.B. M. of the award will be modified in the following respects: In clause 1 (a) instead of "12 days ' wages", the expression "20 days ' wages" will be substituted; In clause 1 (b) for the expression "15 days ' wages", the expression "1 month 's wages" will be substituted; In proviso (ii) to clause 1 for the expression "15 months ' wages", the expression "20 months ' wages" will be substituted; In clause 2 for the expression.
"15 days ' wages", the expression "1 months wages will be substituted; and for the expression ' 15 years service , 10 years service will be substituted; In the proviso to clause 2 for the expression "15 months ' wages", the expression "20 months ' wages" will be substituted; In clause 3 in the proviso for the expression "15 months ' wages", the expression "20 months ' wages" will be substituted; Clause 3 will be followed by an Explanation: "Explanation.
The expression "misconduct" means acts involving violence against the management or other employees, or riotous or disorderly behaviour in or near the place of employment.
342 Where the workman is guilty of conduct which involves the management in financial loss, the loss occasioned may be deducted from the gratuity payable." In clause 4 the words "plus the dearness allowance" will be omitted.
The remaining clauses will stand unaffected except that for the words "within six months from the date of publication of this Award" ' the words "within six months from the date of this judgment" will be substituted.
Annexure 'B ' relating to the B.C.M. and A.T.M. will be modified in the following respects: In clause 1 (a) for the expression "one fourth month 's wages", the expression "15 days ' wages" will be substituted; In clause 1 (b) for the expression "one third month 's wages", the expression "21 days ' wages" will be substituted; In the proviso for the expression "12 months ' wages", the expression "20 months ' wages" will be substituted; In clause 2 for the words "15 years ' service", the expression "10 years ' service" will be substituted; In clause 3 in the proviso for the expression "12 months ' wages", the expression "20 months ' wages" will be substituted and it will be followed by the Explanation of "misconduct" as in Annexure 'A '.
In clause 4 the words "plus the dearness allowance" will be omitted.
There will be no order as to costs in these appeals.
V.P.S. Award modified accordingly.
| IN-Abs | In the Delhi region there are four textile units.
namely, the D.C.M., the S.B.M., the B.C.M., and the A.T.M. The D.C.M. and the S.B.M. are under one management.
Since 1940 they had also a common retirement benefit scheme with a scale of gratuity.
The ' workmen in all the units were receiving basic wages plus dearness allowance.
On March 4, 1958, an industrial dispute between the four units and their workmen was referred to the Industrial Tribunal and one of the matters in dispute related to gratuity.
The Tribunal in its award framed two schemes relating to the payment of gratuity, one relating to D.C.M. and S.B.M., and the other, to B.C.M. and A.T.M. They were made operative from January 1, 1964.
Both employers and employees appealed to this Court.
On the questions: (1 ) Whether in view of a settlement between the management of A.T.M. and its workmen it was open to the Tribunal to ignore the settlement and impose the scheme on the management; (2) Whether in view of the unstable financial condition of A.T.M. the burden of payment of gratuity on A.T.M. was excessive; (3) Whether a uniform scheme applicable to the entire industry on the region cum industry basis should have been adopted instead of schemes applicable to individual units; (4) Whether in determining the quantum of gratuity, basic wage alone should be taken into account and not the consolidated wage including dearness allowance; (5) Whether in deciding this question, an overall view of similar and uniform conditions in the industry in different centers in the country, could he taken into consideration; (6) Whether it was not necessary for the Tribunal to fix the age of superannuation when introducing a gratuity scheme; (7) Whether gratuity should have been awarded even in cases of dismissal for misconduct; (8) Whether provision should have been made for payment of gratuity to badli workmen irrespective of the number of days for which they worked in a year; (9) Whether the schemes should have been made operative from the date of reference; and (10) What is the scope of the expression 'average of the basic wage '.
HELD: (1) The settlement between the workmen and management of A.T.M. did not bar the jurisdiction of the Tribunal to make the Scheme of gratuity applicable to A.T.M. [340] Under the settlement all that was agreed to was, that an award should be made and if it he found that A.T.M. acquired financial stability then it would be liable to pay the gratuity to its workmen.
It was not agreed that the proceedings before the Tribunal should be dropped and that it 308 was only after A.T.M. became financially stable that a fresh claim should be made by the workmen.
[320 D F] (2) The trading accounts of A.T.M. showed that since 1959 60 the Mills had achieved some stability, and that by 1961 62 all previous losses were wiped out.
Therefore, though it was a much weaker unit than the others, it was financially stable from the date on which the scheme became operative.
[321 A C] (3) A unit wise approach in framing the gratuity scheme 'for the four units was appropriate in the present case.
[323 B C; 340 D E] No inflexible rule has been laid down by this Court that gratuity schemes should he framed only on the region cure industry principle.
In the present case, if a common scheme was framed for the entire industry in Delhi for all four units, in view of the financial condition of A.T.M., the benefits under such a scheme would be not only low, but would be lower than the existing benefits available to workmen in the D.C.M. and S.B.M. Units.
[321 C D, H; 322 E F, H] Garment Cleaning Works vs Its Workmen, [1962] 1 S.C.R. 711: and Burhanpur Tapti Mills Ltd. vs Burhanpur Tapti Mills Mazdoor Sangh, , followed.
Bharatkhand Textile Mfg. Co. vs Textile Labour Association ; , explained.
(4) The Tribunal was in error in relating the gratuity awardable to the workmen to the consolidated wage instead of the basic wage.
[340 G] (a) In determining the scope of an industrial reference words used, either in the claim or in the order of reference, should not necessarily be given the meaning they have under the Industrial Disputes Act.
Therefore, merely because the expression "wages" in the Act includes dearness allowance, the Tribunal could not base the gratuity scheme on consolidated wages.
[325 D F] (b) An industrial tribunal cannot adjudicate on disputes not referred; but when called upon to adjudicate ' whether a certain scheme, on the terms indicated in the reference should be framed, such basic guidance does not limit its jurisdiction.
The Tribunal, in this case, was in error in thinking that in determining the rate of gratuity it was limited to the number of days of service in the order of reference as the applicable multiple.
On that assumption, since the gratuity would be too low if only basic wage was chosen, it was not justified in choosing consolidated wage.
The proper procedure would have been to choose only the basic wage and fix upon a larger number of days of service as the appropriate multiple.
[327 E H] (c) The decisions of this Court in May and Baker (India) Ltd. vs their Workmen, [1961] II L.L.J. 94 (S.C.), British India Corporation vs Its Workmen, [1965] II L.L.J. 556 (S.C.), British Paints (India) Ltd. vs Its Workmen, , Hindustan Antibiotics Ltd. vs Their Workmen, and Remington Rand of India vs The Workmen, are conflicting and no principle can be extracted as to whether basic wage or consolidated wage should be considered for purposes of gratuity.
Ordinarily, in those circumstances, this Court would not have interfered with the conclusion of the Tribunal choosing consolidated wage; but, the Tribunal had failed 309 to take into account the prevailing pattern in the textile industry all over the country.
It is country wide industry and in that industry, gratuity has never been granted on the basis of consolidated wages.
[329 C F; 330 A] (d) The primary object of industrial adjudication is to adjust the relations between employers and employees with the object of promoting industrial peace.
If the basic wage alone is taken for purposes of gratuity, it would produce in the present case, a scheme which deprives the workmen of the D.C.M. and S.B.M. of benefits which had been granted to them under the voluntary scheme introduced by the management of those two units and disturb industrial peace therein.
But on that account, the Tribunal was not justified in introducing a fundamental change in the concept of gratuity granted by numerous schemes in the textile industry all over the country.
The appropriate remedy is to frame a scheme consistent with the normal pattern prevailing in the industry and introduces reservations protecting benefits already acquired.
[326 C F] (e) In the report of the Central Wage Board for the cotton textile industry, also, gratuity was directed to be given on the basis of wages excluding dearness allowance.
[330 G] (f) In D. C.M. Chemical Works vs Its Workmen, this Court affirmed the award relating gratuity to consolidated wages.
Though the unit also belonged to D.C.M. it is a unit entirely independent of the textile unit.
So, it cannot be regarded as an effective or persuasive precedent justifying variation from the normal pattern of gratuity schemes in operation in the textile industry all over the country.
[331 H; 332 A B, D E] (5) If all over the country, in textile centres, payment of gratuity.
is related to the basic wage and not to the consolidated wage any innovation Delhi region alone is likely to give rise to serious industrial disputes in other centres in the country.
If maintenance of industrial peace is a governing principle of industrial adjudication, it would be wise to maintain a 'reasonable degree of uniformity in the diverse units all over the country and not to make a fundamental departure from the prevailing pattern.the basic wage is low in all other centres, and if it does not play an important part, there is no reason why it should play, only in the Delhi region, a decisive part so as to make a vital departure from schemes in operation in other centres in the country.
The acceptance of the award the Tribunal in the present case is likely to create conditions of great instability in other parts of the country in the textile industry.
Therefore, the Tribunal 's award granting gratuity on the basis of consolidated wage could not be upheld.
[332 G H; 333 A E] (6) It is not necessary, for a gratuity scheme to be effective, that here should be fixation of the age of superannuation.
[323 C D] Burhanpur Tapti Mills Case, , referred Further, on the terms of the reference the plea of the employers to fix the age of superanuation was beyond the scope of the 'reference, nor was such fixation incidental to the framing of the scheme.
[323 H 324 c] (7) The object of providing a gratuity scheme is to provide a retiring benefit to workmen who have rendered long and unblemished service to the employer and thereby contributed to the prosperity of the employer.
It is therefore not correct to say that no misconduct, however grave, may not be visited with forfeiture of gratuity.
Misconduct could be (a) 310 technical misconduct which leaves no trail of indiscipline; (b) misconduct resulting in damage to the employers ' property which may be compensated by forfeiture of gratuity or part thereof; and (c) serious misconduct such as acts of violence against the management or other employees or riotous or disorderly behaviour in or near the place of employment which, though not directly causing damage, is conducive to grave indiscipline.
The first should involve no forfeiture, the second may involve forfeiture of an amount equal to the loss directly suffered by the employer in consequence of the misconduct, and the third will entail forfeiture of gratuity due to the workmen.
[324 F G; 336 D F; 341 A B] Garment Cleaning Works vs Its Workmen, ; (1961) I L.LJ. 513, Wenger & Ca.
vs Its Workmen, [1963] II L.L.J. 403 (S.C.), Motipur Zamindari (P) Ltd. vs Their Workmen, [1965] II L.LJ.
139 (S.C.) Calcutta Insurance Co. vs Their Workmen, [1967] II L.LJ. 1 (S.C.), and Remington Rand of India vs The Workmen, [1968] I L.L.J. 542 (S.C.).
referred to.
(8) The award does not require to be modified with regard to badli workmen.
If gratuity is to be paid )for service rendered then there are no grounds for holding that a badli workman must be deemed to have rendered service giving rise W a claim of gratuity, merely because, for maintaining his name on the record of the badli workmen, he is required to attend the mills.
[338 A B] (9) The award needs no modification with regard to the date of commencement of the schemes.
The liability of A.T.M. to pay gratuity arose after it acquired sufficient financial stability and the unit acquired financial stability only from January 1, 1964.
If in respect of the A.T.M. which had no scheme.
gratuity becomes operative from January 1, 1964, there is no reason why respect of B.C.M. any different rule should be provided for.
As regards D.C.M. and S.B.M. there was already a more advantageous gratuity scheme in operation and the workmen in those two units were not prejudiced by directing the scheme applicable to them, to commence from January 1, 1964.
If effect was given to the schemes before January 1, 19 '64, it may rake up cases in which workmen have left the establishment many years ago and it would not be conducive to industrial peace to allow such questions to be raised after a long delay.
In the absence of any principle, the matter must be decided on considerations of expediency.
[338 G H; 339 A D] (10) The expression 'average of the basic wage ' means wage earned by a workman during a month, divided by the number of days for which he had worked, and multiplied by 26 in order to arrive at the monthly wage for the computation of gratuity payable.
[333 C D] [Appropriate directions modifying the schemes were accordingly given.]
|
Civil Appeal No. 23 of 1966.
Appeal from the judgment and decree dated May 11, 1962 of the Patna High Court in Appeal from Original Decree No. 169 of 1958.
U.P. Singh, for the appellants.
Sarjoo Prasad and R.C. Prasad, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by Bachawat J.
The plaintiffs, defendants 5 to 7 and the ancestor of defendants 8 to 13 were the sixteen anna proprietors of certain villages in district Shahbad.
By a registered deed dated October 3, 1944 they leased the forest rights in the villages to the defendants 1 and 2 for a period of 9 years ending Bhado 30, 1360 Fasli corresponding to September 2, 1953 at an annual.
rent of Rs. 16,000.
The plaintiffs had 6 annas share in the proprietary rights in the villages and Rs. 6,000 was fixed as their share of the annual rent.
The defendant No. 3 was a transferee of a portion of a lessees ' interest from defendant 1.
On September 3, 1954 the plaintiffs instituted a suit claiming a decree against defendants 1 and 2 for Rs. 36,405 on account of their share of the rent for 1356 to 1360 Faslis and interest thereon at 1% per annum.
During the pendency of the suit, defendant 2 died and his heirs were substituted as defendants 2 and 2(a).
The Trial Court decreed the suit on contest against defendants 2 and sup./69 6 362 2(a) and ex parte against defendants 1 and 3 with future interest and costs.
On appeal, the High Court held that (1 ) as defendant 2 had only 4 anna share in the lessees ' interest as mentioned in the lease deed and as he had acquired another one anna share in the lessees interest subsequently, defendants 2 and 2(a) were liable to pay only 5 annas share in the annual rent, that is to say, Rs. 1,875 per annum and defendants 1 and 3 were liable to pay the balance rent; (2) as the lease deed granted a lease of forest rights, the suit was governed by article 2(b)(i) of Schedule III of the Bihar Tenancy Act, 1885 and consequently the suit in respect of rent for 1356 and 1357 Faslis was barred by limitation, and (3) in view of sec.
67 of the Bihar Tenancy Act the plaintiffs could claim interest at the rate of 61/4% per annum only.
Accordingly the High Court allowed the appeal in part and ' passed a decree against defendants 2 and 2(a) for 5 annas share of the rent for 1358 to 1360 Faslis and a separate decree against defendants 1 and 3 for the balance rent for those years with interest at 61/4 % per annum.
The plaintiffs have filed the present appeal after obtaining a certificate from the High Court.
The appellants challenge the correctness of all the findings of the High Court.
Clause 3 of the lease deed provided: "that the lessees shall pay an annual Zama of Rs. 16,000 in respect of the thika property on 1st Kuar of every year.
If for any reason, the rent for two consecutive years shall fall into arrears in that case the lessors shall be competent to enter into khas possession and occupation of the thika property and to this the lessees shall ' have no objection and in case of making default the lessees shall pay an interest at the rate of Re. 1 per cent till the date of payment.
The lessors either separately or jointly shall realise (the amount) to the extent of their respective shares according to their choice by instituting in court with interest thereon mentioned above from the persons and properties of the lessees.
" At the end of the lease it was stated that defendant 1 had twelve anna share in the lessees ' interest and his share of the rent was Rs. 12000.
It was also stated that defendant 2 had 4 anna share in the lessees ' interest and his share of the rent was Rs. 4GO0.
Clause 3 of the deed clearly shows that the lessees were jointly liable to pay the annual rent of Rs. 16000.
The deed mentioned the share of each lessee and the annual rent for the purpose of indicating what amount would be contributed by each of them towards the rent jointly payable by them.
The joint liability of the lessees is clearly indicated by the provision that entire lease 363 would be terminable on default of payment of rent for two consecutive years.
Having regard to sec.
43 of the defendants 1 and 2 were jointly and severally liable to pay the rent.
It was not disputed before the High Court that the liability of defendant 3 stood on the same footing.
The High Court was in error in holding that defendant 2 was liable to pay only 5 anna share in the rent.
The High Court was right in allowing the defendant to raise the point of limitation, though the plea was not taken in the written statement.
Under section 184 of the Bihar Tenancy Act a suit instituted after the expiry of the period of limitation is liable to be dismissed though limitation has not been pleaded learned Counsel for the appellants could not tell us what further evidence his clients could adduce on this point.
In the circumstances, the absence of the plea of limitation in the written statement did not cause the appellants any prejudice.
On a careful reading of the lease deed, we are satisfied that it granted a lease in respect of forest rights only.
It gave the lessees the right to cut and appropriate trees of certain types and the fruits and flowers of certain fruit bearing trees.
The right to open roads and to construct buildings were incidental to the right to enjoy the forest produce.
The suit is for recovery of rent in respect of forest produce and saving regard to sec.
193 of the Bihar Tenancy Act is governed by article 2(b)(i) of the Schedule III thereto.
This view is supported by the decisions of the Calcutta High Court in Abdulullah vs Asraf Ali(1) and Bande Ali Fakir vs
Amud Sarkar(2).
The special period of limitation applies though the claim for arrears of rent is rounded on a registered instrument, (see Mackenzie vs Haji Syed Muhammad Ali Khan.
(3)The High Court was right in holding that the suit in respect of rent for Fasli years 1356 and 1357 was barred by limitation.
Having regard to sec.
193 all the provisions of the Act applied to a suit.
Section 67 (1 ) provides that arrears of rent shall bear simple interest at the rate of 61/4% per annum.
The section overrides the contractual stipulation that the interest would be payable at 1% per annum.
The High Court was right in holding that interest was payable at the rate of 61/4% per annum only.
In the result, the appeal is allowed in part and it is declared that defendants 1, 2, 2(a) and 3 are jointly and severally liable to pay to the plaintiffs Rs. 6000 per annum on account of the plaintiffs ' share of rent for Fasli years 1358, 1359 and 1360 and simple interest thereon at the rate of 61/4% per annum upto date.
We direct that a decree be drawn up accordingly.
The decree will carry future interest on the principal sum at the rate of 6% (1) 7 C.L.J. 152.
(2) 19C.W.N. 415.
(3) I.L.R.19 Cal.
1. 364 per annum.
The aforesaid defendants will pay to the plaintiffs proportionate costs of the suit in the Trial Court.
The parties will bear their own costs of the appeal in the High Court and in this Court.
This decree will be without prejudice to the payments, if any, made by the defendants to the plaintiffs after the institution the suit.
Y.P. Appeal partly allowed.
| IN-Abs | The plaintiffs defendants 5 to 7 and the ancestor of defendants 8 to 13 leased the forest rights in theft villages to defendants 1 and 2 at an annual rental.
The deed mentioned the share of each lessee and the annual rent for the purpose of indicating what amount would be contributed by each .of them towards the rent jointly payable by them.
It was stated in the lease that the entire lease would be terminable on default of payment of rent for two.
consecutive years and the lessee shall pay interest at Re. 1 per cent in case of default, and that the lessors either separately or jointly shall realise the amount according to their choice.
Defendant 3 was a transferee of a portion of lessees ' interest from defendant 1.
The plaintiff lessors flied a suit in September 1954 claiming a decree of their share of rent for 1356 to 1360 Fasli and interest thereon.
The plea that suit was.
barred by limitation was not taken in the written statement.
Defendant 2 died and his heirs were substituted as defendants 2 and 2(a).
The trial court decreed the suit.
On appeal, the High Court held that (i) the defendants 1 to 3 were liable to pay the amount of the annual rent up to the extent of their respective shares; (ii) as the lease deed granted a lease of forest rights, the suit was governed by article 2(b)(1) of Schedule HI of the Bihar Tenancy Act, 1885 and consequently the suit in respect of rent for 1356 and 1357 Faslis was barred by limitation; and (iii) in view of section 67 of the Bihar Tenancy Act the plaintiffs could claim at the rate of 61/2% per annum only.
In appeal.
this Court, HELD: The defendants 1 to 3 were jointly and severally liable to pay the plaintiff 's share of the rent for 1358, 1359 and 1360 Faslis and simple interest thereon at 61/4% per annum up.
to date.
(i) The deed mentioned the share of each lessee and the annual rent for the purpose of indicating what amount would be contributed by each of them towards the rent jointly payable by them.
The joint liability of the lessees was clearly indicated by the provision that the entire lease would be terminable on default on payment of rent for two consecutive years.
Having regard to section 43 of the defendants 1 and 2 were jointly and severally liable to pay the rent, and the liability of defendant 3 stood on the same footing.
[362 H 363B] (ii) Under section 184 of the Bihar Tenancy Act a suit instituted after the expiry of the period of limitation is liable to be dismissed though limitation is not pleaded.
The respondent was rightly allowed to raise the 361 point of limitation though the plea was not taken in the written statement.
[363 C] The lease deed granted a lease in respect of forest rights only.
It gave the lessees the right to cut and appropriate trees of certain types and the fruits and flowers of certain fruit bearing trees.
The right to open roads and to construct buildings were incidental to the right to enjoy a forest produce.
The suit was for recovery of rent in respect of forest produce and having regard to section 193 of the Bihar Tenancy Act was governed by article 2(b)(1) of the Schedule III therefore.
The special period of limitation applied though the claim for arrears of rent was claimed on a registered document.
[363 D F] The suit in respect of rent for 1356 and 1357 was barred by limitation.
Abdulullah vs Asraf Ali, 7 C.L.J. 152, Bande Ali Fakir vs Amud Sarkar, and Mackenzie vs Haji Syed Muhammad Ali Khan, I.L.R. , approved.
(iii) Interest was payable at the rate of 6 1/4% per annum only.
By section 193 of the Bihar Tenancy Act all the provisions of the Act applied to the suit.
Section 67(1) provides that arrears of rent shall bear simple interest at the rate of 61/2% per annum.
The section overrides the contractual stipulation that the interest be payable at 1% per annum.[363 F G]
|
l Appeal No. 61 of 1951.
Appeal from the Judgment and Decree dated the 10th November, 1944.
, of the High Court of Judicature at Lahore in Civil Regular First Appeal No. 259 of 1942, arising out of the Judgment and Decree dated the 29th July, 1942, of the Court of the Extra Assistant Settlement Officer and Assistant Collector of the 61 First Grade as Senior Sub Judge, Gurgaon, in Suit No. 35 of 1940 41.
Dr. Bakshi Tek Chand, (Ram Nath Chadha and Ganpat Rai, with him) for the appellants.
Naunit Lal for respondents Nos. 1, 3, 7 to 11 and 13 to 19.
April 21.
The Judgment of the Court was delivered by GHULAM HASAN J.
This appeal is brought against the judgment and decree dated November 10, 1944, of the Lahore High Court (Sir Trevor Harries C. J. and Mr. Justice Mahajan, the present Chief Justice of this Court) reversing the judgment and decree of the Assist,ant Collector, First Grade, Gurgaon, as Senior Subordinate Judge, and dismissing the plaintiffs appellants ' suit.
Dalmir, Dilmor and Chhinga were three brothers and Amir Khan and Sharif Khan were the two collaterals.
Alif Khan was the son of Amir Khan.
The present dispute is between the descendants of the five branches of the family.
The suit was brought by the descendants of Dalmir against the descendants of Dilmor, Cbhinga, Alif Khan and Sharif Khan.
To this suit were also impleaded as defendants some of the descendants of Dalmir.
The plaintiffs claimed a declaration that they along with defendants Nos. 17 to 19 are full owners in possession of 819 Bighas 19 Biswas land situate in village Manota Tehsil Ferozepore Jhirka.
in the Gurgaon District, that the defendants Nos.
I to 16 had no right to claim partition of that land and that they were entitled only to the produce of land measuring 140 Bighas 19 Biswas possessed by them without payment of land revenue.
The aforesaid defendants, it was alleged, were bound by the terms embodied in the agreement dated September II, 1861, in the Wajib ul arz of that Settlement and repeated in subsequent Settlements which debarred them from any right to.
claim partition.
Defendants Nos.
I to 16, who are the contesting defendants, pleaded in defence that the plaintiffs along with the pro forma defendants Nos. 17 to 19 were recorded in revenue 62 papers as owners of 1/5th share in the land in dispute, while the contesting defendants were recorded as owners of the remaining 4/5th share and as such they were entitled to claim partition.
The defendants denied that any agreement or condition in the Wajib ul arz restricting their right to partition was binding after the expiry of the term of the Settlement and contended that it could not operate as a bar to their claim to partition.
The Assistant Collector trying the suit as a Civil, Court under section 117 of the Punjab Land Revenue Act (Act XVII of 1887) decreed the claim.
He held that the contesting defendants were entitled only to get produce of 140 Bighas and 19 Biswas of land in their possession without payment of land revenue and had no interest in the remaining land.
This decree was reversed on appeal, the High Court holding that the defendants are entitled to 4/5th share as proprietors, that the original agreement repeated in subsequent Settlements was binding on the parties so long as the Settlements were in force, that it ceased to have any effect after the expiry of the Settlements and that the renewal of its terms in the Settlement of 1938 39 was not binding as they were not agreed to by the contesting defendants.
The learned Judges held that the judgment (D. 4) dated June 15, 1893 of the Chief Court of Punjab inter parties, which held that the prohibition of partition contained in the Wajib ul arz did not survive the expiry of the period of the Settlement, was binding upon them.
They took the view that the contesting defendants being.
proprietors, the right of partition was inherent in their right of ownership.
As a result of these findings the suit was dismissed.
We have heard Dr. Tek Chand, learned counsel for the appellants, in support of the appeal at length but we are of opinion that there is no force in the appeal.
The parties are Meos and the land in dispute is situate in village Manota in Tehsil Ferozepore Jhirka in Gurgaon District.
According to the Gazetteer of Gurgaon District (1910) the Meos owned nearly the whole of the Ferozepore Tehsil and various other villages in Gurgaon.
They are divided into several sub tribes, and these sub tribes possess a strong feeling of unity and the 63 power of corporate action.
It was stated that " in the mutiny the members of each sub division generally acted together; and district officers are advised to keep themselves informed of the names and characters of the men, who from time to time possess considerable influence over their fellow tribesmen." (P. 60).
The documentary evidence regarding the title to the property in dispute ranges over a period of four Settlements, each Settlement being for a period of thirty years.
The first Settlement was made in 1839 42, the second in 1872 1879, the third in 1903 08 and the last in 1938 39 which is the current Settlement.
The village was assessed to annual revenue of Rs. 323 for the, period of 30 years from 1246 to 1275 Fasli (corresponding to 1839 1862 A.D.) which was made payable by Dalmir Lamberdar who is described as sole owner.
The Settlement papers were, however, lost during the mutiny and after taking fresh measurements the settle : ment papers were completed.
Alif Khan, Dalmir and Dilmor signed what is called an agreement binding them by all conditions, provisions and declarations made at the time of the Settlement (P. 12).
It is common ground that the property was originally, granted in 1822 A. D. to Dalmir by Nawab Ahmad Bakhsh Khan Rais of Ferozepore Jhirka.
The grant is not in writing and there is no contemporaneous record which could throw any light on its terms.
Dalmir claimed to be the sole grantee with full proprietary rights.
A number of documents are attached to the Settlement record of 1863.
They are important as showing how the property was dealt with by the Settlement authorities from time to time and the state of the revenue records.
The earliest document on record appe ars to be an agreement dated September 28, 186 1, which is incorporated in paragraph 18 of the Wajib ul arz of village Manota.
It says that the tenure of the village is zamindari.
Dalmir is entitled to profit and liable for loss in respect of the entire village.
The other biswadars are owners of the produce of the land cultivated by them but they pay no revenue.
This, it is stated, is the benefit they enjoy (P. 35 = D. II).
This document is signed in token of verification by Dalmir Lamberdar, 64 Dilmor, Alif Khan Biswadar and Phusa Biswadar, who ,ire described as proprietors.
Phusa, we are told, is the alias of Chhinga.
There is a report of Mr. John Lawrence (later Lord Lawrence), Settlement Officer referred to in the Gazetteer, which says that the arrange ment then in vogue was that a few owners shared the profit and loss of the land revenue and the others were exempted from responsibility.
Manota was one of the few villages which continued to follow the system (P. 179).
Paragraph 2 of the Wajib ul arz which relates to the mode of partition, after stating the area of the village as 837 Bighas and 9 Biswas, says "When we, the co sharers want to partition it, we ourselves will do so of our accord in accordance with our shares shown in the Khewat papers or through the village Patwari in the,presence of Panchayat of the brotherhood.
The new abadi (cultivation of new land) will be made with the consent of all the biswadars.
One biswdar is not competent to make a new abadi".
D. 10).
P. 4 is a statement showing apportionment of Jama, (i.e., Khewat money) in the village.
After stating that the Settlement of the village was made in the name, of Dalmir, sole owner, and that he alone was entitled, to profit and liable for loss, it goes on to say that Alif Khan son of Amir and Phusa son of Chhinga and Dilmor having cultivated a specified area of land be.
came owners of the produce of the land without payment of rent and also became entitled to profit and liable for loss.
Paragraph 10 of the Wajibul arz contains an agreement about trees.
It shows that the trees standing in the house or field of the owner belong to him, and he is competent to plant and cut them.
So far as the occupancy tenants are concerned, the trees standing in their houses also belong to them as they cultivate land but Dalmir alone had the right to cut or sell them.
These are all the material documents pertaining to the Settlement record of 1863.
We now come to the Settlement record of is an important document.
Paragraph I which deals with the history of the village is reproduced below: ' "Fifty two years ago in Sambat 1880, Dalmir, Caste Meo, Got Sogan, along with Dilmor and Chhinga, his real brothers, took possession of the area of this village, with the permission of Nawab Ahmed Bakhshi Khan Sahib.
Rais of Ferozepore, who granted him a Biswadari estate without payment of any Nazrana in lieu of the services rendered by him and made this desolate, tract abad.
He along with his brothers jointly remained in possession thereof and enjoyed profit and bore loss.
After him Amir Khan became abad in the village and along with us, proprietors, remained in possession.
Accordingly, we the proprietors got his name, entered as a Biswadar at the time of the Revised Settlement.
After him Sharif Khan, son of Ghariba, who was also a collateral, came to this village in Sambat 1916 and remained in possession along with us proprietors.
Accordingly we got his name also recorded along with ours on the 14th September, 1863.
We have up to this day been joint owners.
This village has never been partitioned.
Shares are given in the Khewat papers.
," This document shows that although the name of Dalmir is mentioned as being the sole grantee by virtue of the services rendered by him to the Nawab, his two brothers also were in joint possession with him.
Not only this but Amir Khan and Sharif Khan, who are both collaterals, also had joint possession of the village.
They are all described as proprietors and their names are recorded as joint owners.
The authenticity of this documentisbeyondquestion.
It out sat the root of the theory of Dalmir being the sole owner.
It is true that Dalmir was mentioned as the sole owner in D. 4 but the grant was treated by Dalmir himself as being the joint property of his two brothers and the two couaterals whether or not it was originally intended for the benefit of the family as understood in its widest sense.
Paragraph 5 of the Wajib ul arz relating to the tenure of the village and the mode of payment of revenue 9 66 says that the village is bilijmal (joint) and that the sons of Dalmir shall continue to pay the Government revenue in respect of their own shares as well as the shares of the sons of his two brothers and the shares of the collaterals.
The reason given is that no money is taken from the said co sharers on account of relationship.
(P. 15).
This statement is consistent only with joint ownership.
Paragraph 7 of the Wajib ul arz also describes the tenure as Zamindari bilijmal and Repeats the statement that the other co sharers of Dalmir do not pay any rent or Jama in respect of the land cultivated by them on account of their relationship.
No single sharer has the right to reclaim the Banjar area without the consent of all the proprietors (P. 19).
This Wajib ul arz is verified by the proprietors, tenants, Bhandadars (a village servant to whom cultivation is allotted rent free), Kamins (menials) and the inhabitants of the village.
It is admittedly signed by the ancestors of the parties (P. 22).
The Khewat and the Khatauni (P. 31) prepared during the Settlement both record the five branches of the family as being in possession of a 1/5th share each.
A similar entry is to be found in the Khatauni (D. 18).
It appears that during the currency of this Settlement two suits for partition were filed in the Revenue Court but the partition was not allowed (P. 5).
Coming to the Settlement of 1903 08 we find a Statement in clause 3 of the Wajib ul arz (D. 13) that the descendants of Dalmir alone could get the land partitioned in five equal shares but the descendants of the other four co sharers, who were, cultivating land without payment of revenue, owing to non rendition of account in respect of profit and loss of their respective shares, could not have the land partitioned.
, Lastly we come to the Jamabandi of 1937 38 (P. 1).
This shows that all the five branches were entered as being in possession of equal shares.
Mehrab, grandson of Dalmir and one of the plaintiffs, who gave evidence as P. W. 5 admitted that defendants 67 Nos.
I to 16 were shown as proprietors in the Jamabandi but he never raised any objection to it.
He also admitted that Mehar Singh, grandson of Sharif Khan, sold his half share to Chhote Khan and Bhola, his coplaintiffs and that they did not challenge the same.
We may now refer to the civil litigation which started in 1891.
It arose upon the rejection of the applications for partition made by Alif Khan and Sharif Khan on September 24, 1890, by the Assistant Collector.
Alif Khan filed a suit against the descendants of the three brothers and the descendants of Sharif Khan.
In the plaint (D. 1) he claimed a declaration of 1/5th share of the entire village.
The sons of Dalmir denied the claim.
In their written statement (B. 2) they alleged that in previous proceedings they had deniedthe plaintiffs ' right to partition and that the defendants had been in adverse possession of the land and that the plaintiffs and others had been cultivating land as Bhandadars (village servants).
The Subordinate Judge decreed the claim (D. 3).
This decree was upheld by the Divisional Judge, but the judgment is not on record.
In second appeal the Chief Court amended the decree by declaring that the plaintiff was entitled to 1/5th share in the village to be enjoyed subject to the qualifications and restrictions set forth in the Khewat and the Wajib ul arz which do not permit of his obtaining partition while the present Wajib ul arz was in force.
This decree was made upon the admission made by the defendants in the course of the arguments.
Paragraph 8 of the Wajib ul arz of 1877 (D. 12=p.
16) which was the subject of conflicting interpretation by the parties was interpreted by the Chief Court to mean that its effect was to prohibit general division among the co sharers while the Wajibul arz was still in force.
They held that the five sons of Dalmir could separate their shares inter se but not the other co sharers.
We are of opinion that this judgment which is inter partes finally set at rest the controversy between them by declaring that the parties were joint owners holding equal shares and constitutes res judicata.
The judgment is also in conformity with the true effect of the documentary evidence on the 68 record.
No doubt the name of Dalmir was entered.
in some documents as the sole owner but that entry by itself is not conclusive and must be read in conjunction with the other entries in the Settlement record.
Dalmir may have been the original grantee but his own conduct shows that he did not regard himself as absolute owner to the exclusion of his own brothers.
Indeed according to the entry he even treated his collaterals on an equal footing.
His description as sole owner in the circumstances carries no value.
Whatever may have been the position at the time of the original grant, the subsequent conduct of the parties unmistakably shows that all the five branches were treated as owners in equal shares.
Dalmir as the lamberdar was made responsible for the payment of the entire landrevenue.
He was entitled to profit and was responsible for loss.
The others were given less land and were exempted from payment of rent or revenue on account of relationship.
This arrangement appears to have been fairly general in those days as appears from the report of Mr. (later Lord) Lawrence, Settlement Officer, re ferred to above.
The arrangement was that ' a few owners shared the profit and loss of the land revenue assessment while the others were exempted.
The Government was primarily interested in the payment of the revenue and they apparently found it more convenient to hold the head or the most influential member of the family as responsible for payment of the entire revenue leaving it to him to make such arrangement among his co sharers as he thought fit.
In later Settlements the owners accepting responsibility for the payment of the land revenue did not find it profitable and the system gradually disappeared.
Lord Lawrence remarks that at the third Settlement the number of villages which still continued the system was reduced to three and one of these was Manota in Ferozepore Tehsil (page 179).
This accounts for Dalmir being called the sole owner and being made responsible for payment of Government revenue.
By section 44 of the Punjab Land Revenue Act an entry made in the record of rights or in an annual record shall be presumed to be, true until the contrary 69 is proved.
That entries in the Jamabandies fall within the purview of the record of rights under section 31 of the Act admits of no doubt.
Section, 16 of the old Act (XXIII of 1871) laid down that entries in the record of rights made or authenticated at a regular Settlement shall be presumed to be true.
We are satisfied that the materials on the record taken as a whole justify the view which has been taken by the High Court that the contesting defendants are joint owners and not mere cultivators who are not entitled to claim partition of the property.
The judgment of the Chief Court also recognized the proprietary right of the defendants but qualified it by the declaration that so long as the Settlement was in force, they were not entitled to partition by reason of their agreement recorded in the Settlement papers.
The Settlements of 1877 and 1908 09 have ceased to operate and the entry in the current Settlement of 1938 39 having been made under the orders of the Collector has no value when the contesting defendants did not agree to its being incorporated.
The previous agreement was not one for perpetuity but for a limited period only and there is no reason in law why the prohibition against partition should be now enforced against the contesting defend.
It has been held in a number of cases that the entry regarding agreement in a Wajib ul arz holds good during the period of the Settlement in which it is made and becomes inoperative when the Settlement has come to an end: Hira and others vs Muhamadi and Other8 (1); Allah Bakhsh and Others.
Mirza Bashir uddin and Others (2) and Lieut.
Chaudhri Chattar Singh vs Mt. Shugni and Another (3).
We agree with the High Court in holding that partition is a right incident to the ownership of property and once the defendants are held.
as co owners, their right to partition cannot be resisted.
It was contended by Dr. Tek Chand that the appellants had acquired title by adverse possession over the defendants ' share for more than 56 years.
This plea was raised in the plaint but evidently it w as not pressed (1)16 P.R. 1915 (P. 89).
(2)1932 LIT.Rn.
(3) A.I.R. 194 Lah.
70 for no issue was framed, nor any finding recorded by the trial Court.
This point is not taken even in the grounds of appeal to this Court.
The plea has no substance and was rightly rejected by the High Court on the ground that possession was under an arrangement between the co sharers.
and no question of adverse possession could arise under the circumstances.
We hold that there is no force in this appeal and dismiss it with costs.
Appeal dismissed.
| IN-Abs | Held, that an entry regarding agreement in a Wajib ul arz holds good during the currency of the Settlement and does not survive the expiry of the period of Settlement.
Hira and Others vs Muhamadi and Others (16 P.R. 1915 at P. 89), Allah Bakhsh and Others vs Mirza Bashir ud Din and Others and Lieut.
Chaudhri Chattar Singh vs Mt. Shugni and Another (A.I.R. referred to.
|
vil Appeals Nos.
2403 & 2404 of 1966.
Appeals from the judgment and order dated April 4, 1963 of the Assam and Nagaland High Court in Civil Rule Nos. 90 of 1960 and 382 of 1961.
D.N. Mukherjee, for the appellant.
Naunit Lal and B.P. Singh, for the respondents.
The Judgment of the Court was delivered by Ramaswami, J.
These appeals are brought by certificate from the judgment of the High Court of Assam and Nagaland dated April 4, 1963, in Civil Rule No. 90 of 1960 and Civil Rule No. 382 of 1961, whereby the High Court dismissed the petitions under articles 226 and 227 of the Constitution filed by the appellant.
Messrs. Hardeo Das Jagan Nath (hereinafter called the 'appellant ') is a partnership firm carrying on business at Mawk 263 har, Shillong in the District of United Khasi and Jaintia Hills.
By a notification issued under Rule 6 of the Assam Sales Tax Rules 1947, the Commissioner of Taxes, Assam fixed May 20, 1948 as the date by which the dealers of Shillong administered area had to make applications for registration under the Assam Sales Tax Act, 1947 ( 17 of 1947 ), hereinafter called the 'Act '.
By notification dated April 15, 1948, the Government of India had extended the provisions of the Act with slight modifications to the administered area in Shillong under section 4 of the Extra Provincial Jurisdiction Act, 1947.
The appellant got itself registered under the Act.
Upto the half yearly return periods ending September 30, 1957, the appellant was assessed to sales tax and the tax was realised by the Sales Tax Authorities.
On March 6, 1959, the Superintendent of Taxes, Shillong, respondent No. 4 raided the business premises of the appellant and seized the account books etc.
The appellant filed a petition under article 226 of the Constitution in the High Court.
By its order dated June 3, 1960, the High Court directed the Deputy Commissioner of Taxes, Assam to return the seized books and documents within three weeks of the date of the order to.
the appellant.
As directed by the High Court, the documents were returned to the appellant but on the basis of the information received from the account books the Superintendent of Taxes issued notices dated April 4, 1959 under section 19A of the Act for reassessment of the appellant in respect of the half yearly return periods ending on September 30, 1956, March 31, 1957 and September 30, 1957.
Thereafter, ex parte reassessment was made for the return period ending September 30, 1956 by an order dated July 8, 1959 and for return periods ending March 31, 1957 and September 30, 1957 by orders dated July 24, 1959 and tax amounting to Rs. 1,22,933/ was levied for these three periods.
A further sum of Rs. 47,504.70 was levied in respect of the return period ending March 31, 1958 by an ex parte assessment order dated March 23, 1959.
For the other return period ending September 30, 1958; a sum of Rs. 49,427.90 was levied by an ex parte assessment order dated April 8, 1959.
For these two return periods a penalty of Rs. 1,000/ in respect of each return was also levied by two separate orders dated June 27, 1959.
Thus the total amount of salestax and penalty amounting to Rs. 2,19,865.60 in respect of the five return periods was levied.
The appellant paid Rs. 20,074.68 at the time of original assessments in respect of the periods ending on September 30, 1956, March 31, 1957 and September 30, 1957.
The appellant thereafter filed appeals against all the seven ex parte orders before the Assistant Commissioner of Taxes, Assam.
Along with the memoranda of appeals for the periods ending March 31, 1958 and September 30, 1958, two separate applications were made by the appellant alleging that it was not 264 necessary to pay the assessed tax since the provisions of section 30 of the Act as amended did not apply to the case and it was prayed that appeals should be admitted without payment of the assessed tax.
The contention of the appellant was rejected by the Assist.ant Commissioner though he reduced the amount of deposit for the periods ending March 31, 1958 and September 30, 1958.
The .appellant moved the Commissioner of Taxes in revision, but the order of the Assistant Commissioner was affirmed by the Commissioner of Taxes though he reduced the amount further.
On the application of the appellant the matter was referred to the High Court which held that the amended section 30 of the Act was intravires.
In the meantime, the appellant also applied in respect of the appeals relating to the periods ending September 30, 1956, March 31, 1957 and September 30, 1957 as well as the penalty appeals of periods ending on March 31, 1958 and September 30, 1958 and prayed for admission of these appeals without payment of the assessed tax.
In this case also the amount was reduced by the Assistant Commissioner of Taxes but the matter was kept pending till the disposal of the reference by the High Court.
On May 21, 1960, the appellant filed separate petitions before the Assistant Commissioner praying that as the financial condition of the appellant was not good the appellant may be allowed to furnish reasonable security in lieu of cash and the appeals may be admitted on such security.
By his order dated May 23, 1960 the Assistant Commissioner of Taxes fixed June 8, 1960 f, or payment of the amount required for admission of the appeals, failing which the appeals were ordered to be dismissed.
The appellant then moved the Commissioner praying that in view of his financial difficulty he should be .allowed to furnish reasonable security in lieu of cash to be paid.
The application was rejected by the Commissioner on June 21, 1960.
Thereafter all the five appeals were rejected by a common order dated June 22, 1960 and the two appeals against the imposition of penalty were also summarily rejected by an order dated June 22, 1960.
The appellant was further asked to show cause why penalty should not have been imposed in respect of the periods ending September 30, 1956, March 31, 1957 and September 30, 1957.
The appellant filed a petition to the High Court under article 226 of the Constitution, being Civil Rule No. 90 of 1960 praying for a writ to quash the order of the Commissioner dismissing the appeals in respect of the five periods and for further reliefs.
The appellant also filed another petition under article 226, being Civil Rule No. 382 of 1961 asking for similar reliefs with regard to the periods ending March 31, 1959, September 30, 1959, March 31, 1960, September 30, 1960 and March 31, 1961.
The writ petitions were dismissed by the High Court by a common judgment dated April 4, 1963.
The first question to be considered in these appeals is whether the provisions of the Act were validly extended to the Shillong 265 Administered Areas.
By a notification dated April 15, 1948 the Central Government extended the provisions of the Act to the Shillong Administered Areas including Bara Bazar in exercise of powers conferred by section 4 of the Extra Provincial Jurisdiction Act, 1947.
It was argued on behalf of the appellant that on April 15, 1948 when the notification was issued, the Extra Provincial Jurisdiction Act, 1947 (Act XLVII of 1947) was not applicable to the Shillong Administered Areas as the instrument of accession by which the administration of the State of Mylliem was transferred to the Central Government was accepted by the GovernorGeneral of India on August 17, 1948.
The preamble to the Extra Provincial Jurisdiction Act, 1947 (hereinafter called the Act of 1947) provides: "Whereas by treaty, agreement, grant, usage, sufferance and other lawful means, the Central Government has, and may hereafter acquire, jurisdiction in and in relation to areas outside the Provinces of India; It is hereby enacted as follows : " The expression "extra provincial jurisdiction" has been defined under section 2 of the Act of 1947 as meaning "any jurisdiction which by treaty, agreement, grant, usage, sufferance or other lawful means the Central Government has for the time being in or in relation to any area outside the Provinces".
Section 3 states: "3.
(1) It shall be lawful for the Central Government to exercise extra provincial jurisdiction in such manner as it thinks fit.
(2) The Central Government may delegate any such jurisdiction as aforesaid to any officer or authority in such manner and to such extent as it thinks fit.
" Section 4 provides as follows: "4.
(1) The Central Government may, by notification in the official Gazette, make such orders, as may seem to it expedient for the effective exercise of any extra provincial jurisdiction of the Central Government.
(2) Without prejudice to the generality of the powers conferred by sub section (1 ), any order made under that sub section may provide (a) for determining the law and procedure to be observed, whether by applying with or without modifications all or any of the provisions of any enactment in force in any Province or otherwise; (b) for determining the persons who are to exercise jurisdiction, either generally or in particular 2 Sup.
C1/69 18 266 cases or classes of cases, and the powers to be exercised by them; (c) for determining the courts, judges, magistrates and authorities by whom, and for regulating the manner in which, any jurisdiction auxiliary or incidental to or consequential on the jurisdiction exercised under this Act is to be exercised within any Province; and (d) for regulating the amount, collection and application of fees.
" Section 5 is to the following effect: "Every act and thing done, whether before or after the commencement of this Act, in pursuance of any extra provincial jurisdiction of the Central Government in an area outside the Provinces shall be as valid as if it had been done according to the local law then in force in that area.
" The argument was stressed on behalf of the appellant that the extra provincial jurisdiction could only be exercised by the Central Government if by treaty, agreement, grant, usage, sufferance or other lawful means the Central Government has for the time 'being in or in relation to any area outside.
the provinces exercised such jurisdiction.
It was contended that after the declaration independence on August 15, 1947 the paramountcy lapsed and the State of Mylliem became an independent State and the Central Government could not exercise any extra provincial jurisdiction till the instrument of accession was signed by the GovernorGeneral.
It was pointed out that the notification by which the Act was applied to Shillong Administered Areas was issued after the lapse of paramountcy and before the instrument of accession was signed by the Governor General.
It was therefore argued that the notification dated April 15, 1948 was not validly issued and the provisions of the Act were not operative in the Shillong Administered Areas.
It was said that before the State of Mylliem became an independent State on August 15, 1947 there was no treaty, grant, usage or arrangement whereby the British Crown enjoyed any rights to levy taxes on the sale of goods within the Mylliem State or any right to extend to that area any such Act without the express consent or approval of the ruler of that State.
The opposite view point was put forward on behalf of the respondents.
It was said that before August 15, 1947 the relations of the Crown Representative with Khasi Hills States were conducted through the Governor of Assam.
In practice the administration of the Hill States was in great measure assimilated to that of the Province of Assam partly by the application of the British Indian Laws under the Indian (Foreign Jurisdiction) Order in Council 267 and partly by administrative measures.
It was argued that by virtue of the instrument of accession all previous existing arrangements between Khasi Hills States and the Government of India in the Assam Province were continued and the Central Government could therefore exercise extra provincial jurisdiction by usage.
To put it differently, the argument of the respondents was that though the instrument of accession was accepted by the Governor General on August 17, 1948, it recognised the fact that there was a certain existing arrangement regulating relations between the Government of India and the Chiefs of the Khasi Hills States.
The Central Government therefore exercised extra provincial jurisdiction by agreement or usage and it cannot therefore be said that the notification of the Central Government dated April 15, 1948 was invalid.
When the appeals were originally heard we considered that the material on the record was not sufficient to enable us to determine the disputed question, namely whether the Dominion of India was entitled to exercise extra provincial .jurisdiction over the Shillong Administered Areas on April 15, 1948 which was the material date.
The question at issue is not purely a question of fact but a question relating to a "fact of State" which is peculiarly within the cognizance of the Central Government (For expression "Fact of State" see Halsbury Laws of England, 3rd edn.
Vol. 7, p. 285).
In view of the insufficiency of material we thought it proper to avail ourselves of the procedure indicated by section 6 of the Act of 1947 which enacts: "6.
(1) If in any proceeding, civil or criminal in a Court established in India or by the authority of the Central Government outside India, any question arises as to the existence or extent of any foreign Jurisdiction of the Central Government, the Secretary to the Government of India in the appropriate department shall, on the application of the Court, send to the Court the decision of the Central Government on the question, and ' that decision shall for the purposes of the proceeding be final.
(2) The Court shall send to the said Secretary, in a document under the seal of the Court or signed by a judge of the Court, questions framed so as properly to raise the question, and sufficient answers to those questions shall be returned to the Court by the Secretary and those answers shall on production thereof be conclusive evidence of the matters therein contained.
" By an order of this Court dated September 21, 1967 the following two questions were forwarded to the Union of India under the seal of this Court for submission of their answers: 268 "(1) Whether the Dominion of India exercised extra provincial jurisdiction over the Shillong Administered Area including Bara Bazar, which also included Mawkhar, a part of the erstwhile Mylliem State, on April 15, 1948; (2) Whether the Dominion of India had extra provincial jurisdiction on April 15, 1948 to extend the Assam Sales Tax Act, 1947 (Act 17 of 1947) to the Shillong Administered Area including Bara Bazar under section 4 of Extra Provincial Jurisdiction Act (Act 47 of 1947) .
" In compliance of that order the Union of India have submitted their answers on January 12, 1968 in the following terms: "Ministry of Home Affairs.
Replies to the questions mentioned in the order dated September 21,1967 passed by the Supreme Court of India in Civil AppeaLs Nos. 2403 and 2404/1966.
(1) The British Government in India had by treaty, grant.
usage, sufferance and other means acquired jurisdiction over certain territories of the erstwhile State of Mylliem.
The jurisdiction was exercised under the Indian (Foreign Jurisdiction) Order in Council, 1902 as amended by the Indian (Foreign jurisdiction).
Order in Council, 1937.
Mawkhar was a part of the territories of Mylliem jurisdiction over which had been agreed to be given by the Siem of Mylliem to the British Government.
It was included in those parts of Shillong which came, in course of time, to, be called the Shillong Administered Area.
It has been reported that on actual survey the small area known as Bara Bazar area comes partly under Mawkhar proper and partly under South East Mawk har and Garikhana.
Bara Bazar area was thus a part of the area belonging to the erstwhile Mylliem State in which the British Government in India exercised jurisdiction under the Indian (Foreign jurisdiction) Order in Council.
On the withdrawal of British Rule the jurisdiction over the territories of the erstwhile Mylliem State which had been included in the Shillong Administered Area continued to be exercised with the consent of the Siem and the jurisdiction which was until then exercised in those areas by the British Government in India was assumed by the Dominion of India and it was retained thereafter by virtue of the instrument of accession signed by the Siem of Mylliem 269 and the agreement annexed thereto.
The Dominion of India exercised extra provincial jurisdiction over the Shillong Administered Area including the Barra Bazar which also included Mawkhar a part of the Mylliem State on April 15, 1948.
(2) The jurisdiction exercised by the British Government in India over the Shillong Administered Area was quite extensive.
In exercise of that jurisdiction that Government had extended, with appropriate reservations, a number of Acts Central as well as Provincial to the Shillong Administered Area e.g. the Indian Income Tax Act and the Assam Municipal Act with the consent of the Siem of Mylliem where necessary.
On the withdrawal of British rule the Dominion of India acquired the same jurisdiction over the Shillong Administered Area by virtue of the instrument of accession signed by the Siem of Mylliem and the agreement annexed thereto.
The Dominion of India therefore had on April 15, 1948 extra provincial jurisdiction in terms of the Extra Provincial Jurisdiction Act, 1947 (Act 47 of 1947) to extend the Assam Sales Tax Act, 1947 (Act 17 of 1947) to the Shillong Administered Area including Barra Bazar.
The Assam Sales Tax Act was actually extended to the Shillong Administered Area including Barra Bazar, .after obtaining the consent of the Siem of Mylliem, in the Ministry.
of States Notification No. 186 IB dated the 15th April,1948.
L.P. SINGH, Secretary to the Govt.
of India.
New Delhi, January 12, 1968.
" It is clear from the letter of the Union Government that it was entitled to exercise extra provincial jurisdiction over Shillong Administered Area on April 15, 1948.
The reason is that prior to that date the British Government had exercised that jurisdiction under the Indian (Foreign Jurisdiction) Order in Council, 1902 as amended by the Indian .(Foreign Jurisdiction) Order in Council, 1937.
On the withdrawal of British rule the jurisdiction over the territory of Mylliem State continued to be exercised with the consent of the ruler by the Dominion of India and the jurisdiction was retained thereafter by virtue of the instrument of accession signed by the Siem of Mylliem and the agreement annexed thereto.
It is also manifest that the jurisdiction exercised by the British Government over the Shillong Administered Area was quite exten 270 sive and in exercise of that jurisdiction a number of Acts Central & Provincial were extended to the Shillong Administered Area, for example, the Indian Income Tax Act and the Assam Municipal Act with the consent of the Siem of Mylliem where necessary.
On the withdrawal of the British rule the Dominion of India acquired the same jurisdiction which included the extension of the Act to the Shillong Administered Area.
Under section 6(2) of the Act of 1947 the answers of the Central Government to the questions forwarded by this Court shall be treated as conclusive evidence of the matter therein contained.
We accordingly hold that the argument of the appellant on this aspect of the case should be rejected.
It was then contended on behalf of the appellant that section 30 of the Act after the amendment was not applicable and the Assistant Commissioner of Taxes had no authority to ask the appellant to deposit the amount of tax assessed before hearing the appeal.
Section 30 of the Act, as it originally stood, was to the following effect: "30.
(1) Any dealer objecting to an order of assessment or penalty passed under this Act may, within thirty days from the date of the service of such order, appeal to the prescribed authority, against such assess ment or penalty; Provided that no appeal shall be entertained by the said authority unless he is satisfied that such amount of tax as the appellant may admit to be due from him has been paid; Provided further that the authority before whom the appeal is filed may admit it after the expiration of thirty days, if such authority is satisfied that for reasons beyond the control of the appellant or for any other sufficient cause it could not be filed within time. . . . . . " After the amending Act of 1958 the section reads as follows: "30.
(1) Any dealer objecting to an order of assessment or penalty passed under this Act may, within thirty days from the date of the service of such order, appeal to the prescribed authority, against such assessment or penalty; ' Provided that no appeal shall be entertained by the said authority unless he is satisfied that the amount of tax assessed or the penalty levied, if not otherwise directed by him, has been paid; 271 Provided further that the authority before whom the appeal is filed may admit it after the expiration of thirty days, if such authority is satisfied that for reasons beyond the control of the appellant or for any other sufficient cause it could not be filed within time.
. . . . . . . ." It was contended that the amendment came into force with effect from April 1, 1958 and it cannot be given retrospective effect so as to apply to assessment periods ending on September 30, 1956, March 31, 1957 and September 30, 1957.
We are unable to accept this argument as correct because the assessments for these three periods were completed after the amending Act came into force i.e., after April 1, 1958.
The appeals against the assessments were also filed after the amendment.
It is therefore not correct to say that the amending Act has been given a retrospective effect and the Assistant Commissioner of Taxes was there.fore right in asking the appellant to comply with the provisions of the amended section 30 of the Act before dealing with the appeals.
It was lastly contended on behalf of the appellant that the Sales Tax Authorities were not right in holding that there was no provision under the Act by which security can be accepted in lieu of cash payment.
Reliance was placed upon the phrase "otherwise directed" in the amended section 30 of the Act.
In our opinion, there is no substance in this argument.
The expression "otherwise directed" only means that the appellate authority can ask the assessee to deposit a portion of the amount and not the whole, but the section gives no power to the appellate authority to permit the assessee to.
furnish security in lieu of cash amount of tax.
We accordingly reject the argument of the appellant on this point.
For the reasons expressed we hold that the High Court was right in dismissing the writ petitions and these appeals must be dismissed with costs there will be one set of hearing fees.
V.P.S. Appeals dismissed.
| IN-Abs | By a notification dated April 15, 1948 .the
Government of India extended the Assam Sales Tax Act, 1947 to the Administered Area in Shillong under section 4 of the Extra Provincial Jurisdiction.
Act, 1947.
The instrument of accession by which the administration of the Indian Princely State, of Mylliem in the Shillong Administered Area was transferred to the Central Government was accepted by the Governor General of India on August 17, 1948.
Under section 30 of the Assam Sales Tax Act, as amended by Act 6 of 1958, a dealer may appeal against an order of assessment or penalty, but the appeal shall not be entertained by the appellate authority unless he was satisfied that the amount of tax assessed or penalty levied, if not otherwise directed by him, had been paid.
The sales 'tax authorities assessed the appellant to sales tax and imposed penalties for Various periods.
Though some of the; assessment periods were before April 1, 1958 when the Amending Act 6 of 1958 came into force, all the orders of assessment and penalty were passed after April 1, 1958.
The appellant did not pay the tax assessed or the penalty but filed petitions along with its appeals praying that it may be allowed to furnish security in lieu of payment of cash on account of its financial condition.
The petitions were rejected and the appeals were consequently dismissed.
Writ petitions flied by the 'appellant in the High Court, to quash the orders of dismissal of the appeals, were also dismissed.
In appeal to this Court, it was contended that; (1) After August 15, 1947 the State of Mylliem became an independent State and since the Central Government could exercise extra provincial jurisdiction under the Extra Provincial Jurisdiction Act, only if the Central Government exercised ' such jurisdiction under a treaty, agreement, or by other lawful means, the Central Government in the present case, could not exercise such jurisdiction till August 17, 1948 when the instrument of accession was acCepted; and therefore, the notification dated April 15, 1948 was not validly issued and hence the Assam sales Tax Act was not operative in the Shillong Administered Area; (2) As the Amending Act of 1958 came into force on April 1, 1958 it could not be given retrospective effect so as to apply to assessment periods anterior to that date; and (3.) The authorities were not right in holding that there was no provision in the Act empowering them to accept security in lieu of cash payment.
262 As the material on the record was not sufficient to enable the Court to determine the question whether the Dominion of India was entitled to exercise extra provincial jurisdiction over the Shillong Administered Area on April 15, 1948 this Court under section 6 of the Extra Provincial Jurisdiction Act, forwarded to the Union Government the questions: (a) whether the Dominion of India exercised such jurisdiction on April 15, 1948, and (b) whether the Dominion of India had such jurisdiction to extend the Assam Sales Tax Act to, the Area After receiving the answers, HELD: (1) The answers submitted by the Union Government showed that prior to April 15, 1948, the British Government had exercised jurisdiction over the Area under the Indian (Foreign Jurisdiction) Order in Council, 1902, as amended by the Order in Council of 1937 that on the withdrawal of British rule the jurisdiction continued to be exercised with the consent of the Siem (ruler) of Mylliem State by the Dominion of India, that the Jurisdiction was retained thereafter by the instrument of accession signed by the Siem, and that the exercise of the jurisdiction by the British Government and the Dominion of India several Acts were extended to the Shillong Administered Area.
Since under section 6(2) of the Extra Provincial Jurisdiction Act the answer of the Central Government is conclusive evidence of the matter therein the Union Government was entitled to exercise such jurisdiction over the Shillong Administered Area on April 15, 1948 and therefore, the Assam Sales Tax Act was properly extended to the Area.
[269 F H, 270 B C] (2) The assessments for periods anterior to April 1, 1958 were completed after the Amending Act came into force and the appeals were also filed thereafter.
Therefore the Amending Act of 1958 was applicable to the appeals before the appellate authority and was not given retrospective effect.
[271 C D] (3) The expression 'otherwise directed ' only means that the appellate authority can ask the assessee to deposit a portion of the amount and not the whole but the section gives no power to the appellate authority to permit the assessed to furnish security in lieu of the cash amount of tax.
[271 D E]
|
tion No. 67 of 1965.
Petition under article 32 of the Constitution of India for enforcement of the fundamental rights.
M.C. Chagla, F.N. Kaka, O.P. Malhotra and J.B. Dadachanji, for the petitioner.
B. Sen, T.A. Ramachandran and R.N. Sachthey, for the respondents.
The Judgment of the Court was delivered by Shah, J.
On ' February 25, 1965, the Income tax Officer, Companies Circle I ( 3 ), Bombay, directed that for the purpose of the Income tax Act, 1961, the Premier Automobiles Ltd. hereinafter called 'the Company be treated as an agent of M/s Dodge Brothers of United Kingdom a non resident Company.
On the same day the Income tax Officer issued a notice of demand under section 156 read with section 210 of the Act calling upon the .Company to pay on or before March 1, 1965, advance tax of Rs. 11,51,235 91 as agent of the foreign principal during the financial year 1964 65.
The Company then moved a petition in this Court for an order quashing and setting aside the order under section 163 and notice of demand under section 156 for the assessment year 1965 66 and for an injunction or prohibition restraining the Income tax Officer from enforcing or implementing the order under section 163 and the notice under section 156 read with section 210 of the Incometax Act, 1961.
The petition was resisted by the Income tax Officer.
In support of the petition counsel for the Company raised two contentions: (1) that under sections 209 and 210 of the Indian Income tax Act, 1961, no order for payment of advance tax can be made against an agent of a non resident; and (2) that a provision which authorises collection of advance tax from an agent of a non resident infringes the equality clause of the Constitution and is on that account void.
Sections 207 and 208 of the Income tax Act, 1961, insofar as they are material, provide: ' 207 "(1) Tax shall be payable in advance in accordance with the provisions of sections 208 to 219 in the case of income other than income chargeable under the head "Capital gains."" 208 "Advance tax shall be payable in the financial year (a) where the total income exclusive of capital gains of the assessee referred to in sub clause (i) of clause (a) of section 209 exceeded the maximum amount not chargeable to income tax in his case by two thousand five hundred rupees; or (b) . . . . . .
Section 209 sets out the rules for computation of amount of advance tax payable by an assessee in the financial year.
Section 210 provides by sub section
(1) "Where a person has been previously assessed by way of regular assessment under this Act or under the Indian Income tax Act, 1922, the Income tax Officer may, on or after the 1st day of April in the financial year, by order in.
writing, require him to pay to the credit of the Central Government advance tax determined in accordance with the provisions of sections 207, 208 and 209.
" Section, 207, 208, 209 and 210 prescribe machinery for imposition of liability for and determination of the quantum of advance tax in respect of income which is chargeable to income tax in the hands of a person on regular assessment.
Under the Income tax Act, 1961 a person is liable to be.
assessed to tax in respect of his own income, and also in respect of certain classes of income received by or accruing or arising others.
He is also liable to be assessed to tax as a representative assessee.
That is expressly so enacted by section 161 (1 ) which provides: "Every representative assessee, as regards the income in respect of which he is a representative assessee, shall be subject to the same duties, responsibilities and liabilities as if "the income were income received by or accruing to or in favour of him beneficially, and shall be liable to assessment in his own name in respect of 356 that income; but any such assessment shall be deemed to be made upon him in his representative capacity only, . ." A representative assessee by sub section
(1 ) of section 160 includes amongst others, the agent of a non resident in respect of the income of a non resident specified in section 9 (1 )(i), and also a person who is treated as an agent under section 163.
By sub section
(2) a representative assessee is deemed to be an assessee for the purpose of the Act.
By section 162 the representative assessee, who as such pays any sum under the Act, may recover the sum so paid from the person on whose behalf it is paid.
Section 163(1) defines for the purposes of the Act an "agent" in relation to a non resident.
Resort to the machinery for assessing a representative assessee is however not obligatory: it is open to the Income tax Officer to make a "direct assessment of the person on whose behalf or for whose benefit income therein referred to is receivable", or to recover "from such person the tax payable in respect of such income".
On regular assessment an agent of a non resident is, by virtue of section 160.(1) read with section 163 liable to be assessed to tax and the tax so assessed may be recovered from him.
The agent, if assessed to tax, has the right to recover tax paid by him from the person whom he represents: section 162.
Since a non resident is in respect of income which forms part of his total income liable to be assessed to tax, he may also be called upon to pay advance tax in respect of the income accruing to.
or received by him which forms part of his total income chargeable to tax by virtue of sections 4, 5 and 207.
So far there is no dispute.
Counsel for the Company however urged that an agent of a non resident may be assessed in regular assessment in respect of the income accruing.
or arising to his principal,.
but he cannot be called upon to pay advance tax even though he is by virtue of section 160(2) deemed an assessee for the purposes of the Act.
Diverse reasons were suggested in support of that argument.
It was said that since under section 209( 1 ) the amount of advance tax payable by an assessee in the financial year is to be computed on his total income of the latest previous year in respect of which he has been assessed by way of regular assessment, an agent cannot be directed 'to pay advance tax, the incidence of liability whereof depends upon the ,,determination of total income of the principal.
We fail to see any substance in this argument.
Section 207 imposes liability for payment of advance tax, and section 208 prescribes the conditions of liability to.
pay advance tax.
Determination of total income of the previous year of the assessee is not made a condition of the liability to pay advance tax.
Advance tax payable by an assessee is computed in the manner provided by section 209 when the assessee has been previously assessed to tax.
The Income tax Officer is also enjoined by section 210 to issue a notice to a person who has been 357 previously assessed"by way of regular assessment" to pay advance tax for the financial year.
If the assessee has not been previously assessed by way of regular assessment, he is required by section 212(3) to make an estimate 'of his total income excluding capital gains if it is likely to exceed the maximum amount not chargeable to tax by two thousand five hundred rupees, These provisions apply to all assessees.
If an assessee is chargeable to tax in respect of his own income or income of others which is chargeable to tax as his own income, those provisions indisputably apply.
It is expressly enacted by section 161 that as regards income in respect of which a person is a representative assessee, he shall be subject to the same duties, responsibilities and liabilities as if the income were income received by or accruing to or in favour of him beneficially.
It is clearly implicit therein that a representative assessee is not exempt from liability to pay advance tax.
of the liability to pay advance tax it is not predicated that the previous year should have come to.
an end before liability can arise.
The previous year of an assessee may in some cases end.
after the commencement 'but before the end of a financial year in which advance tax is payable: it may in other cases commence and end with the financial year.
But the liability to pay advance tax.
is not in any manner affected because the previous year ends before or with the financial year.
Where an assessees previous, year is the financial year, his total income may not be determined for the previous year before the commencement of the financial year, but on that account no exemption from payment of advance tax is granted by the Act.
On the commencement of a financial year, a person who. is previously assessed to tax is liable to pay advance tax on demand by the Income tax Officer under section 210.
The quantum of tax will be determined by section 209 and will be adjusted in the manner provided by section 210(3).
That applies to every assessee Whether the tax is liable to be paid by him on his own total income, or on the income assessed.in his hands as a representative assessee.
If he has not been previously assessed in the character in which he is liable to pay tax, an obligation is imposed by section 212(3) upon him to make an estimate of his income and to pay advance tax.
That provision also applies to his own income and also to the income in respect of which he is a representative assessee.
There is nothing in the Act under which the liability to pay advance tax of a representative assessee depends upon determination of the total income for the previous year.
An argument of hardship was also raised.
It was said that an agent of a non resident may not normally have in his possession any materials on which he may estimate the income in respeet of which he may be chargeable to advance tax, if he has not been previously assessed to tax as an agent of a non resident.
That again, in our judgment, is not a ground which exempts an 358 agent from liability to pay advance tax on behalf of his principal.
Liability to submit an estimate necessarily implies the duty to secure the requisite information from the non resident for submitting the estimate.
The tax, it must be remembered, is assessed on the agent for and on behalf of the principal, and the Act has made an express provision enabling the agent to recover from the principal the tax so paid by him.
Once the Income tax Officer treats a person as an agent of a non resident, liability to pay tax on regular assessment arises; and his liability as a representative assessee to pay advance tax is not excluded by any provision of the Act.
In our judgment, sections 207 and 208 which impose liability to pay advance tax in a financial year, section 210 which authorise the Income tax :Officer to make a demand for payment of advancetax from a person who is previously assessed, and section 212(3) which imposes the duty to make an estimate of the total income likely to be received or to accrue or arise and to pay advance tax if the total estimated income exceeds the maximum amount not chargeable to tax in his case by Rs. 2,500, apply to every person whether he is assessed in respect of his own income or as a representative assessee, and we are unable to imply an unexpressed limitation on the express 'words of the statute in favour of an agent of a non resident principal.
In the present case by order dated February 25, 1965, for the assessment year 1964 65 the Company was treated as an agent of the non resident principal.
Since the Company was treated as an agent of the non resident, it became liable to pay advancetax in the financial year 1964 65.
By virtue of section 207 read with section 208 the declaration that the Company was an agent involved liability to pay advance tax as well as tax assessed on regular assessment.
We are unable to hold that the liability to pay advance tax did not arise against the Company.
The plea that the provisions imposing liability to pay advancetax upon an agent of a non resident infringe the equality clause of the Constitution has No. substance.
As already observed, the liability to pay advance tax arises under sections 207 .and 208 and its quantum is determined by sections 209, 210 and 212(3), and it is not predicated of the accrual of liability that the total income of the previous year should be ascertained or precisely ascertainable when demand is made by the Income tax Officer under section 210, or when the assessee is required to.
make an estimate.
The assumption that an assessee whose year of account coincides with the financial year is not in respect of that year liable to pay advancetax is not warranted.
The computation of advance tax is not dependent upon the completion of the previous year: it depends upon the rules prescribed by sections 209, 210 and 212.
Every person who has been previously assessed to tax is liable when ordered 359 by the Income tax Officer to pay advance tax, subject to the right to make an estimate under section 212( 1 ).
A person who has not been previously assessed but whose income is likely to exceed the specified amount is also liable to pay advance taX.
The Act does not accord discriminatory treatment between different assessees.
Payment of advance tax is on account and is always liable to be adjusted against the tax assessed on regular assessment.
That again applies.
to all assessees.
It is then difficult to appreciate the grounds on which the plea of denial of equal protection may be sustained.
The only ground urged, that an assessee may escape liability to pay advance tax where his previous year coincides with the financial year, is without substance, and no other ground is set up in support of the plea of violation of the guarantee of equality under article 14 of the Constitution.
The petition therefore fails and is dismissed with costs.
G.C. Petition dismissed.
| IN-Abs | The Income tax Officer, Companies Circle, Bombay treating the petitioner as an agent of a non resident issued a notice of demand under section 156 read with section 210 of the Indian Income tax Act, 1961.
By this notice the petitioner was called upon to pay advance tax as agent of the foreign principal during the financial year 1964 65.
The petitioner filed a petition under article 32 of the Constitution challenging the demand.
The contentions.
in support of the petition were: (i) that under sections 209 and 210 of the Indian Income tax Act, 1961 no order for payment of advance tax can be made against an agent of a non resident; (ii) that a provision which authorises collection of advance tax from an agent of a non resident infringes the equality clause of the Constitution.
In support of the first contention it was urged that since under section 209(1) the amount of advance tax payable by an assessee in the financial year is to be computed on his total income of the latest previous year in respect of which he has been assessed by way of regular 'assessment, an agent cannot be directed to pay advance tax the liability whereof depends upon the determination of total income of the, principal.
HELD: (i) Sections 207 and 208 which impose liability to pay advance tax in a financial year, section 210 which authorises the Income tax Officer to make a demand for payment of advance tax from a person who is previously assessed, and section 212(3) which imposes the duty to make an estimate of the total income likely to be received or to accrue or arise.
and to pay advance tax if the total estimated income exceeds the maximum amount not charge.able to tax in his case by Rs. 2,500/apply to every person whether he is assessed ' in respect of his own income or as a representative assessed and it is not possible to imply in the application of these: provisions 'an unexpressed limitation on the express words of the statute in favour of an agent of a non resident principal.
[358 C D] It is expressly enacted by section 161 that as regards income in respect of which a person is a representative assessee, he shall be subject to the same duties, 'responsibilities.
and liabilities as if the income.
were income received by or accruing to or in favour of him beneficially.
It is clearly implicit therein that a representative assessee is not exempt from liability to pay advance tax.
[357 C] of the liability to pay advance tax it is not predicated that the previous year should have come to.
an end before the liability can anse.
The previous year of an assessee may in some cases end after the commencement but before the end of a financial year in which advance tax is payable: it may in other cases commence and end with the financial year.
But the liability to pay advance tax is not in any manner 354 affected because the previous year ends before or with the financial year.
There is nothing in the Act under which the liability to pay advance tax of a representative assessee depends upon determination of the total for the previous year.
[357 C G] Accordingly, it could not be held that the petitioner was not liable to pay advance tax on behalf of his non resident principal.
[358 E F] (ii) The plea that the provisions imposing liability to pay advance tax upon an agent of a non resident infringe the equality clause of the Constitution could not be accepted.
The only ground urged, that an assessee may escape liability to pay advance tax when his previous year coincides with the financial year, was without substance.
[359 B C]
|
ivil Appeal No. 1064 of 1966.
Appeal by special leave from the judgment and order, dated August 4, 1965 of the Kerala High Court in Writ Appeal No. 205 of 1964.
B. Sen and S.P. Nayar, for appellant No. 1.
A.S. Nambiar and Lily Thomas, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by special leave from the judgment of the Kerala High Court in which the only point which arises for decision is whether Rule 1713 of the Conduct and Disciplinary Rules hereinafter called the Rules, for railway servants was correctly applied and the dismissal of the respondent, who at the material time, was an Assistant Station Master was rightly set aside for non compliance with that Rule.
The facts lie within a narrow compass.
In July 1963 the respondent, who was working as an Assistant Station Master at Chalakudy railway station was served with a statement containing charges relating to certain matters after an inspection report had been submitted to the authorities concerned.
After the reply of the respondent had been received a departmental enquiry was held and the Enquiring Officer submitted a report finding all the four charges which. had been preferred against the respondent proved.
A show cause notice was then served in September 1963 giving the findings of the Enquiring Officer (Assistant Commercial Superintendent ) and it was stated that it had been tentatively decided by the Chief Commercial Superintendent that the respondent should be dismissed from service.
This notice was served after the Chief Commercial Superintendent had recorded the following order (Exh. R. 8 ): "The employee, in his reply dated 3 8 1963 to this charge sheet, has not accepted the charges contained in the same.
An enquiry, therefore was arranged.
It was held by the Assistant Commercial Superintendent Olavakkot from 22 8 63 to 29 8 1963.
I have seen the enquiry proceedings.
I find that the procedure has been followed correctly; that the accused has been given every reasonable opportunity for his defence and I agree with the findings of the Enquiry Officer 345 that all the charges mentioned in the charge sheet have been established.
Since these are serious charges, it is tentatively decided to impose the penalty of dismissal from service on Shri K. Rajappa Menon, Assistant Station Master/Chalakudi.
He should, therefore, be asked to show cause why he should not be dismissed from service accordingly.
" He was given a week for showing cause why the proposed penalty should not be inflicted on him.
After the explanation of the respondent had been received his dismissal was ordered by the Chief Commercial Superintendent.
The respondent filed a petition under article 226 of the Constitution in the High Court and a number of points were raised before the learned Single Judge.
The only point which prevailed with him Was that the Chief.
Commercial Superintendent had not recorded an order as required by Rule 1713.
He examined the other contention raised on behalf of the respondent before him that at the stage of the second show cause notice the Chief Commercial Superintendent had finally made up his mind which he could not or ought not to have done until the reply or the explanation of the respondent had been received and considered by him.
In view of a bench decision of the Kerala High Court he did not rest his decision on the second point but decided in favour of the respondent on the first point holding that the Chief Commercial Superintendent had not given findings on each of the charges.
In his opinion the rule contemplated that the evidence which had been adduced at the enquiry in relation to each charges should be examined and considered by the punishing authority and he should give his own assessment and finding relating to each.
individual charge which was not done in the present case.
The division :Bench on appeal by the present appellant affirmed the judgment of the learned Single Judge.
Now Rule 1713 provides that if the disciplinary authority is not the Enquiring Authority it shall consider the record of the enquiry and.
record its findings on each charge.
The argument which prevailed with the High COurt was that the order embodied in Exh. 8 did not comply with the aforesaid rule because findings relating to each charge were not given after a proper discussion .and analysis of .the: evidence produced at the departmental enquiry.
In other words, the Chief CommerCial Superintendent .was bound.
to pass a detailed order expressing his views about each charge and that a general agreement with the findings of the Enquiry Officer did not satisfy the requirements of Rule 1713.
We are altogether unable to agree with the view expressed by the High Court.
Rule 1713 does not lay down any particular sup.
cI/69 5 346 form or manner in which the disciplinary authority should record its findings on each charge.
All that the Rule requires is that the record of the enquiry should be considered and the disciplinary authority should proceed to give its findings on each charge.
This does not and cannot mean that it is obligatory on the disciplinary authority to discuss the evidence and the facts and circumstances established at the departmental enquiry in detail and write as if it were an order or a judgment of a judicial tribunal.
The rule certainly requires the disciplinary authority to give consideration to the record of the proceedings which, as expressly stated in Exh.
R. 8, was done by the Chief Commercial Superintendent.
When he agreed with the findings of the Enquiry that all the charges mentioned in the charge sheet had been established it meant that he was affirming the findings on each charge and that would certainly fulfil the requirement of the Rule.
The Rule after all has to be read not in a pedantic manner ,but in a practical and reasonable way and so read it is difficult escape from the conclusion that the Chief Commercial Superintendent had substantially complied with the requirements of the Rule.
The interference by the High Court, therefore, on the ground that there had been non compliance with Rule 17 13 was not justified.
Learned counsel for the respondent has sought to raise the second point which the High Court had declined to decide, namely, that the disciplinary authority was not entitled to have finally made up its mind before the explanation to the second show cause notice had been received by it and at a stage prior to the issuance of the notice.
Such a contention is wholly untenable in view of the decisions of this Court.
It has been made quite clear in Khem Chand vs The Union of India & Ors.(1) that the procedure article 311 (2) of the Constitution of affording a reasonable opportunity includes the giving of two notices, one at the enquiry stage and the other when the competent authority as a result of the enquiry tentatively determines to inflict a particular punishment.
It is quite obvious that unless the disciplinary or the competent authority arrives at some tentative decision it will not be in a position to determine what particular punishment to inflict and a Second show cause notice cannot be issued without such a tentative determination.
The appeal is consequently allowed and the judgment of the High Court is hereby set aside.
The petition filed by the respondent under article 226 shall stand dismissed.
No order as to costs.
Y.P. Appeal allowed.
| IN-Abs | After the reply of the respondent a railway employee in respect of certain charges p.referred against him was received, a departmental enquiry was held.
The Enquiring Officer found all the charges proved.
A show cause notice, was then served stating that it had been tentatively decided by the Chief Commercial Superintendent that the respondent should be dismissed from service.
This notice was served after the ' Chief Commercial Superintendent had recorded an order stating that he had seen the enquiry proceedings, that the procedure had been correctly followed, and that he agreed with the findings of the Enquiring Officer.
The respondent submitted his explanation; thereafter his dismissal was ordered.
The respondent filed a writ petition in the High Court.
The single Judge allowed the petition holding that the Chief Commercial Superintendent was bound to> pass a detailed order expressing his views about each of the charges and that a general agreement with the findings of the Enquiry Officer did not satisfy the requirements of r. 1713 of the Conduct and Disciplinary Rules.
This decision was affirmed by the Division Bench.
In 'appeal, this COurt, HELD: The: appeal must be allowed.
(i) Rule 1713 does not lay down any particular form or manner in which the disciplinary authority should record its findings on each charge.
All that the Rule requires is that the record of the enquiry should be considered 'and disciplinary authority should proceed ' to give its findings on each charges.
This does not and cannot mean that it is obligatory on the disciplinary authority to discuss the evidence and the facts and circumstances established at the departmental enquiry in detail and write as if it were an order or a judgment of a judicial tribunal.
The rule certainly requires the disciplinary authority to give consideration to the record of the proceedings which was done by the Chief Commercial Superintendent.
When he agreed with, the findings of the Enquiry Officer that all the charges mentioned in the charge sheet had been established it meant that he was affirming the findings on each charge and that would ' certainly fulfil the requirement of the Rule.
[345 H 346 D] (ii) There was no force in the respondent 's contention that the disciplinary authority was not entitled to have finally made up its mind before the explanation to the second show cause notice had been received by it and at a stage prior to the issuance of the notice.
The procedure which is. to be followed under article 311(2) of the Constitution of 'affording a reasonable opportunity includes the.
giving of two notices, One at the enquiry stage and the other when the competent authority as a result of the enquiry tentatively determines to inflict a particular punishment.
344 It is quite obvious that unless the disciplinary or the competent 'authority arrives at some tentative decision it will not be in a position to determine what particular punishment to inflict and a second show cause notice cannot be issued without such a tentative determination.
[346 E] Khem Chand vs Union of India & Ors., ; , followed.
|
, No. 14 of 1968.
Petition under article 32 of the Constitution of India for enforcement of the fundamental rights.
M.C. Chagla, S.K. Mehta, K.L. Mehta and S.K. Khanna, for the petitioners.
C.K. Daphtary, Attorney General and D.P. Singh, for the respondents.
The Judgment of the Court was delivered by Bachawat,J.
The petitioner company, Mohan Meakin Brewenes Ltd., manufactures and soils Indian made foreign liquor.
Its distilleries are situated at Solan in Himachal Pradesh and at Lucknow and Mohan Nagar in Uttar Pradesh.
It has depots for sale of its products at Patna and Ranchi in the State of Bihar.
Before October 13, 1967 it imported foreign liquor into the State of Bihar from Solan, Lucknow and Mohan Nagar for purposes of sale at its Patna and Ranchi depots on payment of duty at the then current rate of Rs. 14.40 L.P. litres.
Duty on the liquor from Solan was paid upon or before importation by making deposits in the State Bank of India at Patna and Ranchi.
Duty on the liquor from Lucknow and Mohan Nagar was paid upon importation by making deposits with the Uttar Pradesh Government. ' By a notification, dated October 13, 1967 duty on foreign liquor was enhanced from Rs. 14.40 to Rs. 26.20 per L.P. litres with effect from November 1, 1967.
By an order, dated January 3, 1968 the Superintendent of Excise, Patna, directed the Company to pay by January 31, 1968 the difference in duty on the opening balance of India made foreign liquor in its stock on November 1, 1967.
In this writ petition under article 32 of the Constitution the Company challenges the legality of the levy.
Duty on foreign liquor imported into the State of "Bihar is chargeable under section 27(1)(a) of the Bihar and Orissa Excise Act, 1915 (Bihar and Orissa Act H of 1915).
Subject to any rules made under section 90 clause (12), the duty may be levied under section 28 (a) in two ways.
The first method as indicated in section 28 (a) (i) is by payment upon or before importation either in the State of Bihar or in the State or territory from which the article is brought.
This method is followed when the liquor is not imported under bond.
The second method as indicated in section 28 (a)(ii) is by payment upon issue for sale from a warehouse established, authorized or continued under the Act.
In view of the first pro 459 viso to section 28 the payment is made at the rate of duty in force on the date of issue of the article from the warehouse.
This method is followed when the liquor is imported under bond.
The form the bond at page 215 of the Bihar and Orissa Excise Manual, Vol.
II, Part I, issued in 1957 shows that foreign liquor imported under bond is kept without payment of duty in a warehouse established with the approval of the Excise Commssioner under section 15.
In view of section 17 no article can be removed from the warehouse unless duty has been paid or a bond has been executed for the payment thereof.
In the present case, the foreign liquor was imported before November 1, 1967 on payment of duty at the current rate in the manner indicated ins.
28(a)(i).
Duty on imported foreign liquor was enhanced with effect from November 1, 1967.
Sections 27 and 28 do not authorize the levy of the enhanced duty on the liquor imported before November 1, 1967 but lying with the importer on that date.
Section 28, however, is subject to any rules that may be made by the Board of Revenue, Bihar, under section 90 clause (12).
The State of Bihar seeks to justify the levy of the enhanced duty on the stock of imported foreign liquor lying with the petitioner on November 1, 1967 under the proviso to Rule 147 ,framed by the Board of Revenue.
That Rule is as follows : "147.
The duty imposed on (i) foreign liquor and country spirit (a) imported under bond, or (b) manufactured in a distillery, and stored in a distillery or excise warehouse; (ii) Ganja and Bhang (a) imported under bond, or (b) stored in 'an excise warehouse, shall be paid before removal from the distillery or excise warehouse unless a bond has been executed for such payment.
Provided that in case of any revision in the rate of duty on an excisable article, the difference of duty shall be realised from or credited to the licensee, to whom such article has been issued on payment of duty prior to such revision, according as the revised rate of duty is higher or lower than the old rate and the 'calculation of the difference of duty shall be made on the quantity of such article that may remain in possession of such licensee when the revised rate of duty comes into force.
" 460 The main part of Rule 147 applies to foreign liquor imported under bond which, as already stated, is kept in an excise warehouse established under.
the Act.
It provides that ' duty imposed on foreign liquor imported under bond shall be paid before removal from the excise warehouse unless a bond has been executed for such payment.
Under the proviso to Rule 147 in case of any revision of the rate, of duty on an excisable article, the license to whom the article has been issued on payment of duty prior to such revision is liable to pay the difference of duty on the quantity of such article that may remain in his possession when the revised rate of duty comes into force.
The proviso must be construed with reference to the main part of the Rule.
A close scrutiny of the Rule reveals that the main part and the proviso deal with the same subject matter.
The expression "an excisable article" in the proviso means foreign liquor imported under bond and other articles on which duty is payable before removal from the excise warehouse or distillery where they are kept.
It is for this reason that under the proviso the difference of duty is realised from or credited to the licensee to whom the article has been issued from the excise warehouse or distillery on payment of duty prior to such revision.
The proviso does not :apply to all imported foreign liquor.
It applies only to foreign liquor imported under bond, that is to say, foreign liquor on which duty has been levied under section 28(a)(ii) by payment upon issue for sale from an excise warehouse.
It does not apply w foreign liquor not imported under bond upon which duty has been levied under section 28 (a) (i).
The petitioner 's foreign liquor was not imported under bond.
The petitioner is not, therefore, liable to pay under the proviso to Rule 147 the difference of duty in respect of its stock of foreign liquor on November 1, 1947.
The demand for payment of the difference of duty in respect of this stock is not authorised by the Act or the proviso to Rule 147.
The petitioner also challenged the constitutionality of section 27 and the rites of the proviso to Rule 147.
In view of our conclusions aforesaid, it is not necessary to decide these questions.
In the result, there will be an order in terms of (a) (iii) and (b) of the petition.
The order of the Superintendent of Excise, Bihar, dated January 3, 1968, copy whereof is Annexure B,to the petition is quashed and set aside and the respondents are prohibited from enforcing the aforesaid order.
The respondents shall pay to the petitioner the costs of the petition.
G.C. Petition allowed.
| IN-Abs | The petitioner was a company manufacturing Indian made foreign liquor in Himachal Pradesh and Uttar Pradesh.
It had depots for sale of its products at Patna and Ranchi in the State of Bihar.
Before October 13, 1967 it .imported foreign liquor into the State of Bihar from Himachal Pradesh and Uttar Pradesh for purposes of sale at its Patna and Ranchi depots on payment of duty at the then current rate.
Duty on liquor from Himachal Pradesh was paid upon or before importation by making deposits in the State Bank of India at Patna and Ranchi.
Duty on liquor from Uttar Pradesh was paid on importation by making deposits with the government of that State.
By notification dated October 13, 1967 duty on foreign liquor was enhanced with.
effect from November 1, 1967.
The Superintendent of Excise, Patna directed the company to pay the, difference in duty on the opening balance of Indian made foreign liquor in its stock on November 1, 1967.
The company challenged the demand in a writ petition under article 32 of the Constitution.
Apart from sections 27 and 28 of the Act the respondent State relied on the proviso to r. 147 of the Rules made under section 90 of the Act.
HELD i (i) The foreign liquor was imported before November 1, 1967 on payment of duty at the current rate in the manner indicated in section 28(a)(i).
Duty on imported foreign liquor was enhanced with effect from November 1, 1967.
Sections 27 and 28 did not authorize the levy of the enhanced duty on the liquor imported before November 1, 1967 but lying with the importer on that date.
(ii) A close scrutiny of r. 147 reveals that the main part and the proviso deal with the same subject matter.
The expression "an excisable article" in the proviso means foreign liquor imported under .bond and other articles on which duty is payable.
before removal from the excise warehouse or distillery where they are kept.
It is for this reason that under the proviso the difference of duty is realised from or credited to the licensee to whom the article has been issued from the excise warehouse or distillery on payment of duty prior to such revision.
The proviso does not apply to all imported foreign liquor.
It applies only to foreign liquor imported under bond, that is to say, foreign liquor on which duty has been levied under section 28(a)(ii) by payment upon issue, for sale from an excise warehouse.
It does not apply to foreign liquor not imported under bond upon which duty has been levied under section 28(a)(i).
The petitioner 's foreign liquor was not imported under bond.
The petitioner was therefore not liable to pay under the proviso 3 Sup.
C.I./69 12 458 to r. 147 the difference of duty in respect of its stock of foreign liquor on November 1, 1967.
The demand for payment of the difference of duty in respect of this stock was not authorized by the Act or the proviso to r. 147.
[460 C F]
|
: Criminal Appeals Nos. 15 and 35 of 1967.
Appeals from the judgment and order dated October 12, 1966 of the Bombay High Court in Criminal Revision Application No. 289 of 1966.
N.S.Bindra,R.M.Parikh and S.P. Nayar, for the appellants (in Cr. A. No. 15 of 1967) and the respondents (in Cr. A. No. 35 of 1967).
N.N. Keswani, for the appellants (in Cr. A. No. 35 of 1967) and the respondents (in Cr. A. No. 15 of 1967).
K.R. Chaudhuri, for the intervener (in Cr. A. No. 15 of 1967).
The Judgment of the Court was delivered by Hegde, J.
These appeals by certificate arise from the decision of the High Court of Bombay in Criminal Revision Application No. 238 of 1966 wherein the following questions of law arise for decision: (i) Whether the prosecution from which these Criminal Revision Petitions arose is barred under article 20 (2) of the Constitution as against accused Nos. 1 and 2 in that case by reason of the decision of the Collector of Customs in the proceedings under the ? (ii) Whether under any circumstance the finding of the Collector of Customs that the Ist and 2nd accused are not proved to be guilty operated as an issue estoppel in the criminal case against those accused ? (iii) Whether the present prosecution amounts to an abuse of the process of the Court in view of inordinate delay in launching the same and consequently whether it is liable to be quashed ? (iv) Whether section 173(4), Criminal Procedure Code is applicable to the facts of this case and (v) Whether the documents mentioned in the petition filed by the 1st accused on August 3, 1965 are required tO be summoned under section 94, Criminal Procedure Code ? The aforementioned questions were raised before the trial Magistrate by the 1st accused by means of an application but 441 the learned Magistrate ' found ,no substance in the pleas advanced in that application and accordingly he dismissed the same as per his order dated 25,1 1966.
In revision, a .Division Bench of the Bombay High Court agreeing with the trial Magistrate negatived all but one of the contentions advanced on behalf of accused Nos. 1 and 2.
It did not agree with the learned Magistrate that there was no need, at that stage to summon the statements of witnesses recorded Customs Act.
It directed the learned Magistrate to summon hose statements and curiously enough, it went further and directed him to see that the prosecution made available the copies of those statements to the accused before the commencement of the enquiry in the case.
In so far as.
the Other documents called for are concerned, the High Court after indicating, what according to it, is the law on the subject left the matter to the discretion of the learned Magistrate.
Criminal Appeal No. 15 of 1967 is filed by the Assistant Collector of Customs, Bombay and the State of Maharashtra and Criminal Appeal No. 35 of 1967 is the appeal filed by accused Nos. 1 and 2 in the case (Case No. 98 of 1965 in the Court of the Chief Presidency Magistrate, Bombay).
The appellants in Criminal Appeal No. 15 of 1967 challenge the correctness of the decision of the Bombay High Court in so far as it went against them and the appellants in Criminal Appeal No. 35 of 1967 challenge that decision in other respects.
The prosecution case is that the accused persons and some other unknown persons had entered into a conspiracy at Bombay and other places in the beginning Of October, 1959 or India and in pursuance of that conspiracy they had smuggled several items of foreign goods in the years 1959 and 1960.
In that connection an enquiry was held by the Customs authorities.
In the course of the enquiry some of the goods said to have been smuggled were seized.
After the close of the enquiry those goods were ordered to be confiscated.
In addition penalty was imposed on some of the accused.
Thereafter on February 19, 1965, the Assistant Collector of Customs, Bombay after obtaining the required sanction of the Government flied a complaint against five persons including the appellants in Criminal Appeal No. 35 of 1967 (accused Nos. 1 and 2 in the case) under section 120 B,I.P.C. read with cls.
(37), (75), (76) and (81) of section 167 of the (Act VIII of 1878) as well as under section 5 of the Imports and Exports (Control) Act, 1947.
Before the commencement of the enquiry in that complaint, the 1st accused filed on August 3, 1965, the application mentioned above.
C.I./69 11 442 Now we shall proceed to examine the contentions set out earlier.
Reliance on article 20(2) is placed under the following circumstances.
In the enquiry held by the Collector of Customs, he gave the benefit of doubt to accused Nos. 1 and 2.
This is what he stated therein: "As regards M/s. Lamel Enterprises (of which accused No. 1 is the proprietor and accused No. 2 is the Manager) although it is apparent that they have directly assisted the importers in their illegal activities and are morally guilty.
Since there is no conclusive evidence against them to hold them as persons concerned in the act of unauthorised importation, they escape on a benefit of doubt." Despite this finding the Assistant Collector in his complaint referred to earlier seeks to prosecute these accused persons.
Hence the question is whether that prosecution is barred under article 20(2) of the Constitution which says that no person shall be prosecuted and punished for the same offence more than once.
This article has no direct bearing on the question at issue.
Evedently those accused persons want to spell out from this article the rule of autrefois acquit embodied in section 403, Criminal Procedure Code.
Assuming we can do that still it is not possible to hold that a proceeding before the Collector of Customs is a prosecution for an offence.
In order to get the benefit of section 403, Criminal Procedure Code or article 20(2), it is necessary for an accused person to establish that he had been tried by a "court of competent jurisdiction" for an offence and he is convicted or acquitted of that offence and the said conviction or acquittal is in force.
If that much is established, it can be contended that he is not liable to be tried again for the same offence nor on the same facts for any other offence for which a different charge from the one made against him might have been made under section 236 or for which he ' might have been convicted under section 237.
It has been repeatedly held by this Court that adjudication before a Collector of Customs is not a "prosecution" nor the Collector of Customs a "Court".
In Maqbool Hussain vs The State of Bombay(1), this Court held that the wording of article 20 of the Constitution and the words used therein show that the proceedings therein contemplated are proceedings of the nature of criminal proceedings before a court of law or a judicial tribunal and "prosecution" in this context would mean an initiation or starting of proceedings of a criminal nature before a court of law or a judicial tribunal in accordance with the procedure prescribed in the statute (1) ; 443 which creates the offence and regulates the procedure.
This Court further held that where a person against whom proceedings had been taken by the Sea Customs authorities under section 167 of the and an order for confiscation of goods had been passed, was subsequently prosecuted before a criminal court for an offence under section 23 of the Foreign Exchange Regulation Act in respect of the same act, the proceeding before the Sea Customs authorities was not a "prosecution" and the order for confiscation was not a "punishment" inflicted by a Court or judicial tribunal within the meaning of article 20(2) of the Constitution and hence his subsequent prosecution was not barred.
The said rule was reiterated in Thomas Dana vs State of Punjab(1) and in several other cases.
We shall not take up the contention that the finding of the Collector of Customs referred to earlier operated as an issue estoppel in the present prosecution.
The issue estoppel rule is but a facet of the doctrine of autrefois acquit.
In Sambasivan vs Public Prosecutor, Federation of Malaya(a), Lord MacDermott enunciated the said rule thus: "The effect of a verdict of acquittal pronounced by a competent court on a lawful charge and after a lawful trial is not completely stated by saying that the person acquitted cannot be tried again for the same offence.
To that it must be added that the verdict is binding and conclusive in all subsequent proceedings between the parties to the adjudication.
The maxim "Res judicata pro veritate accipitur" is no less appliCable to criminal than to civil proceedings.
Here, the appellant having been acquitted at the first trial on the charge of having ammunition in his possession, the prosecution was bound to accept the correctness of that verdict and was precluded from taking any step to challenge it at the second trial.
And the appellant was no less entitled to rely on his acquittal in so far as it might be relevant in his defence.
That it was not conclusive of his innocence on the firearm charge is plain, but it undoubtedly reduced in some degree the weight of the case against him, for at the first trial the facts proved in support of one charge were clearly relevant to the other having regard to the circumstances in which the ammunition and revolver were found and the fact that they fitted each other.
" The rule laid down in that decision was adopted ' by this Court in Pritam Singh vs State of Punjab(a) and again in N.R. Ghose alias Nikhil Ranjan Ghose vs State of West Bengal(4).
(1) (2) at p. 479.
(3) AI.R. 1956 S.C, 415.
(4) ; 444 But before an accused can call into aid the above rule, he 'must establish that in a previous lawful trial before a competent court,he has secured a verdict of acquittal which verdict is binding on his prosecutor.
In the instant case for the reasons already mentioned, we are unable to hold that the proceeding before the Collector of Customs is a criminal trial.
From this it follows that the decision of the Collector does not amount to a verdict of acquittal in favour of accused Nos. 1 and 2.
This takes us to the contention whether the prosecution must be quashed because of the delay in instituting the same.
It is urged on behalf of the accused that because of the delay in launching the same, the present prosecution amounts to an abuse of the process of the Court.
The High Court has repelled that contention.
It has come to the conclusion that the delay in filing the complaint is satisfactorily explained.
That apart, it is not the case.
of the accused that any period of limitation is prescribed for filing.
the complaint.
Hence the court before which the complaint was filed could not have thrown out the same on the sole ground that there has been delay in filing it.
The question of delay in filing a complaint may be a circumstance to be taken into consideration in arriving at the final verdict.
But by itself it affords no ground for dismissing the complaint.
Hence we see no substance in the contention that the prosecution should be quashed on the ground that there, was delay in instituting the complaint.
We also see no merit in the contention that the accused in this case are entitled to the benefit of section 173(4), Criminal Procedure Code which provides that before the commencement of the enquiry or trial the officer in charge of the police station who forwards a report under section 173, Criminal Procedure Code, should furnish or cause to be furnished to the accused, free of cost, a copy of the report forwarded under section 173(1), Criminal Procedure Code of the first information report recorded under section 154, Criminal Procedure Code and all other documents or relevant extracts thereof on which the prosecution proposes to rely, including the statements and confessions, if any, recorded under section 164, Criminal Procedure Code and the statements recorded under section 161, Criminal Procedure Code of all the persons whom the prosecution proposes to examine as its witnesses.
On a plain reading of section 173, Criminal Procedure Code, it is clear that the same is wholly inapplicable to the facts of the present case.
In the instant case no report had been sent under section 173, Criminal Procedure Code.
Therefore that provision is not attracted.
That provision is attracted only in a case investigated by a police officer under Chapter XIV of the Criminal Procedure Code, followed up by a final report under section 173, Criminal Procedure Code.
It may be remembered that sub section
(4) of 445 173, was incorporated into the Criminal Procedure Code for the first time by Central Act 26 of 1955, presumably because of the changes effected in the mode of trials in cases instituted on police reports.
Before the Criminal Procedure Code was amended by Act 26 of 1955, there was no difference in the procedure to be adopted in the cases instituted on police reports and in other cases.
Till then in all.
cases irrespective of the fact whether they were instituted on police reports or on private complaints, the procedure regarding enquiries or trials was identical.
In both type of cases, there were two distinct stages i.e. the enquiry stage and the trial stage.
When the prosecution witnesses were examined in a case before a charge is framed, it was open to the accused to cross examine them.
Hence there was no need for making available to the accused the documents mentioned in subs.(4) of section 173, Criminal Procedure Code.
The right given to him under section 162, Criminal Procedure Code was thought to be sufficient to safeguard his interest.
But Act 26 of 1955 as mentioned earlier made substantial changes in the procedure to be adopted in the matter of enquiry in cases instituted on police reports.
That procedure is now set out in section 251(A), Criminal Procedure Code.
This new procedure truncated the enquiry stage.
Section 251 (A), Criminal Procedure Code says that the Magistrate, if upon consideration of all the documents referred to in section 173 and making such examination if any, of the accused as he thinks necessary and after giving the prosecution and the accused an opportunity of being heard considers the charge against the accused to be groundless he shall discharge him but if he is of opinion that there is ground for presuming that the accused has committed an offence triable as a warrant case which he is competent to try.
and which in his opinion could be adequately punished by him, he shall frame in writing a charge against him.
Under the procedure prescribed in section 251 (A), Criminal Procedure Code but for the facility provided to him under s.173(4)of that Code an accused person would have been greatly handicapped in his defence.
But in a case instituted on a complaint, like the one before us and governed by sections 252 to 259 of the Criminal Procedure Code, no such difficulty arises.
Therein the position is as it was before the amendment of the Criminal Procedure Code in 1955.
We are unable to agree with the learned fudges of the High Court that the legislature did not make available the benefit of s.173(4), Criminal Procedure Code in cases instituted otherwise than on police reports by oversight.
The observations of the learned Judges in the course of their judgment that "Even the great Homer occasionally nods.
There is nothing to show that the,legislature has applied its mind to the question of the amendment of the procedure so far as the investigation of an offence 446 under the is concerned at the time when it was considering amendments to the Criminal Procedure Code" is without any basis.
In the first place, it is not proper to assume except on very good grounds that there is any lacuna in any statute or that the legislature has not done its duty properly.
Secondly from the history of the legislation to which reference has been made earlier, the reason for introducing section 173(4) is clear.
The learned judges of the High Court were constrained to hold that s, 173(4), Criminal Procedure Code in terms does not apply to the present case.
But strangely enough that even after coming to the conclusion that provision is inapplicable to the facts of the present case, they have directed the learned Magistrate to require the prosecution to make available to the accused, the copies, of the statements recorded from the prosecution witnesses during the enquiry under the Customs Act.
They have purported to make that order under section 94(1), Criminal Procedure Code which to the extent material for our present purpose reads: "Whenever any Court . . considers that production of any document or other thing is necessary or desirable for the purposes of any . enquiry, trial or other proceeding under this Code by or before such Court . such Court may issue a summons . to the person in whose possession and power such document or thing is believed to be, requiring him to attend and produce it.
or to produce it, at the time and place stated in the summons or order.
" This section does not empower a Magistrate to direct the prosecution to give copies of any documents to an accused person That much appears to be plain from the language of that section it was impermissible for the High Court to read into section 94, Criminal Procedure Code the requirements of section 173(4), Criminal Procedure Code.
The High Court was not justified, in indirectly applying to cases instituted on private complaints the requirements of section 173(4), Criminal Procedure Code.
That apart we do not think that the High Court was justified in interfering with the discretion of the learned Magistrate Whether a particular document should be summoned or not is essentially in the discretion of the trial court.
In the instant case the Special Public Prosecutor had assured the learned trial Magistrate that he would keep in readiness the statements of witnesses recorded by the Customs authorities and shall make avail able to the defence Counsel the statement of the concerned witness as and when he is examined.
In view of that assurance, the learned Magistrate observed in his order: "The recording of the prosecution evidence is yet commence in this case and at present there are no male 447 before me to decide whether or not the production of any of the statements and documents named by the accused in his application is desirable or necessary for the purpose of the enquiry or trial.
As stated at the outset, the learned Special Prosecutor has given an undertaking that he would produce all the relevant statements and documents at the proper time in the course of the heating of the case.
The request made for the issue of the summons under section 94, Criminal Procedure Code is also omnibus." The reasons given by the learned Magistrate in support of his order are good reasons.
The High Court has not come to the conclusion that the documents in question, if not produced in court are likely to be destroyed or tampered with or the same are not likely to be made available when required.
It has proceeded on the erroneous basis that the accused will not have a fair trial unless they are supplied with the copies of those statements even before the enquiry commences.
Except for very good reasons, the High Court should not interfere with the discretion conferred on the trial courts in the matter of summoning documents.
Such interferences would unnecessarily impede the progress of eases and result in waste of public money and time as has happened in this case.
For the reasons mentioned above, we allow Criminal Appeal No. 15 of 1967 and dismiss Criminal Appeal No. 35 of 1967.
In other words, we restore the order of the learned Magistrate.
G.C. Criminal Appeal No. 15 of 1967 allowed.
Criminal Appeal No. 35 of 1967 dismissed.
| IN-Abs | The accused persons were charged with having entered into a conspiracy at Bombay and other places in the beginning of October 1959 or there about for the purposes of smuggling foreign goods into India and having, in pursuance of that conspiracy, smuggled several items of foreign goods in the years 1959 and 1960.
In that connection an enquiry was held by the Customs authorities.
In the course of the enquiry some of the goods said to have been smuggled were seized.
After the close of the enquiry those.
goods were ordered to be confiscated.
In addition penalty was imposed on some of the accused.
Accused No. 1 and 2 were given by the Collector benefit of doubt on the ground that there was no conclusive evidence against them.
Thereafter the Assistant Collector of Customs 'after obtaining the required sanction of the Government filed a complaint against five persons including Accused 1 and 2 under section 120 B I.P.C. read with section 167 of the as well as under section '5 of the Imports and Exports (Control) Act, 1947.
Before the commencement of the enquiry the 1st accused filed an application before the Magistrate raising therein various questions of law namely (i) whether the prosecution of Accused 1 and 2 was barred by article 20(2) of the Constitution by reason of the decision of the Collector of Customs (ii) whether the finding of the Collector of Customs operated as an issue estoppel in the criminal case against Accused 1 and 2, (iii) whether the prosecution amounted to 'an abuse of the process of the Court in view of the inordinate, delay in launching the same, and (iv) whether section 273(4) Cr.
P.C. was applicable to the facts of the case, and (v) whether the documents mentioned in the petition of Accused No. 1 to the Magistrate could be summoned under section 94 Cr.
The Magistrate dismissed the application of Accused No. 1.
In revision the High Court, while agreeing with the Magistrate on other issues, did not agree with him that there was no need at the stage to summon the statements of the witness recorded by the customs authorities in the enquiry under the .
It directed the Magistrate to 'summon those statements and to see that the prosecution made available copies of these statements to the accused before the commencement of the ennquiry in the case.
Against the orders of the High Court the customs authorities as well as the accused appealed to this Court.
HELD: (i) In order to get the benefit of section 403 Criminal Procedure Code or article 20(2) it is necessary for an 'accused person to establish 439 that he had been tried by a "court of competent jurisdiction" for an offence and he is convicted or acquitted of that offence and the said acquittal is in force.
If that much is established.
it can be contended that he is not liable to be tried again for any other offence for which a different charge from the one made against hun might have been made under section 236 or for which he might have been convicted ' under section 237.
It has been repeatedly held by this Court that adjudication before a Collector of Customs is not a "prosecution" nor the Collector of Customs a "Court".
Therefore in the present case the plea of the accused based on article 20(2) could not be accepted.
[442 E G] .
Maqbool Hussain vs State o/Bombay; , and Thomas Dana vs State o/Punjab, , applied.
(ii) Before the accused can call into aid the rule of issue estoppel he must establish that in a previous lawful trial before a competent court he has secured a verdict of acquittal which verdict is binding on his prosecutor.
In the instant case since the proceeding before the ' Collector was not a criminal trial it follows that the decision of the Collector did not amount to a verdict of acquittal in favour of accused Nos. 1 and 2.[444 A B] Sambasivan vs Public Prosecutor, Federation of Malaya, at p. 479, Pritam Singh vs State of Punjab, Aj.I.R. and N.R. Ghose @ Nikhil Ranjan Ghose vs State of west Bengal; , , applied.
(iii) The question of delay in filing the complaint may be a circumstance to be taken into consideration in arriving at the final verdict.
But by itself it affords no ground for dismissing the complaint.
[444 D] (iv) Section 173 Criminal Procedure is attracted only in a case in, vestigated by a police officer under Ch.
XIV of the Code followed by a final report.
Section 173(4) was incorporated into the Code by Central Act 25 of 1955 because of the changes effected in the mode of trials in cases instituted on police reports.
Under the new procedure prescribed in section 251(A) of the Code, but for the facility provided to him under section 173(4) an accuse person would have been greatly handicapped in his defence.
But in a .case instituted on complaint like the present, and governed by sections 252 to 259 of the Code no such difficulty.
arises and the position is as it was before the amendment of the Code.
in 1955.
[444 H; 445 G] The High Court was wrong in holding that the Legislature did not make available the benefit of section 173(4) Criminal Procedure Code in cases instituted otherwise than on police reports by oversight.
It is not proper to assume except on very good grounds that there is any lacuna in any statute or that the legislature has not done its duty properly.[445 H] (v) Section 94 (1) does not empower a Magistrate to direct the prosecution to give copies of any documents to an accused person.
It was impermissible for the High Court to read into section 94 Criminal ProcedUre COde the requirements of section 173(4) of the, Code.
The High Court was wrong in indirectly applying to cases instituted on private complaints the requirements of section 173(4).
[446 E F] Further the High Court was not justified in interfering with the discretion of the learned Magistrate.
Whether a particular document should be summoned or not is essentially in the discretion of the trial court.
In the present case the reasons given by 'the Magistrate.:for his 440 order were good reasons.
Unnecessary interference with the orders of the ,trial court results in waste of public money and time as had happened in the present case.
[447 D]
|
Appeals Nos.
2464 and 2465 of 1966.
Appeal from the judgment and order dated April 8, 1964 of the Punjab High Court, Circuit Bench at Delhi in Letters Patent Appeal No. 75 D of 1962.
M.C. Chagla and Lily Thomas, for the appellants (in C.A. No. 2464 of 1966) and the respondents (in C.A. Nos. 2465 of 1966).
A.K. Sen and 1.
N. Shroff, for the respondents (in C.A. E No. 2464 of 1966) and the appellants (in C.A. No. 2465 of 1966).
The Judgment of the Court was delivered by Bachawat, J.
One Mehtab Singh, the landlord, is the owner of the premises No. 279, situate in Dariba Kalan, Delhi.
His son Muni Subrat Dass resides on the first floor while the ground F floor is in the occupation of the tenants, Bahadur Singh and Daryao Singh where they set up a workshop and installed machinery for manufacturing purposes.
According to Muni Subrat the workshop was a nuisance and caused him great annoyance.
He made a number of complaints to the Municipal Committee for stoppage of the nuisance.
On June 10, 1954, Muni Subrat G and the tenants agreed in writing to refer the disputes between them to the arbitration of two named arbitrators.
The landlord was not a party to the agreement.
The arbitrators made their award on July 14, 1954.
The award directed that (i) Muni Subrat would withdraw the applications pending before.
The Municipal Committee; (ii) the tenants would be at liberty to run the workshop during the day time upto December 31, 1957; (iii) on January 1, 1958, the tenants would remove the machinery; (iv) on the same date they would give vacant possession of the ground floor to the landlord and (v) the tenants would pay rent 434 to landlord for the period of their occupation.
.The award was signed by the arbitrators and the parties to the reference and was attested by the landlord.
It was filed in COurt under section 14 of the .
On August 26, 1954, the tenants and Muni Subrat stated in Court that they had no objections against the award.
On the same date the Court pronounced judgment according to the award and a decree followed accordingly.
On August 23, 1958 Muni Subrat and the landlord jointly applied for execution of the decree `for delivery of possession of the premises.
In anticipation of the application for execution of the decree, on January 9, 1958 the tenants filed an application under sec.
47 of the Code of Civil Procedure raising the following objections to the execution of the decree as to the delivery of possession of the premises to the landlord: (i) the award was beyond the scope of the reference and was invalid and the decree based on the invalid award was void; (ii) the decree was passed in contravention of the Delhi and Ajmer Rent Control Act, 1952 (Act No. 38 of 1952) and was void; and (iii) the landlord could not execute the decree.
The Subordinate Judge, First Class, Delhi, dismissed the objection.
He held that (i) that the objection that the award was without jurisdiction could not be raised under sec.
47; (ii) the decree was not in contravention of the Rent Act; and (iii) the landlord was entitled to execute the decree.
On appeal,the Additional Senior Sub Judge, Delhi, held that (i) the question as to the validity of the award could not be agitated in the execution proceedings; (ii) the decree for eviction was passed in contravention .of the Rent Act and was void; (iii) the appeal against the order allowing the landlord to execute the decree was incompetent and (iv) Muni Subrat was entitled to execute the decree for removal of the machinery but he could not execute the decree for eviction.
In the result, he dismissed the appeal in part so far 'as it was directed against the landlord, allowed the appeal in part against Muni Subrat and declared that he could get the machinery removed but he could not claim eviction.
The tenants and the decree holders filed two separate appeals in the Punjab High Court at Delhi.
Gurdev Singh 1.
held that (i) the first appeal filed against the order in favour of the landlord was competent; (ii) the decree for eviction did not contravene the provisions of the Rent Act and (iii) the landlord was entitled.
to execute the decree for eviction.
In the result, he accepted the decree holder 's appeal and dismissed the tenant 's appeal.
The tenants filed an appeal under clause 10 of the Letters Patent.
A Divisional Bench of the High Court held that (1) the objection to the validity of the award could not be entertained in the execution proceedings; (2) the decree directing delivery of possession of the premises to the landlord was passed in contravention of the Rent Act; (3)neither the landlord nor Muni Subrat could 435 enforce that part of the decree; (4) the decree directing removal of the machinery was 'separable and was void and Muni Subrat was entitled to execute it.
In the result, the DiviSional Bench allowed the appeal and restored the order of the Additional Senior Sub Judge, Delhi.
In passing this order the Bench overlooked that the Senior Sub Judge had dismissed the appeal against the landlord as incompetent.
Having regard to the fact that the appeal against the landlord was competent, the Bench should have also set aside the order favouring the landlord.
The present appeals have been filed by the tenants as also by the landlord and Muni Subrat after obtaining certificates from the High Court.
The following points arise for determination in these appeals, (1) Can the objection as to the ' validity of the award be raised after a decree is passed ' on the award, and can the decree be pronounced to be a nullity on the ground that it was based on an invalid award; (2) Is the decree directing the tenants to deliver possession of the premises to the landlord a nullity on the ground that it was passed in contravention of the Rent Act; (3) Is this portion of the decree enforceable either by the landlord or by Muni Subrat; and (4) Is the decree so far as it directs removal of the machinery valid and enforceable by Muni Subrat.
The award was filed in Court under section 14 of the and on notice to the tenants and in their presence a decree, was passed according to the award under section 17.
It is not Open to the tenants now to take the objection that the award was in excess of the 'authority of the arbitrators or was otherwise invalid.
Having regard to the scheme of sections 14 'to 17 and 31 to 33 all ' questions regarding the validity of the award had to be determined by the Court in which the award was filed and by no other Court.
An award which is invalid on any ground can be set aside under section 30.
After a decree is passed on the award it is not ' open to the parties to the reference to raise any ' objection as to ' the validity ' of the award.
As between them the decree conclusively determines that the award is valid.
Nor can the decree be pronounced to be a nullity on the ground that ' the award was invalid.
A decree passed on an invalid award in arbitrations in suits under the second schedule to the Code of Civil ' Procedure, 1908, stood on the same footing, see Rabindra Deb Manna vs Jogendra Deb Manna(1) where Rankin, '1. 'observed: "An award made out of time, Or otherwise 'invalid, is no longer a nullity it is 'liable to be set aside by the Court, but, if not set aside, a decree made for its enforcement is not without jurisdiction, Shib Kristo Daw vs Satish Chandra Dutt The next question is whether the decree directing the tenant to deriver possession of the premises to the landlord was.
passed A.I.R. 1923 Cal.
410, 413.
436 in contravention of section 13 (1) of the Delhi and Ajme Rent Control Act, 1952.
That sub section provided that: "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. " Then followed a catalogue of grounds on which the decree for recovery of possession could be passed.
The other sub sections to section 13 showed that a decree or order could be passed on one of those grounds in a suit or proceeding instituted by a landlord against a tenant.
Section 13 (1) prohibited the Court from passing a decree or order for recovery of possession of any premises in favour of a landlord against a tenant except in such a suit or proceeding and unless the Court was satisfied that a ground of eviction existed.
Now the decree in the present case is on the face of it one for recovery of possession of the premises in favour of a landlord against a tenant.
The Court passed the decree according to an award under section 17 of the in a proceeding to which the landlord was not a party without satisfying itself that a ground of eviction existed.
On the plain wording of section 13 (1 ) the Court was forbidden to pass the decree.
The decree is a nullity and cannot be enforced in execution.
The contusion that a decree passed in contravention of section 13 (1) is a nullity is supported by the decision in Peachey Property Corpn.
vs Robinson(1).
In that case the landlords issued a writ to recover possession of a flat let to tenants who resided there for non payment of rent.
No appearance was entered and judgment was signed in default of appearance.
On an application for leave to issue a writ for possession, the Court held that the judgment was a nullity as it was given without any determination that it was reasonable to do so in contravention of section 3 (1) of the Rent and Mortgage Interest Restrictions (Amendment) Act, 1933.
As the decree was a nullity the Court refused to issue a writ for possession.
Winn, L.J. said : "Accordingly,the Rent and Mortgage Interest Restrictions (Amendment) Act, 1933, section 3(1) was made to apply to these premises and that sub section provided: 'No Order or judgment for the recovery.
of possession of any dwelling house to which the principal Acts apply or for the ejection of a tenant therefrom shall be (1) , 983. 437 made or given unless the Court considers it reasonable to make such an order or give such a judgment. and. " One or other of two additional conditions is satisfied.
It is perfectly plain from what I have said that before the judgment in default of appearance was entered no court had determined whether it was reasonable to make such an order or give such a judgment.
In my view, therefore, by express force of that section the judgment in default of appearance here was a nullity.
It was, according to its terms, a judgment for recovery of possession of these premises, and that is something which the section prohibits unless there has been a prior determination by the court that it was reasonable to give such a judgment." As the decree for the delivery of possession of the premises to the landlord is a nullity it cannot be enforced or executed either by the landlord or by the landlord 's son Muni Subrat.
The decree in so far as it directs the removal of the machinery from the premises is clearly valid and separable from the rest of the decree and may be executed by Muni Subrat.
In the result, it is declared that (a) the objections as to the validity of the award cannot be entertained in the execution proceedings; (b) the decree in so far, as it directs delivery of possession of the premises to the landlord is a nullity and cannot be executed either by Muni Subrat or by Mehtab Singh and (c) the decree in so far as it directs removal of the machinery is valid and may be executed by Muni Subrat.
Subrat to the declarations mentioned above the appeals are dismissed.
There will be no order as to the costs in this Court.
Y.P. Appeals dismissed.
| IN-Abs | The tenants occupying the ground floor of a building set up a workshop therein.
According to the landlord 's son M, who resided in the first floor, the workshop was a nuisance and caused him great annoyance.
M and tenants agreed to refer the dispute to arbitration.
The landlord was not a party to the agreement.
The award directed that the tenants would run workshop up to certain time and ' thereafter remove the machinery.
and on that day give.
vacant possession of the ground floor to the landlord.
The award was signed by the arbitrators, the tenants, and M, and it was attested by the landlord.
It was filed in Court under section 14 of the Arbitration Act.
The tenants and M stated in Court that they had no objections against the award.
The Court pronounced judgment according to the award and decree followed.
On the expiry of the date fixed for removing the, machinery and for vacating the premises, M and the landlord jointly applied for the execution of the decree.
The tenants objected under section 47, Code of Civil Procedure to the execution contending that (i) the award was beyond the, scope of the reference and was invalid and the decree based on the invalid award was void; (ii) the decree was passed in contravention of the Delhi and Ajmer Rent Control Act, 1952 and was void; and (iii) the landlord could not execute the decree.
HELD: (i) The award was filed in Court under section 14 of the Arbitration Act and on notice to the tenants and in their presence a decree was passed according to the award under section 17.
It was not open to the tenants then to take the objection that the award was in excess of the authority on the arbitrators or was otherwise invalid.
Having regard to the scheme of ss, 14 to 17 and 31 to 33 all questions regarding the validity of the award had to be determined by the Court in which the award was filed and by no other Court.
An award which is invalid on any ground can be set aside under section 30.
After a decree is passed on the award it is not open to the parties to the reference to raise any objection as to the validity of the award.
As between them the decree conclusively determines that the award is valid.
Nor can the decree be pronounced to be a nullity oh the ground that the award was invalid.
[435 E G] Rabindra Deb Manna vs Jogendra Deb Manna A.I.R. 1923 Cal. 410, and Shib Kristo Daw vs Sottish Chandra Dutt approved.
(ii) The decree for delivery of possession to the landlord was a nullitv and could not be enforced in execution.
Section 13(1) of the Delhi and Ajmer Rent Control Act, 1952 prohibited the Court, from passing a decree or order for recovery of possession of any premises in 433 favour of a landlord against a tenant except in such a suit or proceeding instituted by the landlord against the tenant for recovery of possession on one of the grounds stated therein, and unless the Court was satisfied that a ground of eviction existed.
The decree in the present case was on the face of it one for recovery of possession of the premises in favour of a landlord against a tenant.
The Court passed the decree according to an award under section 17 of the in a proceeding to which the landlord was not a party without satisfying itself that a ground of eviction existed.
[436 C E] Peachey Property Corpn.
Robinson [1966] 2 All E.R.981, applied.
(iii) The decree in so far as it directed the removal of the machinery from the premises was clearly.
valid and separable from the rest of the decree and could be executed by M.
|
ivil Appeal No. 1654 of 1966.
395 Appeal from the judgment and order, dated March 8, 1963 of the Bombay High Court in Appeal No. 7 of 1963.
and Civil Appeals Nos. 1019 and 1020 of 1967.
Appeals from the judgment and order, dated August 20, 1964 of the Bombay High Court in Appeals Nos.
53 and,55 of 1963.
C.K. Daphtary, Attorney General, N.S. Bindra, R. Gopalakrishnan and S.P. Nayar, for the appellant (in C.A. No. 1654.
of 1966).
Niren De, Solicitor General, G.L. Sanghi, and 1.
B. Dadachanji, for the appellants (in C.As.
1019 and 1020 of 1967) and respondents Nos. 3 and 4 (in C.A. No. 1654 of 1966).
Sen and 1.
N. Shroff, for respondents Nos. 1 and 2 (in C.A. No. 1654 of 1966) K.K. Singhvi, S.C. Agarwala, R.K. Garg, D.P. Singh and K. Gupta, for the respondents (in C.A. No. 1020 of 1967).
The Judgment of the Court was delivered by Shah, J.
The High Court of Bombay has declared section 372(g) and a part of section 385 of the Bombay Municipal Corporation Act 3 of 1888 as amended by Act 14 of 1961 ultra vires because in their view these provisions infringe the guarantee of articles 19 (1 ) (f) & (g) of the Constitution.
The State of Maharashtra and the Municipal Corporation of Greater Bombay have appealed to this Court.
The first respondent in Appeal No. 1654 of 1966 is a society registered under the , and carries on, within the limits of Greater Bombay, the business of skinning carcasses of dead animals and utilising the products for industrial uses.
The second respondent is an owner of a stable of milch cattle at Andheri within the limits of Greater Bombay.
By Act 14 of 1961 the Legislature of the State of Maharashtra amended, amongst others, sections 367, 372 and 385 of Act 3 of 1888 enacting that an owner of the carcass of a dead animal shall deposit it at the place appointed in that behalf by the Corporation, and entrusted the Corporation with power to arrange for disposal of the carcasses.
On October 14, 1961 the Assistant Head Supervisor of the Municipal Corporation called upon the first respondent to stop removing carcasses from the "K" Ward of the Corporation.
On November 27, 1961, the Corporation published a notification inviting the attention of the public concerned to the provisions of section 385 and other provisions of the Act and warned the persons concerned that violation of the provisions was liable 396 to be punished.
On January 10, 1962, the Corporation resolved to grant a contract authorising removal and disposal of carcasses under section 385 of the Act in respect of Wards, H, K, L, M, E, P, B & T to the Harijan Workmens Co operative Labour Society Ltd., and declared that no other person or agency was authorised to remove and dispose of carcasses under the provisions of section 385 of the Act.
Respondents Nos. 1 & 2 to this appeal moved a petition in the High Court of Bombay for an order canceling or setting aside the notice dated October 14, 1961, and the notification dated November 27, 1961, for an order restraining the Corporation from demanding fee for removal of such carcasses, from taking any steps or proceedings against the respondents for enforcement of the provisions of sections 366,.
367(c), 372(g) and 385 of the Act and from claiming ownership in the carcasses of the dead animals of private owners.
The State of Maharashtra was later impleaded as a party respondent to the petition.
Kantawalla, J., dismissed the petition.
He held that sections 366, 367(c) and 385 of the Act were "enacted for the promotion of public health and for the prevention of danger to life of the community and in the larger interest of the public", and that the restrictions upon the rights of the owners of cattle and persons carrying on business in carcasses were, because of the special protection granted by article 31(5)(b)(ii) not inconsistent with or repugnant to the fundamental rights guaranteed under article 31(2) of the Constitution, and since the impugned provisions were protected, the second respondent could not claim that his fundamental right guaranteed by article 19(1)(f) of the Constitution was infringed.
The learned Judge also held that the restrictions imposed by the impugned provisions were reasonable and in the interest of the general public and were on that account not within the protection of article 19(1)(g) of the Constitution.
In appeal under the letters patent the High Court modified the order passed by Kantawalla, J., and declared section 372(g) and a part of section 385 of the Act invalid.
The High Court did not pass any order consequential on the declaration.
Against that order the State of Maharashtra has preferred this appeal with certificate granted by the High Court.
Section 3 (z) defines 'nuisance ': it includes any act, omission, place, or thing which causes or is likely to cause .injury, danger, annoyance or offence to the sense of sight,.
smelling or hearing, or which is or may be dangerous to life or injurious to health or property. ' Section 61 sets out the obligatory and discretionary duties of the Corporation.
It is thereby incumbent upon the Corporation to make adequate provision, inter alia, for scavenging, removal and disposal of excrementitious and other filthy matters, 397 and of all ashes, refuse and rubbish, reclamation of unhealthy localities, removal of noxious vegetation and generally the abatement of all nuisances.
By sections 365, 366, 367, 368, 372 and 385 it was provided that section 365 "For the purposes of securing the efficient scavenging and cleansing of all streets and premises.
the Commissioner shall take measures for securing (a). . . . . . (b) the removal of the contents of all receptacles and depots and of the accumulations at all places provided or appointed by him under section 367 or 368 for the temporary deposit of any of the matters specified in the said sections.
" section 366 "A11 matters collected by municipal servants or contractors in pursuance of the last preceding section and of section 369 and carcasses of dead animals deposited in any public receptacle, depot or place under section 367 shall be the property of the Corporation.
" section 367 "The Commissioner shall provide or appoint in proper and convenient situations public receptacles, depots and places for the temporary deposit or final disposal of (a) dust, ashes, refuse and rubbish; (b) trade refuse; (c) carcasses of dead animals and excrementitious and polluted matter; Provided that (i) the said matters shall not be finally disposed of in any place or manner in which the same have not heretofore been so disposed of, without the sanction of the corporation or in any place or manner which the State Government think fit to disallow; (ii) any power conferred by this section shall be exercised in such manner as to create the least practicable nuisance." section 368 "(1) It shall be incumbent on the owners and occupiers of all premises to cause all dust, ashes, refuse, rubbish and trade refuse to be collected from their respective premises and to be deposited at such times as the Commissioner, by public notice, from time to time prescribes in the public receptacle, depot or 398 place provided or appointed under the last preceding section or the temporary deposit or final disposal thereof. .
" section 372 "No person (a) who is bound, under section 368 or section 370, to cause the removal of dust, ashes, refuse, rubbish and trade refuse or of excrementitious or polluted matter, shall allow the same to accumulate on his premises for more than twenty four hours or neglect to cause the same to be removed to the depot, receptacle or place provided or appointed for that purpose; .
" (g) shall deposit the skin or otherwise dispose of the carcass of any dead animal at a place not provided or appointed for this purpose under section 367.
" section 385 "(1) It shall be the duty of the Commissioner to provide for the removal of the carcasses of all animals dying within Greater Bombay; (2) The occupier of any premises in or upon which the animals shall die or in or upon which the carcass of any animal shall be found, and the person having the charge of any animal which dies in the street or in any open place, shall within three hours after the death of such animal, or if the death occurs at night, within three hours after sunrise, report the death of such animal at the municipal health department office of the division of the Greater Bombay in which the death occurred or in which the carcass is found and shall not unless authorised by the Commissioner in this behalf, remove or permit to be removed the carcass of any animal dying in or upon any place within Greater Bombay; "(3) For every carcass so removed by municipal agency, a fee for the removal of such amount as shall be fixed by the Commissioner, shall be paid by the owner of the animal or, if the owner is not known, by the occupier of the premises in or upon which, or by the person in whose charge, the said animal died.
" The provisions are manifestly enacted with the object of ensuring expeditious removal of carcasses .of dead animals which, if allowed to remain, are likely to constitute a grave nuisance and are likely to endanger public health.
The carcass of a dead animal is a noxious thing, which in the hot and humid climate of Bombay petrifies within a short time after the death of the animal and defiles the place and atmosphere with foul smells, and is likely 399 to spread disease if immediate and proper steps for removal and disposal are not taken.
The Municipal Corporation is entrusted with authority to take steps to ' protect the health of the residents within the municipal area.
To ensure against a grave nuisance to the residents, duty is imposed by the Act upon the owner of the animal or occupier of the premises in or upon which the animal dies or the person having charge of the animal to remove the carcass with the permission of the Commissioner in that behalf at his own expense, or to have it removed through the agency of the Corporation.
If it is removed by the Corporation, the owner is required to pay the prescribed fee for such removal.
After it is deposited by the owner or by the Corporation in a receptacle, depot or place which is set apart for that purpose, the carcass may be disposed of by the Corporation in a manner which is likely to cause the least public nuisance.
For that purpose the carcass is at the disposal of the Corporation.
The Act does not make any provision relating to the manner in which the Corporation is to dispose of the carcass, but it is implicit in the scheme of the Act that the Corporation will provide a place removed from the inhabitated localities where the carcasses may be disposed of without involving any danger to public health.
To facilitate this object it is enacted by the Legislature that the carcasses of dead animals deposited in any public receptacle, depot or place shall be the property of the Corporation.
Unquestionably it is in the interest the residents of the Municipal Corporation and for promotion of public health and for prevention of danger to the community that carcasses of the dead animals shall be removed expeditiously and shall be disposed of in a manner which is likely to cause the least nuisance.
The carcass of a dead animal is private property and belongs to the owner of the animal, and the carcass on sale by the owner, when it.
is of a bull, cow or buffalo, fetches a small price.
Counsel for the second respondent urged that the provisions of the Act which place restrictions upon the right of the owner to dispose of the carcass and compel him to incur expenditure for removal or to pay a fee for that removal to the appointed place, and extinguish his ownership in the carcass when it is deposited in the place appointed, infringe the fundamental right to property guaranteed under article 19(1)(f) and article 31 (2) of the Constitution.
Counsel for the first respondent urged that by the impugned provisions the first respondent is deprived of his right to carry.
on business, and on that account infringe the right guaranteed by article 19(1)(g) of the Constitution.
Counsel for the Corporation conceded that a carcass is property which is capable of being owned.
Counsel, however, submitted that a carcass is not commercial property and the first respondent could not claim to carry on business in disposal of 400 carcasses.
The judgment of the Supreme Court of the United States in Gerrit W. Clason vs State of Indiana(1) on which reliance was placed by counsel for the Corporation merely decided that a State statute requiring the owner of a dead animal not slaughtered for food to bury or burn such .body on his premises or to deliver it W the representative of a disposal plant licensed to do business within the State, and prohibiting transportation over the high ways of the State of the body of such animal except to a licensed disposal plant and with certain sanitary. precautions, did not unduly discriminate against and burden toter state commerce.
The judgment does not support the plea that a citizen carrying on the business in the disposal of the carcasses is not entitled to the constitutional protection against unreasonable restrictions on the carrying on of any lawful business or occupation.
The second respondent is not a dealer in carcasses.
He has a right of ownership in the carcass.
He claims that before the enactment of the impugned provisions he was accustomed to sell the carcass of an animal dying in his/stable for a price; he is under the Act enjoined to deposit the carcass in an appointed place and for that purpose to incur expenditure for removal of the carcass or to pay a fee to the Corporation for arranging for its removal.
On account of the impugned provisions he says that he cannot sell the carcass, and when he deposits the carcass in the appointed place his ownership in the carcass ceases and he has to pay for removal of the carcass.
Article.
19(1)(f) of the Constitution confers upon all citizens the right to acquire, hold and dispose of property.
Carcass of an animal belonging to a person is his property and he has the right of disposal of the carcass.
But that fundamental right, like all other rights in article 19( 1 ).
is not absolute: it is subject to reasonable restrictions.
By el.
(5) it is enacted that: "Nothing in sub clauses (d), (e) and (f) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said subclauses either in the interests of the general public or for the protection of the general public or for the protection of the interests of any Scheduled Tribes.
" 401 the Municipal agency with the least practicable delay is conceived in the interests of the general public and no serious argument to the contrary was advanced before us.
A law designed to abate a grave nuisance and for protection of public health is prima facie one enacted for the protection of the interests of the general public.
But that alone is not sufficient: the restriction imposed by the law must be reasonable, i.e., the restriction must not be arbitrary or excessive, and must not place upon the right of the citizen a limitation which is not calculated to ensure protection of the interests of the general public.
In the view of the High Court the law which compels the owner to deposit the carcass in the appointed place and thereby prevents him from selling it, and involves him in expenditure for removing it, or in the payment of a fee for removal, imposes an unreasonable restriction.
The High Court also observed that a law which declares that as soon as the carcass which is a valuable property is deposited, it becomes the property of the Corporation makes an unreasonable provision since "it makes no difference whether the carcass is disposed of by a purchaser from the owner of the carcass or by a contractor who purchased it from the Corporation".
But in so holding, in our judgment, the High Court ignored the hazard to the public health arising from adulteration of the food of the people.
There is evidence on the record which is not controverted that meat and fat from the carcasses are used by unscrupulous persons for adulterating the food of the community.
Mere imposition of an injunction to remove the carcass within the prescribed period abates the nuisance likely to result from the carcass remaining on the premises of the owner: it does not eliminate grave hazard to public health by the adulteration of the food of the people by the products from carcasses.
By merely enacting that the carcass will be removed expeditiously, the second object cannot be served.
The Corporation has control over the contractor to whom the carcasses are entrusted for disposal.
It has set apart a place for skinning and has supervision over the disposal of the products.
Even by imposing stringent supervision upon persons carrying on the business of skinning carcasses protection of the community against adulteration of its food cannot be effectively secured, because it would not be difficult for a purchaser not subject to the control of the Corporation to remove the carcasses beyond the Corporation limits and then to bring contaminated meat and the fat back into the Corporation area.
The Legislature has designed a scheme by which reasonable restrictions are placed upon the right of a citizen to dispose of his property: possibility of an alternative scheme which might have been but has not been designed, will not justifiably expose the first scheme to the attack that it imposes unreasonable restrictions.
402 Reasonableness of restrictions imposed by a law has to be adjudged in the light of the nature of the right, danger or injury which may be inherent in ' the unbridled exercise of the right and the necessity of protection against danger which may result to the public by the exercise of the right.
In each case the test is whether the restriction is commensurate with the need of protection of the interest of the public against the exercise of the right.
But the fact that the owner is unable to sell for a price the carcass and required to pay a fee for removal of the carcass does.
not, in judgment, render a provision which is essentially conceived in the interests of the general public, as indicated .earlier, unreasonable.
The Corporation has to arrange for effectively disposing of the carcass, and it would be necessary for effectuating that purpose to provide that the title of the owner in the carcass should be extinguished.
Unless the title of the owner in the carcass is extinguished, various complications may arise in the way of disposal of the carcass.
We are unable to agree with the High Court, that for/he purpose of ensuring proper disposal, transfer of ownership to the Municipal Corporation was not necessary or that the provisions went "far beyond the legitimate purpose of making them." In determining the extent of the right which a citizen may claim to exercise, the Court is concerned to deal with the reasonableness of the restriction imposed upon the exercise of the right.
As observed by Patanjali Sastri, C.J., in State of Madras vs If.
G. Row(1) "the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern of reasonableness can be laid down as applicable to all cases.
The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the: evil sought to be remedied thereby, the disproportion of the imposition, the prevailing conditions at ' the time, should all enter into the judicial verdict.
" As stated by Mahajan, I., in Chintamanrao vs State of Madhya Pradesh(2) at p. 763: The word 'reasonable ' implies intelligent care and deliberation.
that is the choice of a course which reason dictates.
Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed in article 19(1) (g) and the social control permitted by clause (6) of article 19 it must be held to be wanting in that quality.
" The High Court was of the view that looking to the object intended to be achieved it was not necessary to impose "such wholesale restriction on the owner of carcasses as also on those who carry (1) ; 607.
(2) ; 403 on the trade as has been imposed.
" We do not think, however, that the provisions incorporated by Act 14 of 1961 were arbitrary or excessive.
Reasonableness of the restriction imposed upon the right to acquire, hold and dispose of property must be evaluated in the light of the nature of the commodity and its capacity to be detrimental to the public weal.
The power of the State to impose reasonable restrictions may extend to prohibiting acquisition holding or disposal of a commodity if the commodity is likely to involve grave injury to the health or welfare of the people.
In adjudging the reasonableness of restrictions imposed upon the holding or disposal of a carcass which is noxious, maintenance of public health is the paramount consideration.
Restriction imposed upon the right of an owner of a carcass to dispose it of in the manner indicated, in the Act, being enacted solely in the interest of the general public, cannot be deemed arbitrary or excessive merely because they involve the owner into a small financial burden.
Under the Constitution a proper balance is intended to be maintained between the exercise of the right conferred by article 19(1 )(f) and (g) and the interests of a citizen in the exercise of his right to 'acquire, hold or dispose of his property or to carry on occupation, trade or business.
In striking that balance the danger which may be inherent in permitting unfettered exercise of right in a commodity must of necessity influence the determination of the restrictions which may be placed upon the right of the citizen to the commodity.
The law which compels the removal of the carcass expeditiously from the place where it is lying is not contended to be arbitrary or excessive.
The law which compels removal to the appointed place and disposal of the carcass under the supervision of the Corporation to which is entrusted the power and duty to take steps to maintain the public health cannot also be regarded as arbitrary or excessive, merely because the enforcement of the law involves some pecuniary loss to the citizen.
We are unable to agree that by compelling disposal of carcasses by leaving to the owner of the carcass to dispose it in any manner he thinks fit, danger to the public health could be effectively avoided.
was faintly argued that the levy of Rs. 20 as fee for removal of each carcass was excessive.
But there is no evidence before the Court about the expenses which the Corporation is required to incur in performing the service relating to the removal of carcasses of all animals some of which may yield in the disposal valuable by products and others not.
Evidently in a large and crowded metropolitan city it would be necessary to maintain covered wagons for removal of carcasses, to maintain an inspecting staff.
to, make adequate arrangements for deposit of carcasses at certain places.
and for their disposal under the supervision of the Municipal staff.
Whether the fee levied from the owner of the 404 carcass of an animal in excess of the expenditure which the Corporation will have to incur for the maintenance of the service is not commensurate is a matter on which no investigation appears to have been made and this Court cannot enter upon that question for the first time.
It was, however, urged that a provision which not only extinguishes the title of the owner in the carcass thereby involving him in the loss of the value which he would have obtained by sale of the carcass, but ' simultaneously imposes upon him a liability to remove the carcass at his own expense is per se unreasonable.
We do not think so.
If the carcass is likely to be deleterious to public health and its removal from the place where it is lying being in the interests of the public health, imposition of an obligation upon the owner to remove the carcass at his own expense or to pay for its removal, cannot be regarded as unreasonable, even if the charge which falls upon the owner is in addition to the loss which he suffers by reason of the extinction of his title in the carcass.
If the owner 's right to dispose of his property is by the enactment of the impugned section subjected to reasonable restrictions, it must follow that the right of the skinner, assuming that he has a right in the carcass, is also subjected to reasonable restrictions, imposed in the interests of the general public.
The impugned provisions do not infringe the guarantee of freedom under article 19(f) of the Constitution.
But even if it be established that the law which imposes a reasonable restriction upon the right of a citizen to acquire, hold and dispose of property, is not on that account free from the challenge that it infringes the guaranteed freedom under article 31.
Article 31, after it was amended by the Constitution (Fourth Amendment) Act, 1955, provides: "(1) No person shall be deprived of his property save by authority of law.
(2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or specifies the principles on which, and the manner in which the compensation is to be determined and given; and no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate.
(2A) Where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a corporation owned or controlled by 405 the State, it shall not be deemed to provide for the com pulsory acquisition Or requisitioning of property, not withstanding that it deprives any person of his property.
. . (5) Nothing in clause (2) shall affect (a) the provisions of any existing law other than a law to which the provisions of clause (6) apply, or (b) the provisions of any law which the State may hereafter make (i) .
(ii) for the promotions of public health or the prevention of danger to life or property, or (6) .
Before the Constitution (Fourth Amendment) Act, 1955, the prevailing opinion in this Court was that articles 31(1) & (2) dealt with the same subject matter and were not mutually exclusive in their scope and content, and should be read together and understood as dealing with the same subject, namely, the acquisition or taking possession of property referred to in cl.
(2) of article 31, and that article 31 (before amendment) is a self contained Article providing for a subject different from that dealt with in article 19.
But since the enactment of the Constitution (Fourth Amendment) Act, 1955, clauses (2) & (2A) of article 31 and cl.
(1) of article 31 deal with different subjects: Clauses (2) & (2A) deal with acquisition and requisitioning of property; and cl.
(1) with deprivation of property by authority of law: Kavalappara Kottarathil Kochuni and Ors.
vs The State of Madras and Ors.(x) It was also held in that case that the word 'law ' used in article 31 (1 ) indicates its limitation and refers back to article 19 and any law made under article 31 (1 ) can be sustained only if the restrictions it imposes are reasonable and in the interest of the general public, and that the correct approach should be first to ascertain the fundamental right and then to see whether the law infringes that right.
If ex facie it does so, it has to stand the test of article 19(5).
In certain circumstances, however, deprivation of fundamental right to property may also amount to a reasonable restriction under that Article.
It was also observed that the word 'law ' in article 31 ( 1 ) must mean a valid law, and such a law must satisfy two tests ( 1 ) that the legislature is competent to enact it; and (2) that it (1) 916.
406 does not infringe any fundamental right.
A law that deprives a citizen of his property may, therefore, be invalid if it infringes article 19(1) (f) of the Constitution, unless it is protected by cl, (5) of article 19.
It was however ruled by a unanimous decision of this Court in Smt.
Sitabati Debi and Anr.
vs State of West Bengal and Anr.(1) that the decision in Kavalappara Kottarathil Kochuni 's case(2) was not concerned with a law of requisition or acquisition and a law relating to acquisition and requisition of property falling within the terms of article 31(2) of the Constitution need not stand the test of reasonableness under article 19 (5).
In the present case the restrictions imposed by the impugned law upon the right of the owner however satisfy, for reasons already stated, the test of reasonableness under article 19(5).
The question still remains whether the impugned law is void because it does not provide for payment of compensation for the loss occasioned to the owner of the carcass resulting from the extinction of his title thereto.
Since the amendment by the Constitution (Fourth Amendment) Act, 1955, cls.
(2) & (2A) of article 31 deal with the acquisition or requisitioning of property movable or immovable for a public purpose.
The protection of cl.
(2) is attracted only if there is acquisition or requisitioning of the property for a public purpose i.e., for using the property for some purpose which would be beneficial to the public.
The right guaranteed by article 31(2) is that property shall not be compulsorily acquired or requisitioned for a public purpose save by authority of law which provides.
for compensation for the property so acquired or requisitioned.
The expression "acquired or requisitioned . . for a public purpose means acquired or requisitioned for being appropriated to or used for a public purpose.
But the law which provides for extinction of the ownership and creation of an interest in the Corporation for the purpose of disposal of the carcass is not a law for acquisition of property for a public purpose: its primary purpose is destruction of the carcass in the public interest, and not utilisation of the property for a public purpose.
The case would not, therefore, fall within the terms of article 31 (2).
In any case the statute is squarely protected by cl.
(5)(b)(ii) of article 31 and on that account the owner is not entitled to compensation for loss of his property.
The words of article 31 (5) (b) (ii) are express and specific.
Nothing in cl.
(2) shall affect the provisions of any law which the State may hereafter make for the promotion of public health or the prevention of danger to life or property.
If a law is enacted directly for the promotion of public health or for ,the prevention of danger to life or property, then, notwithstanding that it may incidentally (1) (2) 407 fall within the terms of cl.
(2), no compensation is payable.
Where the State acquires property and seeks to utilise it for promotion of public health or prevention of danger to life or property, the State is liable to pay compensation.
But a law which directly and immediately seeks W promote public health or to prevent danger to life or property falls within the exemption under cl.
(5)(b)(ii) even if thereby the interest of the owner in perry is extinguished and interest in that property is vested in the State for destruction of that property.
Reliance was placed by counsel for the respondents upon a recent judgment of this Court in The Deputy Commissioner and Collector, Kamrup and Ors.
vs Durganath Sarma(1).
In this case the Government of Assam took possession of lands belonging to a citizen.
Thereafter the Assam Acquisition of Land for Flood Control and Prevention of Erosion Ordinance 2 of 1955 was promulgated by the Governor which authorised the State Government to acquire lands for works or other development measures in connection with flood control or prevention of erosion.
The Ordinance was with the assent of the President replaced by the Assam Acquisition of Land for Flood Control and Prevention of Erosion Act 6 of 1955.
Under the Act the owner of the land was not entitled to the market value of the land at the date of acquisition.
The owner of the land moved a petition in the High Court Assam for a declaration that the Act 6 of 1955 was invalid, and for an order directing the State Government to forbear from giving effect to the notices of acquisition of his land issued thereunder.
Act 6 of 1955 was enacted before the Constitution (Fourth Amendment) Act, 1955, which Came into force on April 29, 1955.
The High Court held, inter alia, that Act 6 of 1955 was a law for acquisition of property and was not protected by cl.
(5)(b)(ii) of article 31.
This Court confirmed the order passed by the High Court.
It was observed by this Court (p. 402): "It is to be noticed that cl.
(5)(b)(ii) saved laws for the promotion of public health or the prevention of danger to life or property.
It did not save laws for the acquisition of property.
We are satisfied that cl.
(5) (b) (ii) was not intended to except laws for the acquition of property from the purview of el.
(2) . .A law for promotion of public health or for prevention of danger to life or property sometimes has to provide for destruction and impairment of value of private property and the taking of temporary possession of the property by the State.
It may be necessary to destroy contaminated food or to burn plague infested buildings for the promotion of public health, to pull down a building to prevent a fire from spreading and consuming other (1) ; 408 buildings in the locality, to demolish a building in a ruinous condition endangering the safety of its occupants and other persons in its vicinity.
The destruction and .the temporary talking of property for such purposes, though necessary for promoting public health or preventing danger to life or property, mounted to taking of property within cl.
But for cl.
(5)(b)(ii), a law authorising such a taking of property would have been invalid unless it provided for compensation.
Clause (5)(b)(ii) saved such laws from the operation of cl.
(2 ) and those laws were not invalid because they authorised such a taking without payment of compensation.
A law authorising the abatement of a public menace by destroying or taking temporary possession of private properties if the peril cannot be abated in some other way can be regarded as a law for promotion of public health or prevention of danger to life or property within the purview of cl.
(5)(b)(ii).
" Counsel for the second respondent, however, invited our attention to the following passage in the judgment of the Court: "Clause 5(b)(ii) will protect laws providing for requisitioning or temporary occupation of property strictly necessary for promotion of public health or prevention of danger to life or property.
The law may authorise the State to requisition the property temporarily for abating the public menace without payment of compensation if the menace cannot be abated in some other recognised way.", and contended that el.
(5)(b)(ii) only applies where there is "temporary occupation of property"; where there is deprivation of property with a view to destroy it, el.
(5) (b) (ii) has no application.
But evidently the expression is used in dealing with the claim to compensation for acquisition of immovable property.
Where possession of movable property is under the authority of law taken with a view to destroy it in the interest of the general public i.e., for prevention of grave danger to life or property, the guarantee of article 31(2) is not attracted.
The law enacted by the Legislature extinguishing the interest of the owner in the carcass and creating an interest in the Corporation being a law directly enacted for _prevention of grave danger to the health of the community fell within the terms of cl.
(5) (b) (ii) and no compensation was _payable in respect thereof, article 31(2) notwithstanding.
We may observe that this Court in Deputy Commissioner Kamrup 's case(1) _proceeded to observe that even though since the amendment by the Constitution (1) ; 409 (Fourth Amendment) Act, cls.
(1) & (2) of article 31 dealt with separate.
subject matters, since el.
(5) (b) (ii) of article 31 has not been amended, its connotation could not be deemed to have been altered.
If originally it was intended to be a restriction on the right to property as delineated by cls.
(1) and (2) of article 31, it continued to have the same operation.
In Deputy Commissioner, Kamrup 's case(1), however, the Court was not directly called upon to declare the precise inter relation between cl.
(5) (b) (ii) and 'el.
(2) as amended for the impugned Assam Act was enacted before the amendment of the Constitution by the Constitution (Fourth Amendment) Act.
It is sufficient for the purpose of this case to hold that a law declaring extinction of the right of the owner in movable property not with a view to use it for a public purpose but to destroy it for abating nuisance and preventing danger to public health and vesting it in the Corporation entrusted with power to take steps to maintain public health is not a law for acquisition of property for a public purpose.
In any event the law is not, because of the exemption contained in el.
(5)(b)(ii) of article 31 of the Constitution, invalid.
even if It does not provide for payment of compensation for deprivation of the right to property.
The owner of the carcass is, therefore, unable to sustain his plea that article 19(1)(f) or article 31(2) were infringed by the impugned provisions.
The claim of the first respondent who.
would, but for the law have been able to purchase carcasses from the second respondent does not require any elaborate discussion.
The first respondent is carrying on business as a skinner of carcasses and claims protection of its fundamental right under article 19(1)(g) of the Constitution.
Evidently it has no right in the carcass until it purchases the carcass.
Restriction upon the right of the owner to sell the carcass does not directly infringe the fundamental right of the purchaser, who, but for the restriction, may have been able to purchase it.
Assuming, however, that the imposition by law of the restriction upon the owner of the carcass involves also a restriction upon the right of the first respondent, we are of the view, having regard to the character of the legislation and its avowed object that it imposes reasonable restrictions upon the right to carry on occupation or business within the meaning of article 19 (6) of the Constitution.
The first respondent cannot claim the protection of article 31(2) of the Constitution, because until it purchases the carcasses from the owner it has no right in the .property, and it cannot set up a grievance for loss of property which it does not own.
(1) A.I.R. 968 S.C. 394.
CI/69 9 410 It was urged that the Corporation instead of disposing of the carcasses under its own supervision had given contracts to the rivals in business of the first respondent and the law which authorised the Corporation, by exercise of legislative authority, to destroy the business of the first respondent must be regarded as imposiag unreasonable restrictions upon the right of the first respondent to carry on business.
The Act, however, contains no provisions about the manner in which the Corporation shall dispose of the carcasses which may come into its possession; it leaves it to the Corporation to take adequate and effective steps for the purpose of disposal.
Whether by virtue of the contracts given by the Corporation to other persons who are claimed to be rivals in business of the first respondent unreasonable restrictions may be deemed to be placed upon their fundamental right is a matter on which no argument was advanced at any stage before the trial Court or the High Court, though it was strenuously urged before us.
Prima facie, the argument has no substance: in any case, it cannot affect the validity of the statute or the provisions which have been declared to be invalid by the High Court.
The facts which give rise to the two other appeals are the same and for reasons already stated the claim made by the respondents must be The appeals are allowed and the orders passed by the High Court set aside.
The petitions shall stand dismissed.
No order as to costs throughout.
V.P.S. Appeals allowed.
| IN-Abs | To ensure against the grave nuisance which may be caused to the residents of a locality if carcasses of dead animals are allowed to remain on the premises within the city, 'a duty is imposed by sections 367, 372 and 385 of the Bombay Municipal Corporation Act, 1888, as amended by Act 14 of 1961, upon the owner of the animal or the person having charge of the animal or the occupier of premises in which the animal .dies, to remove the carcass at his own expense with the permission of the Commissioner of the City of Bombay.
or, to have.
it removed through the agency of the Corporation, for which he was required to pay a fee of Rs. 20.
It was further enacted that after it was removed it shall be deposited in 'a receptacle, depot or other place set apart for the purpose, either by the owner or the Corporation.
Thereupon, the owner lost his property in the carcass and ' it became the property of the Corporation.
Under the Act it was the duty of the Corporation to arrange for its disposal causing the least practicable nuisance.
The second respondent was the owner of a stable of filch cattle in Bombay.
He was selling the carcasses of animals dying in his stable for a price.
The first respondent was a purchaser of carcasses and carried on the business of skinning the dead animals and utilising the products for industrial uses.
The Corporation prohibited the first respondent from removing carcasses and resolved to grant the contract for the disposal of carcasses deposited under the provisions of the Act to Harijan Workmen 's Cooperative Labour Society.
The respondents challenged the provisions and the High Court declared them ultra vires.
In appeal to this Court, on the questions: (1) Whether the obligation not to sell the carcass but to dispose it of as per the provisions of the Act infringe the fundamental rights of the respondents under article 19(1)(f); (2) Whether there was infringement of the fundamental right because of the obligation on the second respondent to incur expenditure for its removal; (3) Whether fee of Rs. 20 was excessive; (4) Whether the second respondent 's loss of ownership and property in the carcass on depositing it as per the provisions of the Act violated the.
respondents ' fundamental right under article 31; and (5) Whether the granting of the contract to the Harijan Society destroyed the business of the first respondent and infringed its fundamental right to carry on business.
HELD: (1) The second respondent had a right of ownership in the carcasses of his animals.
But he was only entitled to constitutional protection against unreasonable restriction on his right to sell the carcasses.
393 Reasonableness of restrictions imposed by a law has to be.
adjudged in the light of the nature of the right, danger or injury which may be inherent in the unbridled exercise of the right and the necessity of protection against danger which may result to the public by the exercise of the right.
In each case the test is whether the restriction is commensurate with the need for protection of public interest against the exercise of the right.
[400 C; 402] A mere imposition of an injunction to remove a carcass only abates the nuisance arising from a dead animal remaining on the premises: it does not eliminate the graver hazard caused by the adulteration of food of the people from its products.
Meat and fat from carcasses are used by unscrupulous persons for adulterating the food of the community.
Even b.y imposing stringent supervision upon persons carrying on the business of skinning carcasses,, protection of the community against food adulteration cannot be effectively secured, because, a purchaser who was not subject to the Corporation control could remove it beyond the Corporation limits and bring back contaminated meat and fat.
Therefore, the Legislature has devised a scheme by which reasonable restrictions are placed upon a citizen 's right to dispose of the carcass.
Under the Act, the Corporation has to set apart a place for depositing the carcass and it is implicit in the scheme of the Act that the Corporation shall provide a suitable place for skinning it.
The Corporation has control over the contractors entrusted with the disposal of carcasses and has supervision over the disposal of the products.
A law which compels the removal of a carcass to an appointed place and its disposal under the supervision of the Corporation which has the duty to take steps for maintaining public health, cannot be regarded as arbitrary or excessive.
The Corporation, has to arrange for effectively disposing of the carcass and it would be necessary for effectuating that purpose to provide that the tatle of the owner in the carcass should be extinguished.
Such a provision is not beyond ' the legitimate purpose for which it was intended, and the fact that the owner is unable to sell for a price the carcass does not render a provision, which is essentially conceived in the interest of the general public,unreasonable.[401 E H;402 B D; 403 E; 404 D] Restriction upon the right of the owner to sell the carcass does not directly infringe the fundamental right of the purchaser.
who, but for the restriction may have been able to purchase it.
Assuming however, that the imposition by law of the restriction upon the owner of the carcass involves also a restriction upon the right of the first respondent having regard to the character of t_he legislation and its avowed object,the restriction upon the first respondents right to carry on his occupation or business is a reasonable one within the meaning of Art 19(5) and (6).
[409 E G] .
Chintaman Rao vs State of M.P. [5950] S.C.R. 759 and State Row; , , followed.
(2) If the carcass is likely to be deleterious to public health and its removal from the place where it is lying being in the interests of the public health, imposition of an obligation upon the owner to remove the carcass at his own expense or to Pay for its removal cannot be regarded as unreasonable, even if the charge which falls upon the owner is in addition to the loss which he suffers by reason of the extinction of his tetle in the carcass.
[404 B D] (3) Whether the fee of Rs. 20 levied on the owner of a carcass for its removal was in excess of the expenditure which the Corporation may go.
Cll69 s 394 have to incur.
was not investigated into by the High Court.
and therefore the question could not, be raised for the first time in this Court.
[404 A B] (4) (a) In the present case, the restrictions imposed by the impugned law upon the right of the owner satisfy the test of reasonableness under article 19(5) and (6).
Therefore, though there is a deprivation of property, it is by a valid law and hence there is no violation of article 31(1).
[406 C D] Smt.
Sitabati Debi vs Stale of West Bengal, , followed.
Kavalappara Kottarathil Kochuni vs State of Madras, referred to.
(b) A law which provides for extinction of the ownership and creation of an interest in the Corporation for .the purpose of disposal of the carcass is not a law for acquisition 'of property for a public purpose: its primary purpose is destruction of a carcass in the public interest, and not its utilisation for a public purpose.
The case does not, therefore, fall within the terms of article 31(2).
[406 F G] (c) In any case the statute is squarely protected by article 31 (5) (b) (ii) and on that account the owner is not entitled to compensation for loss of his property.
Where the State acquires property and seeks to utilize it for promotion of public health or prevention of danger to life or property the State is liable to pay compensation.
But a law which directive and immediately seeks to promote public health or to prevent danger to life or property falls within the exemption of cl.
(5)(b)(ii) even if thereby, the owner 's interest in the property is extinguished and is vested in the State for purposes of destruction.
[406 G H; 407 A B] (d) Article 31(5)(b)(ii) is not confined to 'temporary occupation of property.
In the case of acquisition of immovable property, to have the protection of the clause the occupation of the property must be temporary.
But in the case of movable property, even if its possession is taken with a view to destroying it, if such destruction is in the interests of general public, that is.
for the prevention of danger to life or property, it need not be temporary.
Even such taking of movable property will be protected by cl.
(5) (b) (ii) and the guarantee of article 31(2) would not be attracted.
[408 E G] Deputy Commissioner and Collector, Kamrup vs Durganath Sarma, ; , explained.
The first respondent cannot claim the protection of article 31(2), because, until it purchases the carcasses from the owner it has no right in the property, and it cannot set up a grievance for loss of property which it does not own.
[409 H] (5) Whether by virtue of the contracts given by the Corporation to other persons who are claimed to be rivals in business of the first respondent unreasonable restrictions may be deemed to be placed upon the first respondent 's fundamental right is a matter on which no argument Was advanced before the High Court.
In any event, it cannot affect the validity of the statute or its provisions.
[410 B D]
|
ivil Appeal No. 18 of 1966.
Appeal by special leave from the judgment and decree, dated October 9, 1962 of the Madhya Pradesh High Court in First Appeal No 94 of 1959.
G.L. Sanghi and A.G. Ratnaparkhi, for the appellant.
I. N. Shroff, for respondent No. 1.
The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave is directed against the judgment and decree of the Madhya Pradesh High Court allowing tile appeal of the State of Madhya Pradesh and dismissing the suit brought by the appellant, Badri Prasad hereinafter referred to as the plaintiff.
, The relevant facts for determining the points raised before us are these.
On December 27, 1950, a contract was entered into between Kumar Bharat Shah, minor, through iris guardian, and the plaintiff, in respect of forests in Mouza Sunderpani Jagir.
The terms were reduced to writing and an agreement was signed on January 21, 1951.
It is necessary to reproduce the agreement in extenso as it would be necessary to interpret it carefully.
"Deed of agreement executed by Shri Kumar Bharat Shah minor, guardian Shrimati Rani Umakuar Sahiba, Jagirdar of Mouza Sunderpani.
Conditions of contract, area, forest Mouza Sunderpani 1.
Out of the area of 1704.46 acres of Mouza Sunderpani Jagir contract of all the teak trees of more than 12 inches girth standing in the 1,000 acres of the forest of big trees and excluding those teak trees which have girth upto 12 inches is given to contractor Badri Prasad Moolchand firm of Timarni for a sum of Rs. 17,006 (seventeen thousand rupees), on payment of the amount in a lump sum.
In respect of the teak trees mentioned in paragraph No. 1 contractor Shri Badri Prasad deposited with me the total mount of Rs. 17,000 (seventeen thousand rupees), as under : Rs. 6,000 (Six thousand rupees) on 27 12 1950.
Rs. 11,000 (Eleven thousand rupees) on 21 1 1951.
Receipts have been passed for depositing the above amount.
382 3.
The transfer of the forest shall not be done without consent of the owner.
The contractor shall have to pay Rs. 100 (One hundred rupees), for transfer.
For the proper execution of work of the forest the felling of the forest shall have to be done from one side.
Excluding the teak trees upto the girth of 12 inches the cutting of those teak trees which are above that girth shall have to be serially done.
After felling, the stumps of teak trees should be 3 inches high from the ground and slanting so as to.
drain the water off.
It shall be necessary to prepare the stumps within a week.
Till the stumps are passed the wood cannot be removed.
Only the paring can be done.
The coupe guard shall make a hammer mark of passing on the stump and end of the pared wood.
The contractor shall have to get the transit of goods done by the coupe guard.
The contractor shall have to do.
the transit of goods through the license book and submit the monthly accounts.
Without licence no goods shall be transported out of the forest.
The contractor shall have to take care of the teak trees of 12 inches girth standing in the forest.
If damage is caused proper penalty shall be charged.
The contractor can appoint an agent with permission.
The contractor shall have to deposit Rs. 100 (One hundred rupees)for properly preparing the stumps of the teak trees of the forest before starting the work.
This amount shall be returned on completion of the work if the stumps are properly prepared; otherwise the expenses, which may be incurred shall be deducted.
The contractor shall be responsible for any damage caused to the forest by the contractor or his agent and he shall have to pay the penalty.
The period of the contract shall be 3 years, i.e., from 27 12 1950 to 27 12 1953.
Hence the agreement in execution and the same is The contractor and the owner of the forest On January 22, 1951, the Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act, 1950 (Madhya Pradesh Act 1 of 1951 ) hereinafter referred to as the Act received the assent of the President and was published in the Gazette on 383 January 26, 1951.
The plaintiff started working under the. contract in March 1951.
On March 31, 1951, a notification was issued vesting the estates in the State and the State Government prohibited the plaintiff from cutting timber in exercise of the rights under the contract.
Apparently negotiations took place between the State Government and the plaintiff, and on February 1, 1955, ' the Divisional Forest Officer wrote to the plaintiff as follows: Subject : Contract of big trees of Sunderpani village of Makrai State.
Reference : Memo No. 5424 4339 11, dated 21st October, 1954 of the Forest Department of Madhya Pradesh Government.
Kindly inform whether you are ready to any further Rs. 17,000 (seventeen thousand rupees), for the contract of big trees of Sunderpani village of Makrai Circle which (contract) is under dispute at present.
This contract can be given to you on this compromise only.
If you do not wish to pay this amount you may, in future, take any action you deem fit.
You may express your desire within seven days of the receipt of this letter.
If you fail to do.
this it will be presumed that you are not inclined to make a mutual compromise.
On receipt of your reply the State Government will be informed.
" It is this letter which the plaintiff contends was an offer and which he accepted by the following letter, dated February 5, 1955: "Subject: Contract of sale of teak trees in Sunderpani Forest in Makrai Range.
Reference : Your letter No. 180, dated 1st Feb. 1955 .
Dear Sir, I am ready to pay Rs. 17,000 provided my claim to have the refund of Rs. 17,000 already paid, from Shri Bharat Shah, the owner of the village or any other relief consequential to the judgment of that case remains unaffected.
I reserve my right to claim the said or like amount.
Subject to these conditions I shall pay Rs.17,000 as required in your above referred letter.
" By memorandum, dated October 24, 1956, the Government wrote to the plaintiff as follows: 384 "Reference : .Your application, dated 12th September, 1956, addressed to the Minister for Forests, Madhya Pradesh.
Government regret that the request made in your application under reference cannot be acceded to.
Your application has, therefore, been rejected.
" The application, dated September 12, 1956, is not included in the printed record but the plaintiff states that it is by this memorandum that the Government finally repudiated its obligations under the contract.
Thereupon the plaintiff filed the suit praying for a declaration that the rights granted to the plaintiff under the licence, dated January 21, 1951, had not been affected by the vesting of the estates in the State under the Act.
In the alternative he prayed that he was entitled to specific performance and delivery of the contract which was completed on February 5, 1955.
He further prayed that in case he was not entitled to these reliefs, Rs. 50,000 damages be awarded against the State.
Three points have been raised before us: (1) that the 'forest and trees did not vest in the State under the Act; (2) that even if they vested, the standing timber having been sold to the plaintiff did not vest in the State under the Act; (3) that a new contract was completed on February 5, 1955, and the plaintiff was entitled to specific performance of the contract.
The Act and the rights of persons holding contracts to cut and take away timber and fruits of the trees have been the subjectmatter of consideration by this Court on several occasions.
But the learned counsel for the plaintiff contends that none of those cases cover the case of the plaintiff because, according to him, none of those cases dealt with standing timber.
He says that the plaintiffs contract is a contract for the sale of goods and the property in the goods had vested in him and, therefore, it stands on a different basis from the contracts construed in the earlier cases.
The learned counsel for the respondents, on the other hand, maintains that the plaintiffs case is covered by the earlier decisions and all the arguments which he has advanced have been rejected by this Court in those cases.
The relevant statutory provisions of the Act are these: "Section 3.
Vesting of proprietary rights in the State. ( 1 ) Save as otherwise provided in this Act, on 385 and from a date to be specified by a notification by the State Government in this behalf, all proprietary rights in an estate, mahal, alienated village or alienated land, as the case may be, in the area specified in the notification, vesting in a proprietor of such estate, mahal, alienated village, alienated land, or in a person having interest in such proprietary right through the proprietor, shall pass from such proprietor or such other person to and vest in the State for the purposes of the State free of all encumbrances.
(2) After the issue of a notification under sub section (1), no right shall be acquired in or over the land to which the said notification relates, except by succession or under a grant or contract in writing made or entered into by or on behalf of the State; and no fresh clearing for cultivation or for any other purpose shall be made in such land except in accordance with such rules as may be made by the State Government in this behalf Section 4.
Consequences of the vesting. ( 1 ) When the notification under sec.
3 in respect of any area has been published in the Gazette, then, notwithstanding anything contained in any contract, grant 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 specified in such notification (hereinafter referred to as the date of vesting) ensue, namely : (a) all rights.
title and interest vesting in the proprietor or any person having interest in such proprietary right through the proprietor in such area including land ' (cultivable or barren), grass land, shrub jungle, forest, trees, fisheries, wells, tanks, ponds, water channels, ferries, pathways, village sites, hats, bazars and melas; and in all sub soil, including rights, if any, in mines and minerals, whether being worked or not, shall cease and be vested in the State for purposes of the State free.
of all encumbrances; and the mortgage debt or charge on any proprietary right shall be a charge on the amount of compensation payable for such proprietary right to the proprietor under the provisions of this Act . .
Section 5.
Certain properties to continue in possession of proprietor or other person.
Subject to the provisions in Sections 47 and 63 (a) all open enclosures used for agricultural or domestic purposes and in continuous possession for twelve ' 386 years immediately before 1948 49; all open house sites purchased for consideration; all buildings, places of worship; wells situated in and trees standing on lands included in such enclosures or house sites or land appertaining to such buildings or places of ownership; within the limits of a village site belonging to or held by the outgoing proprietor or any other person shall continue to belong to or be held by such proprietor or other person, as the case may be, and the land thereof with the areas ' appurtenant thereto.
shall be settled with him by the State Government on such terms and conditions as it may determine; (b) all private wells and buildings on occupied land belonging to or held by the outgoing proprietor or any other person shall continue to belong to or be held by such proprietor or other person; (c) all trees standing on land comprised in a homefarm or homestead and belonging to or held by the outgoing proprietor or any other person shall continue to belong to or held by such proprietor or other person; (d) all trees standing on occupied land other than land comprised in home farm or homestead and belonging to or held by a person other than the outgoing proprietor shall continue to belong to or be held by such person; (e) all tanks situate on occupied land and belonging to or held by the outgoing proprietor or any other person shah continue to belong to or held by such proprietor or other person; (f) all tanks, belonging to or held by the outgoing proprietor which are situate on land other than village site or occup ied land and in which no person other than such proprietor has any rights of irrigation, shall belong.
to or be held by such proprietor.
(g) all tanks and embankments (bandhans) belonging to or held by the outgoing proprietor or any other person which are situate on land other than village site occupied land and the beds of which are under cultivation of such proprietor or such other person shah "belong to or be held by such proprietor or such other person and the land under such tanks and embankments shall be settled with such proprietor or such other person on such terms and conditions as the State Government may determine; (h) all groves wherever situate and recorded in village papers in the name of the outgoing proprietor or any other person shall continue to belong to or be held 387 by such proprietor or such other person and the land under such groves shall be settled with such proprietor or such other person by the State Government on such terms and conditions as it may determine.
Section 6.
Certain transfers to be void.
(1) Except as provided in sub section (2), the transfer of any right in the property which is liable to vest in the State under this Act made by the proprietor at any time after the 16th March, 1950, shall, as from the date.
of vesting, be void.
" Let us now look at the decisions of thiS Court and see what has been laid down therein.
In Chhotabhai jethabai Patel vs The State of Madhya Pradesh,(1) which we may mention has since been overruled, the contract was in respect of the right to pluck, collect and carry away tendu leaves, to cultivate, culture and acquire lac, and to cut and carry away teak and timber and other species of tree and bamboos.
The Court observed: "It is clear from the provisions in the impugned Act that only those rights of the proprietor vest in the State which the proprietor had on the specified date . .
The scheme of the Act as can be gathered from the proviSions referred to above makes it reasonably clear that whatever was done before 16th March, 1950, by the proprietors by way of transfer of rights is not to be disturbed or affected, and that what vests in the State iS what the proprietors had on the vesting date.
If the proprietor had any rights after the date of vesting which he could enforce against the transferee such as a lessee or a licensee, those rights would no doubt vest in the State.
In all these petitions, the several contracts and agreements were before the date of vesting, and many of them were prior even to the 16th March, 1950.
The petitioners had taken possession of the subject matter of the contracts, namely, tendu leaves, lac palsadies, teak, timber and hardwood, bamboos and miscellaneous forest produce.
" The Court construed the contracts in that case thus: "The contracts and agreements appear to be in essence and effect licences granted to the transferees to cut, gather and carry away the produce in the shape of tendu leaves, or lac, or timber, or wood." The Court further held that the rights of the petitioners were not encumbrances within the meaning of the expression "free from encumbrances" in section 3 ( 1 ) of the Act.
The Court accordingly issued a writ prohibiting the State from interfering in any manner with (1) ; , 479, 481,483.
388 the enjoyment of those rights by the petitioner.
It may be mentioned that in that case the Court was dealing with an application under article 32 of the Constitution.
Chhotabhai 's(1) case was distinguished in Ananda Behera vs The State of Orissa(2) which again dealt with a petition under article 32 of the Constitution.
In Anand Behara vs The State of Orissa(2) the subject matter of licence was fishery rights and the Act which was construed was the Orissa Estates Abolition Act, 1951.
The Court held that the right sought to be acquired by the petitioners by their several purchases was not in respect of any future goods as claimed by them but was a license to enter on the land coupled with a grant to catch and carry away the fish, in other words, a profit a prendre which is immovable property within the meaning of the Transfer of Property Act read with section 3(25) of the General Clauses Act.
The Court further held that as it was an oral licence it contravened section 54 of the Transfer of Property Act, and therefore, no title or interest therein passed to the petitioners in that case.
The Court distinguished Chhotabhai 's(1) case on the following grounds: "It is necessary to advert to Firm Chhotabhai jethabai Patel & Co. vs The State of Madhya Pradesh(1) and explain it because it was held there that a right to 'pluck, collect and carry away ' tendu leaves does not give the owner of the right any proprietary interest in the land and so that sort of right was not an 'encumbrance ' within the meaning of the Madhya Pradesh Abolition of Proprietary Rights Act.
But the contract there was to 'pluck, collect and carry away ' the leaves.
The only kind of leaves that can be 'plucked ' are those that are growing on trees and it is evident that there must be a fresh crop of leaves at periodic intervals.
That would make it a growing crop and a growing crop is expressly exempted from the definition of 'immovable property ' in the Transfer of Property Act.
That case is distinguishable and does not apply here." In Mahadeo vs The State of Bombay,(a) which was again a petition under article 32 of the Constitution, Chhotabhai 's(1) case was not followed.
In flus case some of the proprietors had granted to the several petitioners rights to take forest produce, mainly tendu leaves, from the forests included in the Zamindaris belonging to the proprietors.
The agreements conveyed to the petitioners in addition to the tendu leaves other forest produce like timber, bamboos, etc., the soil for making bricks, and the right to build on and occupy land for the purpose of their business.
These rights (1) ; (2) ; (3) [1959] Supp. 2 S.C.R. 339.
389 were spread over many years but in the case of a few the period during which the agreements were to operate expired in 1955.
This Court held that the agreements required registration and pointed out that some aspects had not been brought to the notice of the Court in Chhotabhai 's(1) case.
Hidayatullah, J., as he then was, speaking for the Court observed: "But what was the nature of those rights, of the petitioners ? It is plain, that if they were merely contractual right then as pointed out in the two later decisions, in Ananda Behera vs The State of Orissa(2), Shantabai 's case(a) the State has not acquired or taken possession of those rights but has only declined to be bound by the agreements to which they were not a.party.
If, on the other hand, the petitioners were mere hcensees, then also, as pointed out in the second of the two cases cited, the licences came to an end on the extinction of the title of the licensers.
In either case there was no question of the breach of any fundamental rights of the petitioners which could support the petitions which were presented under article 32 of the Constitution.
" The Court then construed the agreements in question and came co the conclusion that the agreements could not be said to be contracts of sale of goods simply.
Then the Court examined the provisions of the Central Provinces I and Revenue Act and came to the following conclusion: "From this, it is quite clear that forests and trees belonged to the proprietors, and they were items of proprietary rights.
The first of the two questions posed by us, therefore, admits of none but an affirmative answer.
If then the forest and the trees belonged to the proprietors as items in their 'proprietary fights ', it is quite clear that these items of proprietary rights have been transferred to the petitioners.
The answer to the second question is also in the 'affirmative.
Being a 'proprietary right ', it vests in the State under sections 3 and 4 of the Act.
The decision in Chhotabhai 's(1) treated these rights as bare licences, and it was apparently given per incuriam and cannot therefore be followed.
" It seems to us that this decision concludes the controversy before us.
This decision was followed in State of Madhya Pradesh vs
Yakinuddin(4) Various agreements were construed in that case; one agreement was to propagate lac, another agreement was to (1) ; (2) ; (3) ; (4) ; 390 collect tendu leaves, and another agreement was with respect to a right to collect fruits and flowers of Mahua leaves.
It was contended that these rights were saved in view of the provisions of the Act, but this contention was negatived.
Sinha, C.J., speaking for the Court, observed that the distinction between a bare licence and a licence coupled with grant or profit a prendre was irrelevant because "whatever may have been the nature of the grant by the outgoing proprietors in favour of the respondents, those grants had no legal effect as against the State, except in so.
far as the State may have recognised them.
But the provisions of the Act leave no manner of doubt that the rights 'claimed by the respondents could not have been enforced against the State, if tiao latter was not prepared to respect those rights and the rights created by the transactions between the respondents and their grantors did not come within any of the saving clauses of section 5.
" Earlier he had observed that "any person claiming some interest as a proprietor or as holding through a proprietor in respect of any proprietary interest in an estate has got to bring his interest within section 5, because on the date of vesting of the estate, the Deputy Commissioner takes charge of all lands other than occupied lands and homestead, and of all interests vesting in the State under section 3.
Upon such taking over of possession, the State becomes liable to pay the compensation provided for in section 8 and,the succeeding sections.
The respondents have not been able to show that their interest comes under any of the clauses aforesaid of section 5." The last case in which this Act was construed was Mulamchand vs State of Madhya Pradesh(1).
In that case Mulamchand had purchased a right to pluck, collect and remove forest produce like lac, tendu leaves, etc., from the proprietors of the different Malguzari jungles.
This Court followed State of Madhya Pradesh vs Yakinuddin(2) and negatived the claim of Mulamchand to exercise his rights under the agreement.
In view of .these cases it is too late in the day to contend that the forest and the trees did not vest in the State under the Act.
There is no force in the contention of the learned counsel that under the contract the plaintiff had become owner of trees as goods.
It is true that trees which are agreed to be severed before sale or under the contract of sale are "goods" for the purposes of the .
But before they cease to be "proprietary" rights or interest in proprietary rights within the meaning of sections 3 and 4(a) of the Act they must be felled under 1 the contract.
It will be noticed that under cl. 1 of the contract (1) Civil Appeal No. 393 of 1965 dated February 20, 1968.
(2) ; 391 the plaintiff was entitled to cut teak trees of more than 12 inches girth.
It had to be ascertained which trees fell within that description.
Till this was.
ascertained, they were not "ascertained goods" within section 19 of the .
Clause 5 of the contract contemplated that stumps of trees, after cutting, had to be 3 inches high.
In other words, the contract was not to sell the whole of the trees.
In these circumstances property in the cut timber would only pass to the plaintiff under the contract at the earliest when the trees are felled.
But before that happened the trees had vested in the State.
This brings us.to the last point, namely, whether a new contract was concluded between the Government and the plaintiff.
It is extremely doubtful whether the letter, dated February 1, 1955, is an offer.
It seems to be an invitation to the plaintiff to make an offer.
Be that as it may, even if it is treated as an offer there was no unconditional acceptance by the letter, dated February 5, 1955.
The plaintiff expressly reserved his right to claim a refund of Rs. 17,000.
.According to the letter of the Divisional Forest Officer, dated February 1, 1955, the plaintiff had to give up his claim to Rs, 17,000 which he had already paid and had to pay a further sum of Rs. 17,000.
The High Court, in our opinion, rightly held that the alleged acceptance of the offer made on February 1, 1955, was conditional and qualified.
In the result the appeal fails and is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | The appellant entered into a contract in respect of certain forests in a Jagir in Madhya Pradesh.
Under el. 1 of the contract, he was entitled to cut teak trees of more than 12 inches girth.
Under cl. 5, the stumps of trees after cutting, had to be 3 inches high.
After the passing of the Abolition of Proprietary Rights (Estates, Mahals.
Alienated Lands) Act, 1950 a notification was issued vesting the estate in the State.
and the appellant was prohibited from cutting timber in exercise of his rights under the contract.
After some negotiations, a letter was written on February 1, 1955, to the appellant, on behalf of the State, that the appellant 's claim to cut trees under the contract would be considered only if he gave up his claim to a sum of Rs. 17,000 which he had already paid under the contract and was willing to pay a further sum of Rs. 17,000.
The appellant, by his letter dated February 5, 1955 expressed his willingness to pay the additional sum but reserved his right to claim a refund of the first sum.
The State Government rejected the appellant 's right to cut trees.
He then filed a Suit claiming specific performance of the contract on the grounds: (1) The forest and trees did not vest in the State under the Act; (2) Even if they vested, the standing timber, having been sold to the appellant, did .not vest in the State; and (3) In any event a new contract was completed on February 5, 1955, and the appellant was entitled to its specific performance.
In appeal to this Court, HELD: (1) The forest and trees vested in the State under the Act.360 F G] Mahadeo vs State of Bombay, [1959] Supp.
2 S.C.R. 339; State of M.P.v.
Yakinuddin; , and Mulamchand vs State of M.P., C.A No 393 of 1965 dated February 20, 1968, followed.
(2) Under the contract the appellant had not become the owner of the trees as goods.
The property in the timber could pass to the appellant only when the trees are felled, but before they were felled, the trees had vested in the State.
[391 B] Under el.
5 of the contract there was no sale of the whole of the trees, and, under cl. 1 it had to be ascertained which trees fell within the description of trees which the appellant was entitled to cut.
Till that was done they were not 'ascertained goods ' within section 19 of the .
[391 A B] (3) Even if the letter of ist February could be treated as an offer, there was no unconditional acceptance of the offer, because, there was 381 a reservation by the appellant of his right to claim refund in his letter dated 5th February and hence there was no concluded contract.
[391 C D]
|
ivil Appeal No. 778 of 1966.
Appeal by special leave from the order, dated May 25, 1965 of the Punjab High Court in Letters Patent Appeal No. 146 of 1965.
S.V. Gupte and Naunit Lal, for the appellant.
A.K. Sen, S.C. Mohatta and A.D. Mathur, for respondent No 1.
V. C. Mahajan and R.N. Sachthey, for respondent Nos. 2, 3 and 4.
The Judgment of the 'Court was delivered by Sikri, J.
This appeal by special leave is directed against the judgment and order of the High Court of Punjab in Letters.
Patent Appeal No. 146 of 1965 whereby the High Court dismissed in limine the Letters Patent Appeal filed by the appellant Surja against the judgment of the learned Single Judge allowing the writ petition filed by the respondent, Hardeva.
The relevant facts for determining the points raised before us are as follows; Hardeva, respondent before us, is a big landlord of village Panniwala Mota in Sirsa Tahsil of Hissar District.
Surja, the appellant, was an old tenant of Hardeva and had been cultivating the land in dispute since about 1949.
Section 18 of the Punjab Security of Land Tenures Act, 1953 (Punj.
Act X of 1953) hereinafter referred to as the Act entitles a tenant of a land owner other than a small land owner to purchase from the land owner .the land held by him, but not included in the reserved area of the land owner if he satisfies the conditions laid down in that section.
Section 18(1) & (2) may be set out.
450 "18(1) Notwithstanding anything to the contrary 'contained in any law, usage or contract, a tenant of a land owner other than a small land owner (i) who has been in continuous occupation of the land comprised in his tenancy for a minimum period of six years, or (ii) who has been restored to his tenancy under the provisions of this Act and whose periods of continuous occupation of the laud comprised in his tenancy immediately before ejectment and immediately after restoration of his tenancy together amounts to six years or more, or (iii) who was ejected from his tenancy after the 14th day of August 1947, and before the commencement of this Act, and who was in continuous occupation of the land comprised in his tenancy for a period of six years or ,more immediately before his ejectment, shall be entitled to purchase from the land owner the land so held by him but not included in the reserved area of the land owner, in the case of a tenant falling within clause (i) or clause (ii) at any time, and in the case of a tenant falling within clause (iii) ' within a period of one year from the date of commencement of this Act; Provided that no tenant referred to in this subsection shall be entitled to exercise any such fight in respect of the land or any portion thereof if he had sublet the land or the portion, as the case may be, to any other person during any period of his continuous occupation, unless during that period the tenant was suffering from a legal disability or physical infirmity, or, if a woman, was a widow or was unmarried; Provided further that if the land.
intended to be purchased is held by another tenant who is entitled to preempt the sale under the next preceding section, and who is not 'accepted by the purchasing tenant, the tenant in actual occupation shall have the right to pre empt the sale.
(2) A tenant desirous of purchasing land under sub section (1) shall make an application in writing w an Assistant Collector of the First Grade having jurisdiction over the land concerned, and the Assistant Collector, after giving notice to the land over and to all other persons interested in the land and after making such inquiry as he thinks fit, shall.
determine the value of 451 the land which shall be the average of the prices obtaining for similar land in the locality during 10 years immediately preceding the date on which the application is made.
" Surja accordingly applied on August 5, 1957, to the Collect or,Hissar District, stating that he intended to purchase the land in dispute and that the land is outside the reserved area of the landowner.
He further alleged that he had been in possession of the land for the last eight years.
Hardeva in his written statement, inter alia, stated that Surja was in possession of the land only for three or four years.
He alleged that Surja had already 150 bighas of cultivable land.
He further stated that the land is reserved and for that reason Surja was not entitled to purchase it.
In his evidence before the Assistant Collector given on March 25, 1958, Hardeva deposed: "The land is reserved.
I do not know whether the land in dispute is reserved or not.", By his order, dated March 31, 1959, the Assistant Collector, Sirsa, held that Surja was entitled to purchase the land in dispute, and, accordingly, fixed the price.
Regarding reservation he observed: "It is admitted by the respondent that they are big land owners and got this land reserved, but later on during his very cross examination, he denied any knowledge about the reservation.
The respondent produced no evidence with regard to having this land got reserved though they are big land owners.
" Hardeva thereupon filed an appeal before the Collector, and one of the grounds taken was that the Assistant Collector erred in holding that the land in dispute was not reserved land.
The Collector, by his order, dated July 20, 1960, dismissed the appeal.
It was common ground before him that Hardeva was a big landowner and that Surja had been in continuous possession of the land in dispute for more than six years, and the only point he determined was whether with the addition of the 28 bighas and 12 biswas of land which Surja had been permitted to purchase his total area would exceed the permissible area or not.
On this point he held in favour of Surja and accordingly dismissed the appeal, .
Hardeva then filed a revision before the Commissioner.
In the grounds of revision dated October 27, 1960, various grounds were taken but there was no ground regarding reservation of land or selection of land under section 5 B of the Act.
On February 1, 1961.
Hardeva filed an application in the Court of the Commissioner.
In this application he stated that the entire land in dis 452 pute was included in the permissible area selected bY him under section 5 B of the Act by submitting form "E".
He further stated that the Financial Commissioner had in Karan Singh vs Angraz Singh (1).
held that selection under section 5 B(1) had the same force as.
reservation under section 5 of the Act, and this disentitled.
Surja from purchasing the land in dispute.
He prayed that he may be allowed to raise the plea of selection under section 5 B (1).
He stated, that tiffs plea involved a question of jurisdiction and in the interest of justice he may be permitted to raise this plea as an additional ground of revision.
The Commissioner allowed the ground to be taken but as Surja 's counsel suspected the bona fides of the selection, the Commissioner sent for the original file and he satisfied himself, after examining the original form "E" and the affidavit in relation to form ' "E", that.
Hardeva had duly submitted the selection document to the Collector within time on June 19, 1958.
It appears that the Financial Commissioner had held in Dhanpat Raf vs State Punjab(2) that the period of six months allowed by section 5 B for making selection would start from March 22, .1958, the date when the Punjab Government Notification proscribing the form was issued.
The Commissioner felt that the selected land could not be purchased under section 18 by the tenant.
lie accordingly submitted the case to the Financial Commissioner with the recommendation.
that the revision petition be accepted and that the orders of the Assistant Collector and the Collector be set aside.
The Financial Commissioner dismissed ,the revision.
He held that as Hardeva had not put forward the plea of selection before the Assistant Collector or the Collector he could not be allowed to do so at that stage.
lie observed: "In other words the consideration that reservation of area under section 5 and selection of area under section 5 B are identical in their effect has no relevance in the present.
cases for the reasons that it was never claimed (except in revision) that the .area .had .been selected under section 5 B.
If such a claim had been made and substantiated, the position would have been .different, but since this. ' was not done, the 'decision against the petitioner cannot be challenged.
it is also clear that there is no question in these eases of authorities concerned having acted without jurisdiction or having exercised.
it with illegality 'or material .irregularity which alone could justify interference 'in revision.
" Hardeva then filed a petition under articles 226 and 227.
of the Constitution.
The Court held that the Financial Commis (1) (1960) 39 Lahore Law Times, 57, (2) (1961) Lahore Law 453 sioner should have accepted.
the recommendation made by.
the Commissioner and accordingly allowed the petition and declared that Surja was not entitled to purchase the land in dispute selected by the land owner under the provisions of 'section 5 B of the Act.
The learned Single Judge was of the view that the disputed question related.
to junsdiction and .went to the root of the whole matter.
It appears that there was some dispute before the learned Single Judge about the date of the selection, because the learned Judge observed: "There is a slight dispute on the question whether the intimation of selection was given on 19th or ' 20th of June, 1958".
He, however.
preferred to accept the finding of the learned Commissioner on the point and gave the land.owner the benefit of it.
He further observed that the question could not have been raised before the Assistant Collector and the Collector because "the prevailing view up till 1960 appears to have been that the selected area had.
not been equated with the reserved area" and it was because of this that Hardeva had not placed it before the Assistant Collector and the Collector although he had placed the point that the area was part of the reserved area.
It seems to us that the High Court was right in holding that the, question whether the land sought to be purchased by Surja was part of the reserved or selected area was a jurisdictional fact.
Under section 18 of the Act a tenant is only entitled to purchase land which as not included in the reserved or selected area of the landowner.
Under section 18(2) the Assistant Collector is only authorized to determine the value of the land after making such enquiries as he thinks fit.
He is not authorized expressly to go into the question whether the land sought to be purchased is included in the reserved or selected area of the land owner or not.
But, obviously it must be the intention that he should go into these questions before embarking on determining the price.
But by wrongly deciding that question he cannot finally confer on himself jurisdiction to deal with the matter.
In exercise of the powers under section 24 of the Act, read with section 84 of the Tenancy Act, the Financial Commissioner had jurisdiction to go into the question whether the Assistant Collector or the Collector had rightly assumed jurisdiction.
It was urged before us that the orders of the Assistant Collector and the Collector were final and could not be assailed on the ground that they had wrongly assumed jurisdiction.
Reliance was placed on authorities.
like Rai Brij Raj Krishna vs section K. Shaw(1) where (1) ; 454 this Court referred to Queen vs Commissioners for Special Purposes of Income Tax (1) and Colonial Bank of Australia vs Willan,(2) That was a case of a suit whereby the order of the Commissioner under the Bihar Buildings (Lease, Rent and Eviction) Control Act, 1947 (section 11) was sought to be declared illegal, ultra vires and without jurisdiction, but we are concerned with the revisional power.of the Financial Commissioner which is the same as that of the High Court.
As observed by Kapur, J., speaking for the Court, in Chaube Jagdish Prasad vs Chaturvedi,.(3) these cases have no application to the exercise of revisional power.
He observed: "The appellant also relied on Rai BrijRai Krishna vs
S.K. Shaw and Bros.(4) where this Court quoted with approval the observations of Lord Esher in Queen vs Commissioner for pecial Purposes of the Income Tax(1) and Colonial Bank of Australia vs Willan(a), where Sir James Colville said: "Accordingly the authorities. establish that an adjudication by a Judge having jurisdiction over the subject matter is, if no defect appears on the face of it, to be taken as conclusive of the facts stated therein and that the Court of Queen 's Bench will not on certiorari quash such an adjudication on the ground that any such fact, however, essential, has been erroneously found." But these observations can have no application to the judgment of the Additional Civil Judge whose jurisdiction in the present case iS to be determined by the provisions of section 5 (4) of the Act.
And the power of the High Court to correct questions of jurisdiction is to be found within the four corners of section 115.
H there is an error which falls within this section the High CoUrt will have the power to interfere, not otherwise.
The only question to be decided in the instant case is as to whether ,the High Court had correctly interfered under section 115 of the Code of Civil Procedure with the order of the Civil Judge.
As we have held above, at the instance of the landlord the 'suit was only maintainable if it was based on the inadequacy of the reasonable annual rent and for that purpose the necessary jUrisdictional fact to be found was the date of the construction of the accommodation and if the court wrongly decided (1) (2) (3) [1959] Supp. 1 S.C.R. 733, 746.
(4) ; 455 that fact and thereby conferred jurisdiction upon itself which it did not possess, it exercised jurisdiction not vested in it and the matter fell within the.
rule laid down by the Privy Council in Joy Chandlal Babu vs Kamalksha Chaudhury(1). ' The High Court had the power to interfere and once it had the power it could determine whether the question of the date of construction was rightly ,or wrongly decided.
The High .Court held that the Civil Judge had wrongly decided that the conStruction was of a date after June 30, 1946, and therfor fell within section 3 A." Similarly, in Jagannath Ramchandra Datar vs Dattaraya Balwant Hingmire(2) this Court observed: "Therefore if it can be shown that the subordinate court without any evidence whatsoever held that the ' transaction in question was not a sale but a mortgage and that the relationship between the parties was that of a debtor and a creditor and on that.
footing proceeded to exercise its power under section 3 and 10 A of the Dekhan Agriculturists Relief Act the High Court would be entitled to interfere with such a decision under both the parts of section 115.
It would then ' be possible to say that the subordinate court had clutched at jurisdiction which it had not under the said section and it would also be possible to say that court had exercised its jurisdiction illegally or with material irregularity.
" It seems to us that the Financial Commissioner did not appreciate the content of his powers of revision under section 24, read with section 84 of the Tenancy Act.
It was obvious from the report of the Commissioner that if the finding arrived at by the Commissioner was accepted the Assistant Collector and the Collector had no jurisdiction in the matter.
In our opinion the Financial Commissioner should have gone into the question whether the Commissioner 's report was acceptable or not on merits.
It is urged by the learned counsel for Surja that the High Court did not decide the question whether the selection had been properly made within time, but it merely, accepted the report of the Commissioner.
He, therefore, still disputes the fact that the selection was made within time.
He also says that it is not a genuine and valid selection.
These points should be gone into by the Financial Commissioner.
Under these circumstances we allow the appeal, set aside the orders passed by the High Court (1) 1949 L.R. 76 I.A. 131.
(2) Civil Appeal No. 585 of 1964 judgment delivered on September 9, 1966.
456 and the Financial Commissioner and remit the case to the Financial.
Commissioner to dispose of the revision filed before him in accordance with law.
There will be no order as to Costs in this appeal. ' Y.P. Appeal allowed.
| IN-Abs | The appellant a tenant of.
the respondent l(a big, land owner).
applied.
for purchase of the.land cultivated by him under section 18 of the Punjab Security of Land Tenures Act, 1953 alleging that he had been in possession of the land for more than.
six years and the land was outside the reserved area of the land oWner.
The respondent alleged.
that th land was reserved.
The Assistant Collector .held that the appellant was entitled.
to purchase the land '.
The respondent filed an appeal t the Collector.
The Collector dismissed the appeal.
The responder then filed a revision to the Commissioner.
While the revision was pending the Financial Commissioner gave a decision in another matter that a selection by land owner under s2 5B(1) for permissible area under the Act had the same force as. 'reservation.under section 5, of the Act.
There respondent thereupon filed an application stating that the entire land dispute was included in the permissible area selected by him under section 5 B and as this disentitled the tenant from purchasing the land prayed that he may be allowed to raise this plea which involved a question of jurisdiction.
The Commissioner satisfied himself that the selection document was filed within time and felt that the land could not purchased and submitted the case to the Financial Commissioner with the recommendation that the.
revision be accepted.
The Financial Commissioner however dismissed the revision holding that as the respondent had not put the plea of selection before Assistant Collector or Collect he could not be allowed to do so at that stage.
The respondent filed a petition in the High Court and the High Court allowed the petitioning that the Financial Commissioner should have accepted the recommendation made by the Commissioner.
In appeal this Court, HELD: The Financial Commissioner should have gone into question whether Commissioner 's report was acceptable or not on merits The question whether the land sought to be purchased by the appellant was part of the reserved or selected area was a jurisdictional f Under section 18 of the Act a tenant is only entitled to purchase land is not included in the reserved or selected area of the land ow Under section 18(2) the Assistant Collector is only authorized to determine the value .of the land after making such enquiries as he thinks fit.
is not authorized expressly to go into the question whether the sought to be purchased is included in the reserved or selected are the land owner or not.
But he should go into these questions be embarking or determining the price and by wrongly deciding.
449 tion he cannot finally confer on himself jurisdiction to deal with the matter.
The revisional power of the Financial Commissioner under section 24 of the Act read with section 84 of the Tenancy Act being the same as that of the High Court in exercise of that power the Financial Commissioner had jurisdiction to go into the question whether the Assistant Collector or the Collector had rightly assumed jurisdiction.
[453 E G] As the question whether the selection by the land owner was made in time and whether it was genuine and valid had to be decided the matter must be remanded to the Financial Commissioner for decision on these points.
Chaube Jagdish Prasad vs Chaturvedi, [1959] Supp. 1 S.C.R. 733, 746 and Jagannath Ramchandra Datar vs Dattaraya Balwant Hingmire, C.A. No. 585 of 1964 dated 9 9 1966, followed.
Rai Brij Raj Krishna vs
S.K. Shaw ; , Queen vs Commissioners for Special Purposes of Income tax, and Colonial Bank of Australia vs Willan L.R. , held inapplicable.
|
ivil Appeals Nos. 1264 and .1265 of 1968.
Appeals from the judgment and order, dated March 18, 1968 of the Patna High Court in Civil Writ Jurisdiction Cases Nos. 235 and 287 of 1967.
C.K. Daphtary, Attorney General, Saptami Jha and B.P. Jha, for the appellant (in both the appeals).
D. Goburdhun, for respondent No.1 (in both the appeals).
B.P. Singh and R.B. Datar, for respondent No. 2 (in both the appeals).
The Judgment of the Court was delivered by Bachawat, J.
Seerval persons including oen Ram Bichar Singh filed applications for the grant of a permanent stage carriage permit for the Chapra Masrakh Siwan Gopalganj route before June 15, 1963 and last date appointed for the receipt of the applications .by the North Bihar Regional Transport Authority.
Ram Bichar Singh died on April 12, 1965 before the final disposal of his application.
His widow Dhani Devi succeeded to the possession of the transport vehicles left by him and accordingly under section 61(2) of the , the Regional Transport Authority,transferred to her all the permits held by him for 509 other routes.
On May 4, 1966, the Regional Transport Authority considered all the applications, allowed Dhani Devi to prosecute the application filed by her husband and directed the grant of the permit to her.
Sant Bihari Sharma, Chandra Kriti Singh and other unsuccessful applicants filed appeals against the order under 64.
At the hearing of the appeals it was contended that the order was without jurisdiction as Dhani Devi had no right to prosecute the application filed by her husband.
The State Transport Appellate Authority accepted the contention, set aside the order appealed from and directed the grant of the permit to Sant Bihari Sharma and in case of his failure to comply with certain conditions gave the second preference to Chandrakriti Singh.
Dhani Devi, .Chandrakiriti Singh and another applicant filed revision petitions against the order under section 64A.
The Transport Minister allowed the revision petition of Dhani Devi and restored the order of the Regional Transport Authority.
He held that the order of the Regional Transport Authority was not without jurisdiction.
Sant Bihari Sharma and Chandrakriti Singh filed two writ petitions in the Patna High Court challenging the said order.
The High Court allowed the petitions, quashed the order for the grant of permit to Dhani Devi and remanded the matter for disposal according to law.
The present appeals have been filed by Dhani Devi against the orders passed by the High Court.
The sole question in this appeal is whether on the death of an applicant for a stage carriage permit in respect of his transport vehicles the Regional Transport Authority has power to allow the person succeeding to the possession of the vehicles to prosecute the application filed by the deceased applicant.
No express provision on the subject is to be found in the or the Rules framed thereunder.
Order 22 of the Code of Civil Procedure does not apply to proceedings under the .
Section 306 of the has no application as no executor or administrator was appointed to the estate of the deceased Ram Bichar Singh. ' No transport vehicle can be used save in accordance with a permit issued under Chapter IV of the .
Four types of permits may be issued under Chapter IV, viz., stage carriage permit, (sections 46 to 48); contract carriage permit (sections 49 to 51); private carrier 's permit, (sections 52 and 53) and public carrier 's permit, (sections 54 to 56).
A person in possession of a transport vehicle is not entitled to a permit as a matter of right, see Verappa Pillai vs Raman & Raman Ltd. (1) His only right is to make an application for the grant of a permit under section 45 and to a consideration of the application in accordance with the provisions of the Act.
If he dies after obtaining the permit, the Regional (1) ; , 591,595.
C1/69 16 510 Transport Authority has power under section 61(2) to transfer the permit to the person succeeding to the possession of the vehicles covered by the permit.
We are inclined to think that in the case of death of the applicant before the final disposal of his application for the grant of a permit in respect of his vehicles the Regional Transport Authority has power to substitute the person succeeding to the possession of the vehicles in place of the deceased applicant and to allow the successor to prosecute the application.
As the relief sought for in the application is dependent upon and related to the possession of the vehicles, the application is capable of being revived at the instance of the person succeeding to the possession of the vehicles.
Under section 57 an application for a stage carriage permit or a public carrier permit must be made within the appointed time and published in the prescribed manner.
The representations relating thereto must also be made before the appointed time.
In the event of the death of an applicant after the expiry of the time appointed for making the applications, the person succeeding .to the possession of the vehicle cannot, having regard to the lapse of time, make another application in his own right.
The successor cannot obtain the permit unless he is allowed to prosecute the application filed by his predecessor and we see no reason why he cannot be permitted to do so.
Where the successor is allowed to prosecute the application, the Regional Transport Authority may have to take into consideration many matters personal to the successor, such as his experience, the facilities at his disposal for operating the services and his adverse record, if any.
The matters personal to the deceased applicant can no longer be taken into account.
The rival applicants should, if necessary be given suitable opportunity to file objections against the grant of the permit to the successor.
Section 57 does not deal with the situation arising on the death of an applicant nor has it prescribed any time for the making of an application for substitution of the successor or for the filing of objections against the grant of the permit to him.
In the absence of any statute or statutory rule the Regional Transport Authority may devise any reasonable procedure for dealing with the situation.
As stated in American Jurisprudence, 2d.
2 (Administrative Law), article 340, p. 155: "Where the statute does not require any particular method of procedure to be followed by an administrative agency, the agency may adopt any reasonable method to carry out its functions." (see also Corpus Juris Secundum, vol.73 (Public Administrative Bodies and Procedure, article 73, p. 399).
The Regional Transport Authority has complete discretion in the matter of allowing or refusing substitution.
It is not bound to embark upon prolonged 511 investigation into disputed questions of succession.
Nor is it bound to allow substitution if such an order will delay the proceedings unreasonably or will otherwise be detrimental to the interests of the public generally.
Under section 57(1) an application for a contract carrier 's permit or a private carrier 's permit may be made at any time, and therefore the Regional Transport Authority can more readily allow the successor to prosecute the application filed by his predecessor.
The Regional Transport Authority may similarly deal with the situation arising on the death of an applicant for the variation of the permit under section 57(8) or the renewal of the permit under section 58.
Likewise, in the case of the death of an applicant during the pendency of an appeal under section 64A or a revision petition under section 64A the appellate or the revisional authority has power if it thinks fit to substitute the successor in place of the deceased applicant in the records of the proceedings.
We may now refer to the relevant decisions on the subject under consideration.
In Ratanlal vs State Transport Authority(1) one Munnalal died during the pendency of appeals filed by him against the orders rejecting his application for the grant of a stage carriage permit and directing the issue of the permit to another applicant.
The appellate authority refused to order substitution of his son Ratanlal in his place.
Ratanlal filed a writ petition challenging the order.
The Allahabad High Court dismissed the petition.
It held that the right to apply for the grant of a permit was not heritable or transferable and Ratanlal 's heir had no right to continue the appeals.
In Meenakshi vs Mysore S.T.A. Tribunal(2) several persons including Gopalassetty applied for the grant of a stage carriage permit.
The Regional Transport Authority decided to grant the permit to another applicant.
Unsuccessful applicants other than Gopalassetty filed appeals against the order.
During the pendency of the appeals Gopalassetty died.
The appellate tribunal allowed the appeals and remanded the matter to the Regional Transport Authority for fresh disposal.
After the matter went back to the Regional Transport Authority, the widow of Gopalassetty was substituted in his place and was allowed to prosecute the application presented by him.
On a consideration of all the applications the Regional Transport Authority granted the permit to the widow of Gopalassetty.
The order was set aside by the appellate tribunal on the ground inter alia that the widow could not continue the application filed by Gopalassetty.
On a writ petition filed by the widow, the Mysore High Court set aside the order of the appellate tribunal and restored the order of the Regional Transport Authority.
It held that the application presented by Gopalassetty could be (1) A.I.R. 1957 All. 471.
(2) A.I.R. 512 prosecuted by his widow.
The decision of the Mysore High Court was reversed by this Court on another point in Hanuman Transport Ca.
vs Meenakshi(1).
But this Court then declined to express any opinion on the question whether the successor can be permitted to prosecute the application filed by his predecessor.
In Maruthuvanan vs Balasubramaniam(2) two partners of a firm filed an appeal ' from an order rejecting their application for the grant of a permit.
During the pendency of the appeal one of the partners died.
The Madras High Court held that the appeal could be continued by the surviving partner.
In Kuppuswami vs Ramchandran(3) one Lakshimi applied for a variation of the stage carriage permits held by her.
Her application was rejected by the Regional Transport Authority.
She filed a revision petition against the order under section 64A.
During the pendency of the revision petition she died.
The State Transport Appellate Tribunal permitted the guardian of her minor legal representatives to continue the revision petition, set aside the order of the Regional Transport Authority and granted the variation sought for.
Two of the rival operators filed writ petitions challenging the order.
The Madras High Court held that the legal representative of Lakshimi could continue the revision petition.
For the reasons already given, we are not inclined to agree with the Allahabad decision.
In Director of Public Works vs Ho Po Sang & Ors.(4) the Privy Council held that the right of a crown lessee of premises in Hongkong to get petition and cross petition for the grant of a rebuilding certificate pursuant to the proposal of the Director of Public Works to be considered by the Governor in Council under sec.
3B of the Landlord and Tenant Ordinance (Hong Kong), 1947 was not a right or a privilege either accrued or acquired within the meaning of see.
10 of the Interpretation Ordinance of Hong Kong, corresponding to sec.
38 of the Interpretation Act, 1889 and that on the repeal of the Ordinance, the proceedings could not be continued and the Governor could not pass any order under section 3B.
This decision is not relevant, as we are not concerned in the present case with the effect of repeal of the on a pending application for the grant of a permit.
Let us now turn to the facts of the present case.
The appellant 's husband Ram Bichar Singh made 'an application for the grant of a stage carriage permit.
Upon his death during the pendency of the application, the Regional Transport Authority allowed the appellant to prosecute the application filed by him. ' She made no formal application for substitution; but no objection was raised on that ground nor was any adjournment asked (1) C.A.No. 794/63 decided on 20 12 1963.
(2) A.I.R.1963 Mad. 292.
(3) A.I.R.1964 Mad. 356. (4) ; 513 for by the rival claimants in order to enable them to file objections.
Ram Bichar Singh is said to have left behind other heirs also, but no objection was taken on the ground of their nonjoinder.
The Regional Transport Authority directed the grant of the permit to the appellant.
On the materials on the record, the Regional Transport Authority found that the appellant was an experienced and displaced operator.
That finding was not challenged in appeal.
The only point taken in the appeal was that the application of Ram Bichar Singh had abated and that the Regional Transport Authority had no power to allow her to continue the application.
The Appellate Authority accepted the contention and set aside the order directing the grant of the permit to the appellant.
The Transport Minister rightly set aside the order of the Appellate Authority and held that the Regional Transport Authority has power to permit her to prosecute the application filed by her deceased husband.
In our opinion, the High Court was in error in setting aside the order of the Transport Minister.
In the result, the appeals are allowed, the order of the High Court is set aside and the order of the Transport Minister is restored.
There will be no order as to costs.
G.C. Appeals allowed.
| IN-Abs | The appellant 's husband was one of the applicants for a permanent stage carriage permit on a route under the jurisdiction of the North Bihar Regional Transport Authority.
On her husband 's death during the pendency of the aforesaid application, the appellant came into possession of all his transport vehicles.
The Regional Transport Authority allowed the appellant to prosecute the application and directed the grant of the permit to her.
The appeal filed by the unsuccessful applicants against this order was allowed by the State Transport Authority but the Transport Minister, in revision under section 64A of the , decided in favour of the appellant.
Against the orders of the Transport Minister writ petitions were filed in the High Court and were allowed.
The ,appellant came to this Court.
The question for consideration was whether on the death of an applicant for a stage carriage permit in respect of his transport vehicles the Regional Authority has power to a11ow the person succeeding to the possession of the vehicles, to prosecute the application filled by the deceased applicant.
HELD: The High Court was in error in setting aside the order of the Transport Minister., A person in possession of a transport vehicle is not entitled to a permit as a matter of right.
His only right is to make an application under section 45 of the and to a consideration of the application under the provisions of the Act.
If he dies after obtaining the permit, the Regional Transport Authority has power under section 61(2) to transfer the permit to the person succeeding to the possession of the vehicles covered by the permit.
In the case of death of the applicant before the final disposal of his application for the grant of a permit in respect of his vehicles the Regional Transport Authority has power to substitute the person succeeding to the possession of the of the. deceased applicant.
As the relief sought for in the application is dependent upon and related to the possession of the vehicles, the application is capable of being revived at the instance of the person succeeding to the possession of the vehicles.
[509 G 510 C] Verappa Pillai.v.
Raman.
& Raman Ltd., ; , 591, 595.
referred to.
Under section 57 an application for a stage carriage permit or a public carrier permit must be made within the appointed time and published in the prescribed manner.
The representations relating thereto must also be made at the appointed time.
In the event of the death of the applicant after the expiry of the time appointed for making the application, the person succeeding to the possession of the vehicles cannot, having regard to the lapse of dine, make another application in his own right.
508 The successor cannot obtain the permit unless he is allowed to prosecute the application filed by his predecessor and there is no reason why he cannot be permitted to do so.
Section 57 does not deal with the situation arising on the death of an applicant nor has it prescribed any time for the making of an application for substitution of the successor or for the filing of objections against the grant of the permit to him.
In the absence of any statute or statutory rule the Regional Transport Authority may devise any procedure for dealing with the situation.
The Regional Transport Authority has complete discretion in the matter of allowing or refusing substitution.
It is not bound to embark on a prolonged investigation into disputed questions of possession.
Nor is it bound to allow substitution if such order will delay the proceedings unreasonably or will otherwise be detrimental to the interests of the public generally.
[510 C 511 A] The same principle would apply to applications under sections 57(1), 58(8) and 58, as well as to appeals under section 64, and revisions under section 64A. [511 B] Ratanlal vs State Transport Authority, A.I.R. 1957 All 471, disapproved Meenakshi vs Mysore S.T.A. Tribunal, A.I.R. 1963 Mys. 279, Hanuman Transport Co. vs Meenakshi, C.A. No. 794/63 dt.
20 12 63, Maruthavanan vs Balasubramaniam A.I.R. 1963 Mad. 292, Kuppu swarmi vs Ramchandran, A.I.R. 1964 Mad. 356, and Director of Public 'Works vs Ho Po Sang & Ors., [1961] A.C. 901, referred to.
|
Appeal (Civil Appeal No. 28 of 1950) from a judgment and decree of the High Court of Judicature at Bombay dated 19th March, 1945, in Appeals Nos.
68 and 190 of 1942.
H.D. Banaji (V. R. Desai, with him) for the appellants.
M.C. Setalvad, Attorney General for India (G. N. Joshi, with him) for the respondent.
February 5.
The judgment of the Court was deliv ered by MAHAJAN J.
This is an appeal from a judgment of the High Court of Judicature at.
Bombay modifying the decree of the trial court and decreeing partially the plaintiff 's suit.
The appellants are the legal representatives of the original plaintiff Haji Ali Mohamed Haji Cassum.
The State of Bombay is the respondent.
The facts giving rise to this Controversy, briefly stated, are as follows ; 35 268 Village Dahisar originally formed part of the Malad Estate comprising in all eight villages.
The said estate was conveyed by the East India Company to two Dady brothers for valuable consideration by a deed of indenture dated the 25th January, 1819.
By that conveyance all the lands in the eight villages were conveyed absolutely to the said purchas ers and it was covenanted by the Company that the purchas ers, their heirs and assigns shall peaceably and quietly enjoy the said villages and receive and take the rents and profits thereof without any hindrance or interruption from the said Company.
By a sale deed dated the 13th December, 1900, Haji Cassum, father of the plaintiff, purchased the village of Dahisar from its proprietors for a price of Rs. 1,30,000 and after his death the plaintiff became the pro prietor thereof and as such received rents and assessment from the tenants and holders of the lands in the village according to the rights prevailing under the survey settle ment which had taken place in the village about the year 1864 65.
In the year 1879 the Bombay Land Revenue Code was enact ed.
Section 48 of the Code is in these terms : "48.
(1) The land revenue leviable on any land under the provisions of this Act shall be assessed, or shall be deemed to have been assessed, as the case may be, with reference to the use of the land (a) for the purpose of agriculture, (b) for the purpose of building, and (c) for a purpose other than agriculture or building.
(2) Where land assessed for use for any purpose is used for any other purpose, the assessment fixed under the provi sions of this Act upon such land shall, notwithstanding that the term for which such assessment may have been fixed has not expired, be liable to be altered and fixed at a differ ent rate by such authority and subject to such rules as the Provincial Government may prescribe in this behalf . . . " 269 After the Act came into force, the Government drafted rules under the provisions of section 214 for promulgation.
The inamdars represented to the Government that the rules should be so framed as not to prejudice their rights under the conveyances executed by the Company in their favour.
The draft rules were promulgated by a notification issued on the 5th June, 1907.
On that date, the Government adopted a resolution ordering that the rules be promulgated and also giving an assurance to the inamdars to the following effect : "Government will, however, be prepared to amend or abrogate these rules if they are found to be detrimental in any material respects to the interests of the inamdars.
" Rule 92 is one of the rules promulgated under the provisions of the Act and it runs thus : "When land assessed for purposes of agriculture only is subsequently used for any purpose unconnected with agricul ture the assessment upon the land so used shall, unless otherwise directed by Government, be altered under sub section (2) of section 48 by the collector in accordance with rules 81 to 87 inclusive." On the 25th July, 1923, the plaintiff requested the Commissioner of Bombay, Suburban District, for a revision of the survey of Dahisar village.
He executed an agreement under the provisions of section 216 of the Bombay Land Revenue Code and made a formal application in that behalf as required by the Code and the rules made thereunder.
The Commissioner by his letter dated the 14th March, 1925, authorised the extension of the provisions of chapters 8 and 9 of the Land Revenue Code to the village in question.
The plaintiff also deposited the necessary expenses required for the revision of the survey.
The revision was made by the Superintendent of the Land Records who submitted his report to the Commissioner on the 15th December, 1926.
This report was sanctioned by Government.
The order sanctioning the revised survey was communicated to the plaintiff on the 23rd 270 December, 1927.
Under the revised survey the assessment of Rs. 4,217 on the village lands was increased to Rs. 6,057 3 2, and the plaintiff from that date started recover ing the increased assessment from the tenants of the lands in the village.
At the time of the revision of the survey it was found that nine plots of land comprised in eleven field numbers which were formerly agricultural had been built upon and these were being used for non agricultural purposes.
The survey officer formed them into a separate group and showed them as kharaba and no assessment, either agricultural or non agricultural, was levied on these nine plots and the plaintiff could not therefore recover any assessment in respect of these plots after 1926.
On the BOth April, 1934, he requested the Collector to assess non agricultural assessment on these plots.
This request was refused by the Collector on the 17th July, 1935, in these terms: "With reference to your letter dated 30 4 1934, I have the honour to state that I regret your request cannot be granted.
" It has to be observed that this refusal was in contra vention of the provisions of rule 92 which imposes on the Collector a duty to make alteration in the assessment, unless he has been directed to the contrary by Government.
It was not denied that by the 17th July, 1935, no such direction had been given to the Collector by Government.
If the Collector had done his duty as enjoined by rule 92, this lengthy and unnecessary litigation might well have been avoided.
Against the order of the Collector the plaintiff ap pealed to the Commissioner.
In his appeal he pointed out that certain additional lands in the village had been con verted to non agricultural uses subsequent to the revision of the survey in 1926.
The Commissioner declined to inter fere.
This information was conveyed by the Collector to the counsel for the plaintiff on the 22nd May, 1937.
Against the Commissioner 's decision, the plaintiff appealed to the Governor in Council and 271 on the 20th December, 1937, he received a copy of the fol lowing communication from Government to the Commissioner : "The undersigned presents compliments to the Commis sioner, Northern Division, and with reference to his letter, No. L.N.D. 3124, dated 20th April, 1936, on the subject noted above, is directed to invite his attention, to the orders issued in Government Resolution, No. s235/3a, dated 8th March, 1937, and to state that Government confirm the action of the Collector, Bombay Suburban District, in refusing the Khot 's request for the levy of nonagricultural assessment in the village of Dahisar.
By order of the Governor in Council, for Under Secretary to the Government of Bombay.
" In order to find out whether there was any resolution of the Government as mentioned in the above communication, during the pendency of the suit the plaintiff issued the following interrogatory to the Government of the State of Bombay : "When was the decision, not to assess the lands men tioned in Schedule II of the plaint and other lands under rule 92, referred to in para.
8 of their written statement arrived at by the Government ? Produce a copy of the said decision which may have been embodied in a Government resolution along with the opinion of the Government officers with which Government may have concurred.
" The answer given on behalf of the State Government to this question was as follows : "(8) Government Memorandum, Revenue Department, No. 5235 B/33, dated the 8th March, 1937, confirmed the Collec tor 's action in refusing the proprietor 's request for the levy of non agricultural assessment. ' ' This answer indicates that the Government acting under rule 92, neither adopted any resolution nor issued any notification giving any directions to the Collector contrary to the provisions contained in that 272 rule.
All that it did was to confirm the Collector 's order rejecting the request of the plaintiff for making the as sessment of non agricultural lands in the village.
During the interval between 1927 37 a large number of plots of land mentioned in schedule II were put to non agricultural uses by the tenants in possession of them and a number of buildings were constructed thereupon.
The plain tiff having failed in persuading the Government to make an assessment under rule 92 of such lands, after service of notice under section 80 of the Code of Civil Procedure, instituted the present suit, (a) for a declaration that he was entitled to have nonagricultural assessment made on all lands in the village of Dahisar which were used or which may thereafter be brought into use for purposes other than agricultural, and (b)for an order that the Collector of Bombay, Suburban District, be directed to determine the amount of non agricultural assessment on the lands mentioned in schedules I and II of the plaint and to levy the same under clause 2 of rule 96 and pay it to the plaintiff, or in the alternative, to direct the defendant to issue a commission to the plaintiff under section 88 of the Land Revenue Code.
Schedule I gave details of the nine plots of land that had been converted into non agricultural use before the survey of 1926, while schedule II gave details of those lands which since 1926 up to the date of the suit had been converted to such use.
The plaintiff also claimed damages to the extent of Rs. 120 as compensation for loss of agricultural assessment for six years in respect of lands mentioned in schedule I and he claimed similar damages to the extent of Rs. 300 for loss of non agricultural assess ment in respect of the other lands.
He also claimed future damages and costs.
The suit was resisted by the State Government on a number of grounds.
It was contended that it was barred under section 4 (c) of the Revenue Jurisdiction Act and under article 14 of the Indian Limitation Act.
On the merits it was pleaded that the action of the survey officer and the Collector in refusing to levy non agricultural assessment on lands contained in the 273 two schedules was lawful and proper and that the civil court could not question the discretion of the Government in such matters.
The trial Judge negatived all the technical objections raised by the defendant and on the merits held that the Collector 's action in refusing to levy nonagricultural assessment on the lands in question was wrongful.
He, there fore, granted the declaration prayed for.
He, however, refused to give further relief to the plaintiff and disal lowed the prayer for a direction for levying non agricultur al assessment on the lands given in the two schedules and for paying it to the plaintiff.
He observed that the Govern ment would be well advised if it levied such assessment and paid it to the plaintiff.
Two appeals were taken to the High Court against the decree of the trial Judge.
That Court modified this decree and granted a declaration to the plaintiff that he was entitled to receive non agricultural assessment on all lands which are and which may hereafter be used for non agricul tural purposes.
It ordered the defendant to levy such altered assessment on the lands mentioned in schedule I and decreed consequential damages to the plaintiff in respect to these lands.
As regards the lands in schedule II, the plain tiff 's suit for a direction to assess and levy non agricul tural assessment on them was dismissed.
The court drew a distinction between lands that had been converted to non agricultural use before the survey of 1926 and those which had since then been converted to such use.
As regards the former, it was held that the survey officer had erroneously declined to make non agricultural assessment on those lands and his action was ultra vires.
Relief was given to the plaintiff regarding those lands as prayed for.
As regards the latter, it was held that it was within the discretion of the Government to order an alteration of the assessment on such lands and this discretion could not be questioned in a court of law.
The plaintiff being dissatisfied with this part of the decision made an application for leave to appeal to.
the Privy Council on the 15th 274 September, 1945.
During the pendency of the application the plaintiff died and his heirs and executors were implead ed as his legal representatives.
A certificate for leave to appeal to the Privy Council was granted on the th February, 1947, and the appeal preferred under the certificate is now before us for decision.
There is no controversy in this appeal as regards the reliefs that have been given to the plaintiff by the High Court.
The appeal concerns the fur ther relief refused to the plaintiff in respect to the lands mentioned in schedule II.
It was contended on behalf of the appellant that under the terms of the conveyance dated 25th January, 1819, and of the covenants contained therein it was not open to the Government or the Collector to refuse the alteration of the assessment claimed by the plaintiff and that the Government could not give any direction under rule 92 which would be contrary to these covenants and assur ances.
It was said that the Government was bound to use its power to levy assessment as trustee for the transferee and that the exercise of this power could not be arbitrarily refused by it.
It was urged that the Government Resolution dated 5th June, 1907, clearly indicated that the rules framed under the Land Revenue Code were not intended to affect adversely the owners of alienated lands and the Collector was bound to make an assessment as required by the plaintiff.
Lastly, it was argued that as a matter of fact Government never exercised its power under rule 92 and never gave a direction to the Collector to a contrary effect and that the mere affirmation of the erroneous order of the Collector by Government did not amount to a direction con templated by the provisions of rule 92.
Having considered this case in all its aspects, we have reached the decision that the High Court 's decision have in so far as it refused relief to the plaintiff in respect to the lands mentioned in schedule II should be reversed.
Rule 92 cited in the earlier part of this judgment in imper ative terms directs the Collector to alter the assessment in case agricultural lands are Converted to non agricultural use.
The Collector has 275 no option in the matter and as soon as an application is made to him he should proceed to make an assessment and levy it on the non agricultural lands.
When the Collector de clined to accede to the request of the plaintiff he acted in contravention of the clear provisions of the rule, because admittedly at that time no "directions to the contrary" had been given to him by the Government.
There was no resolu tion of the Government in existence and no notification had been issued under the provisions of rule 92 directing the Collector not to make an alteration in the assessment when required to do so.
The Commissioner, in dismissing the plaintiff 's appeal, also contravened the provisions of rule 92.
When the matter went up in appeal to the Governor in Council, no decision was taken under the provisions of rule 92.
The High Court assumed that the confirmation of the action of the Collector by the Government amounted to a direction by the Government to the contrary in respect of the lands in question.
We are unable to agree with this conclusion.
When Gov ernment has been given the power to give directions to the Collector not to act in accordance with the imperative provisions of a rule which enjoin upon him to make the altered assessment, that power has to be exercised in clear and unambiguous terms as it affects civil rights of the persons concerned and the decision that the power has been exercised should be notified in the usual manner in which such decisions are made known to the public.
It was conceded by Mr. Joshi that no such decision was taken by Government and no direction was issued by Government under rule 92 Dismissal by the Government of the plaintiff 's appeal and affirmation by it of an erroneous order of the Collector could not be held to amount to action under the provisions of rule 92.
In these circumstances, the plaintiff was clearly entitled to further relief in respect to lands mentioned in schedule II and a direction should have been issued to the State Government for making altered assessment on non agricultural lands and levy it on them and pay it to the plaintiff.
36 276 Mr. Joshi contended that the true effect of the provi sions contained in section 48 (2) and rule 92 was that the Government was not bound to levy altered assessment on lands converted to non agricultural use, that the section merely provided that the persons in possession of land were liable for such assessment but it did not say that it was obligato ry on the Government to make it and that the court had no jurisdiction to interfere with the discretion of the Govern ment in the matter.
We think that when a liability is imposed by a statute, that liability cannot be defeated by the exercise of any discretion by Government or by making rules which may negative that liability, but it is not necessary in this case to finally decide the point as the appeal stands decided otherwise.
It is also unnecessary to express an opinion as to the precise scope of the power conferred on Government by the language of rule 92.
The plaintiff 's learned counsel very properly did not press his appeal in respect to the claim of damages concern ing lands mentioned in schedule II.
Plaintiff 's suit to that extent fails.
For the reasons given above the appeal is allowed and the plaintiff 's suit is decreed with costs except in regard to the claim for damages in respect to the lands mentioned in schedule II.
The defendant is directed to make an assess ment on lands mentioned in schedule II in the same way as in respect of the lands mentioned in schedule I and levy the same and pay it to the plaintiff.
Appeal allowed.
| IN-Abs | Rule 92 of the rules issued under the Bombay Land Reve nue Code, 1879, provided that when land assessed for pur poses of agriculture only is subsequently used for any purpose unconnected with agriculture, the assessment upon the land so used shall unless otherwise directed by the Government be altered under section 48 (2) by the Collector in accordance with rr.
81 to 87: Held, that as the rule imposes an imperative duty on the Collector to alter the assessment, the power which has been given to the government to give directions to the Collector not to act in accordance with the imperative provisions of the rule has to be exercised in clear and unambiguous terms as it affects civil rights of the persons concerned and the decision that the power has been exercised must be notified in the usual manner.
Where the Government did not pass any resolution or issue any directions to that effect but merely confirmed on appeal an order of the Collector rejecting an application to assess nonagricultural assessment on agricultural lands which had been used for building purposes: Held, that the confirmation of the Collector 's order by the Government did not amount to a direction to act otherwise within the mean ing of r. 92 and the applicant was entitled to have the assessment on the lands altered under section 48(2) in accordance with rr.
81 to 87 as laid down in r. 92.
|
Appeal No. 2 of 1954.
Appeal under article 132 (1) of the Constitution of India from the Judgment and Order dated the 10th September, 1953, of the High Court of Judicature at Nagpur in Miscellaneous Petition No. 123 of 1953.
M. C. Setalvad, Attorney General for India (P. P. Naik and I. N. Shroff, with him) for the appellant.
M. K. Nambiar (Rajinder Narain, with him) for the respondent.
B. Sen and P. K. Bose for the Intervener (State of West Bengal).
May 13.
The circumstances under which the above Resolution came to be adopted may be briefly mentioned.
Consequent on the war, there was a phenomenal rise in the price of foodstuffs and of other essential commodities, and among the persons worst hit by it were the Government servants.
As a measure of relief to them, the Central and the Provincial Governments sanctioned a grant of grain allowances to them under various Resolutions passed in 1940.
The scheme adopted by the Central Government was that its employees stationed in various Provinces received the same benefit as the respective Provincial Government employees.
But this scheme was found to be unsuitable for employees of the Central Government, as the allowances granted by the Provincial Governments were not uniform.
On 10th May, 1946, the Central Government appointed a Central Pay Commission, hereinafter referred to as the Commission, to enquire into and 601 report on the conditions of service of its employees with particular reference to I 'the structure of their pay scales 'and standards of remuneration with the object of achieving a rationalisation, simplification and uniformity to the fullest degree possible.
" The Commission, which was presided over by Sir section Varadachariar, recommended by its report dated 3rd May, 1947, the grant of dearness allowance on a specified scale.
On 27th May, 1947, the Government of Central Provinces and Berar appointed a Pay Committee, hereinafter referred to as the Committee, "to examine the recommendations of the Central Pay Commission and to report the extent to which and the modifications subject to which these recommendations should be accepted by the Provincial Government, so far as Government servants under its rule making control are concerned." By its report dated 22nd June, 1948, the Committee recommended the grant of dearness allowance on a scale which, though practically identical with that adopted by the Commission in respect of salaries above Rs. 400 per mensem, was less than it as regards salaries of Rs. 400 per mensem or less.
These recommendations were accepted by the Government by its Resolution dated 16th September, 1948.
This difference in the result between the two scales not unnaturally caused considerable dissatisfaction among the employees concerned, and after unsuccessful attempts to get redress on the executive side, they filed through their representative, the respondent, the present application under article 226 of the Constitution.
In the petition it was alleged that "the State Government should have uniformly adopted the Government of India rates for all its servants and the discrimination in making the two fold slab and accepting the Government of India rates for one slab, i.e., for servants receiving salary over Rs. 400, and not accepting them in respect of the other slab, i.e., of servants drawing below Rs. 400, is highly discri minatory," that "the State Government servant has a right to be treated equally with the Central Government servant similarly situated," and that "every servant has these fundamental and natural rights and 77 602 the petitioner and the members of the Ministerial Services Associations have a right to demand from the respondent the Dearness Allowance at the Government of India rates.
" The petitioner then prayed: "That declaring that all ministerial servants are entitled to the Government of India rates of Dearness Allowance or in any case adequate Dearness Allowance, the State Government should be directed by a writ of mandamus or by any other suitable writ or direction to cancel the discriminatory rules of Dearness Allowance and adopt the Government of India rates to all servants without discrimination or in any case, to provide with adequate rates of Dearness Allowance sufficient to provide reasonable subsistence for them." The Government contested the petition on the grounds, firstly, that the claim for dearness allowance was not justiciable, and secondly, that the difference in the scales of dearness allowance adopted by the Commission and by the Committee did not violate article 14.
The learned Judges (Sinha C.J. and Bhutt J.) held that under the rules dearness allowance was placed on the same footing as pay, and that the claim relating thereto was therefore justiciable; and that the differentiation made between the employees of the Central Government and of the State Government in the matter of the grant of dearness allowance rested on "no intelligible and reasonable basis," and that the Resolution dated 16th September, 1948, was therefore bad.
They accordingly issued a direction to the State Government that they do reconsider the question of dearness allowance payable to the employees concerned.
It is against this judgment that the present appeal has been preferred by the State Government on a certificate granted under article 132(1) of the Constitution.
It is argued on behalf of the appellant firstly that grant of dearness allowance is a matter ex gratia and not justiciable, and that neither a writ of mandamus nor any direction could be issued with reference thereto, and secondly, that the Resolution dated 16th September, 1948, is not hit by article 14 of the Constitution.
In our opinion, both these contention are well founded 603 On the first question, Rule 44 of the Fundamental Rules runs as follow: "Subject to any restrictions which the Secretary of State in Council may by order impose upon the powers of the Governor General in Council or the Governor in Council, as the case may be, and to the general rule that the amount of a compensatory allowance should be so regulated that the allowance is not on the whole a source of profit to the recipient, a Local Government may grant such allowance to any Government servant under its control and may make rules prescribing their amounts and the conditions under which they may be drawn.
" Under this provision, it is a matter of discretion with the local Government whether it will grant dearness allowance and if so, how much.
That being so, the prayer for mandamus is clearly misconceived, as that could be granted only when there is in the applicant a right to compel the performance of some duty cast on the opponent.
Rule 44 of the Fundamental Rules confers no right on the Government servants to the grant of dearness allowance; it imposes no duty on the State to grant it.
It merely confers a power on the State to grant compassionate allowance at its own discretion, and no mandamus can issue to compel the exercise of such a power.
Nor, indeed, could any other writ or direction be issued in respect of it, as there is no right in the applicant which is capable of being protected or enforced.
The learned Judges of the High Court relied on certain rules which put dearness allowance on the, same footing as pay for certain purposes, and held on the authority of the decision in The Punjab Province vs pandit Tara Chand(1) that the present claim was justiciable.
But The Punjab Province vs Pandit Tara Chand was an action for recovery of arrears of salary, land it was held that under the law of this country which differed in this respect from that of England, arrears of salary were a debt due by the Government, that they could be attached in execution of a decree under section 60, Civil Procedure Code, as a debt, and that on that basis an action to recover the same was (1) 604 maintainable.
This decision was quite recently approved by this Court in State of Bihar vs Abdul Majid(1), wherein it was pointed out that salary was not in the nature of a bounty, and that whatever was recoverable by a Petition of Rights in England could be recovered by action in this country.
This question may therefore now be taken to be settled beyond controversy.
But we are not concerned in the present proceedings with any debt payable by the Government.
The claim is not to recover arrears of dearness allowance which had accrued due under the rules in force relating thereto.
The claim now put forward its to compel the Government to grant dearness allowance at a particular rate, and under Rule 44 of the Fundamental Rules, such a claim is a matter of grace and not a matter of right.
In England, no petition of right will lie in respect of such a claim.
The position is thus stated in Halsbury 's Laws of England, Volume IX, page 688, Note (s) @: " It is erroneous to suppose that a petition of right will lie for matters which are of grace and not of right.
[De Bode (Baron) vs R.(2).]" That is also the law in this country where an action is a substitute for a petition of right.
In the result, we must hold that the matters raised in the petition are not justiciable.
Mr. Nambiar, the learned counsel for the respondent, did not dispute the correctness of this position.
But he argued that when once the Government passed 'a Resolution fixing a scale of allowance under Rule 44, that would be law as defined in article 13(3)(a) of the Constitution, and if that law infringed, article 14, it could be declared void.
That is a contention which is clearly open to him, and the question therefore that falls to be decided is whether the Resolution dated 26th September, 1948, is bad as infringing article 14.
Now, the scheme which has been adopted in the impugned Resolution is firstly that dearness allowance if; to I be paid to the employees on a scale graded according to pay, different rates being adopted for different slabs and there being a progressive reduction (1) ; (2) 13 Q. B 364 exhibit Ch.
at P 387 605 of the rate from the lowest to the highest category.
No contention is raised that fixing different rates of dearness allowance for different slabs of pay is obnoxious to article 14.
Secondly, within any given slab, the scheme places all the employees in the same position, except that in the lowest ranks a slightly higher rate is fixed for residents in the cities of Nagpur and Jubbulpore, which again has not been attacked as discriminatory.
These being the features of the scheme, there can be no room for the contention that it has made any discrimination.
Mr. Nambiar does, not contend that there is anything in the scheme or in the Resolution adopting it, which bring s it within the prohibition enacted in article 14.
His contention is that the Committee whose recommendations were accepted by the Government adopted the rates suggested in the report of the Commission as regards Government servants who drew a monthly salary of.
over Rs. 400, but when they came to those employees who drew a monthly salary of Rs. 400 or less, they discarded the rates fixed by the Commission, and, instead, adopted different and lower rates, and that this was discrimination hit by article 14.
In other words, the impugned Resolution, though valid in itself as not infringing article 14, becomes void under that provision when it is taken in conjunction with the report of the Commission.
We do not find anything in article 14 which supports this somewhat startling contention.
Under the Constitution, the Union and the States are distinct entities, each having its own executive and Legislature, with their powers well defined.
Article 12 defines "the State" as including the Government and the Legislature of each of the States.
Article 13(2) enacts that the State shall not make any laws taking away, or abridging the rights conferred by Part III, and article 14 enacts that, "The State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.
" On these provisions, the position is that when a law is impugned under article 13, what the Court has to 606 decide is whether that law contravenes any of the provisions of Part III.
If it decides that it does, it has to declare it void; if it decides that it does not, it has to uphold it.
The power of the Court to declare a law void under article 13 has to be exercised with reference to the specific legislation which is impugned.
It is conceivable that when the same Legislature enacts two different laws but in substance they form one legislation, it might be open to the Court to disregard the form and treat them as one law and strike it down, if in their conjunction they result in discrimination.
But such a course is not open where, as here, the two laws sought to be read in conjunction are by different Governments and by different Legislatures.
Article 14 does not authorise the striking down of a law of one State on the ground that in contrast with a law of another State on the same subject its provisions are discriminatory.
Nor does it contemplate a law of the Centre or of the State dealing with similar subjects being held to be unconstitutional by a process of comparative study of the provisions of the two enactments.
The sources of authority for the two statutes being different, article 14 can have no application.
The result, therefore, is that the scale of dearness allowance recommended by the Commission and sanctioned by the Central Government can furnish no ground for holding that the scale of dearness allowance recommended by the Committee and adopted by the appellant is repugnant to article 14.
It may no doubt ,sound hard that Government servants doing work of a similar kind and working, it may be, even in the same place, should receive different allowances; but the rights of the parties have to be decided on legal considerations, and it is impossible to hold that the Resolution in question is bad under article 14.
It was argued on behalf of the appellant that the assumption underlying the argument of the respondent with reference to article 14 that the Committee had adopted the Report of the Commission in part and rejected it in part was itself without foundation.
In the view we have taken on the applicability of article 14, this question has no practical importance; but as 607 all the materials have been placed before us, we may briefly express our opinion thereon.
In paragraph 80 of the Report the Committee observed that while the Commission based its scale on the cost of living index, they themselves adopted the current level of prices as the basis for fixation of dearness allowance.
In paragraph 83 they further observed that in fixing the scale on the basis of the cost of living index the element of pay had also been taken into account, but that as they had revised the scale of basic pay, they were not including it in fixing the dearness allowance.
In paragraph 31, they observed that unlike the Commission they were taking into consideration the financial resources of the State in fixing the scale.
Thus, the Committee approached the problem from a different angle, and applied different principles in fixing the scale of dearness allowance; and if the two schemes produced the same results at some stages, that was due to coincidence and not to adoption of the report of the Commission by the 'Committee.
Mr. Nambiar also referred us to two Resolutions of the appellant dated 4th January, 195 1, and 6th October, 195 1, adopting the scale fixed by the Commission in respect of certain other categories.
That has no bearing on the question whether the Committee whose recommendations were approved by the Government had adopted in part the Report of the Commission so as to result in discrimination.
The facts stated above show that the Committee went into the matter independently, and viewed the question from a different standpoint; and in formulating the scheme which they did, they did not adopt the Report of the Commission, though they derived considerable assistance from it.
In the result, this appeal must be allowed and the petition of the respondent dismissed; but in the circumstances, there will be no order as to costs either here or in the Court below.
Appeal allowed.
| IN-Abs | The Government of Central Provinces and Berar (Now State of Madhya Pradesh) fixed in 1948 a scale of dearness allowance for its servants which though practically identical with the scale of dearness allowance fixed by Central Government in respect of salaries over Rs. 400 per mensem was less than it in respect of salaries for Rs. 400 per mensem or less.
The petitioner State government servant challenged the validity of the order of the State Government on the ground that his fundamental right under article 14 of the Constitution had been violated inasmuch as he had a right to be equally treated with the Central Government Servants similarly situated.
Held, that under the provisions of Rule 44 of the Fundamental Rules it is a matter of discretion with the local Government whether it will grant dearness allowance to any Government servant and if so how much.
It imposes no duty on the State to grant it and therefore no mandamus can issue to compel the State to grant it nor can any other writ or direction be issued in respect of it as there is no right in the Government servant which is capable of being protected or enforced.
Article 14 does not authorise the striking down of a law of one State on the ground that in contrast with a law of another State on the same subject its provisions are discriminatory.
Nor does it contemplate a law of the Centre or of the State dealing with similar subjects being held to be unconstitutional by a process of comparative study of the provisions of two enactments.
The sources of authority for the two statutes being different, Article 14 can have no application.
Therefore 'the scale of dearness allowance sanctioned by the Central Government can furnish no ground for holding that the allowance sanctioned by the Government of Central Provinces and Berar is repugnant to Article 14.
The State Government was entitled to fix the Government of India rates for one slab and Ali; different rates for another slab, 600 The Punjab Province vs Pandit Tara Chand ([1947] F.C.R. 89), and State of Bihar V. Abdul Majid ([1954] S.C.R. 786) distinguished.
|
: Criminal Appeal No. 181 of 1965.
Appeal by special leave from the judgment and order, dated September14, 1965 of the Patna High Court in Criminal Appeal No. 268 of 1962.
S.C. Agarwala, for the appellant.
D. Goburdhun, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought, by special leave, from the judgment of the Patna High Court dated September 14, 1965 in Criminal Appeal No. 268 of 1962 filed by the appellant against the judgment of the Special Judge, Santhai Pargangs, Dumka dated March 31, 1962.
In January, 1958 the appellant was employed as a Railway Guard on the Eastern Railway and was posted at Sahibganj Railway Station.
On January 18, 1958 Hinga Lal Sinha (P.W. 47) who was in charge of squad of traveling ticket examiners caught hold of Shambu Pada Banerji (P,.
W. 54) as he found him working as a bogus traveling ticket examiner in a train.
P.W.47 handed Shambu Pada Banerji to Md. Junaid (P.W.48) who was a police officer in charge of Barharwa Railway outpost.
A Fard Beyan was recorded on the statement of P.W. 47 and G.R.P. Case No. 12 (1)58 was registered against Shambu Pada Banerji.
In connection with the investigation of that case the house of the appellant which was at a distance of 300 yards from Sahebganj Railway station was searched on January 19, 1958 at about 3.
p.m. by P.W. 56 along with other police Officers, Md. Junaid (P.W. 48) and Dharrnadeo Singh (P.W. 57 ).
Various articles were recovered from the house of the appellant and a search list (exhibit 5/17) was prepared.
A charge sheet was submitted in G.R.P. Case No. 12 (1)58 against the appellant and Shambu Pada Banerji.
Both of them were tried and convicted by the Assistant Sessions Judge, Dumka by a judgment dated June 12, 1961.
The appellant flied Criminal Appeal No. 405 of 1961 against his conviction under section 474/466 of the Indian Penal Code.
The appeal was allowed by the High Court by its judgment dated September 14, 1962 on the ground that there was no proof that the appellant was in conscious possession of the incriminating articles.
During the course of the investigation of G.R.P. Case No. 12 (1)58, the Investigating Officer (P.W. 56) found a sum of Rs. 51,000 standing to the credit of the appellant in the Eastern Railway Employees ' Co operative Credit Society Ltd., Calcutta.
He also found the appellant in possession of National Savings Certificates of the value of Rs. 8,000.
On August 24, 1958 the Investigating Officer (P.W.56) handed over charge of the investigation of G.R.P. Case No. 12(1)58 to P.W. 46 of Sahebganj Government Railway Police Station.
P.W. 46 completed the investigation on February 26, 1958.
Since by that time it was found that the appellant was in possession of pecuniary resources disproportionate to his known sources of income it was thought that he had come in possession of these pecuniary resources by committing 414 acts of misconduct as defined in clauses (a) to (d) of sub section (1) section 5 of the Prevention of Corruption Act, 1947 ( Act 2 or 1947 ), hereinafter referred to as the 'Act ', and since the investigation of a case under the Act could be carried only in accordance with the provisions of section 5A of the Act, under the orders of the superior officers, the case being G.R.P. Case No. 12 (1)58 was split up in the sense that a new case against the appellant being Sahebganj Police Station Case No. 11(2)59 was started upon the first information report of P.W. 46 made on February 26, 1959 to Gokhul Jha (P.W. 45), Officer in charge of Sahebganj Police Station.
By his order dated February 27, 1959 Sri R.P. Lakhaiyar, Magistrate First Class, Sahibganj accepted the recommendation of the Deputy Superintendent of Police that Inspector Madhusudan Haldar, P.W. 55 may investigate the case.
Accordingly Madhusudan Haldhar, P.W. 55 proceeded to investigate the case and after obtaining sanction of the appropriate authority for prosecution of the appellant submitted a charge sheet on March 31, 1960.
Cognizance was taken and the case was transferred to Sri Banerji a Magistrate First Class who committed the appellant and the.
two co accused Baldeo Prasad and Mrs. Kamla Mitra to stand trial before the Court of Session.
By his judgment dated March 31, 1962, the Special Judge, Santhai Parganas convicted the appellant under section 5(2) of the Act and section 411, Indian Penal Code.
The appellant and the other co accused Baldeo Prasad and Mrs. Kamla Mitra were acquitted of the charge of conspiracy under section 120(B) read with sections 379, 411,406 and 420, Indian Penal Code and section 5(2) of the Act.
The Special Judge also acquitted the appellant of the charge under section 474/466, Indian Penal Code.
The matter was taken in appeal to the High Court which by its judgment dated September 14, 1965 set aside the conviction and sentence of the appellant under section 411, Indian Penal Code and confirmed the conviction of the appellant under section 5(2) of the Act.
The High Court, however, reduced the sentence of 6 years simple imprisonment and a fine of Rs. 40,000 to 2 years imprisonment and a fine of Rs. 20,000.
Section 5 of the Act, as it stood before its amendment by Act 40 of 1964, read as follows: "5.(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, or (b) if he habitually accepts or obtains or agrees to accept or attempts to obtain for himself or for 415 any other person,any valuable thing without consideration or for a consideration which he knows to be inadequate, from any person whom he knows to have been, or to be or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him, or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be interested in or related to the person so concerned, or (c) if he dishonestly or fraudulently misappropriates or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do, or (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.
(2) Any public servant who commits criminal misconduct in the discharge of his duty shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to seven years and shall also be liable to fine: Provided that the court may, for any special reasons recorded in writing, impose a sentence of imprisonment of less than one year.
(3) 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 therefore shall not be invalid by reason only that it is based solely on such presumption.
(4) The provisions of this section shah be in addition W, and not in derogation of, any other law for the time being in force, and nothing contained herein shall exempt any public servant from any proceeding which 416 might, apart from this section, be instituted against On December 18, 1964, Parliament enacted the Anti Corruption Laws (Amendment) Act 1964 (Act No. 40 of 1964) which repealed subs.
(3 ) of section 5 of the Act and enlarged the scope Of criminal misconduct in section 5 of the Act by inserting a new clause (e) in section 5(1) of the Act to the following effect: "(e) if he or any person on his behalf is in possession or has, at any time during the period of his office, been in possession, for which the public servant cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income.
" It was in the first place contended on behalf of the appellant that section 5 (3) of the Act was repealed by Parliament while the appeal was pending in, the High Court and the presumption enacted in section 5 (3 ) of the Act was not available to the prosecuting authorities after the repeal of the sub section on December 18, 1964.
The argument was stressed.
that it was not open to the High Court to invoke the presumption contained in section 5( 3 ) of the Act in considering the case against the appellant.
It was also said that the presumption contained in section 5(3) of the Act was a rule of procedural law and not a rule of substantive law and alterations in the form of procedure are always.
retrospective in character unless there is some good reason or other why they should not be.
It was therefore submitted that the judgment of the High Court was defective in law as it applied to the present case the presumption contained in section 5(3) of the Act even after its repeal.
We are unable to accept the contention put forward on behalf of the appellant as correct.
It is true that as a general rule alterations in the, form of procedure ' are retrospective in character unless there is some good reason or other why they should not be.
In James Gardner vs Edward A. Lucas(1), Lord Blackburn stated: "Now the general rule, not merely of England and Scotland, but, I believe, of every civilized nation, is ex.
pressed in the maxim, Noya constitutio futuris formam imponere debet non prateritis ' prima facie, any new law that is made affects future transactions, not past ones.
Nevertheless, it is quite clear that the subject matter of an Act might be such that, though there were not any express words to shew it, might be retrospective.
For instance, I think it is perfectly settled that if the Legislature intended to frame a new procedure, that [1878] III App.
Cass.582 at p.603 417 instead of proceeding in this form or that, you should proceed in another and a different way; clearly there bygone transactions are to be sued for and enforced according to the new form of procedure.
Alterations in the form of procedure are always retrospective, unless there is some good reason or other why they should not be.
Then, again, I think that where alterations are made in matters of evidence, certainly upon the reason of the thing, and I think upon the authorities also, those are retrospective, whether civil or criminal.
" In the King vs Chandra Dharma (1), Lord Alverstone.
C.J. observed as follows: "The rule is clearly established that, apart from any special circumstances appearing on the face of the statute in question, statutes which make alterations in procedure are retrospective.
It has been held that a statute shortening the time within which proceedings can be taken is retrospective (The Ydun, 1899 p. 236.), and it seems to me that it is impossible to give 'any good reason why a statute extending the time within which proceedings may be taken should not also be held to be retrospective.
If the case could have been brought within the principle that unless the language is clear a statute ought not to be construed so as to create new disabilities or obligations, or impose new duties in respect of transactions which were complete at the time when the Act came into force, Mr.
Compton Smith would have been entitled to succeed; but when no new disability or obligation has been created by the statute, but it only alters the time within which proceedings may be taken, it may be held to apply to offenses .completed before the statute was passed.
That is the case here.
" It is therefore clear that as a general rule the amended law relating to procedure operates retrospectively.
But there is another equally important principle, viz. that a statute should not be, so construed as to create new disabilities or obligations or impose new duties in respect of transactions which were complete at the time the amending Act came into force (See In re a Debtor(1) and In re Vernazza(3).The same principle is embodied in section 6 of the General Clauses Act which is to the following effect: "6.
Effect of repeal. 'Where this Act or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or here (1) (2) [1936] 1 ch. 237.
(3) 418 after to be made, then, unless a different intention appears, the repeal shall not . . . . . . . . (b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; 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 or Regulation had not been passed.
" The effect of the application of this principle is that pending cases although instituted under the old Act but still pending are governed by the new procedure under the amended law, but whatever procedure was correctly adopted and concluded under the old law cannot be opened again for the purpose of applying the new procedure.
In the present case, the trial of the appellant was taken up by the Special Judge, Santhai Parganas when section 5 (3) of the Act was still operative.
conviction of the appellant was pronounced on March 31, 1962 by the Special Judge, Santhai Parganas long before the amending Act was promulgated.
It is not hence possible to accept the argument of the appellant that the conviction pronounced by the Special Judge, Santhai Parganas has become illegal or in any way defective in law because of the amendment to procedural law made on December 18, 1964.
In our opinion, the High Court was right in invoking the presumption under section 5 (3) of the Act even though it was repealed on December 18, 1964 by the amending Act.
We ,accordingly reject the argument of the appellant on tiffs aspect of the case.
It was next argued on behalf of the appellant that the statutory safeguards under section 5A of the Act have not been complied with and the Magistrate has not given reasons for entrusting the investigation to a police officer below the rank of Deputy Superintendent of Police.
Section 5A of the Act provides as follows: "Notwithstanding anything contained in the Code of Criminal Procedure, 1898, no police officer below the rank (a) in the presidency towns of Madras and Calcutta, of an assistant commissioner of police, 419 (b) in the presidency town of Bombay, of a superintendent of police, and (c) elsewhere, of a deputy superintendent of police, shall investigate any offence punishable Under section 161, section 165 or section 165A of the Indian Penal B Code or under sub section (2) of section 5 of this Act, without the order of a presidency magistrate or a magistrate of the first class, as the case may be, or make any arrest therefore without a warrant: . . . . . . .
In the present case the officer incharge of Sahibganj police station (P.W. 45) filed a petition dated February 27, 1959 (exhibit 1) to the First Class Magistrate upon which the Deputy Superintendent of Police made an endorsement (Ex.1/1) suggesting that Inspector Haldhar may be empowered to investigate the case.
The order of the Magistrate is Ex.1/2 and is dated February 27, 1959.The order states: "Inspector Sri M.S. Haldhar is ' allowed to do it".
The evidence of P.W. 11 is that he was posted at Sahebganj as a Magistrate from 1956 and used to do the work of the Sub divisional Officer also in his absence.
He passed the order (exhibit 1/2) authorising M.S. Haldhar to investigate the case because the Deputy Superintendent of Police used to remain busy with his work and the present case needed a whole time investigation.
It was argued on behalf of the appellant that there was nothing in the endorsement of the Deputy Superintendent of Police that he was busy and therefore the inquiry should be entrusted to Sri Haldhar.
But the High Court has observed that P.W. 1 was a Magistrate working at Sahibganj for a period of two years prior to the passing to the order in question and he must have known that the Deputy Superintendent of Police could not devote his whole time to the investigation of the case and therefore the Inspector of Police should be entrusted to do the investigation.
On this point the High Court has come to the conclusion that the order of the Magistrate was not mechanically passed and the permission of the Magistrate authorising Haldhar to investigate the case was not illegal or improper.
In our opinion Counsel on behalf of the appellant has been unable to make good his argument on this point.
It was then said that the charge against the appellant under section 5(2) of the Act was defective as there were no specific particulars of misconduct as envisaged under cls.
(a) to (d) of section 5 (1) of the Act.
It was suggested that the charge was 'defective in as much as it deprived the appellant of the opportunity to rebut the presumption raised under section 5(3) of the Act.
.The charge against the appellant reads as follows ': 420 "First That during the period of 1956 to 19th January, 1958 at Sahebganj Police Station Sahebganj G.R.P. and Sahebganj Local, District Santhai Parganas and at other places, within and without the said district, you, being a public servant viz. Guard of trains in the Eastern Railway of the Railway Department and while holding the said post, habitually accepted or obtained from persons for yourself gratifications other than legal remuneration as a motive or reward such as mentioned in sec.
161 of the Indian Penal Code, habitually accepted or obtained for yourself valuable things without consideration or for a consideration which you know to be inadequate from persons having connection with your official function, habitually, dishonestly and fraudulently, misappropriated or otherwise converted for your own use properties entrusted to you or put under your control as a guard of trains or otherwise, and habitually by corrupt and illegal means, or by otherwise abusing your position as a public servant obtained for yourself valuable things or pecuniary advantage, with the result that during the search of your house at Sahebganj aforesaid on 19 1 1958 and during the investigation of the Sahebganj G.R.P.S. Case No. 12 dated 19 1 58 u/s 170 etc.
I.P.C., you were found, during the month of Jan. 1958 in possession of cash amount to the extent of Rs. 59,000 and other properties fully described in the appendix No. 1 attached herewith and forming part of this charge [of Sahebganj P.S. Case No. 11(2)59], and that the said cash amount and properties are disproportionate to your known sources of income and that you cannot satisfactorily account the possession of the same and that you thereby committed the offenses of criminal misconduct, under clauses (a) to (b) of section 5(1) of the Prevention of Corruption Act, 1947 (Act II of 1947), punishable under Sec.
5(2) of the said Act, within the cognizance of this Court.
. . . . . . . . It was argued that the charge did not disclose the amounts the appellant took as bribes and the persons from whom he had taken such bribes and the appellant had therefore no opportunity to prove his innocence.
But, in our view, this circumstance does not invalidate the charge, though it may be a ground for asking for better particulars.
The charge, as flamed, clearly stated.
that the appellant accepted gratification other than legal remuneration and obtained pecuniary advantage by corrupt and illegal.
means.
The charge, no doubt, should have contained better particulars so as to enable the appellant to prove his case.
But 421 the appellant never complained in the trial court or the High Court that the charge did not contain the necessary particulars.
The record on the other hand disclosed that the appellant understood the case against him and adduced all the evidence which he wanted to place before the Court.
Section 225 of the Criminal Procedure Code says "that no error in stating either the offence B or the particulars required to be stated in the charge, and no omission to state the offence or those particulars, shall be regarded at any stage of the case as material, unless the accused was in fact misled by such error or omission, and it has occasioned a failure of justice.
" It also appears that the appellant never raised any objection either before the Special Judge or in the High COurt on the score that the charge was defective and that he was misled in his defence on the ground that no particulars of the persons from whom the bribes were taken were mentioned.
We accordingly reject the argument of the appellant on this point.
For the reasons expressed we hold that the judgment of the High Court dated September 14, 1965 is correct and this appeal must be dismissed.
R.K.P.S. Appeal dismissed.
| IN-Abs | In connection with an investigation in January 1958 relating to another case, the appellant, who was employed as a railway guard on the Eastern Railway, was found in possession of pecuniary resources disproportionate to his known sources of income.
As it was thought that he ' had come in possession of these pecuniary resources by committing acts of misconduct defined in clauses (a) ,to (d) of section 5(1) of the Prevention of Corruption Act 2 of 1947, on the recommendation of the Deputy Superintendent of Police for the area, an Inspector of Police was appointed by an Order dated 27th February 1959 of the Magistrate, Ist Class, Sahibganj, to investigate the case against the appellant.
The Investigating Officer, upon completion of the investigation and after obtaining sanction of the appropriate authority for prosecution of the appellant, submitted a charge sheet on March 31, 1960.
The Trial Court convicted the appellant under section 5(2) of the Act and s.411 I.P.C.
In appeal, by a judgment dated September 14, 1965,.
the High Court set aside the conviction and sentence of the appellant under section 411 I.P.C. but confirmed his conviction under section 5(2) of the Act and reduced the sentence awarded by the Trial Court.
On December 18, 1964 Parliament enacted the Anti Corruption Laws (Amendment) Act 40 of 1964 which repealed sub section (3) of section 5 of the.
Act and enlarged the scope of criminal misconduct in section 5 by inserting a new clause (e) in section 5(1) of the Act.
In appeal to this Court it was contended on behalf of the appellant (i) that section 5(3) of the Act having been repealed while the appeal was pending in the.
High Court, the presumption enacted in section 5(3) was not available to prosecuting authorities after the repeal 'and it was not open to the High Court to invoke the presumption in considering the case against the appellant; the presumption contained in section 5(3) was a rule of procedural law and as alterations in the form of procedure are always retrospective in character, unless it was provided otherwise, it was not open to the High Court to apply the presumption in the present case; (ii) that the statutory safeguards under section 5A of the Act had not been complied with as the Magistrate had not given reasons for entrusting the investigation to a Police Officer below the rank of Deputy Superintendent Police; and (iii) that the charge against the appellant under section 5(2) the Act was defective as there were no specific particulars of misconduct as envisaged under clauses (a) to (d) of section 5(1) of the Act, nothing was stated about the amounts the appellant took as bribes and the 412 persons from whom he had taken such bribes so that the, appellant had no opportunity to rebut the presumption raised under section 5(3) of the Act and to prove his innocence.
HELD: Dismissing the appeal v: (i) The High Court was right invoking the presumption under section 5(3) of the Act .even though it was repealed on December 18, 1964 by the Amending Act.
Although as a general rule the amended law relating to procedure operates retrospectively, there is another equally important principle, which is also embodied in section 6 of the General Clauses Act, that a statute should not be so construed 'as to create new disabilities or obligations or impose new duties ties in respect of transactions which were complete at the time the amending Act came into force.
The effect of the application of this principle is that pending cases although instituted under the old Act but still pending are governed by the new procedure ' under the amended law, but whatever procedure was correctly adopted and concluded under the old law cannot be opened again for the purpose of applying the new procedure.
In the present case, the trial of the appellant was taken up when section 5(3) of the Act was still operative.
The conviction of the appellant was pronounced on March 31, 1962 long before the amending Act was promulgated.
It Was not therefore possible to accept the contention that the conviction pronounced by the trial Court had become illegal or in any way defective in law because of the amendment to procedural law made on December 18, 1964.
[417 G; 418 D] James Gardner v, Edward A. Lucas, at p. 603; King V, Chandra Dharrna, ; In re a Debtor [1936] .1
Ch.237 and In re Vernazza; ; referred to.
(ii) Although the Magistrate 's order on the, petition filed by the DepUty Superintendent of Police suggesting that the Inspector of Police be empowered to investigate the case does not state any reasons for his granting the permission sought, the High Court had rightly concluded 'that as the Magistrate was working in the area for a period of two years prior to the passing of the order in question he must have known that the Deputy Superintendent of Police could not devote his whole.
time to the investigation of the case and therefore the inspector of Police .should be entrusted to do the investigation.
[419 F] (iii) The charge, as framed, dearly stated that the appellant accepted gratification other than legal remuneration and obtained pecuniary advantage .by corrupt ,and illegal means.
The absence of sufficient particulars could not invalidate the charge though it may be a ground for asking for.
better particulars.
The appellant never complained in the trial court or the High Court that the charge did not contain the necessary particulars, he , was.
misled on that account in his defence.
In view this and the provisions of section 225 Cr.
P.C. it could not be said that charge was defective.
[421 F]
|
Civil Appeal No. 329 of 1966.
Appeal by special leave from the judgment and order dated October 11, 14, 1963 of the Bombay High Court in Appeal No. 30 of 1962 from the Appellate Decree.
D. Narsaraju and R.V. Pillai, for the appellant.
M.S.K. Sastri and M.S. Narasimhan, for respondent No. 1.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought, by special leave, on behalf of the .plaintiff against the judgment of the Bombay High Court dated October 11/14, 1963 in Appeal No. 30 of 1962 from the appellate order of the District Court, Osmanabad whereby the High Court reversed the judgment of the lower courts and declared that the appellant was not entitled to execute the decree for pre emption and that the respondents were entitled to be put in possession of the properties of which they were dispossessed in the enforcement of the pre emption decree.
The appellant had obtained a decree for possession of certain lands in a pre emption suit he had brought against the respondents.
The decree was made in March, 1945 and the appellant was directed to pay the consideration of Rs. 5,000 within six months from the date of the decree on which the appellant was to be put in possession of the suit lands.
In case of default in depositing the sum within the time the plaintiff 's suit was to be deemed to have been dismissed.
The respondents preferred an appeal to the District Court against the decree but the District Court confirmed the decree on January 28, 1955.
The amount of Rs. 5,000 was deposited in Court by the appellant on December 20, 1954 within the time granted in the trial court 's decree but it was subsequently withdrawn by him under orders of the Court.
While dismissing the appeal of the respondents and confirming the decree for pre emption, the District Court directed the appellant to deposit the sum of Rs. 5,000 on or before April 30, 1955 and directed the respondents on such deposit to deliver possession of the properties.
There was also a direction in the decree that in case the amount was not paid on the due date the suit shall stand dismissed with costs.
The decree was passed in conformity with O.20, r.14 of the Civil Procedure Code.
The respondents preferred a Second Appeal to the High Court and 516 pending disposal of the appeal the respondents prayed for stay of the execution decree.
On March 23, 1955 the High Court passed the stay order in the following terms: "Stay of execution of decree of the lower appellate court is granted on condition that the appellant furnishes security to the extent of the amount of costs.
" The order was received by the trial court on April 19, 1955.
The appellant who was directed under the terms of the lower appellate court 's decree to deposit the sum of Rs. 5,000 on or before April 30, 1955 made default in depositing the amount on that date.
He, however, deposited the amount on May 2, 1955.
Since the deposit was not made in time according to the lower appellate court 's decree an application was filed along with the deposit stating that the amount could not be paid in time as the appellant fell ill.
The Second Appeal preferred by the respondents to the High Court was dismissed on October 6, 1960 and the pre emption decree in favour of the appellant was confirmed.
Thereafter on February 3, 1961 the appellant flied a Darkhast for possession of the suit properties.
Since the application was within a year of the decree of the High Court a warrant for possession was issued by the Executing Court without notice to the respondents and the appellant also obtained possession of a portion of the suit properties under the aforesaid warrant.
On February 8, 1961 the respondents filed an application in the Executing Court for restitution of the properties taken possession of by the appellant on the ground that the appellant had defaulted in depositing the purchase money on or before April 30, 1955 as required by the lower appellate court 's decree and the Executing Court was in error in issuing the warrant for possession of the suit properties.
The application for restitution was contested by the appellant on the ground that the stay order made by the High Court in the Second Appeal prevented him from acting in accordance with the terms of the lower appellate court 's decree and in any case the High Court had dismissed the Second Appeal and the decree holder would get by necessary implication a fresh starting point for depositing the purchase amount from the date of the High Court 's decree.
The Executing Court rejected the claim of the respondents for restitution and 'allowed the execution case of the appellant to proceed.
Against this order of the Executing Court the respondents went up in appeal to the District Court which dismissed the appeal and confirmed the order of the Executing Court.
The respondents thereafter took the matter in Second Appeal to the Bombay High Court which differed from the view of the District Court and allowed the appeal.
The High Court took the view that there was default on the part of the appellant in depositing the amount and therefore the appellant 's 517 suit stood dismissed automatically and the appellant was not therefore entitled to possession in enforcement of the pre emption decree.
The first question arising in this appeal is whether the High Court was right in taking the view that the effect of the stay order dated March 23, 1955 was merely to stay the delivery of possession by the judgment debtors and not a stay with regard to the deposit of purchase price by the decree holder.
In our opinion, the High Court was in error in taking this view.
The decree framed under O.20, r. 14, Civil Procedure Code requires reciprocal rights and obligations between the parties.
The rule says that on payment into court of the purchase money the defendant shall deliver possession of the property to the plaintiff.
The decree holder therefore deposits the purchase money with the expectation that in return the possession of the property would be delivered to him.
It is therefore clear that a decree in terms of O.20, r.14; Civil Procedure Code imposes obligations on both sides and they are so conditioned that performance by one is conditional on performance by the other.
To put it differently, the obligations are reciprocal and are inter linked, so that they cannot be separated.
If the defendants by obtaining the stay order from the High Court relieve themselves of the obligation to deliver possession of the properties the plaintiff decree holder must also be deemed thereby to be relieved of the necessity of depositing the money so long as the stay order continues.
We are accordingly of the opinion that the order of stay dated March 23, 1955 must be construed as an order staying the whole procedure of sale including delivery of possession as well as payment of price.
The effect of the stay order therefore in the present case is to enlarge the time for payment till the decision of the appeal.
We are further of the opinion that the effect of the order of the High Court dated October 6, 1960 dismissing the Second Appeal was to give by necessary implication a fresh starting point for depositing the amount from the date of the High Court 's decree.
The decree of the High Court was dated October 6, 1960 and the appellant could have deposited the amount immediately after this date.
But the appellant has deposited the amount on May 2, 1955, long before the date of the High Court 's decree and there is no default on the part of the appellant in fulfilling the terms of the pre emption decree.
In the present case, when the High Court dealt with the Second Appeal filed by the respondents, the time limited by the trial court for making the deposit had expired.
It was open to the respondents to press this point in the Second Appeal and for the High Court to decide that, the time having expired, it was not open to the plaintiff to make the deposit and there was nothing before the 518 High Court for decision.
It was equally open to the High Court to dismiss the appeal and expressly extend the time for making the deposit.
When the High Court refrained from following the first course and confirmed the trial court 's decree, what was its intention ? Surely it wanted to give the plaintiff an effective decree in his favour.
If so, we are justified in holding that the High Court intended to exercise its power of extending the time for making the deposit, and incorporated in its decree the relevant provisions of the trial court 's decree.
That is to say, this is a case in which we must hold that a fresh starting point is implied in the decree of the High Court in the Second Appeal.
The view that we have expressed is borne out by the decision of the Bombay High Court in Satwaji Balajiray Deshamukh vs Sakharlal Atmatarnsher(1).
In that case, the plaintiff brought a suit to recover possession of property as purchaser from defendants 1 to 6 and to redeem the mortgage of defendant 7.
The first court having dismissed the suit, the appellate court, on plaintiff 's appeal, passed a decree directing the plaintiff to recover possession on payment to defendants 1 to 6 of a certain sum within six months from the date of its decree and then to redeem defendant 7, and on the plaintiff 's failure to pay within six months from the date of the decree he should forfeit his right to recover possession.
All parties being dissatisfied with the decree, the plaintiff preferred a second appeal to the High Court and the two sets of defendants filed separate sets of cross objections.
The High Court confirmed the decree and the plaintiff 's second appeal and the defendants ' cross objections were dismissed.
Within six months from the date of the High Court 's decree the plaintiff deposited in court the amount payable by him and applied for execution.
Defendant 7 contended that the plaintiff not having complied with the terms of the decree of the first appellate court, his right to recover possession in execution was.
forfeited.
The lower courts upheld the defendant 's contention and dismissed the darkhast.
On second appeal by the plaintiff, the High Court reversed the decree of the lower court and held that the time for executing a decree nisi for possession ran from the date of the High Court 's decree confirming the decree of the lower court, for what was to be looked at and interpreted was the decree of the final appellate court.
There is also a decision to the similar effect in Sita vs Ramnath(2).
For the reasons already given we hold that the decree of the High Court in Second Appeal should be construed in the present case as affording by implication a fresh starting point to the plaintiff for making payment to the Court.
For the reasons expressed we hold that this appeal should be allowed, the judgment of the, Bombay High Court dated October (1) I.L.R. (2) I.L.R. 28 Patna 371.
519 11/14, 1963 should be set aside and the application of the first defendant made on February 8, 1961 for restitution under section 144 of the Civil Procedure Code should be dismissed.
In the circumstances of this case we do not propose to make any order as to costs of this appeal.
T.P. Appeal allowed.
| IN-Abs | The appellant had obtained a decree for possession of certain lands in a pre emption suit which he had brought against the respondents.
The respondents ' appeal to the District Court was dismissed.
The District Court directed the appellant to deposit purchase money by a certain date and directed the respondents on the deposit to deliver possession of the property.
There was also a direction in the decree that in case the amount was not paid on the due date the suit shall stand dismissed with costs.
The respondents preferred a second appeal to the High Court and pending disposal of the appeal the respondents prayed for stay of the execution decree.
Before the date fixed for depositing the purchase money the High Court stayed the execution of the decree of the lower appellate court.
The appellant deposited the purchase price 3 days after the date fixed stating that he could not deposit in time as he fell ill.
Thereafter the High Court dismissed the second appeal, and the appellant, obtained possession of the properties.
The respondents applied to the Executing Court for restitution of properties on the ground that the appellant had defaulted in depositing, the purchase money by the date fixed by the lower appellate court 's decree.
The appellant contended that the stay order made by the High Court in the second appeal prevented him from acting in accordance with the terms of the lower appellate court 's decree, and in any case the High Court had dismissed the second appeal and the decree holder would get by necessary implication a fresh starting point for depositing the purchase amount from the Sate of the High Court 's decree.
The Executing Court rejected the claim of the respondents for restitution.
This decision was affirmed, on appeal by the District Court.
But the High Court in appeal, took the ' view that there was default on the part of the appellant in depositing the amount and therefore the appellant 's suit stood dismissed automatically and the appellant was not therefore entitled to possession in enforcement of the pre emption decree.
HELD: The appeal must be allowed.
A decree in terms of 0.20 r. 14, Civil Procedure Code imposes obligations on both sides and they are so conditioned that performance by one is conditional on performance by the other.
To put it differently, the obligations are.
reciprocal and are inter linked, so that they cannot be separated.
If the defendants by obtaining the stay order from the High Court relieve themselves of the obligation to deliver possession of the properties the plaintiff decree holder must also be deemed thereby to be relieved of the necessity of depositing the money so long as the stay order continue.
[517 D, E] The effect of the order of the High Court dismissing the second appeal was to give by necessary implication a fresh starting point 515 depositing the amount from the date of the High Court 's decree and the appellant could have deposited the amount immediately after the High Court 's decree.
But the appellant had deposited the amount before the date of the High Court 's decree and there was no default on the part of the appellant in fulfilling the terms of the pre emption decree.
[517 F G] Satwaji, Balajiray Deshamukh vs Sakharlal Atmaramshet, I.L.R. and Sita vs Ramanth I.L.R. 28 Patna 371, approved.
|
ivil Appeal No. 1832 of 1967.
Appeal under section 116 A of the Representation of the People Act, 1951 from the judgment and order dated October 31, 1967 of the Madhya Pradesh High Court, Indore Bench in Election Petition No. 40 of 1967.
S.V. Gupte, Rarneshwar Nath, Mahinder Narainand, Ravinder Nath for the appellant.
Sarjoo Prasad and D.N. Misra for respondent No. 1.
The Judgment of the Court was delivered by, Mitter, J.
This is an appeal from a judgment of the Madhya Pradesh High Court by a returned candidate at an election to Madhya Pradesh Legislative Assembly from Ujjain North Constituency held in February 1967 declaring the election of the appellant void under section 98 of the Representation of the People Act (hereinafter referred to as the Act).
There was no less than eight candidates at the said election, five of whom polled very few votes.
The result of the election so far as the other three were concerned was as follows: 1.
Mahadev Govind Joshi, the returned candidate secured 23,709 votes 2.
Mrs. Hansaban Patel polled '10,767 ,, 3.
Shri Bansidhar Azad polled 7,093 .
The election petition was filed by the husband of the 2nd respondent, Mrs. Hansaben Patel.
In the petition numerous grounds were taken.
for declaring the election of the appellant void under 424 the Act and no less than five issues with different sub heads were flamed by the court on August 31, 1967, but at the final stage the hearing only the first issue was canvassed.
The said issue reads as follows: "1. (a) Was the respondent No. 1 holding one or more of the three following offices of profit ? (i) his being included in the panel of lawyers prepared by the Central and Western Railway Administration; (ii) his holding the post of the president member of a tribunal constituted under section 73 of the M.P. Town Improvement Trusts Act, 1960; (iii) his holding the office of Professor of law in the Madhav College, Ujjain on regular salary of Rs. 250 p.m.; (b) If so, its effect ?" Before the trial Judge a number of documents were exhibited and some witnesses were examined.
The learned trial Judge was of opinion that the appellant, the successful candidate held an office of profit under Government being on the panel of lawyers prepared by the Central and Western Railway Administration and having been at the material time a Professor of Law in the Madhav College on a regular salary of Rs. 250 per month, but he was not prepared to hold on the material before him that the appellant held the post of the President member of a Tribunal constituted under section 73 of the Madhya Pradesh Town Improvement Trust Act, 1960.
The first alleged disqualification is based on a letter of appointment dated February 6, 1962 addressed by the Chief Commercial Superintendent to the appellant who accepted the conditions and terms of that letter by his reply within a few days thereafter.
The letter of the Commercial Superintendent ' shows that the appellant 's name.
was kept on the panel of Railway Pleaders for conducting suits filed against the Union of India in the courts of Ujjain on the terms and conditions therein 'mentioned.
It is not necessary to recapitulate the terms excepting three or four to be mentioned presently.
The first term showed that the appellant was ordinarily to be entrusted with cases up to valuation of rupees three thousand only.
The ninth term imposed a condition on the appellant that he would not ' accept any briefs against.
any Railway in any court.
Clause (13) of the terms is really the most important one for our present purposes :and reads as follows : "You will be expected to watch cases coming up for hearing against this Railway in the various courts at 425 UJB and give timely intimation of the same to this office.
H no instructions regarding any particular case are received by you, will be expected to appear in the court and obtain an ,adjournment to save the exparte proceedings against this Railway in the court.
You will be paid Rs. 5 for every such adjournment if you are not entrusted with the conduct of the suit later On.
" The other terms deal mostly with the fees and the expenses to which the appellant would be entitled if he accepted the engagement.
The question before us is, whether by accepting the engagement, the appellant could be said to have held an office of profit.
The word 'office ' according to Webster 's New World Dictionary means, inter alia, "a function or duty assigned to someone, specially as an essential part of his work or position, a position of authority or trust especially in a Government, Corporation etc." According to Jowitt 's Law Dictionary, it means the right and duty to exercise an employment such as an office of a trustee, executor, guardian, director, Sheriff, Judge etc. ' The expression 'office of profit ' finds a place in an old English Act, namely, the Act of Settlement, 1701, section 3 of which provided that "no person having an office or place of profit under the Crown could be a member of the House of Commons.
" The meaning of the expression came up for consideration by this Court in a recent case.
The Statesman (Private) Ltd. vs
H.R. Deb and others(x) decided on April 2, 1968.
There, a question arose as to whether the respondent, H.R. Deb, was qualified to hold a judicial office in India in terms of section 7 (3) of the Industrial Disputes Act.
Under that provision "a person shall not be qualified for appointment as the presiding officer of a Labour Court, unless inter alia. (d) he has held any judicial office in India for not less than seven years".
The facts relating to the career of Mr. Deb as found by this Court were as follows.
He was first appointed in 1940 as a Sub Deputy Collector and was vested with powers of a Third Class Magistrate.
Thereafter, he was vested with powers of a Second Class Magistrate, and after a year or so with those of a First Class Magistrate.
There seems to have been some difference of opinion between the Judges of the High Court on the point as to whether Mr. Deb held a judicial office or whether he merely discharged certain judicial functions.
According to the judgment of this Court delivered by the learned Chief Justice "the dispute, therefore, really reduces itself to this: Does the Magistrate hold ' an "office?" An office means no more than a position to which certain duties are attached.
" The learned Chief Justice also referred to the Judicial Officers Protection Act which (1) ; 3 Sup.
CI/69 10 426 was enacted to protect not only Civil Judges but also Magistrates, and observed that "office means a fixed position for performance of duties.
" We may also refer to certain observations of the House of Lords in 'the case of Mcmillan vs Guest(1).
There LOrd Wright in delivering his opinion said: 1 "The word "office" is of indefinite content.
Its various meanings cover four columns of the New English Dictionary, but I take as the most relevant for purposes of this case the following: "A position or place to which certain duties are "attached, especially one of a more or less public character.
" This was a case arising out of assessment under the Income tax Act.
The appellant was a director of A. Wander, Ld., a private company which was resident and controlled in the United Kingdom.
He was appointed a director by the articles of association and had no contract of service with the company.
Since 1919 he had been resident in the United States of America, and in 1938 he became a naturalized American citizen.
He had gone over to America to take over the management of a company in Chicago allied to the predecessors of A. Wander, Ld., for whom he opened a Canadian office, and concerned himself in the administrative and selling organization there.
Copies of minutes;annual balance sheets etc.
were regularly sent to the appellant in America, but he attended no board meetings in England except one in 1931 and only one in Chicago in 1925.
He was not required to attend board meetings of the English company, and notices of such meetings were not sent to him.
The question before the House of Lords was whether he held an office within the U.K. for the purposes of rule 6 of the Rules applicable to Sch.
E to the Income Tax Act, 1918 and the House of Lords was of the view that he held an office and dismissed his appeal.
If by "office" is meant the right and duty to exercise an employment or a position to which certain duties are attached as observed by this Court, it is difficult to see why the engagement of the appellant in.
this case under t,he letter of February 6, 1962 would not amount to the appellant s holding an office.
By the said letter he accepted certain obligations and was required to discharge certain duties.
He was not free to take a brief against the Railway Administration.
Whether or not the Railway Administration thought it proper to entrust any particular case or litigation pending in the court to him, it was his duty to watch all cases coming up for hearing against the Railway Administration and to give timely intimation of the same to the office of the Chief Commercial Superintendent.
Even if no instructions regarding any particular case were given to him, he was expected (1) 427 to appear in court and obtain an adjournment.
In effect this cast a duty on him to appear m court and obtain an adjournment so as to protect me interests of the Railway.
The duty or obligation was a continuing one so long as the railway did not think it proper to remove his name from the panel of Railway lawyers so long as he did not intimate to the Railway Administration that he desired to be free from his obligation to render service to the Railway.
In the absence of the above he was bound by the terms the engagement to watch the interests of the Railway Administration, give them timely intimation of cases in which they were involved and on his own initiative apply for an adjournment in proceedings in which the Railway had made no arrangement for representation.
It is true that he would get a sum of money only he appeared but the possibility that the Railway might not engage him is a matter, of no moment.
An office of profit really means an office in respect of which a profit may accrue.
It is not necessary that it should be possible to predicate of a holder of an office of profit that he was bound to get a certain amount profit irrespective of the duties discharged by him.
Learned counsel for the appellant argued that the appellant was not a salaried employee of the Railway.
He was not even bound to act for the Railways and if he thought it proper to accept a brief against the railway the Railway Administration could only take steps against him for breach of professional etiquette and nothing more.
According to counsel, he could only get remuneration in case he thought it proper to act on the terms of the letter and appeared in any case to support the cause of the Railway.
In our view, although it was open to the appellant to terminate the engagement at any time and he might even commit a breach of etiquette by accepting a brief against the Railway without formally putting an end to the engagement, that would not detract from the position that he was in duty bound to work the Railway Administration and see that its causes did not suffer by default.
So long as the engagement was not put an end to, he was holding an office of profit in the Railway Administration, and as such was disqualified for being elected to the Legislative Assembly of Madhya Pradesh.
The question as to whether the appellant was holding an office of profit under the Government of Madhya Pradesh as a Professor of Law in the Madhav College, Ujjain is not altogether free from difficulty.
This college was at first one owned and managed by the Government.
In 1950 the appellant was invited by the Principal of the College to come and work as a lecturer.
He did so for some time and his work was purely on the basis of an arrangement between himself and the Principal.
In July, 952 the Principal wrote to the Education Department that the appellant should be formally appointed.
Thereupon the Deputy Secretary, Education Department, wrote to the Director of Edu 428 cation on April 7, 1952 conveying sanction of the Rajpramukh to the appellant 's appointment on one year 's probation as a part time Professor of Law in Madhav College on a fixed salary of Rs. 250 per month with effect from the date he assumed his duties in a temporary capacity, that is to say, August 1, 1951.
The appellant was employed only as a part time lecturer without increment or Provident Fund benefits.
His appointment was never confirmed by any letter.
It is, however, the common case of the parties that he continued to act as a lecturer in Law in Madhav College till July 1967.
Up to March 1959 the College was not only a Government owned institution but one which was being managed from day to day directly by its Education Department.
In 1959 there were certain changes in the management of the institution, but without the Government relinquishing ownership or ultimate control.
As a matter of fact,.
an agreement was entered into on March 16, 1959 between the Governor of Madhya Pradesh and Vikram University Ujjain, a body corporate formed under section 3 of the Madhya Bharat Vikram University Act, 1955, regarding certain terms under which the Governor 'had offered to transfer to the University the management of the Madhav College, together with its buildings and premises etc.
for a period of five years in the fi.rst instance commencing from the 1st of April, 1959 and ending on the 31st March, 1964.
The agreement also recorded that the University was to be in charge of the management for the said period subject to the terms and conditions therein mentioned.
Under cl.
(15) of the said terms and conditions "the existing members of the staff and other servants of the said college shall be treated as being on deputation to the University during its period of management and shall be deemed to have been deputed on the usual foreign service conditions, retaining their lien in the State Educational Service.
The University shall be liable to make payment of salaries and other allowances, except the deputation allowance, to the members of the staff and other servants of the said college, in employment at the date of its transfer.
" Under cl.
(16) "the University shall be entitled to make fresh appointments in regard to the staff and other servants for the said college and, on the University informing the Governor in this behalf, the Governor shall take back within a period of three months from the date of receiving information from the University, in the State Government 's service the members of the existing staff and other servants belonging to the said college at the time of execution of this agreement.
" On March 31, 1964 a telegram was sent to the Vice Chancellor, Vikram University recording that "pending Government decision on Sen Committee Report existing arrangement regarding Madhav College may continue on the same terms till 30th of June 1964.
" There is a further letter dated July 17, 1964 showing that the Government had decided to.
transfer the management of the 429 College and a regular transfer deed was in the course of preparation, but ,actually there is nothing to show that a transfer deed was executed as contemplated.
The position became complicated by reason of the fact that as a Government servant under the Fundamental Rules in force at the time of his appointment, the appellant could continue in service only till he attained the age of 55.
The age of superannuation was later increased to 58.
But even on this basis the appellant had attained the age of 58 on June 30, 1964 and would be deemed to have retired from Government service unless a special order to continue him in service was made.
No such order was, as a matter of fact, made.
Under the Rules of the University a teacher could be continued in service up to the age of sixty but not beyond with this qualification that if a teacher reached the age of sixty during the currency of an academic session he might be permitted to continue in service and retire at the end of the session.
The letters which passed between the Vikram University on the one hand and the Government of Madhya Pradesh and/or the appellant in this case on the other which form part of the record do not permit us to come to any conclusion as to the manner in which the employment of the appellant under the Government as a part time Professor of Law in Madhav College came to an end.
On January 1, 1965 the Under Secretary to the Government of Madhya Pradesh, Education Department, wrote a letter to the Principal of Madhav College asking for information as to whether the appellant, a part time Professor of Law, was confirmed in his existing post.
The record does not include any reply to this letter.
On May 22, 1967 the Registrar of the University addressed a letter to the Principal, Madhav College drawing his attention to the fact that in terms of el.
5 of Schedule B of Statute 7 B of the University Calendar the appellant would retire on June 30, 1967 as he had already attained the age of 60 years on 31st July 1966.
The occasion for writing this letter is not quite clear unless it related to his election to the Legislative Assembly because by the last sentence of the letter the writer was asking the Principal as to whether the appellant had resigned from his post on his being elected as an M.L.A. On July 4, 1967 after the filing of the election petition, the Registrar of Vikram University intimated to the appellant in writing that his services as part time Professor of Law would not be required with effect from the commencement of the academic session 1967 68 i.e. from Monday, the 17th July 1967.The letter went on to add: "Your tenure as part time Professor of Law in Madhav College, Ujjain has therefore ceased with effect from June 30, 1967.
" By letter dated 31st July 1967 the Registrar of the University intimated the Secretary to the Government of Madhya Pradesh 430 Education Department, that under instruction dated 31st March 1967 the University had been asked to maintain the status quo with respect to teachers transferred to the University until final terms and conditions of transfer were eftected and in the absence of any Government orders to the contrary, the appellant also continued to remain in the service of the University.
Finally, the letter recorded that in terms of the rules of the University fixing 60 years as the age of superannuation for teachers, the appellant had been informed that his services would not be required after 30th June 1967.
It was during the hearing of the election petition that a letter dated 9th October 1967 came to be written by the Under Secretary to the Government of Madhya Pradesh,Education Department to the Registrar, Vikram University that the appellant had ceased to be in Government service with effect from 30th June 1964 in terms .of the rule prescribing 58 years as the age of superannuation for Government servants.
The last letter may legitimately be subject to a comment that efforts were being made to establish that the appellant had ceased to be in Government service after June 30, 1964.
It is all the more surprising that the letter of October 9, 1967 should be written at such an opportune moment when more than two years before the Under Secretary was himself enquiring of the Principal as to whether the appellant had been confirmed in his existing post.
Learned counsel for the appellant contended that after attaining the age of 58 the appellant must be treated as not in ernment service and as the University had the power to manage the affairs of the College, in effect it retained him in exercise of its rights under the above mentioned rule but this would not make the appellant 's emp1oyment one under the Government.
On the other hand, it was contended by learned counsel for the resportdent that we should ignore these deeming provisions of the Fundamental Rules and hold that.
as a matter of fact the appellant had continued in service till 1967 notwithstanding the Fundamental Rules of the Madhya Pradesh Government and the rules of the University which permitted the termination of his service before February 1967 but which were never resorted to.
For the purpose of this case, it is nor necessary to express any final opinion on the joint except to say that the contention put forward on behalf of the appellant seems to have great force.
The appellant was only a temporary Government servant.
lie had never 'become permanent.
lie really had no lien on the post.
He was sent on deputation to the University in 1959 and in the ordinary course of things such deputation would have come to an end in 1964 when he attained the are of superannuation.
It was really for the Umversity.
to ignore the fact.
that he had been superannuated.in 1964 and.continue him in service, but that would be an 431 act of the University and not of the Government.
There is room for doubt as to whether in the circumstances mentioned above the appellant was holding an office Of profit under the Government as a Lecturer in law in the Madhav College by reason of the fact that no order was passed in respect of him at any time either by the Government or by the University until after the filing of the election petition.
The last point of disqualification alleged was whether the appellant could be said to have been a holder of an office of profit by reason of his appointment as Chairman of the Improvement Trust Tribunal in Ujjain City.
The appointment was gazetted in October 1966 by a notification to the effect that the State Government was pleased to constitute the Tribunal as specified below for the purpose of section 73 of the Madhya Pradesh Improvement Trusts Act, 1960, for acquisition of land at Ujjain.
President Shri M.C. Joshi, Advocate, Ujjain.
Assessors.
Shri Chand Narayan Rajdan, Retired Traffic Superintendent Agar Light Railway Ujjain.
The High Court in its judgment noted that there was no 'clear positive indication that the appellant had been consulted beforehand.
There is certainly no evidence that he had acted on the appointment or that he had ever taken charge of the office.
The finding of the High Court is that when the order was delivered at his house, the appellant took it and did not inform anybody connected with the Trust, or as for that matter, the Government, that the order had come to him by mistake and he was not "M. C. Joshi" as mentioned in the notification.
The High Court gave, the appellant what it terms "the benefit of doubt" on this alleged disqualification.
But quite apart from the mistake as regards the name, it is difficult to hold that the appellant held the office of profit as the President of the Tribunal.
As noted already, he had never been approached for the purpose nor had he ever signified his willingness to act under the terms of the notification.
He had never taken charge of any office nor had he ever discharged any function with regard to the office.
In the circumstances, it would hardly be right to hold that he was holding an office of profit under the Government.
On the materials before it the High Court was not prepared to hold 'that the appellant was the holder of an office of profit and on the facts of this case, we do not feel called upon to disturb the finding.
of the High Court.
In the result, the appeal fails and is dismissed with costs.
R.K.P.S Appeal dismissed.
| IN-Abs | The appellant 's election to the M.P. Legislative Assembly in February 1957 was challenged by an election petition mainly on the allegation ,that he was disqualified from being a candidate as he held certain offices of profit under the Government.
The trial Judge allowed the election petition holding that the appellant held an office, of profit under the Government being on the panel of lawyers prepared by the Central 'and Western Railway Administration and having been at the material time a Professor of Law in a Government College on a regular salary of Rs. 250 per month; it was also held that on the material before the court it could not be said that the appellant held the post of the President Member of a Tribunal constituted under section 73 of the Madhya Pradesh Town Improvement Trust Act, 1960.
On appeal to this Court, HELD: Dismissing the appeal: (i) "By office" is meant the right and duty to exercise an employment or a position to which certain duties are attached.
The appellant held such an office by his enagagement on the, basis of a letter of appointment dated February 6, 1962 addressed to him by ' the Chief Commercial Superintendent of the Railway and his reply thereto whereby he accepted certain obligations and was required to discharge.
certain duties.
lie was not free to take a brief against the Railway Administration.
Whether or not the Railway Administration thought it proper to entrust any particular case to him, it was his duty to watch 'all cases coming up fog hearing against the Railway Administration and to give timely intimation of the same to the office of the Chief Commercial Superintendent.
Even if no instructions regarding any particular case were given to him, he was expected to appear in court and obtain adjournment.
In effect this cast a continuing duty on him to protect the interests of the Railway as long as his engagement continued.
The fact that the appellant would be paid only if he appeared in a case and the possibility of the Railway 's not engaging him was a matter of no moment.
An office of profit realy means an office in respect of which a profit may accrue.
It is not necessary that it should be possible to predicate of a holder of an office of profit that he was bound to get a certain amount of profit irrespective of the duties discharged by him.
[426 F 427 C] Although it was open to the appellant to terminate the engagement at any time and he might even commit a breach of etiquette by 'accepting a brief against the Railway without formally putting.
an end to the engagement that would ' not detract from the position that he was in duty bound to work for the Railway Administration and see that it causes did not suffer by default.
So long as the engagement was not put an end to, he was holding an office of profit in the Railway Adminis 423 tration, and as such was disqualified for being elected to the Legislative Assembly of Madhya Pradesh.
The Statesman (Private) Ltd. vs
H.R. Deb and others ; ; Mcmillan vs Guest [1942] Appeal Cases 561; referred to.
[427 E F] (ii) Although it was not necessary for the purpose of the present case to express any final opinion on the point, on the facts, there was great force in the appellant 's contention that he did not hold an office of profit by being a Professor of Law in a Government College on a salary of.
Rs. 250 per month.
The Management of the College in question had been handed ' over W the University The appellant was only a temporary Government servant.
He had never become permanent nor had a ,lien on the post.
He was sent on deputation to the University in 1959 and in the ordinary course of things such deputation would have come to an end in 1964 when he attained the age of superannuation.
No order was passed in respect of him at any time either by the Government or by the University until after the firing of the election petition.
[430 F 431 B] (iii) On the facts, it was difficult to hold that the appellant held the office: of profit as the President of a Tribunal constituted under section 73 of the Madhya Pradesh Town Improvement Trust Act, 1950.
He had never been approached for the purpose nor had he ever signified his willingness to act under the terms of the notification.
He had never taken charge of 'any office nor had he ever discharged any function with regard to the office.
[431 G]
|
: Criminal Appeal No. 145 of 1966.
559 Appeal by special leave from the judgment and order dated January 29, 1966 of the Patna High Court in Criminal Appeal No. 231 of 1963.
D. Goburdhun, for the appellants.
B.P. Jha, for the respondent.
The Judgment of the Court was delivered by Shah, J.
At mid day on July 2, 1962, an unlawful assembly about 30 persons armed with lethal weapons made an assault upon certain villagers of Mananki Khandha who were engaged in agricultural operations and caused injuries to six persons.
Budhia one of the persons injured died as a result of the injuries, a few hours after the assault.
The seven appellants in this appeal and one Harihar Gope were tried before the Additional Sessions Judge, Patna, for offences under section 302 read with sections 149, 147, 148, 323, 324, 325 read with 34 and 326 I.P. Code, on the charge that they had formed an unlawful assembly and had committed rioting and in prosecution of the common object of the unlawful assembly, viz. to rescue their cattle which had damaged the maize crop of Budhia and had on that account been detained by the villagers, and to assault persons resisting the rescue, and had caused injuries to the victims as a result of which Budhia died.
The Sessions Judge held, relying on the evidence of four witnesses P.Ws. 5, 8, 12 and 18, that Harihar Gope had caused injuries with a spear to Budhia which resulted in her death.
He accordingly recorded an order of conviction against Harihar Gope of the offence under section 302 I.P. Code and against the other appellants for the offence under section 302 read with section 149 I.P. Code.
The High Court of Patna in appeal acquitted Harihar Gope for the offence under section 302 I.P. Code for they entertained doubt about Harihar Gope 's presence in the unlawful assembly in question.
The High Court observed that Harihar Gope was a resident of another village and had no reason to bring his cattle to the village .Mananki Khandha for grazing,.
and that the name of Harihar Gope was not mentioned in the first information which was given at the police station in the presence of the witnesses who deposed to the assault made on Budhia by Harihar Gope.
The State has not appealed against that order of acquittal.
The High Court has however, confirmed the conviction of the other appellants for the offence under section 302 read with section 149 I.P. Code.
In this Court, counsel for the appellants contends that because of the order of acquittal passed by the High Court in favour of Harihar Gope, conviction of the other appellants for the offence under section 302 read with section 149 I.P. Code cannot, in law, be sus 560 tamed.
Counsel argues that if Harihar Gope who was according to the case of the prosecution responsible for causing the death of Budhia is acquitted the appellants who were charged with sharing the common object of the unlawful assembly cannot be convicted for the vicarious liability arising out of the offence committed in prosecution of the common object of the unlawful assembly.
There is no substance in that argument.
The case for the prosecution when analysed consists of four parts (1) that there was an unlawful assembly of 30 persons the common object of which was to forcibly rescue cattle detained by the villagers of Mananki Khandha and to beat up all those who resisted; (2) that six villagers of Mananki Khandha were beaten up by the members of the unlawful assembly and Budhia died in consequence of the injuries suffered by her; (3) that the injuries were caused to the six victims by the members of the unlawful assembly in prosecution of the common object of the unlawful assembly or the injuries were such that the members of the assembly knew to be likely to he caused; (4) that Harihar Gope was a member of the unlawful assembly, and he caused injuries to Budhia in prosecution of the common object of the assembly in consequence of which she died.
The result of the findings of the High Court is that the first three parts are made out but not the last.
On that account however we are unable to hold that the appellants who are proved to be members of the unlawful assembly escape liability for conviction under section 302 read with section 149 I.P. Code.
On the finding recorded by the High Court it inevitably follows that fatal injuries were caused to Budhia by a member of the unlawful assembly which the members of the assembly knew to be likely to be caused in prosecution of the common object of the unlawful assembly.
The State, however, failed to establish that it was Harihar Gope who caused those injuries.
Failure to establish that a member or members of the unlawful assembly named by .the witnesses for the State cause the particular injury which resulted in the death of Budhia will not result in the rejection of the case of the State against persons proved to be members of the unlawful assembly, if the common object of the unlawful assembly and the commission of the offence in the prosecution of the common object or which the members knew to be likely to be committed be proved.
Where a member of an unlawful assembly is named as an offender who committed an.
offence for which the members of the unlawful assembly are liable under section 149 I.P. Code, and the evidence at the trial is insufficient to establish that the named person committed the act attributed to him, he may still be convicted of the offence if it is proved that he was a member of the unlawful assembly and that the act was done by some member of the assembly in prosecution of the common object or which the members knew was likely to be committed in prosecution of that 561 object.
In our judgment, failure to prove the presence of the named offender among the members of the unlawful assembly will not affect the criminality of those who are proved to be members of the assembly if the other conditions of the applicability of section 149 I.P. Code be established.
If the Court refuses to accept the testimony of witnesses who speak to the presence of and part played by a named offender, the weight to be attached to the testimony of those witnesses insofar as they involve others may undoubtedly be affected, but it cannot be said that because the testimony of witnesses who depose to.
the assault by the named offender is not accepted, other members proved to be members of the unlawful assembly escape liability arising from the commission of the offence in prosecution of the common object of the assembly.
The High Court found that on the day in question more than 30 persons formed an unlawful assembly, the common object of which was to rescue cattle detained by the villagers of Mananki Khandha, and to kill those who resisted, and that members of the unlawful assembly committed 'an assault on the villagers and severely beat up the villagers including Budhia in prosecution of the common object.
The offence being such that it was known to be likely to be committed, every person who was a member of that unlawful assembly at the time of the commission of the offence would by virtue of section 149 I.P. Code be guilty of the offence committed.
The argument that Harihar Gope alone had the object of causing the death of Budhia cannot on the evidence be accepted as correct.
The object to beat up and kill those who resisted the rescue of the cattle detained was according to the case for the prosecution common to all members of the unlawful assembly, and that object was established by abundant evidence.
Proof of the common object of the unlawful assembly did not depend upon the presence therein of Harihar Gope.
Failure to establish that Harihar Gope was a member of the unlawful assembly did not, in our judgment, affect the liability of the persons proved to be members of the unlawful assembly for the acts done in prosecution of its common object, or which they knew to be likely to be committed in prosecution of the object thereof.
When a concerted attack is made on the victim by a large number of persons it is often difficult to determine the actual part played by each offender.
But on that account for an offence committed by a member of the unlawful assembly in the prosecution of the common object or for an offence which was known to be likely to be committed in prosecution of the common object, persons proved to be members cannot escape the consequences arising from the doing of that act which amounts to an offence.
There is clear evidence on the record to show that Budhia was one of those persons upon whom an attack was made by the unlawful assembly of which the appellants and others were members.
562 In the assault made by the members of the assembly Budhia as well as other persons were injured.
On the findings of the High Court, the offender who actually caused injuries to Budhia cannot be ascertained: it follows that the injuries were caused to Budhia by some member of the unlawful assembly, and that Budhia succumbed to those injuries.
In our judgment, the order of conviction of the appellants, other than Harihar Gope, for the offence under section 302 read with section 149 I.P. Code is not rendered illegal, because Harihar Gope is held not to have been a member of the unlawful assembly.
The appeal fails and is dismissed.
R.K.P.S. Appeal dismissed.
| IN-Abs | The appellants and one H were tried on the charge that on July 2, 1962 they had formed an unlawful assembly and in prosecution of the common object of the unlawful assembly i.e., to rescue their cattle which had damaged the maize crop of one B and had on that account beer detained by the villagers, made an assault on persons resisting the rescue causing injuries to various persons including B as a result of which B died.
The Trial Court, relying on the evidence of certain witnesses, held that H had caused injuries with a spear to B which resulted in her death.
It therefore convicted H of an offence under section 302 I.P.C. and the appellants for an offence under section 302 read with section 149 I.P.C.
The High Court appeal acquitted H as it entertained a doubt about his presence in the unlawful assembly, but confirmed the conviction of the other appellants.
In appeal to this Court it was contended on behalf of the appellants that because of the acquittal of H, the conviction of the other appellants for an offence under section 302 read with section 149 I.P.C. could not, in law, be sustained; when according to the prosecution case H was responsible for causing the: death of B and he was acquitted, the appellants who were charged with sharing the common object of the unlawful assembly could not be convicted for the vicarious liability arising out of the offence committed in prosecution of the common object of the unlawful assembly.
HELD: Dismissing the appeal: The order of conviction of the appellants for the offence under section 302 read with section 149 I.P.C. was not rendered illegal because H was held not to have been a member of the unlawful assembly.
[56.2 B] There was clear evidence to show that B was one of the persons upon whom an attack was made and injuries inflicted by the unlawful assembly of which the appellants and others were members.
On the findings of the High Court, the offender who actually caused injuries to B could not be ascertained: it follows that the injuries were, caused to B by some members of the unlawful assembly.
[561 H] Failure to prove the presence of the named offender among the members of the unlawful assembly will not affect the criminality of those who are proved to be members of the assembly if the other conditions of the applicability of section 149 I.P.C. be established.
[56.1 A]
|
titions Nos. 133, 165, 169 172, 185, 218, 219, 227, 228, 230,239, 252, 253, 248 and 249 1968.
Petition under article 32 of the Constitution of India for the enforcement of the fundamental rights.
S.V. Gupte, S.K. Mehta and K.L. Mehta, for the petitioners (in W.P. No. 133 of 1968).
C.D. Garg, S.K. Mehta and K.L. Mehta, for the petitioners (in W.P. No. 165 of 1968).
Harder Singh, for the petitioners (in W.Ps.
Nos. 169 and 170 of 1968).
V.C. Mahajan, S.K. Mehta and K.L. Mehta, for the petitioners (in W.Ps.
171,172, 218, 219, 227, 228, 230, 239, 248, 249, 252 and 253 of 1968).
M.C. Chagla, A.N. Sinha and B.P. Jha, for the petitioners (in W.P. No. 185 of 1968).
Niren De, Solicitor General, O.P. Malhotra and R.N. Sachthey, for the respondents (in W.P. Nos. 133 and 165 of 1968).
A nand Saroop, Advocate General for the State of Haryana and R.N. Sachthey, for the respondents (in W.P. Nos. 218, 219, 227 & 228 of 1968).
O.P. Malhotra and R.N. Sachthey, for the respondents (in W.P. Nos.
169 to 172 of 1968).
R.N. Sachthey,, for the respondents (in W.P. Nos. 185, 230, 239, 248, 249, 252 and 253 of 1968).
B. Datta and P.C. Bharatari, for the interveners (in W.P. No. 165 of 1968).
546 The Judgment of the Court was delivered by Hidayatullah, C.J.
These are 17 petitions challenging the validity of the Punjab General Sales Tax (Amendment and Validation) Act, 1967 (Act No. 7 of 1967) by the Punjab Legislature and the Punjab Sales Tax (Haryana Amendment and Validation)Act, 1967.
Thirteen of these petitions challenge the Punjab Amendment Act and four challenge the Haryana Amendment Act.
The petitioners are firms or companies dealing in cotton or oil seeds.
Their business is to purchase ginned and unginned cotton for manufacturing yarn and selling the said cotton also to registered and unregistered dealers both inside and outside the State.
The petitioners of the second category purchase oil seeds for use in manufacture of edible oils.
The surplus oil seeds are sold to other dealers, registered or unregistered, inside and outside the State of Punjab.
Both these commodities are essential commodities to which the Central Sales Tax Act applies.
Certain provisions of these Amending Acts are challenged on the ground that they offend section 15 of the Central Act and are also unconstitutional being in violation of Articles 14 and 19.
The Punjab General Sales Tax Act was passed in 1948.
It was amended from time to time.
The Act as it stood on April 1, 1960, was challenged in Bhawani Cotton Mills Ltd. vs State of Punjab and anr.(1).
On April 10, 1967 this Court by majority struck down certain portions of the Act on the ground that they were in conflict with the provision of section 15 of the Central Act.
On November 1, 1966 .the former State of Punjab bifurcated and the States of Punjab and Haryana came into existence.
On December 29, 1967, the Punjab Legislature enacted Act 7 of 1967 amending the original Act, and the following day the President 's Act intituled the Punjab General Sales Tax (Haryana Amendment and Validation) Act, 1967 (Act No. 14 of 1967) was passed for Haryana.
Both the Acts were preceded by Ordinances which they replaced.
It is not necessary to refer to the Ordinances.
Section 15 of the (54 of 1956) provided as follows: "15.
Restrictions and conditions in regard to tax on sale or purchase of declared goods within a State.
Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely : (1) ; 547 (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed three per cent of the sale or purchase price thereof, and such tax shall not be leviable at more than one stage; (b) where a tax has been levied =under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of inter State trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State.
" The section provides that in respect of declared goods the tax (sales or purchase) shall not exceed the prescribed limit and shall not be levied at more than one stage and shall be refunded to persons from whom it is collected if the goods are sold in the course of inter state trade or commerce.
The original Punjab General Sales Tax Act, 1948 was challenged before this Court in Bhawani Cotton Mills Ltd. 's case(1).
The Act in defining the tax able turnover in section 5 (2) allowed certain deductions and one such deduction in cl.
(vi) was: " . . turnover during that period on the purchase of goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of inter State trade or commerce, or in the course of export out of the territory of India: Provided that in the case of such a sale to a registered dealer, a declaration, in the prescribed form and duly filled and signed by the registered dealer to whom the goods are sold, is furnished by the dealer claiming deduction.
" The original section, as it stood on April 1, 1960, read as follows: "5.
Rate of tax.
(1) Subject to the provisions of this Act, there shall be levied on the taxable turnover every year of a dealer a tax at such rates not exceeding four naye paise in a rupee as the State Government may by notification direct: Provided . . . . . . (1) ; 548 Provided ,further that the rate of tax shall not exceed two naye paise in a rupee in respect of any declared goods as defined in clause (c) of section 2 of the , and such tax shall not be levied on the purchase or sale of such goods at more than one stage: Provided . . (2) In this Act the expression "taxable turnover" means that part of a dealer 's gross turnover during any period which remains after deducting therefrom (a) his turnover during that period on (i) . . . . (ii) sales to a registered dealer of goods declared by him in a prescribed form . . (vi) the purchase of goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of inter State trade or commerce, or in the course of export out of the territory of India: Provided that in the case of such a sale to a registered dealer a declaration in the prescribed form and duly filled and signed by the registered dealer to whom the goods are sold, is furnished by the dealer claiming deduction.
It was contended in that case that section 2(ff), 5 (1) second proviso and 5(2)(a)(vi) were in conflict with section 15 of the Central Act.
Bhawani Mills were dealers registered under the Punjab General Sales Tax Act, 1948 and for the assessment years 1960 61 1961 62 and 1962 63 the Mills denied their liability to the Central Sales Tax on the purchase of cotton in the accounting year.
The scheme of the Act then in force put the tax on purchase of cotton (which was a declared commodity) 'at the rate of 2 naye paise in a rupee.
By the second proviso to section 5 (1) it was further provided that such tax shall not be levied on the purchase or sale of such goods at more than one stage.
The word 'dealer ' at that time was defined as follows: 549 Dealer means any person including a Department of Government who in the normal course of trade sells or purchases any goods that are actually delivered for the purpose of consumption in the State of Punjab.
irrespective of the fact that the main place of business of such person is outside the said State and where the main place of business of ' any such person is not in the said State, 'dealer ' includes the local manager or agent of such person in Punjab in respect of such business.
" The provisions for taxing purchases of cotton were challenged on the ground that there was a possibility of the tax being levied at more than one stage, the provisions of the second proviso notwithstanding.
The argument was summarized by our brother Vaidialingam thus: "In this case, according to the appellant, it has to send quarterly returns, even during the accounting year and, as per section 10(4) of the Act, it has to pay also tax.
in accordance with the returns submitted by it for every quarter.
In the returns that are being sent, the dealer will have to include all purchases of cotton, effected by him during the quarter for which the return is sent.
There is no indication, either in the Act.
or in the rules or ,the forms prescribed, as to whether the persons from whom the appellant purchased cotton, have paid tax or not.
Section 15 of the Central Act is not restricted only to registered dealers.
There will also be nothing to guide the appellant to know as to whether the goods, purchased by it, have 'been sold to it by its vendor within the period mentioned in cl.
(vi) of section 5(2)(a) of the Act.
Under those circumstances, there is always a possibility, or even a certainty, of more persons than one having paid tax or being made liable to pay tax in respect of the same goods at different stages.
That is quite opposed to the provisions of section 15 (a) of the Central Act.
Even otherwise, it is pointed out that if a person has purchased cotton and sells it after the period provided for in section 5 (2)(a) (vi), that party is liable to pay sales tax and would have also paid the same.
Another purchaser from the said party will also be liable to pay tax.
on the same commodity, if he sells the goods, after 'the period mentioned in cl.
That is, two persons are made liable for payment of tax in respect of the same commodity.
In other words the purchases of the same item of declared goods, by the persons indicated above, are made liable for tax, whereas under the Central Act.
there can be only one levy and collection of tax at one stage, either on sale or on purchase." 550 Learned counsel in that case showed by way of contrast how the Madras, Mysore, Andhra Pradesh and U.P. had avoided such a consequence.
In answer, it was pointed out by the State that since the tax was levied, whether on sale or purchase, at the very first transaction, the stage was fixed and that the dealer could always claim exemption under section 5(2)(a)(vi) or a refund under section 12 of the Act.
This Court in its majority judgment did not consider that the second proviso to section 5 (1) by its mere declaration prevented the levy of tax at more than one stage.
The difficulty however, remained that the Act itself did not indicate the stage at which the tax was to be levied and because under section 15(1) of the Central Act there could be no liability for payment of tax unless this stage was so stated in the Act or the rules thereunder.
It was pointed out that a dealer would have to show in his return all purchases of cotton and pay the tax with his return.
There was nothing which would have enabled the dealer to know whether the tax had already been paid by another dealer and to exclude from his return those transactions.
The dealer could not take a chance as heavy penalties were provided.
This was particularly so where the goods passed through an unregistered dealer 's hands at an intermediate stage.
In dealing with the latter part of the reasons this Court gave an example which may be quoted here: " . if a dealer, 'A ' sells the declared foods to 'B ', six months after the close of the year (B being a registered dealer), A becomes liable to purchase tax.
But, if B sells the identical declared goods, again, after the period mentioned in sub el. (vi), he will also be liable to pay purchase tax.
That means, in respect of.
the same item of declared goods, more than one person is made liable to pay tax and the tax is also levied at more than one stage.
That is not permissible under section 15(a) of the Central Act.
If goods are resold to a nonregistered dealer, within the period, sub el.
(vi), will not help the original purchaser.
We may also point out, at this stage, that sub cl.
(vi) of section 5(2)(a), negatives the assumption that the normal rule, under the Act, in respect of declared goods, is to levy the tax on the first purchaser.
" This Court then referred to section 12 where there is a provision for refund which taken with rules 48 58 allowed for refund to be claimed, and found the provisions insufficient to get over the difficulty.
This Court observed: "Even in the matter of obtaining refunds, there can be no controversy, that the appellant will have to place, before the officer concerned, particulars of transactions connected with the commodity, in question and also the 551 basis on which it claims the relief.
It will be absolutely difficult, if not impossible, for persons like the appellant, to collect materials in this behalf, because, there is no provision, contained either in the Act or the rules, on the basis of which it will be entitled to be supplied with all the material information, relevant, for sustaining a request for refund.
If the Central Act makes it mandatory that the tax can be collected only at one stage, in our opinion, it is not enough for the State to say that a person, who is not liable to pay tax, must nevertheless, pay it in the first instance, and then claim refund, at a later stage.
We may state that the question as to how far a party can ask for refund, without the order of assessment being set aside, by appropriate proceedings, is highly doubtful; because at the time when the actual order of assessment is passed, in certain eases, it may not be possible for a party to say whether he is entitled to exemption, or not, under sub cl.
(vi) of section 5(2) of the Act.
If a person is not liable for payment of tax at all, at any time, the collection of a tax from him, with a possible contingency, of refund at a later stage, will not make the original levy valid; because, if particular sales or purchase are exempt from taxation altogether, they can never be taken into account, at any stage, for the purpose of calculating or arriving at the taxable turnover and for levying tax." Relying upon the observations in .4.
V. Fernandez vs State of Kerala (1) this Court concluded: " . the provisions contained in a statute with .respect to exemptions of tax or refund or rebate, on the one hand, must be distinguished from the total nonliability or non imposition of tax, on the other.
These observations, also, in our opinion, effectively provide an answer to the stand taken by the State, in this ease that section 12 of the Act provides an adequate relief, by way of refund, even if tax is collected at an earlier stage." The Amending Acts which are now challenged set about removing these difficulties.
These amendments are again challenged on the same lines.
It is convenient to take the two Amending Acts separately.
First we shall take up for consideration the Punjab amendments.
Here, we are concerned only with a few of the amendments made by the Amending Act 7 of 1967.
Section 5 was amended retrospectively from different dates.
In subsection (1), in the second proviso, the words "as defined in el. ; 552 of section 2 of the , and such tax shall not be levied on the purchase of sale of such goods at more than one stage" are now omitted.
After the second proviso another proviso is introduced: In sub section
1 A, the words "in respect of such goods other than declared goods" are substituted retrospectively from 16th December, 1965 for the words "in respect of such goods. ' After sub section
(2) a new sub section (3) from October 1,1958.
We may now set out the 5th sub section as it emerges from the amendment before we deal with the objections: "Section 5 Rate of tax (1) Subject to the provisions of this Act, there shall be levied on the taxable turnover of a dealer a tax at such rates not exceeding six naye paise in a rupee as the State Government may by notification direct.
" (2) In this Act the expression 'taxable turnover means that part of a dealer 's gross turnover during any period which remains after deducting therefrom (a) his turnover during that period on (i) . .
(vi) the purchase of ' goods which are sold not later than six months after the close of the year, to a registered dealer, or in the course of inter State trade or commerce, or in the course of export out of the territory of India; Provided that in the case of such sale to a registered dealer, a declaration, in the prescribed front and duly filled and signed by the registered dealer to whom the goods are sold, is furnished by the dealer claiming deduction.
(3) Notwithstanding anything contained in this Act (a) in respect of declared goods tax shall be levied at one stage and that stage shall be (i) in the case of goods liable to sales tax, the stage of sale of such goods by the last dealer liable to pay tax under this Act; (ii) in the case of goods liable to purchase tax, the stage of purchase of such goods by the last dealer liable to pay tax under this Act; (b) the taxable turnover of any dealer for any period shall not include his turnover during that period 553 on any sale or purchase of declared goods at stage other than the stage referred to in subclause (i).
or as the case may be, sub clause (ii) of clause (a).
" In addition, a new section, section 11 AA was added to the following effect: "11 AA.
Review of certain assessments, etc.
of tax on declared goods : (1) Notwithstanding anything contained in this Act.
the Assessing Authority shall (whether or not an application is made to him in this behalf), review all assessments and reassessments made before the commencement of the Punjab GeneraI Sales Tax Amendment and Validation Act, 1967, in respect of declared goods and make such order varying or revising the order previously made as may be necessary for bringing the order previously made into conformity with the provisions of this Act as amended by the Punjab General Sales Tax (Amendment and Validation) Act.1967: Provided that no proceeding for review shall be initiated without giving the dealer concerned a notice in writing of not less than thirty days.
(2) Any dealer on whom a notice is served under sub section (1) may within thirty days from the date of receipt of such notice intimate in writing the assessing authority of his intention to abide by the assessment or reassessment sought to be reviewed and if he does so.
the assessing authority shall not review such assessment or reassessment under this section.
(3) No order shall be made under this section against any dealer without giving such dealer a reasonable opportunity of being heard.
(4) Notwithstanding anything contained in any judgment, decree or order of any court or other authority to the contrary but subject to the provisions of the foregoing sub sections any assessment.
reassessment.
levy or collection of any tax in respect of declared goods made or purporting to have been made, and any ' action or thing taken or done or purporting to have done in relation to such assessment.
are assessment.
levy or collection under the provision of this Act before the commencement of the Punjab General 554 Sales Tax (Amendment and Validation) Act, 1967, shall be as valid and effective as if such assessment, reassessment, levy or collection or action or thing had been made, taken or done under this Act as amended by the Punjab General Sales Tax (Amendment and Validation)Act, 1967.
" The argument is that the position has not altered at all even after the amendments and the liability to taxation at different stages remains still and the Act continues to be in conflict with the Central Act on the same reasons on which Bhawani Mills case(1) proceeded.
It is argued that the amendments have been made retrospective but no machinery is provided to enable the dealer to discover that the goods had been taxed before and the single stage at which the tax is to be levied is still not clearly discernible.
This is the main argument but there are many supplementary arguments which we shall notice later.
For the present we confine our attention to the main point.
The stage of tax is now stated in section 5(3)(i) and (ii).
In the case of sales tax, the stage of tax is the sale of such goods by the last dealer liable to pay the tax and in the case of purchase tax the stage is purchase by the last dealer liable to pay the tax.
It is also provided that the turnover of any dealer for any period shall not include his turnover during that period of any sale or purchase of declared goods at any other stage than the stage so mentioned.
It will be seen that the matter is now in the hands of the dealer.
He has to find out for himself whether he is liable to pay the tax or not.
A dealer knows what he has done with his goods or is going to do with them.
If he knows that he is not the last dealer having parted with the goods to another dealer or he knows that he is going to use the goods or sell them to consumers, he knows when ' he is not liable to tax and when he is.
Therefore, he will not include the transaction in his taxable turnover in the first case but include it in the second.
Goods in the hands of a dealer are not taxed.
They are only taxed on the last purchase or sales.
This information is always possessed by a dealer and by providing that he need not include in his turnover any transaction except when he is the last dealer, the position is now clear.
It is contended that even so the dealer may not know that he is the last dealer and may make some mistake.
The law does not take .into account the actions of persons who are negligent or mistaken but only of persons who act correctly, according to law.
If the dealer is clear 'about his own position he is now quite able see whether he is the last purchaser liable to pay the tax or the last seller liable to pay the tax.
The Act by Specifying the stage ; 555 as the last purchase or sale by a dealer liable to pay the tax makes the stage quite clear and by giving an option to him not to include such transactions in his return saves him from the liability to pay the tax till he is the dealer liable to pay the tax.
In our opinion, therefore, the present provisions of the Act are quite clear and are quite sufficient to make the amended Act accord with the Central Act.
The arguments noted in the earlier case of this Court do not therefore arise.
It will thus be seen that the present Act does not suffer from any of the defects from which the unamended Act had suffered.
It is, however, contended that the Act has been made retrospective but no machinery is provided to discover if the declared goods were assessed to tax more than once.
As we have already pointed out, the matter is within the ken of the dealer himself and it is ,for him to decide whether he would not claim the benefit of section 11AA and ask for a refund or in future transactions delete the sales from his taxable turnover when he is not the last dealer liable to pay the tax.
Therefore the retrospectivity of the Act does not make any difference.
It is not contended before us that it was not within the competence of the Punjab Legislature to pass such an Act retrospectively.
The defect pointed out is the self same defect which was noticed in Bhawani Mills case(1).
But that defect no longer exists.
It is argued further that there is a discrimination between the two kinds of manufacturers.
In the definition of 'dealer ' in section (2)(d) and in the proviso to section 1 IAA it is submitted discrimination arises because of the opportunity given to a dealer to ask for reassessment or to submit to the old assessment.
This is open to every dealer and the intention is to give ,an opportunity to the dealer himself leaving it to his own will whether to ask for a refund or not.
This hardly can be said to create a discrimination.
Lastly it is contended that there is a delegated legislation in that the maximum has been provided without indication of the circumstances under which the tax is to be levied.
This, it is said, creates unguided delegation to administrative authority, the function of the legislature.
It is to be noticed that the Central Act itself gives power to the legislature to choose a rate of tax at not more than 3 per cent of the taxable turnover.
The tax levied is well within that limit and therefore the legislature has chosen the maximum and has left it free to the authorities to impose the tax within that maximum regard being had to the requirements of revenue and the expenditure necessary for the State.
We may now deal with some arguments which are common both sets of cases before considering the case of the Haryana amendment.
It is ,argued that the organisation of the State (1) ; 556 took place on November 1, 1966 and the amendment in some of its parts seeks to amend the original Act from a date anterior to this date.
In other words, the legislature of one of the States seeks to amend a law passed by the composite State.
This argument entirely misunderstands the position of the original Act after the reorganisation.
That Act applied now as an independent Act to each of the areas and is subject to the legislative competence of the legislature in that area.
The Act has been amended in the new States in relation to the area of that State and it is inconceivable that this could not be within the competence.
If the argument were accepted then the Act would remain unamendable unless the composite State came into existence once more.
The scheme of the States Reorganization Acts makes the laws applicable to the new areas until superseded, amended or altered by the appropriate legislature in the new States.
This is what the legislature has done and there is nothing that can be said against such amendment.
In regard to Haryana cases also the same arguments are urged.
It is contended that the amended Act there also offends section 15 for the reasons which we have given.
Neither the amendment of section 55 in this area nor the introduction of section 11AA for refund offends against section 15 of the Central Act or the equality clause of the Constitution.
It is said that pending cases will always be reconsidered whether or not an application in that behalf is made but in the case of disposed of cases it depends upon the party to intimate in writing that he has no objection to the assessment or reassessment already made.
If any objection can be taken it will 'be by those whose cases are pending and not by those whose cases have been closed.
The option to submit to the assessment is open to every one alike and there is no discrimination if a party wants that his case need not be reconsidered.
He has only to state that in writing and that would be the end of the matter.
If he wants his case to be reconsidered then he can go before the Tribunal and get his case reconsidered.
It is also urged in this connection that there is a discrimination between the imported goods and local goods.
It is said that the discrimination is also between the first purchase in the case of imported goods and last sale in the case of local goods.
Since the imported goods might be more expensive by reason of freight etc.
or intermediary sales having taken place, it is said.
that the burden of tax will be heavier and therefore this will offend against the equality clause and article 304 of the Constitution.
In our opinion this argument is without any substance.
The rate of tax same in every case.
In State of Madras vs
N.K. Nataraja Mudaliar(1).
this Court stated that the essence of articles 301 and 303 is to enable the State by a law "to impose on goods imported (1) [1969] S.C.R. 557 from other States or the Union territories any tax to which similar goods manufactured or produced in the State are subject, so, however as not to discriminate between goods so imported and goods so manufactured or produced.
" It was pointed out by this Court that "imposition of differential rates of tax by the same State on goods manufactured or produced in the State and similar goods imported in the State is prohibited by that clause.
But where the taxing State is not imposing rates of tax on imported goods different from rates of tax on goods manufactured or produced,Art.
304 has no application".
Here also the tax is at the same rate and therefore the tax cannot be said to be higher in the case of imported goods.
It may be that when the rate is applied the resulting tax is somewhat higher but that does not offend against the equality contemplated by article 304.
That is the consequence of ad valorem tax being levied at a particular rate.
So long as the rate is the same Art.304 is satisfied.
Even in the case of local manufactures if their cost of production varies, the net tax collected will be more or less in some cases but that does not create any inequality because inequality is not the result of the tax but results from the cost of production of the goods or the 'cost of their importation.
This ground, therefore, has also no substance.
We do not think it necessary to set down here the provisions of the Haryana Amendment Act because they follow the scheme of the Punjab Amendment Act in substance and what we have said in regard to the Punjab Amending Act applies mutatis mutandis to Haryana Amendment Act also.
In the result these petitions have no substance.
They are dismissed with costs.
One set of hearing fee.
Y.P. Petitions dismissed.
| IN-Abs | In Bhawani Cotton Mills vs Stale of Punjab 119671 3 S C R 577 this Court struck down section 5(1) second proviso and sections 5(2)(a)(vi) of the Punjab General Sales Tax Act, 1948 as contravening section 15 of the Central Sales Tax Act, 1955.
because, neither the Punjab Act nor the rules made thereunder indicated, as required by the Central Act the stage at which tax was to be levied.
After the formation of the new States of Punjab and Haryana, the Act was amended by the legislatures of the two States by Act 7 of 1967 and 14 of 1967 respectively.
The amen,dments fixed it at the stage of sale or purchase of respectively, goods by the last dealer liable to pay tax.
In a writ petition before this Court the petitioners contended that (i) the position had not altered at all even after the amendments and the liability to taxation at different stages still remained and therefore the Act con.tinned to be in conflict with the Central Sales Tax Act; (ii) the legislatures of the two States were not competent to amend retrospectively an act passed by the composite State; (iii) by leaving it free to the executive to impose the tax within the maximum fixed there was excessive delegation of legislative functions; (iv) there was discrimination in the new section 11AA and the opportunity given to a dealer to ask for reassessment or to submit to the old assessment and (v) the Act discriminated between imported goods and local goods and therefore contravened the equality clause and article 30.
of the Constitution.
HELD: Dismissing, the petition.
(1) The Act by specifying the stage its the last purchase or sale a dealer liable It) pay the tax makes the stage quite clear.
The matter now in the hands of the dealer and he has to find out for himself whether he is liable to pay the tax or not.
A dealer knows what he has done with his goods or is going to do with them.
By providing that he need not include in his turnover any transaction except when he is the last dealer, the position is now made clear.
[553 F. G] (2) The competency of the Icgislatures of Punjab and Haryana to amend an Act passed the composite State cannot be questioned.
After reorganisation the Act applied as an independent Act to each of the areas and is subject to the legislative competence of the legislature in that area.
[556 B] (3) There is no abdication of legislative funtions in favour of the administrative authoritv as the Central Act itself gives power to the legislature to choose a rate of tax at not more than 3% of the taxable turnover.
The tax levied is well within that limit and therefore the legislature has chosen the maximum and has left it free to the 545 authorities to impose the tax within that maximum regard being had to the requirements of revenue and the expenditure necessary for the State.
[555 G] (4) The opportunity given to a dealer in section 11AA to ask for reassessment or to submit to the old assessment does not result in discrimination.
This is open to every dealer and the intention is to give an opportunity to the dealer himself leaving it to his own will whether to ask for a refund or not.
[555 E F] (5) When a taxing State is not imposing rates of tax on imported goods different from rates of tax on goods manufactured or produced.
Article 304 has no application.
So long as the rate is the same article 304 is satisfied.
In the instant case the tax is at the same rate and therefore tax can,not be said to be higher in the case of imported goods.
When the rate is applied the resulting tax may be somewhat higher but that does not contravene the equality contemplated by article 304.
[557 B. C] State of Madras vs
N.K. Natraja, Mudaliar, [1969] 1 S.C.R. referred to
|
Appeal No. 13 of 1966.
Appeal from the judgment and order dated January 13, 1964 of the Punjab High Court, Circuit Bench at Delhi in Civil Writ No. 557 D of 1961.
M.P. Vashi, Dalip K. Kapur,, S.V. Tambwekar and A. G. Ramaparkhi, ,for the appellant.
D. Narsaraju, R.M. Mehta and S.P. Nayar, for the respondents.
The Judgment of the Court was delivered by Hegde, J.
In this appeal by certificate though.
several contentions were raised in the memo of appeal only two of them were pressed at the time of hearing.
They are: (1) under the circumstances of the case the confiscation ordered by the Collector, Central Excise is illegal and (2) under any circumstance he could not have confiscated the entire quantity of tobacco used in the mixture.
The appellants are tobacco merchants in Dashrath village near Baroda in Gujarat State.
At the relevant time they were holding Central Excise licence in form L 2 and L 5 for the purpose of storing, selling and processing duty paid and non duty paid tobacco.
They had their own duty paid and non duty paid godowns.
In about December 1958 according to their books they possessed the following lots of different varieties of tobacco.
variety of tobacco Quantity Rate of duty Veriety of tobacco Quantity Rate of duty Bmds.
Rs. Biri Patti " 251.8 1.20 np per Ib Stems Kandi " 287.20 0.50 Do.
Rava " 1326.14 0.50 Do.
Stalk Kandi " 57.20 0.06 Do.
582 On December 13, 1958 the appellants obtained permission from the Local Central Excise authorities to mix the above lots of tobacco.
The percentage of different varieties of tobacco when mixed would have been as under: Rava 68.97 % Stems Kandi 14.86 % Biri Patti 13.07 % Stalk Kandi 3.00% On December 23, 1958 when the process of mixing was still going on the Superintendent of Central Excise, Preventive Headquarters, Baroda and his party raided the duty paid premises of the appellants.
There he seized the entire mixture tobacco weighing Mds.
2004.3 srs.
i.e. 1,64,834.50 lbs.
of tobacco.
According to that Superintendent when experiments were conducted he found in the above mixture percentage of different varieties as under: Rava 44 % Biri Patti 51.50 % Stems Kandi 3 .74 % From this he concluded that 'considerable quantity of non duty paid Biri Patti tobacco had been utilised in the manufacture of the mixture.
Hence notice was issued to the appellants on January 6, 1959 to show cause why action should not be taken against them under rule 40 of the Central Excise Rules 1944 inasmuch as they brought into duty paid premises 60,770 lbs.
of Biri Patti tobacco without payment of duty.
It was also alleged in that notice that the appellants had removed certain quantity of Rava tobacco from L 2 premises.
The appellants submitted their reply on March 13, 1959.
At the hearing before the Collector as the appellants challenged the correctness of the experiments conducted by the Superintendent, Central Excise, the Collector himself in the presence of the appellants conducted a fresh experiment.
On the basis of that experiment he came to the conclusion that the results obtained by the experiment conducted by the Superintendent, Central Excise are by and large correct.
By his order dated April 13, 1959, the Collector, Central Excise held the appellants guilty of contravening rule 40 and consequently levied on them a penalty of Rs. 2,000 as well as the duty payable under law.
He also ordered the confiscation of the seized tobacco weighing 1,64,834.50 lbs.
But he gave an option to the appellants of redeeming the same on payment.
of a fine of Rs. 1 lac.
The appellants paid the amount of fine.
under protest and got the goods released.
Thereafter they moved the High Court of Bombay under article 226 of the Constitution for quashing the order of the Collector but that application was withdrawn as the appellants first 583 wanted to exhaust their remedy under the Central Excise Act.
The appellants unsuccessfully went up in appeal and thereafter in revision under the Central Excise and Salt Act, 1944 against the order of the Collector.
After the 3rd respondent dismissed their revision petition they filed in the High Court of Punjab at Delhi Civil Writ No. 557 D of 1961 challenging the legality of the order made by the Collector of Central Excise on April 13, 1959.
That petition was dismissed by a Division Bench of that Court on January 13, 1964.
This appeal is brought against that decision.
in this Court the finding of the Collector of Central Excise that the appellants were guilty of mixing the duty paid tobacco with non duty paid tobacco and thereby they contravened rule 40 was not challenged.
Nor was there any dispute about the quantity of non duty paid tobacco used in the mixture.
The main contention of Mr. M.P. Vaish, learned Counsel for the appellants was that under rule 40, the Collector could not have confiscated the tobacco mixture as it consisted of both duty paid tobacco as well as tobacco on which duty had not been paid.
His alternative contention was that under any circumstance the Collector could not have confiscated anything more than 60,770 ' lbs.
of the mixture which can be said to represent Biri Patti tobacco on which duty had not been paid.
In support of his first contention he heavily relied on the decision of K.T. Desai, J. in Messrs. Valitmahomed Gulamhusain Sonavala & Co. vs C.T. A. Pillai (1).
The seized tobacco mixture weighed 1,64,834.50 lbs.
That included 60,770 lbs.
of Biri Patti tobacco on which duty had not been paid.
But on the remaining quantity duty had been paid.
The tobacco seized was found in the godown licenced to store duty paid tobacco.
Hence the appellants were clearly guilty of contravening rule 40 of the Central Excise Rules which reads: "Except as provided in the proviso to sub rule (1) of rule 32 and in rule 171 no wholesale purchaser of unmanufactured tobacco for the purpose of trade or manufacture and no wholesale purchaser of other unmanufactured products from a curer shall receive into any part of his premises or into his custody or possession, any unmanufactured tobacco or other unmanufactured products, other than tobacco or other unmanufactured products imported from a foreign country otherwise than under a valid permit granted by an officer showing that the proper duty has been paid; and every such wholesale purchaser who receives or has in his custody or possession any such goods, in contravention of this rule shall, in respect of every such offence, be liable to pay the duty leviable on such (1) (1960) 42 B.L.R., p. 634.
584 goods, and to a penalty which may extend to two thousand rupees, and the goods shall also be liable to confiscation." .lm0
In view of this rule the legality of the order made by the Collector in so far as he levied duty as well as penalty cannot be challenged and was not challenged before us.
But so far as the confiscation is concerned ' it was urged that under the rule in question only tobacco on which duty had not been paid could alone have been confiscated.
In the instant case even according ,to the finding of the Collector only on 66,770 lbs.
of Biri Patti tobacco the duty had not been paid; but on the remaining tobacco seized duty had been paid, it was not possible to separate the duty paid tobacco from the non duty paid tobacco; hence it was impermissible for the Collector to confiscate the said tobacco under Rule 40 as that rule permitted the confiscation of only non duty paid tobacco.
In Sonavala 's case(1) referred to earlier Desai, J. had held that the right to confiscate smuggled goods under section 167(8) of the does not carry with it the right to confiscate unsmuggled goods.
The words "such goods ' appearing in section 167(8) of the Act cannot be interpreted .to mean similar goods.
It is not open to the Customs authorities to confiscate similar goods even though they may be of the same quality, bulk and value.
The words 'such goods ' mean the very goods which have been smuggled.
If the smuggled goods lose their identity, it would not be open to the Customs officers to confiscate any part of those goodS.
Where, therefore, gold that has been smuggled has in the melting process got so mixed up with gold that is unsmuggled that it is impossible to separate the smuggled gold from the unsmuggled one, the right to confiscate smuggled gold ceases when the two get inextricably mixed up.
The broad proposition laid down by Desai, J. undoubtedly supports the contention advanced on behalf of the appellants.
We shall presently show that this statement of the law is not correct but it is necessary to mention at this juncture that in the Sonavala 's case(1) an innocent third party had purchased the smuggled gold for proper value and mixed the same with unsmuggled gold, which circumstance had an important bearing on the decision of the case.
In Institutes of Justinian at page 104 dealing with the topic commixtio it is observed: "If the things mixed, still remaining the property of their former owners, were easy to separate again, as for instance, cattle united in one herd, when one owner brought his claim by vindicatio 'his property was restored to him without difficulty but if there was difficulty in separating the materials from each other, as in dividing the grains of wheat in a heap, the obvious (1960) 42 B.L.R.p.
585 mode would be to distribute the whole heap in shares proportionate to the quantity of wheat belonging to the respective owners.
But it might happen that the wheat mixed together was not all of the same quality, and therefore the owner of the better kind of wheat would lose by having a share determined in amount only by the quantity of his wheat; and the judge therefore was permitted to exercise his judgment how great an addition ought to be made to his share to compensate for the superior quality of the wheat originally belonging to him.
" In Williams on Personal Property (18th Edn.) at p. 50, it is observed: "The acquisition of ownership by accession or confusion of substances also presupposes a previous title.
Thus the young of a domestic animal belong to the owner of the mother.
If any substances, for instance tallow, belonging to.
various owners be mixed by consent or accidentally, the mass appears to belong to the owners of its parts in common.
And if the confusion be made wilfully by one without the other 's leave, the mass belongs to the latter, whose ownership is thus unlawfully invaded." Dealing with the same topic it is observed in Halsbury 's Laws of England 3rd Edn.
(Vol. 29) at p. 378.
"Ownership of goods may be acquired by confusion or intermixture, if the goods, when mixed, are indistinguishable.
If the goods are mixed by agreement or consent the proprietors have an interest in common in proportion to their respective shares; if mixed by accident or the act of a third party, or which neither owner is responsible, the proprietors become owners in common of the mixed property in proportion to the amounts contributed.
Where, however, one man wilfully mixes his goods with those of another without the approbation or knowledge of the other, the whole be longs to the latter.
" The law on this topic was stated by Bovill, C.J. as early as 1868 ' in Spence and Anr.
vs The Union Marine Insurance Co. Ltd.(1) thus: "In our own law there are not many authorities to be found upon this subject but, as far as they go, they are in favour of the view, that, when goods of diffe (1) Law Reports (Common Pleas) 3, 1867 68.
586 rent owners become by accident so mixed together as to be undistinguishable, the owners of the goods so mixed become tenants in common of the whole, in the proportions which they have severally contributed to it.
The passage cited from the judgment of Blackburn, J., in the case of the tallow which was melted and flowed into the sewers, is to that effect: Buckley vs Gross.
And a similar view was adopted by Lord Abinger in the case of the mixture of oil by leakage on board ship in Jones vs Moore. ' "It has been long settled in our law, that where goods are mixed so as to become undistinguishable, by the wrongful act or default of one owner, he cannot recover, and will not be entitled to his proportion, or any part of the property, from the other owner, but no authority has been cited to shew that any such principle has ever been applied, nor indeed could it be applied, to the case of an accidental mixing of the goods of the two owners; and there is no authority nor sound reason for saying that the goods of several persons be the property of their several owners, and become bona vacantia.
" The same principle was again reiterated by the House of Lords in Smurthwaite and Ors.
vs Hannay and Ors.(1) The rules enunciated above are of assistance in finding out a solution to the problem before us though they do not govern the same.
In the instant case there is no doubt that the appellants were guilty of an unlawful act in mixing duty paid tobacco with the non duty paid tobacco but the fact remains that they were the owners of both those lots at the time they mixed them and hence the legal principles set out earlier do not cover such a case.
It must also be remembered that in dealing with a provision relating to forfeiture we are dealing with a penal provision.
It would not be proper for us to extent the scope of that provision by reading into it words which are not there and thereby widen the scope of the provision relating to confiscation.
Rule 40 permits the Central Excise authorities to confiscate only those goods on which duty has not been paid.
It does not permit them either specifically or by necessary implication to confiscate other goods.
Therefore it was not permissible for the Collector to confiscate the entire tobacco mixture.
At the same time no person can be permitted to benefit by his wrongful act.
No rule of law should be so interpreted as to permit or encourage its circumvention.
If by the wrongful act of a party he renders it impossible for the authorities to confiscate under rule 40 the non (1) [1894] A.C.p.
587 duty paid goods it is in our opinion open to those authorities to confiscate from out of the goods seized, goods of the value reasonably representing the value of the non duty paid goods mixed in the goods seized.
Applying that rule to the facts of this it follows that the Collector, Central Excise could have confiscated out of the tobacco seized,.
much of it as can be held to reasonably represent the value of the tobacco on which the duty had not been paid.
As noticed earlier the tobacco confiscated had been returned to the appellants after realising from them a sum of Rs 1 lac as fine.
The Counsel for the parties agreed at the hearing that the ' value of the Biri Patti tobacco used in the mixture for which no duty had been paid could be fixed at Rs. 35,000.
In view of this agreement it is not necessary for us to remit the case back to the Collector of Central Excise for assessing the value of the tobacco on which duty had not been paid.
In view of our earlier findings the fine to be levied on the appellants in lieu of the confiscation that could have been ordered has to be fixed at Rs. 35,000.
From this it follows that the Collector has to refund to the appellants a sum of Rs. 65,000 which he has collected from them in excess of the aforementioned Rs. 35,000.
The appeal is allowed to that extent.
In the circumstances of the case we direct the parties to bear their own costs both in this Court as well as before the High Court.
R.K.P.S. Appeal allowed in part.
| IN-Abs | The appellants were tobacco merchants in Baroda in Gujarat State and were holding Central Excise licence in Forms L 2 and L 5 for the purpose of storing, selling and processing duty paid and non duty paid tobacco.
On December 23, 1958 while the process of mixing some tobacco was going on in a godown where duty paid tobacco was.
kept, the Superintendent of Central Excise., Preventive Headquarters, Baroda and his party raided the premises of the appellants and seized a mixture of tobacco weighing 1,64,834.50 lbs.
tobacco This mixture included 60,770 lbs.
of tobacco on which duty had not been paid.
After the 'appellants were issued a show cause notice why action should not be taken against them under rule 40 of the Central Excise Rules, 1944, and after they had filed their reply, the Collector, Central Excise, by his order dated April 13, 1959 held the appellants guilty of contravening rule 40 levied on them a penalty of Rs. 2,000 as well as the duty payable under the law, and also ordered the confiscation of the entire quantity of the tobacco seized.
As he gave the appellants the option of redeeming the same on payment of a fine of Rs. 1 lakh, they paid the fine under protest and secured release of the tobacco.
The appellant 's appeal as well as revision against the Collector 's order under the provisions of the Central Excise and Salt Act, 1944, were both dismissed.
The appellants then filed a writ petition under article 226 of the Constitution challenging the legality of the Collector 's order but this was dismissed by the High Court.
In appeal to this Court the only challenge was to the Collector 's order of confiscation.
It was contended, relying on the decision in Messrs. Valimahomed Gulamhusain Sonavala & Co. vs
C.T.A. Pillai, (1960) 42, B.L.R., p. 634, that the Collector could not have confiscated the tobacco mixture as it consisted of both duty paid tobacco as well as tobacco on which duty had not been paid, the alternative contention was that the Collector could not in any extent have.
confiscated more than 60,770 lbs.
of mixture which could be said to represent tobacco on which duty had not been paid.
HELD: Rule 40 permits the Central Excise.
authorities to confiscate only those goods on which duty had not been paid.
It does not permit them either specifically or by necessary implication to confiscate other goods.
Therefore it was not permissible for the Collector to confiscate the entire tobacco mixture.
At the same time no person can be permitted to benefit by his wrongful act.
No rule of law should be so interpreted as to permit or encourage its circumvention.
If by the wrongful act of a party he renders it impossible for the authorities to confiscate under 581 rule 40 the non duty paid goods, it is open to those authorities to confiscate from out of the goods seized, goods of the 'value reasonably representing the value of the non duty paid goods mixed in the goods seized.
Applying that rule to the facts of the present case it follows that although the appellants were guilty under Rule 40 of an unlawful act in mixing duty paid tobacco with non duty paid tobacco, the Collector could have confiscated out of the tobacco seized so much of it as can be held to reasonably represent the value of the tobacco on which the duty had not been paid.
[586 G 581 B] As the parties were agreed that the value of the tobacco used in the mixture for which no duty had been paid could be fixed at Rs. 35,000,.
the fine to be levied on the appellant in lieu of the confiscation that could have been ordered had to.
be fixed at Rs. 35,000.
The Collector therefore had to refund to the appellant a sum of Rs. 65,000.
Institutes of Justinian, p. 104; Williams on Personal Property (18th edition) p. 50; Spence and Ant.
vs The Union Marine Insurance Co. Ltd., Law Reports (Common Pleas) 3, 1867 68 and Smurthwaite and Ors.
vs Hannay and Ors.
, [1894] A.C.p. 494; referred to.
|
iminal Appeal No.219 of 1966.
Appeal by special .leave from the judgment and order dated February 7, 1966 of the Madhya Pradesh High Court Indore Bench in Criminal Appeal No. 127 of 1965.
H.K. Puri, for the appellant.
I. N. Shroff, for the respondent.
The Judgment of the Court was delivered by Shah, J.
The appellant Nirbhay Singh was tried before the Court of Session, Ujjain, for causing the death of Bhagwanti his mother by inflicting injuries to her with a spear.
The Sessions Judge convicted the appellant of the offence of culpable homicide not amounting to murder, and sentenced him to suffer rigorous imprisonment for seven years.
An appeal preferred by the appellant from jail was summarily dismissed by the High Court of Madhya Pradesh on March 16, 1965.
Thereafter the State of Madhya Pradesh preferred an appeal on March 31, 1965, against the order acquitting the ' appellant of the offence of murder.
The High Court issued notice to the appellant and after hearing counsel for the State and the appellant set aside the order of acquittal and convicted the appellant of the.
offence of murder, and in substitution of the order of sentence imposed by the Court of Session sentenced him to suffer imprisonment for life.
The appellant has appealed to this Court with special leave.
571 Counsel for the appellant urged that the judgment of the High Court dated March 16, 1965, dismissing the appellant 's appeal from the order of conviction under section 304 Part II I.P. Code became final, and that the judgment of the Court of Session got merged into the judgment of the High Court and thereafter the High Court was incompetent in an appeal filed by the State to modify that order and convict the appellant for the offence of murder.
Counsel relied in support of his contention upon sections 369 and 430 of the Code of Criminal Procedure.
Section 369 provides: "Save as otherwise provided by this Code or by any other law for the time being in force or, in the case of a High Court by the Letters Patent or other instrument constituting such High Court, no court, when it has signed its judgment, shall alter or 'review the same except to correct a clerical error.
" Section 430 provides: "Judgments and orders passed by an Appellate Court upon appeal shall be final, except in the cases provided for in section 417 and Chapter XXXII.
" We are unable to hold that the High Court was in the circumstances of the case debarred by the provisions relied upon from entertaining an appeal by the State against the order of acquittal of the offence of murder passed by the Court of Session.
The right to appeal against the order of.
acquittal is expressly conferred upon the State by section 417 of the Code, and section 369 does not purport to place any restriction upon the exercise of that right.
Section 369 occurs in Ch.
XXV/and prima facie applies to judgments of the courts of first instance.
Section 430 applies to judgments of appellate Courts; it declares the judgment of an appellate Court final except in the cases provided for in section 417 and Ch.
XXXII.
In terms the 'provision applies to.
all judgments of Appellate Courts Courts of the District Magistrate, Courts of Session and the High Courts.
Finality of the judgment of the Appellate Court declared by section 430 is subject to.
two restrictions, i.e. the judgment may be set aside or modified in an appeal under section 417 of the Code by the High Court, and in exercise of the power conferred upon the Courts under Ch.
XXXII which deals with the exercise of power to entertain references and revisions.
Judgment of a High Court in appeal is not subject to the exercise of any appellate or revisional power exercisable under the Code.
The exception declared in section 430 therefore only applies to judgment of a court subordinate to the High Court exercising appellate power.
572 There is however no warrant for the argument that when an appeal preferred by a person convicted of an offence is dismissed summarily by the High Court under section 421 of the Code of Criminal Procedure, the judgment of the trial court gets merged in the judgment of the High Court and it cannot thereafter be modified even at the instance of any other party affected thereby, and in respect of matters which were not and could not be dealt with by the High Court when summarily dismissing the appeal.
When the High Court dismisses an appeal of the person accused summarily and without notice to the State, the High Court declines thereby to entertain the grounds set up for setting aside the conviction of the accused.
That judgment undoubtedly binds the accused and he cannot prefer another appeal to the.
High Court against the same matter in respect of which he had earlier preferred an appeal.
But it is a fundamental rule of our jurisprudence that no order to the prejudice of a party may be passed by a court, unless the party had opportunity of showing cause against the making of that order.
When an appeal of a convicted person is summarily dismissed by the High Court the State has no opportunity of being heard.
The judgment summarily dismissing the appeal of the accused is a judgment given against the accused and not against the State or the complainant.
If after the appeal of the accused is summarily dismissed, the State or the complainant seeks to prefer an appeal against the order of acquittal, the High Court is not prohibited by any express provision or implication arising from the scheme of the Code from entertaining.
the appeal.
Where, however, the High Court issues notice to the State in an appeal by the accused against the order of conviction, and the appeal is heard and decided on the merits, all questions determined by the High Court either expressly or by necessary implication must be deemed to be finally determined, and there is no scope for reviewing those orders in any other proceeding.
The reason of the rule is not so muck the principle of merger of the judgment of the trial court into the judgment of the High Court, but that a decision rendered by the High Court after hearing the parties on a matter in dispute is not liable to the reopened between the same parties in any subsequent enquiry.
Cases do frequently arise where a person is charged at the trial with the commission of a grave or major offence and he is convicted of a minor offence, the conviction for the minor offence amounting to his acquittal for the major offence.
Where an appeal against the order of conviction for the minor offence at the instance of the convict is entertained and decided, the State having opportunity of being heard on the merits of the dispute.
, in an appeal subsequently filed at the instance of the State against the order of acquittal, the High Court is precluded from reconsidering all those matters which were expressly decided or flow as a neces 573 sary implication of the earlier judgment.
Any other view is likely to cause the gravest inconvenience in the administration of justice and the principle of finality of judgments would be sadly disturbed.
If, for instance, against an order of acquittal passed for a grave offence, the State prefers an appeal and the appeal is summarily dismissed, it would be impossible to contend that thereby the accused is prevented from filing an appeal against the order of conviction.
Similarly where the accused prefers an appeal against the order of conviction of a minor offence and that appeal is summarily dismissed, the accused cannot prefer another appeal, but the State will not be precluded from preferring an appeal against the order of acquittal because the State had no opportunity of being heard at the earlier stage.
Where, however, notice had been issued in an appeal at the instance of the accused and the State had art opportunity of being heard, the decision of the Court will be regarded as a decision on the merits of the transaction which resulted in the conviction of the accused and that decision cannot be reopened in any subsequent enquiry.
These principles are, in our judgment, supported by abundant authority.
In U.J.S. Chopra vs State of Bombay(1), the appellant Chopra was convicted by the Trial Magistrate of an offence under .
the Bombay Prohibition Act.
His appeal to the High Court of Bombay was summarily dismissed.
Thereafter the State of Bombay applied to the High Court of Bombay for an order for enhancement of sentence, and notice was issued to Chopra to show cause against enhancement of the sentence.
Chopra pleaded that he was entitled to show cause against the order of conviction.
This Court held that the summary dismissal of the appeal preferred by Chopra did not preclude him from showing cause against his conviction under section 439 (6) of the Code of Criminal Procedure, even though his appeal was summarily dismissed.
The case, in our judgment, involves two propositions that after the dismissal of the appeal of Chopra, an application at the instance of the State for enhancement of sentence was maintainable, and that Chopra could canvass the correctness of his conviction, summary dismissal of his appeal notwithstanding.
If the principle of merger of judgment by a summary dismissal of the appeal of the accused is valid, the State could not in U.J.S. Chopra 's case(1) have been permitted to exercise the right to apply for enhancement of the sentence.
Bhagwati, J., speaking for the majority of the Court expressed the view that a judgment pronounced by the High Court in the exercise of its appellate or revisional jurisdiction after issue of a notice and a full hearing in the presence of both the parties is a final judgment which replaces the judgement of the Court of first instance, thus constituting the only (1) ; 4 Sup.
C.I./69 4 574 final judgment to be executed in accordance with law.
When, however, a petition or appeal presented by a convicted person from jail is summarily dismissed under section 421 or a revision application made by him is dismissed in limine the order passed by the High Court does not amount to an expression of the opinion of the Court arrived at after due consideration of the evidence and all the arguments.
In Pratap Singh vs The State of Vindhya Pradesh (Now Madhya Pradesh)(1) this Court held that where a person convicted has exercised the right of presenting an appeal from jail and that appeal has been summarily dismissed under section 421 of the Code of Criminal Procedure, no further appeal lies at his instance through an Advocate.
The distinction between U.J.S. Chopra 's case(2) and Pratap Singh 's case(1) is clear: summary dismissal of the appeal filed by the accused does not bar any proceeding which the State may be competent to initiate against the order passed in favour of the accused, but another appeal by the accused after summary dismissal of his earlier appeal is barred.
In The State vs Babulal and Bherumal,(3), a Division Bench of the Rajasthan High Court held that where the accused charged under section 302 I.P. Code was convicted under section 324 J.P. Code and the appeal of the accused against his conviction under section 324 I.P. Code was dismissed by the High Court on his own prayer that he did not desire to press it and there was no hearing given to.
the State, the order of the High Court was not such a judgment as would preclude the High Court from hearing an appeal by the State against the acquittal of the accused for the offence under section 302 J.P. Code.
In State vs Kalu(4) a Full Bench of the Madhya Bharat High Court held that where after an appeal against conviction under section 423 (1 )(b) of the Code of Criminal Procedure by the accussed has been dismissed by an appellate Bench of the High Court, an appeal filed against an order of acquittal of the accused of other charges by the State under section 417 is not competent.
In the view of the High Court the reason of the rule is that the earlier decision was final, and if the appeal of the State against acquittal was heard on merits, it might disturb the finality of the earlier judgment.
In The State vs Mansha Singh Bhagwant Singh(5) the Punjab High Court expressed a similar view.
In that case also the accused at the trial charged with the offence punishable under section 302 was convicted by the Sessions Judge of the offence under section 304 Part II I.P. Code.
In appeal against the order of conviction by the accused the High Court after hearing 'the State confirmed the (1) ; (2) ; (3) A.I.R. 1956 Raj. 67.
(4) A.I.R. 1952 M.B. 81.
(5) I.L.R. (1958) Punjab 1475.
575 order.
An appeal filed by the State against the order of acquittal of the accused for murder was held not maintainable.
In State vs Diwanji Gardharji and others(1) a Division Bench of the High Court of Gujarat apparently held after discussing many other points not relevant here that when an appeal of time accused against the order of conviction and sentence for the offence under section 304 Part II I.P. Code has been dismissed after a hearing, in an appeal by the State against the order of acquittal for the offence under section 302, the question of the accused having committed an offence of culpable homicide not amounting to murder cannot be allowed to be canvassed.
In the present case the order passed by the High Court at the earlier stage w,rs an order of summary dismissal of the appeal flied by the accused.
No notice of appeal flied by the accused was given to the State, and the State had no opportunity of being heard thereon.
It is true that the High Court had at the earlier hearing called for the record of the case from the Court of Session in exercise of the power under section 421 (2) and after persuing the record had dismissed the appeal.
But that is not relevant in determining the legal effect of the order of the High Court.
The appeal fails and is dismissed.
G.C. Appeal dismissed.
| IN-Abs | The appellant was tried for causing the death of his mother by inflicting injuries with a spear.
The Sessions Judge convicted the appellant of the offence of culpable homicide not amounting to murder, and sentenced him to suffer rigorous imprisonment for seven years.
An appeal preferred by him from jail was summarily dismissed by the High Court.
Thereafter the State filed an 'appeal against the order acquitting the appellant of the offence of murder.
The High Court issued notice to the appellant and after hearing counsel on both sides, convicted the appellant of the offence of murder, and in substitution of the sentence imposed by the Court of Session, sentenced him to suffer rigorous imprisonment for life.
Appeal was filed in this Court by special leave.
On behalf of the appellant it was urged that the judgment of the High Court dismissing summarily the appellant 's appeal against conviction under section 304 became final, and that the judgment of the Court of Sessions got merged into the judgment of the High Court and thereafter the High Court was incompetent in an appeal filed by the State to modify that order and convict the appellant for the offence of murder.
Reliance was placed on sections 369 and 430 of the Code of Criminal Procedure.
HELD: (i) The right to appeal against the order of acquittal is expressly conferred upon the State by section 417 of the Code and section 369 does not purport to place any restriction upon the exercise of that right.
Section 369 ' occurs in Chapter XXVI and prima facie applies to judgments of the courts of first instance.
[571] (ii) Finality of the judgment of the Appellate Court disclosed by section 430 is subject to two restrictions i.e. the judgment may be set aside or modified in an appeal under section 417 of the Code by the High Court and in exercise of the power conferred upon the courts under Ch.
XXXII which deals with the exercise of power to entertain references and revisions.
Judgment of a High Court in appeal is not subject to the exercise of any appellate or revisional power exercisable under the Code.
The exception declared in section 430 therefore only applies to judgment of a court subordinate to the High Court exercising appellate power.
[571 G] (iii) There is no warrant for the argument that when an appeal preferred by a person convicted of an offence is dismissed summarily by the High Court under section 421 of the Code of Criminal Procedure.
the judgment of the trial court gets merged in the judgment of the High Court and cannot thereafter be modified.
The summary dismissal of the appeal of the person accused, binds the accused but not the State which has not been heard.
[572 A, D] If after the appeal of the accused is summarily dismissed the State or the complainant seeks to prefer an appeal against the order of acquit 570 tal, the High Court is not prohibited by any express provision or implication 'arising fro.m the scheme of the Code from entertaining the appeal.
When, however, the High Court issues notice to the State in an appeal by the accused against the order of conviction and the appeal is heard and decided on the merits all questions determined by the High Court either expressly or by necessary implication must be deemed to be finally determined, and there is no scope for reviewing those orders in any other proceeding: The reason of the rule: is not so much the principle of merger of the judgment of the, trial court into the judgment of the High Court, but that a decision rendered by the High Court, after hearing the parties on a matter in dispute is not liable to be reopened between the same parties in any subsequent enquiry.
[572 E, F] (iv) The fact that at the earlier hearing the High Court called for the record of the ease from the court of session in exercise of the power under section 421(2) and after persuing the record dismissed the appeal, was not relevant in determining the legal effect of the order of the High Court.
[575 D] U.J.S. Chopra vs State of Bombay, ; , applied.
Pratap Singh vs State of Vindhya Pradesh (Now Madhya Pradesh) ; , distinguished.
State vs Babulal and Bherumal, A.I.R. 1956 Raj. 67, State vs Kalu, A.I.R. 1952 M.B. 81 and State vs Mansha Singh Bhagwant Singh, I.L.R. (1958) Punjab 1475, referred to.
|
Criminal Appeal No.185 of 1966.
Appeal by special leave from the judgment and order dated June 3, 1966 of the Allahabad High Court, LuCknow Bench inCriminal Revision Applications No. 410 and 413 of 1964.
R.K. Garg, S.C. Agarwala, section Chakravarti and section S.Shukla, for the appellants.
O.P. Rana and Ravindra Bana, for the respondent.
of 1964.
The appellant, Lalta filed a money suit No. 54 of 1955 in the Court of Civil Judge, Gonda against Swami Nath on the basis of a pronote and receipt dated July 1, 1952 on the allegation that Swami Nath had taken a loan of Rs. 250 from him and executed a promisory note and a receipt in lieu thereof.
Swami Nath filed a written statement in that suit denying to have taken any loan or to have executed any pronote and receipt in favour of Lalta.
It appears that prior to the institution of this suit Swami Nath had filed a complaint on January 24, 1955 against Lalta and others alleging that they had forcibly taken his thumb.
impressions on a number of blank forms of pronotes and receipts.
The case arising out of the Criminal complaint came to be heard by a Magistrate Second Class who by his judgment dated May 31, 1956 acquitted Lalta and the other persons complained against.
The Criminal c 'ase against Swami Nath proceeded on the.
charges framed under sections 342 and 384, Indian Penal Code.
In the Civil Suit which was filed by Lalta, the defendant Swami Nath moved an application for a report being called from the Superintendent, Security Press, Nasik regarding the year of the revenue.
stamps affixed on the pronote and the receipt.
The matter was accordingly referred to the Superintendent, Security Press, Nasik and the report received was that the stamps in question had been printed on December 21, 1953 and were issued for the first time on January 16, 1954 to the Treasury.
Subsequent to the receipt of the report Lalta did not put in appearance and the suit was dismissed for default on June 1, 1956.
The Civil Judge was moved for filing a complaint against the appellants for committing forgery.
The Civil Judge Gonda actually filed a complaint on, November 9, 1956 against Lalta for offences under sections 193, 194, 209, 465, 467 and 471, Indian Penal Code and against Tribeni and Ram Bharosey for 'an offence under section 193, Indian Penal ' Code.
The complaint was enquired into by a First Class Magistrate who committed the appellants to the Court of Sessions.
By his judgment dated November 27, 1963, the Assistant Sessions Judge, Gonda convicted Tribeni and Ram Bharosey under section 467 read with section 109, Indian Penal Code and sentenced them to 3 years rigorous imprisonment.
He found Lalta guility under section 467, Indian Penal Code and sentenced him to 3 years rigorous imprisonment.
Lalta was also convicted under section 471, Indian Penal Code and sentenced to 2 years rigorous imprisonment.
He was also found guilty under section 193, Indian Penal Code and sentenced to rigorous imprisonment for two years.
The appellants took the matter in appeal to the Sessions Judge, Gonda who by his order dated October 17, 1964 set aside the convie 528 tion of Lalta under section 193, Indian Penal Code but maintained the conviction of the appellants under the other sections.
Tribeni, Lalta and Ram Bharosey filed Revision Applications before the Allahabad High Court which by its order dated June 3, 1966 affirmed the order of the Sessions Judge, Gonda and dismissed the Revision Applications.
In support of this appeal Mr. Garg put forward the argument that in view of the fact that Swami Nath 's complaint had been ,dismissed by the Second Class Magistrate on May 31, 1956, the prosecution case with regard to the act of forgery must fail and the conviction of Lalta under section 467 and section 471, Indian Penal ,.Code was not sustainable.
It was also pointed out that the ,charge of abetment against Ram Bharosey and Tribeni under section 467 read with section 109, Indian Penal Code and section 471 read with section 109, Indian Penal Code must fail for the same reason.
In our opinion, the argument put forward on behalf of the appellants is well founded and must be accepted as correct.
In Pritam Singh vs The State of Punjab(1), it was pointed out by this Court that the effect of a verdict of acquittal passed by a competent court on a lawful charge and after a lawful trial is not completely stated by saying that the person acquitted cannot be tried again for the same offence, but to that it must be added that the verdict is binding and conclusive in all subsequent proceedings between the parties to.
the adjudication.
In that case the appellant had been acquitted of the charge under section 19(f), Arms Act for possession of a revolver.
There was a subsequent prosecution of the appellant for ,an offence under section 302, Indian Penal Code and the possession of the revolver was a fact in issue in the later case which had to be established by the prosecution.
It was held that the finding in the former trial on the issue of prossession of revolver will constitute an estoppel against the prosecution, not as a bar to the trial and conviction of the appellant for a different offence but as precluding the reception of ,evidence to disturb the finding of fact.
Section 403, Criminal Procedure Code embodies in statutory form the accepted English rule of autrefois acquit.
The section reads as follows: "403.
(1) A person who has once been tried by a Court of competent jurisdiction for an offence and convicted or acquitted of such offence shall, while such conviction or acquittal remains in force; not be liable to be tried again for the same offence, nor on the same facts for any other offence for which a different charge from the one made against him might have been made (1) A.I.R. 1956 S.C. 415.
529 under section 236, or for which he might have been convicted under section 237.
(2) A person acquitted or convicted of any offence may be afterwards tried for any distinct offence for which a separate charge might have.
been made against him on the former trial under section 235, sub section (1).
(3) A person convicted of any offence constituted by any act causing consequences which, together with such act, constituted a different offence from that of which he was convicted, may be after wards tried for such last mentioned offence, if the consequences had not happened, or were not known to the Court to have happened, at the time when he was convicted.
(4) A person acquitted or convicted of any offence constituted by any acts may, notwithstanding such acquittal or conviction, be subsequently charged with, and tried for, any other offence constituted by the same acts which he may have committed if the Court by which he was first tried was not competent to try the offence with which he is subsequently charged.
(5) Nothing in this section shall affect the provisions of section 26 of the , or of section 18 8 of this Code.
Explanation.
The dismissal of a complaint, the stopping of proceedings under section 249, the discharge of the accused or any entry made upon a charge under section 273, is not an acquittal for the purposes of this section.
" Section 26 of the which is referred to in section 403, Criminal Procedure Code enacts as follows: "Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments but shall not be liable to be punished twice for the same offence.
" It is manifest in the present case that.
the appellants cannot plead the bar enacted in section 403(1) of the Criminal Procedure Code.
It is equally manifest that the prosecution of the appellants would be permitted under sub section
(2) of section 403, Criminal Procedure Code.
The question presented for determination in this appeal is, however, different.
The question is whether where an issue of fact has been tried by a competent court on a former occasion and a finding has been reached in favour of an accused, such a 530 finding would constitute an estoppel or res judicata against the prosecution, not as a bar to the trial and conviction of the accused for a different offence but as precluding the reception of evidence to disturb that finding of fact when the accused is tried subsequently even for a different offence which might be permitted by the terms of section 403(2), Criminal Procedure Code.
The distinction between the principle of autrefois acquit and the rule as to issue estoppel; in other words, the objection to the reception of evidence to prove an identical fact which has been the subject matter of an earlier finding between the same parties clearly brought out in the following passage from the judgment Wright,.
J. in The Queen vs OIlis(1): "The real question is whether this relevant evidence of the false pretence on July 5 or 6 ought to have been excluded on the ground that it was part of the evidence given for the prosecution at the former trial, at which the prisoner was charged with having obtained money from Ramsey on that false pretence, and was acquitted of that charge.
" Speaking of this type of estoppel, Dixon, J. stated in The King vs Wilkes ( 2 ): "Whilst there is not a great deal of authority upon the subject, it appears to me that there is nothing wrong in the view that there is an issue estoppel, if it appears by record of itself or as explained by proper evidence, that the same point was determined in favour of a prisoner in a previous criminal trial which is brought in issue on a second criminal trial of the same prisoner.
That seems to be implied in the language used by Wright, J. in R.v. Oilis which in effect I have adoptde in the foregoing statement. . .
There must be a prior proceeding determined against the Crown necessarily involving an issue which again arises in a subsequent proceeding by the Crown against the same prisoner.
The allegation of the Crown in the subsequent proceeding must itself be inconsistent with the acquittal of the prisoner in the previous proceeding.
But if such a condition of affairs arises I see no reason why the ordinary rules of issue estoppel should not apply.
Such rules are not to be confused with those of res judicata, which in criminal proceedings are expressed in the pleas of autrefois acquit and autrafois convict.
They are pleas which are concerned with the judicial determination of an alleged criminal liability and in the case of (1) , 768 769.
(2) ; ,518.
531 conviction with the substitution of a new liability.
issue estoppel is concerned with the judicial establishment of a proposition of law or fact between parties.
It depends upon well known doctrines which control the relitigation of issues which are settled by prior litigation.
" The same question was the subject matter of consideration by the High Court of Australia in a later case Marz vs The Queen(1).
The question at issue was the validity of a conviction for rape after the accused had been acquitted on the charge of murdering the woman during the commission of the act.
In a unanimous judgment by which the appeal of the accused was allowed, the High Court stated as follows : "It is a negation in the alternative upon which, so long as the verdict stood in its entirety, the applicant was entitled to rely as creating an issue estoppel against the Crown.
He was entitled to rely upon it because when he pleaded not guilty to the indictment of murder the issues which were thereby joined between him and the Crown necessarily raised for determination the existence of the three elements we have mentioned and the verdict upon those issues must, for the reasons we have given, be taken to have affirmed the existence of the third and to have denied the existence of one or other of the other two elements.
It is nothing to point that the verdict may have been the result of a misdirection of the judge and that owing to the misdirection the jury may have found the verdict without understanding or intending what as a matter of law is its necessary meaning or its legal consequences.
The law which gives effect to issue estoppels is not concerned with the correctness or incorrectness of the finding which amounts to an estoppel, still less with the processes of reasoning by which the finding was reached in fact; it does not matter that the finding may be thought to be due to the jury having been put upon the wrong track by some direction of the presiding judge or to the jury having got on the wrong track unaided.
It is enough that an issue or issues have been distinctly raised and fou nd.
Once that is done, then, so long as the finding stands, if there be any subsequent litigation between the same parties, no allegations legally inconsistent with the finding may be made by one of them against the other.
" It is therefore clear that section 403, Criminal Procedure Code does not preclude the applicability of this rule of issue estoppel.
(1) ; , 68 69.
532 It was contended by Mr. Rana on behalf of the respondent that the decision of this Court in Pritam Singh 's case(x) was based on the observations of the Judicial Committee in Sambasivam vs Public Prosecutor, Federation of Malaya(2) and the decision in Pritam Singh 's case(1) required reconsideration because the principle could have no application ,to India where the principle of autrefois acquit is covered by a statutory provision viz., section 403, ' Criminal Procedure Code which must be taken to be exhaustive in character.
We are unable to accept this contention as right.
We have already pointed out that section 403, Criminal Procedure Code does not preclude the applicability of the rule of issue estoppel.
In any event, the rule is one which is in accordance with sound principle and supported by high authority and there are already two decisions of this Court, viz., Pritam Singh 's case(1) and a later case Manipur Administration vs Thokchom, Bira Singh(3) which have accepted the rule .as a proper one to be adopted.
We therefore do not see any reason for casting any doubt on the soundness of the rule or for taking a different view from that adopted in the two earlier decisions of this Court referred to.
If the rule of issue estoppel is applied to the present case, it follows that the charge with regard to forgery must fail against all the appellants.
The reason is that the case of Swami Nath is solely based upon the allegation that his thumb impressions were obtained.
on blank forms of promissory notes and receipts on January 7, 1955 by the use of force.
If the finding of the Second Class Magistrate on this issue is final and cannot be reopened, the substratum of the present prosecution case fails and the charges of forgery under sections 467 and 471, Indian Penal Code cannot be established against any of the appellants.
For these reasons we hold that this appeal must be allowed, the judgment of the Allahabad High Court dated June 3, 1966 must be set aside and the convictions of each of the appellants and the sentence imposed upon them should be quashed.
If the appellants are still in jail they should be set at liberty forthwith.
V.P.S. Appeal allowed.
(1) A.I.R. 1956 S.C. 415.
(2) (3) ; L3Sup.
C.I/69 2,500 19 1 70 GIPF.
| IN-Abs | The first appellant filed a suit on a promissory note.
Prior to the institution of the suit, the executant of the promissory note had filed a complaint against the appellants alleging that they had forcibly taken his thumb impressions on a number of blank forms of promissory notes.
The Magistrate 'acquitted the, appellants.
Thereafter.
the suit on the promissory note was dismissed on the ground that the promissory note was a forgery because, the stamps affixed were of a date later than that of the promissory note.
The Court then filed a complaint against the appellants for the offence of forgery.
The appellants were convicted for forgery and abetment of forgery.
In appeal to this Court, HELD: In the earlier criminal case, the allegation that the executant 's thumb impressions on blank forms were obtained by force, was found to be false.
That finding was final and could not be reopened because of the rule as to issue estoppel.
Therefore, the sub stratum of the present case failed and the appellants could not be convicted for the offence of forgery and its abetment.
[532 D F] The rule of issue estoppel is not covered by section 403, Criminal Procedure Code, which deals with the principle of autrefois acquit: but that section does not preclude the applicability of the rule.
The rule is in accordance with sound principle and was applied in two decisions of this Court, namely, Pritam Singh vs State of Punjab, A.I.R. 1956 S.C. 415 and Manipur Administration vs Thockechom Bira Singh, ; There is no reason for casting any doubt on its soundness or for taking a different view.
[532 B D]
|
Appeal No. 1180 of 1968.
Appeal under section 116A of the Representation of the People Act, 1951 from the judgment and order dated January 17, 18, 1968 of the Gujarat High Court in Election Petition No. 2 of 1967.
Shyamala Pappu and Vineet Kumar, for the appellant.
Bishan Narain and D.N. Misra, for the respondent No. 1.
The Judgment of the Court was delivered by Mitter, J.
The only question raised in this appeal from a judgment and order of the High Court of Gujarat dismissing an election petition is, whether the returned candidate was not qualified to be chosen to fill a seat of the State Legislative Assembly inasmuch as he did not subscribe to an oath or affirmation according to the form set out for the purpose in the Third Schedule to the Constitution as prescribed under article 173 thereof. 'The relevant facts may be stated as follows: The notification of the Governor of Gujarat under section 15(2) of the Representation of the People Act of 1951 for the purpose of elections to the Gujarat State Legislative Assembly was issued on January 13, 1967.
Nomination papers were filed by several persons including the returned candidate and the scrutiny thereof was made on January 21, 1967.
The poll took place on February 18, 1967 and the result declared on February 27.
1967 showing the returned candidate winning comfortably by a margin exceeding 3800 votes over his nearest rival.
One of the grounds taken in the election petition was that immediately after the scrutiny of the nomination papers, the third respondent to the election petition had filed a written objection before the Returning Officer contending that the returned candidate had not taken oath 629 properly and on the same ground he along with respondents 2 and 4 were not qualified to be chosen and their nomination papers should be rejected.
This contention was returned down by the Returning Officer and was also negatived by the learned Judge who heard the election petition and in this appeal the unsuccessful petitioner has only pressed this ground.
The relevant portion of article 173 of the Constitution reads as follows : "A person shall not be qualified to be chosen to fill a seat in the Legislature of a State unless he (a) is a citizen of India, and makes and subscribes be,fore some person authorised in that behalf by the Election Commission an oath or affirmation according to the form set out for the purpose in the Third Schedule; (b) and(c) .
" The Third Schedule contains various forms of oath or affirmation.
From VII A the relevant form for the present purpose is, as follows: "Form of oath or affirmation to be made by a candidate for election to the Legislature of a State : "1, A.B., having been nominated as a candidate to fill a seat in the Le gislative Assembly (or Legislative Council), do swear in the name of God that I will solemnly affirm bear true faith and allegiance to the Constitution of India as by law established *and that I will uphold the sovereignty and integrity of India." The returned candidate had filed three nomination papers with three different proposers on January 20, 1967.
Each of the three nomination papers clearly mentioned that he was a candidate for election to fill a seat in the Vidhan Sabha for the Gujarat State i.e. Legislative Assembly of the State.
The nomination paper of the returned candidate contained a form of oath or affirmation which was both in Gujarati as well as in English.
The English form followed word for word Form No. VII as set out in the Third Schedule, to the Constitution and the Gujarati form purported to set out the Gujarati translation of the form of oath or affirmation.
The relevant difference for the purpose of this appeal between the two ,forms lay in this that the words "Legislative Assembly" in the form in English were translated in Gujarati form as "Rajya Sabha" and the appellant 's contention before the High Court and before us rested 630 solely on the use of this word which according to learned counsel went to show that the oath that was taken was for the purposes of filling a seat not in the legislative assembly of the State but in the Legislative Council of the State.
At the hearing of the petition be,fore the High Court the returned candidate gave evidence to the effect that he had taken the oath not according to the words in the Gujarati form but 'according to the translation of the words in the English form rendered by the Returning Officer.
The Returning Officer was merely called to produce some documents but he was not put on oath nor was he asked any question to corroborate the testimony of the returned candidate.
The High Court did not accept this testimony and we see no reason to come to any different conclusion.
We must therefore proceed on the basis that the returned candidate took the oath according to the words of the Gujarati form.
It was argued before us that 'Rajya Sabha ' means the Legislative Council of the State *and not the Legislative Assembly of the State and consequently the oath taken did not fulfill the requirements of article 173(a) of the Constitution.
We were not referred to any official translation of the expression "Legislative Assembly" in Gujarati.
The word "sabha" means a gathering or a meeting or an assembly of persons for a definite purpose.
Giving the word "sabha" the said meaning in the expression 'Rajya Sabha ' it would not be possible to hold that the oath was not in compliance with the form prescribed in article 173(a) of the Constitution.
No doubt by common parlance in many of the States in Northern India the expression 'Rajya Sabha ' has come to mean the Legislative Council of a State while the State Legislative Assembly is generally known as Rajya Vidhan Sabha.
But in the absence of any authoritative translation of the expression "State Legislative Assembly" in Gujarati we cannot guide ourselves by the popular rendering of the expression.
In this connection it is necessary to mention that in the State of Gujarat there is no Legislative Council of the State.
The legislature consists of one house only, namely, the State Legislative Assembly.
There could therefore be no misapprehension either in the person taking the oath or in the Returning Officer when he was accepting the nomination paper with the oath in Gujarati form that the candidate who afterwards won the election was being nominated as a candidate to fill a seat in the Legislative Council of the State and not in the Legislative Assembly.
The High Court held that there was substantial compliance with the requirements of article 173(a) of the Constitution in the circumstances surrounding the making and the subscribing of the oath even if the compliance was not literal.
We are in full agreement with that view.
The essential requirement of article 173(a) of the Constitution for our present purpose is that in order to be 631 qualified to be chosen to fill a seat in the Legislature of a State a person (i) must be a citizen of, India and (ii) must make and subscribe before a person duly authorised an oath or affirmation according to the form set out for the purpose in the Third Schedule.
Form VII A contains the following essential requirements: (1) The person taking the oath or making the affirmation must have been nominated as a candidate to fill a seat in the Legislative Assembly or Legislative Council; (2) That he will bear true faith and allegiance to the Constitution of India as by law established; and (3) That he will uphold the sovereignty ,and integrity of India.
The vital requirements, therefore, are (a) the securing of a nomination, and (b) declaration of beating true faith and allegiance to the Constitution and a promise to uphold the sovereignty and integrity of India.
The securing of a nomination precedes the making of a declaration.
The real purpose of the oath is that the person concerned must give an undertaking to bear true faith and 'allegiance to the Constitution and uphold the sovereignty and integrity of India.
This is brought out by the statement of objects and reasons to the Bill No. 1 of 1963 seeking to amend articles 19, 84 and 173 of the Constitution.
The statement of objects and reasons notes the recommendation of the Committee on National Integration and Regionalism and its view "that every candidate for the membership of a State Legislative or Parliament, and every aspirant to, and incumbent of, public office should pledge himself to uphold the Constitution and to preserve the integrity and sovereignty of the Union and that forms of oath in the Third Schedule to the Constitution should be suitably amended for the purpose".
The Bill proposed to give effect to the recommendation by amending clauses (2), (3) and (4) of article 19 as also articles 84 and 173 and the forms of oath in the Third Schedule.
The words in the form of oath in Form VII A. "I will uphold the sovereignty and integrity of India" were inserted by the Constitution Fifteenth Amendment Act 1963 giving effect to the view of the said committee.
As the essential requirements of the oath given in the form in the Third Schedule were not deviated from in the Gujarati form used in this case, we cannot hold that the oath subscribed in this case was not in compliance with article 173 merely because of the popular meaning of the expression 'Rajya Sabha '.
The real question is, whether the deviation, if any, from the form of oath in English as contained in the Third Schedule is so 632, vital as to lead to the conclusion that no proper oath was taken by the returned candidate.
There have been many instances where this Court has held that a substantial compliance with the statute or with the rules framed thereunder is enough even if there be no literal compliance and in our view there is no reason to adopt a different line of reasoning in the construction and interpretation of the Constitution.
In all such cases, one must consider the real purpose of the provision whether statutory or constitutional, to find out whether notwithstanding the apparently mandatory form of the words used any deviation therefrom was to be struck down.
One of the questions which came up for consideration in Kamaraja Nadar vs Kunju Thevar(1) was whether the election petition ought to have been rejected merely because the deposit provided for under section 117 of the Representation of the People Act was made in favour of the Election Commission and not in favour of the Secretary to the Election Commission as provided for in the said section.
Turning down the argument advanced for rejecting the election petition it was observed: "What is of the essence of the provision contained in section 117 is that the petitioner should furnish security for the costs of the petition, and should enclose along with the petition a ' Government Treasury receipt showing that a deposit of one thousand rupees has been made by him either in a Government Treasury or in the Reserve Bank of India, is at the disposal of the Election Commission to be utilised by it in the manner authorised by law . . " .
In Murarka Radhey Shyam Ram Kumar vs Roop Singh Rathore(2) one of the points urged against the petitioner was that there was non compliance with the provisions of section 81 (3) of the Representation of the People Act because the copy of the election petition served on the appellant was not a true copy of the original filed before the Election Commission.
Rejecting the said contention it was said: " . the word "copy" in sub section
(3) of section 81 does not mean an absolutely exact copy, but means that the copy shall be so true that nobody can by any possibility misunderstand it.
" To the similar effect is the judgment in Ch.
Subbarao vs Member, Election Tribunal, Hyderabad(3).
In State of U.P.v.
Manbodhan Lal Srivastava(4) one of the contentions urged on behalf of the respondent who was reduced (1) (2) [1964] 3 S.C.R. 573. , (4) [1958]S.C.R.533. 633 in rank after departmental enquiry, was that 'the order of the Government was invalid for non compliance with the provisions of article 320(3)(c) of the Constitution which read literally made it obligatory for the Government of India or a Government of a State to consult the Union Public Service Commission or the State Public Service Commission on all disciplinary matters affecting a person in service of the State.
In turning down the above it was observed by this Court: " . the use of the word shall m a statute, though generally taken in 'a mandatory sense, does not necessarily mean that in every case it shall have that effect, that is to say, that unless the words of the statute are punctiliously followed, the proceeding, or the outcome of the proceeding, would be invalid.
" In State of Punjab vs Sat Pal Dang and State of Punjab vs Dr. Baldev Prakash & Ors.(1) one of the points canvassed before this Court was, whether the certificate by the Deputy Speaker on a Money Bill was sufficient compliance with article 199(4) of the Constitution which provides that: "There shall be endorsed on every Money Bill when it is transmitted to the ,Legislative Council under article 198 and when it is presented to the Governor for assent under ,article 200, the certificate of the Speaker of the Legislative Assembly signed by him that it is a Money Bill.
" It was contended that the provisions of the above clause were mandatory and only the Speaker of the Legislative Assembly could sign the Money Bill.
It was pointed out by this Court that the Speaker was not present when the Bills were passed and under article 180(2) the Deputy Speaker could act as the Speaker when the latter was absent.
This Court proceeded to examine the several tests to determine when the provisions of statute might be treated as mandatory ,and when not, and emphasis was laid on one of the distinctions, namely, in cases where strict compliance was necessary to be a condition precedent to the validity of the act itself, the neglect to perform it as indicated was .fatal.
The above cases are sufficient to show that non compliance with the provisions of a statute or Constitution will not necessarily render a proceeding invalid if by considering its nature, its design and the consequences which follow from its non observance one is not led to the conclusion that the legislature or the Constitutionmakers intended that there should be no departure from the strict words used.
(1) ; 634 In this case, as we have already noted, the essential requirement of article 173 read with Form VII A was that the person taking the oath or making the affirmation would bear true faith and allegiance to the Constitution and uphold the sovereignty and integrity of India.
The words which precede this portion are merely descriptive of the person and of his nomination as a candidate.
It is reasonable to think that a mere misprint in the form of the oath or a mere inaccuracy in rendering the expression "Legislative Assembly" in Gujarati would not be fatal to the election of the candidate, if otherwise valid.
In the result, the appeal fails and is dismissed with costs.
| IN-Abs | The returned candidate 'at an election to the Gujarat Legislative Assembly held in February 1967 had taken his oath as prescribed by article 173 of the Constitution in the Gujarati version of the relevant form set out in the Third Schedule to the Constitution.
In the said version the term "Legislative Assembly" was translated as "Rajya Sabha".
In an election petition it was urged that the term "Raiya Sabha" was equivalent not to "Legislative Assembly" but to "Legislative Council", 'and there fore the oath was not taken by the returned candidate in the proper form and his election was liable to be set aside.
The High Court having decided against the election petitioner appeal against its judgment was filed in this Court.
HELD: (i) The word 'sabha ' means a gathering or a meeting or an assembly of persons for a definite purpose.
Giving the word 'sabha ' the said meaning in the word 'Raiya Sabha ' it would not be possible to hold that the oath was not in compliance with the form prescribed in article 173(a) of the Constitution.
No doubt by common parlance in many of the States in Northern India the expression 'Rajya Sabha ' has come to mean the Legislative Council of a State while the State Legislative Assembly is known as Rajya Vidhan Sabha.
But in the absence of any authoritative translation of the expression "State Legislative Assembly" in Gujarati the popular meaning of the expression could not give proper guidance.
The State of Gujarat has no Legislative Council of the State.
The Legislature consists of one house only, namely, the State Legislative.
Assembly.
There could therefore be no misapprehension either in the person taking the oath or in the Returning Officer when he was accepting the nomination paper with the oath in Gujarati form that the candidate who afterwards won the election was being nominated as a candidate to fill a seat in the Legislative Council of the State and not in the Legislative Assembly.
[630 D G] As the essential requirements of the oath given in the form in the Third Schedule were not deviated from in the Gujarati form used in this case it could not be held that the oath subscribed in this case was not in compliance with article 173 merely because of the popular meaning of the word "Rajya Sabha".
(ii) Non, compliance with the provisions of a statute or Constitution will not necessarily render a proceeding invalid if by considering its nature, its design and the consequences which follow from its non observance one is not led to the conclusion that the legislature or the Constitution makers intended that there should be no departure from the strict words used, [633 G H] 628 In the present case the essential requirement of article 173 read with Form VII A was that the person taking the oath or making the affirmation would bear true faith and allegiance to the Constitution and would uphold the sovereignty and integrity of India.
The words which precede this portion are merely descriptive of the person and of his nomination as a candidate.
It is reasonable to think that a mere misprint in the form of the oath or a mere inaccuracy in rendering the expression "Legislative Assembly" in Gujarati would not be fatal to the election of the candidate, if otherwise valid.
[634 A] Kamaraja Nadar vs Kunju Thevar, , Murarka Radhey Shyam Ram Kumar vs Roop Singh Rathore, ; ; Ch.
Subbarao vs Member, Election Tribunal, Hyderabad, ; ; State of U.P. vs Manbodhan Lal Srivastava; , and State if Punjab vs Sat Pal Dang and State of Punjab vs Dr. Bolder Prakash & Ors.
, ; , applied.
|
Appeal No. 1332 of 1966.
Appeal from the judgment and order dated August 25, 1964 of the Punjab High Court, Circuit Bench at Delhi in Letters Patent Appeal No. 37 D of 1964.
B. Sen, D.K. Kapur, B.P. Maheshwari and R.K. Maheshwari, for the appellant.
R.M. Mehta and S.P. Nayar, for the respondents.
The Judgment of the Court was delivered by Bachawat, J.
The appellant, M/s. Hind Trading Company, imported 1,65,000 pieces of Chinese Silver Dollars from Yatung in Tibet to Kalmnpong, via Nathula pass and Rangpo through 535 Sikkim State under two Reserve Bank import licences dated April 22, 1957.
As there were two Reserve Bank licences, the dollars were divided into two lots at Yatung.
Each lot consisted of 66 bags containing 82,500 dollars.
One lot of bags bore the mark "H.D." and serial numbers 1 to 66, and the other lot bore the mark "H.N." and srl.
1 to 66.
On May 15, 1957 the appellant made two applications bearing Nos. 32 and 34 to the officer in charge, Land Customs Station, Kalimpong, for the grant of permits for passing the goods across the frontier.
Application No. 32 related to the bags marked "H.N." Application No. 34 related to the bags marked "H.D." On May 16, the two consignments arrived at the land customs station, Kalimpong and were examined and appraised by the land customs officer in charge of the station.
On the duty being paid, the officer endorsed the two applications, certifying that the duty was paid and permitting the import of the goods.
The consignments loaded in trucks then passed out of the customs house and on the way to Siliguri were checked at the Teesta Bazar check post at.
8.45 p.m. on May 16.
On the night of May 16, they reached Siliguri and were delivered to M/s. Amalgamated Transport Co., for carriage by air to Dum Dum.
On the morning of May 17, one consignment of 82,500 dollars packed in 66 bags together with the import application No. 34 was sent by plane from the Sonapur airstrip to Dum Dum airport and on the same date the consignment reached Dum Dum and was delivered to the appellant at Calcutta.
On May 18, 1957, the Range Officer, Matidhar seized the second consignment of 82,500 dollars packed in 66 bags bearing the mark "H.D." together with the application No. 32, when they were about to be despatched by air from the sonapur airstrip.
The seizure was made under section 5 (3) of the on the Found that the mark on the bags was "H.D." whereas the accompanying import application No. 32 related to "H.N." bags.
On July 7, 1957, the Collector of Land Customs, Calcutta, issued a notice to the appellant to show cause why the dollars seized on May 18, 1957 should not be confiscated and why a penalty should not be imposed upon the appellant under sections 5(3) and 7(1) of the , and section 167(8) read with section 19 of the as made applicable by section 23A of the Foreign Exchange Regulation Act, 1947 as there was reason to believe that the goods had been imported by the appellant by land from Tibet into India on May 16, 1957 through Indo Tibet border, (i) without a valid permit under section 5 of the , and (ii) without valid permission granted by the Reserve Bank of India under notification No. F. 3(84) E.F. VII/56 dated May 4, 1956 issued under sec.
8(1) of the Foreign Exchange Regulation Act.
That notification prohibited ' the 536 import into India of silver coins current in the Tibet region of China without the permission of the Reserve Bank of India.
On July 30, 1957 the appellant showed cause against the proposed action by a letter stating that the first consignment of 82,500 dollars was packed in bags marked "H.N." that by inadvertence the carriers M/s. Amalgamated Transport Co., had sent import application No. 34 with the first consignment and had kept application No. 32 with the bags marked "H.D.", that the two consignments were covered by valid Reserve Bank licences and import passes, that the seizure of the dollars kept in "H.D." bags under section 5 (3) of the was not justified and that there was no ground for confiscating the goods or imposing any penalty.
The appellant was heard by the Collector an August 26, and December 11, 1957.
On January 10, 1958, the Collector passed an order adjudging that offences under sections 5(3) and 7(1) of the and section 167(8) of the had been committed and directing confiscation of the goods under those sections read with section 23A of the Foreign Exchange Regulation Act.
The Collector held that (i) the goods were liable to confiscation under section 5 (3) of the as they were not covered by the accompanying import application No. 32; (ii) the appellant failed to prove that the first consignment of 66 bags bore the mark "H.N." or that by inadvertence of the carriers, application No. 34 had been sent with it and (iii) had the first consignment of 66 bags borne the mark "H.N." the Range Officer.
Matidhar and the officers at Dum Dum would have detected and rioted this fact and the appellant could have produced before the customs officials at Calcutta bags with the mark "H.N." immediately after May 18, 1957.
An appeal against this order was dismissed by the Member, Central Board of Revenue, on May 17, 1958.
A revision petition against the last order was dismissed by the Secretary to the Government of India, Ministry of Finance, Department of Revenue on January 16, 1961.
On November 16, 1962, the appellant filed a writ petition in the Punjab High Court for quashing the aforesaid decisions and for setting aside the order of confiscation of the silver dollars.
On May 14, 1964, Shamsher Bahadur, J. dismissed the petition.
He held that there was no error of law apparent on the face of the record.
The appellant filed a Letters Patent appeal against the order.
On August 25, 1964 the Divisional Bench dismissed the appeal.
It held that (1) section 5 (3) of the applied to the case; (2) the fact that the 66 bags bore the mark "H.D." and the accompanying application No. 32 related to "H.N." bags.
showed conclusively that the dollars contained in those bags were imported without proper licence and import permit and without payment of duty and (3) the finding of fact that there was no mistake on the part of the carriers with regard to the despatch 537 of the consignments and accompanying documents could not be set aside in a writ application.
If he present appeal has been filed by the appellant after obtaining a certificate from the High Court.
Mr. B. Sen for the appellant contended that the seizure and confiscation of the goods was not authorized by section 5 (3) of the , (2) the finding that the appellant had committed offences under that section and other provisions of law was perverse and liable to be quashed; and (3) the impugned orders were passed in contravention of the principles of natural justice.
These contentions were disputed by Mr. R.M. Mehta.
The provided for the levy of duties of customs on articles imported or exported by land from or to territory outside India.
The Act extended to the whole of India, (section 1 ).
Section 2 was the definition section.
Section 3 authorised the appointment of land customs collectors and officers.
The Range Officer, Matidhar, was a land customs officer working under the Collector of Land Customs, Calcutta, having jurisdiction over Sonapur where the dollars were seized.
Section 4 authorised the establishment of land customs stations and the determination of routes by which alone goods imported or exported by land could pass.
The Central Board of Revenue established Kalimpong as the land customs station and prescribed the following routes by which alone dutiable goods could pass out of Tibet into India: (a) road leading from Yatung (in Tibet) to Kalimpong via Jelapala pass and pedong through Sikkim State, (b) road leading from Yatung (in Tibet) to Kalimpong via Nathula pass and Rangpo through the Sikkim State.
Section 5 provided for permits.goods passing across frontier.
Section 6 dealt with personal baggage.
Section 7 prescribed penalties.
Section 8 prescribed certain dates and times when the goods were not to be passed.
Section 9 made applicable for the purposes of levy of land customs under the Act certain provisions of the including section 167 (8) with necessary modifications and adaptations.
Sections 18, 19 and 19A of the and the whole of the Foreign Exchange Regulation Act though not expressly incorporated in the applied their own force to goods imported or exported by land.
Duty on imports and exports by land was imposed by section 5 of the Indian Tariff Act, 1934.
The had now been repealed by the Sea .
It is necessary to read sections 4, 5 and 7(1) of the : "Section 4.Establishment of Land Customs Stations and determination of routes The Chief Customs Authority may, by notification, in the Official Gazette, 538 (a) establish land customs stations for the levy of land customs in any land customs area, and (b) prescribe the routes by which alone goods, or any class of goods specified in the notification may pass by land out of or into any foreign territory, or to or from any land customs station from or to any foreign frontier.
Section 5.
Permit for goods passing across frontier (1) Every person desiring to pass any goods, whether dutiable goods or not, by land out of or into any foreign territory shall apply in writing, in such form as the Chief Customs Authority may by notification in the Official Gazette prescribe, for a permit for the passage thereof, to the Land Customs Officer in charge of a Land Customs Station established in land customs area adjoining the foreign frontier across which the goods are to pass.
(2) When the duty on such goods has been paid or the goods have been found by the Land Customs Officer to be free of duty, the 'Land Customs Officer shall grant a permit certifying that duty has been paid on such goods or that the goods are free of duty, as the case may be: (3) Any Land Customs Officer, duly empowered by the Chief Customs Authority in this behalf, may require any person in charge of any goods which such officer has reason to believe to have been imported or to be about to be imported, by land from, or to any foreign territory to produce the permit granted for such goods; and any such goods which are dutiable and which are unaccompanied by a permit or do not correspond with the specification contained in the permit produced, shall be detained and shall be liable to confiscation; Provided that nothing in this sub section shall apply to any imported goods passing from a foreign frontier to a Land Customs Station by a route prescribed in that behalf.
(4) The Chief Customs Authority may, by notification in the Official Gazette, direct that the provisions of this section, or any specified provisions thereof, shall not, in any land customs areas specified in the notification apply in respect of goods of any class or value or specified.
Section 7.
Penalties (1) Any person who (a) in any case in which the permit referred to in section 5 is required, passes or attempts to pass any 539 goods by land out of or into any foreign territory through any land customs station without such permit, or (b) conveys or attempts to convey to or from any foreign territory or to or from any Land Customs Station any goods by a route other than the route, if any, prescribed for such passage under this Act, or (c) aids in so passing or conveying any goods, or knowing that any goods have been so passed or conveyed, keeps or conceals such goods or permits or procures them to be kept or concealed shah be liable to penalty not exceeding, where the goods are not dutiable, fifty or, where the goods or any of them are dutiable, one thousand rupees, and any dutiable goods in respect of which the offence has been committed shall be liable to confiscation.
" The scheme of sections 4, 5 and 7 (1) of the with regard to imports by land was as follows: Goods could pass by land out of foreign territory or from a foreign frontier to a land customs station by a prescribed route only, [section 4(b)].
To import goods by an unauthorised route or an attempt to do so was an offence, [section 7(1)(b)].
No permit could be obtained for importing goods by an unauthorised route.
The goods could be brought by the prescribed route from the foreign frontier to the land customs station, without a permit [proviso to section 5(3)].
Subject to exemptions, if any under section 5(4), a permit was required for the passage of goods through the land customs station.
Passing of goods through the land customs station without a permit or an attempt to so pass the goods was an offence, Is.
7 (1) (a)].
The importer was required to apply for the permit to the officer in charge of the land customs station, Is.
5(1)].
The goods were brought to the station for examination and appraisement of duty.
On the duty being paid or on its being found that the goods were free of duty, the officer issued the permit allowing the passage of the goods and certifying that the duty had been paid or the goods.
were free of duty as the case might be, Is.
5 (1) and (2)].
Dutiable goods.
in respect of which an offence was committed was liable to confiscation.
What is stated above applied mutatis mutandis to exports by land.
In this setting let us examine the provisions of section 5(3).
That sub section required that all goods imported or about to be exported must be accompanied by a permit for the passage there,of issued by the officer in charge of a land customs station.
It was an offence to take the goods through the land customs station 1.
without a permit.
A duly authorised land customs officer could enforce this requirement by asking any person in charge of the goods to produce the permit.
Dutiable goods unaccompanied by 540 a permit or not corresponding to the specifications contained in the permit produced had to be detained and was liable to confiscation.
It is to be noticed that the sub section referred to goods "unaccompanied by a permit" and to "any person in charge of any goods.
" It obviously contemplated cases where the goods should be accompanied by the permit and the person in charge of the goods was under a duty to produce the permit.
In view of sections 5 and 7 (1) it was necessary that the goods should be accompanied by a permit when they passed through the land customs station.
Rules under the Act could also prescribe that the goods must be accompanied by a permit for some time even after such passage.
In such cases section 5 (3) was infringed if the goods were not accompanied by the permit.
The Central Board of Revenue framed the Chinese Silver Dollars (import) Rules on March 29, 1958 in exercise of the powers conferred by section 9(1) of the .
Rule 6(2) provided that on its journey from the Kalimpong laud customs station to its ultimate destination, any consignment of Chinese silver dollars imported from Tibet into India must be accompanied by a permit, i.e., the importer 's copy of the relative import application bearing the endorsement of the officer in charge of the Kalimpong land customs station permitting the clearance of the consignment.
The permit must be produced at the land customs check post at Teesta Bazar, along with the consignment if the destination was Teesta Bazar or beyond also be produced on demand by any land customs officer at any time during the journey of the consignment upto its ultimate destination.
These Rules were framed on the assumption that independently of the Rules, the importer was not obliged to keep the permit with the dollars after they passed out of the Kalimpong land customs station.
The Rules were not in force on May 18, 1957 when the dollars were seized by the Range Officer, Matidhar.
There was no provision in the Act or the Rules in force on May 18, 1957 which required the appellant to keep.
the permit at Sonapur airstrip with the dollars seized on that date.
The contention of the Revenue is that section 5 (3) required that all imported goods .must always, at all times and at all places be accompanied by a permit.
We are unable to accept this contention. ' After the import, the goods became a part and parcel of the mass of other like goods in 'India.
There was No. duty to keep the permit with the consignment of imported goods for all times and at all places.
Nor was the importer under a duty to keep the consignment intact in his hands.
He could sell portions of it to different buyers and obviously he could not give the permit to every consumer.
He could import rubies from Burma by land .
:and by sea.
It was not necessary to keep any permit with the rubies imported by sea after their clearance from.
the customs 541 house.
Nor was the position different in case of rubies imported by land.
A consumer wearing a necklace made of rubies was not expected to carry the permit for the rubies in her bag.
Under the a customs clearance permit was necessary for the passage of goods imported or about to be .exported through the land customs station.
For this reason section 5(3) read with section (1)(a) required that the goods so passing through the land customs station must be accompanied by the permit.
The Rules could provide that the imported goods should be accompanied by the permit even after such passage.
As already stated.
the Rules required that imported Chinese silver dollars should be accompanied by the permit during the entire journey up to their ultimate destination.
In such cases.
section 5(3) was infringed if the permit covering the goods was not produced on demand by any land customs officer.
Except in such cases, section 5(3) did not apply, and it was not necessary to keep the permit with the goods.
We hold that section 5(3) was not infringed when the carriers did not produce the permit covering the goods at the Sonapur airstrip on May 18.
1957 and the goods could not be confiscated under section 5 (3).
Nor were the goods liable to confiscation under section 7(1) of the .
The appellant imported 1,65,000 dollars from Tibet under two Reserve Bank licences and two import permits.
There was no distinguishing mark on any dollar.
The appellant was found in possession of 1,65,000 dollars only.
No attempt was made to prove that the appellant was in possession of another consignment of 82,500 dollars.
At ' the time of import the dollars were packed in 66 bags marked "H.N." and 66 bags marked "H.D." The Range Officer seized 82.500 dollars packed in 66 bags marked "H.D." There is no evidence to.
show that the seized dollars were not covered by the permits and licences held by the appellant.
The onus was on the respondents to prove that the first consignment of 66 bags bore the mark "H.D." Application No. 34 accompanied the first consignment.
There was no noting on application No. 34 by the customs officer at Sonapur or at Dum Dum indicating that they had examined the bags or that the bags were found to bear the mark "H.D." The summary of the diary of the Range Officer Matidhar set out in the order of confiscation does not show that the officer examined the bags.
The note in the diary that the mark checked was "H.D." could have been made on the basis of the mark "H.D." shown in the accompanying application No. 34.
Before the issue of the show cause notice on July 17.
1957 the appellant had no occasion to produce before the constoms authorities any of the 66 bags marked "H.N." which had reached Calcutta.
No inference has been drawn against the appellant from their inability to produce any bags marked "H.N." after July 17, 1957.
On the materials on.
the record it is impossible to hold that the dollars seized ,on May 18.
C. 1./69 2 542 1957 were smuggled goods.
There was no noting by the customs officers at Sonapur and Dum Dum on application No. 34.
If the appellant desired to send smuggled "H.D." bags from Sonapur to Dum Dum, they could easily obtain application No. 34 from Calcutta and send it with the consignment seized at Sonapur.
Moreover, the customs officers had not put any mark or initials on the bags, and there was nothing to prevent the appellant from putting the mark "H.N." on other bags and using them for the carriage of the dollars.
The conclusion is irresistible that due to the inadvertence of the carriers the permits were inter changed and that application No. 34 was sent with "H.N." bags and application No. 32 was kept with "H.D." bags.
No inference of smuggling could be drawn from the fact that "H.D." bags were found with application No. 32.
In the circumstances.
the finding that the appellant had smuggled the goods and was guilty of an offence under section 7 (1) of the must be characterized as perverse.
Nor was it proved that the appellant committed any offence under sections 8 (1) and section 23A of the Foreign Exchange Regulations Act read with sections 19 and 167(8) of the Sea .
An offence under those sections can be proved by circumstantial evidence, see Issardas Daulat Ram vs Union of India(1).
In the present case there was no evidence either direct or circumstantial to prove the offence.
The appellant had valid Reserve Bank licences for the import of 1,65,000 dollars.
Those licences were not examined nor seized by the customs officials and no attempt was made to prove.
the licences did not relate to the dollars seized on May 1.8, 1957.
It follows that the dollars were not liable to confiscation under any provision of law.
Having regard to the facts on the record no tribunal could reasonably come to the conclusion that the dollars were liable to confiscation if they properly understood the relevant enactments.
In the circumstances the order of the Collector confiscating the goods is liable to be quashed by a writ of certiorari, see Halsbury 's Laws of England, 3rd ed.
II, article 19, pp. 62 63.
In Regina vs Medical Appeal Tribunal(2) the Court held that an assessment of 20% disablement must, having regard to.
the facts appearing on the record, be held to be erroneous in point of law and based upon a misconstruction of Regulation 2(5) of the National] Insurance (Industrial Injuries) (Benefits) Regulation 1948 and the award of the Medical Appeal Tribunal was therefore liable to be quashed by a writ of certiorari.
Denning, L. 1.
observed : "No reasonable person.
who had proper regard to regulation 2(5), could have come to such a conclusion.
[1962] supp.
1 S.C.R. 358.
(2) [1957] I Q.B. 574, 582.
543 It is now settled that when a tribunal come to a conclusion which could not reasonably be entertained by them if they properly understood the relevant enactment, then they fall into error in point of law: see Edwards (Inspector of Taxes) vs Bairstow, [1956] A.C. 14: When the primary facts appear on the record, an error of this kind is sufficiently apparent for it to be regarded as an or on the face of the record such as to warrant the intervention of this Court by certiorari.
" This conclusion is sufficient to dispose of the appeal.
It is therefore unnecessary to examine the contention that the impugned orders were passed in contravention of the principles of natural justice.
In the result, the appeal is allowed with costs.
The order passed by the High Court is set aside and the writ petition filed by the appellant is allowed.
The order of confiscation of the Chinese silver dollars is quashed and the respondents are directed to return them to the appellant.
G.C. Appeal allowed.
| IN-Abs | The appellant imported 1,65,000 pieces Chinese silver dollars from Tibet through Sikkim State under two Reserve Bank import licences.
As there were two licences the dollars were divided into two lots.
One lot bore the mark 'H.D. ' and the other 'H.N. ' The appellant made two applications hearing Nos. 32 and 34 to the Officer in charge, Land Customs Station, for the grant of permits for passing the goods across the frontier.
Application No. 32 related to the lot marked 'H.N. ' and the application No. 34 related to the lot marked 'H.D. ' On May 16, 1957 the two consignments arrived at the land customs station, Kalimpong and were examined and appraised by the land customs officer in charge of the station.
On the duty being paid, the officer endorsed the applications certifying that the duty was paid and permitting the import of the goods. 'The consignments there were then delivered at Siliguri to the carriers for carriage by air to Dum Dum.
On May 17, 1957 one consignment together with application No. 34 was sent by plane from the Sonapur airstrip and on the same date reached Dum Dum and was delivered to the appellant at Calcutta.
On May 18, 1957 the Range Officer, Matidhar seized the second consignment bearing the marks 'H.D. ' together with application No. 32 when they were about to be despatched from the Sonapur airstrip.
The seizure was made under section 5(3) of the Land Customs Act on the ground that the mark on the consignment was 'H.D. 'whereas the accompanying import application No. 32 related to the consignment marked 'H.N. ' The Collector of Land Customs, Calcutta after hearing the appellant held that offences under section 5(3) and section 7(1) of the , and section 167(8) read with of the had been committed by the appellant.
He directed confiscation of the goods under those sections read with section 23A of the Foreign Exchange Regulation Act, 1947.
Departmental remedies having failed the appellant filed a writ petition in the High Court.
Appeal in this Court was filed by the appellant with certificate.
The questions that came up for consideration were inter alia: (i) whether the seizure and confiscation.
of the goods was authorised by section 5(3) of the , and (ii) whether the finding that the appellant had committed offences under that section and other provisions of law was perverse and liable to be quashed.
HELD: (i) Section 5(3) of the .
by itself does not require that all imported goods must always at all times, and at all places be accompanied by a permit.
After the permit the goods become a part and parcel of the mass of other like goods in India.
There is no duty 534 to keep the permit with the consignment for aH times and at all places.
Nor is the importer under a duty to keep the consignment in his hands.
He can sell portions of it to different buyers and obviously he could not give the permit to every consumer.
[540 G H] Before March 29, 1968 when the Central Board of Revenue framed the Chinese Silver Dollars (Import) Rules, there was no provision in the Act or Rules in force which required the appellants to keep the permits at Sonapur airstrip with the dollars seized on that date.
Section 5(3) was not infrinrged when the carriers did not produce the permit concerning the goods at the Sonapur airstrip on May 18, 1957, and the goods could not be confiscated under section 5(3).
[541 C] (ii) Nor were the goods liable to confiscation under section 7(1) of the .
There was no evidence to show that the seized dollars were not covered by licences.
On the materials on record the conclusion was irresistible that due to the inadvertence of the carriers the permits were inter changed and that application No. 34 was sent with 'H.N. ' consignment and application No. 32 was kept with 'H.D. ' consignment.
No inference of smuggling could be drawn from the fact that 'H.D. ' consignment was found with application No. 32.
In the circumstances the finding that the appellant had smuggled the goods and was guilty of an offence under section 7(1) of the must be characterised as perverse.
[541 D E; 542 B C] (iii) It was also not proved that the appellant committed any offence ' under sections 8(1) and 23A of the Foreign Exchange Regulations Act read with sections 19 and 167(8) of the .
Although the offence under these sections may be proved by circumstantial evidence in the present case there was no evidence direct or circumstantial to prove the offence.
[542 D] Issardas Daulat Ram vs Union of India, [1962] Supp.1 S.C.R. 358, referred to.
(iv) Having regard to the facts on the record no tribunal could reasonably come to the conclusion that the dollars were liable to confiscation if they properly understood the relevant enactments.
In the circumstances the order of the Collector confiscating the goods was liable to be quashed by a writ of certiorari.
[542 F] Regina vs Medical Appeal Tribunal, ; , 582, applied.
|
ivil Appeal No. 88 of 1953.
Appeal under article 132(1) of the Constitution of India from the Judgment and Order dated the II th September, 1951, of the High Court of, Judicature for the State of Rajasthan at Jodhpur in D. B. Civil Appeal,(Ijlas i Kbas) No. 6 of 1950.
H. J. Umrigar, Narain Andley and Rajinder Narain for the appellants.
Radhey Lal Aggarwal and B. P. Maheswari, for the respondent.
May 12.
The Judgment of the Court was delivered by MUKHERJEA J.
This appeal is on behalf of the plaintiffs and has come before us on a certificate granted by the High Court of Rajasthan, under article 132(1) of the Constitution, on the ground that the case involves a substantial question of law as to the interpretation of the Constitution.
The appellant has also put in a petition praying for leave to urge other, grounds on the merits of the case.
The suit, out of which this appeal arises, was brought by the appellants, as plaintiffs, on the 16th August, 1946, in the District Court I at Jodhpur in Rajasthan against the defendant respondent, claiming to recover from the latter a sum of Rs. 10,342 annas odd together with interest and costs.
The plaintiffs, at all material times, carried on the business of commission agents both at Indore and Jodhpur under the name and style 441 of " Kanmal Kishenmal " and I" Kanmal Surajmal " respectively and their case is that between September and December, 1945, the defendant entered into several forward contracts for the purchase and sale of bullion through the plaintiffs ' firm at Indore.
These transactions proved unprofitable to the defendant and except a small profit of Rs. 103 annas odd which one of these transactions fetched, every one of the rest ended in loss and the loss aggregated to a sum of Rs. 21,423 1 6 pies.
It is averred in the plaint that this entire amount was paid to third parties at Indore by the plaintiffs on behalf of the defendant and that the plaintiffs received, in all, a sum of Rs. 11,457 8 0, which the defendant paid from time to time, towards these losses, to the plaintiffs ' firm at Jodhpur.
The plaintiffs were therefore entitled to the balance of Rs. 9,861 which together with interest came up to Rs. 10,342 and this was the claim laid in the plaint.
The suit was transferred from the District Court to the Original Side of the High Court of jodhpur and the defendant filed his written statement in the High Court on the 27th October, 1947.
The defence was a complete denial of the plaintiffs ' claim and it was contended inter alia that the transactions in suit amounted to wagering contracts and according to the law prevalent in Marwar, as contained in the notification of the Marwar Government dated the 3rd June, 1943, all forward business contracts in bullion, in which the date fixed for delivery exceeded 12 days, were illegal and were punishable as criminal offences.
No suit was therefore maintainable on the basis of these transactions.
On these pleadings a number of issues were raised of which issue No. 5 stood thus: " Are the transactions in dispute in the suit illegal and the present suit in respect of these transactions is not maintainable on account of the notification dated 3rd June, 1943 ? " The suit came up for hearing before a single Judge of the Jodhpur High Court sitting on the Original Side.
No evidence was adduced by the parties and the case 57 442 was heard only on issue No. 5 which was treated as an issue on a pure question of law.
It was held by the learned Judge that, as it was admitted by the plaintiffs that the contracts to which the suit related covered a period exceeding 12 days, they came within the prohibition of the notification referred to above and a suit based upon them was not maintainable in law.
The judgment shows that a contention was raised on behalf of the plaintiffs that the notification was confined only to contracts made in Marwar or intended to be performed in that place, and as the contracts in suit were all entered into at Indore, they could not be hit by the notification.
This argument was repelled by the learned trial judge on a two fold ground.
It was said in the first place that as the suit was actually brought in the Jodhpur Court, the plaintiffs could not avoid facing the notification and the Jodhpur Court could not give them a relief in violation of its own laws.
The other reason assigned was based upon section 13 of the Civil Pro cedure Code and it was said that if the plaintiffs could and did get a decree on the basis of these transactions in the Indore Court and wanted to enforce the same as a foreign judgment in the Court of Jodhpur, the latter would be justified in refusing to give effect to such judgment under section 13 of the Marwar Civil Procedure Code, on the ground that such judgment was founded on a breach of law in force in Marwar.
In this view the learned Judge, by his judgment dated the 2nd March, 1948, dismissed the plaintiffs ' suit.
The plaintiffs thereupon took an appeal, against this judgment, to the Appeal Bench of the Jodhpur High Court and the appeal was heard by a Division Bench consisting of Nawal Kishore C. J. and Kanwar Amar Singh J.
The learned Judges accepted the legal position taken up by the plaintiffs, that the contracts could be void only if they were entered into at Marwar or were intended to be performed, either wholly or partly, at Marwar.
Admittedly they were entered into at Indore outside Marwar, but the learned Judges held that from the fact that certain payments were made by the defendant and accepted by the plaintiffs towards these contracts at Marwar, it could be inferred that it 443 was a term of the contracts that they would be performed at Marwar.
Another point raised on behalf of the plaintiffs, that as the notification of 3rd June, 1943, itself came to an end by efflux of time on the 30th September, 1946, there, was no obstacle in the way of the plaintiffs ' obtaining a decree at any time after that, was repelled by the learned Judges on the ground that as the contracts themselves were illegal, at the time when they were entered into, by reason of their violating the provisions of the notification, the fact that the notification subsequently ceased to be operative could not make the illegal contracts lawful.
The result was that by its judgment dated the 24th September, 1948, the appellate bench of the High Court dismissed the appeal.
The plaintiffs thereupon with the leave of the Court took an appeal against this decision to the Ijlas i Khas of the State of Jodhpur as it then existed.
While the appeal of the plaintiffs was pending before the Ijlas i Khas of the Jodhpur State, the integration of the various States of Rajasthan took place and the United States of Rajasthan was formed on the 7th of April, 1949.
The Rajasthan High Court Ordinance was promulgated by the Rajpramukh of Rajasthan on the 21st June, 1949, and on the 29th of August following, the High Court of Rajasthan was constituted.
Another Ordinance known as the 'Rajasthan Appeals and Petitions (Discontinuance) Ordinance, 1949 ' provided, by section 4, that pending appeals before the Ijlas i Khas of any of the covenanting States if they related to judicial matters were to be heard by a special Court to be constituted by the Rajpramukh.
This section was amended by an amending Ordinance dated the 24th of January, 1950, and all these pending appeals were directed to be heard and disposed of by the Rajasthan High Court established under ' the Rajasthan High Court Ordinance of 1949.
In accordance with this provision the appeal of the plaintiffs was transferred to the High Court of Rajasthan for disposal.
The Constitution of India came into force on the 26th of January, 1950, and when the appeal came up for hearing before the Rajasthan High Court a preliminary point was raised as to whether the 444 appeal should not be transferred to the Supreme Court for disposal under article 374(4) of the Constitution.
The matter was referred for consideration by a Full Bench, and the Full Bench decided that article 374(4) of the Constitution had no application to the present case and the appeal was to be heard by the High Court of Rajasthan.
The appeal was then placed for hearing before a Division Bench of the Rajasthan High Court and by their judgment dated the 11th of September, 1951, the learned Judges dismissed the appeal and affirmed the decision of the Courts below.
Against this judgment the plaintiffs got leave to file an appeal to this Court under article 132(1) of the Constitution and that is how the matter has come before us.
The only constitutional point involved in the appeal is whether article 374(4) of the Constitution is attracted to the facts of the present case and whether the appeal should therefore have been transferred to this Court for disposal instead of being heard and disposed of by the Rajasthan High Court.
In view of the fact that we have ' acceded to the prayer of the appellants and have granted them leave to urge other grounds relating to the merits of the case in support of the appeal, this constitutional point has nothing but an academic importance and is not pressed by the appellants.
We would therefore proceed to consider the points upon which the learned counsel for the appellants has attempted to assail the propriety of the decision of Rajasthan High Court on its merits.
The learned Judges of the Rajasthan High Court took the view, and it seems to us quite properly, that the Courts below were not right in treating issue No. 5 as raising a pure question of law where no investigation of facts was necessary.
The High Court has pointed out that the defendant while raising the plea of illegality of the contracts in his written statement, nowhere alleged that the contracts were entered into at Marwar or were intended to be performed there.
On the other hand the plaintiffs expressly averred that the contracts were made at Indore.
The one fact from which the appeal bench of the Jodhpur High Court drew the conclusion that the contracts were intended to be 445 performed, partly at least, at Marwar, was that certain payments towards the losses resulting from the transactions were made by the defendant to the plaintiffs ' firm at Marwar.
This, as the Rajasthan High Court points out, does not necessarily lead to the inference that it was a ' part of the original agreement entered into by the parties, that the performance was to be made at Marwar.
The payments might have been made, as a matter of convenience, upon express instructions from the Indore firm.
It is also pointed out that if the general principle of law is that it is the debtor who has to seek the creditor, as the defendant ranked here as a debtor by reason of the losses suffered in the business, it was for him to seek the plaintiffs at Indore and not for the plaintiffs to seek him at Jodhpur.
The ,suit, it is to be further noted, was brought at Jodhpur only on the allegation that the defendant resided within its jurisdiction.
There was no averment in the plaint that any part of the cause of action arose within its jurisdiction.
On all these grounds the Rajasthan High Court was of opinion that the Courts below should have either framed a specific issue on facts or if they thought that issue No. 5 was sufficiently wide to cover the question of fact as well, they should have given an opportunity to the parties to lead evidence for arriving at a finding whether the contracts were to be performed in whole or in part in Marwar.
The learned Judges themselves were inclined to send the case back, on remand, in order that evidence might be adduced on this point.
But they did not take this step as they were told that the contracts were entered into by telegrams and no terms of any sort were settled between the parties, it being understood that the business was to be conducted according to the custom and usage of the market.
The learned Judges further discussed a question of Private International Law, apparently raised on behalf of the defendant, that even if the contract was made outside Marwar and not intended to be performed there.
, still the Court of Marwar should refuse to enforce the contract as it was illegal according to the lex fori, that is to say the law of the place where the suit was brought.
446 This contention of the defendant was not accepted and it was held that if the contract was enforceable by the law of the place where it was made or where it was to be performed, it could not be held unenforceable in Jodhpur on the ground of its being opposed to public policy as the prohibition in the notification was not general in its nature and the contract in question cannot be said to be opposed to any basic ideas of morality or public policy.
After saying all these however, the learned Judges of the Rajasthan High Court dismissed the suit on the short point that even if the sale or purchase under the contracts might have taken place outside Marwar Yet the notification not only hit the contracts of sale and purchase but the contract of agency itself relating to such transactions.
It is said then that in the case of Pakki Adat, primarily the place of payment of profit is the place where the constituent resides and in the present case the plaintiffs had alleged themselves to be Pakka Adatias.
Consequently the agency contract would be hit by the notification as it was to be performed at Jodhpur where the defendant lives.
We do not think that the learned Judges ' approach to the case has been a proper one or that the reasoning adopted by them can be accepted as sound.
By the notice of 3rd June, 1943, an additional rule, namely, rule No. 90(c) was added to the Defence of India Rules as applied to Marwar.
Sub rule (2) of rule 90(c) laid down that no person shall enter into forward contract or option in bullion.
In sub rule (1) " forward contract " was defined to mean 'a contract for delivery of bullion.
at a future date, such date being later than 12 days from the date of the contract '; and a " contract " was defined to mean ' a contract made or to be made or to be performed in whole or in part in Marwar relating to the sale or purchase of bullion. ' The present suit is really not one to enforce any contract relating to purchase or sale of bullion which comes within the prohibition of this notification.
It is a suit by an agent claiming indemnity against the principal, for the loss, which the agent had suffered, in carrying out the directions of the principal.
The right to such indemnity is founded on the statutory provision 447 contained in section 222 of the Indian Contract Act which stands as follows: The employer of an agent is bound to indemnify him against the consequences of all lawful acts done by such agent in exercise of the authority conferred upon him." Here the plaintiffs paid the losses resulting from the transactions to third parties, on behalf of the defend.
ant, in exercise of the authority conferred upon them by the latter.
These acts of payment were certainly lawful acts if we assume, as indeed we must, that all these transactions took place and the payments were made outside Marwar.
It is the statutory right which flows from the contract of agency that the plaintiffs are seeking to enforce against the defendant and the suit has been brought in the Jodhpur Court as the defendant resides within that jurisdiction.
The fact that in case of Pakki Adat the place of payment is normally where the constituent resides is immaterial for our present purpose.
A contract for sale or purchase of bullion may be entered into by and between the parties directly or it may be made through agents.
In either case if such contract is not entered into at Marwar, nor is it agreed to be performed wholly or in part in Marwar, it would be outside the notification and cannot be held to be illegal.
The fallacy in the reasoning of the learned Judges lies in the fact that the contract between principal and agent, which is entirely collateral to the contract of purchase and sale, has been held by them as coming within the prohibition of the notification merely on the ground that payment, by the agent to the principal, of the profits of the transaction could be made or demanded at the place where the principal resides.
In our opinion the right to indemnity, which is an incident of the contract of agency, is not hit by the notification at all and is a matter which is entirely collateral to a forward contract of purchase and sale of bullion which the notification aims at prohibiting.
We hold therefore that the Courts were not right in dismissing the plaintiffs ' suit on the ground that the contracts upon which the suit was based were illegal by reason of their contravening the provisions 448 of the notification.
The result is that we set aside the judgments of the Courts below and send the case back to the Original Court of Jodhpur in order that it may be tried 'on all the other issues raised in the suit after giving opportunity to the parties to adduce such evidence as they want to adduce.
The plaintiffs appellants will have their costs up to this stage.
Further costs will abide the result.
Order accordingly.
| IN-Abs | The respondent as principal entered into several forward contracts for the purchase and sale of bullion through the appellant 's firm at Indore who worked as commission agents for the respondent.
The transactions resulted in a loss and the appellants who had to pay the amount of loss to third parties on behalf of the respondent as the agents brought the suit for recovery of the amount in the Court in Jodhpur where the respondent resided.
It was pleaded by the respondent that according to.
the law prevalent there as contained in the notification of the Marwar Government dated the 3rd June, 1943, all forward business contract in bullion in which the date fixed for delivery exceeded 12 days were 440 illegal and therefore a suit on the basis of these transactions was not maintainable.
Held, that, the suit was really not one to enforce any contract relating to the purchase or sale of bullion which comes within the prohibition of the notification but was one by an agent claiming indemnity against the principal for the loss which the agent had suffered in carrying out the directions of the principal.
The right to such indemnity was founded on the statutory provision contained in section 222 of the Indian Contract Act and the acts of payment made by the plaintiffs on behalf of the defendant were lawful acts as all the transactions took place and the payments were made outside Marwar and therefore the suit was not hit by the notification.
|
ivil Appeal No. 1449 of 1966.
Appeal by special leave from the judgment and decree dated April 28, 1966 of the AIIahabad High Court in Second Appeal No. 289 of 1965.
M.K. Ramatnurthi, Shyamala Pappu and Vineet Kumar, for the appellant.
B.C. Misra, O. Prakash, R.K. Mathur and M.V. Goswami, for the respondent.
577 The Judgment of the Court was delivered by Bachawat, J.
The appellant is the tenant and the respondent is the landlord of House No. 5B, Old 122 Maya Mirganj, Allahabad.
The appeal arises out of a suit for ejectment by the landlord against the tenant from the house.
On October 11, 1961, the landlord obtained permission to institute the suit from the Rent Control and Eviction Officer under section 3 (1) of the U.P. (Temp.) Control of Rent and Eviction Act, 1947.
On October 14, 1961 the landlord instituted the present suit for eviction against the tenant.
On March 27, 1962 the Commissioner Allahabad Division acting under section 3 (3) revoked the permission to institute the suit.
On March 30, 1963 the State Government acting under section 7F set aside the Commissioner 's order and gave leave to the landlord to file the suit with effect from July 30, 1963.
On July 11, 1963 the Trial Court decreed the suit.
The tenant filed an appeal against the decree.
On November 4, 1963 the appellate court set aside the decree and remanded the suit for fresh trial.
After the suit went back on remand the Trial Court decreed the suit on March 2, 1964.
The Trial Court held that the permission granted by the State Government became effective from July 30, 1963 and as the suit was still pending a decree could be passed in the suit.
An appeal against the decree was dismissed on November 28, 1964.
A second appeal was dismissed by the High Court on April 28, 1966.
The present appeal has been filed by the tenant after obtaining special leave.
The sole question in the appeal is whether in the circumstances there was a valid permission to institute the suit under section 3 (1 ).
In Bhagwan Das vs Paras Nath(1) this Court held that a suit validly instituted after obtaining permission of the Commissioner under section 3(3) did not become incompetent if the State Government acting under section 7F revoked the permission after the institution of the suit.
In that case the District Magistrate refused to give permission under section 3 (1) to.
institute the suit.
The Commissioner acting under section 3 (3) set aside the order and granted permission to institute the suit.
The suit was decreed by the Trial Court on November 2, 1960.
The tenant filed an appeal against the decree.
During the pendency of the appeal the State Government acting under section 7F revoked the permission granted by the Commissioner.
The Court held that though the order under section 3(3) was subject to an order under section 7F the Government 's power under section 7F to revoke the permission granted by the Commissioner became exhausted once the suit was validly instituted.
In support of his contention that the present suit is not maintainable, the appellant relies on the following observations of Hegde, J. : ; 578 "When the Commissioner sets aside the order passed by the District Magistrate granting permission to file a suit for ejecting a tenant, the order of the Commissioner prevails.
If he cancels the permission granted by the District Magistrate there is no effective permission left and the suit instituted by the plaintiff without a waiting his decision must be treated as one filed without any valid permission by the District Magistrate.
" Having regard to these observations the present suit though validly instituted after obtaining the permission under section 3 (1) became incompetent when the permission was revoked by the Commissioner under section 3 (3).
But the order under section 3 (3) itself was set aside by the State Government under section 7F during the pendency of the suit.
The question is what is the effect of this order under section 7F.
Now, section 3(4) provides that the order of the Commissioner under section 3(3) subject to an order passed by the State Government under section 7F.
If the State Government acting under section 7F sets aside the order of the Commissioner revoking the permission, the order under section 3 (1) granting permission is revived.
The result is that there is an effective permission to institute the suit under section 3 (1) and the suit is validly instituted.
In Bhagwan Das 's Case (1) the suit was validly instituted after obtaining permission from the Commissioner under section 3 (3).
The State Government could not render such a suit incompetent by any order under section 7F.
In the present case the suit was validly instituted after obtaining permission from the Rent Control and Eviction Officer under section 3 (1).
The effect of the order of the Commissioner revoking the permission was that the suit became incompetent.
The State Government acting under section 7F had power to revise and set aside the Commissioner 's order and restore the permission granted under section 3 (1) so as to make the suit competent.
The order of the State Government after stating that in the interest of justice the house should be available to the landlord for his use, set aside the Commissioner 's order under section 3(3).
The result was that the order of the Rent Control and Eviction Officer passed .under section 3 (1) stood restored.
The further direction in the order that the landlord "is advised to file a suit for eviction from the house in dispute against the opposite party in a civil court under section 3 of the Act, which will be applicable four months after the date of the order" really means that the permission under section 3(1) would become effective on the expiry of 4 months.
The landlord had thus an effective permission to institute the suit under section 3(1) on the expiry of four months from March 30, 1963, that is to say, as from July 30, 1963.
The (1) ; 579 decree in the suit was passed on March 2, 1964.
On that date the landlord had a valid permission to institute the suit.
The suit was therefore maintainable.
In the result, the appeal is dismissed.
There will no order as to costs.
Y.P. Appeal dismissed.
| IN-Abs | The respondent landlord obtained permission to institute a suit from the Rent Control & Eviction Officer under section 3(1) of the U.P. (Temp.) Control of Rent and Eviction Act, 1947, for ejecting from his house the Appellant tenant.
The respondent filed a suit for eviction against the appellant.
Later the Commissioner acting under section 3(3) revoked the permission But the State Government on March 30, 1963 acting under section 7F set aside the Commissioner 's order and gave leave to the respondent to file the suit after 4 months of the date of the order i.e., July 30.
On July 11, 1963 the trial court decreed the suit.
The appellant filed an appeal.
The appellate court set aside the trial court 's decree and remanded the suit for fresh trial.
On remand, the trial court decreed the suit on March 2, 1964 holding that the permission granted by the State Government became effective from July 30, 1963 and as the suit was.
still pending a decree could be passed in the suit.
This decision was affirmed by the first appellate court, and also by the High Court.
Dismissing the .appeal this Court.
HELD: If the State Government acting under section 7F sets aside the order of the Commissioner revoking the permission.
the order under section 3(1) granting permission is revived.
The 'result is that there is an effective permission to institute the suit under section 3(1) and the suit is validity instituted.
[578 D] The direction of the 'State 'Government to file the suit after four months of the order meant that the permission under section 3(1) would become effective on the expiry of 4 months i.e. from July 30, 1963.
The landlord had thus an effective permission to institute the suit under section 3(1) from July 30, 1963.
The decree in the suit was passed on March 2. 1964.
On that date the landlord had a valid permission to institute the suit.
The suit was therefore maintainable.
[578 H] Bhagwan Das vs Paras Nath, ; , distinguished.
|
iminal Appeal No.45 of 1967.
Appeal by special leave from the judgment and order dated September 9, 1966 of the Madras High Court in Criminal Revision Petition 1350 of 1965.
N.H. Hingorani, R. Jethamalani and K. Hingorani, for the appellant.
Niren De, Solicitor General, N.S. Bindra, R.H. Dhebar and S.P. Nayar, for the respondent.
K.R. Chaudhuri and K. Rajendra Chaudhuri, for the intervener.
The Judgment of the Court was delivered by (Grover, J.
The main point in this appeal, by special leave, is whether the statements of the appellant and other accused persons recorded by the customs authorities under the provisions of the (Act 52 of 1962), hereinafter called the "New Act", were admissible in evidence at their trial for the alleged offences under section 120B of the Indian Penal Code read with section 135 of the new Act and ss, 23 (IA) and 23B of the Foreign Exchange Regulation Act 1947 and under Rule 131 B of the Derrace of India Rules.
The facts need not be stated in great detail.
A complaint was laid by the Collector of Customs, Madras, against to persons for having committed the above offences.
The complaint related to an occurrence which involved transport of 750 bars of gold each weighing 10 tolls valued at more than 7 lacs from Bombay to Madras.
The statements of the accused persons were recorded by the Inspector of Customs and other customs authorities before the complaint was filed.
After a preliminary enquiry the Second Presidency Magistrate, George town, Madras committed 9 of the accused persons to stand their trial at the City Sessions Court, the charges being confined to the transaction connected with 700 bars of gold only.
Seventeen charges were framed on October 29, 1965, by the learned Sessions Judge against the appellant and eight other accused persons for the various offences mentioned above.
When the hearing before ,the Sessions Court commenced the prosecution sought to file the statements of the accused persons recorded by the customs authorities.
Certain preliminary objections were raised on behalf of the accused to the admissibility of those statements.
The first was that the officers of the customs department who had recorded the statements must be deemed to be police officers and the statements being of a confessional nature were not admissible in evidence by virtue of the provisions of section 25 of the Indian Evidence Act.
The second objection was that the investigation 615 conducted by the customs officer must be deemed to be under Chapter XIV read with section 5(2) of the Criminal Procedure Code and the statements thus became inadmissible under section 161 read with section 162 of the Code.
The third objection was based on article 20(3) of the Constitution involving testimonial compulsion.
This objection was not mentioned in the order of the learned Sessions Judge but it was alleged to have been raised before the High Court.
The matter went up to the High Court on the Revisional side because the learned Sessions Judge took the view that the statements given by the accused persons to the customs officers could not be received in evidence.
The learned Single Judge, who heard the Revision petition, referred the following questions to a full bench owing to their importance: "Are statement recorded by inquiring officers of the Customs Department under Section 107(108)of the , inadmissible in evidence in a criminal trial by reason of the bar under: (1 ) Section 25 of the Indian Evidence Act; (2) Section 162 of the Criminal Procedure Code; and (3) article 20(3) of the Constitution.
" The full bench answered all the three questions against the accused persons.
Only one out of them, Illias, has appealed to this Court Learned counsel for the appellant has not pressed the second point.
As regards the third point, it was conceded before the full bench of the High Court that when the statements were recorded the investigation had not reached the stage when the particular persons had been accused of an offence within the meaning of article 20( 3 ) of the Constitution.
In view of this concession learned counsel for the appellant has submitted that the matter be left undecided so that it may be open to the appellant to make whatever submissions he wishes to make before the trial court when any such statement is formally tendered for admission into evidence.
Adverting to the first point the main endeavour of the counsel for the appellant has been to demonstrate by reference to various provisions of the new Act that statements recorded by the customs authorities of a confessional nature would be hit by the provisions of section 25 of the Evidence Act.
In State of Punjab vs Barkat Ram,(1) it was held by the majority that customs officers were not police officers for the purpose of section 25 of the Evidence Act and the statements to customs officers were admissible in evidence at the trial of persons accused of offences, inter alia, under the , hereinafter called the "old Act".
It has been submitted that a later decision on this Court in Raja Ram Jaiswal vs State of Bihar(2) which related to the question whether an Excise Inspector exercising powers under the Bihar (1) ; (2) ; 616 & Orissa Excise Act was a police officer for the purposes of section 25 of the Evidence Act goes a great deal in favour of the appellant particularly when the provisions of the new Act wherein substantial departure has been made from those of the old Act are kept in view.
As will be presently seen there is yet a third decision of the constitution bench of this Court in Badku Joti Savant vs Stale of Mysore(1) which related to the provisions of the Central Excises & Salt Act which goes against the contention pressed by the counsel for the appellant.
At any rate, it does not appear that the majority view expressed in Barkat Ram 's case(2) has been shaken in any manner so far as statements recorded by a customs officer under the old Act are concerned.
Indeed in a recent decision of this Court P. Shankar Lal and Ors.
Asstt.
Collector of Customs, Madras,(3) it has been reaffirmed that there is no conflict between the cases of Raja Ram Jaiswal(4) and Barkat Ram(2), the former being distinguishable from the latter.
Before the previous pronouncements of this Court are discussed it is necessary to compare the relevant provisions of the new Act and the old Act.
Under the old Act section 173 provided that persons reasonably suspected of offences under that Act might be arrested by any officer of customs or other persons duty employed for the prevention of smuggling.
Under the new Act according to section 104 if an officer of customs empowered in this behalf by general or special order of the Collector of Customs has reason to believe that any person has been guilty of an offence punishable under section 135, he may arrest such person.
As regards the power to search, Chapter XVII of the old Act contained the relevnt provisions.
Section 169 conferred the power on a customs officer to search, on a reasonable suspicion.
Under section 170 when any officer of customs was about to search any person under the provisions of section 169 such person could require that officer to take him, previous to search, before the nearest magistrate or customs collector.
Section 172 conferred power on a magistrate to issue search warrants on an application by the customs collector.
In the new Act section 100 confers the power to search suspected persons entering or leaving India.
Section 102 contains Provisions analogous to section 170 of the lid Act with some minor differences.
Under the old Act every person arrested on the around that he had been guilty of an offence under that Act had to be forthwith taken to the nearest magistrate .or customs collector, (section 174).
Under the new Act section 104C2) provides that every person arrested shall, without unnecessary delay, be taken to a magistrate.
Lastly section 171A of the old Act conferred power on customs officers to summon persons to give evidence and (1) (2) ; (3) Cr.
52 & 104/65 decided on 12 12 1967.
(4) 617 produce documents.
Under the new Act section 107 gives the power to customs officers empowered by general or special order of collector of customs to examine persons acquainted with the facts and circumstances of the case or to require any person to produce or deliver any document.
Section 108 confers power on a gazetted officer of customs to summon persons for giving evidence or producing documents.
The substantial difference, however, between the two enactments as has been pointed out by the High Court, relates to (1 ) the procedure after arrest; (2) the procedure for enquiry or investigation and (3) the procedure for search.
As regards the procedure after arrest a significant change which, has been made in the new Act is contained in sub section
(3) of section 104.
It is provided thereby that where an officer of customs has arrested any person under sub section
(1 ) he shall, for the purpose of releasing such person, on bail or otherwise, have the same power and be subject to the same provisions as the officer in charge of a police station has and is subject to under the Code of Criminal Procedure.
Sub section (4), however, makes an offence under the new Act non cognizable notwithstanding anything contained in the Code of ' Criminal Procedure (the offences under the old Act were also non cognizable).
In the old Act there was no provision conferring the power of releasing a person on bail or otherwise on a customs, officer and only a magistrate could grant bail.
A great deal of emphasis has been laid by the counsel for the appellant on the power of granting bail which has now been given to a customs officer under the new Act.
It is pointed out that such a power goes a long way and assists a great deal in extortion of confessions against which section 25 of the Evidence Act contains the main safeguards.
It has also been contended that all the powers of an officer in charge of the police station under the Code of Criminal Procedure have been conferred on an officer of customs in the matter of releasing an arrested person on bail or otherwise.
It has even been suggested by the appellant 's counsel that the word "otherwise" invests the customs officer with all the powers which an officer in charge of a police station can exercise under Chapter XIV of the Code.
It may be observed at once that the word "otherwise" clearly relates to releasing a person who has been arrested and cannot possibly be construed in the manner suggested by the learned counsel.
In the old Act the provisions containing the procedure for enquiry were to be found in section 171A. As stated before, any officer of customs duly employed in the prevention of smuggling had the power to summon any person whose attendance he considered necessary either to tender evidence or to produce a document in any enquiry which such officer was making in connection with smuggling of goods, Any person so summoned was bound to attend either in person or by an authorised agent and he was also bound 618 to state the truth upon any subject respecting which he was examined or make a statement and to produce such documents and other things as might be required.
Every such enquiry was by a deeming provision to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian Penal Code.
Under the new Act the enquiry can be of two kinds.
Under section 107 any officer of customs empowered by the collector of customs can require any person to produce or deliver any document etc.
or he can examine any person acquainted with the facts and circumstances of the case.
Section 108 contains the second set of powers which are analogous to section 171A of the old Act, the two sections being almost similar in language.
The contention on behalf of the appellant is that section 107 the new Act gives power of investigation to officers of customs similar to those exercisable by a police officer under Chapter XIV of the Criminal Procedure Code.
Now a police officer under section 160 of the Code can, by an order in writing, require the attendance of any person within the limits of his own or any adjoining station and he can under section 161 examine orally any person supposed to be acquainted with the facts and circumstances of the case.
The submission of the appellant 's counsel, therefore, is that section 107 is similar to sections 160 and 161 and the customs officer conducting an enquiry or investigation relating to offences under the new Act enjoys the same power as a police officer making an investigation under Chapter XIV of the Code of Criminal Procedure.
It is pointed out that under the old Act no such powers were conferred on the customs officer and it was with reference to section 171 A of the old Act that this Court in Barkat Ram 's(1) case laid emphasis on the judicial nature of the proceedings held under that section.
The distinction, it is said, no longer obtains owing to the provisions of section 107 of the new Act.
As regards the procedure for search the important change which has been made in the new Act is that under section 105 if the Assistant Collector of customs has reason to believe that any goods liable to confiscation or any documents or things are secreted in any place, he may authorise any officer of customs to search or may himself search for such goods, documents or things.
Under the old Act it was necessary to obtain a warrant from a magistrate in accordance with section 172 and the warrant could be executed in the same way and had the same effect as a search warrant issued under the law relating to criminal procedure.
An examination of the previous decisions of this Court may now be made in order to test the validity of the argument raised on behalf of the appellant that owing to the substantial changes made in the new Act statements of a confessional nature recorded by the customs officers should be excluded under section 25 of the Evidence Act on the ground that these officers are police (1) ; 619 officers within the meaning of that section.
In the majority judgment in Barkat Ram 's(1) case a comparison was made between the duties and powers of police officers and customs officers which may be summarised as follows : (1 ) The police is the instrument for the prevention and detection of crime which can be said to be the main object of having the police.
The powers of customs officers are really not for such purpose and are meant for checking the smuggling of goods and due realization of customs duties and for determining the action to be taken in the interest of the revenue of the country by way of confiscation of goods on which no duty had been paid and by imposing penalties and fines.
(2) The customs staff has merely to make a report in relation to offences which are to be dealt with by a magistrate.
The customs officer, therefore, is not primarily concerned with the detection and punishment of crime but he is merely interested in the detection and prevention of smuggling of goods and safeguarding the recovery of customs duties.
(3) The powers of search etc.
conferred on the customs officers are of a limited character and have a limited object of safeguarding the revenues of the State and the statute itself refers to police officers in contradistinction to customs officers.
(4) If a customs officer takes evidence under section 171A and there is an admission of guilt, it will be too much to say that statement is a confession to a police officer as a police officer never acts judicially and no proceeding before him is deemed to be a judicial proceeding for the purpose of sections 193 and 228 of the Indian Penal Code or for any other purpose.
Adverting to Raja Ram Jaiswal 's(2) case it is significant that by virtue of section 77(2) read with section 78(3) of the Bihar & Orissa Excise Act, 1915, an Inspector or Sub inspector was deemed to be an officer in charge of a police station and was entitled to investigate any offence under the Excise Act.
He could exercise all the powers which an officer in charge of a police station could exercise under Chapter XIV of the Code.
It was, therefore, held by the majority that a confession recorded by an Excise Officer during an investigation into an excise offence could not reasonably be regarded as anything different from a confession to a police officer Barkat Ram 's(1) case was distinguished on a number of grounds.
One was that the excise officer did not exercise any judicial power just as the customs officer did under the ; secondly the customs officer was not deemed to be an officer in charge of a police station and, therefore, he could not exercise powers of such an officer under the Code of Criminal Procedure.
Further, the customs officer could make an enquiry (1) ; (2) ; 620 but he had no power to investigate into an offence under section 156 of the Code.
Even though some or the powers set out m Chapter XVII of the were analogous to those of the police officer under the Code, they were not identical with those of a police officer and were not derived from or by reference to the Code.
it was pertinently observed that the customs officer was not entitled to submit a report to a magistrate under section 190 of the Code with a view that cognizance of the offence be taken by a magistrate.
It was then said at p. 766: "The test for determining whether such a person is a 'police officer ' for the purpose of section 25 of the Evidence Act would, in our judgment, be whether the powers of a police officer which are conferred on him or which are exercisable by him because he is deemed to be an officer in charge of a police station establish a direct or substantial relationship with the prohibition enacted by section 25, that is, the recording of a confession.
In other words, the test would be whether the powers are such as would tend to facilitate the obtaining by him of a confession from a suspect.
or a delinquent.
If they do, then it is unnecessary to consider the dominant purpose for which he is appointed or the question as to what other powers he enjoys.
" Emphasis was laid on the police officers having such powers which enable them to exercise a kind of authority over the persons arrested which facilitate the obtaining from them statements which may be of incriminating nature.
The case of Raja Ram jaiswal(1) came up for discussion in the third of series of these cases, namely, Badku Joti Savant vs State of Mysore(2).
The appellant there had been found in possession of contraband gold.
He was prosecuted under section 167(81) of the read with section 9 of the Land .
A question arose whether the statement made by the appellant to the Deputy Superintendent of Customs and Excise was admissible in evidence.
The contention raised was that the Central Excise Officer under the Central Excises & Salt Act (Act 1 of 1944), hereinafter called the "Central Excise Act", was a police officer within the meaning of those words in section 25 of the Evidence Act.
Therefore even though the Deputy Superintendent of Customs and Central Excise had acted under the power conferred on him by the , he was still a police officer and the statement made to him which was in the nature of a confession was inadmissible in evidence.
This Court referred to the difference of opinion among the High Courts as to the meaning of the words "police officer" used in section 25 of the Evidence Act.
One view was that those words must be construed in a broad way and all officers would be police (1) ; (2) [1966] 3 s C.R. 698.
621 officers within the meaning of those words if they had powers of the police officer with respect to investigating of offences with which they were concerned even if they were police officers properly so called or not.
The narrow view was that these words in section 25 meant a police officer properly so called and did not include officers of other departments of Government who might be charged with the duty to investigate, under special Acts, special crimes like the excise or customs offences etc.
The Court proceeded on the assumption that the broad view was correct.
After examining the various provisions of the Central Excise Act and in particular section 21 it was observed that a police officer for the purpose of cl.
(b) of section 190 of the Code of Criminal Procedure could only be one properly so called.
A Central Excise Officer had to make a ' complaint under cl.
(a) of section 190 of the Code to a magistrate to enable him to take cognizance of an offence committed under the special statute. 'The argument that a Central Excise Officer under section 21(2) of the Central Excise Act had all the powers of an officer in charge of a police station under Chapter XIV of the Code and, therefore, he must be considered to be a police officer within the meaning of those words in section 25 of the Evidence Act was repelled for the reason that though such officer had the power of an officer in charge of a police station he did not have the power to submit a charge sheet under section 173 of the Code.
Raja Ram Jaiswal 's(1) case was distinguished on the ground that section 21 of the Central Excise Act was in terms different from section 78(3) of the Bihar & Orissa Excise Act, 1915 which provided that for the purpose of section 156 of the Code of Criminal Procedure the Excise Officer empowered under section 77(2) of that Act shall be deemed to be the officer in charge of a police station.
The following observations at page 704 are indeed important: "All that section 21 provides is that for the purpose of his enquiry, a Central Excise Officer shah have the powers of an officerin charge of a police station when investigating a cognizable case.
But even so it appears that these powers do not_ include the power to submit a charge sheet und er section 173 of the Code of Criminal Procedure, for unlike the Bihar & Orissa Excise Act, the Central Excise Officer is not deemed to be an officer incharge of a police station.
" It was reiterated that the appellant could not take advantage of the decision in Raja Ram Jaiswal 's(1) case and that Barkat Ram 's(") case was more apposite.
The ratio of the decision Badku Joti Savant(3) is that even if an officer under the special Act has been invested with most of the powers which an officer (1) ; (2) ; (3) ; Sup CI/69 7 622 in charge of a police station exercises when investigating a cognizable offence he does not thereby become a police officer within the meaning of section 25 of the Evidence Act unless he is empowered to file a charge sheet under section 173 of the Code of Criminal Procedure.
Learned counsel for the appellant when faced with the above difficulty has gone to the extent of suggesting that by necessary implication the power to file a charge sheet flows from some of the powers which have already been discussed under the new Act and that a customs officer is entitled to exercise even this power.
It is difficult and indeed it would be contrary to all rules of interpretation to spell out any such special power from any of the provisions contained in the new Act.
In this view of the matter even though under the new Act a customs officer has been invested with many powers which were not to be found in the provisions of the old Act, he cannot be regarded as a police officer within the meaning of section 25 of the Evidence Act.
In two recent decisions of this Court in which the judgments were delivered only on October 18, 1968 i.e. Romesh Chandra Mehta vs State of West Bengal(1) and Dady Adarji Fatakia vs
K.K. Ganguly, Asstt Collector of Customs & Ant.,( '2) the view expressed in Barkat Ram 's(3) case with reference to the old Act has been reaffirmed on the question under consideration and it has been held that under the new Act also the position remains the same.
This is what has been said in Dady Adarji Fatakia 's(2) case: "For reasons set out in the judgment in Cr.
A. 27/67 (Romesh Chand Mehta vs State of West Bengal) and the judgment of this Court in Badku Joti Savant 's(4) case, we are of the view that a Customs Officer is under the Act of 1962 not a police officer within the meaning of section 25 of the Evidence Act and the statements made before him by a person who is arrested or against whom an inquiry is made are not covered by section 25 of the Indian Evidence Act.
" This appeal fails and it is dismissed.
V.P.S. Appeal dismissed.
(1) (2) Cr.
Appeal No. 46 of 1968 decided on 18 10 1968.
| IN-Abs | The appellant along with others was charged with various offences relating to transport of gold.
Their confessional statements recorded by customs authorities under sections 107 and 108 were sought to be given in evidence at the trial.
On the question, whether the customs authorities should be deemed to be police officers, and therefore, the statements were inadmissible by reason of section 25 of the Evidence Act, HELD: Under , the customs authorities have been invested with many powers of a police officer in matters relating to arrest, investigation and search, which the customs officers did not have under the repealed Act namely, the .
For example, under section 104(3) after arrest, the customs officer has the power of releasing the arrested person on bail and for that purpose has the same powers as an officer in charge of a police station.
Under section 107 a customs officer empowered by the Collector of Customs can require any person to produce any document, which power is similar to those exercisable by 'a police officer under sections 160 and 161, Cr.
Under section 105, if the Assistant Collector of Customs has reason to believe that any goods liable to confiscation are secreted in any place he may authorise any customs officers or may himself search for the goods.
But, customs officers have not been invested with all the powers which an officer in charge of a police station can exercise under Chapter XV, Cr.
The powers conferred do not include the power of submitting a charge sheet under section 173, Cr.
P.C., either expressly or by necessary implication.
Therefore, in order to enable a magistrate to take cognizance of an offence under the , (the offences under the Act are non cognizable), the customs officer will have to file a complaint before the magistrate under section 190(a), Cr. P.C., and cannot like a police officer submit a report under section 190(b).
Hence even though the customs officers have been invested with many of the powers which an officer in charge of a police station exercises when investigating a cognizable offence he does not thereby become a police officer within the meaning of section 25 of the Evidence Act and so the confessional statements made by accused persons to customs officials would be admissible in evidence against them.
[617 C D; 618 B C. F G; 621 C D; 622 C D] Romesh Chandra Mehta vs State of West Bengal.
and Dad.
v Adarji Fatakia vs
K.K. Ganguly, Astt.
Collector of Customs & Anr.
A. No. 46 of 1968 dated October 18, 1968, followed.
State of Punjab vs Barkat Ram, ; , Raja Ram faiswal vs State of Bihar; , Badku Joti Savant vs State of Mysore, ; and P. Shankar Lal & Ors.
vs Asstt.
Collector of Customs, Madras, Cr.
52 & 104/65 dated 12 12 1967.
referred to.
|
minal Appeal No. 195 of 1966.
Appeal from the judgment and order dated February 25, 1966 of the Andhra Pradesh High Court in Criminal Revision, Case No. 382 of 1964.
P. Ram Reddy and G.S. Rama Rao, for the appellant.
A.V. Rangam, Miss Sen, A. Vedavalli and Subhashini, for the respondent.
The Judgment of the Court was delivered by Shah, J.
Motor Lorry No. A.P.P. 4695 belonging to the respondent Yedla Perraya was seized by the Forest Range Officer, Gokavaram, early in the morning of December 25,1963, when it 624 was being used without a license for carrying,eight Yegisi logs on Rajahmundry Gokavaram Road.
The driver of the motor lorry and another person were tried before the 2nd Additional, 2nd Class Magistrate, Rajahmundry on a complaint 'by the Forest Range Officer for offences under sections 35 and 36 of the Andhra Pradesh Forest Act and the rules framed thereunder.
The two accused admitted that they had committed the offence of illicit transportation of timber, and on their plea of guilty they were convicted.
The respondent applied to the Trial Magistrate for an order releasing the motor lorry on the plea that the offence of transportation of timber was committed without his knowledge and that the value of the timber seized was not more than Rs. 50/ at the relevant time.
The learned Magistrate observed: "After careful perusal of the deposition of R.W. 1, I find that there is nothing in it to indicate that the petitioner knowingly lent his lorry for the illicit transport of timber on the night of 24 12 63.
There is also nothing in the case records to show that the petitioner allowed the lorry to illicitly transport the timber on the above date.
1 accordingly hold that the petitioner cannot be said to have knowingly allowed his lorry to illicitly transport the timber.
" But the learned Magistrate was of the view that by section 43 of the Andhra Pradesh Forest Act, where it was proved that the value of the timber transported exceeded Rs. 50/ , he was enjoined to direct confiscation of the vehicle in which the forest produce was being transported without a license.
In his view the value of eight logs of timber seized from the lorry was Rs. 311/ at the market rate in Rajahmundry.
In appeal by the respondent to the Court of Session at Rajahmundry the order of confiscation was set aside and the High Court of Andhra Pradesh confirmed the order of the Court of Session.
The State of Andhra Pradesh has appealed to this Court with certificate.
granted under article 134( 1 ) (c) of the Constitution.
The Andhra Pradesh (Andhra Area) Forest Act 5 of 1882 provides by section 41 that when there is reason to believe that a forest offence has been committed in respect of any timber or forest produce, such timber or produce, together with all tools, ropes, chains, boats, vehicles and cattle used in committing any such offence may be seized by any Forest officer or Police officer.
Section 43 as amended by Act 11 of 1963 provides: "Where a person is convicted of any forest offence, the Court sentencing him shall order ,confiscation.
to the Government of, the timber or the ' forest produce in respect of which such 'offence was committed, and also any 625 tool, boat, cattle and vehicle and any other article used in committing such offence: Provided that it shall be open to such Court not to order confiscation of any tool, boat, cattle, vehicle or any other article used in committing such offence when the value of the timber or the forest produce in respect of which such offence was committed does not exceed fifty rupees.
" It may be observed that before the Forest Act was amended by Act 11 of 1963, the Magistrate was not obliged to direct confiscation of the articles, vehicles, cattle, tools or boats used for committing a forest offence.
The Trial Magistrate was of the view that after the amendment of the Forest Act by Act 11 of 1963 he had no option and he was bound on conviction of the offender in respect of any forest offence to direct confiscation of the vehicle used in the commission of such offence.
Counsel for the respondent contended that if the interpretation put by the Trial Magistrate upon section 43 as amended is correct, the enactment imposes an unreasonable restriction upon the fundamental right ' of the owner of the vehicle declared by article 19(1)(e) of the Constitution, and is on that account void.
Counsel urged that a statute which imposes upon a person who has himself not committed any offence or infraction of the law liability to forfeit his valuable property must be regarded as unreasonable.
It was urged that if a vehicle is stolen and then used for commission of a forest offence, or is borrowed by some person for a legitimate purpose and then used without the consent or knowledge of the owner for committing an offence under the Forest Act, or where with a view to involve the owner of the vehicle into a forest offence, forest produce is surreptitiously introduced into the vehicle, and the vehicle is liable to be forfeited, the provision making it obligatory to impose the penalty of forfeiture of the vehicle must be deemed to impose an unreasonable restriction on the owner of the vehicle and is ultra rites on that account.
It is not necessary for the purpose of this case to express any opinion on that part of the case.
Assuming that the statute which enjoins the Magistrate to confiscate the vehicle used in the commission of the forest offence, even when it is used without the knowledge or consent of the owner, is valid, in our judgment, section 47 of the Act enables the Court of Session and the High Court to make an appropriate order with regard to the vehicle which is just.
That section provides: "Any person claiming to be interested in property seized under section 41, may, within one month from the date of any order passed under section 43, 44 or 626 45, present an appeal therefrom which may be disposed of in the manner provided by section 419 Code of Criminal Procedure.
" The reference to section 419 is to the Code of Criminal Procedure of 1872 in force when the Andhra Pradesh Forest Act 5 of 1882 was enacted.
Section 419 of the Code of 1872 is now substituted by section 520 of the Code of Criminal Procedure, 1898, and by section 520 power is conferred, inter alia, upon the court of appeal to direct that any order passed under sections 517, 518 or 519 by a Court subordinate thereto be stayed pending consideration by the Court of appeal, and that Court may modify, alter or annul such order and make any further order that may be just Section 43 of the Andhra Pradesh Forest Act does not restrict the power of the appellate court to pass any appropriate order as may be just regarding disposal of the property.
The Court of Session in the present case has on the finding recorded by the Magistrate and confirmed by it passed an order which is essentially a just order and that has been confirmed by the High Court.
The Legislature had originally conferred a discretion both upon the Magistrate and the Court of Appeal to pass appropriate order with regard to the disposal of property used in the commission of the offence as may be just.
The Legislature has thereafter amended section 43 by Act 11 of 1963 and made it obligatory upon the Magistrate to confiscate the property or the vehicle used in the commission of Such offence.
No such restriction has, however, been placed upon the power of the appellate court and we will not be justified, having regard to the clear expression of the legislative intent, that the power is to be limited in the manner provided by section 43.
There is no warrant for implying that the power conferred by section 47 of the Act upon the appellate court is subject to some unexpressed limitation.
The High Court was, therefore, right in holding that the motor lorry belonging to the respondent, on the finding recorded by the Magistrate was not liable to be confiscated.
The appeal therefore fails and is dismissed.
V.P.S, Appeal dismissed.
| IN-Abs | The respondent 's lorry was used by the driver of the lorry and another, without the respondent 's knowledge, for illicit transport of forest timber worth more than Rs. 50.
The driver and the other person were convicted for offences under sections 35 and 36 of the Andhra Pradesh Forest Act, 1882, and the magistrate directed confiscation of the lorry under section 43 of the Act as amended by Act 11 of 1963.
The Sessions Court set aside the order of confiscation in appeal and the High Court confirmed the order of the Sessions Court.
In appeal to this Court, HELD: The Legislature originally conferred both upon the trial court and the appellate court a discretion to pass an appropriate: order with regard to the disposal of a vehicle used in the commission of an offence under the Act.
After the amendment of 1963, the Legislature made it obligatory upon the trial court to confiscate the vehicle used, but no such restriction was placed upon the appellate court; Under section 47, the appellate court could pass orders regarding disposal of property in the same manner 'as an appellate court under section 520 Criminal Procedure Code, corresponding to section 419 of the Code of 1872.
Under section 520 of the Code, power is conferred upon the appellate court to pass any appropriate order, as may be just, regarding the disposal of property used in the commission of any offence.
The order of the Sessions Court in appeal in the present case was essentially a just order and was rightly confirmed by the High Court.
[626 B E]
|
ivil Appeal No. 1263 of 1968.
Appeal by special leave from the order, dated November 2, 1967 of the Government of India, Ministry of Finance, Department of Revenue & Insurance, New Delhi in Central Excise Revision Application No. 1323 of 1967.
K. Sen, S.V. Gupte, Rameshwar Nath, Mahinder Netrain and Ravinder Nath, for the appellant.
V.A. Seyid Muhammad and S.P. Nayar, for the respondents.
[ SIKRI, J. delivered the majority Judgment on behalf of himself and BACHAWAT, J. HEGDE, J. gave a dissenting Opinion].
Sikri, J. I have had the advantage of reading the draft judgement prepared by Hegde, J., but, while I agree with him that there is no force in the plea of limitation advanced on behalf of the assessee, in my opinion the appeal should fail on the ground that the excise duty was levied correctly as determined by the Central Government in its order, dated November 2, 1967.
The facts are fully set out in the judgment of Hegde, 21 '.
It is only necessary to mention a few facts in order to make this judgment readable.
The assessee manufactures iron and steel products.
It manufactured wires out of steel rods, which had been imported by it prior to April 24, 1962.
Item 26AA was added to the First Schedule of the (I of 1944) hereinafter referred to as the Excise Act by Finance Act (No. 2), 1962 (XX of 1962) with effect from April 24, 1962.
This reads as under: "26 AA.IRON OR STEEL PRODUCTS, THE FOLLOWING, NAMELY : (i)Bars,rods,coils,wires,joi Five per cent.
ad volorem pl sts, girders, angles,channa us excise duty for the time ls,tees,flats,beams,zeds,tr being leviable on pig iron ough,pilling and all other or steel ingots,as the case rolled forced or extruded may be.
shapes and sections,not other wise specified.
(ii) Plates and sheets, other Seven and a half per cent.ad than plates and sheets inten valorem plus the excise duty ded for for 485 tinning and hoops, and str the time being leviable on ipe, all sorts,including pig iron or steel ingots as galvanised or corrugated the case may be.
and sheets.
(iii) Uncoated plates and Seven and a half per cent.
sheets intended for tin ad valorem plus the excise ning.
duty for the time being le viable on pig or iron steel (iv) Pipes and tubes ingots, as the case may be.
(including blanks there fore)all sorts, whether Five per cent.ad valorem rolled,forged,spun,cast plus the excise duty for drawn,annealed,welded or the time being leviable extruded.
on pig iron or steel ingots as the case may be.
(v) All other steel Five per cent.ad valorem castings,not otherwise sp plus the excise duty for ecified.
the time being leviable on steel ingots. ' The short point that arises is this: What is the duty leviable on the wires manufactured by the assessee out of steel rods which had already been imported ? For the time being I will ignore notifications issued under r. 8 (1) of the rules made under the Excise Act, and the amendments made by the Finance Act (No. 2) of 1962, and Indian Tariff (Amendment Act) 1963 (III of 1963) to the Indian Tariff Act, 1934. ' "Wires".
are mentioned in item No. 26AA(i).Therefore we have to scrutinize the third column of item 26AA(i) for the rate of duty.
Three points need clarification: (a) What is the meaning of or inference derivable from the word 'plus '? (b) What iS the meaning of the formula "the excise duty for the time being leviable on pig iron or steel ingots"? (c) What is the import of the words"as the case may be"? The word 'plus ' in the context indicates that the rate of duty consists of 2 parts: one part is ad valorem duty and the other is the excise duty calculated according to the formula given.
In other words, both duties have to be levied.
I will presently discuss what the formula means but this is clear that the third column contemplates one duty, consisting of two parts, being levied.
Before I discuss the meaning of the formula it will clarify matters if the import of the words "as the case may be" is first ascertained.
These words indicate that a choice has to be made between two types of excise duties excise duty leviable on pig iron or excise duty leviable On steel ingots, Sub items (ii), (iii) and (iv) of item 26AA use the same set of words.
In sub item (v) excise duty leviable on steel ingots is only mentioned.
This sub item consists of steel casting.
This indicates that the duty is being calculated thus because steel castings have been made 486 from steel ingots.
Item 26AA deals with iron 'and steel products.
It seems to me that the context indicates that the words "as the case may be" denote that the excise duty leviable on pig iron is to be charged of the product is an iron product; if it is a steel product then the excise duty leviable on.
steel ingots is to be levied.
In other words, this decides the choice whether item 25 (pig iron) or item 26 (steel ingots) is to be looked at.
Although 1 was not enlightened on the point by counsel during the course of the hearing, I have no doubt that the Excise Department and the trade know how to distinguish a steel product from an iron product.
If there is a dispute on the point it will have to be resolved in the future.
Now to come to the formula "the excise duty for the time being leviable on pig iron or steel ingots.
" Let me give a simple problem in order to illustrate the points which ' arise under this head of inquiry. "A" manufactures a steel ingot 'X ' in May 1961 in Jamshedpur.
He pays excise duty on it in May 1961 as he removes it out of the factory.
Its value is determined at the wholesale cash price at the time of removal in accordance with section 4 of the Excise Act.
Steel ingot 'X ' is sold to a manufacturer "B" in Faridabad who manufactures steel rods ( 'Y ' & 'Z ') out of it in May 1962 and removes them in May 1962.
What is the excise duty payable on steel rods ( 'Y ' & 'Z ') ? Ad valorem duty is easy to calculate.
What about the additional duty ? We know that the steel ingot 'X ' has paid excise duty.
But this does not make any difference.
The additional duty has still to be calculated under the formula.
It is also plain that no excise duty is strictly leviable under sections 3 and 4 of the Excise Act on steel ingot 'X ' as such.
Not only that it does not exist any longer but duty on it has already been paid and further no duty would be leviable under section 4 for it was removed from the factory long time ago in May 1961.
Therefore, it is clear that the formula cannot be concerned with the particular ingot 'X ' at all. ' It seems to me that what it is concerned with is the duty leviable on a hypothetical steel ingot if it had been manufactured or removed at the same time as the steel rods ( 'Y ' & 'Z ') were manufactured or removed.
In the example given above, under the formula the excise duty leviable under item 26 in May 1962 would have to be charged, i.e., 39.35 per metric tonne.
The weight to be taken into consideration would be the weight of steel rods 'Y ' & 'Z ', and not of the steel ingot 'X ' out of which they were made.
It seems to me that this is the true interpretation of column 3 of items 26AA(i).
It simply prescribes a rate of duty as the heading of column indicates.
It is not concerned with actual ingots out of which other articles are made.
It is not concerned with whether that steel ingot has paid excise duty or countervail 487 ing duty or not.
It is a simple formula perhaps inartistically formulated.
It is said that the item should be strictly construed, it being a taxing enactment.
But no rule or principle ,of construction requires that close reasoning should not be employed to arrive at the true meaning of a badly drafted entry in an Excise Act.
I believe I am not stretching the language of the entry against the subject, but it, appears to me that in the context of scheme of the Excise Act this is the only reasonable construction to give to the entry.
If it is permissible to look at the notifications issued by the Central Government which have given reliefs of various kinds, they seem to me to proceed on the interpretation which I have given above.
It will be noted that they do not exempt the article from the levy of duty; they give relief which may in a particular case be the excise duty or countervailing duty levied on the article out of which the assessed article has been manufactured.
To revert to the example given by me above, notification No.70/62, dated April 24, 1962, would exempt manufacturer B '"from so much of the duty of excise leviable on steel rods as is equivalent to .the duty leviable under item 26." Therefore, reading entry 26AA(i) with this notification, manufacturer 'B ' does not pay the whole of the duty leviable on steel rods ( 'Y ' & 'Z ') under col. 3 (item 26AA) because the steel ingot which he has used had already paid the appropriate amount of duty.
I am not able to appreciate how the insertion of item No. 63 (36) in the First Schedule of the Tariff Act or the subsequent amendment of the Indian Tariff Act, 1934, by Indian Tariff (Amendment Act) 1963 throw any light on .the interpretation of item 26 AA(i).
Item No. 63(36) is in respect of the same iron and steel products as are mentioned in item 26AA.
Column 4 (standard rate of duty) reads: "The excise duty for the time being leviable on like articles if produced or manufactured in India, and where such duty is leviable at different rates the highest duty; and the duty so leviable shall be in addition to the duty which would have been levied 'if this entry had not been inserted.
" The effect of this entry is to levy an additional customs duty equivalent to the prevalent excise duty on like articles produced and manufactured.
In other words, if the customs duty leviable under other entries in the Second Schedule on steel rods is 'D ', an additional duty 'E ' has to be levied equal to the excise duty leviable on steel rods, i.e., under item 26AA.
This has been called countervailing duty.
488 The manufacturer India, who used steel rods made in India, and made wires from them was given a certain relief by notification No. 77 of 1962, but the manufacturer in India who used steel rods made abroad to make wires was not first given this exemption.
Later by amendments he was given a similar exemption.
The ' Central Excise Manual (Seventh Edition) at p. 123 states the position thus: "26AA(2) Iron or Steel products falling under item No. 26AA, if made from another article falling under the said item or item No. 63 36) of the First Schedule to the Indian Tariff Act, 1934 (32 of 1934) and having already paid the appropriate amount of excise or countervailing customs duty, as the case may.be, are exempt with effect from 24th April, 1962, from so much of the duty of excise as is equivalent to the excise or countervailing customs duty payable on the said article ' vide Government of India, Ministry of Finance (Department of Revenue) Notification No. 89/62 Central Excise, dated 10th May, 1962 (issued in supersession of Notification No. 77/62 Central Excises, dated 24th April, 1962, as further amended by Notifications No. 93/62 Central Excises, dated 26th May, 1962, and No. 225/62 Central Excises,dated 29th December, 1962.
" The only light thrown by these amendments.
and the notifications referred to above is that it is not the idea to levy excise duty at various stages of manufacture of certain articles and this is achieved by issuing notifications giving appropriate reliefs.
But if there is no relief given by notifications the full duty at the rate mentioned in col. 3 of entry (i) of item 26 AA has to be paid.
In the result the appeal fails and is dismissed with costs.
Bachawat, J. I agree with Sikri, J. Hegde, J. This is an appeal by special leave.
It is directed against the order of the Government of India in No. 1323 of 1967, dated November 2, 1967 rejecting the appellant 's application for refund of the excise duty paid by him under protest.
In order to appreciate the controversy between the parties it is necessary to set out the material facts.
The appellant is a Company having a factory at Rishara in the State of West Bengal.
It manufactures, among other items, Iron and Steel Products such as Jute Baling Hoops, Wire Ropes, Cold Rolled Strips, Chain Pulley Blocks, Electric Hoists.etc.
Between December 1961 and January 1962 the appellant received various consignments of imported High Carbon Steel Wire Rods.
Its opening stock of imported High Carbon Steel Wire Rods on April 24, 1962 was 489 2,788.401 metric tons.
As before, the appellant manufactured wires from those steel rods even after April 24, 1962.
Finance (No. No. 20 of 1962) imposed for the first time excise duty on the Iron and Steel Products; and by sub el.
(S) of sub section
(2) of section 16 of the said Act an amendment was made to the First Schedule of the Central Excise and Salt Act, 1944 (hereinafter referred to as the Act) incorporating after item 26A item 26AA.
The relevant portion of that entry reads thus: Iron or Steel Products.
The following namely: (1) Bars, rods,coils,wires 5% ad valorem plus the ex joists girders,angels,channels cise duty for the time tees,flats beam,zeds,trough, being leviable on pig iron piling and all other rolled and Steel Ingots as the forged or extruded shapes and case may be.
section not otherwise specified.
Pig Iron and Steel Ingots were already subject to excise duty under Items Nos. 25 and 26 in the First Schedule of the Act.
The rate of duty in the case of the former at the material time was Rs. 10 per metric tonne and that of the latter Rs. 39/35 per metric tonne.
The newly imposed duty under Item 26AA came into force on April 24, 1962.
The Collector of Central Excise, West Bengal, Calcutta by a Trade Notice, Central Excise No. 32 Iron and Steel Products 2/62 dated Calcutta the 16th May 1962 notified the procedure to be followed.
By Notification No. 70/62, dated April 24, 1962 issued in exercise of the powers conferred by rule 8 (1 ) of the rules framed under the Act (to be hereinafter referred to as the rules), the Central Government exempted Iron and Steel Products falling under Item 26AA, if made from Pig Iron or Steel Ingots on which the appropriate amount of excise duty has already been paid, from so much of the duty of the excise leviable thereon as is equivalent to the duty leviable under Item 25 or 26 as the case may be.
On the same day as per Notification No. 77 of 1962, the Central Government exempted Iron and Steel Products falling under sub items (2), (3), (4) and (5) of Item 26AA, if made from articles which have already paid the appropriate duty of excise under sub item (1 ) of the said Item, from so much of the duty of excise as is equivalent to the duty payable under the sub item (1).
Finance (Act No. 2) of 1962 by section 15 amended the First Schedule of the Tariff Act by adding Item No. 63 (36) which deals with imported Iron and Steel Products.
The second column of that entry mentions the various Iron and Steel Products included therein.
The items included therein are the very items set out in Sup CI/69 14 490 Item 26AA of the First Schedule to the Act.
The third column of that Item which specifies the levy reads thus: "The excise duty for the time being leviable on like articles if produced or manufactured in India, and where such duty is leviable at different rates the highest duty so leviable shall be in addition to the duty which would have been levied if this entry had not been inserted." On May 10, 1962, the Government issued a fresh Notification (No. 89 of 1962) under rule 8(1) of the rules in supersession of the Notification No. 77/62 dated April 24, 1962.
By that Notification, the Government exempted with effect from April 24, 1962, Iron and Steel Products falling under Item 26AA if made from another article falling under the said Item and having already paid the appropriate amount of duty from so much of the duty of excise as is equivalent to the duty payable on the ' said article.
On the same day namely May 10, 1962, the Government issued yet another Notification (Notification No. 90 of 1962) under rule 8 (1) under which it exempted Iron and Steel Products falling under Item 26AA specified in column 2 of the table annexed to the Notification if made from Pig Iron or Steel Ingots on which appropriate amount of excise duty has already been paid, from so much of the duty of excise leviable on such products as in excess of the duty corresponding entry in column 3 of the said table.
(Wire) the product with which we are concerned in this case is also included in the table.
That Notification contains a proviso which says: "Provided that if the products are made from pig iron and steel ingots on which appropriate amount of duty has not been paid the excise duty for the time being leviable on pig iron or steel ingots as the case may be shall be payable in addition to the duties specified in the appropriate entry in column 3 of the table.
" On December 29, 1962, the Government issued yet another Notification under rule 8(1) amending the Notification No. 89 of 1962 issued on May 10, 1962.
In the place of words "if made from another article falling under the said item and having already paid the appropriate amount of duty from so much of the duty of excise as is equivalent .to the duty payable on the said article.
", the following was substituted: "if made from another article falling under the said Iterm or Item No. 63(36) of the First Schedule to the Indian Tariff Act 1934 (32 of 1934) and having already paid the appropriate amount of excise or court 491 tervailing custom duty as the case may be from so much of the duty of excise as is equivalent to the excise or countervailing custom duty payable on the said article." By Indian Tariff (Amendment Act 1963) (Act No. 3/63) effective from the 25th January 1963, the Indian Tariff Act 1934 was amended and after section 2, the following section was inserted namely: 2(a) (1).
Any article which is imported into India shall be liable to custom duty equal to the excise duty for the time being leviable on a like article if produced or manufactured in India.
Explanation: In this sub sec.
the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India" means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the ' imported article belongs and where.
such duty is leviable at different rates, the highest duty.
(2) The customs duty referred to in sub section (i) shall be in addition to any duty imposed under this Act or under any other law for the time being in force.
" On or after April 24, 1962, the appellants cleared from their warehouse wires produced from the aforementioned imported Steel Rods after obtaining the required permission from the excise authorities and after paying the duty assesse.
On those wires, duty was assessed without taking into consideration "the excise duty for the time being leviable on Pig Iron and Steel Ingots as the case may be.
" At that time the Central Excise authorities proceeded on the basis .that on the stock of wire in question only ad valorem duty had to be levied and not "excise duty for the time being leviable on Pig Iron or Steel Ingots as the case may be." On March 21, 1963, the Inspector of Central Excise attached to M/s. J.K. Steel Ltd., Rishara issued the following notice: "COLLECTORATE OF CENTRAL EXCISE WEST BENGAL No. 6 Range RIS.
I. Date: 21 3 1963.
Circle CGR.
Notice of Demand for duty under rule 9(2) of C.E. Rules, 1944.
492 To M/s. J.K. Steel Ltd., Rishara, Hooghly.
Take notice that on behalf of the Central Government, I hereby demand payment by you of the sum of Rs. 4,18,801/30 N.P. (Rupees four lacs eighteen thousand eight hundred one and paise thirty only) within ten days from the date hereof.
Particulars of Demands Quantity Rate of duty Amount of duty involved Steel Ingot Duty on 6932.964 Rs.39.36 NP Rs.2,72,812/13 M.T.Hoops Per M.T. Steel Ingot Duty on 921.937 Rs.39.36 NP Rs. 36,278/22 M.T.Strips Per M.T. Steel Ingot Duty on 2788.00 Rs.39.36 NP Rs.1,09,710/95 Wire.
Total Rs.4,18,801/30 No. VI/5A/I&S/JKS/CE/63/183, dated 21 3 1963.
Sd/ Inspector I/C Central Excise M/s. 1.
K. Steel Ltd., Rishara.
" The appellants objected to the demand in question as per their letter of March 24, 1963.
They contended that they had not contravened rule 9(2) of the rules nor was there any short levy.
As per his letter of August 26, 1963, the Assistant Collector of Central Excise Calcutta 4th Division confined the demand to that made under serial No. 3 of the notice.
The appellants paid ' the same under protest and thereafter took up the matter in appeal to the Collector of Central Excise who dismissed their appeal as per his order of March 19, 1964, with these observations: "The crucial point of this appeal is whether counter vailing import duty was paid by the appellants on the imported steel rods from which steel wires were manufactured.
The appellants could not produce any documents in support of their argument that either import duty or countervailing duty equivalent to steel ingot rate was paid by them on the iron rods from which steel wires were drawn.
Such duty is leviable on steel rods under tariff item No. 26AA.
As no such duty on steel rods was paid by the appellants, countervailing 493 duty equivalent to steel ingot duty has, therefore, to be paid.
" As against the order of the Collector, the appellants went up in revision to the Central Government.
The Central Government allowed the revision petition to some extent.
This is what the Central Government ordered: "The Government of ' India have carefully considered all the points raised by the petitioners but see no reason to interfere with the Collectors stated that the Steel Wires manufactured out of steel wire rods imported prior to 24 4 1962 on which no countervailing duty was paid, and cleared during the period, from 24 4 1962 to 10 8 1963 were subject to full duty as then leviable under Item 26AA (1) of Central Excise Tariff.
However the demand for differential duty initially made on 2 3 1963 and subsequently amended vide the Asstt.
Collector 's order, dated 26 8 1963 shall be restricted to the clearance effected during the 3 months period prior to the initial service of demand on 21 31963 that is to say, up to 21,12 1962 only as per the provisions of Rule 10 of Central Excise Rules, 1944 which was applicable to this case.
The demand in respect of clearances effected prior to 21 12 1962 is hereby set aside and consequential refund shall be granted to the petitioners.
Subject to the above modifications, the revision application is otherwise rejected.
" Aggrieved by that order, the appellants have brought this appeal.
The questions that arise for decision in this appeal are: (1) What is the true scope of entry No. 26AA of the First Schedule to the Act ? (2) In considering the scope of the said entry, can the Notifications issued by the Government on or after April 24, 1962 be taken into consideration? (3) Is the demand barred by limitation under rule 10 of the rules ? One other question had been raised in the grounds of appeal namely that the order of the Central Government is vitiated as it had contravened the principles of natural justice.
That contention was not pressed at the hearing.
In the context of this case that contention loses much of its significance If we accept the appellant 's contention as regards the scope of entry 26AA then ' the fact that the Government 's illegal is immaterial illegal is immaterial.
If 494 on the other hand we accept the interpretation placed by the Revenue on that entry remand of the case to Central Government serves no purpose.
I shall now proceed to consider the questions earlier formulated for decision.
According to the assessee the true import of the clause in column 3 of entry 26AA is that goods mentioned in column 2 of that entry are dutiable at 5 per cent ad valorem plus the excise duty for the time being leviable under the Act on pig iron or steel ingot used in the production of those goods.
Shri A.K. Sen, the learned Counsel for the assessee urged that the expression leviable in that clause means leviable under the Act; in other words dutiable under the Act; the words 'Pig Iron ' and 'Steel Ingots ' referred to therein is the Pig Iron or the Steel Ingot used in manufacture of the articles on which duty is sought to be levied; otherwise the word leviable becomes inappropriate.
In other words according to him the second limb of the levy under that clause is attracted only when any pig iron or steel ingot dutiable under the Act is used in the manufacture of any article dutiable under sub cl.
(1) of entry 26AA.
As the steel bars used in manufacturing the 'wires ' with which we are concerned in tiffs case were not made out of steel ingot dutiable under the Act, as they were imported bars, that part of the levy is not attracted on those wires.
The contention for the Revenue is that the expression "the excise duty for the time being leviable on Pig Iron or Steel Ingot as the case may be" sets out only a measure; the rate at which the duty is leviable; it has no reference to any particular material; it is merely a yardstick.
The argument of Dr. Syed Muhammad, learned Counsel for the Revenue proceeded thus: The entry in question deals with two classes of products i.e., iron products and steel products.
The assessing authority has first to decide whether a particular article is an iron product or steel product.
If he comes to the conclusion that it is a steel product then he should assess the duty payable firstly by determining the ad valorem duty payable on it, thereafter he must find out its weight in metric tons and add to the ad valorem duty the amount payable as excise duty under entry 26 of the First Schedule on steel ingot of that weight.
If the intention of the Parliament was as suggested by the learned Counsel for the Revenue then column 3 should have read thus: "5 per cent ad valorem plus excise duty at the rate for the time being leviable on pig iron or steel ingots as the case may be.
" 495 It is difficult to interpret the words "for the time being leviable" as indicating a rate.
The expression "leviable on pig iron and steel ingots as the case may be" in my opinion has reference to pig iron or steel ingots dutiable under the Act.
In fiscal legislation the terms "rate" is a familiar term.
In fact entry 5 of the First Schedule dealing with salt speaks of "rate fixed annually by a Central Act".
Therefore it would have been the easiest tiring for the Parliament to convey its intention without ambiguity.
At this stage it may also be noted that the clause in question refers to "the excise duty" and not excise duty in general.
The definite article "the" has considerable significance.
It refers to some particular excise duty.
If the second part of the clause merely refers to a rate than the article "the" has no place in that context.
It was urged on behalf of the Revenue that to accept the contention of the assessee and to hold that the second part of the.
clause refers to the steel ingot used in the production of the "wires" is .to read into the clause the words "used in the production of the article in question.
" It was said that such a construction is impermissible.
Therefore we should not accede to that contention.
I am not prepared to accept that reasoning.
In fact in my opinion to accept the construction contended for on behalf of the Revenue, it would be necessary for us to include the words "at the rate" after the words "excise duty" and before the words "for the time being".
No such difficulty arises if we accept the interpretation placed by the assessee on that clause.
The expression "the excise duty for the time being leviable" by necessary implication refers to an. article dutiable under the Act.
That must necessarily be the article which is one of the components ' of the article on which duly is sought to be levied.
In the instant case that must be the steel ingot used in the production of the "wires" with which we are concerned in this case.
As laid down by this.
Court in C.A. Abraham vs I.T.O., Kottayam and Anr.(1) "In interpreting a fiscal statute the Court cannot proceed to make good deficiencies if there may be any; the court must interpret the statute as it stands and in case of doubt in a manner favourable to the tax payer.
" This Court also laid down in Commissioner of Income Tax vs Karamchand Premchand Ltd., Ahmedabad(2) that if there is any ambiguity of language in a fiscal statute, benefit of that ambiguity must be given to the assessee.
At this.
stage I am tempted to recall to my mind the well known observations of Lord Russel of Killowen in Inland Revenue Commissioners vs Duke of Westminister(3) viz.: (1) ; S.C.607,612 (2) ; , 742.
(3) [1936] A.C.1, 24.
496 "I confess that I view with disfavour the doctrine that in taxation cases the subject is to be taxed if in accordance with a Court 's view of what it considers the substance of the transaction, the Court thinks that the case falls within the contemplation or spirit of the statute.
The subject is not taxable by inference or by analogy, but only by the plain words of a statute applicable to the facts and circumstances of his case.
" About a century ago Lord Cairns in Partington vs The Attorney General(x) observed: "As I understand the principle of all fiscal legislation it is.tiffs: If the person sought to be taxed comes within the letter of the law he must be taxed however great the hardship may appear to the judicial mind to be.
On the other hand, if the Crown, seeking to recover the tax cannot bring the subject within the letter of the law, the subject is.
free, however apparently within the spirit of the law the case might otherwise appear to be.
" Unless I am satisfied that the only reasonable interpretation that can be placed on the clause in col. 3 of entry 26AA is that placed by the Revenue, it is not possible to justify the impugned levy.
There is yet another difficulty in accepting the interpretation tried to be placed by the Revenue on entry 26AA.
According to books on steel making pig iron is the intermediate form through which almost all iron must pass in the manufacture of steel (see "The Making, Shaping and Treating of Steel" edited by Harold E. Mcgannon at p. 384).
Therefore every steel product is also.
an iron product.
If the second part of the clause in column 3 of entry 26AA refers to .a rate and not the duty leviable on the material used in the manufacture of the dutiable article under that entry then the question arises whether the rate in question is that at which duty is leviable on steel ingot or that leviable on pig iron.
That part of the clause refers to two different materials dutiable at different rates.
If on the other hand it refers.
to the material from which the article on which duty is sought to be levied is made the proximate raw material and not the material from which that raw material is made, then there is no difficulty in finding out the amount.
Dr. Syed Muhammad was not able to tell us how the assessing authorities classify articles into iron products and steel products.
It is not his case that there is any recognised basis for doing so.
It is also not his case that there is any prescribed procedure for deciding that question.
His explanation that it is done on the basis of the practice prevailing in the trade is far from satisfactory.
(1) , 122.
497 He was not able to tell us how we can ascertain that practice or what that practice is.
If his contention is correct then the power of the assessing authorities to determine the nature of an article is an arbitrary power.
It is undefined and unguided.
The determination may vary from officer to officer.
It is doubtful whether such a power is a valid power.
That apart legislature is not likely to have conferred such an arbitrary power on the authorities.
That difficulty will not arise if the duty under the second limb of the levy in column 3 of entry 26AA is determined on the basis of the actual material used.
For the purpose of interpreting the clause in question, reference may also be made to entry 63(36) in the First Schedule to the Tariff Act.
It may be remembered that entry as well as entry 26AA in the First Schedule of the Act were enacted simultaneously under Finance (No. Both these entries came into force on the same day namely on 24th April 1962 The Act and the Tariff Act are cognate legislations.
In other words they are legislations which are pari materia.
They form one code.
They must be taken together as forming one system and as interpreting and enforcing each other.
It is proper to assume from the surrounding circumstances, that these two entries were introduced in pursuance of a common purpose, that purpose being that the articles listed in entry 26AA whether produced out of indigenous Pig Iron or Steel Ingot or made out of imported Pig Iron or Steel Ingot must bear the same amount of duty.
If the interpretation placed on entry 26AA by the learned Counsel for the assessee is accepted then it would be seen that entry by itself would not impose the duty contemplated by the second part of the clause in col. 3 of entry 26AA on imported Pig Iron or Steel Ingot.
Evidently in order to equalise the duty on articles made out of indigenous material as well as imported material entry 63 (36) of the First Schedule to the Tariff Act was enacted.
In other words that entry imposes countervailing duty and not additional duty.
It was conceded by the learned Counsel for the Revenue that the duty levied under entry 63(36) of the First Schedule of the Tariff Act is only a countervailing duty.
If that be so, that duty cannot be considered as an additional duty over and above the duty imposed under entry 26AA of the First Schedule of the Act.
But it would be an additional duty if the interpretation of entry 26AA canvassed on behalf of the Revenue is accepted because according to the Revenue the rate prescribed in that entry is equally applicable to all articles mentioned therein whether manufactured from indigenous or imported material.
If that be so the duty collected under entry 63(36) of the First Schedule under the Tariff Act will be an additional duty and not a countervailing duty.
It is true that despite entry 26AA of the First Schedule to the Act and entry 63(36) of the First Schedule 498 of the Tariff Act if pig iron or steel ingot imported before April 24, 1962 is used in the manufacture of an article dutiable under entry 26AA only the ad valorem duty prescribed under that entry can be levied on that article.
It may be that the legislature intended it to be so or there is a lacuna in the provision.
In either case the effect is the same.
I now come to the question whether in interpreting a taxing entry I can take any aid from the various steps taken by the Department in implementing that levy, I have earlier referred to a large number of Notifications issued under rule 8 (1 ) of the rules.
The parties have also produced before us the instructions issued by the Department on May 16, 1962 in the matter of implementation of entry 26AA.
I have now to see whether any aid can be taken from these instructions as well as the Notifications for finding out the true scope of entry 26AA.
So far as the instructions issued by the Department are concerned there is hardly any doubt that the same are wholly irrelevant.
In Craies on Statute Law Sixth Edn.
at page 131 it is stated: "Explanatory notes regarding the working of an Act issued by a government department for the assistance of their officials are inadmissible for the purpose of construing the Act." .
The same conclusion was arrived at by this Court in Commissioner Income ' Tax, Madras vs
K. Srinivasan and K. Gopalan.(1) At pages 502 503 of that report it is observed: "He,(learned Counsel for the assessee), however, drew our attention to the directions contained in the Income tax Manual in force for a number of years and contended that the department itself placed on sub sections (3) and (4) of section 25 the same construction as was placed on them by the senior Judge in the High Court and that was the true construction of these two sub sections.
This argument in our opinion, has no validity.
The department changed its view subsequently and amended the manual.
The interpretation placed by the department on these sub sections cannot be considered to be a proper guide in a matter like this when the construction of a statute is involved.
" Therefore I have to exclude from consideration the instructions issued by the Government.
This takes me to the Notifications issued by the Government under rule 8(1) of the rules.
Under section 38 of the Act all rules (1) , 502 503.
499 made and notifications issued under the Act shall be made and issued by publication in the official Gazette.
All such rules and notifications shall thereupon have effect as if enacted in the Act.
The rules made have to be placed on the table of the Parliament.
The Parliament can amend those rules.
Section 3 8 is of no assistance.
to us in the present case because the notifications referred to earlier are not those issued under the Act.
They are notifications issued under rule 8 (1) of the rules.
Therefore their relevance has to be considered without taking any assistance from section 38.
In Halsbury 's Laws of England 3rd edn.
36 at page 401 it is observed: "Where a statute provides that subordinate legislation made under it is to have effect as if enacted in the statute, such legislation may be referred to for the purpose of construing a provision in the statute itself.
Where a statute does not contain such a provision, and does not confer any power to modify the application of the statute by subordinate legislation, it is clear that subordinate legislation made under the.
statute cannot alter or vary the meaning of the statute itself where it is unambiguous, and it is doubtful whether such legislation can be referred to for the purpose of construing an expression in the statute, even if the meaning of the expression is ambiguous.
" No decision of this Court or of any of the High Courts in this country dealing with tiffs aspect has been brought to my notice.
Even the Counsel for the parties were not definite about the stand that they should take.
They were changing their position again.
and again.
On this question the opinion in English courts is not unanimous.
That question came up for consideration as early as in 1871 in Ex Parte Wier In re Wier.(1).
Sir G. Mellish L.J. delivering the judgment of the Court observed: "We do not think that any other section of the Act throws any material light upon the proper construction of this section,.
and if the question had depended upon the Act alone we should have had great doubt what the proper construction was; but we are of opinion that, where the construction of the Act is ambiguous and doubtful on any point, recourse may be had to the rules which have been made by the Lord Chancellor under the authority of the Act, and if we find that in the rules any particular construction has been put on the Act, that it is our duty to adopt and follow that construction.
" (1) Ch.
Appeal Cases (Vol. 6) p. 879.
500 In Re: Normal Ex parte Board of Trade (1) Lord Esher,M.R.Observed: "It was urged that we ought to hold the Act to be retrospective by reason of the rules and forms which have been made under it, and which have a statutory force; and it is said that shew that that the trustee must go back in his accounts to matters which happened before the Act came into operation.
But, when we look at the forms, we see that they are in express terms headed so as to relate to transactions taking place after the coming into operation of the Act; and, therefore, they supply no reason why we should depart from the ordinary rule that an Act is not retrospective.
" From these observations, it is clear that Lord Esher did take into consideration the subordinate legislation in considering the principal Act.
In Billings vs Reed,(2) Lord Greene stated that: "The fact that the object .of this Act was in substance what I have suggested can be seen from a consideration of the way in which the scheme has been framed pursuant to the Act itself and with the tacit approval of Parliament as provided in the Act.
At any rate, we are entitled to look at the scheme for the purpose of seeing the kind of practical treatment of these questions which Parliament has authorised.
" From this observation, it is seen that the learned Judge did look into the subordinate legislation in finding out the object of the Act.
In Hale vs Bolton Leathers Ltd.,(8) Somervell L. J. observed: "The county court judge was referred, as we were, to various paragraphs in the regulations made under the Act of 1946.
He took the view that these regulations could not affect the construction of the Act.
The regulation making power is conferred by section 89, sub section 1, proviso (b), and is as follows: 'regulations may make such transitional 'or consequential provisions as appear to the Minister to be necessary or expedient, having regard to the repeal of the said enactments in relation to diseases and to injuries not caused by accident, including provision for modifying or winding up any scheme made thereunder. ' We agree that these regulations could not contradict the Act.
(1) , 373:.
(2) (3) , 505.
501 They might, we think, properly be referred to as working out in detail the provisions of the Act consistently with its terms.
" In Howgate vs Ganall and .Anr.(1) Barry J. observed: "I cannot, of course, have recourse to these schemes as a guide to the correct interpretation of the Act under which they were made, but I am, I think, entitled to consider them for certain limited purposes.
In Billings vs Reed(1) Lord Greene H.R., .said, in reference to a scheme made under the Act: 'The fact that the object of this Act was in substance what I have suggested can be seen from a consideration of the way in which the scheme has been formed pursuant to the Act itself and with the tacit approval of Parliament as provided in the Act.
At any rate we are entitled to look at the scheme for the purpose of seeing the kind of practical treatment of these questions which Parliament has authorized.
It is abundantly clear from the wording of the various schemes made under the Act that the Minister, with the tacit consent of Parliament has throughout considered that 'war injuries ' may be sustained outside the United Kingdom . . " The decision in Hales vs Bolton Leathers Ltd.(a) to which references has been made earlier was taken in appeal to the House of Lords.
The judgment of the House of Lords is reported in [1951] A.C.p. 531.
Dealing with the question whether subordinate legislation could be taken into consideration in interpreting the principal Act lord Simonds said: "I much doubt whether I am entitled.
to look to the regulations for guidance on the eaning of the word in sub section
(1), but I will say something on this point later.
" Reverting back to that topic again (at p. 541 of the report) the learned Judge observed: "First, if I may look at the regulations made under section 55, sub section
(4), to assist in the interpretation of the word, I agree with my noble and learned friend Normand, in thinking that they assist or at least are consistent with this interpretation." Lord Normand one of the other Judges who heard the appeal observed: "The National Insurance (Industrial Injuries) (Prescribed Diseases) Regulations, 1948, were made under (1) , 274.
(2) (3) 505.
502 section 55, sub section 4, and though in my opinion they cannot control the construction of the Act, it is yet of some importance to consider whether they fit into the construction which I think the Act properly hears." Lord Oaksey in the same case was positive that the regulations could be looked into for certain limited purposes.
This is what observed: "I agree with your Lordships in thinking that the regulations themselves (National Insurance) (industrial Injuries) (Prescribed Diseases) (Regulations 1948) cannot alter the meaning of the words of the statute, but they may, I think, be looked at as being an interpretation placed by the appropriate Government department on the words of the statute." Therein Lord MacDermott also took the assistance of the regulations while considering the statute.
Lastly we come to the decision of the Chancery Division in London County Council vs Central Land Board(1).
Danckwerts J. in that case referred to the regulations made under the Housing Act, 1936 while construing the provisions of the Act.
From the above decisions, it is clear that several judges in England have referred to the subordinate legislation made under a statute for the purpose of interpreting that statute though for the limited purpose of know how the department which was entrusted with the task of implementing that statute had understood that statute.
In the case of fiscal statutes, it may not be inappropriate to take into consideration the exemptions granted in interpreting the nature and the scope of the impost.
In the matter of fiscal legislation the initiative is in the hands of the executive.
Under article 112(1) of our Constitution, the President shall in respect of every financial year.
cause to be laid before both the Houses of Parliament a statement of the estimated receipts and expenditure for that year.
Under sub article (3) of article 113 no demand for a grant shall be made except on the recommendation of the President.
In the matter of taxation very large powers are left in the hands of the executive.
Generally speaking the question of exemption is left to the discretion of the Government.
It ought to be so because the exercise of that power depends on various circumstances some of which cannot be anticipated in advance.
But yet the levy and exemptions are parts of the same scheme of taxation.
The two together carry into effect the purpose of the legislation.
For finding out the true scheme of a taxing measure we have to take into consideration not merely the levy but also (1) 503 the exemptions granted.
This Court in Kailash Nath and another vs State of U.P. and ors.
(1) held that the exemption granted in pursuance of a notification issued under the.
U.P. Sales Tax Act must be considered as having been contained in the parent Act itself.
This is what this Court stated therein: "This notification having been made in accordance with the power conferred by the statute has statutory force and validity and, therefore, the exemption is as if it is contained in the parent Act itself.
" I do not think it is necessary for me to decide in this case the general question whether subordinate legislation can be used for interpreting a provision in the parent Act.
I am not unaware of the danger in accepting that it could be so done.
But for the present purpose, it is sufficient to hold that for finding out the scope of a particular levy, notifications issued by the executive Government providing for exemption from that levy can be looked into as they disclose the overall scheme.
Even according to the learned Counsel for the Revenue the notifications referred to earlier were issued with a view to avoid double taxation.
If that is so, the exemption granted under those notifications provide a clue as to the scope of the levy made under Item 26AA.
We have earlier seen that on the very day, the levy came into force the Government had issued two notifications i.e., Notifications Nos. 70 and 77 of 1962.
Under Notification No. 70 it exempted Iron and Steel Products falling under item 26AA if made from Pig Iron or Steel Ingots on which the appropriate amount of duty has already been paid, from so much duty of the excise leviable thereon as is equivalent to the duty leviable under Item 25 or as the case may be under Item 26.
Under Notification.
No. 77, it exempted Iron and Steel Products falling under subitems Nos. 2, 3, 4 and 5 of Item 26AA, if made from articles which have already paid appropriate duty of excise under subitem (1) of the said item from so much of the duty of excise as is equivalent to the duty payable under the said sub item (1).
These Notifications clearly indicate that under Item 26AA, there was no intention to levy double excise duty on the same material.
The intention appears to be that if one article is made out of another article both of which are subject to excise duty, the excise duty paid on the raw material should be deducted in putting the excise duty payable on the finished product.
In addition these Notifications clearly show that the Pig Iron and Steel Ingot mentioned in el.
3 of entry 26AA are those used in the manufacture of the article on which duty is sought to be levied under that entry.
(1) A.I.R. 1957 S.C.790.
504 In this connection we may also refer to Notification No. 89/62.
Notification No. 77/62 referred merely to Iron and Steel Pro,ducts falling under sub items 2, 3, 4 and 5 of item 26AA manufactured out of articles falling under sub item (1) thereof.
That Notification by itself was not all comprehensive.
It did not take in other articles made out of Pig Iron or Steel Ingot.
It is that reason Notification No. 89/62 was issued on May 10, 1962 under which exemption was given with effect from April 24, 1962 to all Iron and Steel Products falling under Item 26AA if made from another article falling under the said item and having already paid appropriate amount of duty from so much of the duty of excise as is equivalent to the duty payable on the said article.
Notifications Nos. 70, 77 and 89 exempted payment of excise duty on an article to the extent duty had been paid on the raw material used in the manufacture of the article dutiable under entry 26AA.
All these Notifications proceeded on the basis that the second limb of the levy in column 3 of entry 26AA refers to the duty payable on the Pig Iron or Steel Ingot, as the case may be used in the manufacture of an article dutiable under 26AA.
But the above Notifications do not deal with the countervailhag duty levied under entry 63(36) of the First Schedule to the Tariff Act.
This was clearly an omission.
To make good that omission the Government amended Notification No. 89/62 by its order, dated December 29, 1962.
The amended Notification in addition to the exemption already given under Notification No. 89/62 also exempted from the payment of duty any article falling Within any of the sub items in item 26AA if made from an article on which countervailing duty has been paid under item 63(36) of the First Schedule to the Tariff Act from so much ,of the duty of excise as is equivalent to the countervailing custom .duty payable on the said article.
This Notification clearly shows that the countervailing duty in question was levied on the basis that the excise duty contemplated by entry 26AA will not apply to articles made out of imported Pig Iron or Steel Ingot.
Further if the legislature intended the duty under entry 63(36) to be an additional duty, the exemption granted would nullify the legislative mandate.
To summarise the effect of the Finance (No. 2) Act of 1962 and the various Notifications issued for the purpose of implementing the scheme under that Act is that excise duty is leviable at the rate mentioned in column 3 of Item 26AA on pig iron or steel ingot used in the production of the article on which duty under entry 26AA is sought to be levied but to the extent .any excise duty or countervailing custom duty had been paid on any of the material used in the manufacture of any of that article, the ,same is exempt.
From this scheme it is clear that when Item 26AA 505 speaks of , 'the excise duty for the time being leviable on Pig Iron or Steel Ingots: as 'the case may be" it refers to the excise duty payable on ' the Pig Iron or Steel Ingots used in the production of the article dutiable under that item.
From the above discussion, it follows that the wires which are the subject matter of the levy impugned in this case are not liable to pay the duty in dispute in this case.
At one Stage it was contended on behalf of the assessee that the levy under sub item (1) of Item 26AA comes into effect only when an article is made directly from out of Pig Iron or Steel Ingot as the case may be and not otherwise.
It is not necessary to examine the correctness of this contention because at no stage the assessee had challenged his liability to pay ad valorem duty .under
Item 26AA.
He paid the same without objection nor had he claimed refund of the same.
I shall now take up the question of limitation.
The written demand made on March 21, 1963 purports to have been made under rule 9 (2) of the rules.
Therein the assessing authority demanded steel ingot duty which according to it the assessee had failed to pay.
Quite clearly rule 9(2) is inapplicable to the facts of the case.
Admittedly the assessee had cleared the goods from the warehouse after paying the duty demanded and after obtaining the permission of the concerned authority.
Hence there is no question of any.
evasion.
Despite the fact that the assessee challenged the validity of the demand made on him both the Assistant Collector as well as the Collector ignored that contention; but when the matter was taken up to the Government it treated the demand in question as a demand under rule 10.
The Government confined the demand to clearances effected after December 21, 1962.
The demand so modified is in conformity with rule 10.
But the contention of the assessee is that the demand having been made under rule 9 (2) and there being no indication in that demand that it was made under rule 10, the Revenue cannot now change its position and justify the demand under rule 10; at any rate by the time the Government amended the demand, the duty claimed became barred even under rule 10.
We are unable to accept this contention as correct.
There is no dispute that the officer who made the demand was competent to make demands both under rule 9(2) as well as under rule 10.
If the exercise of a power can be traced to a legitimate source, the fact that the same was purported to have been exercise under a different power does not vitiate the exercise of the power in question.
This is a well settled proposition of law.
In this connection reference may usefully be made to the decisions of this Court in B. Balakotaiah vs The Union of India and Ors.
(1) and (1) ; 3sup.
CI/69 15 506 Afzal UIlah vs State of U.p.(1).
Further a common form is prescribed for issuing notices both under rule 9(2) and rule 10.
The incorrect statements in the written demand could not have prejudiced the assessee.
From his reply to the demand, it is clear that he knew as to the nature of the demand.
Therefore I find ass suesseeance in the plea of Limitation advanced on behalf of the For the reasons mentioned above, this appeal is the Revenue is directed to refund the excess duty paid under protest.
ORDER In accordance with the opinion of the appeal is dismissed with costs.
| IN-Abs | The appellant was a manufacturer of iron and steel products.
It was importing steel rods from which steel wires were manufactured.
April 24, 1962 Finance Act (No. 2) 1962 imposed excise duty on iron and steel products by introducing item 26AA in the Central Excise and Salt Act, 1944.
Under that item, on wires, 5% ad valorem plus the excise duty for the time being leviable on pig iron and steel ingots as the case may be was payable.
Pig iron 'and steel ingots were already subject to excise duty under items 25 and 26 respectively.
On the same day, the first Schedule of the Tariff Act 1934 was amended and two Notifications Nos. 70 and 77 were issued in exercise of the powers conferred by r. 8(1) of the rules framed under the Excise Act.
In the Tariff Act item 63(36) which deals with imported iron and steel products was added to the First Schedule by.
Finance Act (No. 2),.
1962.The items included therein are the very items set out in item 26AA of the Excise Act.
The standard rule of duty is mentioned as 'the excise duty for the time being leviable on like articles if produced or manufactured in India. and the duty so leviable shall be in addition to the duty which would have been levied if this entry had not been inserted.
Under Notification 70, the Central Government exempted iron and steel products falling under item 26AA if made from pig iron or steel in gots on which the appropriate amount of excise duty has already been paid,from so much of the excise duty leviable thereon as is equivalent to the duty leviable under item 25 or 26 as the case may be.
Under Notification 77, the Central Government exempted other iron and steel products falling under sub items (2), (3), (4) and (5) of item 26 AA if made from articles which have already paid the 'appropriate.
excise duty under sub item (1) of item 26AA, from so much of the excise duty as is equivalent to the duty payable under sub item (1).
This notification was later superseded by another Notification No. 89.
by, which the Government exempted with effect from April, 24, 1962, iron and steel products falling under item 26AA if made from another article falling under the said item and having already paid the appropriate amount of ' duty, from so much of the excise duty as is equivalent to the duty payable on the said article.
On and after April 24, 1962, the appellant cleared from its warehouse wires produced from the imported steel rods.
The required permission from the excise authorities was obtained and the duty assessed was paid ', At that time the excise authorities proceeded on the basis that only ad valorem duty had to be levied and not 'excise duty for the time leviable on pig iron or steel ingots. ' On March 21, 1963, the assessing authority issued a written demand under r. 9(2) demanding steel ingot duty which, according to the authority the appellant had evaded to pay.
The appellant paid the duty demanded under protest 482 and appealed to higher authorities.
The Government, in revision.
treated the demand as one under r. 10, because, there was no question of any evasion by the appellant, and confined the demand to clearances effected after December 21, 1962.
In appeal to this Court against the order of the Central Government, the.
appellant contended that: (1) The clause 'excise duty for the time being leviable under the Act on pig iron or steel ingots ' is attracted only when any pig iron or steel ingot dutiable under the Act is Used in the manufacture of any article dutiable under item 26AA (1), and, as the steel bars used in the manufacture of wire were imported and were not made out of steel ingots dutiable under the Act, that loan of the levy was not attracted to the wires; and (2) The demand by the Central Government was barred by limitation under r. 10.
HELD: (1) (Per Sikri and Bachawat, JJ.) The excise duty was levied correctly as determined by the Central Government.
Item 26AA prescribes a rate of duty as the heading of its column 3 indicates.
The rate consists of two parts, one part is the ad valorem duty and the other excise duty.
The context indicates that the words 'as the case may be ' denote the excise duty leviable on pig iron under item 25 is to be charged if the product is an iron product; if it is a steel product then the excise duty leviable on steel ingots under item 26 is to.
be levied.
The weight to be taken into consideration for determining the excise duty would be the weight of the products made out of iron steel ingots and not that of the pig iron or steel ingot out of which they were made.
That is, the duty will be the duty leviable on the hypothetical piece of pig iron or steel ingot 'as the case may be of the same weight as the particular products to be assessed.
The duty is not concerned with the actual price of pig iron or steel ingot out of which other articles are made, and it is not concerned with whether any excise duty or countervailing duty was paid on the pig iron or steel ingot used.
Therefore it is irrelevant whether the article out of which the assessed article was manufactured was imported or not.
[486 A B; F H; 487 B E] The effect of item 63(36) in the Tariff Act, is to levy a countervailing duty as an additional custom duty equivalent to the prevalent .excise duty on like articles produced and manufactured.
The manufacturer in India, who used steel rods made in India and made wires from them was given a certain relief under Notification 77, but the manufacturer who used steel rods made abroad was not given this exemption.
Later by Notification 89, and suitable amendments, he was also given a similar exemption.
But the item in the Tariff Act does not throw any light on item 26AA(1) of the Excise Act.
[487 H; 488 A B] Assuming that it is permissible to look at the notifications issued by the.
Central Government for interpreting item 26AA, they proceed on the interpretation of the item that it refers to a rate.
The Notifications do not exempt an article from the levy of duty; they give relief which may in a particular case be the excise duty or the countervailing duty levied on the article out of which the assessed article has been manufactured.
The rule that a fiscal enactment should be strictly construed does not mean that close reasoning should not be employed to arrive at the true meaning of a badly drafted entry in an Excise Act.
[487 A C] Per Hegde, J. (dissenting): The expression leviable of pig iron and steel ingots as the case may be ' has reference to pig iron or steel ingots dutiable under the Excise Act.
Therefore.
the wires which 'are the subject matter of the impugned levy in the present case, are not liable to pay the duty in dispute as they were made out of imported steel rods and hence not dutiable under the Excise Act.
[495 A B; 505 B] 403 If the item 26AA refers to a rate Parliament would have conveyed such intention without any ambiguity as it has done in item 5.
The words used are 'the excise duty '.
If the clause refers to a rate the article 'the ' has no place in the context.
The expression 'the excise duty for the time being leviable ' by necessary implication refers to an article dutiable under the Act That must necessarily be the 'article which is one of the components of the article on which duty is sought to be levied, that is, in the instant case, the steel ingot used in the production of wires.
Moreover pig iron is the intermediate form through which iron must pass in the manufacture of steel.
Therefore, every steel product is also an iron product.
If the clause in item 26AA refers to a rate and not to the duty leviable on the material used in the manufacture of the dutiable article, then the question would be whether the rate is that at which duty is leviable on steel ingot or that leviable on pig iron.
If it merely depends on the practice prevailing in the trade then the power of the assessing authorities to determine the nature of an.
article would be an arbitrary power, and the legislature is not likely to have conferred such an arbitrary power on the authorities.
If on the other hand.
the item refers to the material from which the article on which duty is sought to be levied is made the proximate, raw material and not the material from which that raw material is made, then there is definiteness for the purpose of finding out the amount.
[495 A C, E F; 496 E G; 497 A B] Observations in C.A. Abraham vs I.T.O. Kottayam ; , 771; C.I.T.v.
Karamchcmd Premchand, Ahmedabad; , , 742; Inland Revenue Commissioners vs Duke of West minister , 24 and Partington vs The Attorney General, , 122, applied Entry 63(36) in the Tariff Act and item 26AA in the Excise Act were enacted simultaneously, came into force on the same day from one code and are pari materia.
They were introduced in pursuance of a common purpose, namely, that the articles listed in item 26AA, whether produced out of indigenous pig iron or steel ingot or made of imported pig iron or steel ingot must bear the same amount of duty.
The duty levied under item 63(36) being a countervailing duty it cannot be considered as an additional duty over and above the duty imposed under item 26AA of the Excise Act.
[497 C E, F G] For finding out the scope of a particular levy, notifications issued by the executive Government providing for exemption from levy can be looked into as they disclose the overall scheme.
The notifications Nos. 70, 77 and 89 were issued with a view to avoid double taxation, and the exemption granted provides a clue to the scope of item 26AA.
The effect of Finance Act (2), 1962, and the various Notifications is that excise duty is leviable at the rate mentioned in item 26 AA on pig iron or steel ingot used in the production of the article on which duty under item 26AA is sought to be levied but.
to the extent any excise duty or countervailing custom duty has been paid on any of the material used in the manufacture of the article, the same is exempt.
Therefore, when item 26AA speaks of 'the excise duty for the time being leviable on pig iron or steel ingots as the case may be ' it refers to the excise duty payable on pig iron or steel ingots used in the production of the article dutiable under that item.
[503 C E; 504 G H] Kailash Nath vs State of U.P.A.I.R. , followed.
(2) (By Full Court): If the exercise, of a power can be traced to a legitimate source, the fact that it was purported to have been exercised under a different power does not vitiate the exercise of the power.
In 484 the present case, a common form is prescribed for issuing notices under rr.
9(2) and 10 and the incorrect statements in the written demand did not prejudice the appellant as shown from its answer to the demand: Therefore, though the demand was made under r. 9(2), the Revenue could change its position and justify the demand under r. 10.
[484 E; 505 D H; 506 A B] B. Balakotaiah vs Union of India ; and Afzal Ulah vs State of U.P. ; , referred to
|
Appeal No. 1631 of 1967.
Appeal by special leave from the order dated May 11, 1967 of the Allahabad High Court in Civil Misc.
Writ Petition No. 1647 of 1967.
S.V. Gupte 'and D.N. Mukherjee, for the appellant.
M.K. Ramamurthi, Shayamala Pappu and Vineet Kumar for respondent No. 2.
The Judgment of the Court was delivered by Vaidialingam, J.
In this appeal, by special leave, the appellant challenges the order of the Allahabad High Court dated May 676 11, 1967 dismissing Civil Miscellaneous Writ Petition No. 1647 of 1967.
The facts leading up to the filing of the said writ petition by the appellant under article 226 of the Constitution, may be briefly stated.
The appellant is an existing company under the and has its registered office at Calcutta.
The company was and is being managed by Martin Burn Ltd., Secretaries and Treasurers.
The company carries on the business of generation, distribution and supply of electricity within its licensed area in the city of Agra and its environs in the State of Uttar Pradesh On a reference made by the Government of Uttar Pradesh regarding a dispute that had arisen between the electricity undertakings managed by Martin Burn Ltd., of which the appellant was one, and their workmen about the demand of the workmen for supply of uniforms, free of charge, the Chairman, Martin Electricity Supply Company Adjudication Board made an award on February 20, 1947 in and by which certain types of workmen were directed to be supplied with uniforms.
The said award remained operative till April 15, 1950 on which date it was terminated.
Though the award had been terminated, the appellant continued the practice of supplying uniforms to its workmen.
Subsequently, again, a dispute was raised by the employees of the electricity undertakings managed by Martin Burn Ltd., regarding the supply of uniforms to some categories of workers.
The said dispute was referred by the Government of Uttar Pradesh, by order dated March 15, 1951, for adjudication to the State Industrial Tribunal, Uttar Pradesh, Allahabad.
The said Industrial Tribunal passed an award dated November 29, 1952 holding that the same categories of workmen to whom uniforms had to be supplied as per the award dated February 20, 1947 were entitled to be supplied with uniforms.
Though this award remained in operation only for a period of one year, the appellant continued to supply uniforms till 1953 after which year the supply of uniforms was discontinued.
Nevertheless, the appellant again resumed supplying uniforms from May 1961.
On December 31, 1961 twenty three employees of the appellant, including the second respondent herein, filed a joint petition before the Labour Court, Meerut,.
under section 6 1 1(2) of the Uttar Pradesh (hereinafter referred to as the Act) claiming that they were entitled to recover the money equivalent to the cost of uniforms which had not been supplied to them during the period 1954 to 1960.
The said petition was numbered as Case No. 1 of 1962.
According to these employees, the employer had failed to supply them uniforms which they were entitled to get and in consequence of such failure the workmen had been put to expense by purchase of clothes to be used while rendering service in the company.
They claimed that the benefits 677 which they were entitled to get should be computed in terms of money to enable them to recover the cost of uniforms from the appellant.
The appellant filed a written statement on January 27, 1962 disputing the claim of the workmen and denying its ii, ability to either supply uniforms or pay the money value of the On February 22, 1964 the application filed by the workmen was taken up by the Labour Court for heating, but as none appeared on behalf of the workmen who were the applicants when the case was called on for hearing the Labour Court Meerut dismissed the application for non prosecution.
The actual order passed by the Labour Court was as follows: "Case called on for hearing.
No one is present on behalf of the applicant, nor 'any request for adjournment has been received.
The application is dismissed as not having been prosecuted.
No order as to costs.
" On or about January 1, 1965 seven employees of the appellant, including the second respondent herein, filed seven separate applications before the Labour Court, Meerut, again under section 6 H(2) of the Act.
The seven applications had been numbered as Case Nos. 217 to 223 of 1965.
The application filed by the second respondent was Case No. 217 of 1965.
The second respontdent, in particular claimed that he was a mains coyly from April 13, 1950 to September 15, 1959 'and that he was entitled to be supplied uniform by the appellant.
As the uniform had not been so supplied he pleaded that he was entitled to recover a sum of Rs. 390/ as cost of the uniforms which the management should have supplied during those years.
All the applicants, including the second respondent, had also stated in their respective applications that they had moved before the Labour Court a similar application, under section 6 H(2) of the Act, but, unfortunately that had been dismissed for default on February 21, 1964 and hence the fresh applications were being filed.
The appellant flied on or about April 7, 1965 separate objections denying the claim made by the applicants.
We are not, at this stage, concerned with the various pleas taken either by the employees, in support of their claim, or by the appellant, in denial thereof.
It is only necessary to state that the appellant pleaded that the fresh applications, filed by the workmen, were not maintainable in view of the fact that identical applications, claiming the same reliefs, had been dismissed on February 21, 1964 by the Labour Court.
If the workmen were aggrieved by that said order, the proper remedy that should have been adopted by them was by taking action under r. 16(2) of the Uttar Pradesh Industrial Disputes Rules, 1957 (hereinafter referred to as the rules).
Not 678 having adopted the procedure indicated therein, the management pleaded that it was no longer open to the workmen to file a second application and the Labour Court had no jurisdiction to entertain the same.
The Labour Court had, by its order dated August 27, 1965 consolidated all the seven applications.
On the basis of the objection raised by the appellant to the maintainability of the applications filed, issue No. 5 was framed in the following terms: "Whether the present applications of the workmen under section 6 H(2) are not maintainable for the reasons given in para 5 of the written statement of the employers ?" and this issue was treated as a preliminary issue 'and arguments heard on the same By order dated February 10, 1967 the Labour Court held that the applications filed by the seven workmen, including the second respondent were maintainable.
The Labour Court has expressed the view that the order passed on February 21, 1964 was one dismissing the applications, filed by the workmen, for default and such an order was not contemplated by sub r.
(1 ) of r. 16 of the rules, and hence the workmen were not bound to take 'action under sub r.
(2) of r. 16.
In consequence the Labour Court held that the applications filed by the workmen were competent and directed the applications to be posted for further hearing.
Though the order had been passed in Case No. 217 of 1965, the Labour Court directed that the finding given on issue No. 5 would govern Cases Nos. 218 to 223 of 1965 also.
The 'appellant challenged this finding of the Labour Court before the High Court of Allahabad in Civil Writ No. 1647 of 1967.
A Division Bench of the High Court, by its order dated May 11, 1967 summarily dismissed the writ petition.
Mr. Gupte, learned counsel for the appellant and Mr. Ramamurthy, learned counsel for the second respondent, urged the same contentions that were urged on behalf of their clients before the Labour Court.
Therefore the question that arises for consideration is whether the view of the Labour Court that the second application filed by the second respondent herein is maintainable, is correct.
Section 6 H of the Act deals with recovery of money due from an employer.
Section 6 H more or less corresponds to section 33 C of the .
Sub section
(2) of section 6 H, with which we are concerned, is as ,follows: "(2) Where any workman is entitled to receive from the employer any benefit which is capable of being computed in terms of money, the amount at which such benefit should be computed may, subject to any rules 679 that may be made under this Act, be determined by such Labour Court as may be specified in this behalf by the State Government, and the amount so determined may be recovered as provided for in sub section (1 ).
" As we have already mentioned, the second respondent, along with certain others, had filed an application on December 31, 1961 claiming identical relief that is now claimed in Case No. 217 of 1965.
That application was dismissed as not having been prosecuted, on February 22, 1964.
The second application was filed on January 1, 1965.
We shall now refer to the relevant rules.
Rule 9 empowers a Tribunal or Labour Court to accept, admit or call for evidence at any stage of the proceedings before it and in such manner as it may think fit Rule 10 relates to the issue of summons for production of any books, papers or other documents as the Labour Court, Tribunal or Arbitrator feels necessary for the purpose of investigation or adjudication.
Rule 12 relates to procedure at the first hearing.
It states that 'at the first sitting of a Labour Court or Tribunal, the Presiding Officer shall call upon the parties in such order as he may think fit to state their case.
Rule 16 provides for the Labour Court or Tribunal or Arbitrator proceeding ex parte, as follows: "( 1 ) If, on the date fixed or on ,any other date to which the hearing may be adjourned, any party to the proceedings before the Labour Court or Tribunal or an Arbitrator is absent, though duly served with summons or having the notice of the date of hearing, the Labour Court or Tribunal or the Arbitrator, as the case may be, may proceed with the case in his absence and such order as it may deem fit and proper.
(2) The Labour Court, Tribunal or an Arbitrator may set aside the order passed against the party in his absence, if within ten days of such order, the party applies in writing for setting aside such order and shows sufficient cause for his absence.
The Labour Court, Tribunal or an Arbitrator may require the party to file an affidavit, stating the cause of his absence.
As many copies of the application and affidavit, if any, shall be filed by the party concerned as there are persons on the opposite side.
Notice of the application shall be given to the opposite parties before setting aside the order.
" Sub rule (1 ) deals with the absence of a party on the date fixed, or on any other date to which the hearing may be adjourned, though he has been served with summons or he has notice of the date of hearing.
Under the circumstances it provides that the 680 Labour Court, Tribunal or Arbitrator, as the case may be "may proceed with the case in his absence and pass such order as it may deem fit and proper".
It is to the setting aside of such an order that may have been passed under sub r. (1 ), that the procedure is indicated in sub r.
According to Mr. Gupte, learned counsel for the appellant, the order passed on February 22, 1964, by the Labour Court is one contemplated by sub r.
(1) of r. 16, in which case the provisions of sub r.
(2) are attracted and the second respondent, if he felt aggrieved by that order, should have filed an application under sub r.
(2), within time, to set aside that order.
We are not inclined to 'accept this contention of Mr. Gupte.
As pointed out earlier by us, the order passed on February 22, 1964, is one dismissing the application as not having been prosecuted, for default of appearance of the second respondent.
We will presently show that the order of February 22, 1964 cannot be considered to be one contemplated to have been passed under sub r.
( 1 ) of r. 16.
Sub r.
( 1 ) refers to a party being absent on the date fixed, or on any other date to which the hearing has been adjourned, and such party having been duly served or having notice of the date of hearing.
The said sub r.
(1 ) indicates as to what is to be done .under such circumstances.
We have referred to r. 12 which provides for what the Labour Court or Tribunal should do at the first hearing.
Neither the Act nor the rules empower a Tribunal or Labour Court to dismiss an application for default of appearance of a party.
Rule 16 (1 ) is the only provision for what is to be done when a party is absent.
That provision, which clearly enjoins the Labour Court or Tribunal in the circumstances mentioned therein "to proceed with the case in his absence" either on the date fixed or on any other date to which the hearing may be adjourned, coupled with the further direction "and pass such order as it may deem fit and proper", clearly indicates that the Tribunal or Labour Court should take up the case and decide it on merits 'and not dismiss it for default.
Without attempting to be exhaustive, we shall just give an example.
Where a workman, after leading some evidence in support of his claim, absents himself on the next adjourned date with the result that he does not lead further evidence, the Tribunal is bound to proceed with the case on such evidence as has been placed before it.
It cannot dismiss the application on the ground of default of appearance of the workman.
This will be an instance of "proceeding with the case in the absence of a party" and giving a decision on merits.
If such an order is passed by the Tribunal in the absence of one or other of the parties before it, a right is given to such party to apply under sub r.
(2) for setting aside the order that has been passed in his absence in the case in terms of sub r.
The application must be filed within the period mentioned in 681 sub r.
(2) and the party will have also to satisfy the Tribunal or Labour Court that he had sufficient cause for his absence.
The necessity for filing an application for setting aside an order passed in the case in the absence of 'a party, as contemplated under sub r.
(2) of r. 16 will only arise when an order on merits affecting the case has been passed in the absence of a party, under sub r.
(1 ) of r. 16.
An order dismissing a case for default or non prosecution, does not come under sub r.
( 1 ) of r. 16 and to such an order sub r.
(2) has no 'application.
We have already indicated that the order passed on February 22, 1964 by the Labour Court cannot be considered to be an order contemplated under sub r.
(1 ) of r. 16.
If that is so, the second respondent was not bound to file an application within the time mentioned in sub r.
(2) for setting 'aside the order dated February 22, 1964.
Therefore the fact that a previous application, filed by the second respondent, was dismissed for non prosecution on February 22, 1964 is no bar under r. 16(2) to the filing of the present application, Case No. 217 of 1965.
It follows that the objections raised by the appellant to the maintainability of the application filed by the second respondent have been rightly rejected by the Labour Court and the High Court.
The appeal fails and is dismissed.
The appellant will pay the costs of the second respondent.
| IN-Abs | The second respondent originally filed an application for certain reliefs against its employer (the appellant company).
The Labour Court dismissed the application as not having been prosecuted for the default of the appearance of the applicants.
The second respondent filed a second application claiming the same reliefs.
The management objected to the maintainability of the second application contending that if the workmen were aggrieved by the earlier order, the proper remedy that should have been adopted by them was by taking action under r. 16(2) of the Uttar Pradesh Industrial Disputes, Rules, 1957.
The Labour Court rejected the objection, and the appellant challenged the decision in a writ petition to the High Court.
The High Court dismissed the writ petition.
HELD: An order dismissing a case for default or non prosecution, does not come under sub r.
(1) of r. 16 and to such an order sub r.
(2) has no application.
Neither the Act nor the rules empower a Tribunal or Labour Court to dismiss an application for default of appearance of a party.
Rule 16(1) is the only provision providing for what is to be done when a party is absent.
That provision, which clearly enjoins the Labour Court or Tribunal in the circumstances mentioned therein "to proceed with the case in his absence", either on the date fixed or on any other date to which the hearing may be adjourned, coupled with the further direction "and pass such order as it may deem fit and proper", indicates that the Tribunal or Labour Court should take up the case and decide it on merits and not dismiss it for default.
The necessity for filing an application for setting aside an order passed in the case in the absence off a party, as contemplated under sub r.
(2) of r. 16 will arise only when .an order on merits affecting the case has been passed in the absence of a party, under sub r.
( 1 ) of r. 16.
[680 E; 681 A B]
|
Criminal Appeal No. 129 of 1966.
Appeal by special leave from the judgment and order dated March 21, 1966 of the Calcutta High Court in Criminal Revision No. 309 of 1966.
521 A. K. Sen, P.K. Chatterjee, M.M. Kshatriya and G.S. Chatterjee, for the appellants.
B. Sen and P.K. Chakravarti, for the respondent.
The Judgment of the Court was delivered by Shah, J.
Mahendra Lal and Probhat Kumar Sarkar were the promoters, and Almohan Das was the first Chairman of the Board of Directors of the Great Indian Steam Navigation Company Ltd. Messrs. Das Brothers of which Almohan Das was the sole proprietor became the managing agents ' of the Company in 1945.
On July 2, 1951, Das Group Ltd. of which also Almohan Das was the principal Director took over the managing agency.
The Registrar of Companies, West Bengal filed a complaint in the Court of the Chief Presidency Magistrate alleging that sometime between March 1, 1945 and December 31, 1947 a sum of .Rs.
7,23,031 9 6 was advanced by the.
Company to the managing agents Messrs Das Brothers; that on July 2, 1951 Messrs Das Brothers resigned from the managing agency and Messrs Das Group Ltd. took over the managing agency; that Almohan Das was at all material times a director of the company and also a director of Messrs Das Group Ltd. and the sole proprietor of Messrs Das Brothers; and that the complainant had reason to believe that Almohan Das with other directors of the company had committed offences under sections 86 D and 87 D of the Indian Companies Act, 1913.
The complainant requested that a through investigation .be made in the matter.
The Chief Presidency Magistrate, Calcutta, referred the case to the police for investigation.
In the course of investigation of the complaint referred to him, Sub Inspector J.N. Mukherjee filed a First Information against eight persons (including the five appellants in this appeal) charging them with having, conspired to commit criminal breach of trust in respect of the company 's funds, falsification of accounts and making false returns, balance sheets and accounts, and in furtherance of the object of the conspiracy with committing offences punishable under sections 409 and 477A I.P. Code and under section 282 of the Indian Companies Act, 1913.
After investigation, Sub Inspector Mukherjee submitted on February 29, 1958, a report under section 173 of the Code of Criminal Procedure in the Court of the Chief Presidency Magistrate for those offences against seven persons including the five appellants.
The Presidency Magistrate, 9th Court, to whom the case was transferred for trial, rejected the contention raised by counsel for the defence that to a charge made against a director in relation to 522 the affairs of the company, the Indian Penal Code can have no application, and the prosecution, if any, may be instituted under the provisions of the Indian Companies Act alone.
The Magistrate also held that it was open to the police officer to whom the case was referred for investigation to submit a charge sheet of his own initiative and that the Court had jurisdiction to enquire into the charge so made without the sanction of the High Court.
A revision application was filed in the High Court of Calcutta against that order, but the application was rejected.
Proceedings were then resumed by the Magistrate on December 5, 1961, and a large number of witnesses were examined before him and several documents were tendered in evidence.
On December 3, 1965, the Presidency Magistrate committed the accused to stand trial for offences under sections 120B read with 409 & 477A I.P. Code before the Court of Session.
He observed: ". having regard to the entire evidence on record and facts and circumstances of the case, I am convinced prima facie that good grounds exist for framing charge under section 409 I.P.C. against accused Almohan Das with charge under section 120B read with section 409 I.P. Code aaginst (1) Almohan Das, (2) Sisir K. Das, (3) Nara Singha Pal, (4) Mohendra Lal Kundu and (5) Provat Kumar Sarkar, another charge under section 467 read with section 34 I.P. Code against (1) Almohan Das, (2) Nara Singha Pal, and (3) Mohendra L. Kundu for forging Ext.
5, and last under section 477A against (1) Aimoban Das, (2) Nara Singha Pal, (3) Mohendra Lal Kundu,(4) Provat Kumar Sarkar and (5) Sisir Kumar Das in respect of falsification of shareholders minute book (Ext. 18) purporting to ratify the action of Almohan Das regarding the funds of the G.I.S.N. & Co. Ltd." Against this order, a revision application was filed in the High Court of Calcutta which was 'rejected in limine.
Against the order passed by the High Court, this appeal has been filed with special leave.
In the present case the order of commitment was made under section 207A of the Code of Criminal Procedure.
Normally the High Court in a revision application filed against the order of commitment under section 207A will not enter upon a reappraisal of the evidence on which the order of commitment is made.
The High Court would be justified in exercising its revisional jurisdiction where a substantial question of law arises on which the correctness of the order of commitment may be effectively challenged, where there is no evidence on which the order of commitment could be made, where there has been denial of a right to fair 523 trial, where there is reason to think because of failure to comply with the rules of procedure or conditions precedent to initiation of criminal proceedings, where by ignoring the substantive law which constitutes the offence, or misconception of evidence on matters of importance grave injustice has resulted, and on similar other grounds.
But in other cases, interference with the order of the Magistrate committing the accused for trial may not be justified and the trial before the Court of Session should be allowed to run its course.
Counsel for the appellants submitted that there was no evi dence on which the order of commitment could be made.
We do not think that there is any ground for so holding.
It was the prosecution case that in order to commit criminal breach of trust in respect of an amount exceeding Rs. 5 lakhs by allowing it to remain with Messrs Das Brothers the previous managing agents of the company of which Almohan Das was the sole proprietor and from whom Messrs Das Group Ltd. took over the managing agency a conspiracy was entered into between the seven named persons, and the minutes book of the meetings of the Board of Directors and the shareholders ' minutes book were fabricated and criminal breach of trust was committed in respect of the funds belonging to the Company.
It is true that in the balance sheet Ext.
137 for the year ending December 31, 1952, on the assets side is an item 'Sundry Advances (Unsecured) ' inclusive of Rs. 5,78,941 7 0 due by a firm in which a director of the Company was a partner.
But this, it is the case of the prosecution, was not supported by any resolution passed by the Board of Directors.
By letter dated June 21, 1956, the Additional Registrar of Companies asked the Company to furnish a certified copy of the minutes of the Board of Directors .in which the loan had been made to the managing agents of the Company.
In reply thereto by letter dated July 12, 1956, the Managing Agents wrote that as the money was held by the managing agents and was not given or treated as a loan, there was no resolution of the Board of Directors in that connection.
On September 29, 1956, the Additional Registrar of Companies again wrote a letter .to the Company enquiring whether the amount of Rs. 5,78,941 7 0 which was lying with the previous managing agents of the Company Messrs Das Brothers had since been realised, and if so, the evidence adjusting the liability,.
and if not, to intimate with material evidence whether any steps had since been taken by the Company for the realization of the dues and how the matter stood.
in the course of the investigation the officer in charge attached a directors ' minutes book Ext.
5 which contains the minutes of a resolution authorising Almohan Das to retain the funds of the Company.
Therefore, there was some evidence on which the 524 charge for fabrication of the Director 's Minutes Book may be sustained.
In dealing with the charge for fabricating the Shareholders ' Minutes Book the learned Magistrate has observed that the materials on the record made out a strong prima facie case that the Shareholders ' Minutes Book Ext.
18 is also a forged document.
The circumstances which lent colour to the prosecution, in the view of the learned Magistrate were (1) that Ext.
18 starts from February 28, 1945, although the Company was incorporated in 1942, (2) in many meetings the signatures of the shareholders were not taken although in some meetings the shareholders signed the minutes book, (3) resolutions of Amaresh Pramanick and Sudhir Kanti Sarkar are not incorporated in the minutes book, (4) some portions in the last page in the agreement (Ext. 20) with the managing agency firm Das Group appear to have been erased out and the agreement was thus tampered with, (5) the minute book Ext.
18 does not incorporate 'the relevant questions, and there appeared tampering with pagination, (6) the evidence of P.Ws. 6 & 16 regarding their presence or absence, and (7) the testimony of P.Ws. 15 & 24 suggested that most of the persons shown to have attended meetings were at the "back and call of the accused Almohan Das".
Whether this evidence may justify a conviction cannot be enquired into at this stage.
The evidence was prima facie sufficient to frame a charge.
The Presidency Magistrate was of the view that a case for framing a charge for committing the case to the Court of Session was made out and the High Court has summarily dismissed the revision application in exercise of its jurisdiction.
It was contended before us that under section 209(1) of the Code of Criminal Procedure, a charge may be framed only if in the view of the committing Magistrate the evidence on record is sufficient to justify conviction of the accused.
Section 209 of the Code provides: "When the evidence referred to in section 208, subsections (1) and (3), has been taken, and he has (if necessary) examined the accused for the purpose of enabling him to explain any circumstances appearing in the evidence against him, such Magistrate shall, if he finds that there are not sufficient grounds for committing the accused person for trial, record his reasons and discharge him, unless it appears to the Magistrate that such person should be tried before himself or some other Magistrate, in which case he shall proceed accordingly." 525 In terms section 209 applies to cases which are instituted otherwise than on a police report.
But the principle underlying that section applies to cases which are instituted on a police report.
A Magistrate holding an enquiry is not intended to act.
merely as a recording machine.
He is entitled to sift and weigh the materials on record, but only for seeing whether there is sufficient evidence for commitment, and not whether there is sufficient evidence for conviction.
If there is no prima facie evidence or the evidence is totally unworthy of credit, it is his duty to discharge the accused: if there is some evidence on which a conviction may reasonably be based, he must commit the case.
The Magistrate at that stage has no power to evaluate the evidence for satisfying himself of the guilt of the accused.
The question before the Magistrate at that stage is whether there is some credible evidence which would sustain a conviction.
We do not agree with counsel for the appellants that there was no evidence on which a charge could be framed against the appellants or that the evidence was so totally unworthy of credit ' that an order recording the conviction against the accused could not be made thereon.
The appeal fails and is dismissed.
We trust that the case which has been held up for a very long time will be taken up by the Court of Session for trial with the least practicable delay.
R.K.P.S. Appeal dismissed.
| IN-Abs | On a complaint filed by 'the Registrar of Companies, and after an investigation by the Police ordered by the Chief Presidency Magistrate, Calcutta, proceedings were instituted against the appellants for conspiring to commit criminal breach of trust in respect of a company 's funds.
After a large number of witnesses were examined and several documents were tendered in evidence, the Magistrate committed the accused to stand trial for offences under section 120B read with Sections 409, 477A I.P.C. before the Court of Sessions.
A revision application against the order of committal was rejected in limine by the High Court.
In appeal to this Court it was contended on behalf of the appellants that there was no evidence on which the order of commitment could be made and that under section 209 (1) Cr.
P.C., the charge may be framed only if in the view of the committing Magistrate the evidence on record is sufficient to justify conviction of the accused.
HELD: Dismissing the appeal: On the facts, it could not by said that there was no evidence on which a charge could be framed against the appellants or that the evidence was so totally unworthy of credit that are order recording the conviction against the accused could not be made.
Although in terms section 209 'applies to cases which are instituted otherwise than on a .police report, the principle underlying that section also applies to cases which are instituted on a police report.
A Magistrate holding an inquiry has to see whether there is sufficient evidence for commitment, and not whether there is sufficient evidence for conviction.
If there is no prima facie evidence or the evidence is totally unworthy of credit, it is his duty to discharge the accused: if there is some evidence on which a conviction may reasonably be based, he must commit the ' case.
[525 A C] Normally the High Court in a revision application flied against the order of commitment under section 207A will not enter upon a reappraisal of the evidence on which the order of commitment is made.
The High Court would be justified in exercising its revisional jurisdiction where a substantial question of law arises on which the correctness of the order of commitment may be effectively challenged.
But in other cases the trial before the Court of Session should be allowed to run its course.
[522 G 523 B]
|
al No. 31 of 1966.
Appeal from the judgment gad decree dated December 5, 1962 of the Allahabad High Court in First Appeal from Order No. 260 of 1952.
R.M. Mehta and S.P. Nayar, for the .appellant.
A.K. Sen, S.V. Gupte and S.S. Shukla, for the respondent.
The Judgment of the Court was delivered by Bachawat, J.
The respondent Jai Narain Misra is a building contractor.
On September 2, 1944, he entered into a contract (No. ES. 2944) with the Government of India represented by the Chief Engineer, Central Command, for the construction of additional quarters at T.P. 2 Kanpur.
The contract contained an arbitration clause.
Disputes between the parties relating to the contract were referred to Col. H.T. Faithful.
The arbitrator made his award on May 19, 1947.
On November 15, 1947 the respondent made an application for modifying the award and for remitting it to the arbitrator for re consideration.
On January 5, 1948, he filed additional objections.
By his order dated May 26, 1952 the Second Civil Judge, Kanpur, dismissed the objections and pronounced judgment according to the award.
The appellant filed an appeal against the order under section 39 of the .
By an order dated December 5, 1962, the High Court allowed the appeal and set aside the award on the ground that it was vague and uncertain.
The present appeal has been filed by the Union of India on the strength of a certificate granted by the High Court.
It appears that the respondent submitted 23 items of claim to the arbitrator.
By his letter dated May 6, 1947 he ' added 6 more items of claim.
The Union of India made a counter claim.
The 4Sup.
C.I./69 5 590 arbitrator was thus required to decide 29 disputed items of claim and the counter claim.
The award recited that certain differences between the parties in respect of contract No. ES.
2944 of 1944 had been referred to the arbitrator for his decision and that a final award was being made of and concerning the matters referred to him.
The relevant part of the award was as follows : "I award and direct that the following sums be paid by the respondent to the claimant.
Rupees twenty two thousand two hundred and ninety two annas five being the amount due to the claimant as calculated by the respondent.
(2) Rupees six thousand being the amount of security deposit paid by the claimant and now in possession of the respondent.
(3) Rupees seventy nine thousand three hundred and thirty nine.
The total amount to be paid by the respondent to the claimant is therefore one lakh seven thousand six hundred and thirty one annas five.
Each party to the dispute shall bear its own costs, including the cost of the stamp duty on this award.
" The High Court held that the award suffered from a patent ambiguity for the following reasons: It was not clear why the arbitrator awarded the first item of Rs. 22,292/5 and the 3rd item of Rs. 79,339 separately.
The arbitrator found only the first item of Rs. 22,292/5 to be due to the respondent, it was not clear whether he intended also to award the 3rd item of Rs. 79,339 to the respondent.
As the dispute consisted of 29 items of claims and a counter claim, the arbitrator should have made an award in respect of all the items separately or in combination or should have made a lump award in respect of all the items.
We are unable to accept this line of reasoning.
The award on the face of it professes to be of and concerning all matters submitted to the arbitrator.
In respect of all such matters the arbitrator awarded 'a sum cf Rs. 1,07,631/5 to the respondent.
This amount was made up of three sums separately mentioned in the award.
It was not the case of the respondent in the Trial Court that the award was uncertain or not intelligible.
The objection was taken for the first time before the High Court.
On the record there is nothing to show that the award was not intelligible to the parties.
The Court leans towards the construction that the award is certain.
Prima facie the award is good, and it is for the defendant 591 10 show that it is uncertain.
Per Jervis, C.J. in Mays & Anr.
vs Cannel(1).
There is no ambiguity about the first and the third items of the award.
The uncontradicted evidence of section Choudhry, the witness for the Government is "Item No. 1 of the award is that which was calculated by us in the government bill.
Item No. 3 is in respect of the remaining claim of the plaintiff." Item No. 1 thus represents the sum admitted by the government to be due to the respondent, and item No. 3 represents the additional sum found by the arbitrator to be due to him.
The arbitrator is not bound to give an award on each point.
He can make his award on the whole case, see Ghulam Khan vs Mohammad Hassan (1).
An arbitrator may award one sum generally in respect of all money claims submitted to him, unless the submission requires him to award separately on some one or more of them, see Whiteworth vs Hulse(3).
The arbitrator can lawfully make an award of a sum admitted to be due and a lump sum in respect of the remaining claim.
As the final award favour of the respondent professes to be made of and concerning all the matters referred to him, it must be presumed that in making it the arbitrator has taken into consideration all the claims and counter claims, see Harrison vs Creswick (4), Jewell vs Christie (5).
We hold that the award is a final and certain determination of all the disputes referred.
The arbitrator made an award in respect of the second item under some misapprehension.
The security deposit of Rs. 6,000 had been returned to the respondent and there was no dispute about it before the arbitrator.
In the circumstances, the arbitrator had no authority to award Rs. 6,000 to the respondent on account of the security deposit.
This part of the award is clearly separable and may be struck out.
Moreover, the award of Rs. 6,000 is to the advantage of the respondent; and the Court usually declines to set aside an award at the instance of a party who has not suffered any injury by the error, see Narsingh Narain Singh vs
Ajodhya Prasad Singh(6).
We find also that the award of Rs. 6,000 is now of no consequence.
After the award was made, the respondent received a sum of Rs. 1,00,594/7 in full settlement of the award, presumably after giving the government credit for the sum of Rs. 6,000 already received by him.
We therefore hold that there is no ground for setting aside the award.
The award is not vague and/or uncertain and does not suffer from any other infirmity.
(1) 24 Law Journal, Q.B. 41, Cal. 167, 186 (P.C.).
(3) (1866) L,R. I exhibit 251.
(4) ; (15) (6) , 113. 592 Mr. Mehta also contended that (1) the appeal before the High Court was not maintainable under sections 17 and 39 of the and (2) the respondent having received payment in full settlement of the award was estopped from challenging it.
We do not find it necessary to decide these points in view of our conclusion that the award is not liable to be set aside.
The appeal is allowed with costs in this Court, and the High Court.
The order of the High Court is set aside and the order and decree passed by the Second Civil Judge, Kanpur, is restored.
G.C. Appeal allowed.
| IN-Abs | The respondent, a building contractor, entered into a contract with the Government of India for the construction of certain flats.
On disputes arising, they were referred to an arbitrator.
the arbitrator made an award and directed certain sums to be paid by the Union of India to tile respondent.
Rupees twenty two thousand two hundred and ninety two, annas five were to be paid as the amount due to the respondent 'as calculated by the Union of India.
Rupees six thousand were to be paid as the amount of security deposit made by the respondent with the Union of India.
The third item was mentioned as Rupees seventy nine thousand three hundred and thirty nine.
total amount payable was mentioned as Rupees one lakh seven thousand six hundred and thirty one, annas five.
The respondent made an application for modifying the award and for remitting it to the arbitrator for reconsideration.
The Second Civil Judge, Kanpur dismissed the objections and pronounced judgment according to the award.
The appellant filed an appeal against the order under section 39 of the .
The High Court allowed ' the appeal and set aside the award on the ground that it was vague and uncertain.
According to the High Court it was not clear why the arbitrator awarded the first item of Rs. 22,292/5/ and the third item of Rs. 79,339/ separately.
Since the arbitrator found only the fir.st item of Rs. 22,922/5/to be due to the respondent, the High Court did not find it clear whether he intended also to award the 3rd item of Rs. 79,339/ to the respondent.
As the dispute related to 29 items of claims and counter claims the arbitrator, according to High Court, should have made an award in respect of all the items separately or in combination or should have made a lump sum award in respect of nil the items.
Against the order of the High Court the Union of India appealed to this Court with certificate.
HELD: The reasoning of the.
High Court could not be accepted.
(i) The award on the face of it professed to be of and concerning all matters submitted for arbitration.
In respect of all such matters the arbitrator awarded a sum of Rs. 1,07,631/6/ to the respondent.
This amount was made of three sums separately mentioned in the award.
On the record there was nothing to show that the award was not intelligible to the parties.
[590 G] The court leans towards the construction that the award is certain.
the evidence item No. 1 represented the sum admitted the sum due to respondent and item No. 3 represented the additional sum found by the arbitrator to be due to him.
[590 H] (ii) The arbitrator is not bound to give an award on each point.
He can give his award on the whole case.
An 'arbitrator may award one sum generally in respect of all money claims submitted to him.
unless the submission requires him to award separately on some one or more of them.
589 The arbitrator can lawfully make an award of a sum admitted to be due and a lump sum in respect of the remaining claim.
As the final award in favour of the respondent professed to be made of and concerning all the matters referred to him, it must be presumed that in making it the arbitrator had taken into consideration 'all the claims and counter claims.
The award must be held to be a final and certain determination of all the disputes referred.
[591 C, D] (iii) The mention of the second item of Rupees six thousand in the award was a mistake.
This part of the award being clearly separable must be struck out.
The award of the sum of Rupees six thousand was to the advantage of the respondent and the court could not set aside an award at the instance of a party who had not suffered any injury.
[591 F] Mays and Anr.
vs Cannel 24 Law Journal Q.B. 41, 45; Ghulam Khan vs Mohammad Hassan I.L.R. , 186 (P.C.); Whiteworth vs Hulse (1866) L.R. 1 exhibit 251; Harrison vs Creswick ; , Jewell vs Christie and Narsingh Narain Singh vs Ajodhya Prasad Singh, , 113, referred to.
|
No. 179 of 1968.
Petition under article 32 of the Constitution of India for a writ in the nature of Habeas corpus.
R.L. Kohli, for the petitioners.
Debabrata Mukherjee and P.K. Chakravarti, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
In this case the petitioners have.
obtained a rule calling upon the respondent, viz., The State of West Bengal 637 to show cause why a writ of habeas corpus should not be issued under article 32 of the Constitution directing their release from detention under orders passed under section 3(2) of the (Act IV of 1950), hereinafter called the 'Act '.
Cause has been shown by Mr. Debabrata Mukherjee and other Counsel on behalf of the respondent to whom notice of the rule was ordered to be given.
The case of the petitioners will be considered in the following three groups: (1) Petitioners nos.
2, 4, 5, 6, 16, 17, 20 and 26, (2) Petitioners nos.
1, 3, 7, 10, 12, 13, 19 and 22, (3) Petitioners nos.
8, 9 and 21.
By the order of this Court dated October 18, 1968, the cases as regards petitioners nos.
11, 14, 15, 18, 23, 24, 25, 27 to 30 were dismissed as they were reported to have been released.
As regards petitioner No. 5, Subhas Chandra Bose alias Kanta Bose, the order of detention was made on January 20, 1968 by the District Magistrate, Howrah and reads as follows: "No. 202/C Dated, Howrah, the 20th January, 1968 WHEREAS I am satisfied with respect to the person known as Shri Kanta Bose alias Subhas Chandra Bose son of Shri Sishir Kumar Bose of 26, Nilmoni Mallick Lane, P.S. and Distt Howrah, that with a view to preventing him from acting in any manner prejudicial to the maintenance of public order it is necessary so to do , therefore, in exercise of the powers conferred by Section 3(2) of the (Act IV of 1950), I make this order directing that the said Shri Kanta Bose alias Subhas Chandra Bose be detained.
Given under my hand and seal of office.
Sd/ D.C. Mookherjee District Magistrate Howrah.
On the same date ' the following grounds of detention were communicated to the detenu: "You are being detained in pursuance of a detention order made under sub section (2) of section 3 of the ' (Act IV of 1950) on the following grounds: Sup C1/69 8 638 2.
You have been acting in a manner prejudicial to the maintenance of public order by commission of offences of riotous conduct, criminal intimidation and assault as detailed below : (a) That on 3 11 65 at about 17/30 hrs.
you assaulted Shri Ashutosh Dutta son of Shri Pyari Mohan Dutta of 55, M.C. Ghosh Lane, P.W. Howrah at the crossing of Panchanan Tala Road and M.C. Ghosh Lane, with knife causing bleeding injuries on his hand.
(b) That on 8 10 66 at about 16.00 hrs.
while Shri Mahesh Prosad Bhagal son of Balgobinda Bhagal of 16, Belilious Road, P.S. Howrah was playing in an open field, you along with your associates demanded money from him and on his refusal you hurled cracker on him causing grievous injury on his right leg (c) That on 8 6 67 at about 11.40 hrs.
you accosted one Sushanta Kumar Ghosh son of Manmatha Ghosh of 2/1/1, Danesh Sk.
Lane inside a saloon at 255, Panchanantala Road on previous grudge and being intervened by Shri Shyamal Biswas son of Sandhya Biswas of 255, panchanantala Road, P.S. Howrah, you whipped out a dagger and assaulted Shri Biswas with the dagger causing injury on his hand.
(d) That on 23 11 67 at about 22.45 hrs.
you hurled cracker on A.S.I.B. Kundu of Bantra P.S. while he was coming to Howrah along panchanantala Road in a wireless van and caused injury to the A.S.I. and damage to the wireless van.
(e) That on 7 1 68 at about 18.30 hrs.
you threatened one Satya Narayan Prosad son of Late purusattam Prosad of 10, Debnath Banerjee Lane, P.S. Howtab with assault at the crossing of M.C. Ghosh Lane and Bellilious Road.
You are hereby informed that you may make a representation to the State Government within 30 days of the receipt of the detention order and that such representation should be addressed to the Assistant Secretary to the Government of West Bengal, Home Department, Special Section, Writers ' Buildings, Calcutta and forwarded through the Superintendent of the Jail in which you are detained.
You are also informed that under Section 10 of the (Act IV of 1950) the Advisory Board shall if you desire to be heard you in person and that if you desire to be so heard by the 639 Advisory Board you should intimate such desire in your representation to the State Government.
Sd/ D.C. Mookerjee District Magistrate Howrah.
" On March 19, 1968 the Advisory Board made a report under section 10 of the Act stating that there was sufficient cause for detention of Sri Kanta Bose alias Subhas Ch.
On March 30, 1968 the Governor of West Bengal confirmed the detention order under section 11 (1) of the Act.
Section 3 of the Act provides: "3.
(1) The Central Government or the State Government may (a) If satisfied with respect to any person that with a view to preventing him from acting in any manner prejudicial to (i) the defence of India, the relation of India with foreign powers or the security of India, or (ii) the security of the State or the maintenance of public order, or (iii) the maintenance or supplies and a services essential to the community, or (b) if satisfied with respect to any person who is a foreigner within the meaning of the (XXXI of 1946), that with a view to regulating his continued presence in India or with a view to making arrangements for his expulsion from India, it is necessary so to do, make an order directing that such persons be detained.
(2) Any of the following officers, namely, (a) District Magistrates, (b) Additional District Magistrates specially empowered in this behalf by the State Government, (c) the Commissioner of Police for Bombay, Calcutta, Madras or Hyderabad, (d) Collector in the State of Hyderabad, may satisfied as provided in sub clauses (2) and (3) of clause (a) of sub section (1 ) exercise powers conferred by the said sub section.
640 (3) When any order is made under this section by an officer mentioned in sub section (2) he shall forthwith report the fact to the State Government to which he is subordinate together with grounds on which the order has been made and such other particulars as in his opinion have a bearing on the matter, and no such order made 'after the commencement of the Preventive Detention (Second Amendment) Act, 1952, shall remain in force for more than twelve days after the making thereof unless in the meantime it has 'been approved by State Government.
(4) When any order is made or approved by the State Government under this section, the State Government shall, as soon as may be, report the fact to the Central Government together with the grounds on which the order has been made and such other particulars as in the opinion of the State Government have bearing on the necessity for the order.
" Section 7 is to the following effect: "7. '(1) When a person is detained in pursuance of a detention order, the authority making the order shall, as soon as may be, but not later than five days from the date of detention, communicate to him the grounds on which order has been made, and shall afford him the earliest opportunity if making a representation against the order to the appropriate Government.
(2) Nothing in sub section (1) shall require the authority to disclose facts which it considers to be against the public interest to disclose.
" It will be noticed that before an order of detention can be validly made by the detaining authorities specified by section 3(2) of the Act, the authority must be satisfied that the detention of the person is necessary in order to prevent him from acting in any prejudicial manner as indicated in cls.
(i) to (iii) of section 3(1) (a).
It is well settled that the satisfaction of the detaining authority to which section 3(1 )(a) refers is a subjective satisfaction, and so is not justifiable.
Therefore it would not be open to the detenu to ask the Court to consider the question as to whether the said satisfaction of the detaining authority can be justified by the application of objective tests.
It would not be open, for instance, to the detenu to contend that the grounds supplied to him do not necessarily or reasonably lead to the conclusion that if he is not detained, he would indulge in prejudicial activities.
The reasonableness of the satisfaction of the detaining authority cannot be questioned in a Court of law; the adequacy of the material on 641 which the said satisfaction purports to rest also cannot be examined in a Court of law.
That is the effect of the true legal position in regard to the satisfaction contemplated by section 3(1)(a) of the Act (See the decision of this Court in The State of Bombay vs Atma Ram Sridhar Vaidya(1).
But there is no doubt that if any of the grounds furnished to the detenu are found to be irrelevant while considering the application of cls.
(i) to (iii) of section 3(1)(a) and in that sense arc foreign to the Act, the satisfaction of the detaining authority on which the order of detention is based is open to challenge 'and the detention order liable to be quashed.
Similarly, if some of the grounds supplied to the detenu are so vague that they would virtually deprive the detenu of his statutory right of making a representation, that again may make the order of detention invalid.
If, however, the grounds on which the order of detention proceeds are relevant and germane to the matters which fall to be considered under section 3 ( 1 ) ( a ) of the Act, it would not be open to the detenu to challenge the order of detention by arguing that the satisfaction of the detaining authority is not reasonably based on any of the said grounds.
It is also necessary to emphasise in this connection that though the satisfaction of the detaining authority contemplated by section 3 (1) (a) is the subjective satisfaction of the said ' authority, cases may 'arise where the detenu may challenge the validity of his detention on the ground of mala fides.
The detenu may say that the passing of the order of detention was an abuse of the statutory power and was for a collateral purpose.
In support of the plea of mala fides the detenu may urge that along with other facts which show mala fides, the grounds served on him cannot rationally support the conclusion drawn against him by the detaining authority.
It is only in this incidental manner that this question can become justifiable; otherwise the reasonableness or propriety of the said satisfaction contemplated by section 3(1)(a) cannot be questioned before the Courts.
The question to be considered in the present case is whether grounds (a), (b) and (e) served on Subhas Chandra Bose are grounds which are relevant to "the maintenance of public order".
All these grounds relate to cases of assault on solitary individuals either by knife or by using crackers and it is difficult to accept the contention of the respondent that these grounds have any relevance or proximate connection with the maintenance of public order.
In the present case we are concerned with detention under section 3( 1 ) of the which permits apprehension and detention of a person likely to act in a manner prejudicial to the maintenance of public order.
Does the expression "public(1) ; 642 order" take in every kind of infraction of order or only some categories thereof.
It is manifest that every act of assault or injury to specific persons does not lead to public disorder.
When two people quarrel and fight and assault each other inside a house or in a street, it may be said that there is disorder but not public disorder.
Such cases are dealt with under the powers vested in the executive authorities under the provisions of ordinary criminal law but the culprits cannot be detained on the ground that they were disturbing public order.
The contravention of any law always affects order but before it can be said to affect public order, it must affect the community or the public at large.
In this connection we must draw a line of demarcation between serious and aggravated forms of disorder which directly affect the community or injure the public interest and the relatively minor breaches of peace of a purely local significance which primarily injure specific individuals and only in a secondary sense public interest.
A mere disturbance of law and order leading to disorder is thus not necessarily sufficient for action under the but a disturbance which will affect public order comes within the scope of the Act.
A District Magistrate is therefore entitled to take action under section 3 (1 ) of the Act to prevent subversion of public order but not in aid of maintenance of law and order under ordinary circumstances.
In Dr. Ram Manohar Lohia vs State of Bihar(1), it was held by the majority decision of this Court that the expression "public order" was different and does not mean the same thing as "law and order".
The question at issue in that case was whether the order of the District Magistrate, Patna under Rule 30(1)(b) of the Defence of India Rules, 1962 against the petitioner was valid.
Rule 30( 1 )(b) provided that a State Government might, if it was satisfied with respect to a person that with a view to preventing him from acting in a manner prejudicial to 'public safety and maintenance of public order ' it is necessary to do so, order him to be detained.
The order of the District Magistrate stated that he was satisfied that with a view to prevent the petitioner from acting in any manner prejudicial to the 'public safety and the maintenance of law and order, ' it was necessary to detain him.
Prior to the making of the order the District Magistrate had, however, recorded a note stating that having read the report of the Police Superintendent that the petitioner 's being at large was prejudicial to 'public safety ' and 'maintenance of public order ', he was satisfied that the petitioner should be detained under the rule.
The petitioner moved this Court under article 32 of the Constitution for a writ of habeas corpus directing his release from detention, contending that though an order of detention to prevent acts prejudicial to public order may be justifiable ,an order to prevent acts prejudicial to law and order would not be justified by the rule.
It was held by the majority judgment that what was (1) ; , 643 meant by maintenance of public order was the prevention of disorder of a grave nature, whereas, the expression 'maintenance of law and order ' meant prevention of disorder of comparatively lesser gravity and of local significance.
At page 746 of the Report, Hidayatullah, J. as he then was, observed as follows in the course of his judgment: "It will thus appear that just as 'public order ' in the rulings of this Court (earlier cited) was said to comprehend disorders of less gravity than those affecting 'security of State ', 'law and order ' also comprehends disorders of less gravity than those affecting 'public order '.
One has to imagine three concentric circles.
Law and order represents the largest circle within which is the next circle representing public order and the smallest circle represents security of State.
It is then easy to see that an act may affect law and order but not public order just as an 'act may affect public order but not security of the State.
By using the expression 'maintenance of law and order ' the District Magistrate was widening his own field of action and was adding a clause to the Defence of India Rules.
" The order no doubt mentioned another ground of detention, namely, the prevention of acts prejudicial to public safety, and in so far as 'it did so, it was clearly within the rule.
But the order of detention must be held to be illegal, though it mentioned a ground on which a legal order of detention could have been based, because it could not be said in what manner and to what extent the valid and invalid grounds operated on the mind of the authority concerned and contributed to the creation of his subjective satisfaction.
It was accordingly held that the order of detention made by the District Magistrate was invalid and the petitioner should be set at liberty.
In our opinion, the principle laid down in this case governs the decision in the present case also and the order of the District Magistrate, Howrah dated January 20, 1968 must be held to be ultra vires and illegal.
The difference between the concepts of 'public order ' and law and order ' is similar to the distinction between 'public ' and 'private ' crimes in the realm of jurisprudence.
In considering the material elements of crime, the historic tests which each community applies are intrinsic wrongfulness and social expediency which are the two most important factors which have led to the designation of certain conduct as criminal.
Dr. Allen has distinguished 'public ' and 'private ' crimes in the sense that some offences primarily injure specific persons and only secondarily the public interest, while others directly injure the public interest 'and affect indivi 644 duals only remotely.
(see Dr. Allen 's Legal Duties, p. 249).
There is a broad distinction along these lines, but differences naturally arise in the application of any such test.
The learned author has pointed out that out of 331 indictable English offences 203 are public wrongs and 128 private wrongs.
The argument was, however, stressed by Mr. Mukherjee on behalf of the respondent that the other grounds, viz., (c) and (d) mentioned in the order of the District Magistrate dated January 20, 1968 are more serious in character and may be held prejudicial to public order.
We shall assume in favour of the respondent that grounds (c) and (d) are matters prejudicial to: public order.
But even upon that assumption the order of detention must be held to be illegal.
It is now well established that even if any one of the grounds or reasons that led to the satisfaction is irrelevant, the order of detention would be invalid even if there were other relevant grounds, because it can never be certain to what extent the bad reasons operated on the mind of the authority concerned or whether the detention order would have been made at all if only one or two good reasons had been before them. (See the decisions of this Court in Shibban Lal Saksena vs The State of Uttar Pradesh(1) and Dr. Ram Manohar Lohia vs State of Bihar(2).
For these reasons we hold that the order of detention made by the District Magistrate, Howrah under section 3(2) of the Act dated January 20, 1968 against petitioner Subhas Chandra Bose alias Kanta Bose and the consequent order made by the Governor dated March 30, 1968 confirming the order of detention under section 11 (1 ) of the Act must be declared to be illegal and accordingly the petitioner.
Subhas Chandra Bose alias Kanta Bose is entitled to be released from custody forthwith.
In the case of petitioner 2, Sukumar Chaudhury, No. 4, Tarapada Bhowmick, No. 6, Golam Rasul Molliek, No. 16, Sk.
Sharafat, No. 17, Hanif Mirza, No. 20, Sk.
Mann, and No. 26, Chittaranjan Majhi, the orders of detention suffer from the same defect as that in the case of petitioner No. 5, Subhas Chandra Bose alias Kanta Bose.
For the reasons already given we hold that the orders of detention made under section 3(2) of the Act and the orders of confirmation by the State Government under section 11 (1 ) of the Act in the case of all these petitioners are illegal and ultra vires and these petitioners are also entitled to be set at liberty forthwith.
We pass on to consider the case of the petitioner mentioned in Group 2.
As regards Pushkar Mukherjee, petitioner No. (1) ; (2) ; 645 the order of detention was made by the District Magistrate, 24 Parganas on September 19, 1967 and reads as follows: "Whereas I am satisfied with respect to the person known as Shri Pushkar Mukherjee, son of Late Jaladhar Mukherjee, Madhyamgram (Bireshpally), P.S. Baraset, Dist.
24 Parganas that with a view to preventing him from acting in a manner prejudicial to the maintenance of Public order, it is necessary so to do.
And, therefore, in exercise of the power conferred by Section 3(2) of the (Act IV of 1950) I make this oder directing that the said Shri Pushkar Mukherjee, son of Late Jaladhar Mukherjee be detained.
B. Majumdar, District Magistrate, 24 Parganas." The grounds of detention were served upon the detenu on the same date and are to the following effect: "Grounds for detention under sub section 2 of section 3 of the (Act IV of 1950).
To Shri Pushkar Mukherjee, s/o Late Jaladhar Mukherjee, of Madhyamgram (Bireshpally), P.S. Baraset, District 24 Parganas.
In pursuance of the provision of Section 7 of the (Act IV of 1950) as amended by the Preventive Detention (Amendment) Act, 1952 and 1954, you Shri Pushkar Mukherjee, s/o Late Jaladhar Mukherjee of Madhyamgram (Bireshpally), P.S. Baraset, 24 Parganas are hereby informed that you are being detained under section 3(1)(a)(ii) of the on the following grounds : 1.
That you have been acting in a manner prejudicial to the maintenance of public order by the commission of offences of riotous conduct, criminal intimidation and assault as detailed below : (i) That on 26 3 1967 at about 11.00 hrs.
you along with your associates Harisikesh Samadder 'and others being armed with dagger, spear and iron rods demanded money for drinks from Shri Joy Nath Roy in his Khatal at Katakhal Ganga Nagar, P.S. Baraset and on his refusal to pay the money you along with your associates dragged him out of his room and assaulted ' him and his friend Sudhir Ghose causing injuries on their persons.
646 (ii) That on 19 6 1967 evening you along with your associates threatened Sushil Kumar Chakravorty of Madhyamgram with assault when he was returning home from New Barrackpore Rly Station apprehending that he might inform the police for your arrest in connection with Baraset P.S. Case No. 56 dated 24 3 1967 u/s 302/394 I.P.C. which was pending investigation.
(iii) That on 8 7 1967 at about 22.00 hrs.
you along with your associates Kalyan Chakraborty and others again threatened Shri Sushil Kumar Chakraborty of Madhyamgram with assault out of previous grudge when he was returning to his house from New Barrackpore Rly Stn.
(iv) That you were detained for your rowdy activities u/s 30(1) of the D.I. Rules 1962 from 22 4 1964 under Govt.
Order No. 1233 H.S. dated 15 4 1964 and was released from detention on 4 10 1965.
(v) That for your rowdy activities you were detained on 19 9 1966 under P.D. Order No. 163/66 which was confirmed under Govt.
Order No. 8999 H.S. dated 26 11 1966 and you were released from such detention on 13 3 1967 under Order No. 1095 H.S. dated 13 3 1967 during General release.
Thus from your activities subsequent to your release from detention under the P.D. Act on 13 3 1967 it appears that the detention did not produce the sobering effect on you.
You have become a menace to the society and there have been disturbances and confusion in the lives o,f peaceful citizens of Baraset and Khardah P.S. areas under 24 Parganas District and the inhabitants thereof are in constant dread of disturbances of public order.
For the above reasons, I am satisfied that you are likely to act in a manner prejudicial to the maintenance of public peace and order, and therefore, I have passed an order for your detention to ensure the maintenance of Public Order.
You are further informed that you have right to make a representation in writing against this order under which you are detained.
If you wish to make such a representation, you should address it to the Assistant Secretary, Govt.
of West Bengal (Home Special) Department, Writers ' Buildings, Calcutta through the Superintendent of your Jail as soon as possible.
Your case will be submitted to the Advisory Board within 30 days of your detention and your representation if received later, may not be considered by the Board.
V. You are also informed that under Section 10 of the (Act IV of 1950), the Advisory Board, shall, if you desire to be heard, hear you in person and that if you desire to be so heard by the Advisory Board you should 647 A intimate such desire in your representation to the State Government.
B. MAJUMDAR.
District Magistrate, 9 9 67.
24 Pargan as.
" On May 23, 1968, the Advisory Board reported that there was sufficient cause for detention of the detenu.
On June 12, 1968 the Government of West Bengal confirmed the order of detention under section 11 ( 1 ) of the Act.
It appears to us that ground No. 2 is extremely vague.
Ground No. 2 states "You have become a menace to the society and there have been disturbances and confusion in the lives of peaceful citizens of Baraset and Khardah P.S. areas under 24 Parganas District and the inhabitants thereof are in constant dread of disturbances of public order.
" It is manifest that this ground is extremely vague and gives no particulars to enable the petitioner to make an adequate representation against the order of detention and thus infringes the constitutional safeguard provided under Art 22 ( 5 ) Reference may be made in this connection to the decision of this court in the state of Bombay vs Alma Ram ion of this Court in The State Sridhar Vaidva(1) in which Kania of Bombay vs Atma Ram C.J. observed as follows: "What is meant by vague ? Vague can be considered as the antonym of 'definite '.
If the ground which is supplied is incapable of being understood or defined with sufficient certainty it can be called vague.
It is not possible to state affirmatively more on the question of what is vague.
It must vary according to the circumstances of each case.
It is however improper to contend that a ground is necessarily vague if the only answer of the detained person can be to deny it.
That is a matter of detail which has to be examined in the light of the circumstances of each case.
If on reading the ground furnished it is capable of being intelligently understood and is sufficiently definite to furnish materials to enable the detained person to make a representation against the order of detention it cannot be called vague.
The only argument which could be urged is that the language used in specifying the ground is so general that it does not permit the detained ' person to legitimately meet the charge against him because the only answer which he can make is to say that he did not act as generally suggested.
In certain cases that argument may support the contention that having regard to the general language used in the ground he has not been given the earliest opportunity to make a representation against the order of detention.
It ' cannot be disputed that the represen (1) ; 648 tation mentioned in the second part of article 22(5).
must be one which on being considered may give relief ' to the detained person.
" It was, however, argued by Mr. Debabrata Mukherjee on behalf of the respondent that even though ground No. 2 may be vague, the other grounds supplied to the detenu are not vague and full and adequate particulars have been furnished.
But it is well established that the constitutional requirement that the grounds must not be vague must be satisfied with regard to each of the grounds communicated to the person detained subject to the claim of privilege under cl.
(6) of article 22 of the ConstitUtion 'and therefore even though one ground is vague and the other grounds are not vague, the detention is not in accordance with procedure established by law and is therefore illegal. (See the decision of this Court in Dr. Ram Krishan Bhardwaj vs The State of Delhi(1).
For these reasons we hold that the order of detention made against the petitioner, Pushkar Mukherjee by the District Magistrate, 24 Parganas on September 19, 1967 and 'the consequent order of the Governor of West Bengal dated June 12, 1968 confirming the order of detention were illegal and ultra vires and the petitioner is entitled to be set at liberty forthwith.
In the case of petitioners No. 3, Barun Kumar Hore, No. 7 Karfick Dey, No. 10, Ajit Basak, No. 12, Sk.
Idris, No. 13, Shamsuddin Khan, No. 19, Khokan Mitra and No. 22, Ranjit Kumar Ghosal, the orders of detention suffer from the same legal defect as the order of detention in the case of petitioner No. 1, Pushkar Mukherjee.
For the reasons already stated, we hold that the orders of detention and the orders of confirmation made by the State Government under section 11 (1 ) of the Act in the case of these seven petitioners also are illegal and ultra vires and these petitioners are also entitled to be set at liberty forthwith.
As regards the cases of the remaining petitioners, nos., 8, 9 and 21, Chandan P. Sharma, Sk.
Sahajahan and Bind Parmeshwar Prasad, alias Bindeshwari Prosad respectively, we have persued the orders of detention and the grounds supplied to these petitioners.
It is not shown by learned Counsel on their behalf that there is any illegality in the orders of detention or in the subsequent procedure followed for confirming these orders.
In our opinion, no ground is made out for grant of a writ of habeas corpus so far as these petitioners are concerned.
Their applications for grant of a writ of habeas corpus are accordingly rejected.
We desire to say that we requested ' Mr. Kohli to assist us on behalf of the petitioners and we are indebted to him for his assistance.
Y.P. Petitions dismissed.
| IN-Abs | In petitions for the writ of habeas corpus under article 32 of the Constitution for release from detention under orders passed under section 3(2) of the Prevention of Detention Act, HELD: The reasonableness of the satisfaction of the detaining authority cannot be; questioned in a Court of law; the adequacy of the material on which the said satisfaction purports to rest also cannot be examined in a Court of law.
But if any of the grounds furnished to the detent are found to be irrelevant while considering the application of cls.
(i) to (iii) of section 3(1)(a) of the Act and in that sense are foreign to the Act, the satisfaction of the detaining authority on which the order of detention is based is open to challenge and the detention order liable to be quashed.
[640 H 641 C] Even if any one of the grounds or reasons that led to the satisfaction was irrelevant, the order of detention would be invalid even if there were other relevant grounds, because it could never be certain to what extent the bad reasons operated on the mind of the authority concerned or whether the detention order would have been made at all if only one or two good reasons had been before them.
Similarly, if some of the ground supplied to the detent are so vague that they would virtually deprive the detent of his statutory right of making a representation, that again may make the order of detention invalid.
If, however, the grounds on which the order of detention proceeds are relevant and germane, to the matters which fall to be considered under section 3(1)(a) of the Act, it would not be open to the detenu to challenge the order of detention by arguing that the satisfaction of the detaining authority is not reasonably based on any of the said grounds.
Though the satisfaction of the detaining authority contemplated by section 3(1)(a) is the subjective satisfaction of the said authority, cases may arise: where the detenu may challenge the validity of his detention on the ground of mala fides.
[641 B F, 644 C D] In the present case, (1) with respect to some of the petitioners three of the grounds of detention related to cases of assault on solitary individuals either by knife or by using crackers.
It could not be held that these grounds had any relevance or proximate connection with the maintenance of public order.
Therefore the orders of detention of these petitioners were illegal and ultra virex.
The expression "public order" in section 3 (1) of the Act does not take in every kind of infraction of law.
When two people quarrel and fight 'and assault each other inside a house or in a street, it may be said that there is disorder but not public disorder.
Such cases are dealt with under the powers vested in the executive authorities under the provisions of ordinary criminal law but the culprits cannot be detained on the 636 ground that they were, disturbing public order.
The contravention of any law always affects order but before it can be said to affect public order, it must affect the community or the public at large.
A line of demarcation between serious and aggravated forms of disorder which directly affect the community or injure the public interest must be drawn and the, relatively minor breaches of peace of a purely local significance which primarily injure specific individuals and only in a secondary sense public interest.
A mere disturbance of law and order leading to disorder is thus not necessarily sufficient for action under the Preventive Detention Act but a disturbance which will affect public order comes within the scope of the Act.
A District Magistrate is therefore entitled to take action under section 3( 1 ) of the Act to prevent subversion of public order but not in aid of maintenance of law and order under ordinary circumstances.
The difference= between the concepts of 'public order ' and 'law and order ' is similar to the distinction between 'public ' and 'private ' crimes in the realm of jurisprudence.
In considering the material elements of crime, the historic Jests which each community applies are intrinsic wrongfulness and social expediency which are the two most important factors which have led to the designation of certain conduct as criminal. 'Public ' and 'private ' crimes have been distinguished in the sense that some Offences primarily injure specific persons and only secondarily the public interest, while others directly injure the public interest and affect individuals only remotely.
[641 H 642 D; 643 G, H] The State of Bombay vs Atma Ram: Sridhar Vaidya, ; ; Dr. Ram Manohar Lohia vs State of Bihar, ; ; Shibban Lal Saksena vs The State of Uttar Pradesh, ; , followed.
(2) One of the grounds of detention supplied to some of the other petitioners, stated, that they had become a menace to the society and there had been disturbances and confusion in the lives of peaceful citizens of the locality and that the inhabitants thereof were in constant dread of disturbances of public order.
The ground was extremely vague and gave no particulars to enable the petitioners to make an adequate representation against the order of detention and this infringed the Constitutional safeguard provided under article 22(5).
Therefore, the orders of detention of these petitioners were illegal and ultra vires.
The Constitutional requirement that the ground must not be vague must be satisfied with regard to each of the grounds communicated to the person detained subject to the claim of privilege under el.
(6) article 22 of the Constitution and therefore even though one ground was vague and the other grounds were not vague, the detention was not in accordance with procedure established by law and was therefore illegal.
[648 B C] Dr. Ram Krishan Bhardwaj vs The State of Delhi, ; , followed.
|
minal Appeal No. 207 of 1966.
Appeal from the judgment and order dated August 10, 1966 of the Patna High Court in Criminal Appeal No. 14 of 1964.
K.R. Chaudhuri, for the appellant.
D. Goburdhun, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
The question involved in this appeal is whether the appellant Akhtar Alam was a "public servant" within the meaning of section 5 (2) of the Prevention of Corruption Act (Act 11 of 1947 ) and section 21 of the Indian Penal Code.
On or about December 11, 1962, the appellant was charged in the Court of the Special Judge of Patna for an offence.
under section 5(2), read with section 5(1) of the Prevention of Corruption Act and section 161 of the Indian Penal Code.
The case of the prosecution was that on July 8, 1961, the appellant committed these offences by obtaining a sum of Rs. 180/ for Sri A.D. Singh, Executive Engineer (Electrical) from Ramprit Singh, P.W. 2 by resorting to corrupt and illegal means or by otherwise abusing his position as public servant.
It is said that on the morning of July 6, 1961, the Electrical Executive Engineer, Sri A.D. Singh, accompanied by his Head Clerk, the appellant paid a visit to Janta Oil Mills situated at Fatuhas.
Ramprit Singh, P.W. 2 was the lessee of the Mills.
The Executive Engineer met P.W. 2 in the mill premises and told him that the outer seal of the meter, technically called the body seal, was in a tampered condition.
P.W. 2 maintained that the seal was not tampered but on a threat by the Executive Engineer, P.W. 2 was compelled to give a written statement that 684 the outer seal was tampered with.
Thereafter the Executive Engineer cut the inner seal, technically known as the loop seal, of the meter and fixed two fresh seals on the meter, one in the terminal 'and the other in the body of the meter.
The Executive Engineer and the appellant thereafter left the mill premises.
At about 10 a.m. on the same day the appellant had gone again to the mill premises and told P.W. 6, Basudeo Singh, the Munshi of the proprietor that P.W. 2 the lessee 'and P.W. 9, Bishna Prasad Yadav, the proprietor of the mill should meet him at his office at Patna within two days and get the matter settled, otherwise they would be put to a big loss.
Thereafter, P.W. 2 went to the office of the Anti Corruption Department at Patna and handed over a petition to P.W. 11 Girjanandan Sinha expressing his apprehension that the Executive Engineer or his Head Clerk, the appellant would demand some bribe from him.
It is alleged that on July 8, 1961 a trap was laid and under the direction of the Deputy Superintendent of Police, P.W. 7 a raiding was organised.
Ramprit, P.W. 2 along with other witnesses proceeded to the 'appellant 's office.
After some conversation the appellant demanded money and P.W. 2 Ramprit gave him eighteen ten rupee currency notes, the serial numbers of which had been previously noted down by the Magistrate, P.W. 20.
P.W. 16, Raghuraj was also present at the time.
After the 'appellant had received money, the Deputy Superintendent of Police, P.W. 7 and other members of the raiding party arrived inside.
The appellant thereafter dropped the bundle of currency notes on the floor below the table and made an attempt to get away but he was taken under arrest .and after his person was searched the currency notes were found lying on the floor near the seat.
The Deputy Superintendent of Police, P.W. 7 picked up the currency notes and upon comparison he found them to bear the same serial numbers which had been noted down in the statement, exhibit 2.
The Deputy Superintendent of Police then lodged the First Information Report, exhibit 11 .at the Gardanibagh police station.
On the basis of that report investigation was made by Deputy Superintendent of Police Sri Ramlakhan Prasad, P.W. 19 and subsequently by Inspector Shahidhar Putt, P.W. 17 under the orders of the Sub Divisional Magistrate.
After concluding the investigation the police submitted a chargesheet against the appellant.
The appellant denied the charges and pleaded that the entire case had been fabricated against him by Raghuraj, P.W. 16 The Special Judge, however, accepted the prosecution case as true and convicted the appellant under section 5 (2) read with section 5(1 )(d) of the Prevention of Corruption Act and sentenced him to undergo rigorous imprisonment for five years.
The appellant was ' also convicted and sentenced to undergo rigorous imprisonment for two years under section 161 of the Indian Penal Code.
The appellant took the matter in appeal to the Patna High Court which dismissed the appeal and affirmed the judgment of the Special Judge.
685 This appeal is brought by special leave from the judgment of the Patna High Court dated August 10, 1966 in Criminal Appeal No. 134 of 1964.
On behalf of the appellant Mr. K.R. Chaudhury did not challenge the findings of the High Court on questions of fact but the argument was put forward that upon the findings recorded by the High Court the appellant could not be convicted of the charges because he was not a "public servant" within the language of section 5(2) of the Prevention of Corruption Act or section 21 of the Indian Penal Code.
Section 5(1)(d) of the Prevention of Corruption Act states: "5.
(1)A public servant is said to commit the offence of criminal misconduct in the discharge of duty, (d) if he, by corrupt or illegal means or by otherwise abusing his position as a public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage.
" Section 5(2) is to the following effect: "(2) Any public servant who commits criminal misconduct in the discharge of his duty shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to seven years and shall also be liable to fine: Provided that the Court may, for any special reasons recorded in writing, impose a sentence of imprisonment of less than one year.
" Section 2 provides as follows: "For the purposes of this Act, 'public servant ' means a public servant as defined in section 21 of the Indian Penal Code.
" By section 2 of the Criminal Law (Amendment) Act, 1958 (Act 11 of 1958) el. 12 was inserted in section 21 of the Indian Penal Code and Explanation 4 was added thereto.
Section 2 was to the following effect: "2.
In section 21 of the Indian Penal Code, (a) after clause Eleventh, the following clause shall be inserted, namely : Twelfth.
Every officer in the service or pay of a local authority or of a corporation engaged in any trade or industry which is established by a Central, |Sup.
4Sup C.I./69 11 686 Provincial or State Act or of a Government company as defined in section 617 of the .
(b) after Explanation 3, the following Explanation shall be inserted, namely : Explanation 4.
The expression corporation engaged in any trade or industry ' includes a banking, insurance or financial corporation, a river valley corporation and a corporation for supplying power, light or water to the public. ' The scope of cl.
(12) of section 21 of the Indian Penal Code was enlarged by section 2 of the Anti Corruption Laws (Amendment) Act, 1964 (Act 40 of 1964).
By section 2 of the amendment Act of 1964, cl.
(12) was substituted by 'a new clause in the following terms: "Twelfth.
Every person (a) in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty by the Government; (b) in the service or pay of a local authority a corporation established by or under a Central, Provincial or State Act or a Government Company as defined in section ' 617 of the .
" By the amending Act Explanation 4 of section 21, Indian Penal Code was also omitted.
In the present case, however, we are not concerned with the amendment effected by Act 40 of 1964 because the occurrence took place before the coming into force of this amending Act but after the enactment of the Criminal Law (Amendment) Act, 1958 (Act 11 of 1958) which came into force on February 27, 1958.
It is not disputed in this case that the appellant was not a Government servant but he was the servant of the State Electricity Board constituted under the provisions of the (Act 54 of 1948).
The State Electricity Board so constituted is not a department of the State Government.
It is a body corporate having the power to appoint the Secretary and such other officers and servants as may be required to enable the Board to carry out the functions of the Board.
Section 5( 1 ) of the Act states: "5.
(1 ) The State Government shall, as soon as may be after the issue of the notification under subsection (4) of section 1, constitute by notification in the Official Gazette a State Electricity Board under such name as shall be specified in the notification.
" 687 Section 12 provides for incorporation of the Board and reads as follows: "12.
The Board shall be a body corporate by the name notified under sub section ( 1 ) of section 5, having perpetual succession and a common seal with power to acquire and hold property both movable and immovable, and shall by the said name sue and be sued.
" Section 15 is to the following effect: "The Board may appoint a Secretary and such other officers and servants as may be required to enable the Board to carry out its functions under this Act: Provided that the appointment of the Secretary shall be subject to the ,approval of the State Government.
" Section 81 enacts: "81.
All members, officers and servants of the Board shall be deemed, when acting or purporting to act in pursuance of any of the provisions of this Act, to be public servants within the meaning of section 21 of the Indian Penal Code.
" On a plain reading of section 81, the officers and servants of the Board are deemed to be public servants only when acting or purporting to act in pursuance of any of the provisions of the .
So far as the receiving of a bribe is concerned, it cannot be brought within the scope of acting or purporting to act in pursuance of any of the provisions of the .
Therefore, the appellant while taking the bribe, cannot be deemed to be a public servant within the meaning of section 21, Indian Penal Code in view of the language of section 81 of the .
The question whether sanction of the Government was required under section 197 of the Criminal Procedure Code where any public servant is accused of an offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty came up for consideration by the Judicial Committee in cases under sections 161 and 409 of the Indian Penal Code against public servants.
In Gill vs The King(1), it was held by the Judicial Committee that prosecution for taking a bribe under section 161, Indian Penal Code did not require sanction under section 197 because taking of a bribe was not acting or purporting to act in the discharge of the official duty of a public servant.
Again in Hori Ram Singh vs The Crown(2), the Federal Court held that sanction was required for prosecution of a public servant for an (1) 75 I.A, 41.
(2) 688 offence under section 477 A as his official capacity was involved in the very act complained of as amounting to a crime; but that no sanction was required for a charge under section 409, because the official capacity is material only in connection with the entrustment and does not necessarily enter into the later 'act of misappropriation or conversion which is the act complained of This view of the Federal Court was approved by the Judicial Committee in Gill 's case(1).
The same view has been expressed by this Court in State of Maharashtra vs Jagatsing Charansingh(2) in which it was held that only when an officer or servant of a corporation was acting or purporting to act in pursuance of any of the provisions of the Transport Corporation Act, 1950 (Act 64 of 1950) or of any other law that he could be said to be a public servant within section 43 of that Act.
Therefore a person taking a bribe could not be said to be a public servant within the meaning of section 21, Indian Penal Code in view of the language of s.43 of the Transport Corporation Act.
Applying a similar line of reasoning to the present case, we are of opinion that the appellant cannot be deemed to be a public servant within the meaning of section 81 of the because he was not acting or purporting to act in pursuance of any of the provisions of that Act.
We pass on to consider the alternative question raised on behalf of the respondent, namely, whether the appellant was a public servant within the meaning of the twelfth clause in section 21, Indian Penal Code as it stood after the Criminal Law (Amendment) Act, 1958 (Act 11 of 1958).
Under this clause the words "public servant" include 'every officer in the service or pay of a local authority or of a corporation engaged in any trade or industry which is established by a Central, Provincial or State Act or of a Government company as defined in section 617 of the '.
In view of Explanation 4 the expression 'corporation engaged in any trade or industry ' includes a banking, insurance 'or financial corporation, a river valley corporation and a corporation for supplying power, light Or water to the public.
It is not disputed in the present case that the appellant was in the service of the State Electricity Board which falls within the language of Explanation 4.
But it was contended for the appellant that its was performing only routine clerical duties and cannot be treated as an officer within the meaning of cl.
(12) to section 21, Indian Penal Code.
The question to be considered therefore is whether as Head Clerk employed under the State Electricity Board and attached to the office of the Executive Engineer, the appellant could be said to be an officer within the meaning of el.
(12) of section 21, Indian Penal Code.
In Reg.
vs Ramajirao Jivbaji(3) it was held by West, J. that the word 'officer ' meant some person employed to exercise to some extent and in certain circumstances a delegated function (1)751.A. 41 (2) [1964]4S.C.R. 299.
(3) 12 Born.
H.C.R. 1.
689 of Government.
He was either himself armed with some authority or representative character or his duties were immediately auxiliary to those of some one who was so armed.
In the course of his judgment, West J. observed as follows: "Seeking the help of English law, we find, in Bacon 's Abridgement at Vol.
6, page 2, the article headed `of the nature of an officer, and the several kinds of officers, ' commencing thus: 'It is said that the word 'officium ' principally implies 'a duty, and, in the next place, the charge of such duty; and that it is a rule where one man bath to do with another 's affairs against his will, and without his leave, that this is an office, 'and he who is in it is an officer. ' And the next paragraph goes on to say: 'There is a difference between 'an office and an employment, every office being an employment; but there are employments which do not come under the denomination of offices; such as ,an agreement to make hay, herd a flock, & c.; which differ widely from that of steward of a manor, ' &c.
The first of these paragraphs implies that an officer is one to whom is delegated.
by the supreme authority, some portion of its regulating and coercitive powers, or who is appointed to repre sent the State in its relations to individual subjects.
This is the central idea; and applying it to the clause which we have to construe, we think that the word 'officer ' there means some person employed to exercise, to some extent, and in certain circumstances, a delegated function of Government.
He is either himself ,armed with some authority or representative character, or his duties are immediately auxiliary to those of some one who is so The decision in Reg.
vs Ramajirao Jivbaji(1) was considered by the Calcutta High Court in Nazamuddin vs Queen Empress(a).
The petitioner in that case was a peon attached to the office of the Superintendent of the Salt Department in the district of Mozafferpur and he had been convicted under section 161 Indian Penal Code.
The contention urged on behalf of the petitioner was that he did not fall within the terms of the last portion of cl.
(9) of section 21, Indian Penal Code.
The contention was rejected and the learned Judges observed at page 346 of the Report 'as follows: "The Learned Judges in that case had to consider whether a lessee from Government was on the conditions of his lease a public servant, and, in doing so, they considered generally the meaning of the term 'officer '.
(1) 12 Born.
H.C.R. 1 (2) I.L.R.:28.Cal.
690 It was there held that an officer means 'some person employed to exercise, to some extent and in certain circumstances, a delegated function of Government.
He is either armed with some authority or representative character, or his duties are immediately auxiliary to those of some person who is so armed. ' The meaning which we are asked to put on those words seems to us to be too narrow as applied to the present case.
The peon who has been convicted as a public servant is in service and pay of the Government and he is attached to the office of the Superintendent of the Salt Department.
The exact nature of his duties is not stated, because this objection was not taken at the trial, but we must take it that, from the nature of his appointment, it was his duty to carry out the orders of his official superior, who undoubtedly is a public servant, and in that capacity to assist the Superintendent in the performance of the public duties of his office.
In that sense he would be an officer of Government, although he might not possibly exercise 'any delegated function of the Government '.
Still his duties would be 'immediately auxiliary to those of the Superintendent who is so armed. ' We think that an 'officer in the service or pay of Government ' within the terms of section 21, Penal Code is one who is appointed to some office for the performance of some public duty.
In this sense the peon would come within section 2 1, el. 9".
In Emperor vs Karam Chand Gobind Ram(1), it was held by the Lahore High Court that a Head Clerk in the Supply Depot at Sialkot whose duty was to put up bills to his officer, vas a public officer within the meaning of section 21, cl.
(9) of the Indian Penal Code.
It was pointed out that even if 'a Head Clerk cannot be said to be employed to exercise to some extent, and in certain circumstances, a delegated function of Government, his duties were "immediately 'auxiliary to the Head of the Office or other officer empowered with official responsibility of accepting and passing his work".
In G. A. Monterio vs The State of Ajmer(2), it was held by this Court that a person, who was a Class Iii servant and was employed as a metal examiner known as Chaser in the Railway Carriage Workshops and was working under the Works Manager who was an officer of the Government and the duties which he performed were immediately auxiliary to those of the Works Manager who was an officer in the service or pay of the Government and was therefore a public servant within the meaning of section 21 (9), Indian Penal Code and section 2, Prevention of Corruption Act.
(1) A.I.R. 1943 Lab.
(2) A.I.R. 1957 section 13.
691 The true test, therefore, in order to determine whether the appellant is ,an officer of the Corporation within the meaning of 21, cl.
(12), Indian Penal Code, is: (1) whether he is in the service or pay of the Corporation, and (2) whether he is himself other armed with some authority or representative character by the Corporation; or whether his duties are immediately auxiliary to those of some one who is .armed with such authority or representative character; In the present case, the High Court has found that the appellant was a person performing duties immediately auxiliary to those of the Executive Engineer who was the lead of the office.
The very designation "Head Clerk" denotes that there are other Clerks attached to the office who occupy subordinate positions in relation to the Head Clerk and the duties of he Head Clerk from the nature of things are bound to be immediately auxiliary to the Head of the office.
Upon the facts found in the present case we are of the opinion hat the appellant was an officer in the service or pay of the Corporation as defined in section 21, cl.
(12), Indian Penal Code and therefore a 'public servant ' within the meaning of that section 'and also of section 2 of the prevention of Corruption Act.
For the reasons expressed we affirm the judgment of the High Court dated August 10, 1966 in Criminal Appeal No. 134 of 1964 and dismiss this appeal.
| IN-Abs | The appellant was the Head Clerk to the Executive Electrical Enginear of the State Electricity Board He was convicted under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act on the allegation that on July 8, 1961 he had committed an offence in obtaining a bribe for the Executive Engineer by resorting to corrupt and illegal means or by otherwise abusing his position 'as a public servant.
An appeal against the conviction was dismissed by the High Court.
In appeal to this Court by special leave, the High Court 's findings on questions of fact were not challenged but it was contended that upon these findings the appellant could not be convicted of the charges because he was not a "public servant" within the language of section 5(2) of the Prevention of Corruption Act or section 21 at the Indian Penal Code.
It was further contended that the appellant was performing only routine clerical duties and could not be treated as an 'officer ' within the meaning of section 21(12)I.P '.C.
HELD: On the facts found the appellant was an officer in the service or pay of a Corporation as defined in section 21(12), I.P.C. and therefore a public servant ' within the meaning of that section and also of section 2 of the Prevention of Corruption Act.
[691 D] The true test in order to determine whether the appellant was 'an officer ' of the Corporation within the meaning of section 21(12), Indian Penal Code, would be: (1) whether he was in the service or pay of the Corporation, and (2) whether he was himself either armed with some authority or representative character by the Corporation; or whether his duties were immediately auxiliary to those of some one who was armed with such authority or representative character.
In the present case, the High Court found that the appellant was a person performing duties immediately auxiliary to those of the Executive Engineer who was the Head of the Office.
The very designation "Head Clerk" denotes that there are other clerks attached to the office who occupy subordinate positions in relation to the Head Clerk and the duties of the Head Clerk from the nature of things are bound to be immediately auxiliary to the Head of the Office.
[691 A] Reg.
vs Ramaiirao Jivbaji, ; Nazamuddin vs Queen Empress, I.L.R. ; Emperor vs Karam Chand Gobind Ram,A.I.R. ; and G. 4.
Monterio vs The State of Ajmer, A.I.R.1957 S.C. 13; referred to.
683 Held Also: The appellant cannot be deemed to be a public servant within the meaning of section 81 of the because he was not acting or purporting to act in pursuance of any of the provisions of that Act.
On a plain reading of section 81 of the the officers and servants of the State Electricity Board are deemed to be public servants only when acting or purporting to act in pursuance of any of the provisions of that Act.
So far as the receiving of a bribe is concerned, it cannot be brought within the scope of acting or purporting to act in pursuance of any of the provisions of the Act.
Therefore the appellant while taking the bribe, cannot be deemed to be a public servant within the meaning of section 21, I.P.C. in view of the language of section 81 of the .
[687 E] Gill vs The King.
75 I. A. 41; Hori Ram Singh vs The Crown, ; and State of Maharashtra vs Jagatsing Charansingh, ; ; referred to.
|
minal Appeal No. 119 of 1966.
Appeal by special leave from the judgment and order dated ' March 15, 1966 of the Calcutta High Court in Matter No. 375 of 1965.
B. Sen, P.K. Chatterjee and P.K. Chakravarti, for the appellant.
section V. Gupte and G.S. Chatterjee, for the Calcutta High Court.
The Judgment of the Court was delivered by Shah, J.
This appeal is filed with special leave against the order of the High Court of Calcutta declaring that a speech broadcast on the night of November 25, 1965, on the Calcutta Station of the All India Radio by Mr. P.C. Sen, then Chief Minister of West Bengal, was calculated to obstruct the course of justice and 651 on that account amounted to contempt of court and the conduct of Mr. Sen merited disapproval.
On August 23, 1965, the State of West Bengal issued, in exercise of power under sub rr.
(2) and (3) of r. 125 of the: Defence of india Rules, the West Bengal Channa Sweets Control Order, 1965, placing restrictions upon the right of persons carrying on business in milk products and especially dealers in sweetmeat made out of Channa.
In a petition moved by Nani Gopal Paul the High Court of Calcutta declared by order dated Novera bet 16, 1965, that the West Bengal Channa Sweets Control Order, 1965, is an "unreasonable piece of delegated legislation made in arbitrary exercise of power under r. 125 without any justification in law and regardless of the purpose for which such order may be made", and issued an injunction against the State of West Bengal from enforcing that order.
The State of West Bengal thereafter issued another order with immediate effect on November 18, 1965, called the "West Bengal ' Milk Product Control Order, 1965".
On November 22, 1965, Messrs Ramlal Ghosh and Grandsons challenged by Petition No. 369 of 1965 the validity of the Order issued on November 18, 1965, and prayed for a writ declaring the Order "null and void" and for an injunction restraining the State of West Bengal and the Secretary, Department of Animal Husbandry and Veterinary Services from giving effect to the said Order.
Rule was issued on the Petition by Banerjee, J., and was duly served on the State of West Bengal, on November 23, 1965.
On the night of November 25, 1965, the Chief Minister of West Bengal broadcast a speech on the All India Radio, Calcutta Station, seeking to justify the propriety of the Control Order.
In the course of that broadcast speech the Chief Minister made several comments on controversial matters which were pending for adjudication before the court At the hearing of the rule on November 29, 1965, counsel 1or.
Ramlal Ghosh and Grandsons brought to the notice of the Court a newspaper report of the speech broadcast by the Chief Minister Rule was issued by Banerjee, J., requiring the Chief Minister to show cause why he should not be committed for contempt of court on the grounds ( 1 ) that the speech was likely to prejudice the Court and the public against the cause of the petitioners, and ' may compel or induce them to discontinue the action, (2) that it was likely to have "the pernicious con,sequence" of prejudicing the minds of the public against the petitioners, (3) and that it was likely to have the effect of misrepresenting a piece of illegal legislation before the Court had an opportunity to decide the matter, and was on that account calculated to deter other persons havingsimilar causes from approaching the Court for relief.
652 Instead of making a frank statement before the Court, the Chief Minister was apparently advised to adopt grossly technical pleas Counsel informed the Court that the Chief Minister did "not like to use any affidavit showing cause".
Evidence was then led before the Court to prove that the offending speech was in fact broadcast by the Chief Minister on the All India Radio, Calcutta Station.
After evidence was recorded in the Court about the speech broadcast by the Chief Minister he somewhat belatedly filed an affidavit on March 4, 1966, admitting that he had delivered the speech on the All India Radio on the night of November 25, 1965, the contents of which were proved by the evidence of the Programme Director.
It was also admitted that the Chief Minister had knowledge of the filing of the petition when he broadcast the speech and of the rule served upon the State Government.
By the affidavit it was attempted to justify the speech, on the plea that the Chief Minister came to learn that certain persons had started publicly propagating the view that far from achieving the objects, the Order will not only reduce the supply of fluid milk in the area, but also displace numerous persons from their normal avocation resulting in unemployment for many that the object of the propaganda was to criticise and ridicule the policy of the State Government in promulgating the Order, that the propaganda had misled certain sections of the people about the object, purpose and nature of the Order and the consequences thereof, particularly with regard to the position of supply of milk and the question of continued employment of the persons working in the sweetmeat shops in the area, that taking advantage of the situation, attempts were made to commence a political agitation against the State Government for having promulgated the Order, and in the circumstances and particularly with a view to preventing widespread agitation in connection with the Order, it was thought that it was the duty of the Chief Minister of the State to explain to the people the policy underlying and the reasons for promulgating the Order, that in making the speech his sole and only intention and purpose was to "remove the confusion and allay the fears, if any, from the minds of the people with regard to the purpose nature, object and effect of the promulgation of the Order", that he had no intention, whatsoever of either showing any disrespect to the Court or interfering in any manner with the due course of the administration of justice, nor did he anticipate that his speech could have any such effect, and that by broadcasting his speech he had committed no contempt of Court nor had he any intention of doing so.
Banerjee, J., after a detailed examination of the relevant law and the speech broadcast, held that the speech broadcast amounted to contempt of Court "in the sense that it was likely to have 653 several baneful effects upon the petitioners" in Petition No. 369 of 1965, "upon their cause and upon others having a cause similar to that of the petitioners".
The learned Judge accordingly recorded that "the Chief Minister cannot wholly escape the charge of having committed contempt of Court", since "the speech was contumacious in the sense that it was likely to have baneful effects upon the petitioners" in Petition No. 369 of 1965 "their cause, and upon persons having a similar cause and as such was likely to interfere with the administration of justice by the Court.
" The learned Judge, however, observed that "the condemner Mr. Sen should be let off with an expression of disapproval of his conduct and in the hope that the sort of indiscretion will not be repeated".
In This appeal counsel for the appellant has raised four contentions in support of his argument that the High Court erred in holding that the Chief Minister by broadcasting the speech did commit contempt of Court: (1) that there is no finding by the High Court that the contempt was intentionally committed by the Chief Minister; (2) that by broadcasting the speech no real prejudice was caused either in the mind of the Judge or to the cause of the petitioners in Petition No. 369 of 1965; (3) that the speech contained no direct reference to any pending proceeding; and (4) that the Chief Minister was under a duty to make the Speech to instruct the public about the true state of affairs and to remove the misgivings arising in the public mind from agitation carried on by political parties.
The law relating to contempt of Court is well settled.
Any act done or writing published which is calculated to bring a Court or a Judge into contempt, or to lower his authority, or to interfere with the due course of justice or the lawful process of the Court, is a contempt of Court: R.v.
Gray(1).
Contempt by speech or writing may be by scandalising the Court itself, or by abusing parties to actions, or by prejudicing mankind in favour of or against a party before the cause is heard.
It is incumbent upon Courts of justice to preserve their proceedings from being misrepresented, for prejudicing the minds of the public against persons concerned as parties in causes before the cause is finally heard has pernicious consequences.
Speeches or writings misrepresenting the proceedings of the Court or prejudicing the public for or against a party or involving reflections on parties to a pro (1)[1900] at p.40.
Sup CI/69 9 654 ceeding amount to contempt.
To make a speech tending to influence the result of a pending trial, whether civil or criminal is a grave contempt.
Comments on pending proceedings, if emanating from the parties or their lawyers, are generally a more serious contempt than those coming from independent sources.
The question in all cases of comment on pending proceedings is not whether the publication does interfere, but whether it tends to interfere, with the due course of justice.
The question is not so much of the intention of the contemner as whether it is calculated to interfere with the administration of justice.
As observed by the Judicial Committee in Debi Prasad Sharma and Ors.
vs The King Emperor (1): " . the test applied by the .
Board which heard the reference was whether the words complained of were in the circumstances calculated to obstruct or interfere with the course of justice and the due administration of the law.
" If, therefore, the speech which was broadcast by the Chief Minister was calculated to interfere with the course of justice, it was liable to be declared a contempt of the Court even asuming that he had not intended thereby to interfere with the due course of justice.
There is nothing in Saibal Kumar Gupta and Ors.
vs B.K. Sen and Ant.
(2), on which counsel for the appellant relied, which supports his contention that intention of the contemner is the decisive test.
The observations of Imam, J., speaking for the majority of the Court that the appellants should be acquitted, because they "had at no time intended to interfere with the course of justice and their conduct did not tend to interfere with the course of justice", does not imply that conduct which tends to or is calculated to interfere with the administration of justice is not liable to be punished as contempt because the contemner had no intention to interfere with the course of justice.
Nor does the judgment of the Judicial Committee in Arthur Reginald Perera vs The King(a) support the contention that in determining whether conduct which is otherwise calculated to interfere with the due administration of justice will not be contempt of Court because on the part of the contemner there was no intention to interfere with the administration of justice.
In that case, a member of the House of Representatives in Ceylon, on receiving a complaint from some of the prisoners about the practice of producing followed by the Jail Authorities in the Court when an appeal filed by the prisoners was being heard, made an entry in the prison visitors ' book that "The present practice of appeals of remand prisoners being heard in their absence is not healthy.
When (1) L.R. 70I. A. 216atp.
(2) [1961] 3S.C.R. 460.
(3) 655 represented by counsel or otherwise the prisoner should be present at proceedings".
Information conveyed to Perera was inaccurate It was held by the Judicial Committee that Perera acted in good faith and in discharge of what be believed to be his public duty as a member of the legislature, and that he had not committed any contempt of Court because the words made no direct reference to the Court or to any of its Judges, or to the course of justice or to the process of the Courts.
His criticism was honest criticism on a matter of public importance and there was nothing in his conduct which came within the definition of contempt of Court.
The Chief Minister in the speech broadcast 'by him in the first instance announced what in his view is the legal effect of the Order promulgated, and then proceeded to state the reasons which persuaded the Government of West Bengal to issue the Order banning the preparation of sweetmeats with milk products Channa and Khir and expressed the hope that the residents of Calcutta will be in a position to secure larger quantities of milk.
He stated that if producers of Milk cooperate with the Government, not only will they be benefited, but they will do real good to a large number of people of the State.
He estimated the number of establishments which were in his view likely to be affected, and stated that many of the employees in their establishments who it was expected were likely to be thrown out of employment, may be employed in depots for collection of milk.
He wound up by stating "This new Order will (not) only be beneficial to the buyers and sellers of milk alone it will (also) be of help in solving the milk problem in the whole of West Bengal in the near future".
In the course of his speech he stated after referring to the difficulties encountered in procuring milk and the acute scarcity of milk prevailing in West Bengal: "According to the science relating to nutrition a person requires at least 8 Ounces of milk per day Hence to prepare any food with Milk in our West Bengal is, indeed, tantamount almost to a crime.
" He also stated: "The quantity of the milk collected under the Greater Calcutta Milk Supply Scheme has increased to 65 thousand Litres from 23 thousand Litres per day on the average.
A large number of people were getting supply of milk according to their requirements from the local Milkman (Goalas).
The quantity of milk collected from different sources in Calcutta increased to 2 lakhs and 61 thousand Litres from 2 lakhs and 12 thousand Litres.
This volume of milk supply (however) consti 656 tutes 41% of the total demand.
This supply could have been augmented much more if powder milk could be obtained in sufficient quantity from foreign countries.
But in view of foreign exchange difficulties, the Government of India curtailed the import of powder milk and as a result thereof great inconvenience was felt.
In the Greater Calcutta areas, the total demand of Milk at present is at least 6 lakhs and 30 thousand Litres" and that "The Government have considered the question of few employees of sweetmeat establishments being thrown out of employment as a result of promulgation of this new Order.
There are about seven thousand sweetmeat shops in the City of Calcutta and the number of persons employed in them is nearly 3,500.
The number of sweetmeat shops in other towns is about 1,000 and the number of persons employed in them is approximately 4,000.
Hence the total number of employees in all these sweetmeat establishments comes to about 39,000.
We should bear in mind that almost all these sweetmeat shops prepare salted (nonta) variety of edibles, such as, nimki, singara, radhaballavi, luchi dalpuri, Kachuri, jhuribhaja, alurdom, curry, dal etc.
Besides, curd is also sold by those shops which also sell kinds of sweets that do not at all require Channa or Khir (for their preparation)," that "Those workers who had until recently been bringing milk and Channa to Calcutta will be able to supply from now on milk to the Milk Collection Centres of the Government", and that "The quantity of milk collected by the Government is indeed daily on the increase.
And yesterday nearly 92 thousand 800 (sic) litres of milk were collected.
New Milk Depots will have to be opened soon in Calcutta and outside.
25 depots will shortly be opened in Calcutta and its neighbouring areas.
If the quantity of milk collected increases according to expectations, at least 1,000 additional depots will have to be opened in different places.
If in spite of an increase in the demand for other sweets a number of workers become unemployed, the Government is prepared to employ them in those depots.
This new Order will only be beneficial to the buyers and sellers of milk alone.
it will (also) be of help in solving the milk problem of the whole of West Bengal in the near future".
In their Petition No. 369 of 1965 M/s. Ramlal Ghosh and Grandsons had pleaded that the State of West Bengal and the Secretary, Department of Animal Husbandry and Veterinary 657 Services had acted mala fide and "in complete and utter disregard of the judgment and order of the High Court of Calcutta and without reading or considering the same had vindictively published" the impugned order "in anger and hot haste being recklessly careless as to the consequences thereof and without giving their mind to the comprehension and their wills to the discharge their duty towards the public" (Para 18).
They also had averted that they and other traders who carried on business only in milk products like Channa, Kheer including Khoa Kheer were facing complete ruin by reason of the total prohibition of their trade, commerce and intercourse (Para 19); that the impugned Order had not only prohibited the trade, commerce and intercourse of the petitioners but also its movement, and by the impugned Order the petitioners were not only prohibited from manufacturing but were also ordered not to supply or to trains ' port the same and to deliver the same to various customers within and outside Calcutta (Para 20); that "there was not nor there was any material before the Governor of West Bengal to form the alleged opinion and/or that the purported opinion was not reasonably formed" (Para 24); and that according to newspaper reports there were about 8,000 shops in Calcutta and 4,000 more in the neighbouring areas and those employed about 50,000 men and presuming that each employee maintained a family of 4, at least 200,000 people would be affected by the impugned Order (Para. 32).
In his speech the Chief Minister characterised the preparation of any food with milk in West Bengal as tantamount to a crime.
He also announced his version about the validity of the Order, the reasons why it was promulgated, and asserted that it was an order made bona fide and in the interests of the public, and that those who resisted it were acting contrary to the public interest.
But these questions had to be determined by the Court.
Banerjee, 1, in the judgment under appeal was of the view that the speech was likely to influence public opinion against the petitioners since the Chief Minister occupies a highly responsible position of power and authority under the Constitution, and being a person most likely to know the needs of the State there would be many who may believe in factual statements made by him.
The learned Judge observed that he was not prejudiced by the speech against the petitioners before him, since he was only "concerned with the constitutional and legal validity of the Control Order, and incidentally only with its socio economic justification", but it could ' not be said that the speech did not or could not or was not likely to prejudice the public against the cause of the petitioners.
He also observed that for the Chief Minister to have made a public appeal in support of the Order, with the knowledge of the issue of 658 the Rule Nisi calling upon the State Government and the Secretary, Department of Animal Husbandry and Veterinary Services to show cause why the Control Order should not be declared void was "improper and ill timed" and also "contumacious", for the Chief Minister had published in advance the defence to be taken against the Rule.
The criticism made by the learned Judge is not unwarranted.
The statements in a broadcast speech by an important dignitary of the State that persons who prepare sweets out of milk in the course of their business are on the version set up by him criminals, and the suggestion that the Order was issued in the interests of the public, whereas it was the contention of the petitioners that it was done "recklessly, arbitrarily and vindictively and without caring for the consequences, and without considering their duty to the public", are prima facie calculated to obstruct the administration of justice, since they are likely to create an atmosphere of prejudice against the petitioners and also to deter other persons having similar claims from approaching the Court.
There is in the speech no direct reference to the proceedings pending before the Court, but it is now common ground that the Chief Minister was aware of the filing of the petition and the issue of the rule which was served upon the Government.
Whether he was aware of all the details of the allegations made in the petition is not relevant.
If he knew that a petition was filed and the rule was served upon the Government of which he was the Chief Minister, before making any statement on a matter which was controversial it was his duty to acquaint himself with the allegations made and also to ascertain what the points in dispute were before going to on to a public broadcasting system to announce the case of the Government.
Whatever may be the motive of the Chief Minister and whatever he may have thought as a Chief Minister to be necessary in order to acquaint the public, a speech which presented the case of the Government to the public, before it was tried by the Court, and suggested that those who prepare sweetmeats out of milk were criminals and were acting in a manner contrary to the interest of the general public, was calculated to interefere with the due administration of justice.
Council for the Chief Minister contended, relying upon certain judgments of the Courts in the United Kingdom that in cases where the trial of a case is held without the aid of a jury, comments on matters in dispute in a pending proceeding or criticism of the parties thereto, will not amount to interference with the administration of justice.
Courts seek to punish acts or conduct calculated to interfere with the administration of justice; and we are unable to hold that when the trial of a case is held by a Judge 659 without the aid of a jury no contempt by interfering with the administration of justice may be committed.
The foundation of the jurisdiction lies not merely in the effect which comments on a pending proceeding may have upon the minds of the jury, but the pernicious consequences which result from the conduct of the contemner, who by vilification, or abuse of a party seeks to hold up a party to public ridicule, obloquy, censure or contempt or by comment on his case seeks to prejudge the issue pending.
We are unable to agree that where a trial of a case is held in the Court of First Instance, without a jury, or before a Court of Appeal persons so inclined are free to make comments on pending proceedings or to abuse parties thereto without any protection from the Court.
It is difficult to accept the contention that comments which are likely to interfere with the due administration of justice by holding up a party to a proceeding to ridicule or to create an atmosphere against him in the public mind against his cause when the trial is held without the aid of a jury do not amount to contempt.
If a party to the proceeding is likely to be deterred from prosecuting ,his proceeding or people who have similar cause are likely to be dissuaded from initiating proceedings, contempt of court would be committed.
It matters little whether the trial is with the aid of the jury or without the aid of jury.
In The William Thomas Shipping Co., In re.
H.W. Dhillon & Sons Ltd. vs The Company, In re.
Sir Robert Thomas and others(1) it was observed that the publication of injurious misrepresentations concerning parties to proceedings in relation to those proceedings may amount to contempt of Court, because it may cause those parties to discontinue or to compromise, and because it may deter persons with goods causes of action from coming to the Court, and was thus likely to affect the course of Justice.
But Maugham, J. observed: "There is an atmosphere in which a common law judge approaches the question of contempt somewhat different from that in which a judge who sits in this (Chancery) Division has to approach it.
The common law judge is mainly thinking of the effect of the alleged contempt on the mind of the jury and also, I think, he has to consider the effect or the possible effect of the alleged contempt in preventing witnesses from coming forward to give evidence.
In these days, at any rate, a Judge who sits in this Division is not in least likely to be prejudiced by statements published in the press as to the result of cases which are coming before him.
He has to determine the case on the (1) 660 evidence, of course, and with regard to the principles of law as he understands them; and the view of a newspaper, however intelligible conducted it may be, cannot possibly affect his mind.
Accordingly, a Judge in the Chancery Division starts on the footing that only in the rarest possible case is it likely that the publication by a newspaper of such a statement as I have here to consider will affect the course of justice in the sense of influencing, altering or modifying the judgment or judgments which the Court will ultimately have to deliver;" But our Courts, are Courts, which administer both law and equity.
Assuming that a Judge holding a trial is not likely to, be influenced by comments in newspapers or by other media mass communication may be ruled out though it would difficult to be dogmatic on that matter also the Court is entitled ' and is indeed bound to consider, especially in our country where personal conduct is largely influenced by opinion of the members of the caste, community, occupation or profession to which he belongs, whether comments holding up a party to public ridicule, or which prejudices society against him may not dissuade him from prosecuting his proceeding or compel him to compromise it on terms unfavorable to himself.
That is a real danger which must be guarded against: the Court is not in initiating proceedings for contempt for abusing a party to a litigation merely concerned with the impression on the Judge 's mind even on the minds of witnesses for a litigant, it is also concerned with the probable effect on the conduct of the litigant and persons having similar claims.
In Regina vs Duffey and others Ex Parte Nash(1) the Court of Appeal in England had to consider the question whether comments made upon a person after his conviction and before appeal was heard may be regarded as contempt of Court.
Lord Parker, C.J., observed: "Even if a Judge who 'eventually sat on the appeal had seen the article in question and had remembered its contents, it is inconceivable that he would be influenced consciously or unconsciously by it.
A Judge is in a very different position to a juryman.
Though in no sense superhuman, he has by his training no difficulty in putting out of his mind matters which are not evidence in the case.
This, indeed, happens daily to Judges on Assize.
This is all the more so in the case of a member of the Court of Criminal (1) 662 Appeal, who, in regard to an appeal against conviction is dealing almost entirely with points of law,.
and who, in the case of an appeal against sentence is considering whether or not the sentence is correct in principle.
" This may be true when a Court of Appeal determines questions of law only or the appeal is confined to questions of sentence, but where a proceeding which is tried on evidence in the Court ' of First Instance, or in the Court of Appeal on questions of fact as well as of law, it would be an over statement to assert that a Judge may not be influenced even "unconsciously" by what he has read in newspapers.
No distinction is, in our judgment, warranted that comment on a pending case or abuse of a party may amount to contempt when the case is triable with the aid of a jury, and not when it is triable by a Judge or Judges.
Ordinarily a Court will not initiate proceedings for commitment for contempt where there is a mere technical contempt.
In Legal Remembrancer vs Matilal Ghose and Others(1) it was observed by Jenkins, C.J., that proceedings for contempt shotfid be initiated with utmost reserve and no court in the due discharge of its duty can afford to disregard them.
It was also observed that jurisdiction to punish for contempt was arbitrary, unlimited and uncontrolled and should be exercised with the greatest caution: that this power merits this description will be realised when it is understood that there is no limit to the imprisonment that may be inflicted or the fine that may be imposed save the Court 's unfettered discretion, and that the subject is protected by no right of general appeal.
We may at once observe that since the enactment of the Contempt of Courts Act 12 of 1926 and Act 32 of 1952 the power of the Court in imposing punishment for contempt of court is not an uncontrolled or unlimited power.
That, however does not justify the court in commencing proceedings without due caution and reserve.
But Banerjee, 1., who must be conversant with local conditions was of the view that action of the Chief Minister was likely to interfere with the course of justice for it was likely to have "baneful effects" upon the petitioners their cause and upon persons having a similar cause, and sitting in appeal we do not think that we can hold that he took an erroneous view of his power or of the tendency of the speech, which he has characterised as having "baneful effects".
Banerjee, J, has ultimately treated the contempt as technical for he has not imposed any substantive sentence, not even a warning.
He has merely expressed his displeasure.
The speech was ex facie calculated (1) I.L.R. 662 to interfere with the administration of justice.
In the circumstances the order of Banerjee, J., observing that the Chief Minister had acted improperly and expressing disapproval of the action does not call for any interference by this Court.
The appeal is dismissed.
| IN-Abs | The West Bengal Government issued an Order under Rule 125 of the Defence of India Rules, placing certain restrictions upon the right of persons carrying on business in milk products.
The validity of this Order was challenged by a writ petition.
After Rule had been issued on the petition and served on the State Government, the State Chief Minister broadcast a speech sreking to justify the propriety of the Order.
The High Court issued a Rule requiring the Chief Minister to show cause why he should not be committed for contempt of Court.
It was contended on behalf of the Chief Minister that he had come to learn of certain persons propagating the view that the Order would not only have the effect of reducing the supply of milk, but also of displacing numerous persons from work and causing unemployment; that attempts were made to commence a political agitation against the Order; and that with a view to agitation it was considered that the Chief Minister was under a duty to explain to the people the policy underlying, and the reasons for promulgating the Order.
The High Court held that the speech amounted to contempt of Court; that it was contumacious in that it was likely to have a baneful effect upon the petitioners who had challenged the validity of the Order, and their cause and upon other persons having a similar cause; and that it was likely to interfere with the administration of justice.
The High Court therefore expressed disapproval of the Chief Minister 's conduct.
In appeal to this Court it was contended, inter alia, on behalf of the Chief Minister that the High Court erred in holding that the Chic/ Minister committed contempt of court because there was no finding that the contempt was intentionally committed; no real prejudice was caused either in the mind of the Judge or to the cause of the petitioners; that the speech contained no direct reference to any pending proceedings and that the Chief Miraster was under a duty to make the speech to instruct the public about the true state of affairs.
HELD :The speech was ex facie calculated to interfere with the administration of justice.
The High Court 's orders observing that the Chief Minister had acted improperly and expressing disapproval of his action was correct and did not call for any interference, by this Court.
Gray, at p. 40 and Legal Remembrancer .v.
Matilal Ghose and Others, I.L.R. ; referred to.
The, question in all cases of comment on pending proceedings is not whether ' the publication does interfere, but whether it tends to interfere, with the due course of justice.
The question is not so much of the in tention.
of the contemner as whether it is calculated to interfere with the 650 administration of justice.
If, therefore, the speech broadcast by the Chief Minister was calculated to interfere with the course of justice, it was liable to be declared a contempt of the Court even assuming that he had not intended thereby to interfere with the due course of justice.
[654 B] Debi Prasad Sharma and Ors.
vs The King Emperor, L.R. 70 I.A. 216 at p. 224; Saibal Kumar Gupta and Ors.
B.K. Sen and Anr., ; ; and Arthur Reginald Perera vs The King, ; referred to.
The Chief Minister in his speech characterised the preparation of food with milk in West Bengal as tantamount to a crime.
He also announced his version about the validity of the order, the reasons why it was promulgated, and asserted that it was an order made bona fide and in the interest of the public so that those who resisted it were acting contrary to the public interest.
These were the very questions that had to be determined by the Court.
The statements in the Chief Minister 's broadcast were therefore prims facie calculated to obstruct the administration of justice, since they were likely to create an atmosphere of prejudice against the petitioners and also to deter other persons having similar claims from approaching the Court.
It could not be held that when the trial of a case is held by a Judge without the aid of a jury, no contempt by interfering with the administration of justice may be committed.
The foundation of the jurisdiction lies not merely in the effect which comments on a pending proceeding may have upon the mind of the jury, but the consequences which result from the conduct of the contemner, who by vilification or abuse of a party seeks to hold him up to public ridicule, obloquy, censure or contempt or by comment on his case seeks to prejudice the issue pending before the Court.
[658 H; 659 A, B] The William Thomas Shipping Co., In re.
H.W. Dhillan & Sons Ltd. vs The Company, In re, Sir Robert Thomas and Others, and Regina vs Duffey and others Ex Parte Nash, ; referred to.
|
: Criminal Appeal No. 18 of 1953.
Appeal under article 134(1)(c) of the Constitution of India from the Judgment and Order dated the 18th February, 1953, of the High Court of Judicature at Bombay in Criminal Appeal No. 592 of 1952 arising out of the Judgment and Order dated the 21st May, 1952, of the Court of the Presidency Magistrate, 19th Court, Bombay, in Case No. 147/P/ 1951.
B. H. Lulla and Rajinder Narain for the appellants.
Porus A. Mehta for the respondent.
May 13.
The Judgment of the Court was delivered by MEHR CHAND MAHAJAN C.J.
The appellants were charged under section 18(1) of the Bombay Rent I Restriction Act, 1947, for receiving from Shankar Das Gupta through Mathra Das, accused No. 3, on 23rd November, 1950, a sum of Rs. 2,400 as premium or 160 pugree in respect of the grant of lease of Block No. 15 in a building under construction.
The magistrate found 'the appellants guilty of the charge and sentenced each of them to two months ' R.I. and a fine of Rs. 1,200.
Mathra Das was convicted and sentenced to one day 's S.I. and a fine of Rs. 100.
The fourth accused, Roshanlal Kanjilal, was acquitted.
Mathra Das preferred no appeal against his conviction and sentence.
The appellants preferred an appeal to the High Court against their conviction.
This was heard by Gajendragadkar and Chainani JJ.
on the 8th of October, 1952.
It was contended, inter alia, that even if it were held that the appellants had accepted the sum of Rs. 2,400 they could not be said to have committed an offence under section 18(1) of the Act inasmuch as the amount could not in law be held to be a premium in respect of the grant of a lease.
On this point the learned Judged said as follows : " In the present case the work regarding the building which still remained to be done was so important that both the parties agreed that the complainant should get into possession after the said work was completed.
In such a case unless the building is completed the tenant has no right which can be enforced in a Court of law.
If the landlord finds it impossible for any reason to complete the building, what is the right which an intending tenant can enforce against him.
Therefore, in our opinion, there is considerable force in the contention urged by Mr. Lulla that in the present case even if it be held that the accused had received Rs. 2,400 in the circumstances to which we have already referred that would not bring them within the mischief of section 18(1) because there has been no grant of a lease at all.
There is only an agreement that the landlord would lease to the complainant a particular flat after the building has been fully and properly completed.
It does appear that section 18 1 does not bring within its mischief executory agreements of this kind." A contrary view had been expressed in Criminal Revision No. 1178 of 1949, by another Bench of the High Court on the construction of section 18(1).
The 161 matter was therefore referred to the Full Bench.
The question framed for the consideration of the Full Bench was in these terms: If as owners of an in complete building the appellants accepted Rs. 2,400 from the complainant in respect of an agreement between them that the appellants were bound to give and the complainant was entitled to take possession of flat No. 15 in the said building as soon as the said building was completed on the agreed rent of Rs. 75 per month, did the acceptance of Rs. 2,400 by the appellants fall within the mischief of section 18 of Bombay Act LVII of 1947 This question, if answered in the negative by the Full Bench, would have concluded the case.
The Full Bench answered the question referred in the affirmative.
It held that the oral agreement did not constitute a lease but it amounted to an agreement to grant a lease in future, and that the receipt of consideration for an executory agreement was within the mischief of section 18(1) of the Act.
The Full Bench Expressed its opinion in these terms: " What the Legislature has penalized is the receipt of a premium by the landlord and the Legislature has also required a nexus between the receipt by the landlord of a premium and the grant of a lease of any premises.
Therefore a receipt alone by a landlord would not constitute an offence, but that receipt must be connected with the grant of the lease of any premises.
Unless that connection is established no offence would be committed.
The contention of Mr. Lulla on behalf of the accused is that the receipt of the premium must be simultaneous with the grant of the lease.
If the lease comes into existence at a future date, then the receipt of a premium according to him is not "in respect of " the grant of a lease.
Therefore the key words according to us in this section are " in respect of.
" It is relevant to observe that the Legislature has advisedly not used the expression "for" or "in consideration of" or " as a condition of " the grant of a lease.
It has used an expression which has the widest connotation and 21 162 means in its plain meaning " connected with or attributable to," and therefore it is not necessary that there must be simultaneous receipt by the landlord with the grant of the lease.
So long as so 'me connection is established between the grant of the lease and the receipt of the premium by the landlord, the provisions of the section would be satisfied.
In our opinion it is impossible to contend that in the present case there was no connection whatever between the landlord receiving the premium and his granting the lease of the premises.
It is true that when he received the premium he did not grant a lease.
It is true that all that he did when he received the premium was to enter into a contract with his tenant to grant a lease in future.
But the object of the landlord in receiving the premium and the object of the tenant in paying the premium was undoubtedly on the part of the landlord the letting of the premises and oh the part of the tenant the securing of the premises.
Therefore the object of both the landlord and the tenant was the grant of the lease of the premises concerned and that object was achieved partly and to start with by an oral agreement being arrived at between the landlord and the tenant with regard to the granting of this lease, the lease being completed when delivery of possession of the premises would be given.
Therefore, in our opinion, on the facts of this case it is not possible to contend that the payment of the premium received by the landlord was unconnected with the grant of a lease of any premises.
The fact that no grant was made at the time when the premium was received, the fact that there was merely an agreement to grant a lease, the fact that the lease would come into existence only at a future date, are irrelevant facts so long as the connection between the receiving of the premium and the granting of the lease is established.
" On return from the Full Bench, the Division Bench considered the other contentions raised on behalf of the appellants and held that there were no merits in any one of those points and in the result the appeal was dismissed.
It was certified that the case involved a substantial question of law and was a fit one for appeal to this Court.
This appeal is before us on that certificate, 163 The principal question to decide in the appeal is whether the answer given by the Full Bench to the question referred to it is right, and whether receipt of a sum of money by a person who enters into an executory contract to grant a lease of a building under construction falls within the mischief of section 18(1) of the Act Section 18(1) provides: " If any landlord either himself or through any person acting or purporting to act on his behalf receives any fine, premium or other like sum or deposit or any consideration, other than the standard rent. " in respect of the grant, renewal or continuance of a lease of any premises such landlord or person shall be punished " in the manner indicated by the section Under the section the money must be received by the landlord in respect of the grant of a lease.
The section refers to the " grant, renewal or continuance of a lease.
" Prima facie, it would not cover an executory agreement to grant a lease.
The words " renewal or continuance of a lease " clearly suggest that there must be a renewal or continuance of a subsisting lease.
In the context, grant of tenancy means the grant of new or initial tenancy; renewal of tenancy means the grant of tenancy after its termination; and continuance seems to contemplate continuance of a tenancy which is existing.
Whether or not an executory agreement for grant of a lease comes within the ambit of the section by reason of the use of the words " in respect of " would be examined hereinafter.
Before doing so it may be stated that an instrument is usually construed as a lease if it contains words of present demise.
It is construed as an executory agreement, notwithstanding that it contains words of present demise, where certain things have to be done by the lessor before the lease is granted, such as the completion or repair or improvement of the premises, or by the lessee, such as the obtaining of sureties.
(Vide Halsbury 's Laws of England, Second Edition, Vol. 20, pp. 37 39).
On the facts of this case therefore the Full Bench very rightly held that the 164 oral, agreement made between the parties did not constitute a lease but it amounted to an agreement to grant a lease in future.
It may further be pointed out that, in fact, in this case the lease never came into existence.
Moreover, in view of the provisions contained in the Bombay Land Requisition Act XXXIII of 1948, as amended, the appellants could not let out the building even after its completion unless on a proper notice being given the Controller of Accommodation did not exercise his powers under that Act.
It so happened that as soon as the building was completed the Controller of Accom modation requisitioned it, and thus no occasion arose for giving effect to the executory contract.
The question that needs our determination in such a situation is Whether section 18(1) makes punishable receipt of money at a moment of time when the lease had not come into existence, and when there was a possibility that the contemplated lease might never come into existence.
It may be here observed that the provisions of section 18(1) are penal in nature and it is a well settled rule of construction of penal statutes that if two possible and reasonable constructions can be put upon a penal provision, the Court must lean towards that construction which exempts the subject from penalty rather than the one which imposes penalty.
It if; not competent to the Court to stretch the meaning of an expression used by the Legislature in order to carry out the intention of the Legislature.
As pointed out by Lord Macmillan in London and North Eastern Railway Co. vs Berriman(1), " where penalties for infringement are imposed it is not legitimate to stretch the language of a rule, however beneficent its intention, beyond the fair and ordinary meaning of its language.
" The High Court took the view that without stretching the language of section 18(1) beyond its fair and ordinary meaning, the very comprehensive expression " in respect of " used by the Legislature could lead to only one conclusion, that the Legislature wanted the (1) , 295, 165 penal consequences of section 18(1) to apply to any nexus between the receipt by a landlord of a premium and the grant of the lease.
In our judgment, the High Court laid undue emphasis on the words "in respect of" in the context of the section.
Giving the words " in respect of " their widest meaning, viz., " relating to " or " with reference to", it is plain that this relationship must be predicated of the grant, renewal or continuance of a lease, and unless a lease comes into existence simultaneously or near about the time that the money is received, it cannot be said that the receipt was " in respect of " the grant of a lease.
The relationship of landlord and tenant does not come into existence till a, lease comes into existence; in other words, there is no relationship of landlord and tenant until there is a, demise of the property which is capable of being taken possession of If the Legislature intended to make receipts of money on executory agreements punishable, the section would have read as follows: " receives any fine, premium or other like sum or deposit or any consideration other than the standard rent in respect of the lease or an agreement of lease of the premises, such landlord or person shall be punished " in the manner indicated in the section.
The section does not make the intention punishable; it makes an act punishable which act is related to the existence of a lease.
It does not make receipt of money on an executory contract punishable; on the other hand it only makes receipt of money on the grant, renewal or continuance of the lease of any premises punishable and unless the lease come into existence no offence can be said to have been committed by the person receiving the money.
It is difficult to hold that any relationship of 'landlord and tenant comes into existence on the execution of at agreement executory in nature or that the expression " premium " can be appositely used in connection with the receipt of money on the occasion of the executor of such an agreement, It may well be that if a leas( actually comes into existence then any receipt of money which has a nexus with that lease may fall within the mischief of section 18(1), but it is unnecessary to ex press any final opinion on the question as in the present 166 case admittedly no lease ever came into existence and the relationship of landlord and tenant was never created between the parties.
The landlord never became entitled to receive the rent from the tenant and the tenant never became liable to pay the rent.
There was no transfer of interest in the premises from the landlord to the tenant.
On its plain, natural, grammatic meaning, the language of the section does not warrant the construction placed upon it by the Full Bench merely by laying emphasis on the words " in respect of.
" In our opinion the language of the section ; 'in respect of the grant, renewal or continuance of a lease " envisages the existence of a lease and the payment of an amount in respect of that lease or with reference to that lease.
Without the existence of a lease there can be no reference to it.
If the Legislature intended to punish persons receiving pugree on merely executory contracts it should have made its intention clear by use of clear and unambiguous language.
The construction we are placing on the section is borne out by the circumstance that it occurs in Part I of the Act.
Section 6 of this Part provides that " in areas specified in Schedule I, this Part shall apply to premises let for residence, education, business, trade or storage.
" This Part relates to premises let, in other words, premises demised or given on lease and not to premises that are promised to be given on lease and of which the lease may or may not come into being.
The definition of the expression " landlord" also suggests the same construction.
Landlord " as defined in section 5 of the Act means any person who is for the time being receiving, or entitled to receive, rent in respect of any premises whether on his own account or on account, or on behalf, or for the benefit, of any other person, or as a trustee, guardian or receiver for any other person or who would so receive the rent or be entitled to receive the rent if the premises were let to a tenant. .
It is obvious that on the basis of an executory agreement the appellants would not be entitled to receive any rent.
They would only be entitled to receive rent after the lease is executed and actual 167 demise of the premises or their transfer is made in favour of the complainant.
The definition of the expression tenant" also suggests the same construction.
Mr. Mehta for the State, besides supporting the emphasis placed by the High Court on the words " in respect of," contended that that construction could be supported in view of the provisions of sub section (3) of section 18 which is in these terms: " 18(3) Nothing in this section shall apply to any payment made under any agreement entered into before the first day of September, 1940, or to any payment made by any person to a landlord by way of a loan, for the purpose of financing the erection of the whole or part of a residential building or a residential section of a building on the land held by him as an owner, a lessee or in any other capacity, entitling him to build on such land, under an agreement which shall be in writing and shall, notwithstanding anything contained in the Indian , be registered.
Such agreement shall inter alia include the following conditions, namely, (1) that the landlord is, to let to 'such person the whole or part of the building when completed for the use of such person or any member of his family. .
It was suggested that but for this exception the executory agreement would be included within the mischief of section 18(1) and that unless such agreements were within the mischief of the section there would have been no point in exempting them from its provisions.
In our view, this contention is not sound.
In the first place, the exception was added to the section by Act 42 of 1951, subsequent to the agreement in question, and for the purposes of this case section 18(1) should ordinarily be read as it stood in the Act, at the time the offence is alleged to have been commit ted.
Be that as it may, it appears that sub section (3) was added to the section by reason of the fact that some Courts construed section 18(1) in the manner in which it has been construed by the Full Bench in this case, and the Legislature by enacting clause (3) made it clear that agreements of the nature indicated in the 168 subjection were never intended to be included therein.
In our opinion, the language of that section is not of much assistance in construing the main provisions of section 18(1).
The result therefore is that in our view the receipt of money by the appellants from the complainant at the time of the oral executory agreement of lease was not made punishable under section 18(1) of the Act and is outside its mischief, and the Presidency Magistrate was in error in convicting the appellants and the High Court was also in error in upholding their conviction.
We accordingly allow this appeal, set aside the conviction of the appellants and order that they be acquitted.
Appeal allowed.
| IN-Abs | Section 18(1) of the Bombay Rents,. ,. .
Control Act 1947 provides; " If any landlord either himself or through any person acting or Purporting to act on his behalf. . receives any fine, premium or other like sum or deposit or any consideration, other than 159 the standard rent in respect of the grant, renewal or continuance of a lease of any premises such landlord or in the manner indicated by the section.
Held, that the words " renewal or continuance of a lease clearly suggest that there must be a renewal or continuance of a subsisting lease.
They would not cover an executory contract to grant a lease.
Giving the words " in respect of " their widest meaning, viz., relating to " or " with reference to " it is plain that this relationship must be predicated of the grant, renewal or continuance of a lease and unless a lease comes into existence simultaneously or near about the time that the money is received it cannot be said that the receipt was " in respect of " the grant of a lease.
The relationship of landlord and tenant does not come into existence till a lease comes into existence, in other words, there is no relationship of landlord and tenant until there is a demise of the property which is capable of being taken possession of.
The section does not make the intention punishable, it makes an act punishable which is related to the existence of a lease.
It does not make receipt of money on an executory contract punishable.
London and North EasterN Railway Co. vs Berriman (1946 A.C.278, 295) referred to.
|
iminal Appeal No. 49 of 1967.
Appeal from the judgment and order dated August 14, 1964 of the Bombay High Court, Nagpur Bench in Misc.
Civil Application No. 13 of 1963.
Mohan Behari Lal, for the appellants.
V.K. Sanghi and Ganpat Rai, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by certificate from the judgment of the Bombay High Court Nagpur Bench dated August 14, 1964 by which the appellants were convicted for contempt of Court of Civil Judge, Junior Division, Nagpur and sentenced to pay a fine of Rs. 200/ each.
By the same judgment respondent No. 3, Sri Ram Nath Vig was also convicted for contempt and sentenced to pay a fine of Rs. 100/ .
It appears that a hire purchase agreement was entered into between the appellants and respondent No. 1 on or about August 12, 1959.
Under that agreement a motor truck was made available to respondent No. 1 for doing transport business.
The hire purchase agreement contained an arbitration clause for settlement of disputes arising between the parties.
It appears that subsequently disputes did arise between the parties and a reference was made to an arbitrator to settle the disputes.
Resportdent No. 3, Sri Ram Nath Vig who is a practicing lawyer in Delhi was the person named as arbitrator in the arbitration agreement itself and the dispute was submitted to him on or about June 25, 1962 at the instance of the appellants.
Thereafter the arbitrator gave notice of the reference and invited statements of the parties.
He fixed the hearing of the arbitration matter before him on July 17, 1962.
The case of respondent No. 1 is that he did not receive notice of this date from the arbitrator and 4Sup.
C.I./69 10 670 therefore he did not appear on the date fixed.
The arbitrator adjourned the hearing of the reference to another date, namely, August 29, 1962.
The contention of respondent No. 1 is that he was not given intimation of this date also but this point is controverted by the respondents.
Respondents nos.
1 and 2 filed a Civil Suit in the Court of Civil Judge, Senior Division, Nagpur on August 30, 1962.
In this suit they claimed a declaration that the hire purchase agreement was brought about by fraud and was not binding on them on various grounds.
The suit was registered and the court ordered summons to be issued to the two appellants.
Meanwhile, the arbitrator postponed the hearing of the reference to September 15, 1962 and it is alleged that he issued fresh notices to the parties on September 1, 1962.
The hearing was again adjourned to October 23, 1962 and it is said that resportdent No. 3 made an award on October 24, 1962.
It has been found by the High Court that on October 18, 1962 a notice was issued by respondent No. 1 to the appellants and the arbitrator with 'a copy of the plaint.
This notice was received by the appellants on October 22, 1962.
In spite of this notice, evidence was recorded by the arbitrator on October 23, 1962 and he made the award on the next day directing respondent No. 1 to pay Rs. 20,400/ .
The allegation of the arbitrator is that he received the notice sent on October 18, 1962 on the next day of the award i.e., on October 25, 1962.
It appears that in the civil suit filed by respondents 1 and 2 which was registered as Civil Suit No. 657 of 1962 on the file of the Civil Judge, Junior Division, the first date of hearing was fixed, on October 15, 1962.
On that date the appellants filed an application under section 34 of the Arbitration Act for staying the proceedings before the court.
No progress was made in the suit which was adjourned to November 6, 1962 and again to November 28, 1962 at the instance of the appellants.
Finally on November 28, 1962 the arbitrator informed respondent No. 1 that he had made the award.
On these facts respondents 1 and 2 filed an application under section 3 of the Contempt of Court 's Act for action being taken ,against the two appellants, respondent No. 3 and one more person.
According to respondents 1 and 2 the appellants and respondent No. 3 had committed contempt of court in proceeding with the arbitration reference in spite of notice under section 35 of the Arbitration Act being given and in spite of the knowledge of the suit which was filed by respondents 1 and 2.
The application was contested by the 'appellants as well as the arbitrator.
The case of the appellants was that the suit itself was not sustainable and they were unaware that participation in the arbitration proceedings after receipt of notice was precluded by law and that they honestly and bona fide believed that they were not expected to take any action after the receipt of the notice without direction from the arbitrator.
It was for the arbitrator to take a decision in the matter and 'if the arbitrator decided to pro 671 ceed with the arbitration, they only obeyed the orders of the arbitrator and therefore had not committed any contempt.
The defence of respondent No. 3 was that in completing the arbitration and giving his award he was only performing his duty.
He denied that it was necessary for him to await the result of the stay application alleged to have been made by respondent No. 1 in the Nagpur Court as he was of the view that the subject matter in the Nagput Court was not the whole subject matter under arbitration, Respondent No. 3 denied that he had any bias or that he conducted the arbitration proceedings in order to defeat the object of the suit and to place an impediment in the conduct of the suit.
The High Court rejected the contention of the appellants and of respondent No. 3 and held that the action of the appellants in participating in the arbitration proceedings and the conduct of respondent No. 3 constituted contempt of court as the conduct of respondent No. 3 and of the appellants had a tendency to bring into contempt the proceedings before the Civil Court.
It is necessary at this stage to set out the relevant provisions of the Arbitration Act (X of 1940).
Sections 32, 33, 34 and 35 are to the following effect: "32.
Notwithstanding any law for the time being in force, no suit shall lie on any ground whatsoever for a decision upon the existence, effect or validity of an arbitration agreement or award, nor shall any arbitration agreement or award be set aside, amended, modified or in any way affected otherwise than as provided in this Act." "33.
Any party to an arbitration agreement or any person claiming under him desiring to challenge the existence or validity of an arbitration agreement or an award or to have the effect of either determined shall apply to the Court and the Court shall decide the question on affidavits: Provided that where the Court deems it just and expedient, it may set down the application for hearing on other evidence, also, and it may pass such orders for discovery and particulars as it may do in a suit." "34.
Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are 672 pending to stay the proceedings, and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceeding." "35.
(1 ) No reference nor award shall be rendered invalid by reason only of commencement of legal proceedings upon the subject matter of the reference, but when legal proceedings upon the whole of the subjectmatter of the reference have been commenced between 'all the parties to the reference and a notice thereof has been given to the arbitrators or umpire all further proceedings, in a pending reference shall, unless a stay of proceedings is granted under section 34, be invalid.
(2) In this section the expression 'parties to the reference ' includes any persons claiming under any of the parties and litigating under the same title.
" In our opinion, the High Court was in error in holding that in the circumstances of this case the appellants and respondent No. 3 were guilty of contempt of court.
It is not disputed that there was an arbitration clause in the agreement between the appellants and respondent No. 1 and in terms of the arbitration clause respondents 1 and 2 had a fight to refer the dispute to the arbitrator.
It is also not disputed that a reference to the arbitrator was made by respondents 1 and 2 long before the institution of the civil suit.
It is also apparent that in view of the admitted existence of the hire purchase agreement containing an arbitration clause the remedy of respondent No. 1 was to move the Civil Court under section 33 of the Arbitration Act challenging the existence or validity of the ,arbitration agreement and to have its effect determined.
It was contended on behalf of the appellants that a separate suit was barred under section 32 of the Arbitration Act.
We do not wish to express any opinion on this point in the present case.
Even on the assumption that the suit filed by respondents nos.
1 and 2 in the Nagpur Court is competent, the question arises whether the arbitrator was bound to stay the proceedings beforehim after he got notice from respondents 1 and 2 of 'the institution of the civil suit.
Section 35 of the Arbitration Act does not expressly prohibit the arbitrator from continuing the hearing of the reference but the only effect of section 35 is that "all further proceedings in a pending reference shall, unless a stay of proceedings is granted under section 34, be invalid".
For this consequence to follow, however, two important and distinct conditions must be satisfied, namely, (1) that such legal proceedings must be upon 673 the whole and not merely part of the subject matter of the reference, and (2) that a notice of such a legal proceeding must be given to the arbitrator.
We do not wish to express any opinion as to whether these conditions were satisfied in this case.
But even on the assumption that these conditions were satisfied the only effect is that the further proceedings before the arbitrator after the receipt of the notice are rendered invalid and there is no prohibition under section 35 requiring the arbitrator not to carry on the arbitration proceedings after the receipt of the notice.
It is well established that an 'authority holding an inquiry in good faith in exercise of the powers vested in it by a statute is not guilty of contempt of court, merely because a parallel inquiry is imminent or pending before a court To constitute the offence of 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 court (See Reg.
vs Gray(1) and Arthur Reginald Perera vs The King(2).
In Tukaram Gaokar vs S.N. Shukla(3), it was held by this Court that the initiation and continuance of proceedings for imposition of penalty on the appellant for his alleged complicity in the smuggling of gold under section 112(b) of the Sea did not amount to contempt of court though his trial in a criminal court for offences under section 135(b) of that Act and other similar offences was imminent 'and identical issues would arise in the proceedings before the customs authorities and in the trial before the criminal court.
In Rizwan ul Hasan vs The State of Uttar Pradesh(4) this Court stated: "As observed by Rankin, C.J. in Anantalal Singha vs Abred Henry Watson [(1931) at 895], the jurisdiction in contempt is not to be invoked unless there is real prejudice which can be regarded as a substantial interference with the due course of justice and that the purpose of the court 's action is a practical purpose and it is reasonably dear on the authorities that the court will not exercise its jurisdiction upon a mere question of propriety." It follows therefore that even if the action of the appellants and respondent No. 1 in this case is assumed to be improper it will not justify the finding that they were guilty of contempt of court when their action was in no way calculated to obstruct the course of justice or to prejudice the trial of the Civil suit.
(1) [1900] 20.B. 36.
(2) (3) ; (4) ; ,588, 674 For these reasons we hold that this ,appeal should be allowed and the judgment of ' the High Court of Bombay, Nagpur Bench dated August 14, 1964 should be set aside and the conviction and sentences imposed on the appellants should be quashed.
The arbitrator, respondent No. 3 has not flied an appeal but in view of our finding with regard to the appellants it is necessary that the conviction of respondent No. 3 and the sentence imposed upon him should also be quashed.
The fines, if already paid by respontdent No. 3 and the ,appellants should be refunded.
| IN-Abs | A hire purchase agreement was entered into between the appellants and respondent No. 1 Under that agreement a motor transport truck was made available to respondent No. 1 for doing transport business.
The agreement contained an arbitration clause for settlement of disputes When disputes arose reference was made to an arbitrator.
Respondent No. 3 a praetising lawyer was named as the arbitrator.
During the pendency of the arbitration proceedings respondents Nos. 1 and 2 filed a civil suit in which they claimed a declaration that the hire purchase agreement was brought about by fraud and was not binding on them on various grounds.
The suit was registered and the court ordered summons to be issued to the two appellants.
A notice was also issued by respondent No. 1 to the appellants and the arbitrator with a copy of the plaint.
When the arbitrator made an award after recording the evidence of the appellants respondents Nos. 1 and 2 filed an application under section 3 of the Contempt of Courts Act on the allegation on that the appellants and respondent No. 3 had committed contempt of court in proceeding with the arbitration reference in spite of the notice under section 35 of the Arbitration Act being given and in spite of the knowledge of the suit which was filed by respondents 1 and 2.
The application was contested by the appellants as well as the arbitrator.
The appellants contended that in obeying the orders of the arbitrator to produce evidence they did not commit any contempt.
Respondent No. 3 denied that he conducted the arbitration proceedings in order to defeat the object of the suit.
The High Court found the appellants and respondent No. 3 guilty of contempt of court on the view that their conduct had a tendency to bring into contempt the proceedings before the Civil Court.
In appeal to this Court by certificate, HELD: The High Court was in error in holding that in the circumstances of the case the appellants and respondent No. 3 were guilty of contempt of court.
Section 35 of the Arbitration Act does not expressly prohibit the arbitrator from continuing the hearing of the reference.
Its only effect is that "all further proceedings in a pending reference shall, unless a stay of proceedings is granted under section 34, be invalid".
For this consequence to follow, however.
two important and distinct conditions must be satisfied, namely, (1) that such legal proceedings must be upon the whole and not merely part of the subject matter of the reference and (2) that a notice of such legal proceeding must be given to the arbitrator.
Even on the assumption that these conditions were satisfied the only effect is that the further proceedings before the arbitrator after the receipt of the notice are rendered invalid and there is no prohibition under section 35 requiring the arbitrator not to carry on the arbitration proceedings after the receipt of the notice.
[672 G 673 B] 669 It is well established that an authority holding an enquiry in good faith in exercise of the powers vested in it by a statute is not guilty of contempt of court, merely because a parallel enquiry is imminent or pending before a court.
To constitute the offence of 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 court '.
[673 C] Reg.
vs Gray , Arthur Reginald Perera vs The King, , Tukaram Gaokar vs S.N. Shukla, ; and Rizwan ul Hasan vs State of Uttar Pradesh, ; , 588, applied.
It followed therefore that even if the action of the appellants and respondent No. 1 in the present case was assumed to be improper it would not justify the finding that they were guilty of contempt of court when their action was in no way calculated to obstruct the course of justice or to prejudice the trial of the civil suit.
|
Appeal No. 131 of 1968.
Appeal by special leave from the Award dated December 8, 1967 of the Industrial Tribunal, Punjab in Reference No. 44 of 1966.
H.R. Gokhale, Anand Parkash, J.B. Dadachanji, K.P. Bhandare and Bhuvnesh Kumari, for the appellant.
A. K. Sen, Rameshwar Nath and Mahinder Narain, for the respondents.
The Judgment of the Court was delivered by Vaidialingam, J.
This appeal, by special leave, is directed against the award dated November 24, 1967 of the Industrial Tribunal, Punjab, Chandigarh, in Reference No. 44 of 1966.
The President of India, by order dated October 31, 1966 referred the following issues for adjudication under section 10(1)(d) of the to the Industrial Tribunal, Punjab, Chandigarh: 708 "1.
Whether the workmen are justified in demanding the minimum bonus payable for the years 1964 65, 1965 66 and future years being fixed @ Rs. 110/ and the maximum @ Rs. 360/ per worker ? If so, with what details ? 2.
Whether the action of the management in treating 4 days advance bonus paid for the year 1965 66 as deductible from bonus payable in future years is justified? If so, are any conditions or stipulations necessary and if so with what details ? 3.
Whether there is any justification for making any amendments in the production bonus scheme introduced by the management in such a way that it enables payment of bonus to the lower paid workers at higher rates and higher paid workers at lower rates ? If so, with what details ? 4.
Whether the workers are entitled to any wages or compensation for the period of strike viz., 12th October to 31st October, 1966.
" It may be stated at the outset that this Court is not concerned with issue No. 3.
The question of introduction of production bonus scheme arises only to a limited extent in so far as it has got a bearing on a contention raised by the appellant that the production bonus scheme has been introduced in substitution of ex gratia payment of bonus which was being made by the management.
Even as regards the strike period mentioned in issue No. 4, parties were agreed before the Tribunal that the period of strike in respect of which wages or compensation were claimed by the workmen was from 17th October to 31st October 1966 and not from 12th October as stated in the issue.
The circumstances under which the Reference came to be made by the President of India may be stated.
The appellant Fertiliser Corporation of India is a limited company incorporated under the and it is also a Government company, as defined in section 617 of that Act.
The Nangal unit of the appellant went into production for the first time during the financial year 1962 63.
On October 29, 1963, the appellant issued a Circular regarding the grant of ad hoc bonus for the year 1962 63.
The General Manager states, in this Circular that the management has sanctioned payment of ad hoc bonus to employees of Nangal unit for good performance during the year 1962 63 and that bonus will be payable to all employees who are on the rolls of the Corporation on October 30, 1963 and had completed 1 year 's service on March 31, 1963 and whose basic salary on that date did not exceed Rs. 500/ per mensem, The 709 Circular proceeds to state that the amount of bonus payable will be 1 month 's basic salary plus dearness allowance, subject to the condition that no employee will get less than Rs. 100/ or more than Rs. 300/ .
On December 17, 1964, the appellant issued a circular regarding the gram of bonus and ex gratia payment for the year 1963 64.
This circular states that the management has decided to sanction bonus and ex gratia payment to the employees of the Nangal unit on the basis mentioned therein.
The principles laid down in this circular regarding payment of bonus and ex gratia payment are: (1) Bonus is being paid to all eligible employees strictly in conformity with the Bonus Commission 's recommendations, as accepted by the Central Government, and the said bonus is the minimum bonus payable as per the Bonus Commission 's recommendations, equivalent to 4% of the total basic wage and dearness allowance (excluding all other allowances etc.) paid during the year 1963 64.
The employees eligible for these payments are those who draw a total basic pay and dearness allowance up to Rs. 1,600 per mensem and the quantum payable to employees drawing over Rs. 750/ of basic pay and dearness allowance will be limited to what they would get if their pay and dearness allowance were only Rs. 750/ per month.
(2) An additional ex gratia payment to be made to all workers drawing basic pay up to Rs. 500/ per month, to the extent that such payment, together with the bonus indicated earlier, is equivalent to at least one month 's full salary (basic pay plus dearness allowance); and the total payment, i.e., bonus and ex gratia, in the case of workers drawing basic pay up to Rs. 500/ per month would be subject to a minimum of Rs. 100/ and maximum of Rs. 300/ .
(3) The minimum qualifying service .for ex gratia payment will be 3 months and the minimum qualifying service for payment of bonus as per Bonus Commission 's recommendation is 30 days.
On December 30, 1964 the appellant issued another circular stating that the minimum limit of Rs. 100/ in respect of bonus and ex gratia payment for the year 1963 64, as per its circular dated December 17, 1964 is raised to Rs. 110/ and that the enhanced amount will be paid along with the salary for the month of December 1964.
Regarding the grant of bonus for the year 1964 65, another circular was issued by the appellant on September 27, 1965.
this circular it is stated that bonus for the year 1964 65 has been decided to be paid strictly in accordance with legal obligations arising out of the payment of bonus under the Payment of Bonus Ordinance, 1965 (Ordinance No. 3 of 1965) (hereinafter referred to as the Ordinance).
According to that Ordinance, bonus 710 that is payable is the minimum bonus which will be equivalent to 4% of the total basic pay and dearness allowance (excluding all other allowances) paid during the year 1964 65, or Rs. 40/ , whichever is higher.
The employees eligible for the bonus will be those who draw a total basic pay and dearness allowance up to Rs. 1,600/ per month, but the quantum of bonus payable to employees drawing total pay and dearness allowance over Rs. 750/ per month will be limited to what it would be if their pay and dearness allowance are only Rs. 750/ per mensem.
It may be stated at this stage that the Ordinance was promulgated on May 29, 1965 and the (Act XXI of 1965) (hereinafter called the Bonus Act) came into force on September 25, 1965.
On December 9, 1965 the Minister of Labour and Employment made a statement in the Lok Sabha regarding a decision having been taken by the Central Cabinet on December 2, 1965.
In this statement the Minister has referred to the fact that with the specific approval of the Cabinet ex gratia payments had been allowed in the past by way of bonus to employees drawing upto Rs. 500/ per mensem in some undertakings in the public sector.
After referring to the recommendations of the Bonus Commission, the Minister announced the decision of the Cabinet dated December 2, 1965.
As the said decision of the Cabinet has been circulated to the appellant, the matters referred to in the said decision will be adverted to by us when we refer to the letter of the Government addressed to the appellant. ' On December 21, 1965 the Government of India addressed a communication to the Chairman and Managing Director of the appellant company on the subject of bonus payable to employees in the public sector undertakings.
As the claim of the labour in the case, for bonus being paid for 1964 65 and 1965 66 is substantially based upon the decision of the Central Cabinet dated December 2, 1965 and as according to the appellant this communication cannot be considered to be a direction or an order, it is desirable to quote, in extenso, the said communication: No. CH/COORD/64/65 GOVERNMENT OF/INDIA MINISTRY OF PETROLEUM & CHEMICALS (Department of Chemicals) New Delhi, the 21st December 1965 To Shri Satish Chandra, Chairman & Managing Director, 711 Fertilizer Corporation of India Ltd., F 43, New Delhi South Extension, Pt.
I, New Delhi.
Subject : Bonus payable to employees in the Public Sector undertakings.
sir I am directed to refer to the payment of Bonus Act, 1965 (No. 21 of 1965) which provides for the payment of bonus to persons employed in certain establishments and for matter connected therewith. "Establishment in public sector" is defined in section 2(16) of the Act.
Further, sub section (1) of section 20 lays down that if in any accounting year an establishment in public sector sells any goods produced or manufactured by it or renders any services, in competition with an establishment in private sector, and the income from such sale or services or both is not less than twenty per cent of the gross income of the establishment in public sector for that year, than the provisions of this Act shall apply in relation to such employment in public sector as they apply in relation to a like establishment in private sector.
It follows that the provisions of the Act do not apply to such of the establishments in private sector.
Notwithstanding the provisions 'of the Act, it has been decided by Government as a matter of policy that noncompetitive public sector undertaking should also make ex gratia payments to their employees of the minimum of 4 (four) per cent of annual gross earnings of the employees on the same lines as bonus will be payable by public sector undertakings falling within the provisions of the aforesaid Act.
The benefit of six year bonus holiday (vide section 10 of the Act) should be available to noncompetitive public sector undertakings.
Government have further decided that the following should be the guiding principles for determining the quantum of ex gratia payments to employees of noncompeting public sector undertakings: (i) all non competing public sector undertakings should pay ex gratia to their employees amounts which they would be liable to pay as bonus if they were to fall within the purview of the ; (ii) where such an undertaking has made ex gratia payment in the past, the amount of such payment should be treated as absorbed in the amount determined as 712 in (i) above.
In other words, any claim of employees to payment determined on the lines of the Bonus Law as an addition to payment on the scale of ex gratia payments in the past, should not be accepted.
If the past ex gratia payment had been higher than the amount as worked out as in (1 ) above, the level of past ex gratia payment should be maintained; (iii) the principle in (ii), above, shall also be followed in the case of competing public sector undertakings; and (iv) the applicability of (ii) and (iii) above should be conditional upon the maintenance of the level of performance of the undertaking in individual cases.
It is requested that the decisions of Government referred to, may be noted for guidance and necessary action.
Yours faithfully, Sd/ Nakul Sen Secretary to Govt.
of India.
" Again, on September 9, 1966 the appellant issued a circular regarding payment of bonus for the year 1965 66.
It is stated therein that the management has decided to pay bonus to the employees of the Nangal unit for the year 1965 66 and that statutory bonus equivalent to 4% of basic pay and dearness allowance would be paid strictly in accordance with the provisions of the Bonus Act, 1965.
It is further mentioned that in addition to this bonus it has been decided to pay production bonus at 3% of wages to employees whose maximum scale of pay does not exceed Rs. 1,400/ per mensem.
Then the letter proceeds to state as to how exactly the production bonus is to be calculated and paid.
The circular further states that in addition to the statutory bonus and production bonus the employees will also be paid 4 days ' wages in the form of advance production bonus to be adjusted as and when total bonus payable to the workers exceeds 30 days ' wages in future.
There was a note appended to this circular on the subject of bonus payments, for the information of workers.
That note proceeds to state that as production for the year 1962 63 exceeded the target the management has decided to pay ad hoc bonus equivalent to a month 's salary for employees drawing up to Rs. 580/ per month.
For the year 1963 64 the employees were entitled to the minimum bonus of 4%, according to the recommendations of the Bonus Commission and that amount of bonus was paid.
Though legally the workmen were not entitled to anything more, nevertheless, as the Nangal unit again exceeded the production 713 target for the year 1963 64, the management decided to give an ex gratia payment for good performance so that the bonus as per the Bonus Commissions Report plus the ex gratia payment worked out to a month 's wage.
But during the year 1964 65 the production exceeded the target and the management decided to pay, in addition to the bonus payable under the Ordinance a performance reward equivalent to half a month 's wages.
The management was considering to introduce a production bonus scheme to provide an incentive for increased production.
This became necessary in view of the advice given by the Labour Law Officer of the company that ex gratia payments should be avoided.
The management further states that production bonus scheme has been approved by the Government of India and under that scheme employees are entitled to sums varying from 3% to 3.5% of their wages.
In the year 1965 66 the production had not exceeded the target and the employees of Nangal unit became entitled only to the statutory bonus of 4% of their wages, under the Bonus Act and production bonus was not admissible.
Ex gratia payment also was ruled out in view of the advice of the Labour Officer and because of the fact that with the introduction of production bonus scheme all ex gratia payments stood eliminated.
But, inasmuch as the workers in the Nangal unit have maintained peace and good industrial relations, the management decided, as a special case, to award production bonus of 3% under the production bonus scheme.
The note summed up the position by stating that for the year 1965 66 the Nangal workers were eligible to (a) statutory bonus at 4% of the annual wages under the Bonus Act; (b) production bonus at 3% of the annual wages and (c) 4 clays ' wages in the form of advance production bonus to give the workmen a month 's wages in all, which was to be adjusted as and when the total bonus payable to the workers exceeds 30 days ' wages in future.
From the circular letters dated September 27, 1965 and September 9, 1966 it will be seen that the management offered to pay only the statutory bonus under the Ordinance and the Bonus Act and that ex gratia payment of bonus has been discontinued.
In particular, in the note annexed to the circular of September 9, 1966 the management has taken the specific stand that a production bonus scheme has been introduced and that the said scheme has been approved by the Government of India.
They also maintained that with the introduction of the production bonus scheme all ex gratia payments are eliminated.
As the appellant did not pay bonus for the years 1964 65 and 1965 66 at the rate at which it was paid for the year 1963 64, 714 the Union submitted a charter of demands to the appellant on August 19, 1966.
The Union demanded that bonus should be paid for the years 1964 65 and 1965 66 at the same rate as it had been paid in previous years and that the appellant was bound to act according to the decision of the Central Cabinet dated December 2, 1965 and communicated to it by the circular letter of the Government of India dated December 21, 1965.
That is, according to the Union the minimum bonus that a worker was entitled to get was Rs. 110/ .
There were certain other demands which are not necessary to consider in this appeal.
By this letter the Union also indicated that if the demands were not met within 15 days, it would be forced to adopt agitational approaches to seek compliance with its demands.
The management did not comply with this demand regarding payment of bonus and attempts at mediation failed and the workmen went on strike from October 17, 1966 and the reference to adjudication was made on November 2, 1966.
Before the Tribunal the workmen pressed their claim for bonus on the basis contained in their charter of demands.
They also raised the plea that the introduction of production bonus scheme had no effect regarding the ex gratia payment of bonus made by the appellant.
As the management had not complied with the reasonable demands of the labour and as it was acting in violation of the Cabinet decision, the workmen were justified in going on strike from October 17, 1966 and they were entitled to full wages for the strike period.
The appellant resisted the claims of the Union.
They raised certain objections regarding the jurisdiction of the Industrial Tribunal to entertain the suit, but that again is not the subject.
of the present appeal.
The management pleaded that the claim for bonus for the years 1964 65 and 1965 66 had to be considered and adjudication made only according to the provisions of the Bonus Act and that the workmen were not entitled to claim anything beyond what was provided in the said Act.
No legal claim could be based on ex gratia payments of bonus in the previous years.
They accepted the position that under article 110 of the Articles of Association of the company the President of India could issue direction which become binding on the company, but pleaded that no such directive had been issued by the President.
Even assuming that such direction had been issued by the President to the company, the workmen, who were third parties, could not seek to enforce any rights based upon such directives.
The appellant Corporation is a public limited company and as such an autonomous statutory body.
They further pleaded that the rate of bonus mentioned in the Cabinet decision would become payable only if the level of performance or production was properly 715 maintained and in the case of the Nangal unit the level had not been kept up.
The management further averred that in consultation and with the approval of the Central Government the appellant introduced the production bonus scheme with effect from 1965 66 and the said scheme replaced the previous system of ex gratia payments, made on ad hoc basis for the initial two years of the Nangal Unit 's operation.
The production bonus is payable in addition to the statutory bonus which the workmen are entitled to under the Bonus Act.
As the Central Government had approved the scheme of payment of statutory bonus and production bonus, in lieu of the past system of making ex gratia and ad hoc payments, the management pleaded that the Cabinet decision of December 2, 1965 stood modified to that extent.
Regarding the treating of the 4 days ' advance bonus paid for the year 1965 66 as deductible from bonus payable in future years and management pleaded that in order to keep industrial peace and as the new production bonus scheme substituting the old ex gratia payment had come into force the appellant decided to pay advance bonus of 4 days wages.
This advance bonus was specifically stated as being deductible when the total bonus payable to workers in future years exceeded 30 days.
Therefore the management averted that they were entitled to adjust this advance payment in future years.
The management further pleaded that there was absolutely no justification for the workmen starting agitation from August 27, 1966 nor for going on strike from October 17, ' 1966.
The conciliation proceedings started under the Act had not terminated and the appellant also was participating in the conciliation proceedings and was anxious to meet the demands of the workmen if it was otherwise possible.
The production bonus scheme for the year 1965 66 had been announced on September 9, 1966.
The strike was both illegal and unjustified and hence the workmen were not entitled to any wages during the strike period.
The Industrial Tribunal in its award has held that the appellant was bound to comply with the Cabinet decision dated December 2, 1965 and communicated to it by the Government by its Circular letter dated December 21, 1965.
The decision of the Central Cabinet had been publicly announced by the Minister concerned in the Lok Sabha on December 9, 1965.
The principles laid down for ex gratia payments by non competitive public sector undertakings had been made applicable to competitive public sector undertakings also.
The Tribunal held that as the appellant was a competitive public sector undertaking and the directions regarding ex gratia payments of bonus as well as the prin 716 ciples for determining the quantum of such payments had all been laid down in the Circular letter of December 21, 1965 and the appellant was bound to implement those directions, the claim of the labour for such payments for the years in question was perfectly justified.
The ex gratia payment to be made under the Cabinet decision was to be in accordance with the level of past ex gratia payments.
No doubt such payments were to be made provided the level of performance was maintained.
On the materials placed before it, the Tribunal held that the said condition was satisfied.
The Tribunal rejected the claim of the appellant that production bonus scheme was introduced in consultation and with the approval of the Central Government and it further held that the introduction of that scheme was not in lieu of the ex gratia payments made on an ad hoc basis in the previous years.
The Tribunal has further held that as the decision of the Central Cabinet, dated December 2, 1965 stands and has not been modified in any way by the Government, the management was bound to continue the ex gratia payments.
It further held that the striking down, by this Court, of sub section
(2) of section 34 of the Bonus Act had no effect on the claim made by the Union because the claim of the Union was sufficiently safeguarded by sub section
(3) of section 34.
Ultimately the Tribunal accepted the claim of the workmen for payment of minimum bonus for the years 1964 (35 and 1965 66 being fixed at Rs. 110/ and regarding the maximum the Tribunal held that was a matter of calculation, having regard to the wages of an employee; but it restricted its direction in this regard to the two years in question and declined to express any opinion regarding future years.
The Tribunal also negatived the claim of the appellant to treat the 4 days ' bonus paid in advance for the year 1965 66 as deductible from the bonus payable in future years.
Regarding the wages claimed by the workmen for the period October 17 to October 31, 1966, the Tribunal held that the strike was both legal and justified and it directed the management to pay the workmen half their wages for that period.
The same stand that has been taken before the Tribunal by the parties has been urged before us by Mr. Gokhale, the learned counsel for the appellant management and Mr. A.K. Sen, the learned counsel for the Union.
We shall first consider the correctness of the decision of the Industrial Tribunal regarding the claim of the workmen for ex gratia payment of bonus.
We are not inclined to accept the contention of Mr. Gokhale that the appellant was not bound to implement the directions contained in the Circular letter of the Government dated December 21, 1965, containing the Cabinet deci 717 sion of December 2, 1965, nor his further contention that the claim of the workmen for bonus should have been adjudicated upon exclusively as per the provisions of the Bonus Act without reference to the Cabinet decision.
The appellant company, registered under the , is no doubt an autonomous unit; but there are several articles in the Articles of Association of the appellant Corporation which give power to the President of India and the Central Government to give directions in the working of the appellant.
In fact, it may not be necessary to deal elaborately with this matter as the, appellant itself, in sub paragraph (1) of paragraph 8 of its reply dated January 25, 1967 filed before the Industrial Tribunal, has categorically admitted the position that trader article 110 of the Articles of Association of the company the President of India can issue directives which become binding on the company; but the stand taken therein is that no such directive was ever issued by the President.
The further stand taken by the appellant is that the production bonus scheme was introduced with the consent and approval of the Central Government and that, on its introduction, the ex gratia payments of bonus were eliminated and, to that event, the decision of the Central Cabinet, dated December 2, 19.65 stood modified.
Even in respect of the Central Cabinet decision, relied on by the Union, the stand taken by the appellant, in its letter dated September 21, 1966 to the Chief Conciliation Officer, Punjab was that the Nangal unit had not 30 far received any instructions from the controlling Ministry regarding the Cabinet decision and that the position with regard to the Cabinet decision would be checked up by the management with their Head Office and the Ministry.
Therefore, it will be seen that it was not the case of the appellant that it will not be bound by the Cabinet decision, if the decision was there as a fact.
We will only refer to articles 67 and 110 of the Articles of Association of the appellant.
Under article 67 the Board of Directors of the company are entitled to exercise all such powers and to do all such acts and things as the company is authorised to exercise and do, but subject to the provisions of the Act and the directives, if any, the President may issue from time to time as contained in article 110.
Article 110 is as follows: "110.
Notwithstanding anything contained in any of these articles, the President may, from time to time, issue such directives as he may consider necessary in regard to the conduct of the business of the Company or Directors thereof and in like manner may vary and annul any such directive.
The Directors shall give immediate effect to directives so issued.
" Reading the two articles together, the position is very clear that the exercise of the powers of the Board of Directors of the com 4 Sup.
C1/69 13 718 pany are, apart from other restrictions, subject to the directives, if any, issued by the President from time to time, with regard to the conduct of the business of the company or Directors.
Any direction given by the President may, in like manner, be varied and annulled.
The Directors are bound to give immediate effect to the directives so issued.
As we are of opinion that the draft letter of October 14, 1966 (which is discussed later on by us) constitutes an offer made by the appellant to the workmen to opt for payment of bonus either according to the Cabinet decision or according to the production bonus scheme, it becomes unnecessary for us to investigate the nature of the power that is exercised either by the President or the Central Government when giving directions to the appellant company, under the Articles of Association.
For the same reason the question as to whether the circular letter of the Central Government, dated December 21, 1965 is a direction or order, as envisaged by the Articles of Association, does not also arise for consideration.
The decision of the Central Cabinet dated December 2, 1965 has been announced by the Minister in the Lok Sabha on December 9, 1965 and this decision has been communicated to the appellant by the concerned Ministry by Circular letter dated December 21, 1965.
There is no controversy that if the Cabinet decision is given effect to, the claim of the workmen for ex gratia payment of bonus as in previous years will have to be accepted, unless the appellant is able to establish its plea that the production bonus scheme was introduced with the consent and approval of the Central Government in lieu of ex gratia payments of bonus.
As to whether the appellant has succeeded in establishing this plea is an aspect which will be adverted to by us at a later stage.
In this case it is not necessary to consider the wider question as to how far, without anything else, the workmen would be able to lay any claim on the basis of any decision communicated by the Government to the appellant alone.
As pointed out by Mr. Sen, it is clear that the Central Cabinet 's decision was made known to the workmen who were given the option either to accept the Cabinet decision, as conveyed to the appellant by the Circular letter of December 21, 1965 or the production bonus scheme as formulated by the appellant Corporation.
Mr. Sen, the learned counsel for the Union, has invited our attention to the draft of a letter, dated October 14, 1966, which was intended to be sent by the workmen to the appellant.
That letter, which is addressed to the appellant Corporation, states: 719 "You have given us the option of accepting either the Cabinet decision conveyed to you vide Department of Chemical 's letter No. CH/COORD/64/65 dated 21st December 1965, the terms of which are annexed to this letter, or the Production Bonus Scheme as formulated by the FCI Board . " That the Circular letter of December 21, 1965 of the Government was made known to the workmen is clear from the evidence of the appellant 's witness R.W. 7 Shri Wadehra.
He has categorically stated that he joined the discussions between the representatives of the workmen and the Managing Director of the appellant corporation which took place at Delhi on October 15, 1966.
He further states that he came to know at that time that on October 14, 1966, during the discussions between the labour and the management at which he was not present, the workmen 's representatives had desired that the Cabinet 's directions may be made applicable to them with regard to bonus.
This witness further states that the Managing Director made an offer during the discussions and that offer is contained in the draft letter dated October 14, 1966, to which we have already referred.
The witness further states that the workmen declined to accept the offer of the management to opt for the production bonus scheme.
His evidence clearly shows that the management has communicated to the workmen the Cabinet decision, as conveyed by the Circular letter of the Government dated December 21, 1965.
This evidence further makes it clear that the workmen declined to opt for the production bonus scheme, but, on the other hand, insisted that bonus must be paid to them according to the Cabinet 's decision.
Mr. Gokhale attempted to explain away the effect of the draft letter of October 14, 1966 by urging that the Cabinet decision has been communicated only after the Union had submitted its charter of demands as early as August 19, 1966.
So long as the Cabinet decision has been communicated and option was given to the workmen, it does not in our opinion matter at what stage the communication was made to the labour.
Under the circumstances, it is idle for the management to contend either that the appellant is not bound to comply with the Cabinet decision or that the workmen are not entitled to make any claim on the basis of that decision.
That leaves us with the alternative contention, raised by the management, that production bonus scheme was introduced with the consent and approval of the Central Government and that on its introduction the ex gratia payment of bonus stood eliminated.
No doubt this is the stand that has been taken in the note attached by the appellant in its Circular letter dated September 9, 1966.
720 we have already adverted to that note in the earlier part of our judgment.
No materials, whatsoever, have been placed by the appellant in support of this contention.
The production bonus scheme itself does not state that it is in lieu of all other ex gratia payments.
There is no order of Government on record to show that the Circular letter of December 21, 1965 has been modified by the Government in any manner whatsoever.
The only evidence relied on by the appellant in this connection was the statement of R.W. 7, Shri Wadehra.
He says that after a full consideration of all the relevant factors and in consultation and with the approval of the Central Government, a production bonus scheme was introduced by the appellant with effect from the year 1965 66 and that he was himself present at a meeting in the Ministry when a decision was taken that the Corporation might introduce the production bonus scheme and that the workmen should be paid production bonus in addition to the bonus payable under the Bonus Act.
He further speaks to the fact that production bonus scheme replaced the ad hoc ex gratia bonus made in the past years.
Excepting this bare statement in the oral evidence, no order of the Central Government to this effect, or modifying its previous decision, has been placed before the Tribunal.
Under those circumstances, the Tribunal was perfectly justified in holding that the appellant has not established that on the introduction of the production bonus scheme, all payments of ex gratia bonus ceased.
The striking down of sub section
(2) of section 34 of the Bonus Act, by this Court, has no effect, as rightly held by the Tribunal, in recognising the claim of the workmen.
When once it is established, as in this case.
that the Cabinet decision regarding ex gratia payment of bonus has been communicated to the workmen with an option to accept the said decision or the production bonus scheme and the labour wanted the Cabinet decision to be implemented.
it follows that an agreement, under section 34(3) of the said Act has come into effect and it is valid.
Hence we are in agreement with the views expressed by the Tribunal that the ex gratia payments, claimed by the workmen, are saved by sub section
(3) of section 34 of the Bonus Act.
There was a feeble argument, attempted to be raised by Mr. Gokhale, that the application of the Cabinet decision is conditional upon the maintenance of the level of performance of the undertaking in individual cases.
The Tribunal has held that the level of performance of workmen, in the years in question, has been maintained.
In this connection, among other matters, it has referred to a statement made in the April May 1966 issue of the "FCI News", a journal published by the appellant.
This journal is issued after the year has come to an end and there is a state 721 ment to the effect that the Nangal Fertilizer factory has exceeded the revised production targets fixed for Calcium Ammonium Nitrate (CAN) and Heavy Water and the said performance, despite the serious handicap suffered because of the severe power cuts enforced since November 1965, was commendable.
We are satisfied that the finding recorded by the Tribunal, on this point, is justified.
Once it is held, as we do, in agreement with the Tribunal, that the appellant was bound to implement the Circular of the Central Government, dated December 21, 1965, it follows that the appellant was bound to pay the ex gratig, payment of bonus, as claimed by the workmen for the years in question and that the appellant is further not entitled to deduct the advance wages of 4 days paid for the year 1965 66.
The decision of the Tribunal, on this aspect is correct and is affirmed.
Before we take up the question regarding the wages for the strike period, it is necessary to give a clarification regarding an observation made by the Tribunal regarding the production bonus scheme.
While discussing the claim of the Union regarding ex gratia payment of bonus as per the Cabinet decision, the Tribunal has observed .that the production bonus scheme introduced by the appellant is in addition to the ex gratia payment which the workmen are entitled to We do not express any opinion regarding the correctness or otherwise of this view of the Tribunal, excepting to state that the opinion expressed by the Tribunal was uncalled for and outside the scope of the reference.
This leaves us with the question of the claim of labour for wages for the strike period from October 17 to October 31, 1966.
The Tribunal has held that the strike was both legal and justified and it has awarded the workmen half the wages for that period.
This finding of the Tribunal is attacked on behalf of the appellant by Mr. Gokhale.
The learned counsel did not urge that the strike was illegal.
, but on the other hand he pressed before us that the strike was thoroughly unjustified and the finding of the Tribunal was contrary to the evidence on record and also perverse.
The counsel urged that various items of evidence which have a very vital bearing on a consideration of this question had not been adverted to at all by the Tribunal.
On the other hand Mr. Sen, learned counsel for the Union, pointed out that the Union made various attempts ,for having its claim regarding bonus amicably settled with.
the management.
The management would not even agree to implement the directions given by the Central Government.
It was very evasive in its replies when pressed to act upon the Cabinet decision.
Several mediation talks were held and conciliation also failed.
Therefore, under those circumstances, the workmen honestly felt that a responsible body like the appellant was not 722 amenable to reason and hence a sense of frustration set in and in consequence the workmen went on strike to draw the pointed attention of the management to the demands made by the Union.
Under those circumstances, the counsel urged that the workmen 's going on strike was justified and the Tribunal had also awarded only half wages for that period.
Counsel urged that this finding had been arrived at on a proper consideration of the materials available before the Tribunal.
We are not satisfied that the Tribunal has properly considered and adverted to the relevant evidence on record before it came to a finding in favour of the workmen.
The Union submitted a charter of demands on August 19, 1966.
One of the demands related to the payment of bonus for the years 1964 65 and 1965 66 at the same rate at which it was paid for the previous years.
The Union has stated that the workmen will resort to coercive measures if the demands are not complied with within 15 days.
The period of notice given should have expired on September 3, 1966.
By that time the Conciliation Officer had intervened and he sent a letter, dated August 30, 1966 to the management and the Union that he had taken up the dispute for the purpose of conciliation and requested both ' the management and the Union to attend the conciliation proceedings on September 14, 1966.
In the meanwhile the Union had started agitation on September 3, 1966 by starting a general hunger strike and actually on September 5, 1966 a 96 hour hunger strike was also resorted to This appears to have continued till September 12, 1966.
The appellant announced on September 9, 1966 the introduction of the production bonus scheme with effect from 1965 66 and also indicating the circumstances under which the ex gratia payment of bonus was being made on prior occasions and as to why it was being discontinued.
The hunger strike by Shri Ramthirtha, the President of the Union, was commenced from September 12 and continued till September 17, 1966.
The conciliation proceedings which had been posted to September 14, 1966 could not be taken up on that day as the Officer was on tour.
On September 17, 1966 the workmen started a one hour strike in each of the shifts.
The Chief Conciliation Officer intervened and he fixed a meeting for September 20, 1966.
The appellant management gave a written statement to the said officer on September 21, 1966 setting out its stand in reply to the demand made by the workmen.
They referred,, in this written statement, to the Circular issued by them on September 9, 1966 regarding the principles governing the payment of bonus.
The management also stated that the Nancy unit had not received instructions from the Controlling Ministry regarding the Cabinet 723 decision and that it would check up with the Head Office and the Ministry about this matter.
Nevertheless, on October 3, 1966, Shri Ramthirth, the President of the Union and his group started an agitation that the management had gone behind its commitments.
On October 12, 1966 the Chief Conciliation Officer again visited Nangal and had discussion with the representatives of the management and the Union and this continued till October 15, 1966.
Shri Wadehra, R.W. 7, speaks to these facts and he also states that Shri Amarnath Vidhyalankar, a Member of Parliament, attended the proceedings on October 15, 1966 on behalf of the workmen.
Shri Wadehra, in his affidavit dated June 24, 1967 has again stated that the Chief Conciliation Officer invited representatives of the workmen to come to Delhi to discuss the matter with the higher authorities of the appellant Corporation.
Shri Wadehra further states that he himself joined the negotiations which took place at Delhi from October 15, 1966 and that the said negotiations were attended by the Managing Director & Chairman on behalf of the appellant and Mr. Vidhyalankar attended the proceedings along with certain other representatives of the workmen.
Mr. Wadehra further states that on the evening of October 15, 1966 the workmen 's representatives intimated that they would discuss the outcome of the negotiations at Delhi with the general body of the workmen at Nangal, the next day, and then return to Delhi and report the reaction of the workmen regarding the proposals discussed during the negotiations.
But, instead of keeping this promise the representatives of workmen addressed a public meeting on the evening of October 15, 1966 and incited the workmen to strike work from October 17, 1966.
The strike was actually commenced from October 17.
Mr. Wadehra also stated that a telegram from the Secretary of the Labour Ministry inviting all the parties to attend the conciliation meeting at Chandigarh on October 17, 1966 was received but the labour did not care to attend that meeting.
We have referred to some of the incidents which have taken place prior to October 17, 1966 only to show the attitude that the labour was adopting in respect of their demands.
There is a further circumstance that a telegram, dated October 13, 1966 had been sent by the Labour Commissioner fixing conciliation proceedings for October 17, 1966, at Chandigarh and a telegram was also sent by Shri Vidhyalankar, who was representing the workmen, to the Union President request his to stay the strike for a day.
So far as the telegram stated to have been sent by Shri Vidhyalankar, the receipt of the same is admitted, but the Union is not prepared to accept the receipt of the telegram, dated October 13, 1966 stated to have been sent by the Labour Commis 724 sioner.
We will presently show that the plea of the Union in this regard cannot be accepted because there is sufficient evidence on record to show that the telegram had been sent by the Labour Commissioner and must have been received by the President of the Union.
We have already referred to the statement of Shri Wadehra about the receipt, by the management, of the said telegram fixing conciliation proceedings for October 17, 1966.
The telegram is Exhibit RW 3/1 which is dated October 13, 1966 and sent from Chandigarh.
The telegram is sent to the appellant and to the Union.
The Labour Commissioner requests the attendance of the parties to the conciliation meeting on October 17, at 11 a.m.
Exhibit R.W. 14 is a letter dated October 13, 1966 sent ' by the Labour Commissioner to the appellant and the unions concerned, containing a copy of the telegram sent by him on that date regarding the conciliation proceedings being fixed on October 17, at Chandigarh and requesting the parties to appear before him.
That the said telegram and letter have been sent is proved by the evidence of R.W. 1 who is an Assistant in the Labour Commissioner 's Office at Chandigarh and who has produced the necessary file pertaining to the same.
That the telegram sent by the Labour Commissioner has been delivered is also proved by R.W. 3 who has produced the delivery sheets in respect of the telegram.
Relying upon these circumstances, quite naturally Mr. Gokhale strenuously urged that the receipt of the telegram issued by the Labour Commissioner is purposely denied by the Union to profess ignorance about the conciliation proceedings being taken up on October 17, 1966, because the Union was in no mood to participate in those proceedings.
Mr. Sen, no doubt relied upon the evidence of the workmen 's witness No. 3, Shri Ramthirtha, President of the Union, that no telegram was received from the Labour Commissioner regarding conciliation proceedings to take place on October 17, 1966, but this witness himself accepts that the telegram sent by Mr. Vidhyalankar was received by him.
We are inclined to accept the contention of Mr. Gokhale that the denial by the Union of the receipt of the telegram sent by the Labour Commissioner cannot be accepted.
Mr. Gokhale, learned counsel, referred us to the decision of this Court in The Managemnt of Chandramalai Estate, Erna Kulam vs its Workmen (1) and particularly to the following observations at p. 455: (1) ; ' 725 "While on the one hand it has to be remembered that strike is a legitimate and sometimes unavoidable weapon in the hands of labour it is equally important to remember that indiscriminate and hasty use of this weapon should not be encouraged.
It will not be right for labour to think that for any kind of demand a strike can be commenced with impunity without exhausting reasonable avenues for peaceful achievement of their objects.
There may be cases where the demand is of such an urgent and serious nature that it would not be reasonable to expect labour to wait till after asking the Government to make a reference.
In such cases, strike even before such a request has been made may well be justified ." Mr. Gokhale urged that there was absolutely no urgency in the case before us because the management was prepared to pay the bonus as admitted by them and the controversy was really regarding the additional ex gratia payment.
Further, counsel pointed out that the Conciliation Officer had not made any report about conciliation having failed and in fact the telegram sent by the Labour Commissioner as late as October 13, 1966 clearly showed that he was still 'continuing the proceedings.
Counsel also pointed out that after having separated from the Delhi meeting on October 15, 1966, promising to consider the proposals put before it by the management and communicate the same to the management, the leaders of the workmen incited them to go on strike at the meeting held the very next day and actually the strike itself commenced from October 17, 1966.
No doubt Mr. Sen, learned counsel, pointed out that there was nothing for the management to consider in their meeting the demands of the workmen, because the Cabinet decision was well known.
He also urged that the workmen obviously felt that the management was not adopting a reasonable attitude and hence they resorted to a strike, which was justified under the circumstances.
We may also indicate that there is evidence, let in by the management, to show that during the strike period and even prior to that, several of the workmen resorted to violence and other acts of indecency.
Evidence has also been let in to show that the workmen continued to strike even after a notification, dated October 31, 1966 was issued by the President of India prohibiting the strike and requiring the workers to report for duty.
We do not propose to dwell on these matters, because we have only to consider the justification or otherwise of the strike from October 17 to October 31, 1966.
The management was prepared to pay at all times the bonus as per the Bonus Act.
They had also announced on September 726 9, 1966 the introduction of the production bonus scheme.
They were actively taking part in the conciliation proceedings.
The appellant also made to the Union certain proposals on October 15, 1966 at the conference held at Delhi which 'proposals ' the representatives of the workmen promised to discuss with the workmen and give a reply to the appellant.
But, on October 16, 1966, at a meeting of the workmen, they were incited to go on strike.
The receipt of the telegram of October 13, 1966 of the Labour Commissioner, fixing October 17, 1966 for further discussions and inviting the Union and the management to attend the meeting, is falsely denied by the Union.
The receipt of Sri Vidhyalankar 's telegram requesting the Union to put off going on strike by one day is admitted by the President of the Union, but that request was not complied with by the workmen.
Sri Vidhyalankar, it must be remembered, was representing the workmen in certain conciliation meetings.
All these circumstances clearly show that the demand of the Union regarding ex gratia bonus cannot be considered to be of an 'urgent and serious nature '.
They also show that the launching of the strike was unjustified.
It therefore follows that the workmen are not entitled to any wages for the period of the strike viz., from October 17 to October 31, 1966.
To this extent the award of the Industrial Tribunal will have to be set aside.
In the result, we set aside the award of the Industrial Tribunal in so far as it directs the appellant to pay the workmen half the wages for the strike period from October 17 to October 31, 1966; and, to that extent, the appeal is allowed.
In other respects the appeal will stand dismissed.
As the appellant has failed on the substantial question, it wilt pay the costs of the respondent workmen.
Y.P. Appeal partly allowed.
| IN-Abs | For the first year of production by a unit of the appellant Corporation (a Central Government Undertaking), it granted ad hoc bonus for good performance to the unit 's employees.
For the next year, the appellant granted bonus as recommended by the Bonus.
Commission and also made ex gratia payment for good performance.
The appellant decided to pay bonus for the third year, strictly in accordance with the Payment of Bonus Ordinance and the Act, which had come into force then.
The Central Minister announced in the Lok Sabha that with the specific approval of the Central Cabinet ex gratia payments had been allowed in the past by way of bonus to the employees and this was communicated by the Government of India by a letter.
In the fourth year the production did not exceed the target, and the appellant offered to pay only the statutory bonus under the Bonus Ordinance and Act 'and stated that a production scheme had been introduced, that with the introduction of the production bonus scheme all ex gratia payments were eliminated and that this scheme was approved by the Government of India.
The workmen demanded that the bonus should be paid for the third and fourth years at the same rate as it had been paid in previous years and the appellant was bound to act according to the decision of the Central Cabinet and communicated by the letter.
The workmen also stated that if their demands were not met within 15 days, they would be forced to adopt agitation approaches.
Conciliation proceedings started.
The appellant offered the workmen the option of either accepting the Cabinet decision or the production Bonus Scheme as formulated by the management.
The workmen desired that the Cabinet 's directions be made applicable to them, declined the offer to opt for the production bonus, and prepared a draft of a letter which was intended to be sent by the workmen to the appellant stating that the offer was also made.
The workmen went on strike and the reference to adjudication was made.
The Tribunal accepted the claim of the workmen, and held that the strike was justified.
HELD: (i) The appellant failed to establish that production bonus scheme was introduced with the consent and approval of the Central Government and that on its introduction the ex gratia payment of bonus stood eliminated.
The evidence established that the Cabinet 's decision was made known to the workmen, who were given the option either to accept the Cabinet decision or the production bonus scheme as formulated by the 'appellant.
So long as the Cabinet decision had been communicated and option was given to the workmen, it did not matter at what stage the communication was made to the labour.
The fact that the communication of the 707 Cabinet decision after the submission of the charter of demands was of no consequence.
The striking down of section 34(2) of the Bonus Act by this Court has no bearing in considering the claim of the.
respondent in this case.
When once it was established, as this case, that the Cabinet decision regarding ex gratia payment of bonus had been communicated to the workmen with an option to accept the said decision or the production bonus scheme and the labour wanted the Cabinet decision to be implemented, it followed that an agreement, under section 34(3) of the said ' Act had come into effect and it was valid.
[720] Therefore, the workmen were entitled to ex gratia payment of bonus as in the previous years.
(ii) The management was prepared to pay at all times the bonus as per the Bonus Act.
They had also announced the introduction of the production bonus scheme.
They were actively taking part in the conciliation proceedings.
The appellant also made to the Union certain proposals at the conference which 'proposals ' the representatives of the workmen promised to discuss with the workmen and give a reply to the appellant.
But, at a meeting of the workmen next day, they were incited to go on strike.
The receipt of the telegram sent by the Labour Commissioner fixing a date for further discussions and inviting the Union and the management to attend the meeting, was falsely denied by the Union.
The receipt of a telegram from a person representing the workmen at conciliation meeting, requesting the Union to put off going on strike by one day was admitted by the President of the Union, but that request was not complied with by the workmen.
All these circumstances clearly established that the demand of the Union regarding ex gratia bonus could not be considered to be of an 'urgent 'and serious nature '.
They also showed that the launching of the strike was unjustified.
[725 H] Therefore, the workmen were not entitled to any wages for the period of strike.
|
iminal Appeal No.159 of 1966.
Appeal by special leave from the judgment and order dated November 24, 1965 of the Bombay High Court in Criminal Misc. "Application No. 323 of 1965.
S.C. A garwala, for the appellant.
M.S.K. Sastri and S.P. Nayar, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal from the judgment of the Bombay High Court passed in exercise of ordinary original civil jurisdiction by which the ,appellants were found guilty of having committed contempt of Mr. Justice Tarkunde in his judicial capacity and of the court.
Appellant No. 2 D.R. Goel, who is the Editor, Printer and Publisher of Perspective Publications (P) Ltd. appellant No. 1, was sentenced to simple imprisonment for one month together with fine amounting to Rs. 1,000/ , in default of payment of fine he was to undergo further simple imprisonment 781 for the same period.
The appellants were also directed to pay the costs incurred by the State.
On behalf of the first appellant it has been stated at the bar that the appeal is not being pressed.
The background in which the impugned article was published ' on April 24, 1965, in a weekly periodical called "Mainstream" which is a publication brought out by the first appellant may be set out.
In the year 1960 a suit was filed by one Krishnaraj Thackersey against the weekly newspaper "Blitz" and its Editor and others claiming Rs. 3 lacs as damages for libel.
The hearing in that suit commenced on the original side of the Bombay High Court on June 24, 1964.
The delivery of the judgment commenced on January 19, 1965 and continued till February 12, 1965.
After June 24, 1964, that suit was heard from day to day by Mr. Justice Tarkunde.
The suit was decreed in the sum of Rs. 3 lacs.
An appeal is pending before a division bench of the High Court against that judgment.
The impugned article is stated to have been contributed by a person under the name of "Scribbler" but appellant No. 2 has taken full responsibility for its publication.
Its heading was "STORY OF A LOAN and Blitz Thackersey Libel Case".
It is unnecessary to reproduce the whole article which appears verbatim in the judgment of the High Court.
The article has been ingeniously and cleverly worded.
The salient matters mentioned in the article are these: After paying a tribute to the Indian judiciary the writersays that according to the report in "Prajatantra" a Gujarati paper architects Khare Tarkunde Private Limited of Nagpur, hereinafter called "Khare Tarkunde" (which is described a Firm in the article) got a loan facility of Rs. 10 lacs from the Bank of India on December 7, 1964.
The partners of Khare Tarkunde included the father, two brothers and some other relations of Justice Tarkunde who awarded a decree for Rs. 3 lacs as damages against Blitz and in favour of Thackersey.
It is pointed out that the date on which Rs. 10 lacs loan facility was granted by the Bank of India was about five and a half months after the Thackersey Blitz libel suit had begun and just over six weeks before Justice Tarkunde began delivering his "marathon judgment" on January 19, 1965.
It is then said that for Rs. 10 lacs loan facility granted to Khare Tarkunde, the New India Assurance Co. stood guarantee and that the two Directors of the Bank of India who voted in favour of the credit of Rs. 10 lacs being granted to Khare Tarkunde were Thackersey and Jaisinh Vithaldas (believed to be a relative of Thackersey).
Next it is stated that one of the Directors of the New India Assurance that stood guarantee for the loan facility was N.K. Petigara, who was also a senior partner of M/s. Mulla & Mulla Craigie Blunt & Caroe, Solicitors of Thackersey in the Blitz Thackersey Libel Case before Justice Tarkunde 4 Sup.
CI/69 17 782 Emphasis is laid on the fact that Khare Tarktunde had a capital of Rs. 5 lacs only and the balance sheet of the firm of June 1964 revealed indebtedness to various financiers to the tune of Rs. 14 lacs.
Thus Khare Tarkunde is stated to be "lucky to get against all this a handsome loan of Rs. 10 lacs from the Bank of India".
The writer refers to the Code among college teachers and university professors of not examining papers when their own children and near relatives sit for examination and adds that Justice Tarkunde himself will recognize the rightness of such a Code.
Referring to the unimpeachable integrity and reputation of judges of the Bombay High Court, the writer proceeds to say "there must not be allowed to be raised even the faintest whisper of any misgiving on that score.
" Paragraph 24 deserves to be reproduced : "If Sri Krishna Thackersey did not lay it bare at the time of the suit that he was one of the sponsors of a contract of which the judge 's relations were the beneficiaries, it is up to the Chief Justice of the Supreme Court and the Bombay High Court including Justice Tarkunde as also the ever vigilant members of the Bar to consider all the implications of these disclosures which have distressed a common citizen like me, so that the finest traditions of our judiciary may be preserved intact.
" A petition was filed before the Bombay High Court by the State of Maharashtra pointing out that the aforesaid article contained scandalous allegations and was calculated to obstruct the administration of justice and constituted gross contempt of court.
The article purported to state certain facts relating to the transaction between Khare Tarkunde and the Bank which were false and there were several mis statements and suppression of facts some of which were: (a) The article wrongly stated that the father of Mr. Justice Tarkunde was a partner in Khare Tarkunde; and (b) The article falsely described the transaction as a 'loan ' by the Bank to Khare Tarkunde.
In fact the said transaction was only a guarantee given by the Bank which undertook to pay to the Govt.
any amount not exceeding Rs. 10 lacs in the event of Khare Tarkunde being unable to perform its obligations.
The Bank was secured by a further guarantee given by the New India Assurance Co. Ltd. undertaking to secure the Bank in the event of the Bank having to pay the said amount or any part thereof.
Appellant No. 2 who also happens to be a Director and Principal Officer of the first appellant, filed a reply raising some objec 783 tions of a legal and technical nature ,and took up the position that the impugned article was based on a report published in "Prajatantra" from which all the facts stated in the article were incorporated.
It was asserted that certain 'major facts ' had been verified by the appellant and found to be true.
It was admitted that upon reading the petition for taking contempt proceedings it was found by appellant No. 2 that there were certain incorrect statements in the article.
It was claimed that the article had been published in a bona fide belief that whatever was stated in the article in "Prajatantra" was true.
The intention was to convey to the public at large that it was incumbent on the plaintiff Thackersey and Pettigara, one of the partners of Mulla & Mulla etc.
, his attorneys to inform Justice Tarkunde that the plaintiff had voted for a resolution of the Board of Directors of the Bank of India which, without reasonable doubt, would help Khare Tarkunde in which Tarkunde happened to be a brother of the Judge.
The High Court analysed the implications of the facts stated in each paragraph of the impugned article in great detail and observed : " . . reading the article as a whole, taking care not to read into it anything more than its plain language implies and making every allowance for literary style and rhetorical flourish expressions which were often used in the arguments for the.
respondents it is impossible to avoid the conclusions that this article exceeds the bounds of fair and reasonable criticism.
In so far as it suggests that there is some sort of casual connection between the granting of the loan to M/s. Khare Tarkunde Pvt. Ltd., and the judgment of Mr. Justice Tarkunde in the Blitz Thackersey case, it clearly attempts to lower the learned judge in his judicial capacity not to mention the fact that it would also tend to shake the confidence of the lay public in the High Court and impair the due administration of justice in that Court.
In so far as there is a suggestion made be it ever so faint that Mr. Justice Tarkunde knew or must have known of the loan to his brother 's firm before he delivered the judgment in the case, the article is malicious and 'not in good faith." The High Court also examined the misstatements and inaccuracies in the impugned article and held that there was no foundation for the suggestion that Khare Tarkunde was an impecunious concern and therefore was "lucky" to get the handsome loan nor for the suggestion that either Thackersey and his co Directors in the Bank of India or Thackersey 's solicitor and his co Directors in the New India Assurance Co. went out of their way to grant accom 784 modation to Khare Tarkunde.
The High Court found no basis for the insinuation that there was any connection between the loan and the judgment in the Blitz Thackersey case or that Justice Tarkunde knew or might have Known about any loan having been granted to his brother 's firm.
No attempt was made to justify these suggestions in the return or in the argument before the High Court and all that was urged was that the words used by contestable did not give rise to the said imputations or innuendos and that the contemnor was only trying to communicate to the public at large what has been stated before.
It is needless to refer to the other points raised before and decided by the High Court because none of them has been argued before us.
In this appeal, counsel for appellant No. 2 has made some attempt to establish that no aspersion was cast on the integrity of Justice Tarkunde in the article nor was any imputation of dishonesty made.
His second contention is that proceedings for contempt for scandalising a Judge have become obsolete and the proper remedy in such a situation is for the Judge to institute action for libel.
Thirdly, it is said that there was no evidence before the High Court that Justice Tarkunde did not know about the transaction or the dealings between the firm in which his brother was a partner and the bank of which Thackersey was a director.
If, it is submitted, the allegations made in the article were truthful or had been made bona fide in the belief that they were truthful the High Court ought not to have found appellant No. 2 guilty of contempt.
At any rate, according to counsel, the statements contained in the article only made out a charge of bias against the Judge and if such a charge is made it cannot be regarded as contempt.
On the first point our attention has been invited to the paragraphs in the article containing expression of high opinion held by the writer of the judiciary in India.
It is suggested that his attempt was only to make a fair and legitimate criticism of the proceedings in the Thackersey suit against the "Blitz" weekly.
It has been emphasised in the article that the damages which were awarded to the tune of Rs. 3 lakhs were almost punitive and that it was a rare phenomenon that the plaintiff (Thackersey) did not step into the witness box and also a permanent injunction had been granted preventing Blitz from printing anything based on the subject matter of litigation.
The law involving freedom of press fully warranted such criticism of a judgment or of the proceedings in a suit in a court of law.
It is true that the writer of the article could exercise his right of fair and reasonable criticism and the matters which have been mentioned in some of the paragraphs may not justify any proceedings being taken for contempt but the article read as a whole leaves 785 no doubt that the conclusions of the High Court were unexceptionable.
It was a skillful attempt on the part of the writer to impute dishonesty and lack of integrity to Justice Tarkunde in the matter of Thackersey Blitz suit, the imputation being indirect and mostly by innuendo that it was on account of the transaction and the dealings mentioned in the article that the suit of Thackersey was decreed in the sum of Rs. 3 lakhs which was the full amount of damages claimed by Thackersey.
It may be that the article also suggests that Thackersey and his ,attorneys were to blame inasmuch as they did not inform the Judge about the transactions of Khare Tarkunde with the Bank of India with which Thackersey was associated in his capacity as a director but that cannot detract from the obvious implications and insinuations made in various paragraphs of the article which immediately create a strong prejudicial impact on the mind of the reader about the lack of honesty, integrity and impartiality on the part of Justice Tarkunde in deciding the Thackersey Blitz suit.
On the second point counsel for appellant No. 2 has relied a great deal on certain decisions of the Privy Council and the Australian and American courts.
In the matter of a Special Reference from the Bahama Islands(1) a letter was published in a colonial newspaper containing sarcastic allusions to a refusal by the Chief Justice to accept 'a gift of pineapples.
No judgment was given by the Privy Council but their lordships made a report to Her Majesty that the impugned letter though it might have been made subject of proceedings for libel was not, in the circumstances, calculated to obstruct or interfere with the course of justice or the due administration of ,law and, therefore, did ,not constitute contempt of court.
In that case there was no question of scandalising the court nor had any imputation been made against the Chief Justice in respect of any judicial proceedings pending before him or disposed of in his court.
It is the next decision of the Privy Council in McLeod vs St.
Aubyn(2) on which a great deal of argument has been built up before us that the courts, at least in England, have stopped committing anyone for contempt for publication of scandalising matter respecting the court after adjudication as well as pending a case before it.
That case came by way of an appeal from an order of the Acting Chief Justice St. Aubyn of the Supreme Court of St. Vincent committing one McLeod to prison for 14 days for alleged contempt of court.
It was said inter alia in the impugned publication that in Mr. Trifford the public had no confidence and his locus tenons, Mr. St. Aubya was reducing the judicial character to the level of a clown.
There were several other sarcastic and libelous remarks made about the Acting Chief Justice.
While recognizing publication of scandalous matter of the court itself ,as a head of contempt of court as (1) (2) 786 laid down by Lord Hardwicke in Re: Read and Huggonson(1), Lord Morris proceeded to make the oft quoted observation "committals for contempt of Court 'by itself have become obsolete in this country even though in small colonies consisting principally of coloured population committals might be necessary in proper cases".
Only a year later Lord Russel of Killowen C.J., in The Queen vs Gray(2) reaffirmed that any act done or writing published calculated to bring a court or a judge of the court in contempt, or to lower his authority, was a contempt of court.
The learned Chief Justice made it clear that judges and courts were alike open to criticism and if reasonable argument or expostulation was offered against any judicial act as contrary to law or the public good no court could or would treat that as contempt of court but it was to be remembered that the liberty of the press was not greater and no less than the liberty of every subject.
In that case it was held that there was personal scurrilous abuse of a judge and it constituted contempt.
All the three cases which have been discussed 'above were noticed by the Privy Council in Debi Prasad Sharma & Ors.
vs The King Emperor(3) where contempt proceedings had been taken in respect of editorial comments published in a newspaper based or a news item that the Chief Justice of Allahabad High Court in his administrative capacity had issued a circular to judicial officers enjoining on them to raise contributions to the war fund and it was suggested that he had done a thing which would lower the prestige of the court in the eyes of the public.
This is what was said at page 224 : "In In re a Special Reference from the Bahama Islands , the test applied by the very strong Board which heard the reference was whether the words complained of were in the circumstances calculated to obstruct or interfere with the course of justice and the due, administration of the law.
In Reg.
vs Gray [1900] 2Q.B. 36 it was shown that the offence of scandalising the court itself was not obsolete in this country.
A very scandalous attack had been made on a judge for his judicial utterances while sitting in a criminal case on circuit, and it was with the foregoing opinions on record that Lord Russel of Killowen C.J. adopting the expression of Wilmot C.J. in his opinion in Rex vs Almon (1765) Wilmot 's Notes of Opinions 243, which is the source of much of the present law on the subject, spoke of the article complained of as calculated to lower the authority of the judge.
" It is significant that their lordships made a distinction between a case where there had been criticism of the administrative act of (1) (2) (3) 70 I.A. 216.
787 a Chief Justice and an imputation on him for having done or omitted to have done something in the administration of justice.
It is further noteworthy that the law laid down in McLeod vs St. Aubyn(1) was not followed and it was emphasised that Reg.
vs Gray(2) showed that the offence of scandalising the court itself was not obsolete in England.
In Rex vs Editor of the New Statesman(3) an article had been published in the New Statesman regarding the verdict by Mr. Justice Savory given in a libel action brought by the Editor of the "Morning Post" against Dr. Marie Slopes (the well known advocate of birth control) in which it was said, inter alia, "the serious point in this case, however, is that an individual owning to such views as those of Dr. Marie Stores cannot 'apparently hope for a fair hearing in a Court presided over by Mr. Justice Avory and there are so many Avorys".
On behalf of the contemnor McLeod vs St. A ubyn(1) was sought to be pressed into service.
The Lord Chief Justice in delivering the judgment of the Court said that the principle applicable to such cases was the one stated in Reg.
vs Gray(2) and relied on the observations of Lord Russel at p. 40.
It was observed that the article imputed unfairness and lack of impartiality to a judge in the discharge of his judicial duties.
The gravamen of the offence was that by lowering his authority it interfered with the performance of his judicial functions.
Again in Ambard vs Attorney General for Trinidad and Tobago(4) the law enunciated in Reg.
vs Gray(2) by Lord Russel of Killowen was applied and it was said at page 335: "But whether the authority and position of an individual judge, or the due administration of justice, is concerned, no wrong is committed by any member of the public who exercises the ordinary right of criticising, in good faith, in private or public, the public act done in the seat of justice.
The path of criticism is a public way; the wrong headed are permitted to err therein; provided that members of the public abstain from imputing improper motives to those taking part in the administration of justice, and are genuinely exercising a right of criticism, and not acting in malice, or attempting to impair the administration of justice, they are immune.
Justice is not a cloistered virtue; she must be allowed to suffer the scrutiny and respectful, even though spoken, comments of ordinary men.
" It was, however, held that there was no evidence upon which the court could find that the alleged contemnor had exceeded fair and temperate criticism and that he had acted with untruth or malice (1) [1899] A .C. 549.
(2) (3) (4) 788 and with the direct object of bringing the administration of justice into disrepute.
Lord Denning M.R. in Reg vs Commissioner of Police of the Metropolis, Ex parte Blackburn (No. 2)(1) made some pertinent observations about the right of every man, in Parliament or out of it, in the Press or over the broadcast, to make fair and even outspoken comment on matters of public interest.
In the words of the Master of Rolls, "those who comment can deal faithfully with all that is done in a court of justice.
They can say that we are mistaken, and our decisions erroneous, whether they are subject to appeal or not.
All we would ask is that those who criticise us will remember that, from the nature of our office, we cannot reply to their criticism.
We cannot enter into public controversy.
Still less into political controversy.
We must rely on our conduct itself to be its own vindication.
" In that case Mr. Quintin Hogg had written an article in "Punch" in which he had been critical of the Court of Appeal and had even made some erroneous statements.
But reading of the article the salient passage of which is set out in the judgment of the Master of the Rolls makes it quite clear that there was no attempt to scandalise the Court and impute any dishonourable or dishonest motives or to suggest any lack of integrity in any particular Judge.
Oswald in his book on the Contempt of Court has expressed the view that it would be going a great deal too far to say that commitments for contempt of court by scandalising the Court itself have become obsolete, and that there does not seem to be any good reason for ignoring the principles which govern the numerous early cases on the subject.
The American and the Australian cases viz., John D. Pennekamp and The Miami Herald Publishing Co. vs State of Florida(2) and Bell vs Stewart(a) to which reference h.as been made on be half of appellant No. 2 can hardly be of much assistance because in this country principles have become crystallized by the decisions of the High Courts and of this Court in which the principles followed by English Courts have been mostly adopted.
We would now advert to the decisions of this Court.
It was held in Bathina Ramakrishna Reddy vs The State of Madras(4) that the fact that the defamation of a Judge of a subordinate court constitutes an offence under section 499 of the Indian Penal Code did not oust the jurisdiction of the High Court to take cognizance of the act as a contempt of court.
In that .case in an article in a Telugu weekly it was alleged that the Stationary Sub Magistrate of Kovvur was known to the people of the locality for harassing (1) [1968].2 W.L.R. 1206.
(2) ; (3 ) (4) ; 789 litigants in various ways etc.
Mukherjea, J., (as he then was) who delivered the judgment described the article as a scurrilous attack on the integrity and honesty of a judicial officer.
It was observed that if the allegations were false, they could not undermine the confidence of the public in the administration of justice and bring the judiciary into disrepute.
The .appellant there had taken the sole responsibility regarding the publication of the article and was not in a position to substantiate by evidence any of the allegations made therein.
It was held that he could not be said to have acted bona fide, "even if good faith can be held to be a defence at all in a proceeding for contempt".
The decision in Re: The Editor, Printer and Publisher of "The Times of India" and In re Aswini Kumar Ghose and Anr.
vs Arabinda Bose & Anr.(1) is very apposite and may be.next referred to.
In a leading article in "The Times of India" on the judgment of this Court in Aswini Kumar Ghose vs Arabinda Bose & Ant.(2) the burden was that if in a singularly oblique and infelicitous manner the Supreme Court had by a majority decision tolled the knell of the much maligned dual system prevailing in the Calcutta and Bombay High Courts by holding that the right to practise in any High Court conferred on advocates of the Supreme Court had made the rules in force in those High Courts requiring advocates appearing on the original side to be instructed by attorneys inapplicable to them.
This is what was said by Mahajan, J., (as he then was) speaking for the Court: "No objection could have been taken to the article had it merely preached to the courts of law the sermon of divine detachment.
But when it proceeded to attribute improper motives to the Judges, it not only transgressed the limits of fair and bona fide criticism but had a clear tendency 'to affect the dignity and prestige of this Court.
The article in question was thus a gross contempt of court.
It is obvious that if an impression is created in the minds of the public that the judges in the highest Court in the land act on extraneous considerations in deciding cases, the confidence of the whole community in the administration of justice is bound to be undermined and no greater mischief than that can possibly be imagined." The Editor, Printer and Publisher of the newspaper tendered an apology which was accepted; but this Court concurred in the expression of views in Ambard vs Attorney General of Trinidad(3), a passage from which has already been extracted.
The guiding principles to be followed by courts in contempt proceedings were enunciated in Brahma Prakash Sharma & Ors.
vs The State of (1) ; (2) ; (3) 790 Uttar Pradesh(1).
The judgment again was delivered by Mukherjea, J., (as he then was) and the English decisions including those of the Privy Council were discussed.
It is necessary to refer only to the principles laid down for cases of the present kind i.e. scandalising the court.
It has been observed that there are two primary considerations which should weigh with the court when it is called upon to exercise summary power in cases of contempt committed by "scandalising" the court itself.
In the first place, the reflection on the conduct or character of a Judge in reference to the discharge of his judicial duties would not be contempt, if such reflection is made in the exercise of the right of fair and reasonable criticism which every citizen possesses in respect of public acts done in the seat of justice.
Secondly, when .attacks or comments are made on a Judge or Judges disparaging in character and derogatory to their dignity, care should be taken to distinguish between what is a libel on a judge and what really amounts to contempt of court.
If, however, the publication of the disparaging statement is calculated to interfere with the due course of justice or proper administration of law by such court, it can be punished summarily as contempt.
"it will be 'an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability or fairness of the judge or to deter actual and prospective litigants from placing complete reliance upon the court 's administration of justice, or if it is likely to cause embarrassment in the mind of the judge himself in the discharge of his judicial duties.
It is well established that it is not necessary to prove affirmatively that there has been an actual interference with the administration of justice by reason of such defamatory statement; it is enough if it is likely, or tends is ,any way, to interfere with the proper administration of law.
" In that case it was held that the contempt was of a technical nature.
This was based apparently on the reason that the Members of the Bar who had passed a resolution attributing incompetency, lack of courtesy etc.
and had referred to complaints against two officers, one a Judicial Magistrate and the other a Revenue Officer and had sent those complaints to the District Magistrate, Commissioner and the Chief Secretary in the State and secondly because very little publicity had been given to the statement.
In Re: Hira Lal Dixit & two Ors.(2) the above principles were ,applied and reaffirmed.
In that case words which had been used in a poster which was published had the necessary implication that the judges who decided in favour of the Government were rewarded by the Government with appointments to this Court.
Although this case was not one of scandalizing of the court but the question that was posed was whether the offending passage was of such character and import or made in such circum (1) (2) ; 791 stances as would tend to hinder or obstruct or interfere with the due course of administration of justice by this Court and it was answered in the affirmative and the contemnor was held guilty of Contempt of Court.
In State of Madhya Pradesh vs Revashankar(1) an application was made under section 528 of the Code of Criminal Procedure in certain criminal proceedings containing serious aspersions against a Magistrate, Mr. N.K. Acharya.
Reliance was once again placed on Brahm Prakash Sharma 's(2) case and the principles laid therein.
It was held that the aspersions which had been made amounted to something more than a mere intentional personal insult to the Magistrate; they scandalised the court itself and impaired the administration of justice and that proceedings under the contempt of court could 'be taken against the contemnor.
There can be no manner of doubt that in this country the principles which should govern cases of the present kind are now fully settled by the previous decisions of this Court.
we may re; state the result of the discussion of the above cases on this head of contempt which is by no means exhaustive.
(1 ) It will not be right to say that committals for contempt for scandalizing the court have become obsolete.
(2) The summary jurisdiction by way of contempt must be exercised with great care and caution and only when its exercise is necessary for the proper administration of law and justice.
(3) It is open to anyone to express fair, reasonable and legitimate criticism of any act or conduct of a judge in his judicial capacity or even to make a proper and fair comment on any decision given by him because "justice is not a cloistered virtue and she must be allowed to suffer the scrutiny and respectful, even though outspoken, comments of ordinary men".
(4) A distinction must be made between .a mere libel or defamation of a judge and what amounts to a contempt of the court.
The test in each case would be whether the impugned publication is a mere defamatory attack on the judge or whether it is calculated to interfere with the due course of justice or the proper administration of law by his court.
It is only in the latter case that it wilt be punishable as Contempt.
(1) (2) 792 (5 ) Alternatively the test will be whether the wrong is done to the judge personally or it is done to the public.
To borrow from the language of Mukherjea, J. (as he then was) (Brahma Prakash Sharma 's case)(1) the publication of a disparaging statement will be an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability or fairness of the judge or to deter actual and prospective litigants from placing complete reliance upon the court 's administration of justice or if it is likely to cause embarrassment in the mind of the judge himself in the discharge of his judicial duties.
As regards the third contention no attempt was made before the High Court to substantiate that the facts stated in the article were true or were rounded on correct data.
It may be that truthfulness or factual correctness is a good defence in an action for libel, but in the law of contempt there are hardly any English or Indian cases in which such defence has been recognized.
It is true that in the case of Bathina Ramakrishna Reddy(2) there was some discussion about the bona fides of the person responsible for the publication but that was apparently done to dispose of the contention which had been raised on the point.
It is quite clear that the submission made was considered on the assumption that good faith can be held to be a defence in a proceeding for contempt.
The words "even if good faith can be held to be a defence at all in a proceeding for contempt" show that this Court did not lay down affirmatively that good faith can be set up as a defence in contempt proceedings.
At any rate, this point is merely of academic interest because no attempt was made before the High Court to establish the truthfulness of the facts stated in the article.
On the other hand, it was established that some of the material allegations were altogether wrong and incorrect.
Lastly the submission that the statements contained in the article made out only a charge of bias against the judge and this cannot constitute contempt has to be stated to be rejected.
It is a new point and was never raised before the High Court.
Moreover the suggestion that the charge in the article was of legal bias which meant that Justice Tarkunde had some sort of pecuniary interest in Khare Tarkunde which had the transactions with the bank of which Thackersey was a Director is wholly baseless.
Counsel had to agree that Justice Tarkunde was neither a shareholder nor was there anything to show that he had any other interest m Khare Tarkunde.
The mere fact that his brother happens (1) (2) ; , 793 to have a holding in it cannot per se establish that Justice Tarkunde would also have some financial or pecuniary interest therein.
It is not possible to accept nor has such extreme position been taken by the counsel for appellant No. 2 that there is any bar to a brother or 'a near relation of a judge from carrying on any business, profession or avocation.
The entire argument on this point is wholly without substance.
The appellant No. 2 showed no contrition in the matter of publication of the impugned article.
lie never even tendered an unqualified apology.
The High Court, in these circumstances, was fully justified in punishing him for contempt of court and in awarding the sentence which was imposed.
In the impugned article there was a clear imputation of impropriety, lack of integrity and oblique motives to Justice Tarkunde in the matter of deciding the Thackersey Blitz suit which, on the principles already stated, undoubtedly constituted contempt of court.
The appeal fails and is hereby dismissed.
V.P.S. Appeal dismissed.
| IN-Abs | One T filed a suit claiming Rs. 3 lacs damages for libel against a newspaper.
The suit was decreed by a Judge of the Bombay High Court.
Thereafter, an article was published in a publication brought out by the first appellant and of which the second appellant was the editor, printer and publisher.
The article contained insinuations that there was a connection between a loan of Rs. 10 lacs, granted to a firm in which the Judge 's brother was a partner, and the judgment m the defamation case; and that the Judge knew, about the loan having been granted to the firm.
The appellants were found guilty of contempt of court.
In appeal to this Court, it was contended that: (1) In the article no aspersion was cast on the integrity of the Judge nor was any imputation of dishonesty made; (2) Proceedings for contempt for scandallzing a Judge have become obsolete, the proper remedy being for the/judge to take action for libel; (3) The allegations were made in the bona fide belief that they were truthful and there was no evidence that the Judge did not know about the transaction; and (4) The statements, if at all, amounted to a charge of bias against the Judge and could not be regarded as contempt.
HELD: (1 ) The obvious implications and institutions made in the various paragraphs of the article, read as a whole, create a strong judicial impact on the mind of the reader about the Jack of honesty, integrity and impartiality on the part of the Judge in deciding the defamation suit.
[785 C D] It is open to anyone to express fair, reasonable and legitimate criticism of any act or conduct of a Judge in his judicial capacity or even to make a proper and fair comment on any decision given by him.
But, if an article attributes improper motives to the Judge, it not only transgresses the limits of fair and bona fide criticism but has a clear tendency to affect the dignity and prestige of the court and would amount to contempt of court.
[785 A, 791 F] (2) It will not be right to say that committals for contempt of court for scandalizing the court have become obsolete.
[791 D] (a) But such summary jurisdiction by way of contempt must be exercised with great care and caution and only when its exercise is necessary for the proper administration of law and justice.
[791 E] (b) There is a distinction between a mere libel or defamation of a judge and what amounts to contempt of court.
The tests are: (i) Is the impugned publication a mere defamatory attack.
on the Judge or is it calculated to interfere with the due course of Justice or the proper administration of law by his court? and (ii) Is the wrong done to the Judge personally or is it done to the public? The publication of a disparaging 780 statement will be an injury to the public if it tends to create an apprehension in the minds of the people regarding the integrity, ability or fairness of the Judge or to deter actual and prospective litigants from placing complete reliance upon the courts administration of justice, or if it is likely to cause embarrassment in the mind of the Judge himself in the discharge of his judicial duties.
[791 G H; 792 A C] B.R. Reddy vs State of Madras, ; , Re: The Editor.
Printer and Publisher of the 'Times of India ' and in re: Aswini Kumar Ghose vs Arabinda Bose, ; , Brahm Prakash Sharma vs State of U.P., ; Re: Hira Lal Dixit & Ors. ; and State of M.P. vs Revashankar , followed.
Re: Read and Huggonson, 2 Atk. 471, In the matter of a Special Reference from the Bahama Islands , McLeod vs St. Aubyn, , Reg.
vs Gray, ; Rex vs Editor of the New Statesman ; Ambard vs Attorney General for Trinidad and Tobago, (.1936) A.C. 322, Debi Prasad Sarma .v.
The 'King Emperor.
70 I.A. 216 and Reg.
vs Commissioner of Police the Metropolis, Ex parte Blackburn, , referred to.
(3) Assuming good faith can be held to be a defence in a proceeding for contempt, in the present case, no attempt was made to substantiate 'that the facts stated in the article were true or were rounded on correct data.
On the other hand, it was established that some of the material allegations were altogether wrong and incorrect.
[792 E F] B.R. Reddy 's case; , , referred to.
(4) The mere fact that his brother happened to have a pecuniary interest in the firm could not per se establish that the Judge would also have a financial interest therein so as to constitute legal bias.
[792 H; 793 A]
|
minal Appeal No. 186 of 1966.
Appeal by special leave from the judgment and order dated November 4, 1965 of the Punjab High Court in Criminal Revision No. 263 of 1965 and Criminal Misc.
224 of 1965.
Pritam Singh Safeer, for the appellants.
Harbans Singh and R.N. Sachthey, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought, by special leave, from the judgment of the Punjab High Court dated November 4.
1965 by which Criminal Revision petition No. 263 of 1965 and Criminal Miscellaneous case No. 224 of 1965 were dismissed.
664 The case of the prosecution is that on October 19, 1961 Sub Inspector Banarasi Lal of Food and Supplies Department ' was present at Smalkha Barrier along with Head Constable Badan Singh and others.
The appellant Malkiat Singh then came driving truck No. P.N.U. 967.
Babu Singh was the cleaner of that truck.
The truck carried 75 bags of paddy weighing about 140 maunds.
As the export of paddy was contrary to law, the Sub Inspector took into possession the truck as also the bags of paddy.
It is alleged that the consignment of paddy was booked from Lakerkotla on October 18, 1961 by Qimat Rai on behalf of Messrs Sawan Ram Chiranji Lal.
The consignee of the paddy was Messrs Devi Dayal Brij Lal of Delhi.
It is alleged that Qimat Rai also gave a letter, exhibit P 3 addressed to the consignee Sawan Ram and Chiranji Lal were partners of Messrs. Sawan Ram Chiranji Lal and they were also prosecuted.
In the trial; court Malkiat Singh admitted that he was driving the truck which ' was loaded with 75 bags of paddy and the truck was intercepted at Samalkha Barrier.
According to Mallfiat Singh, he was given the paddy by the Transport Company at Malerkotla for being transported to Delhi.
The Transport Company also gave him a letter assuring him that it was an authority for transporting the paddy.
But it later transpired that it was a personal letter from ' Qimat Rai to the Commission agents at Delhi and that it was not a letter of authority.
Babu Singh admitted that he was sitting in the truck as a cleaner.
The trial court convicted all the accused ' persons, but on appeal the Additional Sessions Judge set aside the conviction of Sawan Ram and Chiranji Lal and affirmed the conviction of Qimat Rai and of the two appellants.
The appellants took the matter in revision to the High Court but the revision petition was dismissed on November 4, 1965.
It is necessary at this stage to reproduce the relevant provisions of the (Act 10 of 1955).
Section 3 (1 ) is to the following effect: "3.
(1) If the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, it may by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.
" Section 7 states: "7.
(1 ) If any person contravenes any order made under section 3 (a) he shall be punishable (i) in the ease of an order made with reference to clause (h) or clause (i) of sub section (2) of that 665.
section, with imprisonment for a term which may extend to one year and shall also be liable to fine, and (ii) in the case of any other order, with imprisonment for a term which may extend to three years and shall also be liable to fine: Provided that if the Court is of opinion that a sentence of fine only will meet the ends of justice, it may, for reasons to be recorded, refrain from imposing a sentence of imprisonment; and (b) any property in respect of which the order has been contravened or such part thereof as the Court may deem fit including, in the case of an order relating to foodgrains, any packages, coverings or receptacles in which they 'are found and any animal, vehicle, vessel or other conveyance used in carrying foodgrains shall be forfeited to the Government: Provided that if the Court is of opinion that it is not necessary to direct forfeiture in respect of the whole or, as the case may be, any part of the property or any packages, coverings or receptacles or any 'animal, vehicle, vessel or other conveyance, it may, for reasons to be recorded, refrain from doing so.
(2 ) If any person to whom a direction is given under clause (b) of sub section (4) of section 3 fails to comply with the direction he shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both.
" By section 2 of Punjab Act No. 34 of 1959 the Punjab Legislature added a new section, section 7 A in the Central Act No. 10 of 1955 which reads as follows: "Forfeiture of certain property used in the commission of the offence.
Whenever any offence relating to foodstuffs which is punishable under section 7 has been committed, the court shall direct that all the packages, coverings or receptacles in which 'any property liable to be forfeited under the said section is found and all the animals, vehicles, vessels or other conveyances used ' in carrying the said property shall be forfeited to the Government." On January 3, 1959 the Central Government promulgated the Punjab Paddy (Export Control) Order.
1959 in exercise of the powers conferred by section 3 of the .
Para 2 of this Order states: "2. Definitions.
In this Order, unless the context otherwise requires, 666 (a) 'export ' means to take or cause to be taken out of any place within the State of Punjab to any place outside the State.
(b) 'paddy ' means rice in husk; (c) 'State Government ' means the Government of the State of Punjab.
" Para 3 of the Order provides as follows: "Restrictions on export of paddy.
No person shall export or attempt to export or abet the export of paddy except under and in accordance with a permit issued by the State Government or 'any officer authorised by the State Government in this behalf: Provided that nothing contained herein shall apply to the export of paddy, (i) not exceeding five seers in weight by a bona fide traveler as part of his luggage; or (ii) on Government account; or (iii) under and in accordance with Military Credit Notes.
" The question to be considered in this appeal is whether upon the facts found by the lower courts any offence has been committed by the appellants.
It is not disputed that the truck carrying the paddy was stopped at Samalkha Barrier which is 32 miles from Delhi.
It is also not disputed that the Delhi Punjab boundary was, at the relevant point of time, at about the 18th mile from Delhi.
It is therefore evident that there has been no export of paddy outside the State of Punjab in this case.
The truck with the loaded paddy was seized at Samalkha well inside the Punjab boundary.
It follows therefore that there was no export of paddy within the meaning of Para 2(a) of the Punjab Paddy (Export Control) Order, 1959.
It was however argued on behalf of the respondent that there was an attempt on the part of the appellants to transport paddy to Delhi, 'and so there was an attempt to commit the offence of export.
In our opinion, there is no substance in this argument.
On the facts found, there was no attempt on the part of the appellants to commit the offence of export.
It was merely a preparation on the part of the appellants and as a matter of law a preparation for committing an offence is different from attempt to commit it.
The preparation consists in devising or arranging the means or measures necessary for the commission of the offence.
On the other hand, an attempt to commit the offence is a direct movement towards the commission after preparations are made.
In order that a person may be convicted of an attempt to commit 'a crime, he must be shown first to have 667 had an intention to commit the offence, and secondly to have done an act which constitutes the actus reus of a criminal attempt.
The sufficiency of the actus reus is a question of law which had led to difficulty because of the necessity of distinguishing between acts which are merely preparatory to the commission of a crime, and those which are sufficiently proximate to it to amount to an attempt to commit it.
If a man buys a box of matches, he cannot be convicted of attempted ,arson, however clearly it may be proved that he intended to set fire to a haystack at the time of the purchase.
Nor can he be convicted of this offence if he approaches the stack with the matches in his pocket, but, if he bends down near the stack and lights a match which he extinguishes on perceiving that he is being watched, he may be guilty of an attempt to burn it.
Sir James Stephen, in his Digest of Criminal Law, article 50, defines an attempt as follows: " 'an act done with intent to commit that crime, and forming part of a series of acts which would constitute its actual commission if it were not interrupted.
The point at which such a series of acts begins cannot be defined, but depends upon the circumstances of each particular case.
" The test for determining whether the act of the appellants constituted an attempt or preparation is whether the overt acts already done are such that if the offender changes his mind and does not proceed further in its progress, the acts already done would be completely harmless.
In the present case it is quite possible that the appellants may have been warned that they had no licence to carry the paddy and they may have changed their mind at any place between Samalkha Barrier and the Delhi Punjab boundary and not have proceeded further in their journey.
Section 8 of the states that "any person who attempts to contravene, or abets a contravention of, any order made under section 3 shall be deemed to have contravened that order".
But there is no provision in the Act which makes a preparation to commit an offence punishable.
It follows therefore that the appellants should not have been convicted under section 7 of the .
For these reasons we allow this appeal and set aside the conviction of the appellants under section 7 of the and the sentence of fine imposed upon each of them.
We also set aside the conviction and sentence of Qimat Rai and the order of forfeiture passed by the trial Magistrate with regard to 75 bags of paddy and truck No. P.N.U. 967.
The fines, if paid by any of the convicted persons must be refunded.
V.P.S. Appeal Allowed.
| IN-Abs | In exercise of the powers conferred by section 3 of the , the Central Government promulgated the Punjab Paddy (Export Control) Order, 1959.
Paragraph 3 of the Order prohibited the export of or attempt to export paddy from any place within the State of Punjab to any place outside the State except under a valid permit.
Paddy, booked by a firm in Punjab to a consignee to Delhi, was carried ' in a lorry driven by the first appellant.
The lorry was stopped by the police at a place which was 32 miles from Delhi, that is, inside the State of Punjab (the Punjab Delhi boundary was 18 miles from Delhi), and the appellants, along with others, were prosecuted and convicted for an offence under section 7 of the .
In appeal to this Court, HELD: No offence has been committed by the appellants nor was there an attempt to commit an offence.
[667 G] As the paddy was seized well inside the Punjab boundary, there was no export of paddy outside the State of Punjab.
It was also possible that the appellants might have changed their minds at any place between the place of seizure and the State boundary.
The acts of the appellant then would only constitute preparation and not an attempt to commit the offence of export, because, the test for determining whether acts constitute.
merely preparation and not an attempt is whether the overt acts already done are such that if the offender changes his mind and does not proceed further, the acts already done would be completely harmless.
[666 F H; 667 D E]
|
Civil Appeal No. 923 , 1966.
Appeal by special leave from the Award dated May 29, 196 of the Industrial Tribunal, Andhra Pradesh in I.D. No. 12 1964.
M.K. Ramamurthi, Shyamala Pappu and Vineet Kumar, f the appellants.
K. Srinivasamurthy, Naunit Lal and B.P. Singh, for the re. pondents.
The Judgment of the Court was delivered by Vaidialingam, J.
The workmen of Shri Bajrang Jute Mil Ltd., in this appeal by special leave, attack the correctness of th award dated May 29, 1965 of the Industrial Tribunal, Andhr Pradesh, Hyderabad, in I.D. No. 12 of 1964, by which it hel that the demand of the workmen for implementation of the re commendations of the Central Wage Board for Jute Industr (hereinafter referred to as the Wage Board), was not justified.
In view of the fact that the respondent management decline to accede to the demand of the appellants to pay wages in accordance with the recommendations of the Wage Board, the Stat of Andhra Pradesh, by its order dated March 21, 1964, referres for adjudication to the Industrial Tribunal, Hyderabad, th following question: "Whether the demand of the workmen in Sri Bajrang Jute Mills, Limited, Guntur, for implementation of the recommendations of the Central Wage Board for Jute Industry is justified, and if so, to what extent?" The Wage Board was constituted by the Central Government for determining, among other matters, a wage structure, based on the principles of fair wages payable in the jute industry.
The Wage Board consisted of a Chairnan, two independent Members, two Members representing the employers and two Members representing the workers.
It may be noted that the Members 595 representing the industry and labour were not chosen by the representative bodies of the industry or the labour but were appointed by Government.
In fact, neither the industry nor the labour had any voice in the choice by the Government of any of the members of the Wage Board.
The Wage Board submitted its report to the Government, making recommendations about the wage structure and laying down principles for awarding bonus for the year 1962 63 and the subsequent years.
It appears from the Wage Board 's report that, at the very outset, the Wage Board selected 20 mills from West Bengal and 9 reporting mills from outside West Bengal which it considered to form a representative cross section of the industry for a detailed study.
The Wage Board took into account the financial position of the said mills and also collected other data and information not only from the mills concerned but also from other quarters.
The Wage Board took into account the growth of paid up capital, gross block depreciation, profits made and dividends paid by the mills and other allied matters and came to the conclusion that the industry 's position was satisfactory and its future was bright.
The Wage Board was not required to fix a wage structure on the peculiar financial position of any particular unit, al though it was bound to take a fair cross section of the industry represented by units reflecting the general conditions prevailing in the industry as a whole.
The Wage Board also considered the principles for determination of bonus and recommended payment of bonus for the year 1963 on the basis of the basic wages drawn by the worker for the year 1962.
It also recommended that for future years the bonus was to be paid according to the wages drawn in the preceding year.
It further recommended certain rules for determination of the quantum of bonus.
According to the appellants, the respondent was bound to implement the recommendations of the Wage Board in all respects and its refusal to do so was illegal and unjustified.
The respondent pleaded that the recommendations of the Wage Board could not be implemented as the Mill had no financial capacity to bear the burden of the wage scales recommended by the Wage Board.
The respondent made an attempt to implement the Wage Board 's recommendations to some extent at least, provided the labour agreed for revision of work loads, but the labour was not willing for such revision.
It was further stated that the respondent company, though started in 1907, had been running at a loss for a number of years and its loom strength was only 120.
The mill was located at Guntur, which is not a jutegrowing area, and in consequence almost all raw materials had to be brought from Vijayanagaram, in Visakhapatnam District, and from Calcutta.
As the raw materials and other products had to be brought from outside, it involved the mill in considerable 596 expense due to freight charges etc.
The products manufactured in the mill were only cement bags and twine and cement companies were its only customers.
The company had furnished replies to the questionnaire issued by the Wage Board and had made it clear that the wages paid by it were reasonable and it could not bear any additional burden in that regard.
Even the interim relief, recommended by the Wage Board, was implemented with considerable difficulty though it involved the company in an additional revenue expenditure of Rs. 1,53,000 a year.
The Wage Board 's recommendations fixed the wage scales, dearness allowance etc., for all the employees working in all the jute mills situated in the country, irrespective of the financial position of individual mills.
If the recommendations of the Wage Board were to be implemented, the company would be put to further expenditure of Rs. 2,75,385.60 in the first year, Rs. 3.25 lakhs in the second year and Rs. 3.75 lakhs in the third year in addition to the existing wage bill which the company had to meet.
The company has been making only negligible profits and it could not pay any dividend on its equity shares for nearly 7 years.
Its reserves also have been dwindling.
The financial position of the company, therefore, is such that it is impossible for it to bear the burden of the additional wage structure, dearness allowance etc.
, as recommended by the Wage Board.
The company further pleaded that the Wage Board committed a serious mistake when it compared the financial position of the respondent along with two other large mills in the Andhra area viz., Nellimarla and Chitavalasa Jute Mills.
Further the wage scales fixed by the Wage Board are on the basis of the position occupied by big jute mills in West Bengal, having upto 2,561 looms and 13,580 spindles.
The Wage Board did not attempt to make any distinction between small and uneconomic mills and large mills, nor was any classification made in that manner.
Regarding payment of bonus, the company pleaded that this was covered by a settlement and the workmen were not entitled to the same in view of the financial position of the company and as there was no available surplus.
The wage structure, dearness allowances etc., fixed by the Wage Board were not in accordance with the principles laid down by this Court in several decisions.
According to the decisions of this Court, no fair wage can be fixed unless the unit in question has the financial capacity to meet the additional burden; and, in fixing the wage scale and dearness allowance, the principle of industry cum region had to be applied.
Small and struggling units should not be compared with large, flourishing concerns.
The extent of business carried on by them, the labour force, the capital invested, quantum of reserves, dividends declared and profits made, have all to be taken into account to see whether the units could be compared for wage fixation.
597 All these circumstances have not been given due weight and consideration by the Wage Board.
The respondent mill has only 120 looms and it has been compared with not only the very big mills in West Bengal but also with the Nellimarla and Chittavalasa Jute Mills which have 500 and 316 looms respectively.
No classification was made by the Wage Board of the various jute mills as large, medium and small units; and in prescribing uniform scales for all types of units no distinction has been made between economic and uneconomic units.
Small and struggling units have been treated in the same way as large and prosperous units.
Finally, the respondents pleaded that in view of the circumstances indicated above, the Wage Board 's recommendations could not be implemented by it and the labour 's claims, on the basis of the Wage Board 's recommendations, were not justified.
The Industrial Tribunal, in its award under attack, accepted the pleas taken by the management.
While recognising the fact that the Wage Board 's recommendations were made, after collecting considerable data, the Tribunal was of the view that the Wage Board committed an error in comparing the respondent mill with other big mills, not only in Andhra Pradesh but also outside that State.
The Tribunal was also of the view that the principles laid down by this Court that the fixation of wage scales should be on an industry cum region basis and that small units should not be compared with large and flourishing concerns, were not given due regard by the Wage Board.
On the materials placed before it, the Tribunal accepted the claim of the respondent that it was a small concern considered from any point of view, viz., of looms, paid up capital, reserves, or the profits.
In respect of the capacity to pay, the Tribunal was of the view that the Wage Board had not approached the question in the light of the principles laid down by this Court.
The Tribunal came to the conclusion that the respondent, which is a fairly small unit, has not the financial capacity to adopt the wage structure fixed by the Wage Board.
The Tribunal accepted the claim of the respondent regarding the additional financial burden it would have to bear, even according to the phased programme fixed by the Wage Board and has held that the financial position of the company is such that it cannot bear this burden.
The TribUnal also came to the conclusion that as the Wage Board was devising a fair wage, the capacity of the particular industry to bear the additional burden which is one of the essential circumstances to be taken into consideration has not been taken into account.
On the other hand, all jute mills, wherever situate, big or small, prosperous or struggling, economic or uneconomic, have all been treated alike and a uniform wage structure applicable to all mills has been fixed.
There has been no attempt at classification of small and uneconomic mills for the purpose of finding out their financial capacity.
The Tribunal finally came to the conclusion 598 that the demand of the workmen for implementation of the recommendations of the Wage Board was not justified.
The same stand, taken before the Tribunal by the management and the workmen, as mentioned earlier, have been reiterated before us by Mr. M.K. Ramamurthy, learned counsel for the Union, attacking the award and Mr. K. Srinivasamurthy, learned counsel for the management, in support of the award.
Before we refer to the circumstances under which the Wage Board was constituted, as well as the approach made by it in the fixation of wage scales and other matters, it is necessary to refer to the principles laid down by this Court in that regard and to examine whether the Wage Board has properly applied those principles.
Mr. Ramamurthy, learned counsel for the appellant,, has accepted the position that there is an obligation on the Wage Board to follow correctly and apply the principles laid down by this Court in the matter of fixation of wages and dearness allowance.
But his contention is that the Wage Board has, in its recommendations, followed those principles.
In Express Newspapers (Private) Ltd. vs The Union of India(1) this Court has elaborately considered the concept of (i) living wage; (ii) fair wage; and (iii) minimum wage, as well as the machinery for fixation of wages, adopted in various countries.
So it is not necessary to cover the ground over again.
So far as fair wage is concerned, this Court has stated that while the lower limit must obviously be the minimum wage, the upper limit is equally said to be what may broadly be called the 'capacity of the industry to pay '.
It has further been stated that the capacity of the industry to pay should be gauged on an industry cum region basis, after taking a fair cross section of that industry and that in a given case it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay class wise.
This Court further laid down the principles in that regard as follows, at p. 92: "The principles which emerge from the above discussion are: (1) that in the fixation of rates of wages which include within its compass the fixation of scales of wages also, the capacity of the industry to pay is one of the essential circumstances to be taken into consideration except in cases of bare subsistence or minimum wage where the employer is bound to pay the same irrespective of such capacity; (2) that the capacity of the industry to pay is to be considered on an industry cum region basis after taking a fair cross Section of the industry; and (1) 599 (3) that the proper measure for gauging the capacity of the industry to pay should take into account the elasticity of demand for the product, the possibility of tightening up the organisation so that the industry could pay higher wages without difficulty and the possibility of increase in the efficiency of the lowest paid workers resulting in increase in production considered in conjunction with the elasticity of demand for the product no doubt against the ultimate background that the burden of the increased rate should not be such as to drive the employer out of business.
" The discussion on the question of capacity of an industry to pay is wound up at p. 191 with the following observations: "Industrial adjudication is familiar with the method which is usually adopted to determine the capacity of the employer to pay the burden sought to be imposed on him.
If the industry is divided into different classes, it may not be necessary to consider the capacity of each individual unit to pay but it would certainly be necessary to consider the capacity of the respective classes to bear the burden imposed on them.
A cross section of these respective classes may have to be taken for careful examination and all relevant factors may have to be borne in mind in deciding what b urden the class considered as a whole can bear.
If possible, an attempt can also be made, and is often made, to project the burden of the wage structure into two or three succeeding years and determine how it affects the financial position of the employer.
" In French Motor Car Co. Ltd. vs Workmen(1) this Court observed at p. 20: "It is now well settled that the principle of industry cum region has to be applied by an industrial court, when it proceeds to consider questions like wage structure, dearness allowance and similar conditions of service.
In applying that principle industrial courts have to compare wage scales prevailing in similar concerns in the region with which it is dealing, and generally speaking similar concerns would be those in the same line of business as the concern with respect to which the dispute is under consideration.
Further, even in the same line of business, it would not be proper to compare (for example) a small struggling concern with a large flourishing concern." [1963] Spp.
600 The principle that the basis of fixation of wages and dearness allowance is industry cum region was reiterated in Greaves Cotton & Co. vs Their Workmen(1).
According to Mr. Ramamurthy, the learned counsel for the appellant, the principles laid down by the decisions, referred to above have been borne in mind by the Wage Board when it fixed the wage structure and dearness allowance.
Learned counsel .
also urged that when a wage structure was fixed for the industry as such, it is not necessary that the capacity of individual units should also be considered and that on the other hand it would be enough if a fair cross section of the industry was taken into account for this purpose as was done by the Wage Board in the present case.
On the other hand, according to Mr. Srinivasamurthy, the learned counsel for the management, inasmuch as a fair wage was being fixed, the Wage Board was bound to apply the principle of industry cure region in fixing the wage structure and dearness allowance and the Wage Board has committed an error in not classfying the various units as large, medium and small units and prescribing different scales for different types of units.
We shall now proceed to consider the circumstances under which the Wage Board was constituted, its composition and the approach made by it in fixing the wage structure and dearness allowance.
In Chapter XXVII, paragraph 25, of the Second Five Year Plan of the Government of India, it is stated that statistics of industrial disputes show that wages and allied matters are the major source of friction between employers and workers and that an acceptable machinery for settling wage disputes will be one which gives the parties themselves a more responsible role in reaching decisions.
It is further stated that an authority like a tripartite wage board, consisting of equal representatives of employers and workers and an independent chairman would probably ensure more acceptable decisions and that such wage boards shouId be constituted for individual industries in different areas.
In pursuance of this recommendation,, the Government of India, by its Resolution No. WB 5(1)60, dated August 25, 1960, set up a Central Wage Board for Jute Industry.
The Board consisted of a Chairman, two independent Members and two Members representing employers and two Members representing employees.
The terms of reference of the Board were: "(a) to determine the categories of employees (manual, clerical, supervisory, etc) who should be (8) ; 601 brought within the scope of the proposed wage fixation; (b) to work out a wage structure based on the principles of fair wages as set forth in the report of the Committee on Fair Wages." In evolving a wage structure, the Board was also required to take into account the needs of the industry in a developing economy, the special features of the jute industry as an export industry, the requirements of social justice and the need for adjusting wage differentials in such a manner as to provide incentives to workers for advancing their skill '.
The Wage Board was also required, within two months from the date of its starting work, to submit its recommendations regarding the demands of labour in respect of interim relief, pending its final report.
The Wage Board recommended to the Central Government the grant of interim relief of Rs. 2.85 from October 1 to December 31, 1960 and Rs. 3.42 from January 1, 1961 in respect of all jute mills in India, excepting the Katihar Jute Mill in respect of which the interim relief at the rate of Rs. 3.42 was granted from September 1, 1961.
The Central Government accepted this recommendation, by its Resolution No. WB 5(3)/61, dated January 25, 1961 and requested the jute mills to implement the same as soon as possible.
There is no controversy that the respondent mill complied with this request though it involved the company in an additional expenditure of Rs. 1,53,000.
This claim of the company has been accepted by the Industrial Tribunal.
The Wage Board submitted to the Central Government, on September 4, 1963 its final recommendations dated August 31, 1963 and recommended that the new wage structure should be given effect to.
from July 1, 1963.
The Central Government, by its Resolution No. WB 5( 16)/63 dated September 27, 1963 accepted the report and made a request to the employers, the workers and the State Governments to implement the same expeditiously.
The standardised basic wages of various categories of workers of jute mills for a month of 26 days or 208 hours are specified in Appendix XI of the Report; and there is no controversy that the basic wages of all categories of workers in the employ of the respondent jute mill is the same as the standardised basic wage contained in Appendix XI.
But, there is a further recommendation that so far as the appellant jute mill and another jute mill, viz., Sri Krishna Jute Mill, were concerned,the wage increase was to be on a phased basis.
We may refer now to the various aspects dealt with by the Wage Board in its report.
Chapter III deals generally with the Industry.
In para 3.5 it is stated that there is an overwhelming concentration of jute industry in West Bengal and only a sprink 602 ling of it is to be found elsewhere in India.
It is also noted that the loomage at the time of the report in the whole of India stood at 72,916 looms.
The reasons for the heavy concentration in West Bengal of jute mills are stated to be factors like abundant supply of raw material, proximity of coal fields in Ranigunge,navigability of the Hooghly and the availability of the required type of labour in the neighborhood.
So far as jute mills at other places in India are concerned, in para 3.6 of the Report it is stated that small jute mills have come up in other States, including Andhra Pradesh, but the total loomage of all such mills outside West Bengal is only 3,242 looms, and the mills are distributed in various places.
Appendix VII of the Report contains a statement showing the mills operating, number of looms and spindles in the whole of India.
So far as West Bengal is concerned, the total number of looms is given as 65,383; in Andhra Pradesh as 1,072; in Bihar 1,059; Uttar Pradesh 891 and Madhya Pradesh 220.
It will be noted from Appendix VII that in Andhra Pradesh there are two fairly big units, the Nellimarla and Chitavalsa having 316 and 500 looms respectively, whereas the respondent mill lias only 120 looms.
We are particularly referring to this aspect because it is the grievance of the respondent that the Wage Board has compared it with the Nellimarla and Chitavalsa and other big units in West Bengal.
A perusal of Appendix VII shows that there are several jute mills having more than 1,000 looms and some having more than 2,000 looms, in West Bengal.
Chapter IV deals with the scope of enquiry.
In para 4.1 it is stated that the Board 's recommendations will apply to all the jute mills then existing and also to those that might be started thereafter, and a list of all mills then in existence is given in Appendix VII.
Chapter V deals with minimum wages in the jute industry.
In para 5.4 the Wage Board takes note of the fact that the minimum wages in Nellimarla and Chitavalsa jute mills in Andhra Pradesh are found to be the highest in the jute industry.
In para 5.26, the minimum wages in West Bengal jute mills from 1948 and as obtaining from January 1, 1961 has been referred to.
Such minimum wages from January 1, 1961 including Rs. 3.42 granted as interim relief by the Wage Board and the dearness allowance, is stated to be Rs. 70.59, comprised of basic wages of Rs. 34.67 Rs. 3.42 (interim relief)+Rs.
32.50 (dearness allowance).
Regarding the jute mills in Andhra Pradesh, it is stated in para 5.35 that Nellimarla and Chitavalsa jute mills were paying from January 1, 1961 the total emoluments of Rs. 81.21 per month to the 603 lowest category of workers for 208 working hours, inclusive :section 3.42 interim relief granted by the Wage Board.
In para 5.38, it is stated that the respondent mill, from Janury 1, 1961, is paying total emoluments of Rs. 52.17 per month, comprised of Rs. 19.50 (basic)+Rs.
3.42 (interim relief)+ is.
29.25 (dearness allowance).
The jute mills in Bihar State, s will be seen from para 5.43 were paying total monthly emolunents ranging from Rs. 69.98 to Rs. 70.59.
Chapter VI deals with the industry 's capacity to pay.
In para 6.1 it is stated that two matters which received the highest consideration in the course of the deliberations of the Wage Board were the needs of the workers and the capacity of the industry to pay those needs.
It is further stated that the consequences of a fair wage upon the employer or the capacity of the industry to maintain production efficiently, have received the special attention of the Wage Board.
In para 6.8, reference is nade to the Fair Wages Committee 's Report that in determining .he capacity of the industry to pay, it is wrong to take the capacity of a particular unit or the capacity of the entire industry in the country and that the practical method is to take a fair cross section of the jute industry.
In this connection the Wage Board refers to the claims advanced by the workers and the industry.
The workers appear to have suggested the names of mills which were well established and whose financial position was never in doubt, whereas the industry urged that the capacity of the weaker and marginal units should not be ignored as the wages that are to be fixed by the Wage Board should be such as could be paid without difficulty by all units of the industry.
In para 6.9 it is stated that the Wage Board was of the view that the only proper and practical methods was to take a cross section of the industry which could be considered as fair in its view.
Accordingly.
twenty jute mills in West Bengal were selected by it as representing a fair cross section of the industry in that region.
The Wage Board also decided to make a census survey of 9 reporting mills outside the West Bengal region.
Accordingly it selected all the three in Andhra Pradesh, two in Bihar, three in Uttar Pradesh and one in Madhya Pradesh.
A list of the jute mills in West Bengal and outside West Bengal region considered as forming a representative cross action of the jute mills is given in Annexure A to the Report.
So far as Andhra Pradesh is concerned, all the three mills situate in the State have been taken into account, being Nellimarla, Chitavalsa and the respondent.
The Wage Board then considers the capital formation, bonus issue.
total paid up capital, reserves and surplus, percentage of dividend declared, profits made; but, under each of these heads, the Wage Board grouped together all the mills in West Bengal, Andhra Pradesh, Bihar, Uttar Pradesh and Madhya Pradesh.
604 In para 6.44, the Wage Board expresses the view that it would be possible for the industry to bear the extra burden arising from the new wage structure recommended by it without much difficulty and without affecting the economy of the industry adversely.
In Chapter VII the Wage Board considers the principles by which the Tribunal and other wage fixing authorities were guided in fixation of wages in West Bengal and outside that State.
In para 7.19 the Wage Board proceeds to state that it has to devise a fair wage structure.
It refers to the report of the Committee on Fair Wages that with regard to a fair wage, the lower limit must obviously be the minimum wage and the upper limit is equally set by what may broadly be called the capacity of the industry to pay.
In para 7.25 the Wage Board refers to the claim of the workers that the minimum wages at Calcutta, at prices prevailing in 1960 should be Rs. 125 and that the minimum wage at Kanpur, in Uttar Pradesh, should be Rs. 140 per month; while, on the other hand, the Indian Jute Mills Association appears to have pressed that the then existing wages in the jute industry for all categories of workers were fair.
In para 7.34 the Wage Board refers to the fact that the wages in the jute industry had not kept pace with wages in cotton textile and engineering industries in West Bengal, as would be seen from the fact that in 1959, while in the jute industry the minimum wages had gone up by 46% over the 1946 wages, it had gone up in cotton textile and engineering industries by 69.71% and 77.50% respectively.
It further notes the fact that the minimum wages in cotton textile mills in West Bengal on April 1, 1963 were Rs. 83.50 and in the engineering industry Rs. 82 per month.
On the other hand, the wages in the jute industry on April 1, 1963 were Rs. 70.59.
On this reasoning the Wage Board comes to the conclusion in para 7.35 that there was a prima facie case for increase in the wages of the jute workers.
The Wage Board expresses the opinion that the concept of the paying capacity of the jute industry is not the same as it is generally understood in the case of other industries, in view of the fact that the jute industry is principally an export oriented industry, depending upon the fluctuating foreign markets.
In para 7.40 the Wage Board states that in fixing the wage structure for the jute industry it has taken into consideration the prevailing wage structure in the cotton textile industry and the engineering industry in West Bengal.
It has noted that in West Bengal, as on April 1, 1963, the minimum wage in the.
cotton textile industry Was Rs. 84.10 per month and in engineering industry Rs. 82 per month.
As in the opinion of the Wage Board there is a great similarity in the nature and condition of work between cotton textile industry and jute industry, in para 7.43 it 605 decides to devise a wage structure in the jute industry keeping in wages existing in the cotton textile industry in West Bengal.
Regarding dearness allowance, the Wage Board in para 7.44 decides to introduce a system of variable.
dearness allowance linked with the consumer price index.
In para 7.45 the Wage Board refers to the special representations made by the jute mills outside West Bengal that in comparison with the mills in West Bengal they have to pay higher freight charges on coal, batching oil and that mill stores and electricity charges are higher for them, that their productivity is low and that most of them have no export trade.
The Wage Board states that it has considered these problems and though there are these locational difficulties for individual jute mills, it has decided that the wage level in the jute industry should as far as possible be uniform throughout the country.
The Wage Board further states that the wages in some of these jute mills were very low and in order to obviate their financial difficulties in consequence of the raising of wage level, it has decided that the wage level in these mills should be raised in a phased manner.
Having decided that the wage level in the Jute Industry should be uniform throughout the country, the Wage Board, in para 7.52 decides that the total minimum wage in West Bengal should be fixed at Rs. 81 per month, consisting of(i) basic wage; (ii) Wage Board increment; and (iii) variable dearness allowance.
The Wage Board further, in para 7.56, states that in addition to basic wages, all categories of workers should be paid an increase of Rs. 8.33 per month inclusive of interim relief of Rs. 3.42 already granted by it and accepted by the Central Government.
This increment of Rs. 8.33 per month is desired to be shown as a separate item under the heading Wage Board increment ' in the case of all categories of workers and that increment should be treated as part of the basic wages for all purposes like bonus, provident fund, etc.
In para 7.57 the Wage Board states that the dearness allowance of Rs. 32.50 that was being paid then should be considered as the dearness allowance fixed at the working class consumer price index number of 425, for Calcutta with base year 1939 as 100.
It is further stated that the dearness allowance should be a variable one and the rate of increase or decrease should be at 0.20 nP. per point rise or fall in the average working class consumer price index number for Calcutta.
The dearness allowance is also directed to be revised every six months in the months of February and August of each year.
On the basis of these calculations, in para 7.58 the Wage Board fixes the total monthly minimum wage payable at Rs. 84 sup.
606 comprised of (a) Rs. 40.17 basic wage; (b) Rs. 8.33 Wage Board increment; and (c) Rs. 32.50 being variable dearness allowance.
In para 7.59, the Wage Board states that the standardised basic wages of various categories of workers of a jute mill for a month of 26 days or 208 hours are enumerated in Appendix XI to the Report.
When considering the wage structure for jute mills outside West Bengal, in para 7.65(a) the Wage Board states that the basic wages of all categories of workers in the jute mills mentioned by it, outside West Bengal, which includes the respondent mill, should be the same as those in jute mills in West Bengal mentioned in Appendix XI.
Therefore, it is clear that the ,minimum basic wage fixed for the mills in West Bengal has been applied to all the mills outside West Bengal, including the respondent.
But, so far as the respondent mill is concerned, the Wage Board, in the same paragraph, gives a direction that the Standardised basic wages mentioned in Appendix XI of the Report is to be adopted in a phased manner as follows: During the first 24 months Basic wages of all categories from the date on which the of workers should be 20 per recommendation of the Board cent lass than the standar will be effective dised wages shown in Appen dix XI During the next 12 months Basic wages of all categories should be 10 percent less than the standardised wages shown in Appendix XI During the next 12 months Basic wages of all categories should be 5 percent less than the standradised wages shown in Apendix XI Thereafter Basic wages of all categories of workers should be the same as stadardised wages shown in Appendix XI In paragraph 7.66 the Wage Board directs that all categories of workers in jute mills situated outside West Bengal should also be paid the Wage Board increment of Rs. 8.33 per month, inclusive of interim relief of Rs. 3.42 already granted.
In para 7.67(c) it is stated that the rates of dearness allowance of all categories of workers in the respondent mill and in Sri Krishna Mill is fixed at Rs. 32.50 at the average working class consumer price index number of 560 for Eluru for the last six months in 1962 with base year 1935 36 as 100.
It is further stated that the dearness allowance should be a variable dearness allowance and the rate of increase or decrease should be 0.20 nP per point of rise or fall in the average working class consumer price index number for Eluru and that it should be revised every six months in the months of February and August.
Chapter VIII deals with bonus in jute industry and in para 8. 18 ,the Wage Board makes a recommendation that in the jute 607 industry the payment of bonus should be governed by the rules mentioned therein.
Lastly, in para 10.8 of Chapter X, the Wage Board states that the new wage structure recommended by it should come into force from July 1, 1963; and it is provided in para 10.9 that the payment of wages at the new rates should start in any case not later than the week ending November 2, 1963.
We have fairly exhaustively dealt with the various matters considered by the Wage Board in its Report.
It is no doubt true that the Wage Board has gone elaborately in the matter of fixing of the wage structure in the jute industry.
We have earlier referred to the various principles laid down by this Court which should govern the fixing of wages and dearness allowance.
The Board itself states that it was fixing a fair wage for the industry.
We have adverted to the fact that in the Express Newspapers Case(1) this Court has held that in the case of fixation of fair wage, the upper limit may broadly be stated to be the capacity of the industry to pay.
It has been further laid down that the capacity of the industry to pay should be gauged on an industry cureregion basis, after taking 'a fair cross section of that industry and that, in a given case, it may be even permissible to divide the industry into appropriate classes and then deal with the capacity of the industry to pay class wise.
As the Wage Board was fixing a fair wage for the entire jute industry it may not have been strictly necessary to consider the financial capacity of each individual unit.
But, as pointed out in the Express Newspapers Case(1), the requirement of considering the capacity of each individual unit to pay may not become necessary if the industry is divided into different classes.
Even if the industry is divided into different classes, it will still be necessary to consider the capacity of the respective classes to bear the burden imposed on them.
For this purpose a cross section of these respective classes may have to be taken for careful consideration for deciding what burden the class considered as a whole can bear.
The question is whether.
the Wage Board has adopted these principles when it fixed the wage structure for the entire jute industry From the various matters dealt with by the Wage Board and the manner of approach made by it, as referred to above, we are satisfied that no attempt has been made by the Wage Board to divide the industry into classes.
It is also clear that no cross section of such classes has been taken for investigation to decide what burden the units in each class can bear.
The approach of the Wage Board to determine uniform wage scales for the entire industry must suffer from an inherent weakness.
Conditions, such as easy access to raw materials, transport, nearness of market for disposal of the manufactured pro (1) 608 duct, availability of labour, the type of market whether within or outside the country for which the manufactured articles are intended and diverse other factors must vary from region to region.
Likewise, economic conditions affecting the consumer prices must and do differ, as is well known, from region to region, depending largely upon whether a particular region is self sufficient or not in the elemental needs of its citizens and these in turn are bound to affect living standards.
It would therefore be too artificial and unrealistic an approach to be oblivious of these differences and to attempt to group together all establishments and factories and devise common wage scales applicable to all of them disregarding the peculiar features of the industry in a particular region.
Favourable conditions prevailing in one region would place industrial concerns there in a position better than those in other regions where such conditions do not occur.
Similarly, in regions where consumer prices are lower, labour would be better off than in the rest of the regions where the living index is higher; yet, the wage scales would be the same in all the regions.
Uniformity of wage scales, irrespective of differences in conditions would place both the employees and the employers in regions where such favourable conditions prevail in an unfairly advantageous position over the employees and employers in the other regions.
Instead of attaining harmony there would as a result arise inevitably a feeling of discrimination.
Though, as stated by this Court in Express Newspapers ' Case(1), it may not be possible or even necessary for a Wage Board to scrutinise all the establishments separately and it would be enough to take a representative cross section of the industry for assessment, the cross section to be a truly representative one and capable of giving a true picture of the conditions of both the industry and labour must be one from each region where establishments of the industry in question are situate.
What the Wage Board, however, did was that instead of proceeding region wise and selecting a representative cross section from each region, it selected 20 mills from West Bengal and clubbed them with 9 reporting mills from the rest of the regions, viz., Bih 'ar, U.P., Madhya Pradesh and Andhra Pradesh where a few mills are scattered.
The Board considered these 29 mills as representing a cross section of the industry.
It is obvious that these mills so clubbed together could not truly reflect the economic and other conditions prevailing in the mills in different regions with their peculiar problems and differing conditions.
That in our view was not a proper approach and was bound to result in injustice especially in view of the peculiar feature of the jute industry that it is predominently concentrated in West Bengal and is export oriented.
Besides, the jute industry in the (1) 609 other regions suffers from a distinct disadvantage as the raw materials have to be transported from a distance at considerable cost.
Taking the 20 mills from West Bengal and the 9 mills from outside as forming a representative cross section was manifestly incorrect as the West Bengal Mills cannot truly be said to be comparable units for the rest of the mills.
Another difficulty in accepting the Wage Board 's recommendations arises from the fact that the Board equated the cotton textile industry in West Bengal with the jute industry there and finding the wage scales in the jute industry lower than those in the cotton textile industry the Board raised the scales in the jute industry so as to bring them to the level of the cotton textile industry.
Having so done, the next step which the Wage Board took was to raise also the wage scales in mills outside West Bengal to bring them in line with the scales proposed by it for the mills in West Bengal.
This process gave rise to two infirmities: (i) that the Board treated cotton textile concerns in West Bengal as comparable to those.
in jute industry; and (ii) it treated the jute mills in West Bengal as comparable to those outside, although conditions in the different regions where they were situate were obviously different.
This meant that the Board gave a go by to the well established principle of industry cum region consistently applied by Industrial Tribunals whenever wage scales had to be determined.
Such a disharmony in the approach to the problem of determination of wage scales by a Wage Board on the one hand and an Industrial Tribunal on the other must inevitably occur because whereas the attempt of a Board would be to uniformise wage scales for the entire industry, though it is spread over different parts of the country where conditions can rarely be expected to be similar or the same, the concern of a Tribunal would principally be to determine equitably the wage scales of a single unit with which it is for the time being concerned.
The difficulty would be all the more felt by such a Tribunal where it is faced with the dilemma whether or not it should follow the Board 's recommendations arrived at on principles different from (as in the present case) those consistently followed in industrial adjudication.
One should have thought that this difficulty would have been realised before the recommendations of the Wage Board were accepted by Government.
The difficulty referred to above arising from the difference in the functions of the two bodies could well have been obviated if the Wage Board instead of laying down uniform scales for the entire industry irrespective of where its several units were situate and of the different conditions prevailing in various areas.
had considered the units in each area separately and determined the 610 wage scales for each such area by taking from that area a representative cross section of the industry where possible or where that was not possible by taking comparable units from other industries within that area, thus following the principle of industrycum region.
It is true that in doing so uniformity of wagescales for the entire industry would not have been attained.
But in a vast country like ours, where conditions differ often radically from region to region and even the index of living differs within a fairly wide range, such a target cannot always be just or equitable.
If the wage scales had been determined by the Board in the manner aforesaid, even though the Board is not a statutory body and consequently its decisions are of a recommendatory character, it would be possible for industrial tribunals to give due weight to its recommendations as such recommendations would have been in conformity with the principle of industrycum region, a principle binding on the tribunals.
It would be difficult in that event for any unit in the industry in that region 'to propound a grievance that its capacity to pay was not taken into account as the scales so framed would have been determined after taking into consideration scales prevailing in comparable units, whether in that industry or other industries in that region depending on whether in a particular area the accent was on the industry part or the region part of the principle of industrycum region.
The Board, therefore, ought to have selected comparable units from each of the regions where the lute mills are situate and after their examination arrive at common wagescales for each of those regions instead 'of grouping together 20 mills from West Bengal and 9 mills from the other regions and treating them as constituting a cross section representing the industry.
The position in which a Tribunal called upon to fix wage scales would be placed would not be an enviable one for it would find itself in an embarrassing situation where it had either to accept the wage scales fixed by the Board though they were fixed in contravention of the principle of industry cumregion, or discard them and proceed to fix them on its own on the principle of industry cum region, a principle which, as the industrial law stands today, it is bound to follow.
We have already pointed out that the Wage Board has taken the view that the wage level in the entire jute industry should be uniform throughout the country.
It has also stated that the wage structure for the jute industry in West Bengal has to be devised having regard to the pattern of wage structure existing in the cotton textile industry in that area.
It is on this basis, and after a comparison of the wage structure prevailing in the cotton textile industry in that area, that the Wage Board has come to the conclusion that the minimum monthly emoluments of a worker in West Bengal .must be fixed at Rs. 81 taking in the basic wages, the Wage Board increment and the variable dearness allowance.
611 The standardised basic wages enumerated in Appendix XI has been made applicable to all the jute mills outside West Bengal also, including the respondent mill.
We have already referred to the recommendation of the Wage Board in para 7.65 (c) that the respondent jute mill should adopt the standardised basic wages axed in Appendix XI, in a phased manner.
Over and above that basic wage, the Wage Board has given an increase of Rs. 8.33 per month, as Wage Board increment and a variable dearness allowance of Rs. 32.50 per month.
Though it had been pressed by the jute mills outside West Bengal, that they had to pay higher freight charges on coal, batching oil etc., and that mill stores and electricity charges were higher for them, the Wage Board insisted that the Wage level in the jute industry should be uniform throughout the country.
The result of the Wage Board 's recommendations, if they are to be given affect to by the respondent mill, will be that as against the minimum monthly wage of Rs. 52.17 that was being paid by the respondent there is a very sharp rise in its wage bill.
The claim of the respondent that the recurring expenditure for implementation of the recommendation of the Wage Board is over Rs. 3,75,000, and that it has not the financial capacity to bear this burden, has been accepted by the Industrial Tribunal and that finding has not been challenged before us by the appellant.
The respondent mill, which has only 120 looms, has been compared with the two big mills in Andhra Pradesh, viz., Nellimarla and Chitavalsa, having 326 and 500 looms respectively, as also with very large mills in West Bengal, some of whose loom capacity is more than 2,000.
That clearly shows that all mills, small as well as large, economic as well as uneconomic, have been clubbed together and treated alike by the Wage Board.
In considering the capacity, the Wage Board has taken 20 jute mills in West Bengal as representing a fair cross section of the industry in that region and it has taken 9 reporting mills outside West Bengal for this purpose.
Three mills selected in Andhra Pradesh were the Nellimarla, Chitavalsa and the respondent mills.
We have already shown the large disparity that exists between the mills in West Bengal as also between the Nellimarla and Chitavalsa and the respondent mill.
We have also referred to the decisions of this Court that to compare wage scales comparable establishments in the region would be taken into account and that a small, struggling concern should not be compared with a large, flourishing one.
But this is exactly what has happened, when the Wage Board treated alike the respondent mill not only with Nellimarla and Chitavalsa jute mills but also with some of the very big and prosperous mills in West Bengal.
The various aspects, dealt with above, establish that the essential prerequisite of deciding the wage structure.
viz., to consider the capacity of the industry to pay on the principles laid down by 612 this Court, is absent in the recommendations of the wage Board and that introduces a fatal infirmity in its decision.
The question of bonus does not arise for our consideration as the respondent has stated that the management has entered into a settlement with its workmen and that they will.
be entitled for bonus only if the net profits exceed Rs. 75,000.
It has further been stated that there is no available surplus to warrant the payment of bonus.
These statements have not been controverted on behalf of the appellant.
To conclude, the award of the Industrial Tribunal that the demand of the workmen for implementation of the recommendations of the Wage Board is not justified, is correct.
The appeal fails and is dismissed.
In the circumstances of the case, there will be no order as to costs.
Y.P. Appeal dismissed.
| IN-Abs | The Central Wage Board was constituted for devising a wage structure, based on the principle of fair wages payable in the Jute industry.
In determining the financial capacity of the industry the Board selected 20 mills from West Bengal and 9 mills from the rest of the region as representing a cross section of the Industry.
The respondent, a fairly small mill in Andhra Pradesh.
was considered 'as a comparable unit with two larger mills in the State as also with some of the very big and prosperous mills in West Bengal.
The Management of the mill refused to accede to the demand of the workmen to pay wages in accordance with the recommendations of the Board fixing a uniform scale for the entire industry, on the plea that the mill had no financial capacity to bear the burden of the wage scale.
The dispute was referred to the Industrial Tribunal.
The Tribunal upheld the claim of the management.
In appeal to this Court it was contended that the Wage Board recommendations did follow the principles laid down by this Court in the matter of fixation of wages and as such the Tribunal should have implemented its recommendations.
HELD: Dismissing the appeal.
The essential pre requisite of deciding the wage structure viz., consider the capacity of the industry to pay on the principles laid down by this Court was absent in the recommendation of the Wage Board.
This Court has laid down that the capacity of the industry to pay should be gauged on an industry cum region basis after taking a fair cross section of the industry and that the cross section to be truly representative and capable of giving a true picture of the conditions of both industry and labour must be one from each region where establishments of the industry in question are situate.
[608 E F] In the present case taking 20 mills from West Bengal and 9 mills from outside as forming a representative.
cross section was manifestly incorrect as the West Bengal mills could not be said to be comparable units with the rest of the mills.
These mills so clubbed together could not reflect the economic and other conditions prevailing in the mills in different regions with their peculiar problems and differing conditions.
The Board ought to have considered the units in each area separately and determined the wage scales for each such area by taking from that area a representative cross section of the industry where possible or where that was not possible by taking comparable units from other industries within that area.
[608 G H] Express Newspapers Ltd. vs Union of India, [1959] S.C.R. 12, French Motor Car Co. vs Workmen, [1963] Supp. 2 S.C.R. 16 and Greaves Cotton & Co. vs Workmen, [1964] 5 S.C.R. 362, followed.
594 If the wage scale had been determined by the Board in the mam aforesaid, even though the Board was not a statutory body and decisions were only of a recommendatory character, it would be possi for Industrial Tribunal to give due weight to its recommendations such recommendations would have been in conformity with the princil of industry cum region, a principle binding on the ' tribunals.
[609 H] [The difficulty felt by the Tribunal faced with the dilemma whether not to follow the recommendations of the Wage Board arrived at principles different from those consistently followed in industrial adjucation should have been realised by the Government before accepti the recommendations of the Wage Board.] [609 F G]
|
minal Appeal No.1 (N) of 1967.
Appeal by special leave from the judgment and order dated October 12, 13, 1966 of the Gujarat High Court in Criminal Appeal No. 390 of 1965.
B. Datta, for the appellant.
H.R. Khanna and B.D. Sharma, for the respondent.
The Judgment of the Court was delivered by Grover, J.
The sole point which arises for decision in this appeal by special leave is whether the trial became illegal by reason of the search not having been conducted strictly in accordance with the provisions of section 15 of the Suppression of Immoral Traffic in Women & Girls Act, 1956 (Act CIV of 1956), hereinafter called the "Act".
The facts need not be stated in detail.
The appellant and two other persons were tried for various offences under the provisions of the Act, the charge substantially against her being that she was keeping a brothel in her house and knowingly lived on the earnings of the prostitution of women and girls.
All the three accused persons were acquitted by the magistrate.
The State preferred an appeal to the High Court against the appellant and the third accused only.
The High Court set aside the order of acquittal in respect of the appellant and convicted her for offences punishable under sections 3(1) and 4(1) of the Act.
She was sentenced to suffer rigorous imprisonment for one year and to pay a fine of Rs. 200/ , (in default to suffer further rigorous imprisonment for six months) and to suffer rigorous imprisonment for six months on the second count, the sentences of imprisonment being concurrent.
The prosecution case was that on receiving complaints from several residents of the locality a raiding party was organised.
The services of a decoy witness Kishan Taumal were requisitioned and he agreed to work as the punter.
After ascertaining that he had no money he was given Rs. 8/ in all.
That amount included a currency note of Rs. 5/ and three currency notes of Re. 1/ each, the numbers of notes having been noted down in the first part of the panchnama.
The punter was instructed to hand over the amount for the charges that would have to be 801 paid for having sexual intercourse with any girl or woman in the appellant 's house.
He was, however, only to engage himself in talk not the actual act.
A panch witness Prem Singh Hiraji was also to accompany the raiding party.
The raid was ultimately made according to the original plan and Kishan, the punter managed to engage a women in conversation in a room in the house of the appellant.
The raiding party found that she had opened the buttons of her blouse and she was found with her clothes in such a disordered condition that it was apparent that she was getting ready to have sexual intercourse with Kishan; but on seeing the police party she got up and dressed herself.
The seven currency notes i.e. one five rupee note and two of one rupee currency notes were recovered from the appellant which were marked and had been given by Kishan.
Sub sections (1) & (2) of section 15 of the Act provide as follows: "(1) Notwithstanding anything contained in any other law for the time being in force, whenever the special police officer has reasonable grounds for believing that an offence punishable under this Act has been or is being committed in respect of a woman or girl living in any premises, and that such search of the premises with warrant cannot be made without undue delay, such officer may, after recording the grounds of his belief, enter and search such premises without a warrant, (2) Before making a search under sub section (1) the special police officer shall call upon two or more respectable inhabitants (at least one of whom shall be a woman) of the locality in which the place to be searched is situate, to attend and witness the search, and may issue an order in writing to them or any of them so to do.
" What has been stressed greatly by learned counsel for the appellant is that the Act being a special Act its provisions should have been strictly followed.
It is pointed out that the panch witness Prem Singh was not an inhabitant of the locality in which the p1ace to be searched was situate.
Another panch witness had also been taken who was a woman (Bai Shanta) to satisfy the requirement of sub section
(2) of section 15 but she also was not an inhabitant of the locality where the house of the appellant was situate.
It has been pointed out that in Public Prosecutor, Andhra Pradesh vs Uttaravalli Nageshwararao(1) it was held by Shar fuddin Ahmed J., that the Act being a special piece of legislation enacted with a specific purpose all the directions contained in section 15 were mandatory.
According to the learned judge while the recording of (1) A.I.R, 1965 A.p. 176.
802 reasons for proceeding without obtaining the search warrant might not be done, which was a matter of discretion, so far as the requisition of the services of the respectable inhabitants was concerned the direction was mandatory and the legislature by insisting on the presence of one woman mediator at the time of search had undoubtedly chosen to safeguard the interests of the persons with whom the Act was intended to deal.
In that case the services of a woman mediator had not been requisitioned at all.
The search was held to be altogether illegal with the result that the accused person in that case was acquitted and his acquittal was upheld by the High Court.
In the present case two main defects have been pointed out in the matter of.search; one is that the special police Officer Shri Mankad has been found both by the Magistrate ' and the High Court to have prepared the document Ext.
8/A long after the search.
As found by the High Court this document contained reproduction of section 15(1) and it hardly contained any ground on which the police officer had formed the belief with regard to the matters stated in sub section (1 ).
The other point which has been pressed on behalf of the appellant relates to contravention of sub section
(2) inasmuch as the panch witnesses were not inhabitants of the locality in which the appellant 's house was situate.
The High Court was of the view that power to conduct the search was derived from the statute and not from the recording of reasons and therefore the search was not rendered illegal, in the present case, on account of contravention of section 15(1) of the Act.
On the second point it was held that there was no provision in law which rendered the evidence of the panch witnesses inadmissible even though section 15(2) had been contravened.
The High Court did not agree with the decision of the Andhra Pradesh High Court that the directions contained in sub section
(2) were of a mandatory nature.
Our attention has been drawn to State of Rajasthan vs Rehman(1) in which a Deputy Superintendent of Central Excise who had received information that the respondent in that case had.
cultivated tobacco but had not paid the excise duty, went to search his house.
He was obstructed, while making the search with the result that he fell down and was injured.
The respondent was prosecuted under section 353.
Indian Penal Code.
It was held that section 165 of the Code of Criminal Procedure was applicable to such a search and the search being in contravention of that section it was illegal.
The respondent.
therefore had been rightly acquitted In this case bowever.
it was observed that the recording of reasons under section 165 did not confer on the officer [1969] I.S.C.R. 991 803 jurisdiction to make search though it is a necessary condition for doing so.
Jurisdiction or power to make a search was conferred by the statute and not derived from the recording of reasons.
these observations are sufficient to dispose of the first point which has been pressed about tile omission to record the reasons before the search or even thereafter m a proper way.
This case cannot be of much assistance to the appellant because no question is involved m tile present case of any public servant having been obstructed in the course of a search conducted under section 165 of the Criminal Procedure Code.
The trial of the appellant was for contravention of certain provisions of the Act ann the search was made in respect of those offences.
The trial having taken place the question of the applicability of section 537 of the Criminal Procedure Code will at once arise.
If the non observance of the provisions of section 15 (2) is not an illegality but is a mere irregularity then the sentence cannot be set aside unless it can be shown that such irregularity has caused failure of justice.
As will be presently seen we are of the opinion that non compliance with the directions contained in section 15(2) in the matter of search would only be an irregularity and not such an illegality which will vitiate the trial.
The decision in Delhi Administration vs Ram Singh(1) which concerned offences committed under the Act and on which reliance has been placed on behalf of the appellant involved a different point.
There the police officer who had entered the premises where the offences were alleged to be committed was not a special police officer who alone is authorised to do the various things mentioned in the provisions of the Act.
It was observed that the Act created new offences and provided for the forum before which they would be tried.
Necessary provisions of the Code of Criminal Procedure had been adopted fully or with modification.
As the Act provided machinery to deal with the offences created the necessary implication must be that the new machinery was to deal with those offences in accordance with the provisions of the special Act.
The entire police work in connection with the purposes of the Act within a. certain area had been put in the charge of a special police officer.
According to the majority judgment in that case, only the special.
police officer was competent to investigate and as the investigation had been conducted by a regular police officer who did not come within the category of a special police officer the order of the magistrate quashing the charge sheet was upheld.
This case certainly supports one part of the submission of the counsel for the appellant that the Act is a complete Code with respect to what has to be done under it.
In that sense it would be legitimate to say that a search which is to be conducted under the Act must comply with the provisions contained in section 15; but it cannot be held that if a search is not (1) [1962] 2 S .C.R. 694. 804 carried out strictly in accordance with the provisions of that section the trial is rendered illegal.
There is hardly any parallel between an officer conducting a search who has no authority under the law and a search having been made which does not strictly conform to the provisions of section 15 of the Act.
The principles which have been settled with regard to the effect of an irregular search made in exercise of the powers under section 165 of the Code of Criminal Procedure would be fully applicable even to a case under the Act where the search has not been made in strict compliance with its provisions.
It is significant that there is no provision in the Act according to which any search carried out in contravention of section 15 would render the trial illegal.
In the absence of such a provision we must apply the law which has been laid down with regard to searches made under the provisions of the Criminal Procedure Code.
Now in The State of Uttar Pradesh vs Bhagwati Kishore Joshi(1) this Court had to deal with a case where a booking clerk was stated to have committed an offence of criminal breach of trust.
A Sub Inspector of police made some investigation and submitted a report but this was done without obtaining the order of a magistrate.
Subsequently the permission of the magistrate was obtained to investigate into the case as required; by section 5A of the Prevention of Corruption Act.
After making further investigation he submitted a charge sheet.
The respondent in that case was tried and convicted under section 5(2) of that Act.
It was held by this Court (by the majority) that there was a contravention of section 5A of the Prevention of Corruption Act at the first stage of investigation when the requisite permission of the magistrate had not been obtained but after the permission had been given there was practically a de novo.
investigation.
Therefore the accused not having been prejudiced by the illegality committed by the police, the conviction could not be set aside on the ground of mere irregularity or illegality in the matter of investigation.
The following passage at p. 84 may be usefully reproduced : "The High Court set aside the conviction on the ground that there was a breach of the mandatory safeguards of the Act in that the first stage of the investigation .
was contrary to the provisions of the Act.
But it did not consider the other question whether the said breach caused prejudice to the accused in the matter of his trial.
In doing so, the High Court ignored the provisions of section 537 of the Code of Criminal Procedure.
Having carefully gone through the record for the reasons aforesaid, we are satisfied that no such prejudice has (1) ; 805 been caused to the accused.
He had a fair trial 'and had his full say.
" It is abundantly clear that section 537 of the Cr.
P.C. would be applicable to the proceedings in the present, case.
Section 5(2) of the Code provides that all offences under the Indian Penal Code shall be investigated, inquired into, tried and otherwise dealt with according to the provisions of the Cr.
P.Code.
All offences under any other law shall be similarly investigated etc.
according to the same provisions but subject to any enactment regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences.
According to section 22 no court inferior to that of a magistrate as defined in clause (c) of section 2 shall try any offence under sections 3 to 8 of the Act.
Thus all proceedings 'including investigation had to be conducted in accordance with the procedure laid down in the Criminal Procedure Code except to the extent of the specific provisions contained in the Act.
No such provision has been brought to our notice nor indeed has it been contended that section 537 of the Code of Criminal Procedure would not govern the investigation, inquiry or trial of the offences with which the appellant was charged.
The ratio of the decision in the case of Bhagwati Kishore Joshi(1) must be followed and in the absence of any prejudice having been shown by non compliance with the provisions of sub sections
(1) and (2) of section 15 of the Act, the order of the High Court must be upheld.
In conclusion it may be observed that the investigating agencies cannot and ought not to show complete disregard of such provisions as are contained in sub sections
(1) and (2) of section 15 of the Act.
The legislature in its wisdom provided special safeguards owing to the nature of the premises which have to be searched involving inroads on the privacy of citizens and handling of delicate situations in respect of females.
But the entire proceedings and the trial do not become illegal and vitiated owing to the non observance of or non compliance with the direction contained in the aforesaid provisions.
The court, however, has to be very careful and circumspect in weighing the evidence where there has been such a failure on the part of the investigating agency but unless and until some prejudice is shown to have been caused to the accused person or persons the conviction and the sentence cannot be set aside.
It may not be out of place to reiterate what was said in H.N. Rishbud and Inder Singh vs The State of Delhi(2), that a defect or an ii.legality in the investigation, however serious, has no direct bearing on the competency or the procedure relating to cognizance or trial of an offence and that (1) ; (2) .
4 Sup CI/69 19 806 whenever such a situation arises, section 537 of the Code of Criminal Procedure is attracted and unless the irregularity or the illegality in the investigation or trial can be shown to have brought about a miscarriage of justice, the result is not affected.
For the above reasons this appeal fails and it is dismissed.
V.P.S. Appeal dismissed.
| IN-Abs | The appellant was convicted for offences punishable under sections 3(1) and 4(1) of the Suppression of Immoral Traffic in Women and Girls Act, 1956.
The special police officer conducted a raid on the appellant 's house which was being kept as a brothel and recovered marked currency notes from the appellant.
He took with him two persons to witness the search but they were not inhabitants of the locality as required by section 15(2) of the Act.
After the search he prepared a document.
It did not satisfy the requirements of section 15(1) as it did not contain any ground on which he formed the belief that an offence under the Act was being committed in the premises and that a search of the premises with warrant cannot be made without undue delay.
On the question whether the trial was illegal as there was a violation of section 15(1) and (2).
HELD: The Act being a special one a search under the Act must comply with section 15.
Investigating agencies ought not to disregard the special safeguards such as those in section 15(1) and (2) provided by the Legislature, but the trial itself would not be vitiated if there was noncorrosive with such directions unless thereby some prejudice is caused to the accused.
The court however, has to be very careful in weighing the evidence where there has been such non observance of the provisions.
[803 G H; 805 E G] (a) Though the recording of reasons may be a necessary condition for making a search, jurisdiction to make a search is not derived therefrom.
The power to search is conferred by statute.
Therefore, omission to record reasons before the search or even thereafter in a proper way, would not by itself affect the validity of the search.
[803 A B] State of Rajasthan vs Rehman, [1960] 1 S.C.R. 991, followed.
(b) Under section 5(2) Criminal Procedure Code, all proceedings including investigation of offences under any law, have to be conducted in accordance with the procedure laid down in the Code except to the extent of any specific provision contained in a special Act.
Under the Suppression of Immoral Traffic Act there Tim no provision dealing with the effect of contravention of section 15.
Therefore, the law with regard to the effect of an irregular search under section 165 of the Code would apply.
Where a trial has taken p1ace, under section 537 of the Code a defect or an illegality in the investigation has no bearing on the result of the trial unless the irregularity or illegality is Shown to have brought about a miscarriage of justice.
Since the non observance of the provisions of section 15(2) of the Act in the present case, is a mere irregularity, the conviction of the appellant could not be set aside as it was not shown that the irregularity caused any failure of justice.
[804 B C; 805 B, E, H 806 B] 800 H.N. Rishbud & Inder Singh vs State of Delhi, ; and State of U.P.v.
Bhagwati Kishore Joshi, ; , followed.
Delhi Administration vs Ram Singh, ; and Public Prosecutor, Andhra Pradesh vs U. Nageswararao A.I.R. 1965 A.P. 176, referred to.
|
Appeal No. 579 of 1965.
Appeal from the judgment and decree dated April 20, 28, 1960 of the Bombay High Court (Now Gujarat High Court) in Appeal No. 172 of 1956 from Original Decree.
N.S. Bindra, M.S.K. Sastri and S.P. Nayar, for the appellant.
S.T. Desai, Y.S. Chitale and D.N. Misra.
for the respondent.
The Judgment of the Court was delivered by Bachawat, J.
In January 1948 in view of the imminent constitutional changes in the Baroda State, it was considered likely that the services of the Diwan Sri Sudhalkar, the appellant and Sri Gaekwad, the three official members of the Executive Council of the State would be prematurely terminated.
The respondent was then 'drawing a salary of Rs. 2,000/ per month and was to retire on February 14, 1952 on reaching the superannuation age of 56 years.
On January 28, 1948 His Highness the Maharaja of Baroda enhanced the respondents salary to Rs. 2,500/ per month.
By separate orders the salaries of other official member 's also were enhanced.
By a Huzur order dated February 8, 1948 the Maharaja fixed the pension and other retirement benefits of the respondent and Sri Gaekwad.
The order was in these terms : "His Highness the Maharaja Saheb has been pleased to order that in the event of premature retirement of the Government Members, Messrs. D.V. Gaekwad and Chandrachud, they will get forthwith as compensation an amount equivalent to the total ,amount they would have received had they continued in service up to.
the date of retirement and a full pension of Rs. 500 per month from the date of the premature retirement.
Mr. D.V. Gaekwad 's salary is raised to Rs. 2,000/ from the date of his confirmation as Naib Dewan.
" On the same date the Maharaja by a separate order fixed the pension and retirement benefits of Sri Sudhalkar.
On May 18, 1948, the Maharaja directed the compulsory retirement of the respondent with effect from June 1, 1948.
Soon thereafter the respondent drew from the State Treasury Rs. 95,196/4/ on account of compensation allowance.
On June 1, 1948 he retired 758 from service.
On the same date Dr. Jivraj Mehta became the Diwan and President of the Executive Council in place of Sri Sudhalkar.
On the representations of Dr. Jivraj Mehta the Maharaja passed another Huzur order on July 22, 1948 modifying his previous orders and directing that the respondent and the other officials would draw pension only as and when they would reach the age of retirement and that the respondent would in addition draw the salary to which he might be eligible under the Account Rules.
In October 1948 there was correspondence touching the Huzur Orders between the Maharaja and Dr. Jivraj Mehta.
On April 22, 1949 the Executive Council of the State of Baroda headed by Dr. Jivraj Mehta purported to review and set ,aside the Huzur Orders with respect to payment of compensation to the retiring officials and directed that (1 ) the respondent would get 4 months ' privilege leave salary and as from April 1, 1949 the pension of Rs. 500/ per month sanctioned by the Maharaja, (2) the amount received by the respondent as compensation be forfeited to the State and returned by him to the Treasury; (3) Rs. 77,416/consequently due from him after taking into account his salary and pension up to March 31, 1949 be recovered from him under section 148 of the Baroda Land Revenue Code.
Pursuant .to thistle the respondent 's properties were attached on April 26, 1949.
The respondent was compelled to refund to the State Treasury Rs. 55,000/ on April 27, 1949 and Rs. 10,000/on April 29, 1949.
On March 14, 1952 the Collector of Baroda sent a notice to the respondent demanding payment of the balance of Rs. 12,416/ .
The respondent continued to draw pension at the rate of Rs. 500/per month from April 1, 1949.
On April 17, 1952 he gave notice of his intention to file the present suit under section 80 of the Code of Civil Procedure.
On June 23, 1952 he instituted the suit against the State of Bombay asking for a declaration that the Huzur order dated FebrUary 8, 1948 ,as modified by the Huzur order dated July 22, 1948 was valid and binding on the defendant, a declaration that the order of the Executive Council dated April 22, 1949 was invalid, an injunction restraining the defendant from recovering Rs. 12,416/ and a decree for Rs. 65,000/ and interest thereon totaling Rs. 77,300/ , future interest and costs.
On August 31, 1955, the Trial Court decreed the suit.
On appeal, the High Court held that the respondent was entitled to recover Rs. 65 '000/ 'only without interest and was liable to refund Rs. 17,250/ drawn on account of pension from April 1.
1949 up.
to February 14, 1952.
Consequently, the High Court reduced the money decree to Rs. 47,750/ give proportionate costs and confirmed the rest of the decree.
The present appeal has been filed by the State of Gujarat after obtaining a certificate from the High Court.
It is necessary at this stage to refer to the constitutional and political changes culminating in the merger of Baroda State in the 759 Province of Bombay.
The Maharaja of Baroda enjoyed internal.
sovereignty in the State under the suzerainty of the British crown.
In 1940 the Maharaja enacted the Government of Baroda Act 1940, (Act No. VI of 1940).
Section 3 provided that Baroda would continue to be governed by the Maharaja and that all rights, authority and jurisdiction appertaining to its government was exercisable by him except as provided in the Act or "as may be otherwise directed by His Highness.
" Section 4 preserved all the Maharaja 's powers, legislative, executive and judicial, in relation to the State and its government and his right and prerogative to make laws, and issue proclamations, orders and ordinances by virtue of his inherent authority.
Section 5 vested the executive ' authority of the State in an Executive Council consisting of the Dewan and other members chosen by the Maharaja and holding office during his pleasure subject to the other provisions of the Act and the directions given by the Maharaja.
Section 18(d) provided that no Bill affecting any order passed by the Maharaja in exercise of his prerogative could be moved in the Dhara Sabha without the previous sanction of the Maharaja.
Section 32(f) provided that pensions and gratuities sanctioned by the Maharaja would be expenditure charged on the revenues of the State.
On August 15, 1947 the Indian Independence Act, 1947 was passed and the paramountcy of the British crown lapsed.
On the same date the State of Baroda acceded to the Dominion of India.
Under the Instrument of Accession the Maharaja of Baroda ceded to the Dominion legislature the power to legislate for the State of Baroda with respect of defence, external affairs and communications.
The advent of independence in India gave momentum to the popular movement for transfer of power from the Maharaja to the people and for formation of a responsible government in the State.
On January 9, 1948 the Maharaja issued a proclamation directing the formation of a body elected on the basis of ,adult franchise frame a Constitution for the State subject to certain reservations and announcing his intention to appoint popular representatives, to the Executive Council.
By another proclamation dated August 25, 1948 the Maharaja announced that (1) the Constitution framing assembly would have full and unrestricted authority to frame a Constitution for the State in respect of all matters and subjects; (2) the entire executive authority of the State would immediately vest in the Executive Council, the Government of Baroda Act would stand amended ,accordingly and the words "or as may be ' otherwise directed by His Highness" occurring in section 3 and the whole of section 4 of the Act would be deemed to be omitted; On September 16, 1948 the Maharaja promulgated the Baroda State Executive Rules.
Rule 6 provided that "the Executive Council shall have the entire executive authority in regard to the administration of the State in ,all matters without any reservation.
" On March 21, 1949 the Maharaja executed the Baroda Merger Agreement whereby ' 760 he ceded to the Dominion Government full authority, jurisdiction and powers for and in relation to the governance of the State and agreed to transfer the administration of the State to the Dominion Government on May 1, 1949.
On May 1, 1949 the administration of the State was made over to the Dominion Government.
As from that date, all sovereign powers of the Maharaja of Baroda ceased and the Dominion Government acquired full and exclusive extra provincial jurisdiction for and in relation to the governance of the State of Baroda.
By a notification No. 101 P dated May 1, 1949 the Central Government in exercise of its powers under section 3(2) of the Extra Provincial Jurisdiction Act, 1947 delegated to the Provincial Government of Bombay its aforesaid extra provincial jurisdiction including the powers conferred by section 4 of that Act to make orders for the exercise of the jurisdiction.
By notification No. 4530/46F of the same date, the Government of Bombay in exercise of the powers conferred by section 4 of the Extra Provincial Jurisdiction Act, 1947 repealed the provisions of the 'Government of Baroda Act excepting sections 1, 2 and 36 to 45 with immediate effect.
On the same date the Government of Bombay promulgated the Administration of the Baroda State Order Paragraph 3 of the Order vested the executive authority of the State in a special commissioner, subject to the supervision and control of the Bombay Government.
Paragraph 4(i)(b) provided for the continuance of (a) of any law, or (b) of any notification, order, scheme, rule, form or bye law issued, made or prescribed under any law as were in force immediately before May 1, 1949 in the Baroda State.
On July 23, 1949 the Government of Bombay promulgated the Bombay State (Application of Laws) Order 1949.
Paragraph 3 of the Order provided for the extension and continuance of certain laws to the Baroda State.
Paragraph 5 repealed sections 1, 2, and 36 to 45 of the Government of Baroda Act and certain other enactments.
Paragraph 5(iii)(a) provided 'that the repeal would not affect any right, title, obligation or liability already acquired, accrued or incurred, or any remedy or proceeding in respect thereof.
On July 27, 1949 the Governor General in exercise of his powers under section 290A of the Government of India Act, 1935 promulgated the States ' Merger (Governors Provinces) Order 1949.
Paragraph 3 of the Order provided that Baroda would be merged in the province of Bombay and administered in all respects as if it formed 'part of that Province.
Paragraph 4 provided for the continuance of laws then in force in the merged State.
Paragraph 7 (1 ) provided that all liabilities in respect of such loans, guarantees and other financial obligations of the Dominion Government as arose out of the governance of a merged State, would as from August 1, 1949 be liabilities of the absorbing Province, unless the loan, guarantee or other financial obligation was relatable to central purposes.
Paragraph 9 provided that any proceedings which if the order had not been passed 761 night lawfully have been brought in the merged State against the Dominion might in the case of any liability arising before August 1, 1949 be brought (a) against the Dominion if the proceedings could have been brought against the Dominion had the liability arisen after that date and (b) otherwise against the absorbing Province.
The questions arising for determination in this appeal are as follows : (1 ) Was the order of the Executive Council dated April 22, 1949 ultra vires its powers and invalid and not binding on the respondent; (2) Was the Government of Baroda liable to pay the sum of Rs. 65,000/ to the respondent; and (3) if so, has the liability devolved upon the State of Gujarat.
The Executive Council Rules made by the Maharaja of Baroda on September 16, 1948 vested in the Executive Council the entire executive authority in regard to the administration of the Baroda State in all matters without any reservation.
The Executive Council had very wide powers, but, in our opinion, they had no authority to override and rescind the Huzur orders passed by the Maharaja himself.
The prerogative and inherent powers of the Maharaja was not delegated to the Executive Council.
The Maharaja was still the sovereign ruler.
The members of the Executive Council were responsible to him and held office during his pleasure.
No appeal lay from his order to the Executive Council On the contrary under Rule 46 of the Privy Council Rules promulgated on December 18, 1947 an appeal lay to the Maharaja from an order passed by the Executive Council.
In view of section 18(d) of the Baroda Constitution Act 1940 even a legislative bill affecting an order passed by the Maharaja in the exercise of his prerogative rights could not be moved in the Dhara Sabha without his previous sanction.
Under section 32(f) pensions and gratuities sanctioned by the Maharaja were charged on the revenues of the State.
The Fluzur order was passed by the Maharaja on February 8, 1948 in the exercise of his prerogative and inherent powers.
The order was executed and the monies were paid under it to the respondent.
The Executive Council had no authority to revoke the Huzur order and to forfeit the monies.
We hold that the order of the Executive Council dated April 22, 1949 was ultra vires its powers and was illegal and not binding upon the respondent.
It is now conceded that the direction in the order dated April 22, 1949 for the recovery of monies under section 148 of the Baroda Land Revenue Code was illegal.
That section did not allow recovery of moneys payable under an order of the Executive 762 Council.
The attachment levied on the respondent 's properties was unlawful.
The recovery of Rs. 65,000/ from the respondent, under the invalid order of the Executive Council cannot be justified as an act of State.
The Courts below rightly found that the respondent was compelled to pay Rs. 65,000/ under coercion.
The result of the illegal recovery was that to the extent of Rs. 65,000/ the Ii, ability of the Baroda Government under the Huzur Order dated February 8, 1948 remained outstanding.
The main question arising in the appeal is whether the liability the Baroda Government under the Huzur order dated February 8, 1948 devolved upon the successor governments after the merger of the Baroda State on May 1, 1949.
The view which currently prevails in this Court is that in cases where the Government of India has acquired the territory of a sovereign Indian State either by conquest, treaty, cession or otherwise the privileges and rights obtained from the predecessor State cannot be enforced by action against the Government of India, see M/s. Dalmia Dadri Cement Co. vs The Commissioner of Income tax(1) (cession of Jind), pema Chibar vs Union of India(a) (conquest of Daman), nor can it be sued in the municipal courts for the debts 'and contractual liabilities of the predecessor, see jagannath Agarwala vs State of Orissa(3) (Cession of Mayrbhunj), Firm Bansidhar Premsukhdeo vs State of Rajasthan(4) (Bharatpur), unless it has chosen, to recognise the right, privilege, debt or liability by legislation, agreement, or otherwise.
The rule extends to the acts of the predecessor State after its accession to the Dominion of India on August 15, 1947 and before its complete merger in the Dominion.
In State of Gujarat vs Fiddali(5) the Ruler of Sant State issued a resolution or Tharao granting certain forest rights on March 12, 1948 after the accession of the State to the Dominion.
On June 10, 1948 he transferred the administration of the State to the Dominion under a merger ,agreement dated March 19, 1948.
The Court held that the Tharao was not binding upon the successor government.
It was said that the Rulers of the Indian States parted with their sovereignty in successive stages, firstly on accession, and finally on merger.
As a result of accession, the Dominion of India acquired power to legislate for the territories of the acceding state in respect of defence, external affairs, and communications.
Under section 5 of the Indian Independence Act the Dominion was as from August 15, 1947 a union comprising the acceding State.
But the acceding State continued to retain its separate existence and individual sovereignty until its complete merger in 'the Dominion.
(1) [1959] S.C.R. 729.
(2) ; (3) ; (4) ; (5) ; 763 The question then is whether the successor governments recognized the rights and liabilities under the Huzur order dated February 8, 1948.
The onus of proving the recognition is upon the respondent, see Valesinghji Joravarsingji vs Secretary of State for India(1).
The recognition "may be either express or may be implied from circumstances and evidence appearing from the mode of dealing with those rights of the new sovereign," see State Gularat vs Fiddali(2).
On behalf of the respondent it was argued that the Huzur Order dated February 8, 1948 was a law and as such was recognised and continued in force by the Government of India.
We axe unable to accept this contention.
A grant made by the Ruler of an Indian State is not a law, see State of Gujarat vs Fiddali(2), 461 (grant of forest rights), R.N. Pratap Singh Deo vs State of Orissa(a) (grant of khorposh allowance), Union of India vs Gwalior Rayon Silk Manufacturing (Weaving) Co.(4) (grant of exemption from taxation), State of Madhya Pradesh vs Lal Bhargavendra Singh(5) (grant of maintenance allowance), nor is an agreement executed by the Ruler a law, see Maharaja Shri Umaid Mills Ltd. vs Union of India(6).
Accordingly, it was held in State of Madhya Pradesh vs Col.
Ram Pal(7) that an order granting retirement pension in relaxation of the State Pension and Gratuity Rules was not a law.
The Huzur order dated February 8, 1948 did not lay down a rule conduct for the official members of the Executive Council generally.
It fixed the retirement benefits of the respondent and of Gaekwad and enhanced Gaekwad 's salary.
A separate order fixed the retirement benefits of Sudhalkar, the other official member.
The order concerning the respondent was an executive act and had none of the characteristics of law unlike other laws it was not published in the Adhya Patrika or the official gazette of Baroda State.
We hold that the order was not a law.
The next question is whether the Baroda merger agreement dated March 21, 1949 recognised the rights and liabilities under the Huzur Order dated February 8, 1948.
Now the Articles of the merger agreement may furnish valuable evidence of the affirmance of rights conferred by the predecessor State, see M/s. Dab mia Dadri Cement Co. Ltd. vs The Commissioner of Income tax(s).
In the State of Madhya Pradesh vs Shyam Lal(9) a recognition of those rights was inferred from articles in merger agreements providing for the continuance of the laws of the merging State and for the taking over its assets and the liabilities by the new State.
In the present case article VIII of the merger agreement (1) (1924) L.R. 51 I.A. 357, 361.
(2) ; at p. 510.
(3) ; (4) ; (5) ; (6) [1963] Supp. 2 S.C.R. 515.
(7) ; (8) [1959] S C.R. 729 at p. 748.
(9) 764 dated March 21, 1951 provided : (1 ) The Government of India hereby guarantees either the continuance in service of the permanent members of the Public Services of Baroda on conditions which will be less advantageous than those on which they were serving before the date on which the administration of Baroda is made over to the Government of India or the payment of reasonable compensation.
(2) The Government of India further guarantees the continuance of pensions and leave salaries sanctioned by His Highness the Maharaja to the members of the public services of the State who have retired or proceeded on leave preparatory to retirement, before the date on which the administration of Baroda is made over to the Government of India.
Clause (2) of article VIII applies to the respondent.
.He was member of the public services of the Baroda State, and he retired before the date of the merger.
It guarantees the continuance of the pension and ' leave salary sanctioned to him by the Maharaja.
Now what does the word "pension" in clause (2) of article VIII mean? Ordinarily the word "pension" means a periodical allowance of money granted by the Government in consideration or recognition of meritorious services.
The word "pension" in the , section 60(1)(g) of the Code of Civil Procedure,1908 and section 6(g) of the implies periodical payments of money by Government to the pensioner, see Nawab Bahadur of Murshidabad vs Karnani Industrial Bank Ltd.(1) Pension, gratuity and provident fund are three distinct types of retirement benefits.
But the word "pension" (pensionem, payment) in its widest etymological sense can be construed as including all payments of every kind and description to a retiring government servant, see Secretary of State vs Khemchand jeychand(2).
The term "pension" is frequently, particularly in recent years, used in the broad sense of retirement allowance or adjusted compensation for services rendered, see Corpus Juris Secundum, Vol. 67, page 331; Vol. 70, page 425.
It has received the wider connotation in the definition sections of many modern statutes.
To give a few illustrations, the word "pension" includes "any payment of a lump sum in respect of a person 's employment", see Fatal Accidents Act, 1959 (7 & 8 Eliz, 2c.
65) section 2(2), "a superannuation allowance", see Midwives Act, 1936 (26 Geo.
5 & 1 Edw.
40) section 2(6), a "gratuity" and a return of contributions to a pension fund with or without interest thereon or any other addition thereto, see Transport Act, 1947, (10 & 11 Geo.
49) section 125(1), Gas Act, 1948 (11 & 12 Geo. 6c.
67) section 74(1).
(1) L.R. (1931) 58 I.A. 215, 219 20.
(2) I.L.R. , 436.
765 Now clause (1 ) of article VIII of the merger agreement guarantees payment of reasonable compensation to officials whose services are dispensed with by the new Government.
Clause 2 guarantees the continuance of pensions and leave salaries sanctioned by the Maharaja to officers who had retired before the date of the merger.
Considering that the object of article VIII is to guarantee payment of retirement benefits to retired public servants of the merged State, we are not inclined to give the word "pensions" a narrow interpretation.
In our opinion, the word "pensions" in clause 2 of article VIII includes the lump sum payable to the respondent as compensation under the Huzur order dated February 8, 1948 as modified by the Huzur order dated July 22, 1948.
In substance, the Huzur order directed that the respondent would get his full salary as his pension from the date of his premature retirement up to the completion of his superannuation age and allowed him to draw immediately the entire allowance for the period in one lump sum.
The allowance so payable to the respondent, a retiring government servant, in recognition of his past services is "pension" within the meaning of cl. 2 of article VIII of the merger agreement.
Article VIII of the merger agreement thus furnishes strong evidence of recognition by the Government of India of the liability to pay retirement compensation under the Huzur order dated February 8, 1948.
We have also noticed that the successor governments continued the old laws of the Baroda State until they were repealed or altered.
The successor governments resisted the respondent 's claim on the ground that the order of forfeiture passed by the Executive Council on April 22, 1949 was lawful.
There was no question of their disclaiming liability under the Huzur order of February 8, 1948 in case it was found that the order of the Executive Council dated April 22, 1949 was invalid.
In the 'circumstances, we hold that the successor governments recognized and took over the liability under the Huzur order dated February 8, 1958.
If so, it is not disputed that the liability has now devolved on the State of Gujarat.
It follows that the Courts below rightly decreed the suit.
This conclusion is sufficient to dispose of the appeal and we express no opinion whether the liability was also recognized by paragraph 4(i)(b) of the Administration of Baroda State Order, paragraph 5(iii)(a) of the Baroda State (Application of Laws) Order, 1949 or paragraph 7 (1 ) of the States ' Merger (Governors ' Provinces) Order, 1949.
In the result, the appeal is dismissed.
There will be no order as to costs in this Court.
R.K.P.S. Appeal dismissed.
| IN-Abs | On August 15, 1947 upon the passing of the Indian Independence Act, 1947 when paramountcy of the British crown lapsed, the erstwhile State of Baroda acceded to India.
By a. proclamation on August 25, 1948 the Maharaja of Baroda announced inter alia that the entire 'executive authority of the State would immediately vest in his Executive Council.
On March 21, 1949 he executed the Baroda Merger Agreement whereby the full powers in relation to the governance of the State were transferred to the Indian Government from May 1, 1949.
These powers were then delegated to the Provincial Government of Bombay.
The respondent was an official member of the Maharaja 's Executive Council of the State of Baroda.
In January.
1948 when it was considered likely that in view of the imminent constitutional changes m the State the members of the old Executive Council might be prematurely retired, the Maharaja enhanced the respondents salary, and by 'a Huzur order dated February 8, 1948, he fixed the pension and other retirement benefits of the respondent and another member of the Executive Council.
It was provided that in the event of their premature retirement, they would get 'as compensation an amount equivalent to what they would have received if they continued in service upto the date of retirement and a full pension of Rs. 500.00 per month from the date of the premature retirement.
On May 18, 1948, the Maharaja directed compulsory retirement of the respondent with effect from June 1, 1948 and he therefore drew Rs. 95,196.00 on account of his compensation.
At the instance of a new Executive Council the Maharaja passed another Huzur order on July 22, 1948 modifying his previous orders and directing that the respondent 'and the other officials would draw pension only when they reached the age of retirement and would in addition draw the salary to which they were eligible under the Account Rules.
On April 22, 1949, the new Executive Council purported to review and set aside the Huzur orders with respect to payment of compensation to the retired officials and directed, inter alia, that a sum of Rs. 77,416.00 out of the compensation received by the respondent be recovered.
from him under section 148 of the Baroda Land Revenue code.
He was compelled to refund Rs. 65,000.00 and a balance of Rs. 12,416.00 was demanded from him by the Collector of Baroda.
The respondent filed a suit against the State of Bombay asking inter alia for a declaration that the Huzur order dated February 8, 1948 as modified by the Huzur Order dated July 22, 1948 was binding on the defendants and that the order of the Executive Council of April 22, 1949 was invalid.
The Trial 756 Court decreed the suit and the High Court, in appeal, substantially upheld the respondent 's case but reduced the amount of the decree.
Apart from the validity of the Executive Council 's order of April 22, 1949, the other questions arising for determination in the 'appeal to this Court were whether the Government of Baroda was liable to pay the sum of Rs. 65,000 to the respondent; and if so, whether the liability devolved upon the appellant State of Gujarat.
HELD: Dismissing the appeal: (i) The Huzur order of February 8, 1948 was passed by the Maharaja in the exercise of his prerogative and inherent powers.
The Executive Council had no authority to revoke that order and until the Maharaja passed the entire executive authority to the Council on August 25, 1948, he was still the sovereign ruler.
The order of the Executive Council dated April 22, 1949 was therefore ultra vires and not binding upon the respondent.
[761 G] (ii) The direction in the order of April 22, 1949 for the recovery of monies under section 148 of the Baroda Land Revenue Code was illegal.
That section did not allow recovery of moneys payable under an order of the Executive Council.
The result of the illegal recovery of Rs. 65,000 from the respondent was that to the extent of that amount, the liability of the Baroda Government under the Huzur order dated February 8, 1948 remained outstanding.
[762 A] (iii) Clause (1) of Article VIII of the Baroda Merger Agreement guaranteed payment of reasonable compensation to officials whose services were dispensed with by the new Government.
Clause (2,) guaranteed the continuance of pension and leave salaries sanctioned by the Maharaja to officers who had retired before the date of the merger.
Article VIH thus furnishes strong evidence of recognition by the Government of India of the liability to pay retirement compensation under the Huzur order of February 8, 1948.
Furthermore, the successor Governments continued the old laws of the Baroda State until they were repealed or altered.
The appellant resisted the respondent 's claim on the.
basis only of the order of April 22, 1949 but as this was invalid, it must be held that the successor Governments recognised and took over liability under the Huzur order of February 8, 1948, which liability had since devolved on the appellant State of Gujarat.
Considering that the object of Article VIII was.
to guarantee payment of retirement benefits to retired public servants of the merged State, the word "pensionS" could not be given any narrow interpretation and would include the lump sum payable to the respondent as compensation under the Huzur order dated February 8, 1948 as modified by the Huzur order dated July 22, 1948.
[765 A D] M/s. Dalmia Dadri Cement Co. vs The Commissioner of Income Tax.
[1959] S.C.R. 729; Pema Chibar vs Union of India, ; ; Jagannath Agarwala vs State of Orissa, ; ; Firm Bansidhar Premsukhdeo vs State of Rajasthan; , ; State of Gujarat vs Fiddali, ; ; Vajesinghji Joravarsingji vs Secretary of State for India, [1924] L.R. 51 I.A. 357, 361; R.N. Pratap Singh Deo vs State of Orissa, ; ; Union of India vs Gwalior Rayon Silk Manufacturing (Weaving) Co., ; ; State of Madhya Pradesh vs Lal Bhargavendra Singh, [1966] 2 S.C.R. 56 Maharaja Shri Umaid Mills Ltd. vs Union of India, [1963] Supp. 2, S.C.R. 757 515; State of Madhya Pradesh vs Col.
Ram Pal, ; ; M/s. Dalmia Dadri Cement Co. Ltd. vs The Commissioner of Income tax ; Nawab Bahadur of Murshidabad vs Karnani Industrial Bank Ltd., L.R. [1931] 58 I.A. 215, 219 20 and Secretary of State vs Khemchand Jeychand, I.L.R. , 436; referred to.
|
Appeal No. 25 1966.
Appeal by special leave from the judgment and decree dated ' January 2, 1963 of the Orissa High Court in Second Appeal No. 365 of 1960.
V.D. Misra, for the appellant.
N.C. Chatterjee and Sukumar Ghose, for the respondents Nos. 1 to 3 and 5 to 12.
564 The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave is directed against the judgment of the Orissa High Court in a second appeal whereby the High Court affirmed the decree and order passed by the First Additional Sub Judge, Cuttack, with modifications.
The High Court held that "the restrictive order of the lower appellate court directing the plaintiffs to take out processions with a 'low sound music except drumbeating, is not justified" and directed the deletion of this portion from the order of the lower appellate court.
In order to appreciate the points raised before us it is necessary to give a few facts and the findings of the court below.
The plaintiffs, respondents before us and hereinafter referred to as the plaintiffs, brought this suit against the defendants, appellants before us and hereinafter referred to as the defendants, praying for a declaration that the Hindu villagers of the two villages had the right to take out religious and non religious processions with appropriate music along the District Board and village roads and other public highways of the locality including those by the side of the defendants ' mosques without any interruption wherever the plaintiffs ' community chose to take out without restriction and that the defendants, viz., the Mohamedan villagers of villages Alkund and Nuagaon, be permanently restrained from interfering with the plaintiffs ' lawful procession as aforesaid in any manner.
The case of the plaintiffs, in brief, was that the villages Nuagaon and Alkund were contiguous villages and they had a common social, cultural and religious life, and they were entitled to take out religious and non religious processions with appropriate music.
It was alleged that the Muslim villagers of the locality had two mosques, one in each village, abutting the highway.
It was further alleged that till the Kartick Purnima day of 1952 the plaintiffs had taken out their religious and social processions with ' appropriate music without any interruption before the mosques in question; that the plaintiffs were prevented from exercising their lawful rights by orders of the Magistracy at the instance of the defendants; that the defendants held out threats to attack the plaintiffs ' peaceful processions and accordingly it was necessary to clear the cloud created by the Magistracy and the conduct of the defendants.
We may mention that the District Magistrate and the State Government were not made parties to this suit. ' The defendants ' main plea was that the right claimed by the plaintiffs could only be exercised as not to cause any interference with the exercise of the rights of the defendants.
It was alleged that the Muslim community of the two mauzas also had inherent, natural and fundamental rights to offer their prayers in complete calmness without any interference whatsoever and they were entitled to oppose music being played near about the mosque in 565 order to maintain the calmness inasmuch as the music or Sankirtan really disturbed the calmness which was absolutely necessary for concentration of mind in prayer.
The defendants also.
relied on a compromise alleged to have been arrived at between the two communities in 1931.
It was alleged that in pursuance of the compromise two pillars had been put up by the defendants on both sides of the mosques to indicate to the music players of the processionists where to stop the music, and the pillars bore the following engraved inscriptions: "Baja bajaiba nishdha" The following issues, among others, were framed by the Trial Judge: (5) Is the right of the plaintiff villagers to take religious and non religious processions with appropriate music by the side of the mosques of Nuagaon and Alkund likely to infringe the rights of the defendant moslem villagers to offer their prayer in calmness ? (6) Are the plaintiffs entitled to.
enforce their fight in wanton disregard of the fundamental rights of the defendants ? (7) Are the plaintiff villagers estopped to re agitate their lost fundamental right to play music in front of the mosques ? (8) Are the plaintiffs bound by the compromise entered into between the properly represented leaders of both the communities.
dated 2 3 31 and had the compromise been acted upon ? The Trial Court held that the rights of the plaintiffs to take out the processions with the accompaniment of music was not absolute and the plaintiffs could only exercise the same on all occasions except near the mosques at the time of congregational prayer of the defendant community according to Islamic religion and subject to other lawful orders or directions given by the Magistrate or Police for preventing breach of peace or regulating traffic.
The Court further held that a compromise was effected in 1931 and the Hindu community had been acting according to the terms of the compromise so as not to disturb the religious sentiments of the Muslim community by playing music before their mosques while going in processions.
The Court accordingly held that the plaintiffs were estopped from re agitating the matter which they had agreed not to do.
The Court accordingly decreed the suit and gave the following declaration: "That the plaintiffs have a right to take out both religious and non religious processions with the 566 accompaniment of proper music for the occasion on the highways of Alkund and Nuagaon villages subject to the undermentioned restrictions (a) that they do not play music between the space of brick pillars situated on both sides of Alkund mosque and between the space indicated by two stones on either side of the Nuagaon mosques so as not to disturb the defendants or their community in their offering their prayers and (2) that the right also subject to any lawful order or direction by the Magistrate or the Police for preventing breaches of public peace or obstructing the highway and such other orders under any other statutory provisions for regulating traffic.
The parties will bear their own costs.
" On appeal by the plaintiffs, the First Additional Sub Judge also held that the compromise was binding on the plaintiffs.
He further held that it was manifest from the inscription on the two pillars (Baja bajaiba nishdha) that the leaders of the Hindu community agreed to stop only drum beating near the said two mosques.
In view of this conclusion he gave the following modified declaration: "That the plaintiffs both in their individual capacities and as members of the Hindu Community have a fight to take out religious and social processions accompanied by music in a low sound except drum beating along public roads while passing the two brick pillars situated on either side of Alkund mosque and the two stones fixed on either side of Nuagaon Mosque, subject to any orders or directions issued by the magistrate or police for preventing breaches of public peace or obstructions of the thoroughfares or for other matters mentioned in section 144 Criminal P.C. or under other statutory provisions or for regulation of traffic, provided that the exercise of such right does not amount to a nuisance recognised by law.
" The defendants appealed to the High Court and the plaintiffs filed a cross appeal.
R.K. Das, J., held that no restriction order of the lower appellate court directing the plaintiffs to take out processions with appropriate music and that the restrictive could be imposed on the right of the plaintiffs ' community to take out procession with "low sound music except drum beating" was not justified and was liable to be set aside.
He, however, maintained the rest of the declaration given by the First Additional Sub Judge.
The High Court further held that the compromise did not create an estoppel against the plaintiffs.
He observed that "there is nothing on record to show that the signatories to the said compromise had any authority whatsoever to bind the com 567 munity as a whole.
It is well settled that a few self constituted leaders or even leaders chosen by the officials do not legally represent the entire community which includes minors also and without proof of valid authority such leaders cannot bind the other members of the community.
The question whether any valid authority was given or not is a question of fact in each case." The learned counsel for the defendants contends that (1 ) the High Court had no jurisdiction to set aside the finding that the compromise was effected in a representative capacity; (2) that Babu Ram Singh vs Subhan Mochi(1) lays down good law and should have been followed by the High Court; and (3) that both the Hindus and the Muslims have fundamental rights and in case of conflict reasonable restrictions on playing of music before the mosques should be imposed by this Court.
In our opinion the High Court was right in coming to the conclusion that the compromise was not binding on the Hindu community.
The learned Additional Sub Judge had misdirected himself in law in coming to the contrary conclusion.
The compromise was not arrived at in a suit fought in a representative capacity but was filed in a proceeding under section 107, Criminal Procedure Code.
The signatories declared inter alia that "neither we, the Musalmans nor we the Hindus can at any time in future create any disturbance towards.
each other 's religion and will deal with each other amongst ourselves .
There is no apprehension of breach of peace as we the Hindus and the Musalmans have amicably settled the matter nor will there occur any breach of peace in future.
So we both parties having settled the matter amicably hereby submit this petition and pray that the case be disposed of in terms of this compromise petition.
" It is signed by a number of persons but there is no indication that they represented the two communities.
It may be that these persons, who signed the compromise, were important persons in the communities and it may be that both the communities should act according to the compromise effected by the so called important persons.
But in law it does not debar the parties from asserting their legal rights in a civil court.
We need not decide what the compromise means, and particularly whether the words inscribed on the pillars were part of the compromise effected by the leaders.
The facts in Babu Ram Singh vs Subhan Mochi(1), which was.
relied on by the learned counsel for the defendants, were different.
There the Court was satisfied from a consideration of the circumstances that the agreement was binding on the parties.
The Court observed: (1) A.I.R. 1932 All.
568 "It is manifest that the parties did summon the leaders of the various communities and that they were summoned as representatives of their various communities .
We find it quite impossible to believe in the circumstances of the case that the other Mahomedans of Rasra were not fully aware of the meeting to which their leaders had been summoned, and their subsequent conduct in the ensuing years shows that during those years, at any rate, they accepted the representative capacity of the leaders who had signed the agreement.
It is manifest that for at least three years no single Mahomedan made any endeavor to repudiate the authority of those leaders .
That it is right and proper to infer the representative character of the signatories to the agreement from the surrounding circumstances is amply supported by a reference to section 187, Contract Act.
" We are not called upon to decide whether that case was rightly decided or not as the facts in that case were quite different.
As we have said, this was a proceeding under section 107 against particular parties and we are unable to appreciate how any party in a proceeding under section 107, Criminal Procedure Code, could represent the whole community to which he belongs.
The law on the subject of rights of persons to take out religious processions was settled by the Privy Council in Manzur Hasan vs Muhammad Zaman(1).
The learned counsel has not challenged that decision, but appeals to us to.
incorporate more reasonable restrictions so as to fully preserve the rights of the appellants defendants to say their prayers in peace in the mosques.
In our opinion there is no reason why we should not follow the decision of the Privy Council in Manzur Hasan vs Muhammad Zaman (1), and the form of declaration given therein.
The declaration given by the Privy Council paid due regard to the rights of both communities.
We accordingly substitute the following declaration: "That the plaintiffs have a right to take out both religious and non religious processions with the accompaniment of music on the highways of Alkund and Nuagaon villages (1) subject to the order of the local authorities regulating the traffic and (2) subject to.
the Magistrate 's directions under any law for the time being in force and the rights of the public.
" The appeal accordingly fails and is dismissed.
There will be no order as to costs.
V.P.S. Appeal dismissed.
(1) [1924] 52 I.A. 61.
| IN-Abs | The respondents, who were Hindus filed a suit against the appellants who were Muslims, for a declaration that the Hindu residents of their villages had the right to take out religious and non religious processions.
with appropriate music along the roads and public highways in the: villages, including those by the side of two mosques in the villages.
The appellants contended that in 1931, in proceedings under section 107, Criminal Procedure Code, there was a compromise between the Hindus and the Muslims of the two villages, whereby it was agreed that Hindus would not play music between two land marks near the mosques, and that such a restriction was necessary to enable them to say their prayers in the. mosques.
The trial court held the respondents were bound by the compromise.
The first appellate court also held that the respondents were bound by the compromise, but that the respondents could take the processions between the landmarks with 'music in a low sound except drumbeating.
Both parties appealed to the High Court.
The High Court held, that the respondents were not bound by the compromise, that no restriction could be imposed on the right of the respondents ' community (Hindus) to take out processions with appropriate music, and that the restrictive order of the first appellate court that only low sound music could be played should be set aside.
In appeal to this Court.
HELD: (1) As the compromise was not arrived at in a suit fought.
in a respresentative capacity, it did not debar the parties from asserting, their legal rights in a civil court.
[567 D] Babu Ram Singh vs Subban Mochi, A.I.R. 1929 All. 519, explained.
(2) The respondents have the right to take out both religious and ' non religious processions with accompaniment of music on the roads and highways subject only to (a) an.y order of the local authorities regulating the traffic; (b) any directions of the Magistrate under any law fOE the time being in force; and (c) the rights of the public.
[568 G] Manzur Hasan vs Muhammad Zaman, (1924) 52 I.A.61, applied.
|
iminal Appeal No. 46 of 1967.
Appeal from the judgment and order dated November 1, 1966 of the Kerala High Court in Criminal Revision Petition No. 191 of 1966.
Lily Thomas, for the appellant.
W.S. Barlingay and Ganpat Rai, for respondent No. 1.
A.G. Pudissery, for respondent No. 2.
693 The Judgment of the Court was delivered by Shah, J.
Rathi daughter of M.C. Verghese was married to T.J. Ponnan.
On July 18, 1964, July 25, 1964 and July30, 1964, Ponnan wrote from Bombay letters to Rathi who was then residing with her parents at Trivandrum which it is claimed contained defamatory imputations concerning Verghese.
Verghese then filed a complaint in the Court of the District Magistrate, Trivandrum, against Ponnan charging him with offence of defamation Ponnan submitted an application raising two preliminary contentions (1) that the letters which formed the sole basis of the complaint were inadmissible in evidence as they were barred by law or expressly prohibited by law from disclosure; and (2) that uttering of a libel by a husband to his wife was not "publication" under the law of India and hence cannot support a charge for defamation, and prayed for fan order of discharge, and applied that he may be discharged.
The District Magistrate held that a communication by a husband to his wife or by a wife to her husband of a matter defamatory of another ' person does not amount in law to publication, Since the husband and wife are one in the eye of the law.
In so holding, he relied upon the judgment in Wennhak vs Morgan and Wife(1).
He also held that the communication was privileged, and no evidence could be given in court in relation to that communication.
He accordingly ordered that Ponnan be discharged under section 253 (2) Code of Criminal Procedure.
In a revision application filed by Verghese before the Court of Session, the order was set aside and further enquiry into the complaint was directed.
In the view of the learned Sessions Judge the doctrine of the common law of England that a communication by one spouse to another of a matter defamatory of another person does not amount to publication has no application in India, and section 122 of the Indian Evidence Act does not prohibit proof in the Court by the complainant of the letters written by Ponnan to his wife.
The case was then carried to the High Court of Kerala in revision.
The High Court set aside the order of the Court of Session and restored the order of the District Magistrate.
The High Court held that from the averments made in paragraphs 9 to 11 of the complaint it was clear that the writing of defamatory matter by Ponnan to his wife Rathi was not in law publication, and that "if the letters written by Ponnan to his wife cannot be proved in court either by herself directly or through her father, in whose hands she had voluntarily placed them, the imputations therein fell outside the court 's cognizance and no charge under section 500 Indian Penal Code could be deemed to be made out".
Against (1)[1888] 120.Q.B.D. 635.
694 the order passed by the High Court discharging Ponnan, this appeal is preferred with certificate granted by the High Court.
It was assumed throughout these proceedings that the letters are defamatory of the complainant.
Under the Indian penal Code in order that an offence of defamation may be committed there must be making or publication of any imputation concerning any person by words either spoken or intended to be read, or by signs or by visible representations, intending to harm, or knowing or having reason to believe that such imputation will harm, the reputation of such person.
To constitute the offence of defamation there must therefore be making or publication of an imputation concerning any person and the making or publication must be with intent to harm, or knowing or having reason to believe that such imputation will harm, the reputation of such person.
Unless there is publication there can be no offence of defamation committed.
In England the rule appears to be well settled that except in certain well defined matters.
the husband and wife ,are regarded as one and in an action for libel disclosure by the husband of the libel to his wife is not publication.
In Wennhak 's case(1) Manisty, J., observed: " . the maxim and principle acted on for centuries is still in existence viz., that as regards this Case, husband and wife 'are in point of law one person." The learned Judge examined the foundation of the rule and stated that it was, after, all, a question of public policy or, social policy.
But the rule that husband and wife are one in the eye of law has not been adopted in its full force under our system of law and certainly not in our criminal jurisprudence.
In Queen Empress vs Butch(2) it was held that there is no presumption of law that the wife and husband constitute one person in India for the purpose of the criminal law.
If the wife, removing the husband 's property from his house, does so with dishonest intention, she is guilty of theft.
In Abdul Khadar vs Taib Begum(5) the Madras High Court again held that there is no presumption of law in India that a wife and husband constitute one person for the purpose of criminal law, and therefore the English common law doctrine of absolute privilege cannot prevail in India.
It must be remembered that the Indian Penal Code exhaustively codifies the law relating to offences with which it deals and (1) (2) I.L.R. (3) A.T.R. 695 the rules of the common law cannot be resorted to for inventing exemptions which are not expressly enacted.
In Tiruvengadda Mudali vs Tripurasundari Ammal(1) a Full Bench of the Madras High Court observed that the exceptions to section 499 I.P. Code must be regarded as exhaustive as to the cases which they purport to cover ,and recourse cannot be had to the English common law to 'add new grounds of exception to those contained in the statute.
A person making libelous statements in his complaint filed in court is not absolutely protected in a criminal proceeding for defamation, for under the Eighth Exception ,and the illustration to section 499 the statements are privileged only when they are made in good faith.
There is therefore authority for the proposition that in determining the criminality of an act under the Indian Penal Code the courts will not extend the scope of special exceptions by resorting to the rule peculiar to EngLish common law that the husband and wife are regarded as one.
But we do not deem it necessary to record any final opinion on this question because, in our judgment.
this enquiry has to be made when the complaint is tried before the Magistrate.
Verghese has complained that he was defamed by the three letters which Ponnan wrote to Rathi Ponnan, however, says that the letters addressed by him to his wife are not except with his consent admissible in evidence by virtue of section 122 of the Indian Evidence Act, and since the only publication pleaded is publication to his wife and she is prohibited by law from disclosing those letters.
no offence of defamation could be made out.
So stated the proposition is in our judgment, not sustainable.
Section 122 of the Indian Evidence Act falls in Ch.
IX which deals with evidence of witnesses in proceeding before the court.
That section provides: "No person who is or has been married shall be compelled to disclose any communication made to him during marriage by any person to whom he is or has been married; nor shall be permitted to disclose any such communication.
unless the person who made it, or his representative in interest, consents, except in suits between married persons, or proceedings in which one married person is prosecuted for any crime committed against the other.
" The section consists of two branches (1) that a married person shall not be compelled to disclose any communication made to him during marriage by his spouse; and (2) that the married person shall not except in two special classes of proceedings be permitted to disclose by giving evidence in court the communication, (1) I.L.R. 696 unless the person who made it, or his representative in interest, consents thereto.
A prima facie case was set up in the complaint by Verghese.
That complaint has not been tried and we do not see how, without recording any evidence, the learned District Magistrate could pass any order discharging Ponnan.
Section 122 of the Evidence Act only prevents disclosure in giving evidence in court of the communication made by the husband to the wife.
If Rathi appears in the witness box to give evidence 'about the communications made to her husband, prima facie the communications may not be permitted to be deposed to or disclosed unless Ponnan consents.
That does not, however, mean that no other evidence which is not barred under section 122 of the Evidence Act or other provisions of the Act can be given.
In a recent judgment of the House of Lords Rumping vs Director of Public Prosecutions(1), Rumping the mate of a Dutch ship was tried for murder committed on board the ship.
Part of the evidence for the prosecution ,admitted at the trial consisted of a letter that Rumping had written to his wife in Holland which amounted to a confession.
Rumping had written the letter on the day of the killing, and had handed the letter in a closed envelope to a member of the crew requesting him to post it as soon as the ship arrived at the port outside England.
After the appellant was arrested, the member of the crew handed the envelope to the captain of the ship who handed it over to the police.
The member of the crew, the captain and the translator of the letter gave evidence at the trial, but the wife was not called as witness.
It was held that the letter was admissible in evidence.
Lord Reid, Lord Morris of Borth Y Gest, Lord Hodson and Lord Pearce were of the view that at common law there had never been a separate principle or rule that communications between a husband and wife during marriage were inadmissible in evidence on the ground of public policy.
Accordingly except where the spouse to whom the communication is made is a witness and claims privilege from disclosure under the Criminal Evidence Act.
1898, (of which the terms are similar to section 122 of the Indian Evidence Act though not identical), evidence as to communications between husband and wife during marriage is admissible in criminal proceedings.
The question whether the complainant in this case is an agent of the wife because he has received the letters from the wife and may be permitted to give evidence is a matter on which no opinion at this stage can be expressed.
The complainant claims that he has been defamed by the writing of the letters.
The letters are in his possession and are available for being tendered in evidence.
We see no reason why inquiry into that complaint should, on the (1) 697 preliminary contentions raised, be prohibited.
If the complainant seeks to support his case only upon the evidence of the wife of the accused, he may be met with the bar of section 122 of the Indian Evidence Act.
Whether he will be able to prove the letters in any other manner is a matter which must be left to be determined at the trial 'and cannot be made the subject matter of an enquiry at this stage.
One more question which was raised by counsel for the appellant may be briefly referred to.
It was urged ' that since the matter reached this Court, Rathi has obtained a decree for nullity of marriage 'against Ponnan on the ground of his impotency, and whatever bar existed during the subsistence of the marriage cannot now operate to render Rathi an incompetent witness.
But the argument is plainly contrary to the terms of section 122.
If the marriage was subsisting at the time when the communications were made, the bar prescribed 'by section 122 will operate.
In Moss vs Moss(1), it was held that in criminal cases, subject to certain common law and statutory exceptions, a spouse is incompetent to give evidence against the other, and that incompetence continues after a decree absolute for divorce or a decree of nullity (where the marriage annulled was merely voidable) in respect of matters arising during coverture.
Counsel for the appellant however urged that the rule enunciated in Moss 's case(1) has no application in India because under sections 18 & 19 of the Divorce Act no distinction is made between marriage void and voidable.
By section 18 a husband or a wife may present a petition for nullity of marriage:to the appropriate court and the court has under section 19 power to make the decree on the following grounds: "(1) that the respondent was impotent at the time of the marriage 'and at the time of the institution of the suit; (2) that the parties are within the prohibited degrees of consanguinity (whether natural or legal) or affinity; (3 ) that either party was a lunatic or idiot at the time of the marriage; (4) that the former husband or wife or either party was living at the time of the marriage, and the marriage with such former husband or wife was then in force.
Nothing in this section shall affect the jurisdiction of the High Court to make decrees of nullity of marriage (1.) 698 on the ground that the consent of either party was obtained by force or fraud.
" Marriage with the respondent who was impotent at the time of the marriage or at the time of the institution of the suit is not ab initio void: it is voidable.
As stated in Latey on Divorce, 14th Edn., at p. 194, article 353: "Where impotence is proved the ceremony of marriage is void only on the decree absolute of nullity, but then it is void ab initio to ,all intents and purposes '.
Such a marriage is valid for all purposes, unless a decree of nullity is pronounced during the life time of the parties.
" When the letters were written by Ponnan to Rathi, they were husband and wife.
The bar to the admissibility in evidence of communications made during marriage attaches at the time when the communication is made, and its admissibility will be adjudged in the light of the status at the date and not the status at the date when evidence is sought to be given in court.
We are, therefore, of the view that the appeal must be allowed and the order passed by the High Court set aside.
The proceed Lugs will be remanded for trial to the District Magistrate according to law.
V.P.S. Appeal allowed.
| IN-Abs | The first respondent wrote letters to his wife who is the daughter c the appellant.
The letters contained defamatory imputations concerning the appellant.
The letters were handed over to the appellant and he filed a complaint for defamation against the first respondent.
The Magistrate held that a communication between spouses of a matter de (amatory of another did not amount to publication and that no evidence could be given of it under section 122 of the Evidence Act, 1872, against the first respondent, and discharged him.
The Court of Session set aside the order but the High Court restored it.
While the appeal against the order of discharge was pending in this Court a decree of nullity of marriage was passed against the first respondent on the ground of his impotency.
HELD: If the appellant sought to support his case only upon the evidence of the wife of the first respondent, 8. 122 of the Evidence Act would be a bar.
Further a marriage with a person important at the time of marriage and at the time of institution of proceedings for nullity is under the Indian Divorce Act not ab initio void; it is valid till the decree of nullity is pronounced.
Therefore, if the defamation case were to proceed and 'the wife ' should appear as a witness to give evidence about the communication made to her by her husband (the first respondent), the communication could not be deposed to unless the first respondent consented because, if the marriage was subsisting at the time when the communication was made the bar prescribed by section 122 would operate.
But the letters were in appellant 's possession and were available for being tendered in evidence, and he could prove the letters in any other manner.
Therefore, the accused (first respondent) should not have been discharged.
[696 H; 697 A C; 698 A B] Rumping vs Director of Public Prosecutions, applied.
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Appeal No. 1036 of 1966.
Appeal by special leave from the judgment and order dated March 15, 1965 of the Allahabad High Court in First Appeal No. 268 of 1963.
C.B. Agarwala and K.P. Gupta, for the appellant.
R. K. Garg, D.K. Agarwal and M.V. Goswami, for the respondent.
795 The Judgment of the Court was delivered by Sikri, J.
This is an appeal by special leave, and while granting it this Court confined it only to the point arising under section 97 of the U.P. Municipalities Act, 1916 hereinafter referred to as the Act The facts relevant to the point are as follows: The Municipal Board, Saharanpur, respondent before us and hereinafter referred to as the plaintiff brought a suit for the recovery of Rs. 12,044/ 19 and future interest upto the date of realisation from B.C. Mohindra, appellant before us and hereinafter referred to as the defendant.
In brief, the case of the plaintiff was that there was an auction on March 29, 1960, of the theka for collecting tahbazari dues of the mandi in Mazahir Gang alias Ganj Jadid, Saharanpur, for one year from April 1, 1950 to March 31, 1951, subject to the conditions of sale entered in the amended sale proclamation.
The defendant bid Rs. 40,000/ subject to the confirmation by the Board.
The Board did not confirm the auction sale, and on April 8, 1960, the tahbazari was re auctioned.
The defendant bid Rs. 53,025/ .
At ,the time of the auction sale a meeting of the Board was also held in which the auction aforesaid was confirmed under Resolution No. 26 dated April 8, 1950, in the presence of the defendant, and only the condition relating to the payment of auction money was amended to provide for payment in four installments.
The defendant had to deposit 1/4th of the bid on April 8, 1950.
He failed to deposit this instalment on April 8, 1950, but on April 10, 1950, he deposited the instalment and took charge of the mandi aforesaid and began to collect tahbazari dues.
The defendant was asked to execute and complete an agreement in favour of the plaintiff according to the conditions and the rules but he continued to put off the matter.
As the defendant failed to deposit the amount of the second instalment and execute the agreement, the plaintiff cancelled the theka of the defendant and began to collect tahbazari dues through its own staff and re auctioned the theka on July 3, 1950.
After taking into account the money received from the re auction on July 3, 1950, and the money deposited by the defendant, according to the plaintiff there was a shortage of Rs. 12,044/ 19.
The defendant did not dispute the fact that an auction was held and that he made the last bid of Rs. 53,025/ which was accepted.
He also admitted that he had deposited Rs. 13,256/4/ .
But he ,alleged that the plaintiff had committed various breaches of the contract in contravention of the rules, contract and the bye laws as a result of which the defendant Suffered a loss of Rs. 9,685/ .
796 The Trial Court flamed various issues arising out of the pleadings but no issue was raised regarding non compliance with section 97 of the Act.
It appears that an argument was raised before the Trial Court regarding section 97.
The Trial Court observed: "On the basis of this decision (A.W.R. 1951 page 560), it was urged on behalf of the defendant that it was necessary in the present case that a written contract should have been obtained by the plaintiff under section 97 of the Municipalities Act . .
In a public auction, the various bidders give their bids which may be called offers and the moment the auctioneer knocks the hammer down at a particular bid, that bid is to be taken as accepted between the parties.
It is the knock of the hammer which concludes the contract.
The list of bidders is the only evidence of the contract showing that out of various offers, the highest bid was accepted.
In this particular case, the list of bidders bears the signature of the defendant and of the Chairman of the plaintiff Board, thus reducing the contract into writing vide exhibit 17.
The contract in this case is, therefore, a written contract evidenced from paper exhibit 17 .
According to the provision of section 97 of the Municipalities Act, such a contract should have been only in writing and this condition was fulfilled by drawing up the list of bidders and obtaining the signature of the highest bidder in whose favour the auction was concluded on such a list." The Trial Court decreed the suit.
The defendant appealed to the High Court, and the High Court (Srivastava and Jagdish Sahai, J J) by its order dated October 5, 1961, remanded the case on two issues: (1) Whether the agreement relied upon by the plaintiff was in accordance with sections 96 and 97 of the U.P. Municipalities Act of 1916 ? If not, what is the effect ? (2) Whether section 65 of the Indian Contract Act applied ? If so, what compensation, if any, could be recovered by the plaintiff from the defendant on account of any advantage the latter may have received under the agreement ? While passing the order of remand the High Court observed: "While hearing arguments in this appeal we discovered that a very important point was apparently missed 797 both by the parties and by the learned Civil Judge.
We feel that the case cannot be properly decided without having findings of learned Civil Judge on that point.
The point involves two questions.
" We are in agreement with the contention of the learned counsel for the plaintiff that there was no justification in remanding the case.
The Trial Court had dealt with the question of section 97 of the Act and this apparently escaped the notice of the High Court.
Be that as it may, the Trial Court, in a very careful and reasoned order, dated August 24, 1962, held that on the facts sections 96 and 97 of the Act had been fully complied with.
The High Court (Jagdish Sahai and Broom, JJ.), came to the conclusion that section 97 of the Act did not apply to the facts of the case.
The High Court observed: "The suit, therefore, is one for the failure to execute the contract deed and to pay the amounts which have become due from him by way of damages.
Section 97 of the Act deals with contracts which have been executed.
It is for this reason that we have come to the conclusion that the provisions of Section 97 of the Act are not attracted to the present case.
" Section 97 of the Act reads as follows: "Execution of Contracts (1) Every contract made by or on behalf of a Board whereof the value of the amount exceeds Rs. 250/ shall be in writing; Provided that unless the Contract has been duly executed in writing, no work including collection of materials in connection with the said Contract shall be commenced or undertaken.
(2) Every such contract shall be signed (a) by the President or a Vice President and by the Executive Officer or a Secretary, or (b) by any person or persons empowered under subsection (2) or (3) of the previous section to sanction the contract if further and in like manner empowered in this behalf by the Board.
" It seems to us that on the facts of the case it is clearly proved that there was a contract in writing within the meaning of proviso to section 97(1) and the provisions of sub.
section
We agree with the conclusion of the Trial Court in this respect.
The list of bids, exhibit 17, at the auction sale held on April 8, 1950, is signed by the defendant, the Chairman and the Executive Officer.
This auction was held before the Board and Resolution No. 26 4Sup.
CI/69 18 798 dated April 8, 1950, was passed on that day, which reads as follows: "Auction of the tehbazari contract of Mandi Mazabar Gunj for the year 1950 51 (Boards Reso.
No. 431 dated 30 3 50).
Auction held before the Board.
Terms of auction, were announced.
During the auction, at the request of the bidders, the Board unanimously, passed the following amendment in the terms of auction : "One fourth of the auction money will be deposited at the fall of hammer and the remaining amount in three equal instalments at the interval of two months each 1st instalment today 8 4 50 2nd instalment on 8 6 50 3rd instalment on 8 8 50 4th instalment on 8 10 50" Auction sanction to the highest bidder Shri B.C. Mohindra for Rs. 53,025/ w.e.f.
9 4 50 to 31 3 51.
Chairman Finance Committee to please deliver the possession and to decide the disputes, if any.
" The original proceedings book was produced before the Trial Court and it was proved by Ram Swarup, clerk.
He proved that after the entire proceedings were over, it was signed before him by Shri Madho Prasad, Executive Officer of the Municipal Board, and Shri Jamshed Ali Khan, the Chairman.
In our opinion the list of bids and the Resolution No. 26 dated April 8, , constituted a contract in writing within the meaning of section 97 of the Act.
It was held by this Court in Union of India vs Rallia Ram(1) that for the purposes of section 175(3) of the Government of India Act, 1935, a valid contract could be spelt out of correspondence.
It seems to us that similarly it is not necessary for the purpose of complying with section 97 of the Act that the contract should be contained in one document signed by both the parties.
In view of our conclusion it is not necessary to consider what would have been the rights of the plaintiff if.
there had been no such contract in writing.
In the result the appeal fails and is dismissed with costs.
R.K.P.S. Appeal dismissed.
(1) ; , 173.
| IN-Abs | At an auction held on April 8, 1950 of the theka for collecting Tahbazari dues of a Mandi, the appellant 's bid was accepted.
At the time of auction a meeting of the respondent Board was also held in which the auction was confirmed by resolution and the usual conditions relating to the payment of auction money were amended to provide for payment in four installments.
The appellant was asked to execute and complete an agreement in favour of the respondent according to the conditions and rules, but he 'failed to do so.
In view of this and the fact that he failed to pay the second installment, the respondent Board cancelled the appellant 's theka and reauctioned it.
After taking into account the money received from the reduction and the instalment paid by the defendant, the Board sued the appellant for the recovery of the balance and future interest.
One question considered by the Trial Court was whether the provisions of section 97 of the U.P. Municipalities Act, 1916, which required certain contracts made by or on behalf of the Board be in writing, had been complied with.
The Trial Court found that there was a list of bidders at the auction held on 8th April, 1950 which bore the signature of the appellant and of the Chairman of the respondent Board; it therefore considered that the contract was a written contract and decreed the suit.
In appeal the High Court remanded the case as it took the view that the question of the applicability of and compliance with section 97 of the Act had not been dealt with.
On appeal to this Court, HELD: On the facts, it was clearly proved that there was a contract in writing within the meaning of the proviso to section 97(1) and the provisions of sub.
section (2).
The signed list of bidders and the resolution of the Board passed at the time of the auction constituted a contract in writing within the meaning of section 97 of the Act.
There was therefore no justification in the High Court remanding the case.
[797 H; 798 F G] Union of India vs Ralla Ram, ; , 173, referred to.
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Appeal No. 25 of 1952.
Appeals from the Judgment and Order dated the 10th day of January, 1952, of the High Court of Judicature of Travancore Cochin at Ernakulam (Kunhiraman C.J. and Subra mania Iyer J.) in Original Petitions Nos. 4, 23and 24 of 1951 respectively.
T.N. Subramania Iyer, Advocate General of Travancore Cochin, (T.R. Balakrishna lyer and M.R. Krishna Pillai, with him) for the State of Travancore Cochin.
N.C. Chatterjee (C.R. Pattabhirarnan, with him) for the respondent in Civil Appeal No. 25 of 1952.
C. R. Pattabhiraman for the respondent in Civil Appeal No. 28 of 1952.
N.C. Chatterjee '(Thomas Vellappally, with him) for the respondent in Civil Appeal No. 29 of 1952.
M. C. Setalvad, Attorney General for India, and C.K. Daphtary, Solicitor General of India (G.N. Joshi, with them) for the Union of India.
October 16.
The Judgment of the Court was delivered by PATANJALI SASTRI C.J.
These are connected appeals from the judgment and order of the High Court of Travancore Cochin quashing the assessments under the United State of Travancore and Cochin Sales Tax Act (No. 11 of 1125 M.E.) (hereinafter referred to as "the Act") on the respond ents on the turnover of the sales of the commodities (coif products in C.A. 25, lemon grass oil in C.A. 28 and tea in C.A. 29) in which they respectively deal.
The dealings followed more or less the same pattern in all the cases and consisted of export sales of the respec tive commodities to foreign buyers on c.i.f. or f.o.b. terms as the case may be.
The respondents in each case claimed exemption from assessment in respect of the sales effected by them on the ground, inter alia, that such sales took place "in the 'course of the export of the goods out of the territory of India" within the meaning of article 1115 286(1) (b) of the Constitution.
The Sales Tax Authorities rejected the contention as, in their view, the sales were completed before the goods were shipped and could not, therefore, be considered to have taken place in the course of the export.
Thereupon the respondents by separate petitions applied to the High Court of the United State of Travancore and Cochin (hereinafter referred to as the State) under article 226 of the Constitution for issue of writs of certiorari and prohibition quashing the assessments made On them and pro hibiting such assessment in future.
The applications were heard, along with nine other applications for similar re liefs by dealers in cashew nuts, by a Division Bench (Kunhi raman C.J. and Subramania Iyer J.) who upheld the claim of exemption and quashed the assessment orders in respect of the transactions subsequent to the commencement of the Constitution.
From that decision the State has preferred appeals in all the cases on a certificate granted by the High Court under article 132 (1) of the Constitution.
As the appeals involved important questions of law which may have a bearing on the sales tax legislation of the various States in India, this Court directed notice of these proceedings to the Attorney General for India and the Advo cates General of those States, and they have intervened and participated in the debate at the hearing of these appeals.
When the argument had proceeded for some time, it was discovered that the material facts relating to the course of dealings in cashew nuts, which were more complex in charac ter, had not been clearly ascertained and consequently the relative appeals were remitted to the High Court for find ings on certain points agreed upon by the parties.
These three appeals were, however, fully heard as they were found to admit of disposal on the materials on record.
Article 286(1), on which the respondents found their claim to exemption, runs thus: 1116 No law of a State shall impose, or authorise the imposi tion of, a tax on the sale or purchase of goods where such sale or purchase takes place.
(a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India.
Explanation.
For the purposes of sub clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consump tion in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State.
On the scope and meaning of clause (b), the learned Judges expressed their view as follows : "The words 'in the course of ' make the scope of this clause very wide.
It is not restricted to the point of time at which goods are imported into or exported from India.
The series of transactions which necessarily precede export or import of goods will come within the purview of this clause.
Therefore, while in the course of that series of transactions, the sale has taken place, such a sale is exempted from the levy of sales tax.
The sale may have taken place within the boundaries of the State.
Even then sales tax cannot be levied if the sale had taken place while the goods were in the course of import into India or in the course of export out of India.
We are stressing this point because both parties in what we may describe as the cashew nut cases entered into a lengthy discussion as to the exact point of time when the sale became completed and as to the exact place where the goods were when the sale became a completed transaction.
" On this interpretation, local purchases "made for the purpose of export" were held by the learned Judges to be "integral parts of the process of exporting".
In support of this construction the learned Judges referred 1117 to the debates in the Constituent Assembly on clause 264 A of the draft Constitution which corresponded to article 286 and quoted from the speech of one of the members who unsuc cessfully moved an amendment defining export as meaning the last transaction and import as meaning the first transac tion.
In view of the wide construction thus placed upon clause (b) of article 286 (1), the arguments before us ranged over a large field, and as many as four different views as to its scope and meaning were pressed upon us for our acceptance : (1) The exemption is limited to sales by export and purchases by import, that is to say, those sales and pur chases which occasion the export or import as the case may be, and extends to no other transactions however directly or immediately connected, in intention or purpose, with such sales or purchases, and wheresoever the property in the goods may pass to the buyer.
This is the view put forward on behalf of the State of Madras.
The Advocate General thought that a State could not impose sales tax though title passed within State limits while the goods were still under trans port on the high seas and no question of exemption could therefore arise.
He said, however, that no such ease had actually arisen.
(2) In addition to the sales and purchases of the kind described above, the exemption covers the last purchase by the exporter and the first sale by the importer, if any, so directly and proximately connected with the export sale or import purchase as to form part of the same transaction.
This view was sponsored ' by the Attorney General who was also inclined to think, as advised at the moment, that sales or purchases made while the goods were on the high seas would be exempt, but he would prefer not to go into the wider question, because, whatever view was taken, sales such as those involved in the present cases must, in any event, be exempt.
(3) The exemption covers only those sales and purchases under which the property in the goods 1118 concerned is transferred from the seller to the buyer during the course of the transit, that is, after the goods begin to move and before they reach their foreign destination.
This view is supported by the State of Bombay and certain other States.
(4) The view which found favour with the learned Judges of the High Court in the passage already extracted.
It will be seen that the construction first mentioned is the narrowest and the last mentioned the widest.
We are clearly of opinion that the sales here in ques tion, which occasioned the export in each case, fall within the scope of the exemption under article 286(1)(b).
Such sales must of necessity be put through by transporting the goods by rail or ship or both out of the territory of India, that is to say, by employing the machinery of export.
A sale by export thus involves a series of integrated activi ties commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea.
Such a sale cannot be dissociated from the export without which it cannot be effectuated, and the sale and resultant export form parts of a single transaction of these two integrated activities, which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other.
Assuming without deciding that the property in 'the goods in the present cases passed to the foreign buyers and the sales were thus completed within the State before the goods commenced their journey as found by the Sales Tax Authorities, the sales must, never theless, be regarded as having taken place in the course of the export and are, therefore, exempt under article 286(1)(b).
That clause, indeed, assumes that the sale had taken place within the limits of the State and exempts it if it took place in the course of the export of the goods concerned.
In the foregoing discussion we have assumed that the word "sale" used in the Constitution has the same 1119 meaning as in the law relating to the sale of goods, but it has been suggested in the course of the argument that it imports a wider concept than the passing of title from the seller to the buyer which under that law is determined by highly technical rules based upon the presumed intention of the parties and liable to be displaced by their expressed intention.
We leave the point open as it is unnecessary for the purpose of these appeals to pronounce any opinion upon it.
It was said that, on the construction we have indicated above, a "sale in the course of export" would become practi cally synonymous with "export", and would reduce clause (b) to a mere redundancy, because article 246 (1), read with entry 83 of List I of the Seventh Schedule, vests legisla tive power with respect to "duties of customs including export duties" exclusively in Parliament, and that would be sufficient to preclude State taxation of such transactions.
We see no force in this suggestion.
It might well be argued, in the absence of a provision like clause (b) prohibiting in terms the levy of tax on the sale or purchase of goods where such sales and purchases are effected through the machinery of export and import, that both the powers of taxation, though exclusively vested in the Union and the States re spectively, could be exercised in respect of the same sale by export or purchase by import, the sales tax and the export duty being regarded as essentially of a different character.
A similar argument induced the Federal Court to hold in Province of Madras vs Boddu Paidanna and Sons(1) that both central excise duty and provincial sales tax could be validly imposed on the first sale of groundnut oil and cake by the manufacturer or producer as "the two taxes are economically two separate and distinct imposts".
Lest similar reasoning should lead to the imposition of such cumulative burden on the export import trade of this country which is of great importance to the nation 's economy, the Constituent Assembly may well have thought it necessary to exempt (1) 1120 in terms sales by export and purchases by import from sales tax by inserting article 286 (1) (b) in the Constitution.
We are not much impressed with the contention that no sale or purchase can be said to take place "in the course of" export or import unless the property in the goods is transferred to the buyer during their actual movement, as for instance, where the shipping documents are indorsed and delivered within the State by the seller to a local agent of the foreign buyer after the goods have been actually shipped, or where such documents are cleared on payment, or on acceptance, by the Indian buyer 'before the arrival of the goods within the State.
This view, which lays undue stress on the etymology of the word "course" and formulates a mechanical test for the application of clause(b), places, in our opinion, too narrow a construction upon that clause, in so far as it seeks to limit its operation only to sales and purchases effected during the transit of the goods, and would, if accepted, rob the exemption of much of its useful ness.
We accordingly hold that whatever else may or may not fall within article 286 (1) (b), sales and purchases which themselves occasion the export or the import of the goods, as the case may be, out of or into the territory of India come within the exemption and that is enough to dispose of these appeals.
Our attention was called, in the course of the debate, to various American decisions which hold that the power "to regulate" inter State commerce vested exclusively in the Congress by article 1 section 8(3) of the American Constitu tion (the Commerce clause) excludes by implication the States ' power of taxation only when the goods enter "the export.
stream", and until then such goods form part of "the general mass of property in the State" subject, as such, to its jurisdiction to tax, and that this principle was also applicable to cases arising under article 1 section 9(5) and section 10(2) (the Import Export clause), [see e.g., Empresa Siderurgica vs Merced Co.(1)].
These clauses (1) ; 1121 are widely different in language, scope and purpose, and a varying body of doctrines and tests have grown around them interpreting, extending or restricting, from time to time, their operation and application in the context of the ex panding American commerce and industry, and we are of opin ion that not much help can be derived from them in the solution oil the problems arising under article 286 of the Indian Constitution.
It remains only to point out that the use made by the learned Judges below of the speeches made by the members of the Constituent Assembly in the course of the debates on the draft Constitution is unwarranted.
That this form of ex trinsic aid to the interpretation of statutes is not admis sible has been generally accepted in England, and the same rule has been observed in the construction of Indian stat utes see Administrator General of Bengal vs Prem Nath Mallick(1).
The reason behind the rule was explained by one of us in Gopalan 's case(2) thus : "A speech made in the course of the debate on a bill could at best be indicative of the subjective intent of the speaker, but it could not reflect the inarticulate mental process lying behind the majority vote which carried the bill.
Nor is it reasonable to assume that the minds of all those legislators were in accord," or, as it is more tersely put in an American case "Those who did not speak may not have agreed with those who did; and those who spoke might differ from each other United States vs Trans Missouri Freight Association(3). ' ' This rule of exclusion has not always been adhered to in America, and sometimes distinction is made between using such material to ascertain the purpose of a statute and using it for ascertaining its meaning.
It would seem that the rule is adopted in Canada and Australia see Craies on Statute Law, 5th Ed., p. 122.
(1) (895) 22 I.A. Io7,118.
(2)[1950] S.C.R.88.
(3) 169 U.S.290,318.
144 1122 In the result, agreeing with the conclusion of the High Court, though on different grounds, we dismiss the appeals with costs.
Appeals dismissed.
Agent for the respondent in C.A. No. 25 of 52: M.S.K. Sastri.
Agent for the respondent in C.A. No. 28 of 52: Sardar Bahadur.
Agent for the respondent in C.A. No. 29 of 52: V.P.K. Nambiyar.
Agent for the Interveners (Union of India, State of Bombay, State of Madras, State of Hyderabad, State of Punjab, State of MysOre, and State of Orissa): P.A. Mehta.
Agent for the State of Uttar Pradesh: C.P. Lal.
| IN-Abs | Whatever else may or may not fall within article 286 (1) (b) of the Constitution, sales and purchases which themselves occasion the export or the import of the goods as the case may be, out of or into, the territory of India come within the exemption.
The view that no sale or purchase can be said to take place in the course of export or import unless the property in the goods is transferred to the buyer during their actual move ment, as instance, where the shipping documents ,are in dorsed and delivered within the State by the seller to a local agent of the foreign buyer after the goods have been actually shipped or where such documents are cleared on payment, or on acceptance, by the Indian buyer before the arrival of the goods within the State, puts too narrow a construction upon article 286 (1)(b) and is not correct.
A sale by export involves a series of integrated activi ties commencing from the agreement of sale with a foreign buyer and ending with the delivery of the goods to a common carrier for transport out of the country by land or sea.
Such a sale cannot be dissociated from the export without which it cannot be effectuated and the sale and 'the result ant export form parts of a single transaction.
Of these two integrated activities which together constitute an export sale, whichever first occurs can well be regarded as taking place in the course of the other.
Even in cases where the property in the goods passed to the foreign buyers and the sales were thus completed, within the State before the goods commenced their journey from the State, the sales must be regarded as having taken place in the course of the export and therefore exempt under article 286 (1) (b).
The Commerce clause (article 1, section 8 (3)) and the Import Export clauses [article I, sections9 (5) and 10 (2)] of the American Constitution are widely different in lan guage, scope and purpose, and a varying body of doctrines and tests have grown around them interpreting, extending or restricting from time to time, their operation and applica tion in the context of the expanding American commerce and industry and much help cannot be derived from them in the solution of the problems arising under article 286 of the Indian Constitution.
Speeches made by the members of the Constituent Assembly in the course of the debates on the draft Constitution cannot be used 'as aids for interpreting the Constitution.
Administrator General of Bengal vs Prem Nath Mullick [22 I.A. 107 at 118], A.K. Gopalan vs The State [(1950) S.C.R. 88], United States vs Trans Missouri Freight Association at 318] referred to.
143 1114
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Appeal No. 1116 of 1965.
Appeal from the order dated August 26, 1964 of the Punjab High Court in Civil Writ No. 498 D of 1964.
M.C. Chagla, Sardar Bahaclur, Ajit Prasad Jain, Vishnu B. Saharya ,and Yougindra Kaushalani, for the appellant.
V.A. Seyid Muhammad and S.P. Nayar, for the respondents.
862 The Judgment of the Court was delivered by Sikri, J.
The appellant, Durga Prashad, filed a petition under article 226 of the Constitution against the respondents.
The High Court of Punjab, Circuit Bench, Delhi, dismissed the petition in limine.
Thereupon the appellant applied for a certificate under article 133 (1)(a) of the Constitution.
The High Court gave this certificate on the ground that the value of the subject matter directly involved in the petition exceeds Rs. 20,000/ .
In our opinion this appeal must fail on the ground that the petition under article 226 of the Constitution was filed after great delay.
The relevant facts are as under.
The appellant was carrying on business of export and import, and exported goods of the value of Rs. 8,10,325/ , F.O.B. value Rs. 8,03,530.45, during the period August 25, 1958, to September 29, 1958.
On November 12, 1958, the appellant applied for an import licence for art silk yarn of the f.o.b. value of Rs. 8,03,530.45 nP under the Export Promotion Scheme.
The Export Promotion Scheme was discontinued with effect from March 6, 1959.
On October 9, 1959, import licence of the value of Rs. 3,27,841/ only was issued to the appellant by the Joint Chief Controller of Imports and Exports, Bombay.
His appeal against this order was rejected by the Joint Chief Controller on March 4, 1960.
It is alleged by the appellant that he was not given a hearing.
The appellant filed a second appeal to the Chief Controller of Imports and Exports, and this was dismissed on April 22, 1961.
Here again it is alleged that no ' hearing was given to the appellant.
He filed a representation against the order dated April 22, 1961, and on that representation a supplementary import licence for import of art silk yarn of the value of Rs. 30,000/ was issued to the appellant.
This exhausted all the remedies he had under para 85 of the order relating to the Export Promotion Scheme, but he instead of filing a writ chose to wait.
The appellant apparently approached the Minister of International Trade by letter dated April 6, 1964 this is the letter referred to in the letter of the Private Secretary to the Minister of International Trade and the Private Secretary, vide his letter dated April 16, 1964, wrote to him saying that his letter had been passed on to the Chief Controller of Imports and Exports, New Delhi, and if so desired the appellant may see him in the matter.
Apparently the Chief Controller invited him and on June 22, 1964, he was informed that no further licence would be issued to him.
On August 24, 1964, the appellant filed the petition above mentioned in the High Court.
No explanation has been given in the petition for the delay in filing the petition and it has not been explained what the appellant was doing between March 863 5, 1962, when the supplementary licence was issued, and April 6, 1964.
It is well settled that the relief under article 226 is discretionary, and one ground for refusing relief under article 226 is that the petitioner has filed the petition after delay for which there is no satisfactory explanation.
Gajendragadkar, C.J., speaking for the Constitution Bench, n Smt.
Narayani Debi Khaitan vs The State of Bihar(1), observed.
"It is well settled that under article 226, the power of the High Court to issue an appropriate writ is discretionary.
There can be no doubt that if a citizen moves the High Court under article 226 and contends that his fundamental rights have been contravened by any executive action, the High Court would naturally like to give relief to him; but even in such a case, if the petitioner has been guilty of laches, and there are other relevant circumstances which indicate that it would be inappropriate for the High Court to exercise its high prerogative jurisdiction in favour of the petitioner, ends of justice may require that the High Court should refuse to issue a writ.
There can be little doubt that if it is shown that a party moving the High Court under article 226 for a writ is, in substance, claiming a relief which under the law of limitation was barred at the time when the writ petition was filed, the High Court would refuse to grant any relief in its writ jurisdiction.
No hard and fast rule can be laid down as to when the High Court should refuse to exercise its jurisdiction in favour of a party who moves it after considerable delay and is otherwise guilty of laches.
That is a matter which must be left to the discretion of the High Court and like all matters left to the discretion of the Court, in this matter too discretion must be exercised judiciously and reasonably.
" Relying on the judgment of this Court in Maharashtra State Road Transport Corporation vs Shri Balwant Regular Motor service, Amravati(2) the learned counsel for the appellant contends hat the delay should not debar him from seeking relief because he respondents have not suffered in any manner because of the delay.
In this case Ramaswami, J., speaking for the Court, referred to an earlier decision in Moon Mills vs Industrial Court(a).
(1) C.A. No. 140 of 1964; judgment dated September 22, 1964.
(2) ; (3) A.I.R. 1967 S.C. 1450, 53, 54.
Sup CI/69 4 864 In that case Ramaswami, J.,. speaking for the Court, observed: "It is true that the issue of a writ of certiorari is largely a matter of sound discretion.
It is also true 'that the writ will not be granted if there is such negligence or omission on the part of the applicant to assert his right as, taken in conjunction with the lapse of time and other circumstances, causes prejudice to the adverse party.
The principle is to a great extent, though not identical with, similar to the exercise of discretion in the Court of Chancery.
" It would be noticed that Ramaswami, J., had first examined the question of delay and came to a finding that in fact there was n delay.
Ramaswami, J., observed: "On behalf of the respondent Mr. B. Sen, however, pointed out that the conduct of the appellant does not entitle it to the grant of a writ, because it has been guilty of acquiescence or delay.
It was pointed out that the award of Mr. What was given on April 25, 1958, but an application to the High Court for grant of a writ was made long after on November 16, 1959.
We do not think there is any substance in this argument, because the second respondent had made an application, dated August 19, 1958 to the Labour Court for enforcement of the award and the appellant had contested that application by a Written Statement, dated September 15, 1958.
The Labour Court allowed the application on August 4, 1959 and the appellant had preferred an appeal to the Industrial Court on August 31, 1959.
The decision of the industrial Court was given on October 24, 1959 and after the appeal was dismissed the appellant moved the High Court for grant of a writ on November 16, 1959.
" The appellant in this case had claimed a mandamus or direction to the respondents to issue to the appellant import licence for art silk yarn of the value of Rs. 8,03,530.45.
It is well know that the exchange position of this country and the policy of Government regarding International trade varies from year t year and it would be rather odd for this Court to direct that a Import licence be granted in the year 1968 in respect of allege,, default committed by the Government in 1959 or 1962.
In these matters it is essential that persons who are aggrieved by order of the Government should approach the High Court after exhausting the remedies provided by law, rule or order with utmost expedition.
865 The learned counsel for the appellant contends that this matter involved fundamental rights and this Court at least should not refuse to give relief on the ground of delay.
But we are exercising our jurisdiction not under article 32 but under article 226, and as observed.
by Gajendragadkar, C.J., in the passage extracted above, even in the case of alleged breach of fundamental rights the matter must be left to the discretion of the High Court.
In the result the appeal fails.
Parties will bear their own costs.
Y.P. Appeal dismissed.
| IN-Abs | The appellant who carried on the business of export and import applied for an import licence to import certain goods.
The licence was issued in 1959 for only a part of the value applied for.
He filed appeals and exhausted all the remedies under para 85 of the order relating to the Export Promotion Scheme, as a result of which finally in March 1962 he was granted a supplementary licence to import a small part of the goods.
In April 1964, the appellant approached the Minister, and he was informed that no further licence would be issued to him.
Thereupon, the appellant filed a petition under article 226 of the Constitution seeking a mandamus for the issue of the import licence.
The High Court dismissed the petition in limine but granted certificate Under article 133(1)(a) of the Constitution. ' HELD: The appeal must fail.
The petition under article 226 of the Constitution was filed after great delay.
No explanation was given in the petition for the delay in filing the petition and it was not explained what the appellant was doing between March 6, 1962, when the supplementary licence was issued, and April 1964.
The exchange position of this country and the policy of the Government regarding international trade, varies from year to year and it would be rather odd for this Court to direct that an import licence be granted in the year 1968 in respect of alleged default committed by the Government in 1959 or 1962.
In these matters it was essential that persons who were aggrieved by orders of the Government should approach the High Court after exhausting the remedies provided by law, rule or order with utmost expedition.
Even in the case of alleged breach of fundamental rights the matter must be left to the discretion of the High Court.
[864 G, 865 B] Smt.
Narayani Debi Khaitan vs State of Bihar, C.A. No. 140 of 1964 judgment dated, September 22, 1964, Maharashtra State Road Transport Corporation vs Shri Balwant Regular Motor Service, Amravati, ; and Moon Mills vs Industrial Court, A.I.R., , 1453, 1454, referred to.
|
Appeal No. 1778 of 1967.
Appeal under section 116 A of the Representation of the People Act, 1951 from the judgment and order dated October 3, 1967 of the Bombay High Court, Nagpur Bench in Election Petition No. 14 of 1967.
C.B. Agarwala and A.G. Ratnaparkhi, for the appellant.
R.M. Hazarnavis, B.A. Masodkar, section B. Wad, V.D. Chetande and M.S. Gupta, for respondent No. 1.
The Judgment of the Court was delivered by Hegde, J.
The appellant is the returned candidate from the Rajura constituency of the Maharashtra State Legislative Assembly in the general election held in February 1967.
In that election he secured 21,435 votes as against 17,521 votes secured by his nearest rival, the first respondent herein, the nominee of the Indian National Congress.
The first respondent was representing that constituency prior to the said general election.
The first respondent challenged the validity of the appellant 's election in Election Petition No. 14 of 1967 in the High Court of Judicature at Bombay (Nagpur Bench) on two grounds namely (1) that the appellant was disqualified to be a candidate in that election and (2) that he was guilty of corrupt practices under section 123(4) of the Representation of the People Act, 1951 (to be hereinafter referred to as the Act).
The High Court allowed the petition and set aside the election of the appellant on the ground that he was guilty of publishing statements of facts which are false and which he either believed to be false or did not believe them to be true, in relation to the personal character and conduct of the first respondent.
It did not uphold the contention of the first respondent that the appellant was disqualified to be a candidate.
768 Though at one stage Mr. Hazarnavis, learned Counsel for the first respondent attempted to support the judgment of the trial court on the ground that the appellant was disqualified to be candid.ate, he finally gave up that contention.
Therefore it is no necessary to examine the same.
The High Court has found that the appellant was responsible for the publication of Exhs.
55 and 56 which ,according to contained statements of facts relating to the personal character and conduct of the first respondent and those statements were either false to his knowledge or at any rate he did not believe them to be true.
It further came to the conclusion that in some of the election meetings the appellant had falsely stated that the first respondent had a share in the contract secured by him for Abid Hussain.
The bulk of the evidence adduced in this case relates to the controversy whether the appellant was responsible for the printing and publication of Exhs.
55 and 56.
The High Court has accepted the case of the first respondent that the appellant was responsible for printing and publishing those pamphlets.
We have been taken through that evidence and we agree with the High Court on that aspect of the case.
It is not necessary to deal with that evidenced as we are of opinion that the statements contained in those pamphlets do not amount to corrupt practice under section 123 (4) of the Act Section 123(4) reads: "The publication by a candidate or his agent or by any other person (with the consent of a candidate or his election agent) of any statement of fact which is false, and which he either believes to be false or does.
not believe to be true in relation to the personal character or conduct of any candidate, or in relation to the candidature or withdrawal of any candidate, being a statement reasonably calculated to prejudice the prospects of that candidate 's election.
" The ingredients of the corrupt practice mentioned in this section are (1 ) the publication by a candidate or his election agent or by any other person with the consent of that candidate or his election agent of any statement of fact; (2) which statement is false and which was believed by the candidate to be false or a any rate was not believed by him to be true; (3) the said statement relate to the personal character or conduct of a candidate on in relation to his candidature or withdrawal and (4) the same being a statement reasonably calculated to prejudice the prospects of that candidate 's election.
As explained by this Court in Sheopat Singh vs Ram Pratap(1) section 123(4) is designed to achieve the dual purpose of protecting (1) ; 769 freedom of speech and prevention of malicious attack on the personal character ,and conduct of rivals.
A statement which reflects on the mental or moral character of a person is one relating to his personal character or conduct whereas any criticism of a person 's political or public activities and policies is outside it.
Section 123 (4)further requires that the candidate who made a false statement should have believed it to be false or did not believe it to be rue and lastly it should be a statement reasonably calculated to prejudice the prospects of the election of the candidate against whom it was made.
The word 'calculated ' means designed: it denotes more than mere likelihood and imports a design to affect voters.
The election law in this country as in England guarantees freedom of criticism of political nature at the time of election.
It is true that the freedom of criticism given might be sometime misused.
The political history of even countries like England shows that sensational false election propaganda against a political party, particularly on the eve of election might upset the party 's electoral fortune.
But the advantage gained from free criticism though sometimes it may turn out to be irresponsible in the long run outweighs the disadvantages.
It is in the interest of democracy that such criticism should be allowed.
This is the view of political thinkers.
A political party 's reputation is not built on shifting sands.
It has, at any rate, it should have, firmer foundation and should not be affected by passing winds.
But in the case of individuals a different approach is necessary.
A campaign of slander is likely to create prejudice in the mind of the people against him.
It cannot be put down as cynicism when it is sometimes said that the bigger the lie the greater is the chance of its being accepted as true.
There is unfortunately a tendency in the minds of the unwary public to believe the worst about individuals.
Democracy will be a farce if interested persons are allowed to freely indulge in character assassination during election.
Section 123(4) as we understand it embodies the two principles discussed above.
Every false allegation does not come within the mischief of section 123(4).
When any false allegation of fact pierce the politician and touches the person of the candidate then section 123(4) is contravened.
Dealing with the meaning of the expression 'personal character and conduct ' found in section 123(4) Subba Rao J. speaking for the Court in T.K. Gangi Reddyv.
M.C. Anjaneya Reddy and Ors.(1) observed at p. 266 of the report: "the words 'personal character or conduct ' are so clear that they do not require further elucidation or definition.
The character of a person may ordinarily (1) XXH, E.L.R. p. 266.
770 be equated with his mental or moral nature.
Conduct connotes a person 's actions or behaviour.
" Dealing with a provision similar to section 123(4) Darling J., Cumberland (Cockermouth Division) case(x) observed: "What the Act forbids is this.
You shall not make or publish any false statement of fact in relation to the personal character or conduct of such candidate; if you do, it is an illegal practice.
It is not an offence to say something which may be severe about another person nor which may be unjustifiable nor which may be derogatory unless it amounts to a false statement of fact in relation to the personal character or conduct of such candidate; and I think the Act says that there is a great distinction to be drawn between a false statement of fact which affects the personal character or conduct of a candidate and a false statement of fact which deals with the political position or reputation or action of the candidate.
If that were not kept in mind, this statute would simply have prohibited at election times all sorts of criticism which was not strictly true relating to the political behaviour and opinions of the candidate.
That is why it carefully provides that the false statement, in order to be an illegal practice, must relate to the personal character and personal conduct.
" The language of section 123 (4) is 'any statement of fact which is false ', and that language must be used in contrast to a false statement of opinion.
The language used is not merely a 'false statement ' .but a 'statement of fact which is false '.
The statement in question must be in relation to the personal character or conduct of a candidate, which means a false statement of fact bearing on the personal character or conduct of a candidate.
Further one of the ingredients of the corrupt practice under section 123 (4) is that the statement complained of must be one reasonably calculated to prejudice the prospects of the election of the person against whom it is made.
It may be noted that the section does not merely say 'being a statement calculated to prejudice the prospects of the candidate 's election ' but on the other hand it says 'being a statement reasonably calculated to prejudice the prospects of that candidate 's election '.
The meaning of that expression is as held by a Division Bench of the Bombay High Court in Dattatraya Narayan Patil vs Dattatraya Krishnaji Khenvikar and Ors.(2) that the publication of false statement of fact relating to the personal character or conduct must be such as would, in the estimation of the Court, having regard to the nature of the publication, the evidence ten (1) (1901) 5, O 'M & H.p.
(2) A.I R. 771 dered in Court and the surrounding circumstances have its natural and probable consequence of prejudicing the prospects of the candidate relating to whose personal character or conduct the publication has been made.
So far as the last limb of section 123(4) is concerned, the emphasis is not so much on the intention of the publisher but on the probable effect on the election of the candidate against whom those statements are directed.
It is trite to say that the burden of proving everyone of the ingredients of the corrupt practice alleged is on him who alleges it.
If he fails to establish any one of them to the satisfaction of the Court he must fail.
We shall now proceed to consider whether the statements of facts contained in Exhs.
55 and 56 fall within the mischief of section 123(4).
Before doing so it is necessary to give the background under which the statements complained of were made.
As mentioned earlier the first respondent was representing the constituency in question prior to the general election in 1967.
Sometime before the election the cultivators in the Rajura constituency as in other places were required to deliver to the Government a portion of the juwar crop raised by them in pursuance of the levy orders made.
This circumstance must have undoubtedly caused dissatisfaction to the rooting.
Rajura Taluka was previously a part of the Nizam 's State and thereafter the State of Hyderabad till the formation of the Maharashtra State.
We understand that in that Taluka, the boundary stones had not been fixed.
The State of Maharashtra 'appears to have directed the landowners to fix the necessary boundary stones for their property within a certain period.
As some of them did not comply with that direction, the., Government took upon itself the responsibility of fixing those boundary stones at the cost of those ryots.
That work was given on contract to one Abid Hussain.
It was suggested that charges fixed were excessive.
It may be mentioned at this.
stage that during the time when the juwar levy was imposed and the contract for fixing the boundary stones was given (as also at present ), the Congress Party was in power in the State of Maharashtra.
The first respondent was a Congress M.L.A.
In the past tolls were levied on every vehicle entering the municipal limits of Rajura but some years before the election that levy had been .abolished but the same was again reimposed sometimes before the election At the time of the reimposition of that levy Shri Shankarrao Deshmukh, a Congressman was the Chairman of the Rajura Municipality.
Having mentioned these facts we shall now proceed to examine the statements in Exhts.
55 and 56.
55 is a Marathi poem composed by the appellant 's election agent Dr. Suresh Vishvanathrao Upaganlawer (R.W. 3).
Its English rendering is as follows: 772 "Request to Voters.
Rise Rise Oh Voters Awake at least now Understand and begin to work.
You have suffered for five years, auspicious day has dawned now, truthful to your conscience, wake to vote, Oh brothers wake to vote.
Today kick off (this) slavery in the freedom (and) you should expose; you should expose the sins of Vithalrao.
He held out to be the leader of the people (but) he put burden of stones (on the people) By those very stones (you) build his grave, brothers build his grave.
For recovery of levy (from us) unlimited force used against us.
They take white juwar and give red millow (to us) and now confront him (with this).
Today our luck has dawned (in that) we got a great leader.
For protecting the interests of poor people see this Guruji has taken an Avatar.
(His) name is Jivtode Shrihari, has responded to our immediate call.
By giving your invaluable vote.
To Jivtode and Kaushik Pleader, Elect them this time.
Take vow like Bhishma and begin working today brothers.
begin working today, Seeing Lion Symbol, by affixing rubber stamp on it We will show to the world, Brother we will show our candidates that success garlands (him.)" Exh. 56 is a pamphlet published in Marathi.
It purports to be an appeal by one Ganpat Patil Dhote.
The English translation of it is found at p. 563 565 of.the paper book.
It reads thus: VOTERS BE CAREFUL In the forthcoming General Elections the sitting M.L.A. Shri Vithalrao Dhote is standing for Maharashtra Legislative Assembly on behalf of Congress.
The poor people have had experience of Shri Vithalrao Dhote as M.L.A. 773 Having been elected in the 1St General Elections Shri Vithalrao Dhote would work for the benefit, of the people and develop the backward Rajura Taluka was our expectation.
But the People of Rajura Taluka have been utterly disappointed by Shri Vithalrao Dhote.
In the this Taluka the High School which was there in the times of Nizam the High School is there in whole of Rajura Taluka till to day.
Shri Vithalrao Dhote could not construct a Single Pucca Road.
Could not supply electricity to any village anywhere.
Could not make arrangements for watering agriculture.
In this Taluka though there is thousands of acres of fallow land, for distributing it to landless no effort was made by Shri Vithalrao Dhote.
In the last five years no work for the benefit of the people has been done by Vithalrao Dhote.
On the contrary, through his selfish and fraudulent companion Shri Shankarrao Deshmukh, the Municipal President of Rajura (he got) imposed the stopped toll tax on the bullock cart (Rengi and Bandi) of poor people coming to Rajura.
Its effect has been surely felt by every poor man in the Taluka.
Similarly by fixing boundary stones on the Dhuras of the cultivators in Rajura Taluka and by recovering price of stones Shri Vithalrao Dhote has worked for the benefit of Abid Husain Thekedar alone.
In this taluka the cultivators could not get Taccavi loans without giving bribe at the time of distributing taccavi, Shri Vithalrao Dhote could not check bribery.
Shri Vithalrao Dhote has neglected the poor people by looking to the interests of Thekedar (contractor) alone.
By this, poor people have lost all faith in Shri Vithalrao Dhote in Rajura Taluka.
By this the poor people are very much harassed.
When I myself moved in the villages in this Taluka, I found that public opinion is inclined against Shri Vithalrao Dhote.
People are organised as Shri Vithalrao Dhote has harassed the poorer for furthering interests of his selfish and deceitful companion.
Because of this and with great reluctance and keeping interests of public in view I am publishing this pamphlet against Amdar Vithalrao Dhote to keep the true facts before the public.
The man who is proving dangerous to the majority in the Society and poorer section of the public has to be pulled down from his office (and) except this, there is no other way is ' my belief.
Hence I humbly request the voters in Rajura Constituency that they should not vote for the Congress candi 774 date Shri Vithalrao Dhote.
Contesting candidate from Rajura Constituency Shri Jivatode Guruji has 'worked for spread of Education by opening Janata High Schools.
Shri Jiotode Guruji has benefited the poor people by opening all kinds of colleges of Chanda. "Shri Jiotode Guruji" will bring about the development of backward Rajura Taluka positively.
Hence by putting a cross on the Lion Symbol of Vidarbha Joint Front 's Shri Jiotode Guruji, Shri Jiotode Guruji be elected by a large majority is my humble and earnest request to the voters.
yours humbly Symbol of Lion Ganpat Patil Dhote Put Cross only on Lion.
In small type Publish: Ganpat Patil (Shivshakti of Chote r/o Nimani T. Rajura Chandrapur).
The various statements contained in these two pamphlets are summarised by the learned Trial Judge thus: "(a) (The Petitioner) has imposed the toll tax on poor citizens on their bullock carts through his selfish and bogus companion Shri Shankarrao Deshmukh, President of Rajura Municipality, which has caused undue suffering to every poor citizen residing in this part.
(b) Vithalrao Dhote has only secured advantage for Abid Husain, Contractor, by imposing the burden of paying for the border stones which were compulsorily ordered to be fixed.
(c) In this taluq no cultivator has been able to get taccavi without payment of bribe 'and Vithalrao is unable to prevent it.
(d) Vithalrao Dhote has solely protected the interest of the contractor and neglected the poor citizens and on that account Vithalrao Dhote has forfeited confidence of poor persons in Rajura taluq.
(e) The poor population is simply harassed and I have found that the inclination of the people is against Vithalrao Dhote when I went around in the village.
(f) Poor persons are simply harassed on account of exploitation and ruin caused by Vithalrao Dhote solely for the benefit of his selfish and bogus companions.
775 (g) Persons (meaning the petitioner) who is a menace W the majority of the community and poor persons must be sacked from the office in my firm conviction.
" None of the afore mentioned allegations can be hold to relate to the personal character or conduct of the first respondent.
They are undoubtedly criticism, true, false or exaggerated, of the first respondent 's roll as politician.
Those statements do not make any reflection on the moral or mental qualities of the first respondent.
As mentioned earlier a Congressman was the President of the Rajura Municipality 'at the time the tolls were reimposed.
It may be that the first respondent had no hand in the matter of reimposition of the tolls and that the accusation that he got it reimposed is not true but that in no manner can be said to reflect on the personal character or conduct of the first respondent.
Similarly the accusation that the first respondent secured advantage for Abid Hussein by imposing a burden on the land owners by making them pay for the boundary stones cannot be said to reflect on the private character of the first respondent whether the statement in question is true or false.
The appellant had a right to hold the first respondent responsible for the actions of the Government as he was a member of the party in power.
The allegation that in the Rajura Taluka no cultivator had been able to get Taccavi loans without payment of bribe and that the first respondent was unable to prevent it, is undoubtedly a legitimate criticism.
The allegation that he solely protected the interests of the contractor and ignored that of the poor citizens and on that account he has forfeited the confidence of the poor persons in his constituency is an expression of an opinion, whether the same is true or not.
The allegation that the poor population is simply harassed and that the signatory to the pamphlet found that the inclination of the people is against the first respondent when he went around in the village, is merely an opinion and not a statement of fact.
Similarly the allegation that the poor persons are being harassed on account of the exploitation and ruin caused by the first respondent solely for the benefit of his selfish and bogus companions is an expression of an opinion and it is a permissible criticism in a political debate.
The assertion that the first respondent is a menace to the majority as also to the poor and therefore he must be sacked from the office is as stated in the pamphlet itself is purported to be the conviction of the person who issued the statement.
He is entitled to hold that opinion and propagate it.
It must be remembered that during election time passions are roused; election propaganda should not be tested by the standards to be adopted in a debate carried on by intellectuals.
It may be that many of the charges levelled against a candidate as regards his political past or about his capacity to be a useful representative 776 are not true.
It is for the electorate 'to judge those accusations.
So long as those accusations do not affect the personal character or conduct of the candidate, the election law will not take note of it.
That is why it is said that a politician must be thick skinned and more so at election time.
As mentioned earlier it is not a corrupt practice to say something which may be severe about another person, nor which may be unjustifiable nor which may be derogatory unless it amounts to a false statement of fact in relation to his personal character or conduct.
It is unfortunate that the High Court exclusively focussed its attention on the question whether or not the appellant caused to get Exhs.
55 and 56 printed and published and completely ignored the true effect of the statements contained therein.
It proceeded on the erroneous impression that every false or unjustified criticism of a candidate amounts to a contravention of section 123(4).
Dealing with Exhs.
55 and 56 this is what the learned Trial Judge observed: "To say against anybody that he is responsible for imposition of a tax without ' justification through.
that person 's selfish and pretentious friend like the President of the Municipal Council is, to say the least, to suggest that such person is the direct cause of 'harassment on account of such taxation on poor people.
It is said in the third paragraph of the pamphlet and then there is a direct allegation against the petitioner that it is the petitioner who caused the cultivators in the Rajura taluq to be burdened with.
the expense of fixing.
the border stones and that in doing so the petitioner Vithalrao Dhote has solely secured an advance for Abid Hussain Thekedar.
In the fourth paragraph, it is categorically alleged that the petitioner Vithalrao Dhote has exploited and harassed poor people in order to benefit his i.e. Vithalrao selfish and pretentious friends and such harassment has caused untold miseries.
That these allegations are scurrilous does not admit of any doubt.
They are defamatory per se.
Every citizen is entitled to be presumed to be innocent until contrary is proved.
If therefore an allegation of a personal character is made against anyone, it is the maker of the allegation who has to establish that there is truth in the allegation.
" It is clear that the High Court failed to examine the effect of the statements contained in Exhs.
55 and 56 by the tests prescribed in section 123(4).
Further there is no proof in this case that the statements contained in Exhs.
55 and 56 are reasonably calculated to prejudice the election of the respondent.
The Trial Court did not give any finding effect.
777 This leaves us with the question whether the appellant had announced in his election meetings that the first respondent had a share in the profits earned by Abid Hussain in the matter of fixing boundary stones.
The High Court has held that the appellant made that accusation while 'addressing election meetings at two places.
If that finding is correct then undoubtedly there is a contravention of section 123(4) but after carefully examining the material on record we have come to the conclusion that finding is unsustainable.
The election petition was filed on April 11, 1967.
That petition merely sets out what according to the petitioner are the contents of Exts.
55 and 56.
It is not stated therein that apart from the statements contained in those pamphlets any other false statement of fact relating to the personal character or conduct of the first respondent had been made either by the appellant or his supporters.
The allegation that the appellant in his election meetings had stated that the first respondent had a share in the profits earned by Abid Hussain in the matter of fixing the boundary stone is not mentioned there.
An application to amend the election petition was made on June 24, 1967.
In that application also there is no reference to the allegation in question.
The election petition was again amended on 3 7 1967.
It was only then the following allegation was made: "He (the appellant) was falsely alleging that the petitioner was or had actively helped Abid Hussain for his selfish ends to make illegal gains and thus allege false corrupt motives to him." Even this allegation is vague.
That apart it is a highly belated allegation.
It appears to be an afterthought.
It is not necessary for us to decide in this case whether such an amendment could have been permitted after the limitation for filing the election petition had expired.
But the very circumstance that the allegation in question was made several months after the election petition was filed by itself casts serious doubt on the veracity of that allegation.
This circumstance was completely overlooked by the High Court.
The witnesses who spoke in support of the said allegation are the first respondent (P.W. 2), P.W. 9, Arjan Kashinath Masirkar and P.W. 12, Nazir Hussain Akbar Ali.
So far as P.W. 2 is concerned he is undoubtedly an interested witness.
In the circumstances mentioned above, his evidence can have very little persuasive value.
So far as P.W. 9 is concerned on his own showing he was highly interested in the first respondent and the Congress Party.
As elicited during his cross examination he was a Congress candid.ate for election as Sarpanch and as a member of the Panchayat Samiti.
The appellant 's cousin was his rival in that election.
Admittedly during the last election he canvassed for the 778 first respondent.
Under these circumstances much reliance cannot be placed on the testimony of this witness.
Then we come to the evidence of P.W. 12.
During his cross examination this is what he stated: "I have not received a summons.
Vithalrao had asked me to produce the register where the hire of cycles is noted and that is how the chits which I have filed came with the register . ." His evidence is to the effect that the appellant while presiding over the meeting at Rajura on February 13, 1967 stated that the first respondent had a share in the contract for fixing of border stones which was produced for him by Vithalrao.
When he was crossexamined about that meeting this is what he stated: "I don 't remember who was the President of the meeting.
I will ' not be able to name at this distance of time the names of persons from the town or the villagers who were listening at the meeting.
I will not be able to name a single person from amongst these.
" Obviously he is a procured witness.
No reliance can be placed on his evidence.
For the reasons mentioned above we hold that the election petitioner (first respondent herein ) has failed to make out that the appellant had contravened section 123(4).
Hence this appeal succeeds and the election petition stands dismissed.
We are of opinion that we should not award any costs to the appellant.
He had come forward with a false case and had protracted the trial of the case by adducing voluminous false evidence.
Hence we direct the parties to bear their own costs both in this Court as weld as in the High Court.
G.C. " Appeal allowed.
| IN-Abs | The appellant was the returned candidate from the Rajura constituency Maharashtra State Legislative Assembly in the general election held in February 1967.
The first respondent who was one of the defeated candidates challenged the appellant 's election in an election petition.
The High Court held that the appellant had made false statements about the personal character and conduct of the first respondent and was guilty of corrupt practice within the meaning of section 123(4) of the Representation of the People Act, 1951.
On this view the High Court allowed the election petition and set aside the election of the appellant who appealed to this Court.
HELD: (i) The election law in this country as in England guarantees freedom of criticism of political nature at the time of election.
The freedom of criticism may sometimes be misused, but the advantage gained from free criticism though sometimes it may turn out to be irresponsible in the long run outweighs the disadvantages.
It is in the interests of democracy that such criticism should be allowed.
However democracy will be a farce if interested persons are allowed to freely indulge in character assassination during election.
A political party may not be affected by passing winds but a campaign of slander against an individual is likely to create prejudice in the mind of the people against him.
Section 123(4) is designed to achieve the dual purpose of protecting freedom of speech and prevention of malicious attack on the personal character and conduct of rivals.
[769 C] (b) The ingredients of the corrupt practice mentioned in section 123(4) are (1) the publication by a candidate or his election agent or by any other person with the consent of that candidate or his election agent of any statement of fact; (2) which statement is false and which was believed by the candidate to be false or at any rate was not believed by him to be true; (3) the said statement relates to the personal character or conduct of a candidate or is in relation to his candidature or withdrawal; and (4) the same being a statement reasonably calculated to prejudice the prospects of that candidate 's election.
The burden of proving 'every one of the ingredients of the corrupt practice alleged is on him who alleges it.
[768 G; 77] (c) Every false allegation does not come within the mischief of section 123(4).
The language of the section is 'any statement of fact which is false ' and that language must be used in contrast to a false statement of opinion.
The statement in question must be in relation to the personal character of candidate.
It is when the false allegation pierces the politician and touches the person of the candidate that section 123(4) is contravened.
Further one of the ingredients of the corrupt practice under the section is that the statement complained of must be one reasonably calculated to prejudice the prospects of the election of the person against whom it is ' made. 'Calculated ' means designed: it denotes more than mere 767 likelihood and imports a design to affect voters.
The emphasis in the last limb of the section is not so much on the intention of the publisher but on the probable effect on the election of the candidate against whom those statements are directed.
[769 F G; 770 E] (ii) In the present case the statements alleged to have been made by the appellant did not amount to corrupt practice within the meaning of section 123(4) as they amounted either to fair political criticism or were mere expressions of opinion.
The complaint that the appellant had stated that the respondent had a share in the profits earned by a contractor is neither alleged in the election petition nor satisfactorily proved.
[777 D, F] Sheopat Singh vs Ram Pratap, [1965] t S.C.R. 175, T.K. Gangi Reddy M.C. Anjaneya Reddy & Ors., XXII E.L.R.p.
266 and Dattatraya Narayan Patil vs Dattatraya Krishnaji Khenvikar & Ors. , relied on.
Cumberland (Cockermouth Division) Case, , referred to.
|
Appeal Nos.
45 to 49 of 1968.
Appeals from the judgment and order dated September 20, 1967 of the Madras High Court in Writ Appeals Nos. 247 to 251 of 1966.
C.K. Daphtary, Attorney General, Niren De, Solicitor General, N.S. Bindra, Mohan Kumaramangalam, R.H. Dhebar, A.S. Nambiar and ' S.P. Nayar, for the appellants (in C.As.
45 and 47 to 49 of 1968 ).
Niren De, Solicitor General, Mohan Kumaramangalam, N.S. Bindra, R.H. Dhebar, A.S. Nambiar and S.P. Nayar, for the appellants (in C.A. No. 46 of 1968).
A.K. Sen, Soli Sorabji, S.R. Vakil, B.D. Barucha, G.L. Sanghi, and S.K. Dholakia, for the respondents (in C.A. No. 45 of 1968).
N.A. Palkhivala, Soli Sorabji, D.N. Misra, S.R. Vakil and B.D. Barucha, for the respondent (in C.As.
Nos. 46 and 49 of 1968).
G.L. Sanghi, S.R. Vakil and B.D. Barucha, for respondents '(in C.A. No. 47 of 1968) and their respondent (in C.A. No. 48 of 1968).
N.A. Palkhivala, P.P. Ginewala, D.N. Mukherjee and Ajit Chaudhury, for interveners Nos. 1 to 4.
A.K. Sen, S.D. Khetri, Avadh Behari and R.N. Bajoria, for intervener No. 5.
N.A. Palkhivala and D.N. Gupta, for intervener No. 6.
M. C, Chagla and D.N. Gupta, for intervener No. 8.
N.A. Palkhivala, A.K. Basu, S.C. Mitter and 1.
N. Shroff, for intervener No. 7.
M.C. Setalvad and M.K. Banerjee, for intervener No. 9.
SIKRI, J. delivered a dissenting Opinion.
The Judgment of BACHAWAT and HEGDE JJ.
was delivered by HEGDE, J. SiKri, J.
These five appeals by certificate are directed against the judgment of the High Court of Madras whereby the High Court accepted the Writ Appeals against the judgment of Kailasam, J., in Writ Petitions Nos.
1592, 1593, 1594 and 1601 of 1966 and 3948 of 1965, and directed the issue of writs of prohi 731 bition to the Union of India, the Collector of Customs, Madras, and the Deputy Collector of Customs, Visakhapatnam, appellants before us, prohibiting them from taking any action in pursuance of certain show cause notices issued by the Deputy Collector Customs, Visakhapatnam.
Common questions of law are involved in these appeals and it would suffice if I give facts in Writ Petition No. 1592 of 1966 out of which Civil Appeal No. 45 of 1968 arises.
The relevant facts in that writ petition, for appreciating the points raised before us, are as follows: On February 17, 1965, the Deputy Collector of Customs, Visakhapatnam, issued memorandum No. S/21/14/65 to M/s. Rai Bahadur Seth Shreeram Durgaprasad (Private) Ltd., Tumsar, and five others, hereinafter referred to as the Shippers.
In this memorandum, in brief, it was stated that the Shippers had entered into a formal contract on October 13, 1965, with M/s. Intercontinental Ores Supply Corporation, New York, for the shipment of 20,000 tons of Indian Manganese Ore of the grade of 43% Mn., from the port of Visakhapatnam at a price of $0.67 per unit of Manganese per dry long ton, f.o.b. Visakhapatnam/Bombay.
The Shippers exported from the port of Visakhapatnam 3,300 tons of Indian Manganese per 's.s. 'ALPHEM ' under the cover of Shipping Bill No. 187 dated March 20, 1957, declaring therein that the export was being made in pursuance of the aforesaid contract.
A G.R.I. form was attached.
It was stated that a certain note book which had been seized earlier in August 1963 disclosed that a sum of $25298.24 was received on April 21, 1957, from INOSCO, i.e., Intercontinental Ores Supply Corporation, New York, the consignee of the subject goods, the amount having been credited to an account in the name of Gangadhar Narsinghdas Agrawal with the Trust Co. of North America, 115, Broadway, New York.
It was further alleged in the memorandum that the Shippers had derived financial benefits in respect of the subject export over and above those revealed to the Customs Authorities and/or other concerned authorities and the information about them was deliberately suppressed.
It was further alleged that this constituted a contravention of section 12(1) of the Foreign Exchange Regulation Act, 1947, read with Notification No. 12(17) F. 1/47 dated August 4, 1947, as amended, issued thereunder and the Foreign Exchange Regulation Rules, 1952.
I may mention that by this notification the Central Government had prohibited "the export otherwise than by post of any goods either directly or indirectly to any place outside India other than any of the countries or territories in the Schedule annexed to this order unless a declaration supported by such evidence as may be prescribed is furnished by the exporter to the prescribed 732 authority that the amount representing the full export value of the goods has been or will within the prescribed period be paid in the prescribed manner." According to the Deputy Collector Customs, the goods have been thus exported in contravention of the restrictions and prohibitions imposed under section 19 of the , read with section 12(1) and the Notification No. 12( 17) F. 1/47 dated August 4, 1947, issued thereunder, and section 23A of the Foreign Exchange Regulation Act, 1947, which exportation constituted an offence liable to be punished under section 167(8) of the .
Accordingly, the parties concerned were called upon to explain the matter and show cause in writing to the Collector of Customs, Madras, why a penalty should not be imposed on them/ him under section 167(8) of the .
It appears that a number of such memoranda were issued in respect of diverse shipments.
Thereupon five petitions were filed in the High Court of Madras.
In Writ Petition No. 1592 of 1966 it was alleged that 125 show cause notices had been issued to the petitioners on various dates and it was prayed that a writ of prohibition or other appropriate writ, order or direction under article 226 of the Constitution of India prohibiting the respondents from taking any action in pursuance of the said show cause memos, may be issued.
Various allegations were made but I need only mention the following allegations.
It was submitted that the petitioners had complied with the statutory provisions inasmuch as a declaration in statutory form had been furnished to the prescribed authority.
to wit, the Collector of Customs, and the Collector of Customs, having passed the consignments for shipment, had no further right or jurisdiction to take proceedings relating to the consignments in question.
It was contended that if a declaration is found to be false, it did not mean that there was a breach of the provisions of section 12(1).
In reply it was contended that what was required under section 12(1) of the Foreign Exchange Regulation Act and the Rules was not any value but the actual amount representing the full export value, and a mere declaration of any value would not be sufficient compliance with the provisions of section 12(1) of the Foreign Exchange Act.
The learned Single Judge, Kailasam, J., dismissed the petitions.
Various points were urged but on the point addressed to us he held that the declaration to be given by the exporters meant not only that the value of the goods will be paid in the prescribed manner but also that the full export value of the goods given is the correct value.
733 I may mention that before the Division Bench the case of the Revenue was clarified in an affidavit and we may set out para 5 thereof: "Since the Court has now directed the respondents to file a supplemental affidavit clarifying the stand taken by the department 1 state respectfully that the stand taken by the department both in the show cause memo and here is that the essence of the offence committed by the appellants is that in the declaration required under section 12(1) of the Foreign Exchange Regulation Act, they have deliberately given false particulars supported by false evidence.
By giving this fraudulent declaration, they have secured the export of their goods.
This fraud vitiates the declaration itself, thereby making the export one in violation of the prohibition contained in Section 12(1) of the Foreign Exchange Regulation Act It is not necessary to set out the modus operandi adopted by the petitioners but 1 may mention that it was contended that a scheme was entered into prior to the actual export and the goods were undervalued deliberately and the department was induced to accept their declarations by means of false evidence and fraudulent suppression of facts.
It is suggested that by this method a sum of Rs. 3,20,00,000 had been suppressed and there has been a failure to repatriate a corresponding amount of foreign exchange which had been earned surreptitiously.
It was further stated that this scheme was adopted for all the shipments covered by the show cause notices, and also for many other shipments in respect of which show cause notices yet remain to be issued.
The Division Bench on appeal came to the conclusion that as the declarations were made under section 12(1) and as they were scrutinised by the authorities it is not possible to contend that these goods were either exported or attempted be exported in violation of the prohibitions or restrictions imposed by law and are therefore, liable to be confiscated under section 167(8)of the .
The Division Bench further held that the alleged fraud on the part of the petitioners did not make any difference.
According to the Division Bench "if the petitioners had misled the authorities by false representations or failed thereby to repatriate foreign exchange, by virtue of his obligation under section 12(2), these are different offences for which separate and specific penalties can be imposed.
" The relevant statutory provisions at the time of exportation were as follows: "The Foreign Exchange Regulation Act, 1947 section 12(1) The Central Government may, by notification in 4 Sup.
CI,/69 14 734 the Official Gazette, prohibit the taking or sending out by land, sea or air (hereinafter in this section referred to as export) of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless a declaration supported by such evidence as may be prescribed or so specified, is furnished by the exporter to the prescribed authority that the amount representing the full export value of the goods has been, or will within the prescribed period be, paid in the prescribed manner.
(2) Where any export of goods has been made to which a notification under sub section (1) applies, no person entitled to sell or procure the sale of the said goods shall, .except with the permission of the Reserve Bank, do or refrain from doing any act with intent to secure that (a) the sale of the goods is delayed to an extent which is unreasonable having regard to the ordinary course of trade, or (b) payment for the goods is made otherwise than in the prescribed manner or does not represent the full amount payable by the foreign buyer in respect of the goods, subject to such deductions, if any, as may be allowed by the Reserve Bank, or is delayed to such extent as aforesaid: Provided that no proceedings in respect of any contravention of this sub section shall be instituted unless the prescribed period has expired and payment for the goods representing the full amount as aforesaid has not been made in the prescribed manner.
(3) Where in relation to any such goods the said period has expired and the goods have not been sold and payment therefor has not been made as aforesaid, the Reserve Bank may give to any person entitled to sell the goods or to pro.cure the sale thereof, such directions as appear to it to be expedient for the purpose of securing the sale of the goods and payment therefor as aforesaid, and without prejudice to the generality of the foregoing provision may direct that the goods shall be assigned to the Central Government or to a person specified in the directions.
(4) Where any goods are assigned in accordance with sub section (3) the Central Government shall pay to the person assigning them such sum in consideration of the net sum recovered by or on behalf.
of the Central 735 Government in respect of the goods as may be determined by the Central Government.
(5) Where in relation to any such goods the value as stated in the invoice is less than the amount which in the opinion of the Reserve Bank represents the full export value of those goods, the Reserve Bank may issue an order requiring the person holding the shipping documents to retain possession thereof until such time as the exporter of the goods has made arrangements for the Reserve Bank or a person authorised by the Reserve Bank to receive on behalf of the exporter payment in the prescribed manner of an amount which represents in the opinion of the Reserve Bank the full export value of the goods.
(6) For the purpose of ensuring compliance with the provisions of this section and any order or directions made thereunder, the Reserve Bank may require any person making any export of goods to which a notification under sub section (1) applies to exhibit contracts with his foreign buyer or other evidence to show that the full amount payable by the said buyer in respect of the goods has been, or will within the prescribed period be, paid in the prescribed manner.
section 22.
No person shall when complying with any order or direction under section 19 or with any requirement under section 19B or when making any application or declaration to any authority or person for any purpose under this Act, give any information or make any statement which he knows or has reasonable cause to believe to be false, or not true, in any material particulars.
section 23.
(1) If any person contravenes the provisions of section 4, section 5, section 9 or sub section (2) of section 12 or of any rule, direction or order made thereunder, he shall (a) be liable to such penalty not exceeding three times the value of the foreign exchange in respect of which the contravention has taken place, or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement in the manner hereinafter provided, or (b) upon conviction by a Court, be punishable with imprisonment for a term which may extend to two years, or with line, or with both.
736 (IA) Whoever contravenes (a) any of the provisions of this Act or of any rule, direction or order made thereunder, other than those referred to in sub section (1) of this section and section 19, shall, upon conviction by a Court, be punishable with imprisonment for a term which may extend to two years, or with fine, or with both; (b) any direction or order made under section 19 shall, upon conviction by a Court, be punishable with fine which may extend to two thousand rupees.
(1B) Any Court trying a contravention under subsection (1) or sub section (IA) and the authority adjudging any contravention under clause (a) of sub section (1) may, if it thinks fit, and in addition to any sentence or penalty which it may impose for such contravention, direct that any currency, security, gold or silver, or goods or any other money or property, in respect of which the contravention has taken place, shall be confiscated to the Central Government and further direct that the foreign exchange holdings, if any, or the person committing the contravention or any part thereof shall be brought back into India or shall be retained outside India in accordance with the directions made in this behalf.
Explanation.
For the purposes of this sub section, property in respect of which contravention has taken place shall include deposits in the bank, where the said property is converted into such deposits (2) Notwithstanding anything contained in section 32 of the Code of Criminal Procedure, 1898, it shall be lawful for any Magistrate of the first class, specially empowered in this behalf by the State Government, and for any Presidency Magistrate to pass a sentence of fine exceeding two thousand rupees on any person convicted of an offence punishable under this section.
(3) No Court shall take cognizance (a) of any offence punishable under sub section (1) except upon complaint in writing made by the Director of Enforcement, or (b) of any offence punishable under sub section (1 A) of this section or under section 54 of the Indian Income tax Act, 1922, as applied by section 19 of this Act, except upon complaint in writing made by the Director of Enforcement or any officer authorised in 737 this behalf by the Central Government or the Reserve Bank by a general or special order: Provided that where any such offence is the contravention of any of the provisions of this Act or any rule, direction or order made thereunder which prohibits the doing of an act without permission, no such complaint shall be made unless the person accused of the offence has been given an opportunity of showing that he had such permission.
(4) Nothing in the first proviso to section 188 of the Code of Criminal Procedure, 1898, shall apply to any offence punishable under this section.
section 23A.
Without prejudice to any provisions of section 23 or to any other provision contained in this Act, the restrictions imposed by sub sections (1) and (2) of section 8, sub section (1) of section 12 and clause (a) of sub section (1 ) of section 13 shall be deemed to have been imposed under section 19 of the Sea Customs Act, 1879, and all the provisions of that Act shall have effect accordingly, except that section 183 thereof shall have effect as if for the word "shall" therein the word "may" were substituted." "The 167.
The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively: Sections of this Act Offences to which Penalties offence has reference 8.
If any goods, the importation 18 Such goods shall be liable or exportation of which is for & to confiscation; the time being prohibited or 19 and restricted by or under Chapter IV of this Act, be imported Any person concerned in into or exported from India any such offence shall be contrary to such prohibition or liable to a penalty not ex ceeding three times the value restriction; or of the goods, or not exceeding If any attempt be made so to one thousand rupees.
import or export any such goods; or If any such goods be found in any package produced to any officer of Customs as containing no such goods; or 738 Offences Penalties If any such goods, or any dutiable goods, be found either before or after landing or shipment to have been concealed in any manner on board of any vessel within the limits of any port in India; or If any goods, the exportation of which is prohibited or restricted as aforesaid, be brought to any wharf in order to be put on board of any vessel for exportation contrary to such prohibition or restriction.
"Foreign Exchange Regulation Rules, 1952.
Form of declaration. (1) A declaration under section 12 of the Act shall be in one of the forms set out in the First Schedule as the Reserve Bank may by notification in the Gazette of India specify as appropriate to the requirements of a case.
(2) Declarations shall be executed in sets of such number as indicated on the forms.
Authority to whom declaration to be furnished.
(1) The original of the declaration shall be furnished to the Collector of Customs: provided that when export is by post, the original of the declaration shall be furnished to the postal authorities.
(2) Copies of the declaration shall be submitted to the authorities and in the manner specified on forms.
(3) The documents pertaining to every export passed by the Customs shall within 21 days from the date of the export, be submitted to the authorised dealer mentioned on the relevant declaration form, unless the Reserve Bank, in its discretion, authorises otherwise.
Evidence in support of declaration.
(1) The Reserve Bank, or subject to such directions, if any, as may be given by the Reserve Bank, the Collector of Customs or the postal authorities, may, to satisfy themselves of due compliance with section 12 of the Act, 379 require such evidence in support of the declaration as may satisfy them that the exporter is a person resident in India, or has a place of business in India.
(2) The Reserve Bank, or subject to such directions, if any, as may be given by the Reserve Bank, the Collector of Customs, or the Postal authorities may require any exporter to produce in support of the declaration such evidence as may be in his possession or power to satisfy them.
(ii) that the invoice value stated in the declaration the full value.
of the goods; and (iii) that the amount representing the full export value of the goods has been or will be paid to the exporter.
Explanation. " The points which have emerged from the discussion at the Bar and which require determination may be formulated thus: (1) What is the meaning of the expression "restrictions mean posed by sub section (1) of section 12" occurring in section 23 A of the Exchange Act ? Can other sections of the Exchange Act be looked at for determining the ambit of the restrictions imposed by section 12(1) ? Do restrictions imposed under the Rules made under the Exchange Act and relating to section 12(1) come within the meaning of this expression ? (2) What is the true meaning of the words "a declaration supported by such evidence as may be prescribed .or so specified is furnished by the exporter to the prescribed authority that the amount representing the full export value of goods has been or will within the prescribed period be paid in the prescribed manner" '? Is it necessary that the declaration shall be made honestly or in good faith '? Should it disclose the true export value it a breach of the sub section if a declaration is made honestly but happens to show incorrect export value to a small but not material extent ? Does not a deliberately false declaration contravene the provisions of section 12(1) ? (3) If an action is a contravention of section 12(1) and other provisions of the Exchange Act, e.g., sections 22, 23, 12(2), 12(3) and 12(5), was it the intention that it should be treated as a contravention of section 12(1)? Before dealing with point (1) mentioned above, a few preliminary observations may be made.
I have to construe an Act which was enacted in the interest of the national economy.
A deliberate large scale contravention of its provisions would affect 740 the interests of every man, woman and child in the country.
Such an Act, 1 apprehend, should be construed so as to make it workable; it should, however, receive a fair construction, doing no violence to the language employed by the Legislature.
It was said that if two constructions are possible the one that is in favour of the subject should be accepted.
It is not necessary to pronounce on this proposition for I have come to the conclusion that there is one true construction of section 12(1).
But I should not be taken to be assenting to this proposition in so far as it is applicable to an enactment like the Exchange Act, for no subject has a right to sabotage the national economy.
Coming to the first pointed find that the following words of Lord Blackman express my views as to how the construction of section 23A should be approached.
He was dealing with a case where a single section of an Act of Parliament has been introduced into another Act.
He said in The Mayor of Portsmouth vs Charles Smith (1): "When a single section of an Act of Parliament is introduced into another Act, I think it must be read in the sense which it bore in the original Act from which it is taken, and that consequently it is perfectly legitimate to refer to all the rest of that Act in order to ascertain what the section meant, though those other sections are not incorporated in.
the new Act.
I do not mean that if there was in the original Act a section not incorporated, which came by the way of a proviso or exception on that which. is incorporated, that should be referred to.
But all others, including the interpretation clause, if there be one, may be referred to.
" It seems to me that this is the correct way of looking at section 23A of the Exchange Act for another reason.
The restrictions imposed by section 12(1) cannot be different for the purpose of the Exchange Act from that for the purposes of section 167(8) of the , for the breach of section 12(1) may also be punishable under the Exchange Act.
In other words, the same contravention may attract penalties under the as well as the Exchange Act, and it would be incongruous to hold that the restrictions imposed by a section are different for different Acts.
Then am I entitled to take into account the restrictions imposed by the Rules made under section 27 of the Exchange Act ? It seems to me that rules not deferrable to section 12(1) cannot be taken into account, but any restrictions imposed by rules referrable to section 12(1) must be treated as restrictions imposed by section 12(1).
Section 12(1) itself contemplates rules being made on three points.
(1) 10 A.C. 364.
371 741 i.e. (1 ) the evidence which is to support the declaration, (2) the authority to which the declaration is to be furnished; and (3) manner of payment.
It was said that the words "by section 12(1)" exclude the restrictions made under the Rules.
But though in some contexts and scheme of an Act this proposition may be true, the general rule is as stated by Lord Alverstone.
C.J., in Wellingdale vs Norris(1) as follows: "If it be said that a regulation is not a provision of an Act, I am of opinion that Rex vs Walker(2) is an authority against that proposition.
I should certainly have been prepared to hold apart from authority that, where a statute enables an authority to make regulations a regulation made ' under the Act becomes for the purpose of obedience or disobedience a provision of the Act.
The regulation is only the machinery by which Parliament has determined whether certain things shall be or shall not be done." These observations were approved by the House of Lords in Wicks vs Director of Public Prosecution(3) thus: "There is, of 'course, no doubt that, when a statute like the Emergency Powers (Defence) Act, 1939, enables an authority to make regulations, a regulation which is validly made under the Act, i.e., which is intra vires the regulation making authority, should be regarded as though it were itself an enactment.
As the Court of Criminal Appeal has pointed out in its judgment, that was decided by the Divisional Court in Willingdale vs Norris(1), and it appears to me that decision is perfectly correct.
Consequently, the charge against the appellant here was in effect, that he had committed crimes defined or contained in the Act of Parliament.
" The Court of Criminal Appeals had stated in R.v. Wicks(4), as follows: "The first observation which the court would make is that they are in complete agreement with the decision of the Divisional Court in Willingdale vs Norris(1) that where a statute enables an authority to make regulations, a regulation made under the Act becomes for the purpose of obedience or disobedience a provision of the Act.
The regulation is only the machinery by which Parliament has determined whether certain things shall or shall not be done.
It is, therefore, clear that the (1) ,64.
(2) [1875] L.R. 10Q.B. 355.
(3) 206.
(4) , 531.
742 regulations must be read as though they were contained in the Act itself.
They derive their efficacy solely from the Act and accordingly expire with the Act, but it may be that the legislature has provided that some restrictions or consequences shall remain effective notwithstanding the expiration of the Act." In a recent case, Rathbone vs Bundock(1), the Divisional Court following these cases held that regulation 89 of the Motor Vehicles (Construction and Use) Regulations, 1955, was for the purpose of obedience or disobedience a provision of the Road Traffic Acl, 1930.
In Dr. Indramani Pyarelal Gupta vs W. R. Nathu and Others(2) this Court was concerned, inter alia.
with the interpretation of section 3(1 ) of the Forward Contract (Regulation) Act, 1952, which used the words "such duties as may be assigned by or under this Act".
Ayyangar, J., speaking for the majority, observed: "Learned Counsel is undoubtedly right in his submission that a power conferred by a bye law is not one conferred "by the Act" for in the context the expression "conferred by the Act" would mean "conferred expressly or by necessary implication by the Act itself .
The words, "under the Act" would, in that context, signify what is not directly to be found in the statute itself but is conferred or imposed by virtue of powers enabling this to be done; in other words, by laws made by a subordinate law making authority which is empowered to do so by the parent Act.
This distinction is thus between what is directly done by the enactment and what is done indirectly by rule making authorities which are vested with powers in that behalf by the Act.
(vide Hubli Electricity Bombay Ltd vs Province of Bombay(2), and Narayanaswami Naidu vs Krishna Murthi(4)".
The observations of Subba Rao.
J., as he then was.
at p. 775~ relied upon by the appellants are these: "I would, therefore, construe the words "by or under this Act, or as may be prescribed" as follows: "by this Act" applies to powers assigned proprio vigore by the provisions of the Act; "under this Act" applies to an assignment made in exercise of an express power conferred under the provisions of the Act; and "may be prescribed" takes in an assignment made in exercise of (1) (2) ; ,737.
(3) 67 I.A. 57.
(4) I.L.R. 547.
743 a power conferred under a rule.
This construction gives a natural meaning to the plain words used in the section and avoids stretching the language of a statutory provision to save an illegal bye law.
" In my opinion that case does not assist me because the Court was construing the words "by or under the Act", and Ayyangar, J., specifically discussed the meaning of "by the Act" in the context.
Regarding the case of United States vs George R. Eaton,(1) relied on appellants ' behalf, I find that the Supreme Court of the United States explained and distinguished that case in Singer vs United States ( 2 ) as follows: "United States vs Eaton(1) turned on its special facts, as United States vs Grirnaud(3) emphasizes.
It has not been construed to state a fixed principle that a regulation can never be a "law" for purposes of criminal prosecutions.
It may or may not be, depending on the structure of the particular statute.
The Eaton case involved a statute which levied a tax on oleomargarine and regulated in detail oleomargarine manufacturers.
Section 5 of the statute provided for the keeping of such books and records as the Secretary of the Treasury might require.
But it provided no penalty for non compliance.
Other sections, however, laid down other requirements for manufacturers and prescribed penaLties for violations.
Section 20 gave the Secretary the power to.
make all needful regulations" for enforcing the Act.
A regulation was.
promulgated under section 20 requiring wholesalers to keep a prescribed record.
The prosecution was for non compliance with that regulation.
Section 18 imposed criminal penalties for failure to do any of the things "required by law.
" The Court held that the violation of the regulation promulgated under section 20 was not an offence.
It reasoned that since Congress had prescribed penalties for certain acts but not for the failure to keep books the omission could not be supplied by regulation.
And Congress had not added criminal sanctions to the.
rules promulgated under section 20 of that Act.
" I would in this connection prefer to apply the English decisions referred to above, as section 12(1) itself does not impose any restrictions and contemplates certain things to be prescribed.
(1) ; (2) ; , 290.
(3) , 518, 519:55 L. Ed 563, 568:31 section Ct. 480. 744 Coming now to the construction of section 12(1), it seems to me that what it requires is a declaration of some actual figure which according to the declarant represents 'the full export value '.
Otherwise there is no point in requiring support of such evidence as may be prescribed.
Further it is clear that some actual figure has to be mentioned when the exporter declares that he has received the amount representing the full export value.
I apprehend that the same applies in the case where the amount has not yet been received.
The rules make this clear.
Rule 5(2)(ii) which requires the invoice value stated in the declaration to be the full export value of goods, is referrable to section 12(1) of the Exchange Act and may be taken to indicate that an actual figure has to be mentioned.
It may be an estimate ' if the goods have not been sold before the export, but a figure must be indicated.
Coming to the crux of the problem, does section 12(1) by itself require absolutely correct particulars ? It is said that section 12(1) does not require it for section 22 requires the exporter only to make a declaration "which he knows or has reasonable cause to be false or not true in any material particulars.
" How could it be that if section 12(1) itself requires absolutely correct particulars, section 22 limits the requirement ? It seems to me that there is force in this contention but only to a limited extent.
Section 12(1) and the notification dated August 4, 1947, made under it, impose a conditional prohibition.
The section confers a power on an exporter to lift the bar by a unilateral declaration.
When such a power is conferred on an exporter by a statute, good faith on his part must at least be implied and be a condition prerequisite.
This construction is necessary in order to prevent abuse of the power given by the Act.
(See Maxwell on Interpretation of Statutes, 11th Edition, p. 116).
If the exporter makes a deliberately false declaration he contravenes section 12(1) because he has not made the statutory declaration in good faith.
It is not necessary to say that the declaration becomes nullity because the breach of good faith, a condition prerequisite, is itself a contravention of the conditional prohibition or restriction, within section 167(8) of the read with section 23A and section 12(1) of the Exchange Act.
Clerical mistakes and mistakes made bona fide even in respect of material particulars are not within the mischief of section 12(1), but a deliberate falsehood and a deliberate evasion of the provisions of section 12(1) come within section 12(1).
Otherwise the ambit of section 12(1), read with section 23A, would be narrowed to the point of extinction.
An exporter and persons concerned in the export could with impunity give a deliberately false declaration but in apparent compliance with section 12(1), and deprive this country of foreign exchange.
I cannot give an interpretation which will make 745 a mockery of the section.
But it is said that other sections of the Exchange Act will take care of such an exporter.
He can be prosecuted under section 23(1A) read with section 22.
He can be sentenced to imprisonment which may extend to two years.
He can also be fined to an unlimited extent.
The Foreign Exchange lost can be retrieved by a court acting 1 under section 23(B).
This may be true that the exporter is liable as stated above.
But what about persons concerned in the illegal export ? It is the persons concerned in the export which in most cases enables the exporter to successfully evade the provisions of the Exchange Act.
These persons are taken care of only under the Customs Act.
If they are covered by section 167(8), there is no reason to exclude the exporter himself.
It is not unusual to make persons liable both to penalties under the and the Exchange Act.
It is indeed conceded that if no declaration is given under section 12(1) and the goods are exported, the exporter and the persons concerned in the export would be liable to be proceeded both under section 167(8) of the and the Exchange Control Act.
I can draw no distinction between such an exporter and an exporter who gives a deliberately false declaration for the purpose of the applicability of section 167(8) of the .
I am not impressed by the argument that the Foreign Exchange Act deals with the basic policy regarding foreign exchange and it was not the intention to punish offenders who violate foreign exchange restrictions under the .
It is section 23A of the Exchange Act which itself deems the restrictions imposed under section 12(1) to have been imposed under section 19 of the .
Not only that.
The opening sentence of section 23A makes it clear that this is without prejudice to section 23 and to any other provisions in the Exchange Act.
In other words, the provisions of section 23 and other relevant sections are not affected or limited.
They will have their full operation.
The fact that the exporter may be proceeded under section 12(2) I may assume that this is so for the purpose of this case) for non payment of the full amount payable by the foreign buyer, or that the Reserve Bank can in the eventualities mentioned in section 12(5) require the holding up of shipping documents or that the Reserve Bank by exercising powers under section 12(6) secure contracts and other evidence to discover the full amount payable do not throw any light on the construction of section 23A and section 12(1) except that the Legislature is anxious that the "full export value" shall be received in this country.
Section 23A read with section 12(1) calls in the aid of Customs authorities to achieve the same object.
but ropes in alongwith the exporter the persons concerned in the prohibited export.
746 I am not able to appreciate how the existence of section 167(37), section 167(72) and section 167(81) is of any assistance for the purpose of interpreting section 23A and section 12(1) of the Exchange Act.
It may be I do not decide it that an exporter, like the respondents, will also be liable to be proceeded against under these items of section 167.
Taking the facts as alleged by the Customs authorities to be true, as they must be taken to be true for the purpose of this application under article 226, it seems to me that no case for the issue of a writ of prohibition has been made out.
In the result the judgment of the Appeal Court is reversed and that of the learned Single Judge restored.
The appellants will have costs incurred in this Court.
One hearing fee.
Hegde, J. We had the advantage of studying the judgment just now delivered by our brother Sikri 3.
but we regret that we are unable to agree with the conclusions reached by him.
After carefully analysing the arguments advanced before us we have come to the conclusion that no grounds were made out to interfere with the order of the Appellate Bench of the Madras High Court.
We shall now proceed to give our reasons in support of our conclusion.
The respondents in these appeals are exporters of manganese ore.
It is said that they had exported large quantities of manganese ore after ostensibly complying with the formalities of law but in reality they had under invoiced the various consignments sent by them and further that they had failed to repatriate foreign exchange of the value of about three chores of rupees obtained by them as the price of the manganese ore exported.
It is said that by so doing they had contravened section 12(1) of the Foreign Exchange ReguLation Act, 1947 (to be hereinafter referred to as the Act) read with section 23(A) of that Act and sections 19 and 167(8) of the .
The case for the appellants is that dying the search of the houses of some of the respondents on suspicion that they had hoarded gold, certain documents from the house of some of the respondents were seized and those documents disclosed the facts set out above.
On the basis of the said information the Deputy Collector of Customs, Visakhapatnam issued several notices to the respondents requiring them to show cause why no action should not be taken against them under the aforementioned provisions.
On receipt of those notices the respondents moved the High Court of Madras under article 226 of the Constitution praying that court may be pleased to quash the show cause notices in question and prohibit the appellants from taking any further ,action on the basis of those notices.
Those petitions were dismissed by Kailasam J. on September 1. 1966 747 but his orders were reversed by the Appellate Bench of that Court by its Judgment dated September 12, 1967.
The Appellate Bench granted the reliefs prayed for by the respondents.
It is as against that decision these appeals have been brought after obtaining the necessary certificates from the High Court.
The only question that arises for decision in these appeals is whether on the facts set out in the show cause notices, which facts have to be assumed to be correct for the purpose of these proceedings, the respondents can be held to have contravened section 12(1) which reads: "The Central Government may, by notification in the Official Gazette, prohibit the taking or sending out by land.
sea or air (hereinafter in this section referred to as export) of any goods or class of goods specified in the notification from India directly or indirectly to any place so specified unless a declaration supported by such evidence as may be prescribed or specified, is furnished by the exporter to the prescribed authority that the amount representing the full export value of the goods has been, or will within the prescribed period be, paid in the prescribed manner.
" On August 4, 1947, the Central Government issued a notification prohibiting the export of all goods to any place outside India unless a declaration supported by such evidence as may be prescribed is furnished by the exporter to the prescribed authority that the amount representing the full export value of the goods has been or will within the prescribed period be, paid in the prescribed manner.
Rule 3 of the Foreign Exchange Regulation Rules 1952 framed under section 27 of the Act provides that a declaration under section 12 of the Act shall be in one of the forms set out in the First Schedule as the Reserve Bank may by notification in the Official Gazette specify as appropriate to the requirements of a case.
The form that is relevant for our present purpose is G.R.I. Rule 5 empowers the Reserve Bank, the Collector of Customs or the postal authorities, to require the exporter to furnish such evidence in support of the declaration as may satisfy them that the exporter is a person resident in India or has a place of business in India.
These authorities may also require the exporter to produce in support of the declaration such evidence as may be in his possession or power to satisfy them (1) that the destination stated on the declaration is the final place of destination of the goods exported; (ii) that the invoice value stated in the declaration is the full export value of the goods, and (iii) that the ' amount representing the full export value of the goods has been or will be paid to the exporter.
Form G.R. 1 stipulates that the exporter should furnish the information called for therein.
748 Therein the exporter is also required to make the following declaration.
"I hereby declare that I am the seller/consignor of the goods in respect of which this declaration is made and that the particulars given above are true and (a) that the invoice value declared is the full export value of the goods and is the same as that contracted with the buyer; (b) that this is a fair valuation of the goods which are unsold.
1/My principals undertake that 1/they will deliver to the bank mentioned below the foreign exchange/rupee proceeds resulting from the export of these goods or before . . " It is not denied that the respondents before exporting the goods in question had furnished declaration in the prescribed forms.
Therein they had declared that the full export value of the goods has been or will within the prescribed period be paid in the prescribed manner.
It is also not denied that they had furnished to the appropriate authorities the prescribed evidence.
The case against them as mentioned earlier, is that they had under invoiced the goods and failed to repatriate a portion of the foreign exchange earned by them.
It is also alleged that they gave incorrect information in their declarations.
If these allegations are correct which we have to assume to be correct for the purpose of this case, then it is obvious that the declarations given by the respondents do not comply with the requirements of rule 5.
Section 22 of the Act provides that no person when making an application or declaration to any authority or person for any purpose under the Act shall give any information or make any statement which he knows or has reasonable cause to believe to be false or not true, in any material particular.
Section 23 prescribes that if any person contravenes the provisions of section 12 or of any rule, direction or order made thereunder he shall (a) be liable to such penalty not exceeding three times the value of the foreign exchange in respect of which the contravention has taken place, or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement in the manner provided in the Act or (b) upon conviction by a court, be punishable with imprisonment for a term which may extend to two years, or with fine, or with both.
In view of these provisions it was not disputed before us that if the information given by the respondents in the aforementioned declarations was false to the knowledge of those who made those declarations or if they had reasonable cause to believe that it was false or not true in any 749 material particular then they are liable to be dealt with under section 23.
Sub section (2) of section 12 provides that: "where any export of goods has been made to which a notification under sub section
(1) applies, no person entitled to sell, or procure the sale of the said goods shall, except with the permission of the Reserve Bank, do or refrain from doing anything or take or refrain from taking any action which_ has the effect of securing that: (b) payment for the goods is made otherwise than in the prescribed manner or does not represent the full amount payable by the foreign buyer in respect of the goods, subject to such deductions, if any, as may be allowed by the Reserve Bank, or is delayed to such extent as aforesaid . " The contravention of the above provisions is punishable under section 23.
Hence the respondents failure to repatriate any part of the foreign exchange earned by them by the sale of the manganese ore exported can be penalised by imposing on them a penalty not exceeding three times the value of the foreign exchange in respect of which the contravention had taken place or Rs. 5,000/ whichever is more as may be adjudged by the Director of Enforcement in the manner provided in the Act.
Hence it is open to the Director of Enforcement to levy on such of the respondents as have contravened section 12(2) panelist not exceeding three times the value of the foreign exchange not repatriated which in the present case can be about nine crores of rupees.
They may also be punished under section 23(1)(b).
This position is conceded by the Counsel appearing for the appellants.
But it is urged on behalf of the appellants that for the offences committed by the respondents they are not only liable to be punished under section 23 but also under section 23(A).
The Appellate Bench of the Madras High Court negatived that contention.
Section 23(A) as it stood at the relevant time provided that: "without prejudice to the provisions of section 23 or any other provision contained in this Act, the restrictions imposed by . . sub section
(1) of section 12 shall be deemed to have been imposed Under section 19 of the and all provisions of that Act shall have effect accordingly, except that section 183 thereof shall have effect as if for the word 'shall ' therein the word may were substituted." the allegations mentioned in the show cause notices come with the scope of section 23(A) then it necessarily follows that they will Sup.
CI/69 15 750 be governed by the provisions of section 19 and section 167(8) of the .
Section 19 of the Sea Customs.
Act provides: "that the Central Government may from time to time by notification in the official gazette prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of India across any customs frontiers as defined by the Central Government." This section is similar to section 12(1) of the Act.
Section 167(8) provides for punishments for offences under that Act.
That section to the extent material for our present purpose reads: "The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively Offences Sections of Penalties this Act to which offen ce has refe rence 8.
If any goods, the importation 18 and Such goods shall be liable or exportation of which is for 19 to confiscation; and the time being prohibited or restricted by or under Chapter any person concerned in any IV of this Act, be imported into such offence shall be liable or exported from India contrary to a penalty not exceeding to such prohibition or restriction; three times the value of the or goods, or not exceeding one thousand rupees.
if any attempt be made so to import or export any such goods; or if any such goods be found in any package produced to any officer of Customs as containing no such goods; or if any such goods, or any dutiable goods, be found either before or after land or shipment to have been concealed in any manner on board of any vessel within the limits of any port in India; or if any goods, the exportation of which is prohibited or restricted as aforesaid, be brought to any wharf in order to be put on board of any vessel for exportation contrary to such prohibition or restriction.
If an offence falls under section 23A the fact that the said offence is also punishable under section 23 is immaterial.
The provisions of 751 section 23(A) are without prejudice to the provisions of section 23.
The mere fact that the offences alleged against the respondents are punishable under section 23 would not exclude the application of section 23(A).
Therefore all that we have to see is whether those offences fall within the ambit of section 23(A).
If they do then the impugned show cause notices must be held to be valid.
If they do not, then no proceedings can be taken on the basis of those notices.
Before a case can be held to fall within the scope of section 23(A) it must be shown that there has been a contravention of the restrictions imposed by section 12(1).
Therefore we have to find out what those restrictions are ? The only restriction placed by section 12(1) read with the Central Government Notification dated August 4, 1947, is that no one should export any goods from this country without furnish the declaration mentioned in section 12(1).
Admittedly the stipulated declarations in the prescribed forms have been furnished.
The evidence specified have also been given.
Therefore prima facie there was no contravention of section 12(1).
What is said against the respondents is that the invoice price mentioned by them in the declarations did not represent the full export value; hence the declarations given by them are invalid declarations which means that the concerned goods were exported without furnishing the declarations required by section 12(1).
It is not possible to accept this argument.
The declarations given to satisfy the requirements of section 12(1) though they do not correctly furnish all the information asked for in the form.
Such declarations cannot be considered as non est.
The information called for in the prescribed form cannot be considered as restrictions imposed by section 12(1).
They are merely informations called for the proper exercise of the powers under the Act.
Many of them do not relate to the restrictions imposed by section 12(1).
Neither section 12(1) nor any other provision in the Act empower the rule making authority to add to the restrictions imposed by section 12(1).
For finding out the restrictions imposed by section 12(1)we have only to look to that section.
The requirement of that section is satisfied if the stipulated declaration supported by the evidence prescribed or specified is furnished.
The contravention complained of in this case is really the contravention of section 12(2) and Rule 5.
The former is punishable under section 23 and the latter under section 23 read with section 22.
The declaration required by section 12(1) is only to the effect that the amount representing the full export value of the goods has been or will within the prescribed period be, paid in the prescribed manner.
This is as it should be because this section governs both the goods sold to the foreign buyers as well as to those sent on consignment basis.
So far as the ' goods sold to 752 the foreign buy are concerned it is generally possible for the exporter to know the exact export value but that would not be the position when the goods are sent on consignment basis.
In the case of goods sent on consignment basis, the exporter can give only an estimated value.
The main purpose of section 12(1) is to get a declaration from the exporter that he has either brought or will bring back the amount representing the full export value of the goods exported.
There are other provisions in the Act to deal with other situations.
We shall presently refer to them.
If we are to hold that every declaration which does not state accurately the full export value of the goods exported is a contravention of the restrictions imposed by section 12(1) then all exports on consignment basis must be held to contravene the restrictions imposed by section 12(1).
Admittedly section 12(1) governs every type of export.
Again it is hard to believe that the legislature intended that any minor mistake in giving the full export value should be penalised in the magnet provided in section 23(A).
The wording of section 12(1) does not support such a conclusion.
Such a conclusion does not accord with the purpose of section 12(1).
It is true that the regulations contained in the Act are enacted in the economic and financial interest of this country.
The contravention of those regulations which we were told are widespread are affecting vital economic interest of this country.
Therefore the rigorous and sanctity of those regulations should be maintained but at the same time it should not be forgotten that section 12(1) is a penal section.
The true rule of construction of a section like section 12(1) is, if we may say so with respect, as mentioned by Plowman J. in Re H.P.C. Productions Ltd.(1) Therein the learned Judge observed: "I approach the question of the construction of the Exchange Control Act in the light of the principles stated by Upjohn J. in London and Country Commercial Properties Investment vs Attorney General(2) to which Mr. Bagnall referred.
In that case the court was concerned with the construction of the Borrowing (Control and Guarantees) Act, 1946 and the Control of Borrowing Order 1947.
Upjohn J. said: "The first question I have to consider is what are the principles of construction which I must adopt in construing this Act and this order .
I have to bear in mind that this is a penal statute.
It indeed, I suppose, represents the high water mark of the Parliamentary invasion of the traditional rights of the subjects of this realm.
" Then he went on (1) [1962] Ch.
Dn. 466 at 473 (2) & 753 to explain why that was so and continued: "in those circumstances what are the canons of construction to be adopted ? I do not propose to refer to the authorities at length.
I think that the proper approach to the construction of such a statute as this is that I must construe it as I would any other instrument, that is to say, I must look at all the surrounding circumstances, I must look at the mischief intended to be remedied, I must above all give effect to the words that have been used in the section.
That is plain from the decision in Dyke vs Elliot(1) see, in particular, the judgment of James L.J. but if on construing the relevant sections of the Act and the order there appears any reasonable doubt or ambiguity, then being a penal statute I must apply the principles laid down succinctly by Lord Esher in Tuck and sons vs Prester.
( 2 ) In London and North Eastern Rly.
Co. vs Berriman,(3) Lord Macmillan observed: "Where penalties for infringement are imposed it is not legitimate to stretch the language of a rule, however beneficent its intention, beyond the fair and ordinary meaning of its language." This Court in Tolaram Relumal and anr.
vs State of Bombay(4) speaking through Mahajan C.J. observed: "It is not competent to the Court to stretch the meaning of an expression used by the Legislature in order to carry out the intention of the Legislature." Hereinbefore we have examined the language of section 12(1) and its purpose.
We have also referred to the provisions which provide for the punishment of the contravention complained of in these cases.
Those provisions are adequate to meet the situation.
In our opinion the language of section 12(1) does not permit the acceptance of the interpretation placed on it by the appellants nor are we able to come to the conclusion that the legislature intended that the offences complained of in these proceedings should be made punishable under section 23(A).
If the interpretation sought to be placed by the appellants on section 12(1) is accepted it may result in unnecessary hardship in numerous cases.
There are two facets in every export, one relating to the goods exported and the other relating to the foreign exchange earned as a result of the export.
Broadly speaking the former aspect is dealt with by the customs authorities and the latter either by the (1) [1872] , 191.
(2) (3) at 295.
(4) ; at p. 164.
754 Reserve Bank or by the Director of Enforcement.
The price of the goods exported has to be mentioned in the invoice.
But the Reserve Bank has power to examine whether the price mentioned in the invoice is correct.
Section 12(5) provides that where in relation to any goods exported the value as stated in the invoice is less than the amount which in the opinion of the Reserve Bank represents the full export value of those goods, the Reserve Bank may issue an order requiring the person holding the shipping documents to retain possession thereof until such time as the exporter of the goods has made arrangements for the Reserve Bank or a person authorised by the Reserve Bank to receive on behalf of the exporter payment in the prescribed manner of an amount which represents in the opinion of the Reserve Bank the full export value of the goods.
Sub Section (6) of section 12 says that for the purpose of ensuring compliance with the provisions of that section and any orders or directions made thereunder, the Reserve Bank may require any person making any ,export of goods to which a notification under sub section
(1) applies to exhibit contracts with his foreign buyer or other evidence to show that the full amount payable by the said buyer in respect of the goods has been or will within the prescribed period be paid in the prescribed manner.
These provisions go to indicate that so far as the value of the goods exported is concerned the matter is left primarily in the hands of the Reserve Bank, and the Customs authorities are not burdened with that work.
This aspect becomes relevant in ascertaining the true scope of section 12(1).
If we bear in mind the scheme of the Act, it is clear that so far as the Customs authorities are concerned all that they have to see is that no goods are exported without furnishing the declaration prescribed under section 12(1).
Once that stage is passed the rest of the matter is left in the hands of the Reserve Bank and the Director of Enforcement.
In view of our above conclusion it is unnecessary for us to examine the other contention advanced on behalf of the parties.
In the result these appeals fail and they are dismissed with costs.
One hearing fee.
ORDER In accordance with the opinion of the majority, these appeals are dismissed with costs.
One hearing fee.
| IN-Abs | By a notification dated August 4. 1947 issued under section 12(1) of the ' Foreign Exchange Regulation.
Act, 1947 and the, Foreign Exchange Regulation Rules, 1952, and amended thereunder, the Central Government prohibited the export to countries mentioned in its Schedule.
of goods, except by post.
unless a declaration supported by such evidence as may be prescribed is furnished by the exporter to the prescribed authority that the amount representing the full export value of the goods has been paid or would be paid within the prescribed period.
In 1957, the respondents shipped goods after furnishing to the prescribed authority, namely, the Collector of Customs a declaration in the statutory form prescribed under the Foreign Exchange Regulation Rules, and the Collector of Customs passed the, goods for shipment.
In 1965, the Dy.
Collector of Customs issued a notice to the respondents calling upon them to show cause why a penalty under section 167(8) of the , should not be imposed, on the basis that the respondents under valued the goods deliberately, that they gave in the prescribed form false particulars supported by false evidence, that there was a failure to repatriate large amounts of foreign exchange contrary to the requirements of section 12(2) and r. 5, that section 12(1) of the Foreign Exchange Regulation Act and Rules required a declaration of the actual amount representing the full export value and a mere declaration of any value would not be sufficient compliance with the provisions, that under the circumstances by virtue of section 23 A of the Foreign Exchange Regulation Act, the exportation constituted an offence.
under section 167(8) of the .
the respondents thereupon.
filed a writ petition contending that the declaration to the Collector of Customs was sufficient compliance with the statutory provisions and that the Collector having passed the consignments for shipment, had no further jurisdiction to take proceedings against them.
A single Judge of the High Court dismissed the petitions, but on appeal, the Divisional Bench allowed the petitions.
In 'appeal to this Court.
HELD: Per Bachawat and Hegde, JJ.
On the facts set out in the show cause notice the respondents could not be held to have contravened section 12(1).
(1) The regulations contained in the Act are enacted in the economic and financial interest of the country.
Therefore, the rigour and sanctity of the regulations should be maintained but at the same time it should not be forgotten that section 12(1) is a penal section, and in interpreting it.
it is not competent to the Court to stretch its language in order to carry out the intention of the ' Legislature.
[752 E] 728 Tolaram Rehumal vs State of Bombay ; , 164, followed; Re.
H.P.C. Production Ltd. [1962] Ch.
Dn. 466, 473, ,red London & North Eastern Ry.
Co. vs Beriman, , 295, applied.
(2) Neither section 12(1) nor any other provision of the Act empowers the rule making authority to add to the restrictions imposed by the section, and for finding out the restrictions imposed by the section one can only look at that section.
The only restriction placed by section 12(1) read with the notification dated August 4, 1947 is that no one should export any goods from this country without furnishing the declaration mentioned in s.12(1).
The items of information called for in the prescribed form cannot be considered as restrictions imposed by section 12(1).
They are merely information called for the proper exercise of the powers under the Act.
In fact many of them do not relate to the restrictions imposed if the section.
[751 C F] (3) So far as goods sold to the foreign buyer are concerned it is possible for the exporter to know the, exact export value, but that would not be the position when the goods are sent on consignment basis, and, in such a case the: exporter can give only an estimated value.
If every declaration which does not state accurately the full export value of the goods exported is held to be, a contravention of section 12(1) then all exports on consignment basis must be held to contravene the restriction imposed by section 12(1), but, the Legislature could not have intended that minor mistakes in giving the full export value should be punished under section 23A.
Therefore, the declarations given in the present case do satisfy the requirements of section 12(1) though they did not correctly furnish all the information asked for in the form, and hence, there was no contravention of the section.
[751 H 752 D] (4) The main purpose of section 12(1) is to get a declaration from the exporter that he has either brought or will bring back the amount representing the full export value of the goods.
The scheme of the Act is that so far as customs authorities are concerned all that they have to see is that no goods are exported without furnishing the declaration prescribed under section 12(1).
Once that stage is passed the rest of the matter is left in the hands of the Reserve Bank and the Director of Enforcement under sections 12(5) and (6).
[752 B, 754 F] (5) Before a case can be held to fall within the scope of sections 23A and 167(8) of the , could be invoked, it must be shown that there has been a contravention of the restrictions imposed by section 12(1); but the language of section 12(1) does not permit the interpretation that the Legislature intended that the offences complained in these proceedings should be punishable under section 23A. The contravention complained of in this case are really contraventions of section 12(2) and r. 5 and they are punishable, the former, under section 23 and the latter.
under sections 22 and 23.
[751 B C, G] Per Sikri, J. dissenting.
On the facts alleged by the Customs authorities no case for the issue of a writ to the authorities had been made out.
(1) The Act was enacted in the interests of national economy.
Since a deliberate large.
scale contravention of its provisions would have serious effects, it should be construed so as to make it workable.
No subject can insist on an interpretation which will have the effect of sabotaging the national economy.
[739 H 740 A] 729 (2) As section 12(1) itself does not impose any restrictions and contemplates rules being made on: (a) evidence which is to support declaration; (b) authority to which the declaration is to be furnished; and (c) the manner of payment; the restrictions imposed by rules which are deferrable to the section must be treated as restrictions imposed by the section.
[740 H] Wellingdale vs Norris [1909] 1 K.B. '57, 64, Wicks vs Director of Public Prosecution, [1947] 1 All E.R. 205, 206, R. vs Wicks, , 53t and Rathbone vs Bumlock, , applied.
Dr. Indramani Payarelal Gupta vs W.R. Nathu, ; , 737, distinguished.
U.S.v.
George R. Eaton; , and Singer vs U.S. 89 L.Ed.258, 290.
referred to.
(3) Even in a case where the amount has not been received, there must be declaration of some actual figure, which, according to the declaration represents the 'full export value ' It may be an estimate if the goods have not been sold before the export, but a figure must be indicated.
The requirement of supporting evidence and r. 5(2)(ii) requiring the statement of the invoice value in the declaration indicate that an actual figure has to be mentioned.
SeCtion 12(1) and the notification impose a conditional prohibition an on exporter which he can lift by a unilateral declaration.
When such a power is conferred on an exporter by a statute good faith, on his part must be implied and is a condition prerequisite.
Section 22 provides that the declare shall not give any information which he knows or has reasonable cause to believe to be false or not true Clerical mistakes and mistakes made bona fide even in respect of material particulars would not come within the mischief of the section.
but a deliberate falsehood and deliberate evasion of the provisions of the section would be a contravention of section 12(1) for otherwise the ambit of the section read with section 23A would be narrowed to the point of extinction.
An exporter and persons concerned in the export, could with impunity give a deliberately false declaration but in apparent compliance with section 12(1) and deprive this country of foreign exchange.
There is no distinction, between an exporter and the persons concerned in the export when no declaration under section 12(1) is given at all and in a case where the exporter gives a deliberately false declaration for the purpose of the applicability of section 167(8) of the .
[1744 D 745 D] (4) Since the same contravention may attract penalties under the as well as the Foreign Exchange Act it will be incongruous to hold that the restrictions imposed by section 12(1) are different for the two acts.
[740 F G] The Mayor of Portsmouth vs Charles Smith, 10 A.C. 364, 371, applied.
(5) Section 23A of the Foreign Exchange, Act deems the restrictions imposed under section 12(1) to have been imposed under s, 19 of the , without prejudice to the provisions in section 23 dealing with penalty and procedure for contravention of the provisions of section 12 or any rule or direction or order made thereunder of Foreign Exchange Act and therefore, offenders who violate those restrictions could be proceed with both under the Foreign, Exchange Regulation Act as well as the .
It may be that action can be taken against an exporter under other sections of the Foreign Exchange ReguLation Act 730 or the , but that does not prevent action under section 23A read with section 12(1) with the aid of customs authorities, both against exporters and persons concerned in the prohibited export.
[745 E H]
|
Appeal No. 1464 of 1968.
Appeal ,from the judgment and order dated March 18, 1968 of the Patna High Court in C.W.J.C. No. 816 of 1967.
A. K. Sen, Bhola Sen, D. Parkar Gupta, Om Khetan, B.P. Maheshwari and R.K. Maheshwari, for the appellant.
M.C. Chagla and R.C. Prasad, for respondents Nos. 1 and 2.
M.C. Chagla, D.P. Singh, S.C. Agarwal, Uma Dutta and section Chakravarti, for respondent No. 5.
Sobhugmal Jain and Krishna Sen, for respondent Nos. 6 to 8.
The Judgment of the Court was delivered by Hegde, J.
This appeal by certificate arises from the decision rendered on 18th March 1968 by the Patna High Court in C.W.J.C. No. 816 of 1967.
That was a petition filed by the appellant under article 226 of the Constitution praying, inter alia, that the High Court may be pleased to quash the two orders made by the Cane Commissioner, Bihar on November 14, 1967 under which he excluded 99 villages from the area reserved by him in favour of the appellant under cl. 6 of the Sugar Cane (Control) Order 1966 (to be hereinafter referred to as the 'order ') and included those villages in the area reserved in favour of New Siwan Mill (5th respondent in this appeal).
The High Court dismissed that writ petition.
The appellant Co. was established in 1903.
Though its sugar mill is in U.P. it used to draw its sugarcane requirement mainly from the neighboring areas in Bihar State.
The mill in question is within about 100 yards of the Bihar border.
The appellant 's case is that for the last over 30 years the 208 villages of Bihar, with which we are concerned in this appeal had been the principal source of its supply of sugarcane and that the Bihar authorities used to reserve those villages for it.
The appellant claims to have spent huge amount in the development of sugarcane growing areas in the said 208 villages in the course of years.
It also claims to have advanced large sums to the sugarcane growers in the said villages, such sums to be adjusted later on against the price of the sugarcane purchased.
In 1955 the Central Govern 810 ment promulgated the 'order ' in exercise of its powers under the Essential Commodities Act.
One of the main purpose of that order was to regulate the supply and distribution of sugarcane.
Reservation of the said 208 villages in favour of the appellant continued under that order.
But in view of the agitation carried on by the 5th respondent and others, .during the two seasons 1962 63 and 1963 64 those villages were kept unreserved.
Hence any factory was free to make purchases in that area.
Even during that period the appellant continued to get its supplies from that area.
On February 3, 1964, there was a meeting of the Cane Commissioners of Bihar and U.P. with the object of deciding on a long term basis the question of allotting sugarcane grown in the border area among the sugar factories situated near the Bihar U.P. border.
In that meeting it was decided inter alia that the aforementioned 208 villages should be reserved in favour of the appellant; at the same time some of sugarcane growing areas in U.P. were reserved for some of the Bihar sugar mills.
Accordingly the Cane Commissioner of Bihar passed orders reserving the aforementioned 208 villages for the appellant for two seasons i.e. 1964 65 and 1965 66.
For the New Siwan mill (5th respondent) 100 more villages were reserved in Guthani area.
The representation of the New Siwan mill for reserving the 208 villages mentioned earlier was rejected by the Cane Commissioner.
The powers of the Central Government under cls.
6, 7, 8 and 9 of the 'order ' were delegated to the several States and the Cane Commissioners mentioned in the notification issued by the Central Government on July 16, 1966.
The State Government of Bihar and the Cane Commissioner of Bihar are amongst the authorities to whom the powers under those clauses were delegated.
By its order of November 4, 1966, the State Government of Bihar rejected the representation made by New Siwan mill by its application of February 17, 1966 asking for reservation of the 208 villages mentioned earlier.
Thereafter by his order of December 30, 1966, the Cane Commissioner Bihar reserved those villages for the appellant under el.
6(1)(a) of the 'order ' for two seasons (1966 67 and 1967 68).
The New Siwan mill challenged the validity of that order in C.W.J.C. No. 63 of 1967 in the Patna High Court.
The appellant filed its counter affidavit in that proceeding on March 21, 1967.
The application was heard in part on Aprii 13, 1967 and April 14, 1967 but thereafter the case was adjourned.
Later the appellant learnt that the 5th respondent had moved the Chief Minister of Bihar to revoke the reservation made in favour of the appellant.
Apprehending that the appellant 's interest may be jeopardised, one of the Directors of the appellant company wrote to the Chief Minister on June 15, 1967 praying that the reservation made in favour of the appellant should 811 not be disturbed.
Subsequent to that, the appellant made numerous other representations both to the Chief Minister as well as to the Cane Commissioner.
One of the Director of the appellant company met the Chief Minister as well as his Private Secretary.
Meanwhile the 5th respondent was also making representations, to the Chief Minister as well as to the Cane Commissioner.
From the records produced before us, it is clear that the Cane Commissioner was firmly of the opinion that there was no justification for disturbing the reservation made in favour of the appellant.
He strongly recommended to the Chief Minister against interfering with the said reservation.
According to him it was in the interest of the Sugar industry as well as that of the Sugar mills in Bihar not to disturb the agreement arrived at the meeting of the Sugar Cane Commissioners of U.P. and Bihar.
From the records.
produced before us it is seen that one of the grounds urged by the 5th respondent in support of his plea was that while it was a Bihar mill, the appellant was a U.P. mill and as such the Bihar villages should be reserved for its use.
From the note submitted by Shri Taring Sahai, an officer in the Cane Commissioner 's department, to the Assistant Cane Commissioner on July 5, 1967, it is seen that the Chief Minister was interesting himself ' in the controversy between the appellant, and ' the 5th respondent.
That is also clear from the note submitted by section Asanullah another officer in the same department to the Cane Commissioner ' on 7 7 1967.
It is unnecessary to refer to the correspondence that passed between the Cane Commissioner and the Chief Minister but one thing is clear from that correspondence that while the Cane Commissioner was firm in his opinion that the agreement entered into between him and his counter part in U.P. should be respected, the Chief Minister was inclined to alter the reservation made in favour of the appellant.
In the notes submitted by the Assistant Cane Commissioner to the Cane Commissioner we find the following statement: "As verbally ordered by the Cane Commissioner in the background of the above notes of the Assistant Cane Commissioner in connection with the discussions held with the Chief Minister the undersigned examined the geographical positions given in the map.
208 villages of Bihar are reserved for Pratabpur mill.
They are divided as follows: (a) Mirganj police station . 87 (b) Siwan police station . 106 (c) Darauli police station . 15 Total .
208 ", 812 In the note submitted by the Cane Commissioner to the Chic Minister on October 27, 1967, it is stated: "As per order, the above two suggestions (Ka and Kha) have been given for division of 208 villages between the New Siwan Mill and the Pratabpur Mill.
According to one (Ka) the New Siwan Mill gets 121 villages and according to the second proposal (Kha) it gets 99 villages.
As it is clear from the notes of the Assistant Cane Commissioner, the Chief Minister has ordered that most of these 208 villages may be given to the New Siwan Mill.
This order is carried out under proposal 'Kha ', but under it, about 20 22 such villages come as are at a distance of only 2 3 miles from the Pratabpur Mill and the farmers of those villages can also have some objection on account of it.
Hence only after obtaining a clear order from the Chief Minister, the necessary notification will be issued.
Sd/ Illegible 27 10.
" On November 7, 1967, the Chief Minister passed the following order on the above note.
"I agree with the notes as at Kha of page 33.
99 villages be left to the New Siwan Mill and 109 villages to the Pratabpur Mill.
None of the two mills will have the right to keep the weigh bridge of sugar cane collecting centre in the area of each other.
Sd/ Mahamaya Pd.
Sinha 7 11 67.
" On the basis of this direction the Cane Commissioner made the impugned orders on November 14, 1967, which were duly published in the Gazette.
In the High Court the validity of the order made by the Cane Commissioner on November 14, 1967 was challenged on six different grounds i.e. (1 ) that the Cane Commissioner had no jurisdiction to pass those orders; (2) in passing those orders, the Cane Commissioner practically abdicated his statutory functions and mechanically implemented the directions issued by the Chief Minister; (3) the orders are vitiated as the proceeding before the authority culminating in those orders was a quasi judicial proceeding and the authority had failed to afford a reasonable opportunity to the appellant to represent against the orders proposed to be made; (4) even if the proceeding in question should be 813 considered as an administrative proceeding as the orders made involve civil consequence and the proceeding having not been conducted consistently with the rules of natural justice, the impugned orders cannot be sustained; (5) those orders were passed mala fide and lastly (6) they are discriminatory against the petitioner and hence hit by article 14 of the Constitution.
The High Court rejected every one of the contentions.
It came to the conclusion that the Cane Commissioner who had the power to make reservations under cl. 6 of the 'order ' had also the power to modify Or cancel those reservations in view of section 21 of the General Clauses Act; the impugned orders were that of the Cane Commissioner both in fact as well as in law; the proceeding before the Cane Commissioner which resulted in making the impugned orders is a purely administrative proceeding; even if it is considered to be quasi judicial proceeding, reasonable opportunity had been given to the appellant to represent its case and in fact it had represented its case fully and effectively; the plea of mala fide is unsubstantiated and the orders in question did not contravene article 14 of the Constitution.
In this Court Shri A.K. Sen, learned Counsel for the appellant attacked the impugned order on the following grounds: (1) The orders in question though purported to have been made by the Cane Commissioner, were in fact not so; the Cane Commissioner merely acted as the mouth piece of the Chief Minister; in truth he had abdicated his statutory functions and therefore the orders are bad; (2) Every proceeding to modify any reservation made under cl.
6 of the 'order ' is a quasi judicial proceeding.
As the impugned modifications were made without affording the appellant reasonable opportunity for representing its case they are bad in law; (3) Even if the said proceeding is considered as an administrative proceeding, the impugned orders are liable to be set aside on the basis of the rule laid down by this Court in State of Orissa vs Dr. (Miss) Binapani Dei and Ors.
(1), and ( 4 ).
The impugned modifications contravene article 301 of the Constitution.
Shri Sen did not address any arguments on the last ground formulated by him.
Therefore we shall not deal with the same.
The contentions of Shri M.C. Chagla, learned Counsel for the State of Bihar as well as the 5th respondent were as follows: Though the Cane Commissioner had consulted the Chief Minister, the impugned orders were really made by the former, hence it cannot be said that he had abdicated his statutory func (1) ; 814 tions.
According to him, the proceeding before the Cane Commissioner was administrative in character and to such a proceeding rules of natural justice are not attracted.
He further urged that even if it is held that the said proceeding was a quasi judicial proceeding, there was no contravention of the principles of natural justice as the appellant had represented his case fully both before the Chief Minister as well as before the Cane Commissioner.
Before we proceed to examine the contentions advanced on behalf of the parties, it is necessary to refer to the relevant provisions of law.
Clause 5 of the 'order ' which deals with the power to regulation, distribution and movement of sugarcane reads as under: (1) The Central Government may, by order notified in the official gazette: (a) reserve any area where sugarcane is grown (hereinafter in this clause referred to as reserved area) for a factory having regard to the crushing capacity of the factory, the availability of sugarcane in the reserved area and the need for production of sugar, with a view to enabling the factory to purchase the quantity of sugarcane required by it; (b) determine the quantity of sugarcane which a factory will require for crushing during any year; (c) fix, with respect to any specified sugarcane grower or sugarcane growers generally in a reserved area, the quantity or percentage of sugarcane grown by such grower or growers, as the case may be, which each such grower by himself or, if he is a member of a co operative society of sugarcane growers operating in the reserved area, through such society; shall supply of the factory concerned; (d) direct a sugarcane grower or a sugarcane growers ' cooperative society supplying sugarcane to a factory, and the factory concerned to enter into an agreement to supply or purchase, as the case may be, the quantity of sugarcane fixed under paragraph (c); (e) direct that no gur (jaggery) or khandsari sugar or sugar shall be manufactured from sugarcane except under and in accordance with the conditions specified in the licence issued in this behalf; (f) prohibit or restrict or otherwise regulate the export of sugarcane from any area (including a reserved 815 area) except under and in accordance with a permit issued in this behalf.
(2) Every sugarcane grower, sugarcane growers ' co operative society and factory, to whom or to which an order made under paragraph (c) of sub clause (1) applies, shall be bound to supply or purchase, as the case may be, that quantity of sugarcane covered by the agreement entered into under the paragraph and any wailful failure on the part of the sugarcane growers ' cooperative society or the factory to do so, shall constitute a breach of the provisions of this Order: Provided that where the default committed by any sugarcane growers ' co operative society is due to any failure on the part of any sugarcane grower, being a member of such society such society shall not be bound to make supplies of sugarcane to the factory to the extent of such default.
Clause (11 ) deals with delegation of powers.
It reads: "The Central Government may, by notification in the Official Gazette, direct that all or any of the powers conferred upon it by this Order shall, subject to such restrictions, exceptions and conditions, if any, as may be specified in the direction, be exercisable also by: (a) any officer or authority of the Central Government; (b) a State Government or any officer or authority of a State Government." As seen earlier, the Central Government had delegated its power under cl.
(6) to the State Government of Bihar as well as to the Cane Commissioner, Bihar.
In the matter of exercise of the power under rule 6(1) the State Government and the Cane Commissioner are concurrent authorities.
Their jurisdiction is co ordinate.
There was some controversy before us whether a Cane Commissioner who had reserved an area for a sugar factory for a particular period can alter, amend, or modify the area reserved in the middle of the period fixed.
As seen earlier 208 villages With which we are concerned in this case were reserved for the appellant for two seasons i.e. 1966 67 and 1967 68.
The contention was that the Cane Commissioner could not have interfered with that reservation within that period.
The High Court has come to the conclusion that the Cane Commissioner who had the power to make the reservation in question must be held to have had the power to alter or modify that reservation.
But it is not necessary for us to pronounce on this question as we are of the opinion that the 816 impugned orders though purported to have been made by the Cane Commissioner were in fact made by the Chief Minister and hence they are invalid.
We have earlier seen that the Cane Commissioner was definitely of the view that the reservation made in favour of the appellant should not be disturbed but the Chief Minister did not agree with that view.
It is clear from the documents before us that the Chief Minister directed the Cane Commissioner to divide the reserved area into two portions and allot one portion to the 5th respondent.
In pursuance of that direction, the Cane Commissioner prepared two lists 'Ka ' and 'Kha".
Under the orders of the Chief Minister, the villages contained in list 'Ka ' were allotted to the appellant and in list 'Kha ' to the 5th respondent.
The Cane Commissioner merely carried out the orders of the Chief Minister.
It is true that the impugned orders were issued in the name of the Cane Commissioner.
He merely obeyed the directions issued to him by the Chief Minister.
We are unable to agree with the contention of Shri Chagla that though the Cane Commissioner was initially of the view that the reservation made in favour of the appellant should not be disturbed, he changed his opinion after discussion with the Chief Minister.
From the material before us, the only conclusion possible is that the Chief Minister imposed his opinion on the Cane Commissioner.
The power exercisable by the Cane Commissioner under cl.
6(1) is a statutory power.
He alone could have exercised that power.
While exercising that power he cannot abdicate his responsibility in favour of anyone not even in favour of the State Government or the Chief Minister.
It was not proper for the Chief Minister to have interfered with the functions of the Cane Commissioner.
In this case what has happened is that the power of the Cane Commissioner has been exercised by the Chief Minister, an authority not recognised by cl.
(6) read with cl.
(11) but the responsibility for making those orders was asked to be taken by the Cane Commissioner.
The executive officers entrusted with statutory discretions may in some cases be obliged to take into account considerations of public policy and in some context the policy of a Minister or the Government as a whole when it is a relevant factor in weighing the policy but this will not absolve them from their duty to exercise their personal judgment in individual cases unless explicit statutory provision has been made for them to be given binding instructions by a superior.
In Commissioner of Police, Bombay vs Gordhandas Bhanji(1) this Court struck down the order purported to have been passed by the Commissioner of Police in the exercise of his powers (1) ; 817 under the Bombay Police Act and the rules made thereunder as the order in question was in fact that of the Government.
The rule laid down in that decision governs the question under consideratiing.
This Court reiterated that rule in State of Punjab vs Hari Kishan Sharma(1).
Therein this Court held that the State Government was not justified in assuming jurisdiction which had been conferred on the licensing authority by section 5 (1 ) and (2) of the Punjab Cinemas (Regulation) Act.
For the reasons mentioned above we hold that the impugned orders are liable to be struck down as they were not made by the prescribed authority.
This takes us to the question whether the proceeding which resulted in making the impugned orders is a quasi judicial proceeding or an administrative proceeding.
There was some controversy before us whether a proceeding under el.
6(1) of the 'order ' is a quasi judicial proceeding.
It is not necessary for us to decide that question as in this case we are only concerned with the proceeding which resulted in making the impugned orders.
In that proceeding the only question before the authorities was whether all or some of the villages reserved for the appellant should be taken out from the reserved area and reserved for the 5th respondent.
The plea of the 5th respondent was that all those villages should be reserved for it whereas the appellant insisted that the reservation made in its favour should not be disturbed.
Whether there was a lis between the appellant and the 5th respondent at an earlier stage or not, we are of the opinion, as soon as the 5th respondent moved the Government for altering or modifying the reservation made in favour of the appellant, a lis commenced.
The dispute that arose between the appellant and the 5th respondent had to be decided on the basis of the objective criteria, prescribed by cl. 6 of the 'order ' i.e. (1) the crushing capacity of the appellant mill; (2) the availability of the sugarcane in the reserved area and (3) the need for the production of sugar.
There is hardly any doubt that the modification of the reservation made in favour of the appellant would have had serious repercussions on the working of the appellant 's mill.
It was bound to affect its interests adversely.
Hence it is not possible to accept the conclusion of the High Court that the proceeding before the Cane; Commissioner was not a quasi judicial proceeding.
The impugned orders are similar to orders revoking or modifying licenses.
It would not be proper to equate an order revoking or modifying a licence with a decision not to grant a licence.
Therefore Shri Chagla is not right in his contention that (1) ; 818 in this case we are called upon to deal with a privilege and not right.
As observed by S.A. De Smith in his Judicial Review Administrative Action (2nd Edn.) at p. 211: "To equate a decision summarily to revoke a licence with a decision not to grant a licence in the first instance may be still more unrealistic.
Here the "privilege" concept may be peculiarly inapposite; and its aptness has not been enhanced by the manner in which it has been employed in some modern cases.
It is submitted that the courts should adopt a presumption that prior notice and opportunity to be heard should be given before a licence can be revoked.
The presumption should be rebuttable in similar circumstances to those in which summary interference with vested property rights may be permissible.
That the considerations applicable to the revocation of licences may be different from those applicable to the refusal of licences has indeed been recognised by some British statutes and a number of judicial decisions in other Commonwealth jurisdictions.
" In Province of Bombay vs Kusaldas section Advani and Ors.(1) Das, J. formulated the following tests to find out whether proceeding before an authority or a tribunal . 'is a quasi judicial proceeding : (i) that if a statute empowers an authority, not being a Court in the ordinary sense, to decide disputes arising out of a claim made by one party under the statute which claim is opposed by another party and to determine the respective rights of the contesting parties who are opposed to each other, there is a lis and prima facie and in the absence of anything in the statute to the contrary it is the duty of the authority to act judicially and the decision of the authority is a quasi judicial act; , 'red (ii) that if a statutory authority has power to do any act which will prejudicially affect the subject, then although there are not two parties apart from the authority and the contest is between the authority proposing to do the act and the subject opposing it, the final determination of the authority will yet be a quasi judicial act provided the authority is required by the statute to act judicially.
These tests were adopted by this Court in Shivji Nathubhai vs The Union of India and Ors.(2).
Therein this Court was (1) ; at p. 725.
(2) ; 819 considering the validity of cancellation in review by the Central Government a mining lease granted by the State Government.
In that context this Court held that even if the act of the State Government in granting a mining lease was an administrative act, it was not correct to say that no right of any kind passed to the lessee until the review was decided by the Central Government where a review had been applied for.
Rule 52 of the rules framed under the Mines and Minerals (Regulation and Development) Act, No. 53 of 1941 which gives the aggrieved party the right to a review created a lis between him and the lessee and, consequently, in the absence of anything to the contrary either in rule 54 or the statute itself there could be no doubt that the Central Government is required to act judicially under rule 54.
This Court in Board of High School and Intermediate Education U.P, Allahabad vs Ghanshyam Das Gupta and Ors.(1) held that where the statute in question is silent as to the manner in which the power conferred should be exercised by the authority acting under it, the exercise of power will depend on the express provisions of the statute read alongwith the nature of the rights affected, the manner of disposal provided, the objective criteria, if any, to be adopted, the effect of the decision on the persons affected and other indicate afforded by the statute.
The mere fact that the Act in question or the relevant Regulations do not make it obligatory on the authority to call for an explanation and to hear the person concerned is not conclusive on the question whet her the authority has to act as a quasi judicial body when exercising its power under the statute.
On applying the various tests enunciated in the above decisions, there is hardly any doubt that the proceeding before the Cane Commissioner was a quasi judicial proceeding.
In this connection reference may be usefully made to the decision of the Court of Appeal of New Zealand in New Zealand Dairy Board vs Okitu Co operative Dairy Co., Ltd.(2).
We are referring to that decision because the facts of that case bear a close resemblance to the facts of the present case.
Therein as a result of a Zoning Order made by the Executive Commissioner of Agriculture in May 1937, the respondent dairy company, carrying on business in Gisborne and the surrounding district, and the Kia Ora Co operative Dairy Co. Ltd. became entitled to operate exclusively in a defined area in the Gisborne district.
They were excluded from operating outside that area.
The zoning conditions so established continued to exist until 1950, when the appellant Board issued the zoning orders which were impugned in that case.
It may be noted that the zoning orders were made in the exercise of the statutory power conferred on the appellant board.
[1962] Supp. 3 S.C.R. 36.
(1953) New Zealand Law Reports p. 366.
820 Before 1942, the respondent Co. was approached by the Health Department with a request that it undertakes the treatment and supply of pasteurised milk to the public ' schools, and it was informed that other dairy companies had declined the proposal.
the company complied with the request, after overcoming the difficulties of finance.
The scheme was put into operation.
In 1942 the respondent company put up a treatment plant and expanded its business.
This expansion resulted in an annual turnover in the company 's milk department going upto about A 90,000 as against pound 43,000 in its butter department.
In March, 1950, the Kia era company, by letter, expressed its desire that the appellant Board (which had been substituted by regulation for the Executive Commission) should examine the question of cream and milk supplies in the Gisborne and surrounding districts.
This letter was, in substance, an application to the Board to review the whole question of zoning and to require the respondent company to cease the manufacture of butter.
Moreover the letter set out the circumstances in a manner prejudicial to the respondent company.
After various meetings and negotiations between the appellant Board, companies concerned, and interested parties, at none of which were the contents of the Kia Ora company 's letter to the Board disclosed to the respondent company, no agreement was reached.
The result of discussions with the Kia Ora company and detailed replies to complaints were given to the Board by the respondent company, and its letter ended with a statement to the effect that it would appreciate the privilege of appearing before the full Board with the object of stating its case more fully or of answering any questions.
The Board ignored this specific request.
At a full meeting of the Board held on May 31, 1950, the Board decided that only one butter factory should operate in the Gisborne district.
On August 3, the Board by resolution, decided to give notice of its intention of issuing a zonal order to operate as from October 1, 1950 assigning to the Kia Ora company the cream collection area over which the two companies then operated.
On August 29, the respondent company wrote to the Board protecting against its proposal and asking for recession of the Board 's resolution and ,for an opportunity of being heard.
On September 2, 1950, the appellant Board in exercise of the power conferred upon it by Regulation 716 of the Dairy Factory Supply Regulations, 1936 and in terms of its resolution of August 3, 1950, made Zoning Order No./20 which was the subject of the proceedings before the Supreme Court of New Zealand.
That order was to come into force on October 1, 1950.
Its effect was to assign exclusively to the Kia Ora Co. the area defined in Zoning Order (No. 30) of 1937 as that in which the two companies could jointly collect cream produced in supplying dairies situated in that area, and ' to prohibit the res 821 pondent dairy company after October 1, 1950 from collecting or receiving any cream so produced for the purposes of manufacture into cream or butter.
The respondent company and others presented a petition to the Parliament praying for relief and remedy by way of legislation either in the direction of reversing and setting aside the Board 's decision in the matter of the zoning order or setting aside such decision and rehearing of the matter by an independent tribunal.
The petition was heard by a select Committee of the House of Representatives, which decided to make no recommendation on the petition.
On August 4, the Board made an amended Zoning Order (No. 120A) postponing until June 1, 1951, the date of the coming into operation of Zoning Order No. 120 already made, but otherwise confirming that order.
The respondent company commenced an action against the Board claiming (a) a declaration that Zoning Orders Nos. 120 and 120A issued by the Board were invalidly passed and were of no legal effect; (b) an order of certiorari to remove into the Supreme Court and quash the zoning orders; and (c) an injunction restraining the Board from carrying out its intention of promulgating the zoning orders or from proceeding further or exercising any jurisdiction in accordance with the same.
The action was heard by Mr. Justice Hay, who found that, in the conduct of the inquiry instituted by the Board, following the application made to it by the Kia Ora Company, there was, in the various respects mentioned in the judgment, a departure from those principles of natural justice which were incumbent on the Board; and in particular, the plaintiff company was denied a hearing on the crucial issue as to whether or not a zoning order should be made.
The learned Judge held that the plaintiff company was entitled to succeed in the action in respect of all the reliefs it claimed and he gave the judgment in its favour with costs against the Board.
The Court of Appeal affirmed by majority the judgment of the learned trial judge.
The Court held that the New Zealand Dairy Board in making its zoning order No. 120 on September 1, 1950 was determining a question affecting the rights of the respondent company and further that the order of the Board was that of a body that was, at least primarily, an administrative body and the question whether such a body was under a duty to act judicially in the course of arriving at an administrative decision was to be determined on the true construction of the authorising legislative provisions and the conditions and circumstances under which, and in which, the jurisdiction fell to be exercised.
It held that on the facts and circumstances of the case the power exercised by the Board vitiated as the Board had failed to conform to the principles of natural justice in making the zoning order in question and hence the same is unsustainable.
The decision 822 Of the Privy Council in James Edward Jeffs and Ors.
vs New Zealand Dairy Production and Marketing Board and Ors.
(1) proceeded on the basis that the aforementioned decision of the Court of Appeal is correct.
Shri Chagla contended that even if we are to hold that the power exercised by the authorities in making the impugned orders had to be exercised judicially, on the facts of his case we must hold that there was no contravention of the principles of natural justice.
He took us to the various representations made by the appellant.
According to him the appellant had stated in its representations to the authorities all that it could have said on the subject.
Therefore we should not hold that there was any contravention of the principles of natural justice.
It is true as observed by this Court in Suresh Koshy George vs The University Kerala and Ors.(2) that "the rules of natural justice are not embodied rules.
The question whether the requirements of natural justice have been met by the procedure adopted in a given case must depend to a great extent on the facts and circumstances of the case in point, the constitution of the tribunal and the rules under which it functions.
" In this case what has happened is that both the appellant as welt as the 5th respondent were making repeated representations to the Chief Minister as well as to the Cane Commissioner.
The representations made by the 5th respondent or even the substance thereof were not made available to the appellant.
The proposal to split the reserved area into two or the manner in which it was proposed to be split was not made known to the appellant and his objections invited in that regard.
The appellant complains that the manner in which the area had been divided had caused great prejudice to it.
Its grievance may or may not be true but the fact remains that it had no opportunity to represent against the same.
Hence the appellant is justified in complaining that the principles of natural justice had been contravened.
In view of our finding that the proceeding which resulted in the making of the impugned orders was a quasi~judicial proceeding, it is unnecessary to decide whether the impugned orders could have been validly made in an administrative proceeding.
We see no merit in the contention advanced on behalf of the 5th respondent that the Cane Commissioner was not competent to reserve the area in question for the appellant as its mill is in U.P.
The reserved area is in Bihar.
The Cane Commissioner of Bihar had power to reserve that area for any sugar mill whether situated in Bihar or not.
[1967] A.C. 551.
(2) ; 823 The contention of Shri Chagla that as no orders had yet been passed under cls.
6(c) and (d) of the 'order ' the ,appellant cannot be considered as an aggrieved party is not correct.
As soon as a portion of the area reserved for the appellant was ordered to be taken away and added to the reserved area of the 5th respondent, the appellant 's interest was adversely affected.
Therefore it is immaterial for the appellant what orders are passed under sub cls.
(c) and (d) of el.
6 of the 'order ', because it can no more get any sugarcane from the area in question.
What hurts the appellant is the impugned orders and not the further orders that may be passed.
For the reasons mentioned above this appeal is allowed and the orders impugned quashed.
The State of Bihar as well as the 5th respondent shall pay the costs of the appellant both in this.
Court as well as in the High Court.
G.C. Appeal allowed.
| IN-Abs | The Sugar Cane (Control) Order, 1955 was promulgated by the Central Government in the exercise of its powers under the Essential Supplies Act.
Under cl. 6 of the Order the Central Government could reserve any area where sugarcane was grown for a factory taking into account various relevant 'factors.
Clause 11 allowed the Central Government to delegate its power under el. 6, and the Central Government by a notification dated July 16, 1966 delegated the said power to the several State Governments and the Cane Commissioners of those States.
The appellant was a sugar mill situated in U.P. near the border of Bihar State.
For a long time its source of supply of sugarcane had been the neighboring area of Bihar State consisting of 208 villages.
For the seasons 1966 67 and 1967 68 the 5th respondent a sugar mill situate on the Bihar side of the order sought to have the area reserved for itself but by order dated November 30, 1966 the request was rejected by the State Government.
In December 1966 the Cane Commissioner, Bihar passed an order under el.
6(1) of the Sugar Cane (Control) Order reserving the said area of 208 villages for the appellant for the seasons 1966 67 and 1967 68.
The 5th resportdent made representations to the Chief Minister.
Acting on directions given by the Chief Minister the Cane Commissioner, Bihar passed orders on November 14, 1967, whereby by a notification in the Bihar Government Gazette 121 of the aforesaid villages were reserved for the appellant and 99 villages for the 5th respondent.
The appellant filed a writ petition in the High Court challenging this order of the Cane Commissioner but the petition was rejected.
With certificate appeal was filed in this Court.
The contentions urged on behalf of the appellant were: (i) The orders in question though purported to have been made by the Cane Commissioner were in fact not so, and were therefore invalid; (ii) Every proceeding to modify any reservation under cl. 6 is a quasi judicial proceeding.
As the impugned notifications were made without affording the appellant reasonable opportunity for representing its case they were bad in law; (iii) Even if the said proceeding was considered an administrative proceeding the impugned orders were liable to be set aside on the basis of the rule laid down by this Court in State of Orissa vs Dr. (Miss) Binapani Dei, ; HELD: (i) From the material on record the only conclusion possible was that the Chief Minister imposed his opinion on the Cane Commissioner.
The power exercisable by the Cane Commissioner under cl.
6(1) is a statutory power.
He alone could have exercised that power.
While exercising that power he cannot abdicate his responsibility in favour of anyone not even in favour of the State Government or the Chief Minister.
It was not proper for the Chief Minister to have interfered with the 808 functions of the Cane Commissioner.
In this case what had happened was that the power of the Cane Commissioner had been exercised by the Chief Minister, an authority not recognised by el.
(6) read with cl.
(11) but the responsibility for making those orders was asked to be taken by the Cane Commissioner.
The executive officers entrusted with statutory discretions may in some cases be obliged to take into account considerations of public policy and to some context the policy of a Minister or the Government as a whole when it is a relevant factor in weighing the policy but this will not absolve .
them from their duty to exercise their personal judgment in individual cases unless explicit statutory provision has been made for them to be given binding instructions by a superior.
[816] Commissioner of Police, Bombay vs Gordhandas Bhanji, ; and State of Punjab vs Hari Kishan Sharma, A.I R. , applied.
(ii) As soon as the 5th respondent moved the Government for altering or modifying the reservation made in favour of the appellant, a lis commenced.
The dispute that arose between the appellant and the 5th respondent had to be decided on the basis of the objective criteria, prescribed by el. 6 of the order i.e. (1 ) the crushing capacity of the appellant mill; (2) the availability of the sugarcane in the reserved area and (3) the need for the production of sugar.
There could hardly be any doubt that the modification of the reservation made in favour of the appellant would have had serious repercussions on the working of the appellant 's mill.
It was bound to affect its interests adversely.
Hence it was not possible to accept the conclusion of the High Court that the proceeding before the Cane Commissioner was not a quasi judicial proceeding.
[817 E H] Province of Bombay vs Kusaldas section Advani & Ors., ; at p. 725, Shivji Nathubhai vs The Union of India, ; , Board of High School and Intermediate Education U.P. Allahabad vs Ghanshyam Das Gupta & Ors., [1962] 3 Supp.
S.C.R. 36.
New Zealand Dairy Board vs Okitu Co operative Dairy Co. Ltd., (1953) New Zealand Law Reports.
p. 366, and James Edward Jeffs & Ors.
vs New Zealand Dairy Production & Marketing Board & Ors., [1967] A.C.p. 551, referred tO. (iii) In the present case both the appellant and the 5th respondent were making repeated representations to the Chief Minister as well as to the Cane Commissioner.
The representations made by the 5th respondent or even the substance thereof were not made available to the appellant.
The proposal to split the reserved area into two or the manner in which it was proposed to be split was not made known to the appellant and his objection invited in that regard.
It had no opportunity to represent against the same.
Hence the appellant was justified in complaining that the principles of natural justice had been contravened.
[822 D F] Suresh Koshy George vs The University of Kerala & Ors., ; , referred to.
(iv) The appellant 's interest was adversely affected by the impugned order and the contention of the respondent that as no orders had been passed under cls.
6(c) and (d) of the 'order ' the appellant could not be considered as an aggrieved party.
was not correct.
[823 A] 809 [The Court did not consider it necessary to decide the questions (a) whether the impugned orders could have been validly made in an administrative proceeding, (b) whether the Cane Commissioner who. had the power to make the reservation in question also had the power to alter or modify that reservation]
|
Appeals Nos. 2251 and 2252 of 1968.
Appeals by special leave from the judgment 'and order dated ' October 9, 1968 of the Madras High Court in O.S.A. Nos. 26 and 27 of 1968 and Civil Appeals Nos. 2305 and 2306 of 1968.
Appeals by special leave from the judgment and order dated April 12, 1968 of the Madras High Court in Applications Nos. 1760 and 2455 of 1967 in C.S. No. 118 of 1967.
M.C. Setalvad, V.P. Raman, D.N. Mishra and 1.
B. Dadachanji for the appellant (in C.As.
Nos. 2251 and 2252 of 1968) and respondent No. 1 (in C.As. 2305 and 2306 of 1968).
section Mohan Kumaramangalam, M.K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for respondent No. 1 (in C.As.
Nos. 2251 and 2252 of 1968) and the appellant (in C.As. 2305 and 2306 of 1968).
Rameshwar Nath and Mahinder Narain, for respondent No. 2 (in all the appeals).
The Judgment of the Court was delivered by Hegde, J.
These are connected appeals.
They arise from Civil Suit No. 118 of 1967 on the original side of the High Court of Judicature at Madras.
Herein the essential facts are few and simple though the question of law that arises for decision is of considerable importance.
The suit has been brought by M/s. Tarapore & Co., Madras (hereinafter referred to as the "Indian Firm").
That firm had taken up on contract the work of excavation of a canal as a part the Farakka Barrage Project.
In that connection they entered into a contract with M/s. V/O Tractors Export, Moscow (which 922 will hereinafter be referred to as the "Russian Firm") for the supply of construction machinery such as Scrapers and Bulldozers.
In pursuance of that contract, the Indian Firm opened a confirmed, irrevocable and divisible letter of credit with the Bank of India, Limited for the entire value of the equipment i.e., Rs. 66,09,372 in favour of the Russian Firm negotiable through the Bank for Foreign Trade of the U.S.S.R., Moscow.
Under the said letter of credit the Bank of India was required to pay to the Russian Firm on production of the documents particularised in the letter of credit alongwith the drafts.
One of the conditions of the letter of credit was that 25 per cent of the amount should be paid on the presentation of the specified documents and the balance of 75 per cent to be paid one year from the date of the first payment.
The agreement entered into between the Bank of India and the Russian Firm under the letter of credit was "subject to the Uniform Customs and Practice for Documentary Credits (1962 Revision), International Chamber of Commerce Brochure No. 222".
Article 3 of the brochure says that: " 'An irrevocable credit is a definite undertaking on the part of an issuing bank and constitutes the engagement of that bank to the beneficiary or, as the case may be, to the beneficiary and bona fide holders of drafts drawn and/or documents presented thereunder, that the provisions for payment, acceptance or negotiation contained in the credit will be duly fulfilled, provided that all the terms and conditions of the credit are complied with.
An irrevocable credit may be advised to a beneficiary through another bank without engagement on the part of that other bank (the advising bank), but when an issuing bank authorises another bank to confirm its irrevocable credit and the latter does so, such confirmation constitutes a definite undertaking on the part of the confirming bank either that the provisions for payment or acceptance will be duly fulfilled or, in the case of a credit available by negotiation of drafts, that the confirming bank will negotiate drafts without recourse to drawer.
Such undertakings can neither be modified nor cancelled without the agreement of all concerned.
" Article 8 of the brochure says: "In the documentary credit operations all parties concerned deal in documents and not in goods.
923 Payment, acceptance or negotiation against documents which appear on their face to be in accordance with the terms and conditions of a credit by a bank authorised to do so, binds the party giving the authorisation to take up the documents and reimburse the bank which has effected the payment, acceptance or negotiation . " The only other Article in that brochure which is relevant for our present purpose is article 9 which reads: "Banks assume no liability or responsibility for the form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents, or for the general and/or particular conditions stipulated in the documents or superimposed thereon; nor do they assume any liability or responsibility for the description, quantity, weight, quality, condition, packing, delivery, value or existence of the goods represented thereby, or for the good faith or acts and/or omissions, solvency, performance or standing of the consignor, the carriers or the insurers of the goods or any other person whomsoever.
" On the strength of the aforementioned.
contract, the Russian Firm supplied all the machinery it undertook to supply, by about the end of December 1965, which were duly taken possession of by the Indian Firm and put to work at Farakka Barrage Project.
They are still in the possession of the Indian Firm.
After the machinery was used for sometime, the Indian Firm complained to the Russian Firm that the performance of the machinery supplied by it was not as efficient as represented at the time of entering into the contract and consequently it had incurred and continues to incur considerable loss.
In that connection there was some correspondence between the Indian Firm and the Russian Firm.
Thereafter the Indian Firm instituted a suit on the original side of the High Court of Madras seeking an injunction restraining the Russian Firm from realizing the amount payable under the letter of credit.
During the pendency of that suit the parties arrived at an agreement on August 14, 1966 at Delhi (which shah be hereinafter referred to as the Delhi agreement).
The portion of that agreement which is relevant for our present purpose reads as follows: "Tarapore & Co., Madras, agree to withdraw immediately the court case filed by them against 'Tractoro export ' Moscow, in the Madras High Court.
Immediately on Tarapore withdrawing the case, V/O 'Tractoro export ' agree to instruct the Bank for 924 Foreign Trade of the USSR in Moscow, not to demand any further payment against L.C. established by Tarapore & Co., Madras, for a period of six months from the due dates in the first instance.
During this period both the parties shall do theft best to reach an amicable settlement.
In case the settlement between the two parties is not completed within this period of six months V/O Tractors export shall further extend the period of payment by further period of six months for the settlement to be completed.
Tarapore & Co. (shall authorise their Bank to keep the unpaid portions L.C. valid for the extended period as stated above.
" At this stage it may be mentioned that the Russian Firm had received from the Bank of India 25 per cent of the money payable under the letter of credit very soon after it supplied to the Indian Firm the machinery mentioned earlier.
In pursuance of the aforementioned agreement the Indian Firm withdrew the suit.
Thereafter there were attempts to settle the dispute.
In the meantime the Indian Rupee was devalued.
The contract between the Indian Firm and the Russian Firm contains the following term: "Payment for the delivered goods shall be made by the Buyers in Indian Rupee in accordance with the Trade Agreement between the USSR and India dated.
10th June, 1963.
All the prices are stated in Indian Rupees.
One Indian Rupee is equal to 0.186621 grammes of pure gold.
If the above gold content of Indian Rupee is changed the, prices and the amount of this Contract in Indian Rupee shall be revalued accordingly on the date of changing the gold parity of the Indian Rupee.
" This clause will be hereinafter referred to as the 'Gold Clause '.
In view of that clause, the price fixed for machinery supplied stood revised.
Consequently under the contract the Indian Firm had to pay to the Russian Firm an additional sum of about rupees twenty six lacs.
Accordingly the bankers of the Russian Firm called upon the Indian Firm to open an additional letter of credit for payment of the extra price payable under the contract.
They also intimated the Indian Firm that the extension of time for the payment of the price of the machinery supplied, agreed to at Delhi will be given effect to only after the Indian Firm arranges for the additional letter of credit asked for.
The Indian Firm objected to this demand as per its letter of 20th September, 1966.
The relevant portion of that letter reads: 925 "We are rather surprised to see this, because, by our arrangement dated the 14th Aug., 1966, at New Delhi you had agreed to give further time for the payments on the withdrawal of the Madras High Court case.
That was the only condition that was talked about and incorporated in our written agreement.
If you will be good enough to refer to the agreement dated the 14th Aug., 196 '6, you will find that we were obliged to withdraw the Madras suit pending talks of settlement and immediately on our withdrawing this suit, you agreed to instruct your Bankers not to demand any further payment under the letter of credit.
There is absolutely no reference in that agreement to our having to open any additional letter of credit in view of the devaluation of the Indian rupee . .
We would therefore request you to immediately instruct your Bankers in Moscow.
to advise our Bankers regarding the extension of time for payment under the letter of credit without any reference to any additional letters of credit in view of devaluation . .
Moreover, when the entire question is open for amicable settlement between us, it is not possible to determine what exactly will be the amount payable and unless that amount is known, it is not possible to open additional letters of credit to give effect to the gold clause . . " On November 1, 1966, the Russian Firm sent to the Indian Firm addendum No. 1 modifying the original contract in accordance with the gold clause.
The last clause of that addendum recited that "all ,other terms and conditions are as stated in the above mentioned contract" (original contract).
The Indian Firm objected to that addendum as well as to the demand for opening an additional letter of credit.
In that connection the Russian Firm wrote a letter to the Indian Firm on November 29, 1966.
As considerable arguments were advanced on the basis of that letter, we shall quote the relevant portion of that letter : " .
We confirm that you have signed with us the addendum No. 1 to our Contract No. 61/Tarapore 220/65 dated the 2nd Feb., 1965, at our request for the sole and specific purpose of satisfying our bankers.
We confirm further that this addendum will not in any manner prejudice the arrangement we have come to in Delhi on the 14th August, 1966, and is without prejudice to your claims and points of controversy regarding which we shall have further discussions with a view to reach an amicable settlement.
926 Under this addendum, the company will extend the letter of credit for one year and accept the drafts for the difference in value of 57.5 per cent due to devaluation.
The final amount payable will be in accordance with the settlement.
" Thereafter the Russian Firm appears to have drawn drafts on the Indian Firm for the excess amount payable under the gold clause.
For one reason or the other, no settlement as contemplated by the Delhi agreement was reached.
The Indian Firm complained that the Russian Firm never made any serious attempt to resolve the dispute whereas the Russian Firm alleged that it found no substance in the complaint made by the Indian Firm as regards the machinery supplied.
In the suit as brought, as well as in these appeals that controversy is not open for examination.
Suffice it to say that the parties did not amicably settle the dispute in question.
When the extended time granted under the Delhi agreement was about to come to a close, the Indian Firm instituted the suit from which these appeals have arisen.
In that suit the only substantive relief asked for is that the Bank of India as well as the Russian Firm ' should be restrained from taking any further steps in pursuance of the letter of credit opened by the Indian Firm in favour of the Russian Firm.
Therein temporary injunctions were asked for in the very terms in which the permanent injunctions were prayed for.
At a subsequent stage a further injunction restraining the Russian Firm from enforcing its right under the gold clause was also prayed for.
The Russian Firm opposed those applications but the trial judge granted the temporary injunctions asked for.
The Russian Firm took up the matter in appeal to the Appellate Bench of that High Court which reversed the order of the trial judge by its Order dated October 9, 1968 but it certified that they are fit cases for appeal to this Court.
When the applications in the appeals seeking interim orders came up for consideration by this Court the Russian Firm entered its caveat.
It not only opposed the interim reliefs prayed for, it further challenged the validity of the certificates granted by the High Court on the ground that the orders appealed against are not final orders within the meaning of article 133 of the Constitution.
Evidently as a matter of abundant caution, the Indian Firm had filed two separate applications seeking special leave to appeal against the orders of the Appellate Bench of the Madras High Court.
After hearing the parties this Court revoked the certificates granted holding that the orders appealed against are not final orders but at the same time granted special leave to the Indian Firm to appeal against the orders of the Madras High Court.
Civil Appeals Nos.
2051 and 2052 of 1968 are appeals filed by the Indian Firm.
Before the Appellate Bench of the High Court of Madras, the Indian Firm had objected to be maintainability of the appeals 927 filed by the Russian Firm on the ground that orders appealed against are not judgments within the meaning of el. 15 of the Letters Patent of the Madras High Court but that objection had been overruled by the Appellate Bench following the earlier decisions of that High Court.
That contention was again raised in the appeals filed by the Indian Firm in this Court.
To obviate any difficulty the Russian Firm applied to this Court for special leave to appeal against the interim orders passed by the trial judge.
We allowed those applications and consequently Civil Appeals Nos.
2305 and 2306 of 1968 came to be filed.
In view of the appeals filed by the Russian Firm in this Court against the interim orders made by the trial judge it is not necessary to decide whether the appeals filed by the Russian Firm before.
the Appellate Bench of the Madras High Court were maintainable? On that question, judicial opinion is.
sharply divided as could be seen from the decision of this Court in Asrumati Debi vs Kumar Rupendra Deb Rajkot and Ors.(x) Hence we shall, confine our attention to the question whether the temporary injunctions issued by the trial judge are sustainable? The scope of an irrevocable letter of credit is explained ' thus in Halsbury 's Laws of England (Vol.
34 paragraph 319 at p. 185): "It is often made a condition of a mercantile contract that the buyer shall pay for the goods by means of a confirmed credit, and it is then the duty of the buyer to procure Iris bank, known as the issuing or originating bank, to issue an irrevocable credit in favour of the seller by which the bank undertakes to the seller, either directly or through another bank in the seller 's country known as the correspondent or negotiating bank, to accept drafts drawn upon it for the price of the goods, against tender by the seller of the shipping documents.
The contractual relationship between the issuing bank and the buyer is defined by the terms of the agreement between them under which the letter opening the credit is issued; and ' as between the seller and the bank, the issue of the credit duly notified to the seller creates a new contractual nexus and renders the bank directly liable to the seller to pay the purchase price or to accept the bill of exchange upon tender of the documents.
The contract thus created between the seller and the bank is separate from, although ancillary to, the original contract between the buyer and.
the seller, by reason of the bank 's undertaking to the seller, which is absolute.
Thus the bank is not entitled to, (1) ; L6 Sup.
CI/69 8.
928 rely upon terms of the contract between the buyer and the seller which might permit the buyer to reject the :goods and to refuse payment therefore; and, conversely, the buyer is not entitled to an injunction restraining the seller from dealing with the letter of credit if the goods are defective.
" Chalmers on "Bills of Exchange" explains the legal position in these words: ' "The modern commercial credit serves to interpose between a buyer and seller a third person of unquestioned solvency, almost invariably a banker of international repute; the banker on the instructions of the buyer issues the letter of credit and thereby undertakes to act as paymaster upon the seller performing the conditions set out in it.
A letter of credit may be in any one of a number of specialised forms and contains the undertaking of the banker to honour all bills of exchange drawn thereunder.
It can hardly be over emphasised that the banker is not bound or entitled to honour such bills of exchange unless they, and such accompanying documents as may be required thereunder, are in exact compliance with the terms of the credit.
Such documents must be scrutinised with meticulous care, the maim de minimis non curat lex cannot be invoked where payment is made by later of credit.
If the seller has complied with the terms of the letter of credit, however, there is an absolute Obligation upon the banker to pay irrespective of any disputes there may be between the buyer and the seller as to whether the goods are up to contract or not: Similar are the views expressed in Practice and Law of Banking by H.P. Sheldon 'the Law of Bankers Commercial Credits" by H.C. Gutteridge "the Law Relating to Commercial Letters of Credit" by A.G. Davis "the Law Relating to Bankers ' Letters of Credit" by B.C. Mitra and in several other text books read to us by Mr. Mohan Kumaramangalam, learned Counsel for the Russian Firm.
The legal position as set out above was not controverted by Mr. M.C. Setalvad, learned Counsel for the Indian Firm.
So far as the Bank of India is concerned it admitted its liability to honour the letter of credit and expressed its willingness to abide by its terms.
It took the same position before the High The main grievance of the India Firm is that if the Russian Firm is allowed to take away the money secured to it by the letter ' 929 of credit, it cannot effectively enforce its claim arising from the breach of the contract it complains of.
It was urged on its behalf that the Russian Firm has no assets in this country and therefore any decree that it may be able to obtain cannot be executed.
Therefore, it was contended that the trial court was justified in issuing the impugned orders.
The allegation that Russian Firm has no assets in this country was not made in the pleadings.
That apart in the circumstances of this case that allegation has no relevance.
An irrevocable letter of credit has a definite implication.
It is a mechanism of great importance in international trade.
Any interference with that mechanism is bound to have serious repercussions on the international trade of this country.
Except under very exceptional circumstances, the Courts should not interfere with that mechanism.
For our present purpose we shall assume, without deciding, that the allegations made by the Indian Firm are true.
We shall further assume that the suit as brought is maintainable though Mr. Kumaramangalam seriously challenged its maintainability.
But yet, in our judgment, the learned trial judge was not justified in law in granting the temporary injunctions appealed against.
Ordinarily this Court does not interfere with interim orders.
But herein legal principles of great importance affecting international trade are involved.
If the orders impugned are allowed to stand they are bound to have their repercussion on our international trade.
We have earlier referred to several well known treatises on the subject.
Now we shall proceed to consider the decided eases bearing on the question under consideration.
A case somewhat similiar to the one before us came up for consideration before the Queens Bench Division in England in Hamzeh Malas and Sons vs British Imex Industries Ltd.(1) Therein the plaintiffs, a 10 Jordanian firm contracted to purchase from the defendants, a British firm, a large quantity of reinforced steel rods, to be delivered in two instalments.
Payment was to be effected by opening in favour of the defendants of two confirmed letters of credit with the Midland Bank Ltd., in, London, one in ' respect of each instalment.
The letters of credit were duly opened and the first was realized by the defendants on the delivery of ' t, he first instalment.
The plaintiffs complained that that instalment was defective and Sought an injunction to bat the defendants from realizing the second letter of credit.
Donovan 1.
, the trial judge refused the application.
In appeal Jenkins, Sellers and Pearce L.JJ.
confirmed the decision of the trial judge.
In the course of (1) 930 his judgment Jenkins L.J. who spoke for the Court observed thus: "We have been referred to a number of authorities, and it seems to be plain enough that the opening of a 'confirmed letter of credit constitutes a bargain between the banker and the vendor of the goods, which imposes upon the banker an absolute obligation to pay, irrespective of any dispute there may be between the parties as to whether the goods are up to contract or not.
An elaborate commercial system has been built up on the footing that bankers ' confirmed credits are of that character, and, in my judgment, it would be wrong for this Court in the present case to interfere with that established practice.
There is this to be remembered, too.
A vendor of goods selling against a confirmed letter of credit is selling under the assurance that nothing will prevent him from receiving the price.
That is of no mean advantage when goods manufactured in one country are being sold in another.
It is, furthermore, to be observed 'that vendors are often reselling goods bought from third parties.
When they are doing that, and when they are being paid by a confirmed letter of credit, their practice is and I think it was followed by the defendants in this case to finance the payments necessary to be made to their suppliers against the letter of credit.
That system of financing these operations, as I see it, would break down completely if a dispute as between the vendor and the purchaser was to have effect of 'freezing, ' if I may use that expression, the sum in respect of which the letter of credit was opened." In Urquhart Lindsay and Co. Ltd. vs Eastern Bank Ltd.(1) the King 's Bench held that the refusal of the defendants bank to take and_pay for the particular bills on presentation of the proper documents constituted a repudiation of the contract as a whole and that the plaintiffs were entitled to damages arising from such a breach.
It may be noted that in that case the price quoted in the invoices was objected to by the buyer and he had notified his objection to the bank.
But under the terms of the letter of credit the bank was required to make payments.
on the basis of the invoices tendered by the seller.
The Court held that if the buyers had an enforceable claim that adjustment must be made by way of refund by the seller and not by way of retention by the buyer.
(1) 931 Similar opinions have been expressed by the American Courts, The leading American case on the subject is Dulien Steel Products Inc., of Washington vs Bankers Trust Co.(1).
The facts of that case are as follows: The plaintiffs,.
Dulien Steel Products Inc., of Washington, contracted to sell steel scrap to the European Iron and Steel Community.
The transaction was put through M/s. Marco Polo Group Project, Ltd. who were entitled to commission for arranging the transaction.
For the payment of the commission to Marco Polo, plaintiffs procured an irrevocable letter of credit from Seattle First National Bank.
As desired by Marco Polo this letter of credit was opened in favour of one Sica.
The defendant bankers confirmed that letter of credit.
The credit stipulated for payment against (1 ) a receipt of Sica for the amount of the credit and (2 ) a notification of Seattle Bank to the defendants that the plaintiffs had negotiated documents evidencing the shipment of the goods.
Sica tendered the stipulated receipt and.
Seattle Bank informed the defendants that the Dulien had negotiated documentary drafts.
Meanwhile after further negotiations between the plaintiffs and the vendees the price of the goods sold was reduced and consequently the commission payable to Marco Polo stood reduced but the defendants were not informed of this fact.
Only after notifying the defendants about the negotiation of the drafts drawn under the contract of sale, the Seattle Bank informed the defendants about the changes underlying the transaction and asked them not to pay Sica the full amount of the credit.
The defendants were also informed that Sica was merely a nominee of Marco Polo and has no rights of his own to the sum of the credit.
Sica, however, claimed payment of the full amount of the credit.
The defendants asked further instructions from Seattle Bank but despite Seattle Bank 's instructions decided to comply with Sica 's request.
After informing Seattle Bank of their intention, they paid Sica the full amount of the credit.
Plaintiffs thereupon brought an action in the District Court of New York for the recovery of the moneys paid to Sica.
The action was dismissed by the trial court and that decision was affirmed by the Court of Appeals.
That decision establishes the well known principle that the letter of credit is independent of an unqualified by the contract of sale or underlying transaction.
The autonomy, of an irrevocable letter of, credit is entitled to protection.
As a rule courts refrain from interfering with that autonomy.
A half hearted attempt was made on behalf of the Indian Firm to persuade us not to apply the principles noticed above as in these appeals we are dealing with a complaint of fraud.
The facts pleaded in the plaint do not amount to a plea of fraud despite the (1) Federal Reporter 2nd Series 298, p. 836.
932 assertions of the Indian Firm that the Russian Firm was guilty of fraud.
Evidently with a view to steer clear of the well established legal position Mr. Setalvad, learned Counsel for the Indian Finn urged that the letter of credit was no more enforceable as the original contract stood modified as a result of the Delhi agreement and the Subsequent correspondence between the parties.
, It was urged that according to the modified contract the Indian Firm is only liable to pay the price that may be settled between the buyer and the seller.
This contention has not been taken either in the plaint or in the arguments before the trial judge or before the Appellate Bench.
It is taken for the first time in this Court.
This is not purely a legal contention.
The contention in question bears on the intention of the parties who entered into the agreement.
NO one could have known the intention better than the plaintiff who was a party to the contract.
If there was such an intention, the plaintiff would have certainly pleaded the same.
That apart, we are unable to accept the contention that either the Delhi agreement or the subsequent correspOndence between the parties modified, the original contract.
The Delhi agreement merely provided that the parties will try and settle the dispute out of court, if possible.
Much was made of the letter written, by the Russian Firm to the Indian Firm on 29 11 1965 wherein as seen earlier it was stated: "that the final amount payable will be in accordance with the settlement".
This letter has to be read along with the other letters that passed between the parties.
If so read, it is clear that the statement that the final payment will be made in accordance with the settlement is subject to the condition that the parties are able ,to arrive at a settlement.
Otherwise the parties continue to be bound by the original contract subject to the extension of the time granted under the Delhi agreement for the payment of the price.
As regards the additional payment demanded by the Russian Firm, there is no occasion for issuing any temporary injunction.
If the Indian Firm does not comply with that demand the law will take its course.
It is for that Firm to choose its course of action.
In the result we allow Civil Appeals Nos.
2305 and 2306 of 1968 with costs of the appellant therein and set aside the temporary injunctions granted by the trial judge.
The other appeals are dismissed with no order as to costs.
The costs to be paid by the Indian Company.
V.P.S. C.A. Nos.
2305 & 2306/68 allowed.
C.A.Nos.
2251 & 2252/68 dismissed.
| IN-Abs | An Indian Firm (the appellant) entered into a contract with a Russian Firm (the respondent) for supply of certain machinery.
In pursuance of the contract, the appellant opened a confirmed, irrevocable and divisible letter of credit with a Bank in India for the entire value of the equipment.
The respondent supplied all the machinery and received 25% of the money payable under the letter of credit from the Bank.
Thereafter, the appellant complained that the performance of the machinery was not efficient and filed a suit seeking an injunction restraining the respondent from realising the balance of amount payable under the letter of credit.
The parties, however, entered into an agreement, by which it was agreed that the appellant would withdraw the suit, the respondent would not demand any payment under the letter of credit for 6 months, the parties would try to settle the dispute amicably during that period, 'and if no settlement was reached the period would be extended by a further period of 6 months.
The appellant withdrew its suit, but before any settlement was arrived at the Indian rupee was devalued, as a result of which the appellant had to pay an additional sum for the machinery supplied.
There was correspondence between the parties wherein the respondent insisted upon the appellant opening an additional letter of credit.
for the extra amount and the appellant objected to such a course.
The original dispute between the parties was not amicably settled and when the extended time under the agreement was about to expire, the appellant filed a suit on the original side of the High Court for restraining the Bank and the respondent from taking any steps in pursuance of the letter of credit.
A temporary injunction was also prayed for and it was granted, but the order was reversed by the Appellate Bench of the High Court.
In appeal to this Court, on the question whether the order of temporary injunction was sustainable, HELD: (1 ) An irrevocable letter of credit has a definite implication.
It is independent of and unqualified ' by the contract of sale or other underlying transactions.
It is a mechanism of great importance in international trade and any interference with that mechanism is bound to have serious repercussions on the international trade of this country.
The autonomy of an irrevocable letter of credit is entitled to protection 'and except in very exceptional circumstances courts should not interfere with that autonomy.
[929 B C; 931 G] Urquhart Lindsay and Co. Ltd. vs Eastern Bank Ltd., ; Hamzeh Malas and Sons vs British Imex Industries Ltd., and Dulien Steel Products Inc. o/Washington vs Bankers Trust Co., Fed.
Rep. 2nd Series, 298, p. 836, applied.
(2) The allegation of the appellant that the respondent had no assets in this Country and therefore if the respondent was allowed to take away 921 the money secured to it by the letter of credit the appellant could not effectively enforce its claim arising from the breach of the contract, was not made in the pleadings.
Nor do the facts pleaded in the plaint amount to a plea of fraud.
[929 B; 931 H] (3) It could not be contended that the letter of credit was not enforceable as the original contract was modified by the later agreement and subsequent correspondence between the parties.
The contention was not taken either in the plaint or in the High Court.
It is not a mere legal contention as it bears on the intention of parties.
Further, a perusal of the entire correspondence between the parties shows that in the absence of an amicable settlement, the parties continued to be bound by the original contract subject only to extension of time granted for payment of ' price.
[932 B D, F]
|
Appeals Nos.
1399 1402 of 1968.
Appeals from the judgment and decree dated April 26, 1968 of the Bombay High Court in Appeals Nos. 96, 97, 98 and 86 of 1967.
870 A.K. Sen, Krishna Sen, Rameshwar Nath and Mahinder Narain, for the appellant (in all the appeals).
S.J. Sorabjee, 1.
M. Chagla, K.D. Mehta, Ravinder Narain, J.B. Dadachanji and O.C. Mathur, for respondent No. 1 (in the appeals.).
F.S. Nariman and 1.
N. Shroff, for respondents Nos. 2 and 3 (in C.A. No. 1399 of 1968).
B. Divan, Rameshwar Nath and Mahinder Narain, for Creditors Nos.
1 to 8 (in C.A. No. 1399 of 1968).
C.K. Daphtary, Attorney General, Rameshwar Nath and Mahinder Narain, for Creditors Nos. 9 and 10 (in C.A. No. 1399 of 1968).
The Judgment of the Court was delivered by Shelat,J.
These appeals, rounded on a certificate, are directed against the order of the High Court of Bombay ordering the winding up of Respondent No. 1 Company.
Prior to August 1965, the company was managed by Singhanias, (referred to hereinafter as the J.K. group), who held 25,625 out of 45,000 equity shares of the company.
By 1965 the company was in a bad way, its liabilities having exceeded its assets and was not in a position to pay its unsecured creditors.
On June 21, 1965 one of its creditors, M/s. Indulal & Co., filed a petition for winding up.
On August 2, 1965 the Court appointed a provisional liquidator.
On August 6, 1965 the cotton textile mills of the company stopped working and the provisional liquidator took charge thereof.
On August 16, 1965 an agreement was made between the J.K. group and Nandial Jalan and two others, (hereinafter referred to as the Jalans), under which the latter agreed to take over the company 's management on terms and conditions therein set out.
The agreement provided that the J.K. group should sell to the Jalans at Rs. 10/ per share the said block of shares held by the former, that the J.K. group thereafter should resign as directors and accept as directors the nominees of the Jalans, that the company should execute a second legal mortgage of its fixed and other assets in favour of the J.K. group and certain other unsecured creditors named in Sch. 'B ' to the agreement in consideration of which those creditors agreed not to claim interest at more than 1/4% and not to demand repayment of their debts except in the manner set out in the agreement and Sch. 'C ' thereto, and that the transactions therein contained should be completed, within one month from the date when the said petition would be withdrawn.
The agreement recorded that the debts due to Sch. 'B ' creditors amounted to Rs. 48.28 lacs.
Sch. 'C ' to the agreement contained the terms to be included in the second mortgage to be executed by the company.
Term 3 provid 871 ed that the said Rs. 48.28 lacs were to be repaid two years after the date of the said mortgage by annual instalments of an amount equal to 50 per cent of the profit made by the company or Rs. 6.50 lacs whichever was lower, provided, however, that in any event the whole debt should be paid off by June 30, 1980.
Term 4(a) provided that in the event of the assets secured under the second mortgage being damaged or impaired or the first mortgagees enforcing their security or the company being wound up, the entire debt due under the second mortgage would immediately become due.
Term 4(d) contemplated the company obtaining loans from certain financial institutions including the Central and the State Governments and securing them by a prior charge over its fixed assets and therefore provided that in such an event "security of the second mortgagees for the fixed assets shall be subject to" such first or prior charge.
Term 4(e) likewise permitted the company to Obtain loans from any person, firm or company on a first or prior charge over its liquid assets so that the security of the second mortgagees over the liquid assets "shall be subject to the first or prior charge in favour of such lender".
There was already a first mortgage in favour of the Punjab National Bank Ltd. (hereinafter referred to as the 'Bank ') for securing advances made by it to the company.
The effect of the said agreement was two fold: (1) that the Jalans by purchasing the said shares could take over the company 's management, and (2) on the second mortgage being executed Sch. 'B ' creditors, who, in respect of the debts due to them, were unsecured creditors, would take precedence over the other unsecured creditors by becoming secured creditors.
No doubt, they agreed to accept 1/4% interest and to postpone the date of payment of their debts, nonetheless, in the event of the company being wound u13 the entire debt due to them would become immediately payable and they would have priority over the rest of the unsecured creditors.
On October 18, 1965 an agreement was made between the company, the Jalans and the workers ' union, which inter alia provided that the new management would employ 2700 out of the total 4200 workers and pay to the rest retrenchment compensation.
Agreements with the largest group of unsecured creditors on the one hand and the workers on the other having been thus secured, the company took out on October 19, 1965 a summons submiting a scheme for the sanction of the High Court.
It would seem that though the other creditors of the company were willing to accord their consent to the said scheme, the Bank was not, unless two cash credit accounts under which the company owed to it Rs. 19 lacs were paid off and a term loan of Rs. 26.75 lacs 872 secured by a first mortgage of the company 's fixed assets was reduced by Rs. 5 lacs.
To remove the Bank 's objection the Jalans had, therefore, to make an immediate financial arrangement.
On February 14, 1966 an agreement between the company, (still under the old management), the Jalans and Sushil Investment (P) Ltd., a company under the control of the Jalans, was made whereunder Sushil Company agreed to pay off the said cash credits accounts and also to pay Rs. 5 lacs against the said term loan, in all Rs. 23 lacs.
On so doing the Bank was to release the assets hypothecated with it and the company was to hypothecate such assets in favour of Sushil Company.
Sushil Company also agreed to finance the company to the extent of Rs. 40 lacs including the said Rs. 23 lacs on the company hypothecating cotton cloth, yarn and other movable assets in its favour, and the Jalans giving their personal guarantee.
This agreement under which the company agreed to hypothecate all its movable assets together with Term 4(d) and (e) of Sch. 'C ' to the agreement of August 16, 1965 shows that it was understood between the parties that the Jalans were entitled to procure finance on the security of the company 's assets, both fixed and movable, and that such security would take priority over the second mortgage to be executed in favour of the J.K. group and other S`h. 'B ' creditors.
By his order dated February 17, 1966, Mody J., gave his sanction to the said scheme making therein two significant observations: (1) that all the concerned parties realised that the company at that stage was commercially insolvent, and (2) that though he appreciated the objection of some of the opposing creditors that the Jalans under the scheme gave no personal guarantee for payments provided thereunder to the unsecured creditors or for providing adequate finance for the working of the mills, he was giving his sanction as the majority of the unsecured creditors were anxious that the company should be allowed to work under the scheme.
The preamble of the scheme expressly recites that it was "for the payment of the secured and unsecured creditors".
Clause (1) sets out that the secured creditors were the Bank and M/s. R. Ratilal & Co., whose advances to the company were secured by hypothecation and mortgage in favour of the Bank and by a pledge of cotton in favour of R. Ratilal & Co. Clause (2) states that the unsecured debts of the company amounting to Rs. 101.39 lacs were due to four categories of creditors: Category k:consisted of (a) J.K. (Bombay) (P) Ltd. for Rs. 3.46 lacs, being the amount advanced by it to the company for purchase of 2000 shares of Bengal and Assam Investors.
The company agreed to get these 873 shares released from the Bank with which they were pledged and hand them over to this creditor within 90 days from the date of the order sanctioning the scheme.
(b) J.K. concerns and others to whom Rs. 48.39 lacs were due and who were mentioned in Sch. 'B ' to.
the agreement dated August 16, 1965.
(2) provided that this amount was to be secured by a second mortgage of the company 's assets in consideration whereof the creditors would accept payment in the manner provided by the agreement dated August 16, 1965, annexed as exhibit A to the scheme.
Sub clause (3) of cl.
(2) provided that if the Controller of Capital Issues gave his sanction the second mortgage should be in the form of a debenture trust deed and the company should issue debentures of the said amount of Rs. 48.13 lacs of Rs. 100 each to these creditors ranking pari passu.
Category 2: Creditors were the Bombay Municipal Corporation, the Collector of Sales Tax, the Commissioner of Income Tax, the Bombay Port Trust, the Collector of Bombay, the Life Insurance Corporation, the Employees State Insurance Corporation, the workers, their cooperative society, and lastly the Tata Power Company Ltd. These were to be paid off within the time specified against their names.
Category 3: Creditors were 15 in number and were the suppliers of cotton and to whom Rs. 6.84 lacs were due.
These were to be paid off in certain instalments, the first instalment being 37% of the debt, payable within 90 days from the date of sanctioning of the scheme.
Category 4: Creditors whose claims were Rs. 1000/ or less were to be paid off within 90 days after the sanction of the scheme.
Creditors whose claims were above Rs. 1000/ , the total of whose debts amounted to Rs. 33.70 lacs, were to be paid off by 8 equal annual instalments, the first instalment being 121/2% payable within 90 days from the sanctioning of the scheme.
(3) of the scheme referred to the said agreement dated October 18, 1965.
Lastly, clause (4) provided that the Jalans "will provide the necessary finance required for running the mills".
Except for cl.
(4), the scheme thus represented an arrangement between the company and the creditors for repayment of debts due to the creditors.
The Jalans were not parties to the scheme for at the date when it was sanctioned they were not either the shareholders or the directors though they appeared before Mody J., and gave their concurrence.
The scheme having been sanctioned, the winding up petition was withdrawn, the provisional liquidator was discharged and all the assets taken charge of by him were handed over to the com 874 pany.
On February 22, 1966 the nominees of the Jalans were appointed directors and two days later the directors from the J.K. group, except Gopal Krishna Singhania, resigned.
From and after that date the Jalans, according to the said agreement of August 16, 1965 took over the management of the company.
The scheme envisaged the restarting of the mills which had been closed from August 6, 1965, the repayment to categories H, III and IV of the unsecured creditors, in some cases in full and in the rest by instalments, the execution of the second mortgage by the company in favour of category 1(b) creditors or issuing of debentures in their favour to secure repayment of Rs. 48.13 lacs from out of the profits which may be made by the company by working the said mills and the handing over of the said investment shares to J.K. (Bombay) (P) Ltd. There can be no dispute that the scheme assumed that the mills would be worked and that from the profits which may accrue the J.K. concerns and other creditors of category (b) would be paid off by 1980 and in the meantime the debts due to them would be secured by a debenture trust deed or a second mortgage.
This naturally meant that finance to work the mills had to be procured and that was why cl.
(4) provided that the Jalans would provide the requisite finance.
There is reason to believe, and it so appears from the record also, that in the early stages at any rate, there was a genuine desire on the part of the Jalans to implement the scheme.
In March 1966, the company 's solicitors were instructed to prepare a draft debenture trust deed, which, after it was ready, was sent to the Singhanias for approval.
Likewise, the mills were restarted on April 1, 1966, after spending, ,it was said, Rs. 5 lacs for setting the machinery into working order.
May 17, 1966 was under the scheme the due date for payment in full to category II creditors and for payment of the first instalment to categories III and IV(a) and (b) creditors.
It is undisputed that the company made these payments.
What remained, therefore, to be implemented were the following: (i) the execution of second mortgage or the debenture trust deed, (ii) the transfer of the said investment shares and (iii) providing finance for working the mills.
Regarding the second mortgage, it appears that after the draft was sent for Singhanias ' approval a dispute arose between the parties regarding interest payable on Rs. 48.13 lacs due to the Sch. 'B ' creditors, the Singhanias claiming the original interest chargeable on advances made by them until the execution of the second mortgage and the Jalans replying that interest at 1/4% only was payable from August 16, 1965, the date of the agree 875 ment between them and the J.K. group.
Despite the controversy, the company applied on September 27, 1966 to the Controller of Capital Issues for sanctioning the ,debentures trust deed.
It appears that along with the application the company had to send a treasury chalan for Rs. 50/ , that though a chalan was despatched it was under a wrong head, and, therefore, the Controller asked the company to replace it by a proper chalan.
This the company did not do and the application remained unattended to.
In the meantime, the Singhanias wrote to the company inquiring about the outcome of the company 's application and requiring the company to send a copy of the application and the order made thereon.
On coming to know that the sanction of the Controller could not be issued because of the technical defect in the chalan they sent Rs. 50/ to the Controller 's office asking him to issue the sanction.
That, of course, could not be done as the Singhanias had no locus stand in the matter of the said application since the application had to be made by the person desiring to issue debentures and sanction could be given to such applicant only.
While this correspondence was going on, the Controller enquired of the company when the requisite chalan could be expected.
The company thereupon requested him to keep the matter of sanction in abeyance.
Mr. Sen contended that the Controller had already given his consent and that the only thing which remained to be done was to issue it to the company which could not be done by reason of the said defect in the chalan and that that being so, the company could have executed the debenture trust deed and issued the debentures.
The correspondence on this subject, however, does not factually support the contention.
The Controller did not proceed with the application as the company itself had written to keep the matter in abeyance.
There is, however, no doubt that the company, if it had so desired, could have obtained the sanction and proceeded with the execution of the debenture trust deed.
But it asked the Controller to keep the matter in abeyance as the Jalans, rightly or wrongly, alleged that though Rs. 48.13 lacs were stated in the scheme to be due to the J.K. group, they were not entitled to that amount by reason of their having committed several fraudulent acts during the period of their management.
We may mention that in the order made by the Company Judge in the summons for directions taken out later on by the Appellants he held that the affidavit of Goenka in which these allegations were made was not in conformity with Order XIX, rule 3 of the Code of Civil Procedure, and that therefore, they could not be taken notice of, that assuming that these allegations were true, the said alleged acts were of certain individuals, that the company 's obligation was not affected thereby and that the proper remedy was to take proceedings against those individuals.
876 As regards the said investment shares, the company got those shares released and handed them over to J.K. (Bombay) (P) Ltd. but failed to hand over the transfer deeds therefore.
There can, therefore, be no doubt that the company failed to implement this part of its obligation.
As regards the implementation of cl.
(4) of the scheme, the Jalans, as aforesaid, entered into an arrangement with Sushil Co., to which the J.K. Group were parties, under which Sushil Co. gave loans totalling Rs. 43 lacs including Rs. 23 lacs paid to the Bank.
This arrangement was evidently made as moneys were immediately required to pay to the Bank, without which the Bank 's objection to the scheme could not be removed and also because it would not presumably have been possible to have further dealings with the Bank.
After the initial difficulties with the Bank were thus got over, fresh negotiations were started with the Bank and an arrangement was made whereunder the Bank agreed to advance Rs. 50 lacs provided the Central and the State Governments gave their guarantees therefore.
Both the Governments were prepared to furnish their guarantees on a 50 50 basis for an advance of Rs. 50 lacs by the Bank against a pledge of stocks, stores etc.
and a second charge on the company 's fixed assets which charge under Term 4(b) of Sch.
'C ' of the agreement of August 16, 1965 would have priority over the second mortgage in favour of Sch. 'B ' creditors.
The State Government even agreed to issue a provisional letter of intent pending completion of guarantee documents guaranteeing thereby 90 per cent of its share of Rs. 25 lacs, whereupon the Bank advanced Rs. 25 lacs, part of the intended loan of Rs. 50 lacs.
With regard to the remaining Rs. 25 lacs, the Central Government was not prepared, as the State Government did, to give its guarantee until the documents were completed.
On November 17, 1966 the Bank gave its consent to the company creating a second charge in favour of the two Governments on its fixed assets which were subject to a first mortgage in its favour.
Though the Bank was agreeable to facilitate the said transaction, the J.K. group were not.
By his letter dated July 7, 1966 Singhania contended that such a charge in favour of the two Governments which would have priority over the proposed second mortgage could only be in favour of financial institutions mentioned in the said Term 4(d) advancing the said loan and not the two Governments who were giving only their guarantee, and therefore, the company could grant to the said Governments only a third and not a second charge.
Strictly speaking the company could give such a prior charge to the Bank and not to the two Governments.
But the objection was technical and was raised for creating an obstacle in the way of the company getting the said advance from the Bank.
It really made no difference to the creditors whether the 877 prior charge was given in favour of the Bank or the two Governments.
The result was that the Central Government declined to give its guarantee and the further advance of Rs. 25 lacs became unavailable.
Even the provisional guarantee given by the State Government for a year in the first instance expired in July 1967.
The position which ultimately emerged was that the company got advances of Rs. 43 lacs from Sushil Co. of which Rs. 23 lacs were paid to the Bank.
Rs. 20 lacs, however, remained with.
the company presumably for meeting immediate payments under the scheme, the expenses needed to restart the mills and for other urgent purposes.
The company obtained from the Bank an advance of Rs. 25 lacs on the provisional guarantee of the State Government and subsequently a further advance of Rs. 20 lacs on a further charge over its fixed assets.
It was contended that though the company obtained Rs. 45 lacs from the Bank, none of it except Rs. 2 lacs remained with it for working the Mills as out of Rs. 45 lacs Rs. 43 lacs were paid to Sushil Co. against the loans given by that company.
That, no doubt, is true, but as a result of these transactions Rs. 20 lacs out of Rs. 43 lacs advanced by Sushil Co. still remained with the company, Rs. 23 lacs only having been used to pay off the said cash credit accounts and in reducing the said term loan by Rs. 5 lacs.
It appears from the record that at this stage the new directors had before them two alternatives: (1) to continue its liability to Sushil Co. in respect of Rs. 43 lacs or (2) to procure from the Bank a loan of Rs. 50 lacs on the guarantee of the two Governments.
They obviously could not do both, continue the loan from Sushil Co. and to obtain the advances from the Bank as well, because the two Governments were prepared to furnish their guarantee only on the company hypothecating all its movable assets in their favour and giving a second charge on its fixed assets.
Since the movable assets were already pledged with Sushil Co. unless they were released from that company and pledged with the two Governments, no guarantee would be forthcoming from them.
Sushil Co., therefore, had to be paid off and the assets pledged with it released, unless of course that company was prepared to let go its right under the said agreement to have movable assets of the company hypothecated in its favour.
In these circumstances it is difficult to say that the new management did anything palpably wrong in paying off Sushil Company particularly as there was every likelihood of the company obtaining Rs. 50 lacs from the Bank on the guarantee of the said two Governments.
There is at the same time no doubt that no further finance was provided by the Jalans over and above these transactions.
The learned Company Judge took the view that under el.
(4) of the scheme the jalans were bound not only to procure but to 878 personally bring in the finance sufficient to work the mills, that by ' paying off Sushil Co. and not bringing in further finance they starved the mills of finance and therefore could not be heard to say that the scheme had become unworkable.
Holding that the scheme was workable he directed the Jalans to provide the necessary finance which meant that they must bring in their own finance in addition to any finance which they may or may not procure from elsewhere.
He also directed the company to obtain sanction from the Controller of Capital Issues and to execute debenture trust deed within three weeks.
In accordance with this view he dismissed the winding up petitions filed by the company and others.
In the appeals against these orders the Appeal Court held that as Singhania himself had admitted in his affidavit that the company was commercially insolvent at the date when the scheme was approved and that the scheme could not be worked unless the Jalans provided the necessary finance there was nothing more to decide except as to whether the Jalans had undertaken an obligation to provide finance.
The Appeal Court answered that ,question holding that "there was no binding obligation or duty undertaken by the Jalans to pay anything to the company or to compulsorily provide finance", that the company had become commercially insolvent, that no reasonable or prudent person would invest any of his moneys in the company, that its capital and reserves had been wiped out, that its substratum had disappeared inasmuch as its business of manufacturing cotton cloth could no longer be carried on with profit, and lastly, that therefore the scheme which was on the assumption that the mills could work and the company 's debts would be paid from out of the profits could not be implemented.
The Appeal Court was also of the view that the Company Judge was in error in giving the said directions and in dismissing the petitions for winding up.
Accordingly, it allowed the appeals and ordered winding up.
In doing so it rejected the contention that Sch. 'B ' creditors had under the scheme already become secured creditors and had priority over the other unsecured creditors, or that in the alternative, the court should order winding up only after directing the company to execute a second mortgage in their favour and thus implement the scheme which the company and the Jalans were bound to do.
It also held that even assuming that the Jalans had brought about an impasse due to which the mills could not be run with any prospect of profits, their mala fides were not relevant once the court ,came to the conclusion that the company had become commercially insolvent.
Mr. Sen, as also the learned Attorney General, principally relied on two facts in support of their stand that the Appeal Court was in error in setting aside the directions given by the Company 879 Judge and in ordering instead winding up of the company.
These were (1) the failure of the Jalans to provide finance which would include their bringing in their own monies, and (2) giving away the processing unit of the mills which was the most profit yielding part of the mills for a nominal value to Jhunjhunwalas, the nominees of the Jalans.
Mr. Sen commended the following propositions for our acceptance: (1) that the scheme when sanctioned by the court became a statutory bargain and part of the company 's constitution, and therefore, all further arrangements of the pany 's affairs had to be on the basis of the rights and obligations thereunder; (2) that if the company were to be wound up, such winding up can only be ordered after compelling it to carry out those obligations and it would be opposed to equity and public policy to allow the company to escape its obligations by ordering it to be wound up, (3 ) that even if the scheme could be ignored by directing winding up it could only be done by putting the parties in the position they were prior to the scheme, and (4) that the winding up of the company being at the instance of the Jalans who had failed to carry out their obligation to find the finance, acceding to their prayer for winding up was tantamount to acceding to their default.
He firstly argued that no winding up order should at all have been passed and the scheme ought to have been ordered to be implemented as the Company Judge did, and secondly, in the alternative, that even if the company were to be wound up, it should be so done subject to the implementation of the rights and obligations of the parties.
The learned Attorney General adopted these contentions and in addition urged that Sch. 'B ' creditors were entitled to a charge on the company 's as.
sets not merely on the said second mortgage being executed, but irrespective of it and in presenti under the scheme and the said agreement of August 16, 1965.
As regards financing the company, the contention was that under cl.
(4) of the scheme the Jalans were bound to bring in their own monies required for working the mills and that they could not contend that because they could not procure.
finance on the credit of or on the security of the assets of the company,.
their obligation was over. ' The Company Judge agreed with this view, but the Appeal Court, as aforesaid, took a different views held that under cl.
(4) it was not as if the Jalans were bound ' to provide finance in all circumstances or were bound to bring in their own monies.
In our view both the Company Judge and the Appeal Court took, extreme views of cl.
It is clear from the sanctioning order of Mody, J., that the company at that stage was, and that fact was well known to all concerned, commercially insolvent.
A winding up petition was at that stage pending before the High Court.
There were, therefore, two alternatives before creditors, either to take the company in liquidation, Sup CI/69 5 880 in which event the creditors knew, as Mody, J., has observed, that they could not be paid their dues, or to restart the company under an arrangement whereunder it would work the mills and pay the debts gradually from out of the profits such debts in the meantime being secured by a second mortgage.
The basis of the scheme, therefore, was that a new management would replace the old, the mills would be restarted and the unsecured creditors would be paid gradually from the profits.
Every one including the Jalans must have realised that the mills could not be restarted and profits made unless necessary finance for working them was furnished.
The scheme which was framed and sanctioned with their concurrence threw the responsibility of bringing finance on the Jalans.
It is true, as argued by Mr. Nariman, that the scheme was essentially an arrangement between the company.
and its creditors and that the Jalans did not give any personal undertaking to the Court.
Nevertheless, it was sanctioned by the court after the Jalans had concurred and given their assent through cl.
(4) that they would provide the necessary finance.
The word 'provide ' in cl.
(4) is of wide import which would mean that they would arrange for the finance, either on the credit of and security of the assets of the company or if necessary, by bringing in the monies themselves.
In view of the language of cl.
(4) we cannot agree with Mr. Nariman that the clause meant only finance secured on the assets of the company.
At the same time even though the scheme is not a mere agreement but has statutory force it has to be construed as a commercial document, that is, in the manner in which businessmen would read it.
There can be no doubt that the Jalans took the responsibility to provide finance required for running the mills so that from out of their profits the obligation to pay the creditors under cl.
2(ii) of the scheme could be met in the manner therein laid down.
Therefore, the Jalans were to provide finance either on the credit of the company or on the security its assets, or if necessary, their own monies for running the mills in the commercial sense, i.e. with a reasonable prospect of making profits and not in all events and in all circumstances as the Company Judge appears to have thought, even if there was no prospect of running them at reasonable profit.
Such a construction would be contrary to the fact that the creditors.
including the workers and those who had supplied stores and other materials knew that there was hardly any chance of their being paid, and therefore, with few exceptions, were anxious that instead of taking the company into liquidation the mills should be restarted and their dues paid bit by bit.
Thus, the assumption on which the scheme was made was that there was a possibility of running the mills successfully and that the creditors would be paid gradually out of the profits which the mills would make. 881 In the events that have happened it is impossible to say that the Jalans had no genuine desire to work the mills or that they did not; in the initial stages at any rate, make arrangements for financing the mills.
This can be seen from the arrangement made with Sushil Co., their bringing the mills machinery in working order after the mills had remained closed for nearly 8 months and their arrangement with the Bank and the two Governments for a loan of Rs. 50 lacs.
It is true, as pointed out by Mr. Sen that out of Rs. 45 lacs received from the Bank Rs. 43 lacs were utilised for paying off Sushil Co. leaving only Rs. 2 lacs therefrom as working capital.
But, as already stated, they had to have the assets pledged with Sushil & Co. released in order to procure the guarantee of the two Governments on which alone the Bank was prepared to advance the new loan of Rs. 50 lacs.
The two Governments on their part were prepared to stand a guarantee only if the company gave them a second charge on its fixed assets pledged and a hypothecation of all its movable assets.
That could only be done by paying off Sushil & Co. and having the assets with it released.
Whether what they did in these circumstances was right or wrong, the fact remains that had the deal with the Bank and the two Governments gone through, there would have been a further sum of Rs. 25 lacs over and above Rs. 20 lacs left from the loan by Sushil & Co. available as working capital.
Besides restarting the mills, it is undisputed that the company, as provided by the scheme paid off the small creditors and also paid the first instalment due to creditors of categories Iii and IV(a) and (b).
It is, therefore, impossible to say that the Jalans did not make efforts to work the mills or to implement the scheme.
There is evidence on record, though the figures given by the Jalans are not admitted by the appellants, that though the working of the mills was at a loss it was continued upto June 1967.
But the contention was that the mills did not yield profits because of the Jalans having parted with the processing unit to Jhunjhunwalas.
The allegation was that the company should have worked this unit as it was the most profit yielding department, that Jhunjhunwalas were the nominees of Jalans, and that the rent or compensation, as the case may be, was a nominal one.
The Company Judge directed termination of the agreement as he thought that if that unit had not been parted with at a nominal consideration it was possible to run the mills at profit and to implement the scheme.
The Appeal Court rightly disagreed with the premises on which the said conclusion was arrived at.
There could be no valid objection to the company entering into a lease or a licence agreement, for Singhania himself had in September 1965 asked permission from the Textile Commissioner to separate this unit and either to sell or lease it and the Textile Commissioner had 882 assured him to consider the proposal favourably.
The argument, nonetheless, was that in 1964 65 the company had earned Rs. 17.12 lacs from processing work of outsiders after processing its own goods, that after entering into the said agreement the company had in 1966 67 paid Rs. 21.77 lacs for processing its own goods and in the bargain got only Rs. 50,000 a month.
On these figures it was urged that whereas the company earned a profit of Rs. 17 lacs in 1964 65, it incurred a loss of a like amount in 196667 as a result of the aforesaid bargain.
On these figures only the Company Judge directed the company to terminate the said agreement.
The figures were, however, misleading because Rs. 17.12 lacs were the gross receipts and not net profit.
Before arriving at net profits, cost of raw materials, labour, depreciation etc.
had to be worked out and then only a true picture of the working of the unit would emerge.
Besides, the,figure of Rs. 17 lacs does not take into account the cost of processing the company 's goods and whether that had resulted in profit.
This is important when it is remembered that the company paid Rs. 21 lacs in 1966 67 for processing its goods though Jhunjhunwalas were to charge only cost price for processing the company 's goods.
It was, therefore, unsafe from a few figures to jump to the conclusion that had the unit not been parted with the mills would have made profit.
It was said that the Jalans should have produced the company 's accounts if they wanted to show that the terms on which they had parted with the said ,unit were profitable to the company.
The Jalans gave several reasons why the account could not be produced.
Whether they were true or not, even if the accounts had been produced they could not have thrown any light as no separate accounts were kept of the income and expenditure of the unit in 1964 65.
But then if the unit was the most profit yielding unit and had made large profit in 1964 65 one wonders why Singhanla should have applied for permission to sell or lease it.
It is also difficult to believe that the Jalians would let out the unit at a nominal consideration only a month after they had restarted the mills as in the beginning at any rate they were genuinely interested in working the mills and implementing the scheme unless of course the allegation that Jhunjhunwalas were their nominees was true.
But, as the Appeal Court has rightly said, no proof was offered in support of that allegation.
The next question is whether the closure of the mills was due to the Jalans having starved them of finance.
Having perused the record and after hearing counsel we do not think such a conclusion possible.
The correspondence between the Textile Commissioner, the Mills Federation and the company shows that from the middle of 1966 and onwards there was great difficulty in obtaining adequate quantity of cotton and particularly of the type required by 883 the mills, that the supply position was worsening day by day and though the Government had fixed ceiling prices and a little later on enhanced them, dealers in cotton charged prices in excess of the ceiling prices.
Even the Textile Commissioner had to acquiesce in the mills purchasing cotton at prices nearly 20% more than even the enhanced ceiling prices.
Realising the difficulties in which its member/mills were placed, the Federation at first evolved a policy of voluntary restraint and advised its members not to purchase cotton in excess of their requirements for three months, to purchase only at ceiling prices and to close down the mills or reduce their spindleage if it was not possible for them to get cotton at ceiling prices.
The Federation even agreed to reimburse the mills of lay off compensation if they were forced to close down for a while.
Not only the prices of cotton but all other stores had spiraled up partly due to devaluation of the rupee on June 6, 1966 and partly due to the stock of cotton being less than the demand and Government 's insistence to avoid unemployment that the mills should work at their full quota.
As the position worsened after September 1966, 'the Federation revoked its earlier policy and permitted its members to buy cotton at prices above the ceiling prices as it was realised that on the one hand the mills were not getting cotton at prices fixed by the Government and on the other they were not permitted to restrict their spindleage.
Prices of cotton of almost all varieties had by this time gone up by 50% above the ceiling prices.
Realising the difficulty supply position Government on December 3, 1966 directed the mills to observe one extra holiday per week and to pay lay off compensation for such extra holiday.
On December 7, 1966 the company wrote to the Textile Commissioner that as it was not getting the requisite type of cotton it had reduced its count from 30 to 20, that till that day it had not received a single requisitioned bale, that though the dealers were directed to sell cotton at Rs. 1430 a bale they were charging Rs. 1600 a bale and that lay off compensation for the extra holiday imposed by Government meant an additional burden of Rs. 80,000 a month.
On December 12, 1966 the company demanded of the Textile Commissioner to requisition cotton required by it.
No cotton was delivered to the company although the Textile Commissioner promised to requisition it.
On December 23, 1966 the Essential Commodities Ordinance, 13 of 1966 was promulgated empowering the Government to direct an employer not to close his establishment without the authorised officer 's permission, not to work the establishment for more than the prescribed days and hours and to pay lay off compensation where the employer obtained permission for closure.
The next day Government issued an order directing that no employer should close wholly or partially his undertaking without the permission of the Textile Commissioner and directed all establishments to observe an extra 884 holiday per week and to pay lay off compensation for it.
On December 25, 1966 Government informed the company that no permission would be given to any mill for not giving the extra holiday.
In view of there being no possibility of getting proper cotton the company asked for a quota of terylene fibre as a substitute.
That also could not be procured.
Meanwhile, the company had deposited with the Federation Rs. 12,500 as advance towards the price of cotton which may be requisitioned for it.
In February 1967, some cotton was requisitioned for the company but the sellers could not deliver it as the authorities had sealed their godowns and prohibited removal of cotton therefrom.
On February 15, 1967 the company put up a notice of closure owing to want of cotton.
A few days later it requested the Textile Commissioner for requisitioning 2000 bales stating that the company was not in a position to buy cotton at excess prices.
The reply was that 150 bales were requisitioned for it, that the question of requisitioning 350 bales more was under consideration but that the company should appreciate that it cannot go on requisitioned cotton only.
The implication was that the company must manage to buy cotton even at exorbitant prices.
So far out of 2000 bales demanded only 200 bales had been allotted to the company.
Even in respect of these bales the sellers would not permit their sample survey to ascertain their quality.
In March 1967, the spinning department was partially closed causing labour unrest.
The cotton position in April 1967, as explained by the company in its letter of April 25, 1967 was as follows: 1282 bales were allotted to the company between February 15, 1967 and April 20, 1967 out of which the company took delivery of 200 bales.
No survey by sample was allowed in respect of 732 bales.
Survey made by the suppliers of 350 bales was challenged by the company.
In respect of the balance of 250 bales the company disputed the right of the suppliers to demand clearance charges and that dispute was referred to the Textile Commissioner.
From this letter alone and without reading it in the context of the previous correspondence, the Company Judge concluded that though cotton was requisitioned for it the company had declined to lift it.
The conclusion was neither fair nor just.
It stands to reason that no purchaser would take delivery of goods unless he is satisfied from their survey that they were of the quality for which he had paid.
If the suppliers declined to permit survey the company could not be accused of refusing delivery.
Mr. Sen argued that the company could not depend upon getting cotton at ceiling prices or on cotton requisitioned for it and that it should have purchased it even at excess prices just as other mills were doing.
If that contention was right there was no point in Government fixing the ceiling prices.
It may be that other mills might have purchased cotton at excess prices, but if the finances of the company did not permit that luxury it is 885 difficult to hold that the company was guilty of any dereliction.
Even apart from having to pay high prices for cotton, the mills had to pay Rs. 80,000 a month because of the compulsory extra holiday.
In the meantime several other difficulties were mounting up.
The affidavit of Goenka shows that the mills were working at a loss of Rs. 1.5 lacs a month and the total losses by June 1967 had risen to Rs. 28 lacs.
These figures were not admitted by the appellants as the company did not produce books of accounts.
The ' precision of the loss could be disputed but not the fact.
On May 9, 1967 the guarantee given by the State Government for one year expired and a fresh arrangement with the Bank became necessary.
The Government would not renew its guarantee as Singhanias had objected to a second charge being made in its favour.
On May 17, 1967 the second instalment payable under the scheme to categories III and IV(b) creditors amounting to over Rs. 5 lacs became due.
The mills were for the reasons stated above closed on June 4, 1967 with the consequence that the company became liable to pay to 2700 workers retrenchment compensation.
By the time the winding up petitions were heard the company had already become liable to pay a large amount by way of retrenchment compensation.
The closure of the mills was followed by workers ' unrest culminating in hunger strikes and prevention of the directors from entering the mills and disposal by them of cotton, cloth and other articles.
If the scheme were to be worked as directed by the Company Judge it meant paying of the retrenchment compensation, putting the machinery once again in working order etc.
, requiting large amounts to meet these claims and expenses.
The argument, however, was that the Jalans were to thank themselves for this calamity.
But, surely, they could not be blamed, however badly they might have behaved in other respects, for the closure of the mills which was due to reasons beyond their control, viz., the price rise due to devaluation which overtook them only two months after they restarted the mills, the impossibility of getting cotton at reasonable prices, and the imposition of the extra holiday which meant both loss of production and the burden of lay off compensation.
It is, therefore, not fair to say that the Jalans were responsible for the closure of the mills either on the ground of failure to lift the cotton or by their having given away the processing unit as alleged.
As regards cl.
(4) of the scheme, we do not agree with the learned Attorney General that the jalans had to finance the mills from their own monies only nor with Mr. Nariman that their obligation was confined only to arranging finance on security of the company 's assets.
Both of them took up extreme positions with which it is not possible to agree.
On the one hand sub cls.
(d) and 886 (e) of Term (4) of the said Sch. 'C ' clearly contemplate the right, of the Jalans to arrange finance on the security of the company 's ' assets.
On the other hand it must have been clear to them that as the company 's assets were already mortgaged and pledged, further finance would have to be brought in either by them or on their own credit.
In cases such as the one before us, the scheme has to be read as a commercial document, that is, in the sense in which businessmen conducting such an establishment would understand.
If so read, cl. 4 cannot mean that the Jalans had taken upon themselves the liability to put in monies even if the mills could not be run at reasonable profits.
No industrial establishment is ordinarily run except in the hope of doing so at profit.
Considering the circumstances which existed in 1966 67 we cannot say that the conclusion of the Appeal Court that there was no reasonable prospect to run the mills at profit was incorrect.
The company was commercially insolvent when the scheme was sanctioned.
It was concurred in by the Jalans in expectation that the company could be resuscitated and the mills worked at reasonable profit.
By June 1967, when the mills were closed and the company filed the winding up petition, it was commercially insolvent in the sense that its assets and its existing liabilities were such as to make it reasonably certain that the existing and probable assets of the company would be insufficient to meet its liabilities.
Besides, the very object for which the company was formed, namely, to run the mills commercially, had failed.
By November 6, 1967 when the Company Judge delivered his judgment, apart from the company 's debts being in excess of its assets, the company 's total losses and its liability to pay retrenchment compensation to its workers had run into considerable figures.
Although the figure of Rs. 28 lacs for such losses and Rs. 5 lacs a month for compensation were not admitted by the appellants, there can be no doubt that the company had been running the mills at loss and its liability for retrenchment had swelled to a large figure.
Under sec.
392 of the Act the High Court which has sanctioned the scheme has the power to supervise the carrying out of it and to give directions in regard to any matter or to make modifications in it as it may consider necessary for its proper working.
But if the Court is satisfied that the scheme cannot be worked satisfactorily with or without modifications, it can either suo moto or on an application by any person interested in the company 's affairs order its winding up.
Both Mr. Sen and the learned Attorney General contended that the Company Judge was right in holding that the scheme could have been worked but for the defaults of Jalans, that the Company Judge was right in giving directions under sec.
392(1) compelling the Jalans and the company to implement their obligations and that no winding up 887 order in exercise of power under sec.
392(2) should have been passed.
We have examined the circumstances in which and the reasons why the company closed the mills and held that theft closure was for reasons beyond the control of the company.
As Mody, J., had, while sanctioning the scheme, observed, he sanctioned it only because most of the creditors, except a few, were anxious that instead of the company being wound up, it should be given an opportunity under a new management to work so that, it may pay off gradually the debts due to them by working its millS. The assumption, therefore, on which the scheme was framed was that the company could work the mills profitably and pay off its creditors from out of the profits.
Therefore, it was not as if the mills had to be worked even if their working resulted in loss.
Assuming that the Jalans were under an obligation to bring in finance including their own monies, they could not be said to be under an obligation to bring in finance even if the working of the mills showed no reasonable prospect of profit.
If the mills could not be worked except at loss the company would be justified in ceasing to work them.
The very object of the company being to manufacture cloth, if the mills had to be closed that would mean that the very object for which the company existed and which also was the assumption on which the scheme was flamed ceased to exist.
The direction of the Company Judge that the Jalans should bring in the necessary finance could only be on the basis that the mills could be successfully ' worked.
But before giving such a direction he did not, and indeed could not, on affidavits only, ascertain whether in the circumstances then existing there was any reasonable prospect of profits.
If there was not, it stands to reason that the court could not compel the Jalans to work the mills at loss and equally could not compel them to pour in their monies in such an undertaking.
Besides, the direction did not, and in the very nature of things, could not, specify how much finance the Jalans were to bring in.
If the Jalans were to bring in the finance, assuming there was a binding obligation on them to do so, they would do so in the expectation that they would be repaid.
The words "necessary finance required for running the mills" in cl. 4 of the scheme must necessarily mean the amount which a reasonable and prudent financier would think necessary for working the mills at profit and not an unlimited amount in a concern which cannot be expected to work at reasonable profit.
The direction did not also specify on what terms the Jalans should bring in their monies nor the terms upon which they would be repaid.
It was, therefore, nebulous and vague and impossible of being enforced.
In the absence of any enquiry as to whether the mills could be worked at profit no court would compel a party to furnish monies without even specifying how much and for how 888 long he should provide.
If such a direction was not possible, no direction could also be given under sec.
392(1) to work the scheme as its implementation depended on the mills working at profit.
The only course left to the Court was, as the Appeal Court did, to pronounce that in the circumstances then prevailing the scheme could not be satisfactorily worked and therefore a winding up order under sec.
392(2) had become inevitable.
By the time the Appeal Court passed its order, the mills having been closed since June 1967, a huge amount had become payable as retrenchment compensation.
But it was urged that assuming that a winding up order in these circumstances could be passed it had to be subject to the rights and obligations of the parties.
The contention was that irrespective of the second mortgage which the company had to execute, Sch. 'B ' creditors had already become entitled to a charge on the company 's assets.
It was argued that where an agreement specifies 'a property out of which a debt is to be payable and is coupled with an intention to subject such property to a charge, the property becomes subject to a charge in presenti even though a regular mortgage is to be executed at some future date.
Such an intention, the learned Attorney General argued, was demonstrated by the agreement that (1) the debts were to be paid out of profits and (2) 'the engagement by the company not to deal with its assets.
The distinction between a charge and a mortgage is clear.
While in the case of a charge there is no transfer of ' property or any interest therein, but only the creation of a right of payment out of the specified property, a mortgage effectuates transfer of property or an interest therein.
No particular form of words is necessary to create a charge and all that is necessary is that there must be a clear intention to make a property security for payment of money in presenti.
In Jewan Lal Daga vs Nilmani Choudhuri,(1) a case relied on by him, the question was one relating to an agreement to mortgage.
Following on the agreement,_ a draft mortgage was prepared which was.
approved by the respondent 's solicitors, the mortgage deed was engrossed and even the stamp for it was paid by the respondent.
The question was whether specific performance of the agreement completing the respondent to execute the mortgage could be granted before accounts between the parties were made up and the amount due thereunder was ascertained.
The Privy Council disagreeing with the High Court held that that could be done and observed that "there was a valid agreement charging the property with whatever sum was actually due . and that a proper mortgage ought be executed to carry out these terms." In Khajeh Solehman, (1) 55 I.A. 107.
889 Quadir vs Salimullah ( 1 ) certain deeds were executed purporting to make wakfs of certain properties in favour of the members of a Mahomedan family and then for charitable purposes.
Later on, agreements were executed, under one of which the members.
of the family agreed that allowances fixed under the wakfs should be paid out of the income to named persons of the family and upon their death to theft heirs, and under the other agreement the mutawalli agreed that he and the future mutawallis would pay the said allowances.
The wakfs were held invalid as creating a perpetual succession of estates.
The question was whether the agreements to pay allowances also fell along with them.
The ' Privy Council held that they did not, that they Were valid and enforceable and that the direction in the agreements to pay the allowances out of the income of the settled properties showed an intention to create a charge.
In both these decisions the Board came to the conclusion that there was a clear intention on the part of the parties to create a charge in presenti.
The argument of the learned Attorney General was that if an agreement indicated a property out of which a debt is to be paid and an intention to subject it to a charge in presenti, the court must find the charge.
Certain other decisions were also brought to our notice but it is not necessary to burden this judgment with them because in each case the question which the court would have to decide would be whether ' the agreement in question creates a charge in presenti.
2(ii) of the scheme first sets out Rs. 48.13 lacs as being due to Sch. 'B ' creditors and then provides that the said amount would be repaid by annual instalments of an amount equal to 50% of the profits which the company would make, such instalments commencing after two years from the date of the execution of the second mortgage.
3 of the agreement of August 16, 1965 provides for the execution of the second mortgage in consideration of the said creditors agreeing to accept repayment in accordance with the terms in Sch. 'C ' thereto.
Term 3 in Sch. 'C ' provides the said mode of repayment and term 4 provides that in the events there set out the debt or the balance thereof remaining unpaid would become immediately payable.
In our view, neither the scheme nor the said agreement shows any intention to subject to the company 's assets to a charge in presenti.
All that they provide is a promise to create a second mortgage which was.
to contain the terms set out in the said Sch. 'C ' in consideration for which the creditors 'agreed to postpone repayment in the manner therein provided.
Thus the scheme merely contains an agreement to mortgage and the mode of repayment and the said agreement provides for (a) the sale of shares and (b) a promise to postpone repayment in consideration of a second mortgage to (1) 49 I.A. 153. 890 be executed by the company.
Even if term 4 in the said agreement can be construed to mean an engagement not to deal with the assets of the company, that by itself, in the absence of an intention to create a charge under the agreement, would not be enough to hold that it creates a charge.
Mulla 's Transfer of Property Act, (5th Ed.) 616.] In our view the said provisions of the scheme and the agreement amount only to an agreement to mortgage which can give rise to an obligation to specifically perform it, a personal obligation, but do not constitute either a mortgage under sec.
58 or a charge under section 100 of the Transfer Property Act.
Hukumchand vs Radha Kishan)(1).
The claim urged on behalf of Sch. 'B ' creditors that they had a charge irrespective of the proposed mortgage and were entitled to be treated as secured creditors cannot therefore be upheld.
The contention next was that a scheme sanctioned by the court being binding on the company, its shareholders and the creditors, anything done contrary to its provisions is ultra vires the company.
Therefore, if the company is wound up it could be so done subject to the rights and obligations under such a scheme.
The order of the Appeal Court was, therefore, wrong inasmuch as it could pass a winding up order only after the company had been made to perform its obligations under the scheme, that is, after it had been made to execute the debenture trust deed or the second mortgage.
Reliance in this connection was placed upon the decision in Premila Devi vs Peoples Bank of Northern India Ltd.(2) where the respondent bank had issued A & B shares of which Rs. 50/ on each such share out of the face value of Rs. 100 were called up.
The bank being in difficulty, a scheme was prepared which was sanctioned by the court.
Later on the scheme was mended and that also was sanctioned by the court. 'The scheme so amended provided that further calls on A & B ,shares should not exceed 25% which included 20% already called by the directors between the passing of the original and the amended scheme and provided further that the balance of 5% call should be payable in 5 instalments payable each half year.
The directors, however, resolved that the said 5% should be paid on February 26, 1933 ignoring the amended scheme and later passed another resolution forfeiting the shares of those who failed to pay by the aforesaid date.
The bank thereafter went into liquidation and the liquidator contended that the forfeitures were ultra vires the bank being contrary to the scheme and that the names of those shareholders should be included in the fist of contributories.
The Privy Council held (1) that the amended scheme once sanctioned by the court became binding on the company, the creditors and the shareholders and its terms could be (1) A.I.R. 1930 P.C. 76.
(2) [1938] 4 All E.R. 337.
891 varied only by an order of the court after such variation was approved at meetings of the creditors and the shareholders; (2) that, therefore, it was not possible for the bank or the directors or the shareholders, whether by resolution or ratification or otherwise, to alter the dates of payments of the call monies fixed by the scheme; (3) that the resolution calling the call money on a date different from those dates was ultra vires the company and the forfeitures in pursuance of the said resolution, even if ratified by the shareholders, were equally ultra vires, and that the liquidator therefore was entitled to include the names of those shareholders in the list of contributories.
It is difficult to say how this decision can assist the appellants for neither the company nor the directors have passed any resolution over riding the provisions of the scheme while it was in operation.
The problem is whether in relation to the incomplete rights of the appellants the Appeal Court was bound first to call upon the company to complete those rights and then pass a winding up order.
The decision in Premila Devi 's case(1) had nothing to do with the winding up of the company or the correctness of an order of windingup and is, therefore, not relevant to the question before us.
The case of Re Garner.
Motors Ltd.
,(a) relied on by Mr. Sen lays down that though a joint debtor would ordinarily under the principle of accord and satisfaction be released from his liability if the debt is paid up by the other joint debtor, a release of one of them under a scheme of arrangement is a release by operation of law and not under accord and satisfaction and therefore would not relieve the other joint debtor.
The principle is that a scheme sanctioned by the court does not operate as a mere agreement between the parties: it becomes binding on the company, the creditors and the shareholders and has statutory force, and therefore, the joint debtor could not invoke the principle of accord and satisfaction.
By virtue of the provisions of sec.
391 of the Act, a scheme is statutorily binding even on creditors ,and shareholders who dissented from or opposed to its being sanctioned.
It has statutory force in that sense and therefore cannot be altered except with the sanction of the Court even if the shareholders and the creditors acquiesce in such alteration of Premila Devi vs Peoples Bank(1).
The effect of the scheme is "to supply by recourse to the procedure thereby prescribed the absence of that individual agreement by every member of the class to be bound by the scheme which would otherwise be necessary to give it validity".
(Palmer 's Company Law, 20th Ed. 664) Sub sec.
(2) of sec.
391 of the Act allows the decision of the majority prescribed therein to bind the minority of creditors and shareholders and it is for that reason that a scheme is said to have statutory operation and cannot be varied by the share (1) (2) [1937] 1 A11 E.R. 671. 892 holders or the creditors unless such variation is sanctioned by the ,court.
The effect, therefore, of a scheme between a company and its creditors is that so long as it is carried out by the company by regular payment in terms of the scheme a creditor who is bound by it cannot maintain a winding up.
petition.
But if the company Commits a default, there is a debt presently due by the ,company and a petition for winding up can be sustained at the instance of a creditor.
The scheme, however, does not have the effect of creating a new debt; it simply makes the original debt payable in the manner and to the extent provided in the scheme.
The proposition that a winding up order can only be passed after compelling the company to complete the rights which are still incomplete is not borne out by the decisions relied on by Mr. Sen. Reliance was also placed on the principle that no act of a court, (in the present case ' the sanctioning of the scheme) should be permitted to harm a litigant who has acted on the faith of such an act and that such a person should be restored to the position he would have occupied but for that act.
Jang Singh vs Brijlal(1) and Jai Behram vs Kedar Nath Marwari(2).
We do not see how this principle can be invoked for the purpose of completion of rights where such rights are incomplete at the date when a winding up order is made.
There is no question of the appellants having done something on the faith of an act of the court, the appellants and the other Sch. 'B ' creditors having agreed to a postponement of repayment to them in consideration of an agreement between them and the company providing for a,second mortgage in their favour.
Next, it was said.
that by reason of sub section 3 and 4 of sec.
391 a scheme once sanctioned becomes part of the company 's constitution.
Therefore, the company cannot be ordered to be wound up except in conformity with the rights and obligations of the parties under such a scheme.
But sub sec.
3 only provides that an order sanctioning a scheme begins to operate only when a certified copy of such order is filed with the Registrar.
Thus, the sub section merely lays down a condition precedent to the coming in force of a scheme and does not deal with rights and obligations of parties under such a scheme.
Sub sec.
4 requires a copy of such order to be annexed to every copy of the memorandum of the company issued after the certified copy of the order has been filed with the Registrar, and sub sec.
(5) provides penalty for default of this requirement.
These sub sections were presumably introduced to ensure notice of the order sanctioning the scheme to persons dealing with the company so that they may deal with the company henceforth with the knowledge of the (1) ; (2) 49 I.A. 351 at 356.
893 scheme.
But the sub sections do not mean that the scheme becomes part of the constitution of the company.
Sub sec.
(4) clearly lays down that a copy of the order is to be annexed to a copy of the memorandum issued after its certified copy has been filed with the Registrar, that is, after the operation of the scheme commences.
A scheme, therefore, is not to be considered for instance, as modifying existing special rights attached to shares unless such modification is provided for in the scheme.
Re Downing (T.H.) & Co.(1)].
The contention, therefore, that the scheme becomes part of the company 's constitution or of its memorandum, and therefore, a winding up order cannot be passed except in conformity with the altered constitution of the company, is not tenable.
So long as the scheme is in operation and is binding on the company and its creditors, the rights and obligations of those on whom it is binding are undoubtedly governed by its provisions.
But once the scheme is cancelled under sec.
392(2) on the ground that it cannot be satisfactorily worked and a winding up order passed, such an order is deemed to be for all purposes to be one made under sec.
It is not as if because the scheme has been sanctioned under sec.
391 that a windingup order under sec.
392(2) cannot be made.
If the appellants ' contention, that a winding up order can only be made subject to the rights and obligations of the parties under the scheme were to be right, it would mean that where a company makes default in paying an instalment on the date prescribed by the scheme and a creditor files a winding up petition, even though a windingup order is made on the basis that the debt has become presently payable, still the creditor is bound by the scheme and his debt is to be payable by instalments as provided by the scheme.
The effect of a winding up order is that except for certain preferential payments provided in the Act the property of the company is to be applied in satisfaction of its liabilities pari passu.
Pari passu distribution is to be made in satisfaction of the liabilities as they exist at the commencement of the winding up.
528 & 529 of the Act; Ghosh on Indian Companies Law, 11th Ed.
Vol. 2, p. 1073), The effect of a winding up order on rights already completed as against rights yet to be completed is succinctly stated by Lord Halsbury in the Bank of Scotland vs Macleod(2) as follows: "Rights in security which have been effectually completed before the liquidation must still receive the effect.
which the law gives to them.
But the company and its liquidators are just as completely disabled by the winding up from granting new or completing imperfect (1) ; also Buckley on the Companies Acts (13th Ed.) 411.
(2) ; at 317, 318.
894 rights in security as the individual bankrupt is by his bankruptcy.
This, indeed, is the necessary effect of the express provisions of the Companies Act that the estate is to be distributed among the creditors pari passu.
Every creditor is to have an equal share, unless ' any one has already a part of the estate in his hands, by virtue of an effectual legal right." [cf.
Tulsidas Jasraj Parekh vs The Industrial Bank of Western India(1)].
Similarly, in Re Anglo Oriental Carpet Manufacturing Company(2) it was held that even where a company had executed a trust deed and issued debentures creating a charge on its assets but the charge had not been registered as required by the Companies Act by the time the company had passed an extraordinary resolution for voluntary winding up the debenture holders were not, as against the joint body of creditors, secured creditors.
It is thus well established that once a winding up order is passed the undertaking and the assets of the company pass under the control of the liquidator whose statutory duty is to realise them and to pay from out of the sale proceeds its creditors.
Such creditors acquire on such order being passed the right to have the assets realised and distributed among them pari passu.
No new rights can thereafter be created and no uncompleted rights can be completed, for doing so would be contrary to the creditors ' right to have the proceeds of the assets distributed among them pari passu.
But Mr. Sen 's argument was that the appellants had acquired under the scheme a vested right to have a second mortgage which 'could not be nullified by the court passing the windingup order.
We cannot accede to this contention for the scheme vested no such right.
What it did provide was that in consideration of the company agreeing to execute a second mortgage the appellants and the other Sch. 'B ' creditors agreed to receive repayment of debts due to them in the manner provided in the scheme and the agreement of August 16, 1965.
On failure of the company to execute the mortgage the consideration for postponement of repayment failed and the monies due to those creditors became immediately payable.
It is also not correct to say that the scheme gave any priority to those creditors.
Such a priority could result only on the execution of the mortgage which would make them secured creditors.
On the findings by the Appeal Court that the company was commercially insolvent and that the scheme could not satisfactorily be worked with or without modifications, the only alter (1) 32 Bombay Law Reporter 953 at 967.
(2) 895 native for that Court was to pass the winding up order under sec.
392(2).
The Court could not have completed, as contended by the appellants, their rights which were still incomplete or order the company to execute a debenture trust deed or the second mortgage, and thus set up the appellants and the other Sch. 'B ' creditors as secured creditors against the rest of the unsecured creditors.
Such an order could not be passed as it would be contrary to and in breach of the right of distribution pari passu of the joint body of unsecured creditors.
The Appeal Court, therefore, correctly followed the principle that the status of creditors which could be recognised was that which existed at the date of the winding up order, that the second mortgage or the debenture trust deed not having so far been executed, the appellants and the other Sch. 'B ' creditors were still unsecured creditors and therefore could not claim any priority over the rest of the unsecured creditors.
In the result, we are of the view that the Appeal Court was right in ordering winding up of the company and we uphold that, order.
Appeals are dismissed with costs.
As there has been one common argument, we think it proper that there should be one set of costs for all the respondents in these appeals.
The creditors for whom the learned Attorney General and Mr. A.B. Divan appeared will bear their own costs.
R.K.P.S. Appeals dismissed.
| IN-Abs | On a winding up petition being filed in respect of the respondent company in June, 1965, a provisional liquidator was appointed, who took charge of the Cotton Textile Mills of the Company after they had stopped working.
Thereafter an agreement was entered into in August, 1965 between the S group who owned the majority of equity shares in the company and the J group which agreed to buy the shares and to take over the management.
The agreement provided, inter alia, that after the J group took over, the Company would execute a second legal mortgage of its fixed and other assets in favour of the S group and certain other unsecured creditors mentioned in Schedule B to the agreement m consideration of which those creditors; agreed to receive interest at a nominal rate and receive repayment of their debts over a long period.
The agreement also contained provision which contemplated the Company obtaining loans from certain financial institutions, the Central and State Governments and other persons and securing them by a prior charge over its fixed assets as well as liquid assets; After this agreement with the unsecured creditors and another with the workers union, the COmpany submitted a scheme for the sanction of the High Court.
By an order in February, 1966, a single Judge of the High Court approved the scheme which provided, inter alia, for payments to various categories of creditors within specified periods and for the execution of a second mortgage in favour of the Schedule B creditors; or alternatively for the execution of a debenture trust deed 'and the issue of debentures in their favour if sanction of the Controller of Capital Issues could be obtained.
It was also provided in clause (4) of the scheme that the J group "will provide the necessary finance required for running the mills".
The winding up petition was then withdrawn, the provisional liquidator discharged and 'the J group Wok over the Company 's management.
The mills were restarted in April, 1966 and payments to various categories of creditors other than the Schedule B creditors were duly made.
However in view of certain disputes between the two groups, the company did not execute the mortgage or the proposed debenture trust deed in favour of the Schedule B creditors.
The mills continued to work until June, 1967, but the management experienced various difficulties in raising adequate working finances.
in securing sufficient supplies of cotton, due to price rise following devaluation of the Rupee in 1966 and for various other reasons.
In view of 867 these the mills were eventually closed down in June, 1967, and thereafter the Company and others filed a petition for its winding up.
However, the Company Judge in the High Court took the view that under clause (4) of the scheme the J group were bound not only to procure but to personally bring in the finance sufficient to work the mills.
Holding that the scheme was workable he directed the J group to provide the necessary finance.
He also directed the company to execute the debenture trust deed in favour of the unsecured creditors in Schedule B. He therefore dismissed the winding up petitions.
In appeal, a Division Bench of the High Court held that the Company Judge was in error in giving the said directions and in dismissing the petitions for winding up.
Accordingly, it allowed the appeals and ordered winding up of the company.
In appeal to this Court it was contended inter alia that the Appeal Court was in error in setting aside the directions given by the Company Judge and in ordering winding up instead; the Company had reached its unsatisfactory position in view of (i) the failure of the J group to provide finance in accordance.
with clause (4) of the scheme; and (ii) giving away the processing unit of the mills which was the most profit yielding part of the mills for a nominal value to a nominee of the J group.
It was also contended that once the scheme was sanctioned by the court, it became a statutory bargain and pan of the company 's constitution, and therefore, all further arrangements of the company 's affairs had to be on the basis of the rights and obligations thereunder; if the company were to be wound up, such winding up could only be Ordered after compelling it to carry out those obligations and it would be opposed to equity and public policy to allow the company to escape its obligations by ordering it to be wound up; even if the scheme could be ignored by directing winding up, it could only be done by putting the parties in the position they were prior to the scheme; and that the winding up of the company being at the instance of the J group who had failed to carry out their obligation to find the finance, acceding to their prayer for winding up was tantamount to acceding to their default.
It was further contended on behalf of the Schedule B creditors that the J group had deliberately failed to secure permission of the Controller of Capital Issues for execution of the debenture trust deed and that they were entitled to a charge on the company 's assets not merely on the second mortgage being executed.
but irrespective of it and in presenti; as the agreement of August, 1965, specified the property out of which a debt was to be payable and this was coupled with an intention to subject such property to a charge, the property became subject to a charge in presenti even though a regular mortgage was to be executed 'at some future date.
HELD: Dismissing the appeal: (1) The direction of the Company Judge that the J group must provide the required finance was nebulous and vague and impossible of being enforced.
In the.absence of any enquiry as to whether the mills could be worked at a profit no court would compel a party to furnish monies without even specifying how much 'and for how long he should provide.
If such a direction was not possible, no direction could be given under section 392(1) to work the scheme as its implementation depended on the 'mills working at profit.
The only course left to the Court was to pronounce that in the circumstances then prevailing the scheme could not be satisfactorily worked and, therefore, a winding up order under section 392(2) had become inevitable.
[887 H 888 B] 868 Although the scheme had statutory force, it had to be construed as a commercial document, that is, in the manner in which businessmen would read it.
There can be no doubt that the J group took the responsibility to provide finance required for running the; mills so that from out of their profits the obligation to pay the creditors could be met in the manner laid down in the scheme.
Therefore, the J group were to "provide" finance either on the credit of the company or on the security of its 'assets, or if necessary, their own monies for running the mills in the commercial sense, i.e. with a reasonable prospect of making profits and not in all events and in all circumstances.
even if there was no prospect of running them in reasonable profit.
Such a constitution would be contrary to the fact that the creditors knew there was hardly any chance of their being paid and wore anxious that instead of taking the company into liquidation the mills should be restarted and their dues paid bit by bit.
By virtue of the provisions of section 391 of the Act, a scheme is statutorily binding even on creditors and share holders who dissented from or were opposed to its being sanctioned.
It has statutory force in that sense and therefore cannot be altered except with the sanction of the Court even if the share holders and the creditors acquiesce in such alteration.
The effect of the scheme is "to supply by recourse to the procedure thereby prescribed the absence of that individual 'agreement by every member of the clause.
to be bound by the scheme which would otherwise be necessary to give it validity".
Sub sec.
(2) of section 391 of the Act allows the decision of the majority prescribed therein to bind the minority of creditors and shareholders and it is for that reason that a scheme is said to have statutory operation and cannot be varied by the shareholders or the creditors unless such variation is sanctioned by the court.
The effect, therefore, of a scheme between a company and its creditors is that so long as it is carried out by the company by regular payment in terms of the scheme, a creditor who is bound by it cannot maintain a winding up petition.
But if the company commits a default, there is a debt presently due by the company and a petition for winding up can be sustained at the instance of a creditor.
The scheme, however, does not have the effect of creating a new debt; it simply makes the original debt payable and in the manner and to the extent provided in the scheme.
It cannot be said that a winding up order can Only be passed after compelling the company to complete the rights which are still incomplete under the scheme.
[891 F] Once a scheme is cancelled under section 39 '2(2) on the ground that it cannot be satisfactorily worked and a winding up order passed, such order is deemed to be for all purposes one made under section 433.
It is not as if because the scheme has been sanctioned under section 391 that a winding up order under section 39 '2(2) cannot be made.
If the contention, that a winding up order can only be made subject to the rights and obligations of the parties under the scheme were to be right, it would mean that where a company makes default in paying an instalment on the date prescribed by the scheme and a creditor files a winding up petition, even though a winding up order is made on the basis that the debt has become presently payable, still the creditor is bound by the scheme and his debt is to be.
payable by instalments as provided by the scheme.
[893 C E] (2) The Appeal Court was right in holding that no proof had been offered in support of the allegation that the I group had let out the processing unit of the mills which was the most profit yielding part to one of their nominees to the prejudice of the company.
869 (3) An examination of the scheme and the agreement of August 1965 did not show that there was any intention to subject the company assets a charge in presenti in favour of the Schedule B creditors.
The provisions of these two documents amounted only to an agreement to mortgage which could give rise to an obligation to specifically perform it but did not constitute either a mortgage under section 58 or a charge under section 100 of the Transfer of Property Act.
There was, therefore, no force in the contention that the: Schedule B creditors, irrespective of the proposed mortgage, were entitled to be treated as secured creditors.
[889 G] Jewan Lal Daga vs Nilmani Choudhuri, 55 I.A. 107; Khajeh Solehman Quadir vs Salimullah, 49 I.A. 153; Hukamchand vs Radha Kishan, A.I.R. 130 P.C. 76; referred to.
(4) On the findings by the Appeal Court that the company was commercially insolvent and the scheme could not be satisfactorily worked with or without modifications, the only alternative for that Court was to pass the winding up order under section 392(2).
Court could not have completed, as contended by the appellants, their rights which were still incomplete or order the company to execute a debenture trust deed or the second mortgage, and thus set up the appellants and the other Schedule B creditors as secured creditors against the rest of the unsecured creditors.
Such an order could not be passed as it would be contrary to and in breach of the right of distribution pari passu of the joint body of unsecured creditors.
The Appeal Court had, therefore correctly followed the principle that the status of creditors which could be recognised was that which existed at the date of the ' windingup order, that the second mortgage or the debenture trust deed not having so far been executed, the appellants and the other Schedule B creditors were still unsecured creditors and therefore could not claim any priority over the rest of the unsecured creditors.
[894 H 895 C] Bank of Scotland vs Macleod ; at 317, 318; Tulsidas Jasrai Parekh vs The Industrial Bank of Western India 32 Bombay Law Reporter 953 at 967; Re Anglo Oriental Carpet Manufacturing Company , referred to.
The principle that no act of a court should be permitted to harm a litigant who has acted on the faith of such an act cannot be invoked for the purpose of completion of rights where such ' rights are incomplete at the date when a winding up order is made.
There was no question of the appellants having done something on the faith of an act of the court, the appellants and the other Schedule B creditors having agreed to a postponement of repayment to them in consideration of an agreement between them and the company providing for a second mortgage in their favour.
[892 D] Premila Devi vs Peaples Bank of Northern India Ltd., ; Re Garner Motors Ltd., ; Jang Singh vs Brijlal, ; ; Jai Behram vs Kedar Nath Marwari, 49 I.A. 351 at 356; Re Downing (T.H.) & Co. ; also Buckley on the Companies Acts (13th Ed.) 411 referred to.
|
No. 53 of 1968.
Petition under article 32 of the Constitution of India for enforcement of the fundamental rights.
H.K. Shah, B. Datta and J.B. Dadachanji for the petitioners.
C.K. Daphtary, Attorney General, R. Gopalakrishnan, R.H. Dhebar and S.P. Nayar, for the respondents.
HIDAYATULLAH, C.J., BACHAWAT and MITTER, JJ., delivered segarate judgments dismissing the petition.
SIKRI and HEGDE, JJ. delivered separate dissenting opinions allowing the petition.
Hidayatullah, C.J.
This petition has led to a sharp division of opinion among my 'brethren: Sikri and Hegde, JJ. would allow the petition and Bachawat and Mitter, JJ.
would dismiss it.
They have differed on the question whether the petition deserves to be dismissed on the ground of delay.
I agree in the result reached by Bachawat and Mitter, JJ.
and would also dismiss if I wish briefly to state my reasons.
At the threshold it appears to me that as there is No. law which prescribes a period of limitation for such petitions, each of my brethren has really given expression to the practice he follows or intends to follow.
I can do no more than state the views 1 830 hold on this subject and then give my decision on the merits of the petition in the light of those views.
The problem divides itself into two.
The first part is a general question to be considered in two aspects: (a) whether any limit of time at all can be imposed on petitions under article 32, and (b) whether this Court would apply by analogy an article of the Indian appropriate to the facts of the case or any other limit ? The second is what is to be done in this case ? I shall begin by stating my views on the first question.
There appears to be some confusion about the scope of Article 32.
That Article gives the fight to move the Supreme Court by appropriate proceedings for enforcement of the rights conferred by of the Constitution.
The provision merely keeps open the doors of this Court, in much the same way, as it used to be said, the doors of the Chancery Court were always open.
The State cannot place any hindrance in the way of an aggrieved person seeking to approach this Court.
This is logical enough for it is against State action that Fundamental Rights are claimed.
But the guarantee goes no further at least on the terms of article 32.
Having reached this Court, the extent or manner of interference is for the Court to decide.
It is clear that every case does not merit interference.
That must always depend upon the facts of the case.
In dealing with cases which have come before it, this Court has ,already settled many principles on which it acts.
A few of them may be mentioned here.
This Court does not take action in cases covered ' by the ordinary jurisdiction of the civil courts, that is to say, it does not convert civil and criminal actions into proceedings for the obtainment of writs.
Although there is no rule or provision of law to prohibit the exercise of its extraordinary jurisdiction this Court has always insisted upon recourse to ordinary remedies or the exhaustion of other remedies.
It is in rare cases, where the ordinary process of law appears to be inefficacious, that this Court interferes even where other remedies are available.
This attitude arises from the acceptance of 'a salutary principle that extraordinary remedies should not take the place of ordinary remedies.
Then again this Court refrains from acting under article 32 if the party has already moved the High Court under article 226.
This constitutes a comity between the Supreme Court and the High Court.
Similarly, when a party had already moved the High Court with a similar complaint and for the same relief and failed, this Court insists on an appeal to be brought before it and does not allow fresh proceedings to be started.
In this connection the principle of res judicata has been applied, although the expression is somewhat inapt and unfortunate.
The reason of the rule no 831 doubt is public.
policy which Coke summarised as "interest reipublicae res judicates non rescindi" but the motivating factor is the existence of another parallel jurisdiction in another Court and that Court having been moved, this Court insists on bringing its decision 'before this Court for review.
Again this Court distinguishes between cases in which a speaking order on merits has been passed.
Where the order is not speaking or the matter has been disposed of on some other ground at the threshold, this Court in a suitable case entertains the application before itself.
Another restraint which this Court puts on itself is that it does not allow a new ground to be taken in appeal.
In the same way, this Court has refrained from taking action when a better remedy is to move the High Court under article 226 which can go into the controversy more comprehensively than this Court can under article 32.
It follows, therefore, that this Court puts itself in restraint in the matter of petition under article 32 and this practice has now become inveterate.
The question is whether this Court will inquire into belated and stale claims or take note of evidence of neglect of one 's own rights for a long time? I am of opinion that not only it would but also that it should.
The party claiming Fundamental Rights must move the Court before other rights come into existence.
The action of courts cannot harm innocent parties if their rights emerge by reason of delay on the part of the person moving the Court.
This principle is well recognised and has been applied by Courts in England 'and America.
The English and American practice has been outlined in Halsbury 's Laws of England and Corpus Juris Secundum.
It has been mentioned by my brethren in their opinions and I need not traverse the same ground again except to say this that Courts of Common Law in England were bound by the Law of Limitation but not the Courts of Chancery.
Even so the Chancery Courts insisted on expedition.
It is trite learning to refer to the maxim "delay defeats equity" or the Latin of it that the Courts help those who .are vigilant and do not slumber over their rights.
The Courts of Chancery, therefore, frequently applied to suits in equity the analogy of the law of Limitation applicable to actions at law and equally frequently put a special limitation of their own if they thought that the suit was unduly delayed.
This was independently of the analogy of law relating to limitation.
The same practice has been followed in the United States.
In India we have the which prescribes different periods of limitation for suits, petitions or applications.
There are also residuary articles which prescribes limitation in those cases where no express period is provided.
If it were a matter of a suit or application, either an appropriate article or the residuary article L6Sup.
C.I./69 2 832 would have applied.
But a petition under article 32 is not a suit and it is also not a petition or an application to which the applies.
To put curbs in the way of enforcement of Fundamental Rights through legislative action might well be questioned under article 13(2).
The reason is also quite clear.
If a short period of limitation were prescribed the Fundamental Right might well be frustrated.
Prescribing too long a period might enable stale claims to be made to the detriment of other rights which might emerge.
If then there is no period prescribed what is the standard for this Court to follow ? I should say that utmost expedition is the sine qua non for such claims.
The party aggrieved must move the Court at the earliest possible time and explain satisfactorily all semblance of delay.
I am not indicating any period which may be regarded as the ultimate limit of action for that would be taking upon myself legislative functions.
In England a period of 6 months has been provided statutorily, but that could be because there is no guaranteed remedy and the matter is one entirely of discretion.
In India I will only say that each case will have to be considered on its own facts.
Where there is appearance of avoidable delay and this delay affects the merits of the claim, this Court will consider it and in a proper case hold the party disentitled to invoke the extraordinary jurisdiction.
Therefore, the question is one of discretion for this Court to follow from case to case.
There is no lower limit and there is no upper limit.
A case may be brought within by reason of some Article but this Court need not necessarily give the total time to the litigant to move this Court under article 32.
Similarly in a suitable case this Court may entertain such a petition even after a lapse of time.
It will all depend on what the breach of the Fundamental Right and the remedy claimed ,are and how the delay arose.
Applying these principles to the present case what do I find ? The petitioner moved the High Court for relief on the ground that the recovery from him was unconstitutional.
He set out a number of grounds but did not set out the ground on which ultimately in another case recovery was struck down by this Court.
That ground was that the provisions of the Act were unconstitutional.
The question is: can the petitioner in this case take advantage, after a lapse of a number of years, of the decision of this Court ? He moved the High Court but did not come up in appeal to this Court.
His contention is that the ground on which his petition was dismissed was different and the ground on which the statute was struck down was not within his knowledge and therefore he did not know of it and pursue it in this Court.
To that I answer that law will presume that he knew the exact ground of unconsti 833 tutionality.
Everybody is presumed to know the law.
It was his duty to have brought the matter before this Court for consideration.
In any event, having set the machinery of law in motion he cannot abandon it to resume it after a number of years, because another person more adventurous than he in his turn got the statute declared unconstitutional, and got a favorable decision.
If I were to hold otherwise, then the decision of the High Court in any case once adjudicated upon and acquiesced it may be questioned in a fresh litigation revived only with the 'argument, that the correct position was not known to the petitioner at the time when he abandoned his own litigation.
I ,agree with the opinion of my brethren Bachawat and Mitter, JJ.
that there is no question here of a mistake of law entitling the petitioner to invoke analogy of the Article in the .
The grounds on which he moved the Court might well have impressed this Court which might have also have decided the question of the unconstitutionality of the Act as was done in the subsequent litigation by another party.
The present petitioner should have taken the right ground in the High Court and taken it in appeal to this Court after the High Court decided against it.
Not having done so and having abandoned his own litigation years ago, I do not think that this Court should apply the analogy of the Article in the and give him the relief now.
The petition, therefore, fails and is dismissed with costs.
Sikri, J. I have had the advantage of reading the drafts of the judgments prepared by Mitter, J., and Bachawat, J.
I agree with Mitter, J. in his conclusion that the rule laid down in Daryao vs State of U.P.(1) is inapplicable to the facts of the case, but for the reasons I will presently give, in my opinion the petition should be allowed.
article 32(2) of the Constitution confers 'a judicial power on the Court.
Like all judicial powers, unless there is an express provision to the contrary, it must be exercised in accordance with fundamental principles of administration of justice.
General principles of res judicata were accordingly applied by this Court in Daryao vs State of U.P.(1), and Amalgamated Coalfields Ltd. vs Janapada Sabha, Chindwara(2).
I understand that one of the fundamental principles of administration of justice is that, apart from express provisions to the contrary, stale claims should not be given effect to But what is a stale claim ? It is not denied that the Indian does not directly apply to a petition under article 32.
Both the English Courts and the American Courts were confronted with a similar problem.
In the United States the Federal Courts of Equity solved the problem thus: (1) ; (2) A.I.R. 1964 S.C. 1013, 1018.
834 "Except, perhaps, where the statute by its express terms applies to suits in equity as well as to actions at law, or where the jurisdiction of law and equity is concurrent, the rule appears to be that Federal courts sitting in equity are not bound by state statutes of limitation.
Nevertheless, except where unusual conditions or extraOrdinary circumstances render it equitable to do so, the Federal courts usually act in analogy to the state statutes of limitation applicable to cases of like character." (Vol 34, American Jurisprudence, Limitation of Actions, s 54.") In Courts of Admiralty, where the statutes of limitation do not control proceedings, the analogy of such statutes is ordinarily followed unless there is something exceptional in the case.
(ibid) Story on Equity Jurisprudence states the legal position thus: "It was, too, a most material ground, in all bills for an account, to ascertain whether they were brought to open and correct 'errors in the account recenti facto; or whether the 'application was made after a great lapse of time.
In cases of this sort, where the demand was strictly of a legal nature, or might be cognizable at law, courts of equity governed themselves by the same limitations as to entertain such suits as were prescribed by the ' Statute of Limitations in regard to suits in courts of common law in matters of account.
If, therefore, the ordinary limitation of such suits at law was six years, courts of equity would follow the same period of limitation.
In so doing, they did not act, in cases of this sort (that is, in matter of concurrent jurisdiction) so much upon the ground of analogy to the Statute of Limitations, as positively in obedience to such statute.
But where the demand was not of a legal nature, but was purely equitable; or where the bar of the statute was inapplicable; courts of equity had another rule, rounded sometimes upon the analogies of the law, where such analogy existed, and sometimes upon its own inherent doctrine, not to entertain stale or antiquated demands, and not to encourage laches and negligence.
Hence, in matters of account, although not barred by the Statute of Limitations, courts of equity refused.
to interfere after a considerable lapse of time.
from considerations of public policy, from the difficulty of doing entire justice, when, the original transactions had become obscure by time, and the evidence might have been lost, and from the consciousness that the repose of ' titles and the security of property are mainly promoted by a full en 835 forcement of the maxim, Vigilantibus, non dormientibus jura subveniunt.
Under peculiar circumstances, however, excusing or justifying the delay, courts of equity would not refuse their aid in furtherance of the rights of the party; since in such cases there was no presence to insist upon laches or negligence, as a ground for dismissal of the suit; and in one case carried back the account over a period of fifty years." (Third Edition, page 224, $529) In England, as pointed out by Bachawat, J., the Court of Chancery acted on the analogy of Statute of Limitation (vide Halsbury, Vol.
14, p. 647, article 1190).
It seems to me, however, that the above solution is not quite appropriate for petitions under article 32.
A delay of 12 years or 6 years would make a strange bed fellow with a direction or order or writ in the nature of mandamus, certiorari and prohibition.
Beating in mind the history of these writs I cannot believe that the Constituent Assembly had the intention that five Judges of this Court should sit together to enforce a fundamental right at the instance of a person, who had without any reasonable explanation slept over his rights for 6 or 12 years.
The history of these writs both in England and the U.S.A. convinces me that the underlying idea of the Constitution was to provide an expeditious and authoritative remedy against the inroads of the State.
If a claim is barred under the , unless there are exceptional circumstances, prima facie it is a stale claim and should not be entertained by this Court.
But even if it is not barred under the/radian , it may not be entertained by this Court if on the facts of the case there is unreasonable delay.
For instance, if the State had taken possession of property under a law alleged to be void, and if a petitioner comes to this Court 11 years after the possession was taken by the State, I would dismiss the petition on the ground of delay, unless there is some reasonable explanation.
The fact that a suit for possession of land would still be in time would not be relevant at all.
It is difficult to lay down a precise period beyond which delay should be explained.
I favour one year because this Court should not be approached lightly, and competent legal 'advice should be taken and pros and cons carefully weighed before coming to this Court.
It is common knowledge that appeals and representations to the higher authorities take time; time spent in pursuing these remedies may not be excluded under the , but it may ordinarily be taken as a good explanation for the delay.
It is said that if this was the practice the guarantee of article 32 would be destroyed.
But the article no where says that a petition, howsoever late, should be entertained and a writ or order or 836 direction granted, howsoever remote the date of infringement of the fundamental right.
In practice this Court has not been entertaining stale claims by persons who have slept over their rights.
There is no need to depart from this practice ,and tie our hands completely with the shackles imposed by the Indian .
In the case of applications under article 226 this Court observed in State of Madhya Pradesh vs Bhailal Bhai(1): "It may however be stated as a general rule that if there has been unreasonable delay the Court ought not ordinarily to lend its aid to a party by this extraordinary remedy of mandamus.
Again, where even if there is no such delay the Government or the statutory authority against whom the consequential relief is prayed for raises a prima facie triable issue as regards the availability of such relief on the merits on grounds like limitation, the Court should ordinarily refuse to issue the writ of mandamus for such payment.
In both these kinds of cases it will be sound use of discretion to leave the party to seek his remedy by the ordinary mode of action in a civil court and to refuse to exercise in his favour the extraordinary remedy under article 226 of the Constitution.
" In State of Kerala vs Aluminium Industries(2) Wanchoo, J., speaking on behalf of a large Bench of this Court, observed: "There is no doubt in view of the decision of this Court in Sales Tax Officer vs Kanhaiyalal(3) that money paid under a mistake of law comes within the word 'mistake ' in section 72 of the Contract Act and there is no question of estopped when the mistake of law is common to both the parties, which was the case here inasmuch as the respondent did not raise the question relating to Article 286 of the Constitution and the Sales Tax Officer had no occasion to consider it.
In such a case where tax is levied by mistake of law it is ordinarily the duty of the State subject to any provision in the law relating to sales tax (and no such provision has been brought to our notice) to refund the tax.
If refund is not made, remedy through court is open subject to the same restrictions and also to the period of limitation (see Article 96 of the Limitation Act, 1908), namely, three years from the date when the mistake becomes known to the person who has made the payment by mistake [see State of Madhya Pradesh vs Bhailal(1)].
In this view of the matter it was the duty of the State to (1) ; ,271 72.
(2) 16 S.T.C. 689, 692, (3) 837 investigate the facts when the mistake was brought to its notice and to make a refund if mistake was proved and the claim was made within the period of limitation.
" But these cases cannot directly apply to petitions under article 32 because they proceed from the premise that the remedy is discretionary under article 226.
Coming to the facts of this case, which have been stated in detail by Mitter, J., it seems to me that the delay in coming to this Court has been adequately explained.
In brief, the facts are these: The Sales Tax Officer, by his order dated March 17, 1958, forfeited a sum of Rs. 26,563.50 under section 21 (4) of the Bombay Sales Tax Act (Bombay Act III of 1953), which provision is similar to section 12A(4) of the Bombay Sales Tax Act, 1946.
The petitioner promptly filed a writ petition in the Bombay High Court challenging this order.
His petition was dismissed on November 28, 1958.
He also failed in appeal before the Division Bench on July 7, 1959.
An order of attachment followed.
The petitioner paid the sum of Rs. 26,563.50 in various instalments from October 3, 1959, to August 8, 1960.
By letter dated January 9, 1962, the petitioner was called upon to pay a penalty amounting to Rs. 12,517/68 on account of late payment of sales tax dues but this order of penalty was ultimately cancelled.
The Gujarat High Court (Shelat, C.J., and Bhagwati, J.) in Kantilal Babulal
H.C. Patel, Sales Tax Officer(x) held on December 2, 1963, that section 12A(4) of the Bombay Sales Tax Act, 1946, was valid and did not violate article 19(1) (f) as it was saved by article 19(5).
On September 29, 1967, this Court, on appeal, in Kantilal Babulal vs
H.C. Patel Sales Tax Officer(2) struck down this provision as it infringed article 19(1)(f).
On February 9, 1968, four petitioners hereinafter compendiously referred to as the petitioner filed this petition praying that the order dated March 17, 1958, and the notice and order dated December 18, 1958, and December 24, 1958, be quashed.
There is no doubt that under section 72 of the Contract Act the petitioner would be entitled to the relief claimed and the refund of the amount if he paid the money under mistake of law.
I find it difficult to appreciate why the payment was not made under a mistake of law.
In my opinion the petitioner was mistaken in thinking that the money was liable to be refunded under a valid law.
Nobody has urged before us that the grounds which he had raised before the High Court were sound.
The petitioner had 'attempted to raise before the Bombay High Court the following grounds: (1) 16 S.T.C. 973.
(2) 21 S.T.C. 174.
838 1.
Inasmuch as the sum of Rs. 26,563.50 was paid by way of refund under the Bombay Sales Tax Act 1946, the taxing authorities had exceeded their power under section 21 (4) of the Act of 1953, in forfeiting the said sum of money.
Assuming that the respondent had power to forreit the sum under the Act of 1953, it was strictly limited to taxes payable trader the provisions of the Act .and as no tax was payable on outside sale the authorities had no power to forfeit the sum of Rs. 26,563.50.
Even assuming while denying that the respondent had power to forfeit the sum of Rs. 26,563.50, the power to forfeit an amount as a tax presupposes a power to impose a tax and inasmuch as on a proper construction of the relevant provisions of the Constitution no State Legislature had at any time a power to impose tax on the aforesaid transactions, the power to forfeit tax in respect of those transactions is ultra vires the State Legislature.
" The learned Single Judge held: "This appears to me to be a gross case where even if I was of the opinion that the order is invalid and involved violation of fundamental rights would not in my discretion interfere by way of issuing a writ.
I 'am not depriving the petitioner of any other appropriate remedy.
I have, therefore, decided to dismiss this petition on that single ground.
" The Division Bench, on appeal, decided on the limited ground that "Mr. Justice K.K. Desai having exercised his discretion no Case is made out for interference with the exercise of that discretion." The petitioner rightly did not file an appeal to this Court for he would have had little chance of succeeding.
Suppose a petitioner challenges a provision of the Sales Tax Act before the High Court on the ground that it does not fall within List II or List III of the Seventh Schedule.
He fails and pays the tax and does not appeal to the Supreme Court.
Ultimately, in another petition, the provision is struck down under article 14 or article 19, a point which he and his lawyers never thought of All assessees who had paid tax without challenging the provision would be entitled to approach this Court under article 32 and claim a refund (see Sales Tax Officer, Benaras vs Kanhaiya Lal Mukundlal Saraf) (1).
But why not the assessee who applied to (1) 839 the High Court ? The answer given is that he had thought at one time that the law was bad, though on wrong grounds.
If a law were framed sanctioning the above discrimination, I believe, it would be difficult to sustain it under article 14, but yet this is the discrimination which the respondent wants me to sanction.
The grounds extracted above show that it never struck the petitioner that the provision could be challenged on the ground ultimately accepted by this Court.
If the petitioner had not thought of going to the Bombay High Court on the points he did, and had paid on demand, as most of the assessees do, he would, I imagine, have been entitled to maintain this petition.
But it is now said that the petitioner 's position is worse because he exercised his right to approach the High Court under article 226.
The contention seems to be that when a petitioner approaches a High Court and fails, he can no longer suffer from any mistake of law even if the point on which this Court ultimately strikes down the provision, never struck him or his lawyer or the Court.
I cannot uphold this contention.
In my opinion the petitioner was under a mistake of law, when he paid up, the mistake being that he thought that section 12A (4) was a valid provision in spite of its imposing unreasonable restrictions.
This mistake he discovered like 'all assessees when this Court struck down section 12A(4) of the Bombay Sales Tax Act.
He has come to this Court within six months of that day and there is no delay.
The petition is accordingly allowed and the impugned order dated March 17, 1958, quashed and the respondent directed to refund the amount.
Under the circumstances there will be no order as to costs.
Bachawat, J. I have had the advantage of reading the judgment prepared by G.K. Mitter, J.
For the reasons given in this judgment, 1.
agree with the order proposed by him.
As the earlier petition filed in the High Court was not dismissed on the merits, the present petition is not barred by res judicata or principle analogous thereto.
The petitioners realised Rs. 26,563.50 P from their customers outside Bombay on account of sales tax.
The Sales Tax Officer by his order dated March 17, 1958 forfeited this sum under section 21 (4) of the Bombay Sales Tax Act 3 of 1953.
On March 28, 1958 the petitioners filed a writ petition ' in the Bombay High Court seeking to restrain the Sales Tax Officer from recovering the amount.
They pleaded that they were not liable to pay the amount, that section 21 (4) was ultra vires the powers of the State legislature and that the order of forfeiture was violative of articles 19(1) (f) and 265 of the Constitution and was invalid.
On November 28, 1958, K.K. Desai, J. dismissed the petition.
He held that the petitioners having defrauded other persons were not 840 entitled to any relief.
The petitioners filed an appeal against the order.
In the memorandum of appeal, they pleaded that the threatened levy was in violation of articles 19(1)(f) and 31 of the Constitution.
The appeal was dismissed on July 13, 1959.
In the meantime on December 24, 1958 the Collector of Bombay attached the petitioners ' properties.
Between August 3, 1959 and August 8, 1960 the petitioners paid the sum of Rs. 26,563.50 P to the Collector of Bombay.
In Civil Appeal No. 126 of 1966, Kantilal Bapulal & Bros. vs
H.C. Patel decided on September 29, 1967 this Court struck down section 12(A)(4) of the Bombay Sales Tax Act, 1946 as unconstitutional and violative of article 19 ( 1 ) (f).
The arguments in the present 'appeal proceeded on the assumption that section 21 (4) of the Bombay Sales Tax Act, 1953 is liable to be struck down on the same ground.
On February 9, 1968 the petitioners filed the present writ petition under article 32 of the Constitution claiming refund of Rs. 26,563.50 P under section 72 of the .
They alleged that they paid this sum to the Collector under coercion and/or mistake of law, and that they discovered the mistake on September 29, 1967.
Two points arise for decision in this writ petition: (1 ) Would the claim be barred by limitation if it were the subject matter of a suit in February 1968 and (2) if so, are the petitioners entitled to any relief in this petition under article 32 of the Constitution.
Subject to questions of limitation, waiver and estoppel, money paid under mistake or coercion may be recovered under section 72 of the .
The fight to relief under section 72 extends to money paid under mistake of law, i.e., "mistake in thinking that the money paid was due when, in fact, it was not due.
" Shiva ' Prasad Singh vs Srish Chandra Nandi ( 1 ), Sates Tax Officer vs Mukundlal Saraf(2).
In my opinion, the petitioners were ' not labouring under any mistake of law when they made the payments.
As early as March 1958 they filed a wait petition for restraining the levy under the order dated March 17, 1958 claiming that the order was invalid and that section 21 (4) of the Bombay Sales Tax Act, 1953 was ultra vires and unconstitutional.
They might not have then known the precise ground upon which the Court subsequently struck down a similar provision of law, but they had discovered presumably under legal advice that they were not legally bound to make any payment.
After the writ petition was dismissed their properties were attached and they made the payments under coercion in 1959 and 1960.
The payments were not made under a mistake of law or as pointed out in Shiva Prasad Singh 's Case(1) under a mistake in thinking that the money was due.
They cannot claim any relief on the ground of mistake.
(1) [1949] L.R. 76 I.A. 244, 254.
(2) [1959] S.C.R. 1350, 1361, 1362.
841 As we are assuming in favour of the petitioners that section 21 (4) of the Bombay Sales Tax Act 1953 as invalid, we must hold that they made the payments under coercion.
A suit for the recovery of the money on this ground instituted on January 1, 1964 would be governed by Article 24 of the and the period of limitation would be three years from the dates in 1959 and 1960 when the money was received by fife respondents.
The petitioners cannot obtain an extension of fife period under section 30(a) of the as article 62 of the Indian Limitation Act, 1908 prescribed fife same period of limitation.
A suit for recovery of tax or other levy illegally collected was governed by article 62 and not by article 120, see A1.
Venkata Subba Rao vs State Andhra Pradesh(1).
Accordingly a suit for the recovery of money instituted in February 1968 would be barred by limitation.
If the petitioners could claim relief on the ground of mistake the suit would be governed by article 96 of fife Indian Limitation Act, 1908 and time would begin to run from the date when the mistake becomes known to the plaintiff.
In State of Madhya pradesh vs Bhailal Bhai & Ors.(2), and State of Kerala vs Aluminium Industries Ltd.(3) it was held that article 96 applied to a suit for recovery of money paid under a mistake of law.
Section 17(1)(c) of the now provides that in the case of a suit for relief from the consequences of a mistake the period of limitation does not begin to run until the plaintiff has discovered the mistake or could with reasonable diligence have discovered it.
Section 17(1)(c) corresponds to section 26(c) of the Limitation Act, 1939 (2 & 3 Geo. 6, c. 21).
It was held in Re Diplock(4) that sec.
26(c) applied by analogy to a suit for recovery of money paid under mistake of law.
On appeal, the House of Lords said that the section presented many problems and refrained from saying more about it, see Ministry of Health vs Simpson(5).
In some American States, it has been held that a mistake of law cannot be regarded as a mistake within a similar statute and time ran from the date of the accrual of the cause of action, see Corpus Juris Secundum, vol.
54, Limitation of Actions, Article 198, page 202, Morgan vs Jasper County(6), and the cases referred to therein.
It is not necessary to pursue the matter any further as the petitioners cannot claim relief on the ground of mistake.
Accordingly, I express no opinion on the scope of section 17(c) of the , For the reasons already stated a suit for the recovery of the money instituted in February 1968 would be barred by limitation.
(1) ; , 612 620.
(2) [1964] 6 S.C.R. 261, 274.
(3) [1965] 16 S.T.C. 689, 692.
(4) , 515 516.
(5) ,277.
(6) 11 A.L.R. 634:274 N.W. 310.
842 The next and the more fundamental question is whether in the circumstances the Court should give relief in a writ petition under article 32 of the Constitution.
No period of limitation is prescribed for such a petition.
The right to move this Court for enforcement of fundamental rights is guaranteed by article 32.
The writ under article 32 issues as a matter of course if a breach of a fundamental right is established.
Technical rules applicable to suits like the provisions of section 80 of the Code of Civil Procedure are not applicable to a proceeding, under article 32.
But this does not mean that in giving relief under article 32 the Court must ignore and trample under foot all laws of procedure, evidence, limitation, res judicata and the like.
Under article 145 (1 ) (c) rules may be framed for regulating the practice and procedure in proceedings under article 32.
In the absence of such rules the Court may adopt any reasonable rule of procedure.
Thus a petitioner has no right to move this Court under article 32 for enforcement of his fundamental right on 'a petition containing misleading and inaccurate statements and if he files such a petition the Court will dismiss it, see W.P. No. 183 of 1966, Indian Sugar and Refineries Ltd. vs Union of India decided on March 12, 1968.
On grounds of public policy it would be intolerable if the Court were to entertain such a petition.
Likewise the Court held in Daryao vs The State of U.P.(1) that the general principles of res judicata applied to a writ petition 'under article 32.
Similarly, this Court has summarily dismissed innumerable writ petitions on the ground that it was presented after unreasonable delay.
The normal remedy for recovery of money paid to the State under coercion or mistake of law is by suit.
Articles 32 and 226 of the Constitution provide concurrent remedy in respect of the same claim.
The extraordinary remedies under the Constitution are not intended to enable the claimant to recover monies, the recovery of which by suit is barred by limitation.
Where the remedy in a writ application under article 32 or article 226 corresponds to a remedy in an ordinary suit and the latter remedy is subject to the bar of a statute of limitation, the Court in its writ jurisdiction acts by analogy to the statue adopts the statute as its own rule of procedure and in the absence of special circumstances imposes the same limitation on the summary remedy in the writ jurisdiction. 'On similar grounds the Court of Chancery acted on the analogy of the statutes of limitation in disposing of stale claims though the proceeding in a Chancery was not subject to any express statutory bar, see Halsbury 's Laws of England, vol.
14, page 647, article 1190, Knox vs Gye(2).
Likewise the High Court acts on the analogy of the statute of limitation in a proceeding under article 226 though the statute does not expressly apply to the proceeding.
The Court will almost always refuse to give relief under article 226 if the ; C2) , 674.
843 delay is more than the statutory period of limitation, see Stale of.
Madhya Pradesh vs Bhailal Bhai(1).
Similarly this Court acts on the analogy of the statute of limitation in respect of a claim under article 32 of the Constitution though such claim is not the subject of any express statutory bar of limitation.
If the right to a property is extinguished by prescription under section 27 of the the petitioner has no subsisting right which can be enforced under article 32 (see Sobhraj Odharmal vs Slate of Rajasthan(2).
In other cases where the remedy only and not the right is extinguished by limitation, it is on grounds of public policy that the Court refuses to entertain stale claims under article 32.
The statutes of limitation are rounded on sound principles of public policy.
As observed in Whitley Stoke 's Anglo Indian Codes, Vol.
11 p. '940: "The law is rounded on public policy, its aim being to secure the quiet of the community, to suppress fraud and perjury, to quicken diligence, and to prevent oppression.
" In Her Highness Ruckmaboye vs Lulloobhoy Mottickchund(a) the Privy Council observed that the object of the statutes of limitation was to give effect to the maxim, "interest reipublicae ut sit finis litium" (Co Litt 303) the interest of the State requires that there should be a limit to litigation.
The rule of res judicata is rounded upon the same rule of public policy, see Daryao vs State of U.P.(4) at page 584.
The other ground of public policy upon which the statutes of limitation are rounded is expressed in the maxim "vigilantibus non dormientibus jura subveniunt" (2 Co. Inst.
690) the laws aid the vigilant and not those who slumber.
On grounds of public policy the Court ' applies the principles of res judicata to writ petitions under article 32.
On like grounds the Court acts on the analogy of the statutes of limitation in the exercise of its jurisdiction under article 32.
It follows that the present petition must be dismissed.
Miller, J.
The facts leading up to the filing of the petition under article 32 of the Constitution are as follows.
The first petitioner before us is a registered partnership firm (hereinafter referred to as 'the firm ') carrying on business in Bombay and the other petitioners are partners of the said firm.
The firm has been carrying on business as a dealer in and a trader of textiles and art silk etc.
It was registered as a dealer 'and has held registration certificates under the various sales tax laws prevailing in the State of Bombay from 1946 onwards including the Bombay Sales Tax Act 5 of 1946, the Bombay Sales Tax Act 3 of 1953 and the Bombay Sales Tax Act 51 of 1959.
In the course of assessment for the assessment period commencing on April 1, 1949 and ending on 31st October 1952 the 273 74.
(2) [1963] Supp. 1 S.C.R. 99, 111.
[1851 52] 5 M.I.A., 234. 251.
(4) [1962] 1 S.C.R. 574.
844 firm contended that its sales of the value of Rs. 13,42,165 15 6 were not liable to be taxed under the provisions of the Bombay Sales Tax Act then in force as the goods were delivered as a direct result of such sales for purposes of consumption outside the State of Bombay.
The firm claimed that it was entitled to a refund of the amount which it had collected from its customers and paid on account of the aforesaid sales at the time of submitting the returns of its turnover.
The Sales Tax Officer did not accept this contention but on appeal the Assistant Collector of Sales Tax upheld the firm 's contention after examining the details submitted by it and found that sales involving the sum of Rs. 26,563 8 0 realised by way of tax were protected under article 286 of the Constitution.
He therefore directed that the said sum be refunded to the firm on a proper application.
This appellate order was passed on November 7, 1956.
The firm preferred an application for refund of Rs. 26,563.50 on November 13, 1956 whereupon the Assistant Collector (the appellate authority) simultaneously with the issue of 'a cheque for the above amount by way of refund wrote a letter dated May 11, 1957 to the effect that the petitioner should produce before him within one month of the date of the cheque receipts totalling Rs. 26,563.50 from its customers outside Bombay State to show that the refund had been passed on to them.
It appears that the petitioner did not fulfil this condition and a notice dated 28th January 1958 was issued calling upon the firm to show cause why the said sum of Rs. 26,563.50 should not be forfeited under section 21(4) of the Bombay Sales Tax Act, 1953.
In reply thereto, the firm stated by letter dated February 7, 1958 that it had collected from its customers outside the State of Bombay the said sum of money and "under an honest mistake of law had paid the same to the sales tax authorities.
" The firm went on to add that the order for refund had been made only when the authorities were satisfied that 'it was not liable to pay the said sum but the latter had insisted upon a condition that the firm should in its turn refund the said amount to its customers from whom the collection had been made.
The letter records that the firm "had agreed to that condition under coercion even though in ,law the authorities were bound to refund the said ,amount without any such condition.
" Further the firm 's case in that letter was that the authorities had "no right to forfeit any amount collected by a dealer under a mistake of law in respect of these transactions" and the threat to forfeit the amount on the ground that it had not been refunded to the firm 's customers was without the authority of law.
The order on the show cause notice passed on March 17, 1958 records that though given sufficient opportunity to produce stamped receipts from its customers the firm had failed to do so and had thereby contravened the provisions of section 21(2) of the Bombay Sales Tax Act.
The firm was directed to refund the said sum to 845 the Reserve Bank of India on or before April 1, 1958 failing which it would be recoverable as arrears of land revenue from the firm together with penalty.
The order was purported to be passed under section 21 (4) of the Bombay Sales Tax Act, 1953.
Within a few days thereafter i.e. on March 28, 1958 the firm presented an application to the High Court of Bombay under article 226 of the Constitution for the issue of a writ in the nature of certiorari quashing the above mentioned order of forfeiture and for incidental reliefs.
In paragraph 4 of the petition it was stated that the order of forfeiture was "without the authority of law and therefore in violating of article 19(1)(g) and article 265 of the Constitution.
" It appears that a similar application had been presented on behalf of Pasha Bhai Patel and Co. (P) Ltd. to the Bombay High Court and the application of the firm along with the first mentioned application were disposed of by a learned single Judge of the Bombay High Court on November 28, 1958.
The main judgment was delivered in Pasha Bhai Patel and Company 's case.
The learned Judge observed in the course of his judgment that there was no merit whatsoever in it and "justice did not lie in his (the petitioner 's) side and this was a matter in which the court should not interfere by way of a writ and give relief to the petitioner company.
" The Judge further observed that the petitioner has not referred to fundamental rights of any kind in the petition and said: "This appears to me to be a gross case where even if I was of the opinion that the order is invalid and involved violation of fundamental rights, I would not in my discretion interfere by way of issuing a writ.
I am not depriving the petitioner of any other appropriate remedy.
I have therefore decided to dismiss this petition on that single ground.
" No copy of the petition in Pasha Bhai Patel and Company 's case is before us but the present petitioner, as shown already, did complain of violation of article 19(1)(g) and article 265 of the Constitution besides contending that the order was "ultra vires, bad and inoperative in law.
" Dealing with the petition of the firm the learned Judge said that "there was no merit in the case and justice did not lie on the side of the petitioner" and for reasons given in Pasha Bhai Patel and Co. 's case the petition was dismissed.
The firm went up in appeal to the same High Court.
A note may be taken of some of the grounds in the memorandum of appeal filed by the firm.
They were inter alia : "(13) The learned Judge erred in not deciding the petition on merits even when there was a question of violation of fundamental rights.
846 (16) The learned Judge erred in holding that this was a gross case where even if he had 'been of the opinion that the order was invalid or that it involved violation of fundamental rights, he would not in his discretion interfere by way of issuing a writ.
(30) The learned Judge failed to appreciate that the order of forfeiture was nothing but the deprivation of property without the authority of law and the action of the respondent was an unreasonable restriction on the fundamental rights of the petitioner under article 19(1)(f) and article 31 of the Constitution of India.
" In dismissing the appeal the learned Judges of the Division Bench observed: "The appellant claims to retain with himself amounts to which he has no claim and the appellant is seeking to come before this Court to retain with himself amount which he has obtained from the sales tax authorities on a representation that he is going to refund the same and which he has not refunded.
Mr. Justice K.K. Desai was of the view that the claim made by the appellant was a gross claim and even if it involved violation of fundamental rights, in exercise of his discretion, he will not interfere by issuing a writ.
The learned Judge having exercised his discretion which he undoubtedly was entitled to exercise, we do not think sitting in appeal we would be justified in exercising our powers as an appellate court in interfering with the order under appeal.
We may observe that we are not dealing with this case on the merits at all.
We have not considered the question whether the appellant is entitled in law to retain the moneys which he has obtained from the sales tax department.
We have decided this 'appeal on the limited ground that Mr. Justice K.K. Desai having exercised his discretion, no case is made out for our interference with the exercise of that discretion.
" It is therefore amply clear from the above that the learned JudGes of the Bombay High Court did not examine the merits of the firm 's contention that the order of refund was without the authority of law or ultra ' vires or in violation of an}, fundamental rights of the partners of the firm.
They merely exercised their discretion on the question of issue of a writ under article 226 of the Constitution in view of the firm 's conduct in obtaining an order for refund of the amount mentioned and later on refusing to fulfil the condition imposed.
It does not appear that the firm took any further steps in the court of law for vindicating its position before filing the present 847 writ petition.
It received a notice dated December 18, 1958 under the Bombay City Land Revenue Act 2 of 1876 calling upon it to pay the said sum of Rs. 26,563.50 to the State of Bombay failing which proceedings were threatened to be taken by attachment and sale of its property and by other remedies provided by section 13 of the Land Revenue Act.
It appears that the Collector of Bombay actually issued an order of attachment on the right, title and ' interest of two of the partners of the firm including the goodwill and tenancy right in the premises where the business was carried on.
The firm paid the sum of Rs. 26,563.50 in various instalments beginning on October 3, 1959 and ending on August 8, 1960.
In paragraph 8 of the present petition to this Court it is submitted that the petitioners "paid the sum to the State of Bombay under coercion 'and/or mistake of law.
" The petitioners also state they "did not know that the sections of the Sales ,Tax Acts under which the said sum was sought to be forfeited and/or recovered and/or retained were ultra vires.
" In paragraph 10 of the petition it is stated that the petitioners discovered their mistake in law when they came to know of the decision of this Court dated September 29, 1967 that section 12A(4) of the Bombay Sales Tax Act 5 of 1946 was ultra vires.
In paragraph 14 of the petition the firm also states: "that the said sum had been forfeited and/or recovered and/or retained by the respondents from the petitioners in violation of article 265, article 31 and article 19 ( 1 ) (f) of the Constitution.
The fundamental rights of the petitioners have thus been violated.
The petitioners submit that they have been deprived of their property, to wit, the said sum, by the respondents without any authority in law and contrary to the fundamental rights guaranteed to the petitioners by articles 19(1)(f) and 31 of the Constitution.
" The grounds of law under which the firm claimed that the action of the State of Bombay and the respondents in recovering, retaining, forfeiting and not returning the said sum were void and invalid in law are set forth in paragraph 15 of the petition.
In the view which we take of the firm 's claim and in view of the decision of this Court in Kantilal Babulal and Bros. vs H.C. Patei(1) dated September 29, 1967, it is not necessary to examine the validity or otherwise of the provisions of section 12A(4) of the Act of 1946 or the corresponding section of the Act of 1953 i.e. section 21 (4).
The appeal of Kantilal Babulal and Bros. vs
H.C. Patei(1) decided by this Court on September 29, 1967 was from a decision of the High Court of Gujarat reported in 16 Sales Tax (1) 21 S.T.C. 174.
L6Sup.
C.I./69 3 848 Cases 973.
The Gujarat High Court had held that section 12A(4) was saved by Art, 19 (5) of the Constitution.
The appeal by the assessee was allowed by this Court on the short ground that assuming that section 12A(4) was a penal provision within the legislative competence of the legislature, it was violative of article 19(1) (f) ' inasmuch as it did not lay down any procedure for ascertaining whether in fact the dealer concerned had collected any amount by way of tax from his purchasers outside the State 'and if so what that amount was.
It was further observed that the section did not contemplate any adjudication nor did it provide for making any order and on a reasonable interpretation of the impugned provision.
it was observed "that the power conferred under section 12A(4) was unguided, uncanalised and uncontrolled.
" On the above reasoning the Court held that the provisions in section 12A(4) were not a reasonable restriction on the fundamental right guaranteed under article 19 ( 1 ) within the meaning of article 19 ( 5 ).
To establish that the payments totalling Rs. 26,563.50 made in the years 1959 and 1960 were under a mistake of law, the petitioners must satisfy the court that they paid the money under a genuine belief that the law allowed it but that they later discovered that they were under no legal obligation to pay.
Repayment of money paid under a mistake is provided for by section 72 of the occurring in Chapter V of the said Act which deals with certain relations resembling those created by a contract.
It reads: "A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return "" It was laid down by the Judicial Committee of the Privy Council in Sri Sri Shiba Prasad Singh, deceased, now represented by Kali Prasad Singha vs Maharaja Srish Chandra Nandi(x) that: "Payment 'by mistake ' in section 72 must refer to a payment which was not legally due ,and which could not be enforced: the mistake is thinking that the money paid was due when in fact it was not due.
" The above decision of the Judicial Committee was relied on by this Court in Sales Tax Officer vs Kanhaiya Lal Mukundlal Saraf(2) where it was said: "The Privy Council decision has set the whole controversy at rest and if it is once established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law the party is entitled to recover the same and the party receiving the (1) 76 I.A. 244, 254.
(2) , 1363.
849 same is bound to repay or return it.
No distinction can therefore be made in respect of a tax liability and any other liability on a plain reading of sec.
72 of the Contract Act . .
In Mukundlal 's case(1) the respondent firm had paid sales tax in respect of its forward transactions in pursuance of the assessment orders passed by the Sales Tax Officer for the years 1949 to 1951.
The levy of sales tax on forward transactions being held to be ultra vires by the High Court of Allahabad by its judgment delivered on February 27, 1952 in the case of Budh Prakash Jai Prakash vs
S.T.O. Kanpur, the respondent by its letter dated 8th July 1952 asked for a refund of the amount of sales tax paid by it under assessment orders passed on May 31, 1949, October 30, 1950 and August 22, 1951.
The Commissioner of Sales Tax U.P. refused to refund the ,amount claimed by letter dated July 19, 1952.
The above judgment of the Allahabad High Court was confirmed by this Court on May 3, 1954 see Sales Tax Officer, Pilibhit vs Budh Prakash Jai Prakash(2).
In the meanwhile the respondent had filed a writ petition No. 355 of 1952 in the High Court for quashing the ,assessment orders which was allowed by an order of a single Judge on November 30, 1954.
The appellant 's Special Appeal from the said order contending that money paid under a mistake of law was irrecoverable being dismissed, a further appeal was taken to this Court under a certificate.
On the facts of that case the Court held that both the parties were labouring under a mistake of law the legal position as established later as by the decision of the Allahabad High Court in Budh Prakash Jai Prakash vs The S.T.O. Kanpur subsequently confirmed by this Court in S.T.O. Pilibhit vs Budh Prakash Jai Prakash(2 ) not having been known to the parties at the relevant time. ' This mistake of law had become apparent only on May 3, 1954 when this Court confirmed the decision of the Allahabad High Court in Sales Tax Officer, Pilibhit vs Budh Prakash Jai Prakash(2) observing: "on that position being established the respondent became entitled to recover back the said amounts which had been paid by mistake of law.
The state of mind of the respondent would be the only thing relevant to consider in this context and once the respondent established that the payments were made by it under a mistake of law . it was entitled to recover back the said amounts.
and the State of U.P. was bound to repay or return the same to the respondent irrespective of any other consideration .
On a true interpretation of section 72 of the the only two circumstances there indicated as 'entitling the party to recover the money (1) [1959]S.C.R. 1350.
(2) [1955] 1 S.C.R. 243.
850 back are that the moneys must have been paid by mistake or under coercion.
" In State of Madhya pradesh vs Bhailal Bhai(1) this Court had to deal with 31 appeals arising out of an equal number of applications filed before the Madhya Pradesh High Court contending that the taxing provisions under which the tax was assessed and collected from the petitioners (the Madhya Pradesh Sales Tax Act) infringed article 301 of the Constitution and did not come within the special provision of article 304(a).
In all the petitions a prayer was made for refund of the taxes collected.
The High Court allowed the prayer for refund in 24 applications but rejected the same in the other applications.
This Court agreed with the decision of the High Court that the imposition of the tax contravened the provisions of article 301 of the Constitution and was not within the saving provisions of article 304( 'a) and on that view observed that the payment was made under a mistake within section 72 of the and so the Government to whom the payment had been made must repay it.
The tax provisions under which these taxes had been assessed and paid were declared void by the High Court of Madhya Pradesh in their decision in Mohammad Siddique vs The State of M.P. on 17th January, 1956.The respondeats claimed to have discovered their mistake in making the payments after they came to know of these decisions.
Sixteen of the applications out of 31 were made to the High Court within three years from 17th January 1956 and the High Court took the view that this was not an unreasonable delay and in that view ordered refund.
The High Court also ordered refund in seven other applications made more than three years eight months after the said 17th January 1956.
This Court although of opinion that the High Court had power for the purpose of enforcement of fundamental rights and statutory rights to give consequential relief by ordering repayment of money realised by the Government without the authority of law, observed: "At the same time we cannot lose sight of the fact that the special remedy provided in article 226 is not in tended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defenses legitimately open in such actions.
It has been made clear more than once that the power to give relief under article 226 is a discretionary power.
This is specially true in the case of power to issue writs in the nature of mandamus.
Among the several matters which the (Courts rightly take into consideration in the exercise of that discretion is the delay made by the aggrieved party (1)[1964] 6 S.C.R 261 851 in seeking this special remedy and what excuse there is for it.
Thus, where, as in these cases, a person comes to the Court for relief under article 226 on the allegation that he has been assessed to tax under a void legislation and having paid it under a mistake is entitled to get it back, the court, if it finds that the assessment was void, being made under a void provision of law, and the payment was made by mistake, is still not bound to exercise its discretion directing repayment.
Whether repayment should be ordered in the exercise of this discretion will depend in each case on its own facts and circumstances.
It is not easy nor is it desirable to lay down any rule of universal application.
It may however be stated as a general rule that if there has been unreasonable delay the court ought not ordinarily to lend its aid to a party by this extraordinary remedy of mandamus.
Again, where even if there is no such delay the Government or the statutory authority against whom the consequential relief is prayed for raises a prima facie triable issue as regards the availability of such relief on the merits on grounds like limitation, the Court should ordinarily refuse to issue the writ of mandamus for such payment.
In both these kinds of cases it will be sound use of discretion to leave the party to seek his remedy by the ordinary mode of action in a civil court and to refuse to exercise in his favour the extraordinary remedy under article 226 of the Constitution.
" In State of Kerala vs Aluminium Industries Ltd.(1) the respondents after submitting returns under the Sales Tax Act for the period May 30, 1950 to March 31, 1951 showing a net turnover exceeding Rs. 23 lakhs and depositing necessary sales tax claimed a refund on the ground of having discovered their mistake soon after March 7, 1951.
The petition to the Kerala High Court under article 226 of the Constitution was opposed on behalf of the State on various grounds.
Holding that money paid under a mistake of law was recoverable, this Court called for a finding from the Sales Tax Officer on the question whether the writ petition was within three years of the date on which the mistake first became known to the respondent so that a suit for refund on that date would not be barred under article 96 of the Indian of 1908.
Speaking for myself I am not satisfied that the petitioners in this case had made a mistake in thinking that the money paid was due when in fact it was not due.
As already noted, in their reply to the show cause notice dated February 7, 1958 the petitioners ;case was that the threat of the sales tax authorities to forfeit the amount was without the authority of law and that the firm had (1) 16 S.T.C. 689.
852 agreed to the condition of refunding the amount received to its own coustomers under coercion even though in law the authorities were bound to refund without any such condition.
The petitioners did not content themselves merely by opposing the claim of the sales tax authorities to forfeit the amount but suited their action to their belief by presenting a writ petition to the Bombay High Court describing the order of forfeiture as without the authority of law and in violation of article 19(1)(g) and article 265 of the Constitution 'and praying for the necessary reliefs.
They did not accept the decision of the learned single Judge of :the Bombay High Court under article 226 of the Constitution but filed their appeal raising practically the same contentions as they have done in the present petition except that they did not state having discovered any mistake on 'a perusal of the decision of any court of law.
The grounds of appeal to the Divisional Bench of the Bombay High Court are illustrative of the frame of mind and viewpoint of the petitioners then.
They complained about the violation of their fundamental rights, the illegality of the order of forfeiture and in particular mentioned the unreasonable restriction on their fundamental rights enshrined in article 19(1)(f) of the Constitution.
Further, they had the benefit of the judgment of the appeal Bench of the Bombay High Court that the case was not being decided on the merits at all and even if there was any violation of the fundamental rights of the petitioners the exercise of discretion by the learned single Judge would not be interfered with in appeal.
It was therefore clear to the petitioners that there was no adjudication as to their fundamental rights or the merits of their claim and there was nothing to prevent the petitioners then from coming up to this Court by preferring an appeal from the judgment of the Bombay High Court or by instituting a suit for declaration of the order of forfeiture illegal and ultra vires and for an injunction restraining the State from giving effect thereto.
Before the Bombay High Court the petitioners questioned the legality of the order of forfeiture and prayed for quashing it on the ground of the threatened invasion of their fundamental rights.
On these facts it is idle to suggest that the petitioners ever entertained any belief or thought that the money was legally due from them.
The way they asserted their position under the law precludes any inference that they were ever influenced by a mistake of law or that they ever failed to appreciate the correct position under the law.
Even after the decision of the Bombay High Court they did not willingly pay up the amount forfeited but only made disbursements after an attachment had been levied on the business including the tenancy of the premises and its good will.
They protested against the order of forfeiture not only out of court but in court and only paid after the issue of a legal process.
853 It is therefore not possible to hold that the payments complained of following the order of forfeiture were made in mistake of law.
They were payments under compulsion or coercion A payment under coercion has to be treated in the same way for the purposes of a claim to refund 'as a payment under mistake of law, but there is an important distinction between the two.
A payment under mistake of law may be questioned only when the mistake is discovered but a person who is under no misapprehension as to his legal rights and complains about the illegality or the ultra vires nature of the order passed against him can immediately after payment formulate his cause of action as one of payment under coercion.
The Limitation Acts do not in terms apply to claims against the State in respect of violation of fundamental rights.
A person ',complaining of infraction of any such rights has one of three courses open to him.
He can either make an application under article 226 of the Constitution to a High Court or he can make an application to this Court under article 32 of the Constitution, or he 'can file a suit asking for appropriate reliefs.
The decisions of various High Courts in India have firmly laid down that in the matter of the issue of ,a writ under article 226 the courts have a discretion and may in suitable cases refuse to give relief to the person approaching it even though on the merits the applicant has a substantial complaint as regards violation of fundamental rights, Although the does not apply, the courts have refused to give relief in cases of long or unreasonable delay.
As noted above in Bhailal Bhai 's case(1), it was observed that the "maximum period fixed by the legislature as the time within Which the relief by a suit in a civil court must be brought may ordinarily be taken to be a reasonable standard by which delay in seeking remedy under article 226 can be measured.
" On the question of delay we see no reason to hold that a different test ought to be applied when a party comes to this Court under article 32 from one applicable to applications under article 226.
There is a public policy behind all statutes of limitation and according to Halsbury 's Laws of England (Third Edition, Vol.
24), article 330 at p. 181: "The courts have expressed at least three different reasons supporting the existence of statutes of limitation, namely, (1) that long dorment claims have more of cruelty than justice in them, (2) that a defendant might have lost the evidence to disprove a stale claim and (3) that persons with good causes of action should pursue them with reasonable diligence.
" In my view, a claim based on the infraction of fundamental rights ought not to be entertained if made beyond the period fixed (1) ; 854 by the for the enforcement of the right by way of suit.
While not holding that the applies in terms.
I am of the view that ordinarily the period fixed by the should be taken to be a true measure of the time within which a person can be allowed to raise a plea successfully under article 32 of the Constitution.
article 16 of the of 1908 fixed a period of one year for a suit against Government to recover money paid under protest in satisfaction of a claim made by the revenue authorities on account of arrears of revenue or on account of demands recoverable as such arrears, from the date when the payment was made.
As an attachment was levied under section 13 of the Bombay City Land Revenue Act Ii of 1876 it is a moot question as to whether the payments made in 1959 and 1960 in this case would not attract the said article of the of 1908.
It was held by this Court in A.V. Subbarao vs The State(1) that the period of limitation for a suit to recover taxes illegally collected was governed by Article 62 of the of 1908 providing a space of three years from the date of payment.
But taking the most favourable view of the petitioners ' case, article 120, of the of 1908 giving a period of six years for the filing of a suit would apply to the petitioners ' claim.
The period of six years would have expired some time in 1966 but the of 1908 was repealed by the of 1963 and by section 30(a) of the Act of 1963 it was provided that: "Notwithstanding anything contained in this Act (a) any suit for which the period of limitation is shorter than the period of limitation prescribed by the Indian Limitation Act, 1908, may be instituted within a period of five years next after the commencement of this Act or within the period prescribed for such suit by the Indian Limitation Act, 1908, whichever period expires earlier: A claim for money paid under coercion would be covered by article 113 of the giving a period of three years from the first of January 1964 on which date the Act came into force.
The period of limitation for a suit which was formerly covered by article 120 of the Act of 1908 would in a case like this be covered by article 113 of the new Act and the suit in this case would have to be filed by the 1st January, 1967.
As the petition to this Court was presented in February 1968 a suit, if filed, would have been barred and in my view the petitioners ' claim in this case cannot be entertained having been preferred after the 1st of (1) ; 855 January, 1967.
The facts negative any claim of payment under a mistake of law and are only consistent with a claim for money paid under coercion.
As the petitioners have come to this Court long after the date when they could have properly filed a suit, the application must be rejected.
I may also note in brief another contention urged on behalf of the respondents that the present petition is barred by principles analogous to res judicata.
It was contended by learned counsel for the respondents that the decisions of the Bombay High Court were speaking orders and even if the petition to the Bombay High Court had been dismissed in limine there would be a decision on the merits.
I am unable to uphold this contention.
It was ,held in Daryao and others vs The State of U.P.(1) that when a petition 'under article 226 is dismissed not on the merits but because of laches on the party applying for the writ or because an alternative 'remedy is available to him, such dismissal is no bar to the subsequent petition under article 32 except in cases where the facts rouged by the High Court might themselves be relevant under under article 32.
It was pointed out in Joseph vs State of Kerala(2) that: "Every citizen whose fundamental right is infringed by the State has a fundamental right to approach this Court for enforcing his right.
If by a final decision of a competent Court his title to property has been negatived, he ceases to have the fundamental right in respect of that property and, therefore, he can no longer enforce it.
In that context the doctrine of res judicata may be invoked.
But where there is no such decision at all, there is no scope to call in its aid.
" The judgment of the Bombay High Court in 1958 clearly shows that the merits of the petitioners ' claim were not being examined.
I cannot however find no merit in the contention that because there is an invasion of a fundamental right of a citizen he can be allowed to come to this Court, no matter how long after the infraction of his right he applies for relief.
The Constitution is silent on this point; nor is there any statute of limitation expressly applicable, but nevertheless, on grounds of public policy I would hold that this Court should not lend its aid to a litigant even under article 32 of the Constitution in case of an inordinate delay in asking for relief and the question of delay ought normally to be measured by the periods fixed for the institution of suits under the Limitation The petition therefore fails and is dismissed with costs.
(1) ; (2) A.I.R. 1965 S.C. 1514.
856 Hegde, J. I had the advantage of studying the judgments just delivered by my brothers Sikri, Bachawat and Mitter, JJ.
The facts of the case are fully set out in those judgments.
I shall not restate them.
I agree with the decision of Mitter J. that to the facts of this case the rule laid down by this Court in Daryao and Ors.
vs The State of U.P. and Ors.(1) is inapplicable.
The principle underlying that decision as I understand, is that the right claimed by the petitioner therein had been negatived by a competent court and that decision having become final, as it was not appealed against, he could not agitate the same over again.
It is in that context the principle of res judicata was relied on.
A fundamental right can be sought to be enforced by a person who possesses that right.
If a competent court holds that he has no such right, that decision is binding on him.
The binding character of judgments of courts of competent jurisdiction is in essence a part of the rule of law on which administration of justice depends.
In view of the decision of this Court in Kantilal Babulal and Bros. vs
H.C. Patel(2) that section 12A(4) of the Bombay Sales Tax Act, 1946 is violative of article 19(1)(f) of the Constitution on the grounds that that section did not lay down any procedure for ascertaining whether in fact the dealer concerned had collected any amount by way of tax from its purchasers outside the State and if so what that amount was; neither the section nor any rule framed under the Act contemplated any enquiry much less a reasonable enquiry in which the dealer complained of could plead and prove his case or satisfy the authorities that their assumptions were wholly or partly wrong and further the section also did not provide for any enquiry on disputed questions of fact or law or for making an order, it follows that the impugned collection was without the authority of law and consequently the same is an exaction resulting in the infringement of one of the proprietary rights of the petitioners guaranteed to them under article 19(1 )(f) of the Constitution.
Hence the petitioners have a fundamental right to approach this Court under article 32 of our Constitution for appropriate relief and this Court has a duty to afford them appropriate relief.
In Kharak Singh vs The State of UP and Ors.(a) Rajagopala Ayyangar 1.
speaking for the majority observed that once it is proved to the satisfaction of this Court that by State action the fundamental right of a petitioner has been infringed it is not only the right but the duty of this Court under article 32 to afford relief to him by passing appropriate orders in that behalf.
The right given to the citizens to move this Court under article 32 is itself a fundamental right and the same cannot be circumscribed or curtailed except as provided by the Constitution.
It is in ; (2) 21 S.T.C. 174.
(3) [1964] 1 S.C.R. 332. 857 appropriate to equate the duty imposed on this Court to the powers, of the Chancery Court in England or the equitable jurisdiction of the American Courts.
A duty imposed by the Constitution cannot be compared with discretionary powers.
Under article 32.
the mandate of the Constitution is clear and unambiguous and that mandate has to be obeyed.
It must be remembered, as emphasized by several decisions of this Court that this Court is charged by the Constitution with the special responsibility of protecting and enforcing the fundamental rights under Part III of the Constitution.
If I may with respect, borrow the felicitous language employed by Chief Justice Patanjali Sastri in State of Madras vs
V.G. Rao(1) that as regards fundamental rights this ' Court has been assigned the role of a Sentinel on the qui vive.
The anxiety of this Court not to whittle down the amplitude of the fundamental rights guaranteed has found expression in several of its judgments.
It has not allowed its vision to be blurred by the fact that some of the persons who invoked its powers had no equity in their favour.
It always took care to see that a bad case did not end in laying down a bad law.
I am not unaware of the fact that the petitioners before us have no equity in their favour but that circumstance is irrelevant in deciding the nature of the fight available to an aggrieved party under article 32 of the Constitution.
All of us are unanimous on the question that the impugned collection amounts to an invasion of one of the fundamental rights guaranteed to the petitioners.
Our difference primarily centres round the question whether their fight to get relief under article 32 is subject to any limitation or to be more accurate whether this Court has any discretion while exercising its jurisdiction under that Article ? As mentioned earlier a right to approach this Court under article 32 is itself a fundamental right.
In that 'respect our Constitution makes a Welcome departure from many other similar Constitutions.
As seen earlier a party aggrieved by the infringement of any of its fundamental rights has a right to get relief at the hands of this Court, and this Court has a duty to grant appropriate relief see Joseph Pothen vs The State of Kerala(2) '.
The power conferred on this Court by that Article is not a discretionary power.
This power is not similar to the power conferred on the High Courts under article 226 of the Constitution, Hence laches on the part of an aggrieved 'party cannot deprive him of the right to get relief from this Court under article 32.
A DiVision Bench of the Bombay High Court in Kamalabai Harjivandas Parekh vs
T.B. Desai(3) held that where a constitutionals to the validity of a legislation is taken in a petition under article 226, the question of mere delay will not affect the (1) ; (2) A.I.R. 1965 S.C. 1514.
(3) [1965] Vol.
67 B.L.R.p.
85. 858 maintainability of that petition.
Law reports do not show a single instance, where this Court had refused to grant relief to a petitioner in a petition under article 32 on the ground of delay.
There has been some controversy whether an aggrieved party can waive his fundamental right.
That question was elaborately considered in Basheshar Nath vs The Commissioner of Income Tax Delhi, Rajasthan and anr.(1) by a Constitution Bench consisting of S.R. Das, C.J. and Bhagwati, S.K. Das, J.L. Kapur and Subba Rao, JJ.
The learned Chief Justice and Kapur J. held that there could be no waiver of a fundamental right founded on article 14.
Bhagwati and Subba Rao JJ.
held that no fundamental right can be waived and S.K. Das J. held that only such fundamental rights which are intended to the benefit of a party can be waived.
I am mentioning all these aspects to show how jealously this Court has been resisting every attempt to narrow down the scope of the rights guaranteed under Part 111 of our Constitution.
Admittedly the provisions contained in the do not apply to proceedings under article 226 or article 32.
The Constitution makers wisely, if I may say with respect, excluded the application of those provisions to proceedings under article 226, 227 and 32 lest the efficacy of the constitutional remedies should be left to the tender mercies of the legislatures.
This Court has laid down in I.C. Golaknath and ors.
vs State of Punjab and anr.(2) that the Parliament cannot by amending the Constitution abridge the fundamental rights conferred under Part III of the Constitution.
If we are to bring in the provisions of by an indirect process to control the remedies conferred by the Constitution it would mean that what the Parliament cannot do directly it can do indirectly by curtailing the period of limitation for suits against the Government.
We may console ourselves by saying that the provisions of the will have only persuasive value but they do not limit the power of this Court but the reality is bound to be otherwise.
Very soon the line that demarcates the rule of prudence and binding rule is bound to vanish as has happened in the past.
The fear that forgotten claims and discarded rights may be sought to be enforced against the Government after lapse of years, if the fundamental rights are held to be enforceable without 'any time limit appears to be an exaggerated one.
It is for the party who complains the infringement of any right to establish his right.
As years roll on his task is bound to become more and more difficult.
He can enforce only an existing right.
A right may be lost due to an earlier decision of a competent court or due to various other reasons.
If a right is lost for one reason or the other there is no right to be enforced.
In this case we are dealing with an existing right even if it can be said that the petitioners ' (1) [1959] Supp. 1 S.C.R. 528.
(2) ; 859 remedy under the ordinary law is barred.
If the decision of Bachawat and Mitter, JJ. is correct, startling results are likely to follow.
Let us take for example a Case of a person who is convicted and sentenced to a long period of imprisonment on the basis of ,a statute which had been repealed long before the alleged offence was committed.
He comes to know of the repeal of the statute long after the period prescribed for filing.
appeal expires.
Under such a circumstance according to the decision of Bachawat and Mitter, JJ.
he will have no right the discretion of the Court apart to move this Court for a writ of habeas corpus.
Our Constitution makers in their wisdom thought that no fetters should be placed on the right of an aggrieved party to seek relief from this Court under article 32.
A comparison of the language of article 226 with that of article 32 will show that while under article 226 a discretionary power is conferred on the High Courts the mandate of the Constitution is absolute so far as the exercise of this Court 's power under article 32 is concerned.
Should this Court, an institution primarily created for the purpose of safeguarding the fundamental rights guaranteed under Part III of the Constitution, narrow down those rights ? The implications of this decision are bound to be far reaching.
It is likely to pull down from the high pedestal now occupied by the fundamental fights to the level of other civil rights.
I am apprehensive that this decision may mark an important turning point in down grading the fundamental rights guaranteed under the Constitution.
I am firmly of the view that a relief asked for under article 32 cannot be refused on the ground of laches.
The provisions of the have no relevance either directly or indirectly to proceedings under article 32.
Considerations which are relevant in proceedings under article 226 are wholly out of place in a proceeding like the one before us.
The decision of this Court referred to in the judgment of Bachawat and Mitter JJ.
where this Court has taken into consideration the laches on the part of the petitioners are not apposite for our present purpose.
None of those cases deal with proceed under article 32 of the Constitution The rule enunciated by this court in the State of M.P.v.
Bhailal Bhai(1) is only applicable to proceedings under article 226.
At page 271 of the report Das Gupta, 1. who spoke for the Court specifically referred to this aspect when he says: "that it has been made clear more than once that power to relief under article 226 is a discretionary power".
Therefore those decisions are of no assistance to us in deciding the present case.
Once it is held that the power of this Court under article 32 is a discretionary power that in nay opinion is the result of the decision of Bachawat and Mitter JJ then it follows that this Court can refuse relief under Art 32 on any one of the ; 860 grounds on which relief under article 226 can be refused.
Such a conclusion militates not only against the plain words of article 32 but also the lofty principle underlying that provision.
The resulting position is that the right guaranteed under that Article would cease to be a fundamental right.
Assuming that the rule enunciated by this Court in Sales Tax Officer vs Kanhaiya Lal Mukundlal Saraf(1) and further refined by this Court in State of M.P.v.
Bhailal Bhai(") can apply to the facts of this case even then I am of opinion that the petitioners are entitled to the relief that they have asked for.
As could be gathered from the decision of Bachawat and Mitter, JJ., the Bombay High Court did not decide the merits of the case in the writ petition filed by the petitioners.
In that petition the Court refused to exercise its discretion in favour of the petitioners.
The grounds on which the petitioners challenged the validity of section 12A(4) of the Bombay Sales Tax Act, 1946 before the High Court of Bombay have now been found to be unsustainable by the Gujarat High Court in Kantilal Babulal and Bros. v.H. C. Patel(3).
In the appeal against that decision this Court did not examine those grounds.
It struck down section 12A(4) on a wholly different ground, a ground not put forward by the petitioners in their writ petition before the Bombay High Court.
A mere impression of a party that a provision of law may be ultra vires the Constitution can not be equated ' to knowledge that the provision is invalid.
Hope and desire are not the same things as knowledge.
A law passed by a competent legislature is bound to be presumed to be valid until it is struck down by a competent court.
The fact that after a futile attempt to get the provision in question declared invalid the petitioners gave up their right and submitted to the law which was apparently valid is no proof of the fact that they knew that the provision in question is invalid.
As seen earlier that none of the grounds urged by the petitioners in support of their contention that the provision in question is invalid has been accepted by any court till now.
Under these circumstances I see no justification to reject the plea of the petitioners that they became aware of the invalidity of the provision only after the decision of this Court in Kantilal Babulal 's case(4) which decision was rendered on September 29, 1967.
This petition was filed very soon thereafter.
Hence this case under any circumstance falls within the rule laid down by this Court in Bhailal Bhai 's case(2).
For the reasons mentioned above I allow this petition and grant the relief prayed for by the petitioners.
ORDER In accordance with the opinion of the majority, the petition fails and is dismissed with costs.
V.P.S. (2) ; (3) 16 S.T.C. 973.
(4) 21 S.T.C. 174.
| IN-Abs | The sales tax authorities directed that the sum realised as sales tax by the petitioners from their customers and paid over to the State should be refunded to the petitioners on condition that the petitioners passed on the amounts to their customers.
Since the petitioners did not fulfil the condition, the sales tax officer 'forfeited the sum under section 21(4) of .the
Bombay Sales Tax Act, 1953, by order dated March 17, 1958.
On March 28, the petitioners filed a writ petition in the High Court and contended that section 21(4) was ultra rites the powers of the State Legislature and was violative of articles 19(1)(f) and 265 of the Constitution and hence, they were not liable to repay the amount.
The single Judge dismissed the petition on the ground that the petitioners defrauded their customers and so were not entitled to any relief even if there was a violation of fundamental rights.
The appellate bench of the High Court dismissed the appeal on the ground that it would not interfere with the discretionary order of the single Judge.
On December 24, 1958, the Collector attached the properties of the petitioners for recovering the amount as arrears of land revenue and the petitioners paid the amount in instalments between August 1959 and August 1960.
On September 29, 1967 this Court in Kantilal Babual vs H.C. Panel, 21 S.T.C. 174 (S.C.) struck down section 12A(4) of Bombay Sales Tax Act, 1946, corresponding to section 2 '1(4) of the 1953 Act, on the ground that it was violative of article 19(1)(f) inasmuch as the power conferred by the section was unguided, uncanalised and uncontrolled and so was not a reasonable restriction on the fundamental right guaranteed under the Article.
On the assumption that section 21(4) of the 1953 Act is also liable to be struck down on the same ground, on February 9, 1968, the petitioners flied a writ petition under article 32 claiming a refund of the amount.
The petitioners contended that they did not know that the section was ultra vires on the particular ground on which this Court struck it down, that they paid the amounts under coercion or mistake, that the mistake was discovered on September 29, 1967 (the date of the judgment of this Court) and that they were entitled to the refund under section 72 of the .
On the questions: (1) Whether the petition is liable to be dismissed on the ground of Inches; and (2) Whether the petition is barred by res judicata in view of the decision of the High Court.
HELD: (Per Hidayatullah, C.J., Bachawat and Mitter, JJ.): (1) The petition must be dismissed on the ground of Inches.
825 Per Hidayatullah C.J.: Article 32 gives the right to move this Court by appropriate proceedings for enforcement of fundamental rights and the State cannot place any hindrance in the way of an aggrieved person.
But once the matter has reached this Court, the extent or manner of interference is for this Court to decide.
This Court has put itself in restraint in the matter of petitions under article 32.
For example, this Court refrains from acting under the Article if the party had already moved the High Court under article 226 and if the High Court had exercised its parallel jurisdiction.
In such a case, this Court would not allow fresh proceedings to be started under article 32 but would insist on the decision of the High Court being brought before it on appeal.
Similarly, in inquiring into belated and stale claims, this Court should take note of evidence of neglect of the petitioner 's own rights.
for a long time or of the rights of innocent parties which might have emerged by reason of the delay.
The party aggrieved must therefore move this Court at the earliest possible time and explain satisfactorily all semblance of delay.
It is not possible for this Court to lay down any specific period as the ultimate limit of action and each case will have to be considered on its own facts.
A petition under article 32 is neither a suit nor an application to which the Limitation Act applies.
Further, putting curbs in the way of enforcement of fundamental rights through such legislative action might be questioned under article 13(2).
for, if a short period of limitation is prescribed the fundamental right might be frustrated.
Therefore, this Court has to exercise its discretion from case to case, and where there is appearance of an avoidable delay and this delay affects the merits of the claim, this Court will consider it, and in a proper case, hold the party disentitled to invoke its extraordinary jurisdiction.
[830C, DE.
G H; 831 A B. C E; 832 A E] In the present case, the petitioners moved unsuccessfully the High Court for relief on the. ground that the recovery from them was unconstitutional, but did not come up in appeal to this Court.
There is thus no question of any mistake of law.
Having set the machinery of law in motion they cannot abandon it to resume it after a .number of years because another person got the statute declared unconstitutional.
They should have known the exact ground of unconstitutionality since every one is presumed to know the law; and pursued the ground in this Court.
Not having done so, and having abandoned his own litigation years ago.
this Court will not apply the analogy of the Article in the Limitation Act in cases of mistake of law and give him relief.
[832 F H; 833 A B, C E] Per Bachawat, J.: The normal remedy for recovery of money paid to the State under coercion or mistake of law is by suit.
The right to move this Court for enforcement of fundamental rights is guaranteed by article 32, and no period of limitation is prescribed for such a petition.
The writ issues as a matter of course if a breach of a 'fundamental right established, but this does not mean that in giving relief under the Article this Court may ignore all laws of procedure.
The extraordinary remedies under articles 32 and 226 of the Constitution are not intended to enable a claimant to recover monies the recovery of which by suit is barred by limitation.
In the absence any roles of procedure under article 145(1)(c) this Court may adopt any reasonable rule.
For example.
this Court will not allow a petitioner to move this Court under article 32 on a petition containing misleading and inaccurate statements.
Similarly, the general principles of res judicata are applied where applicable on grounds of public policy.
Therefore, where the remedy in a writ application under article 32 or article 226 corresponds to a 'remedy in an ordinary suit and the latter remedy is subject to the bar of a statute of limitation, the Court imposes on analogy the same limitation on the summary 826 remedy in the writ jurisdiction even though there is no express statutory bar of limitation, on grounds of public policy and on the principle that the laws aid the vigilant and not those who slumber.
[842 A F; 843 A F] In the present case, the petitioners were not labouring under any mistake of law when they made the payments, because, in their writ petition in the High Court, they contended that the order was invalid and that section 21(4) of the Bombay Sales Tax Act, 1953, was ultra vires and unconstitutional although they did not know the precise ground upon which this Court subsequently struck down section 12A(4) of the 1946 ACt.
Therefore, when they made the payments in 1959 and 1960 they were made under coercion and not under a mistake of law in thinking that the money was due.
Hence the petitioners could not claim any relief on the ground of mistake.
They could rely on the ground of coercion but a suit for the recovery of money on the ground of coercion instituted in February 1968, would have been barred by limitation.
A suit for recovery of money on the ground of coercion instituted after January 1, 1964 would be governed by article 24 of the , and the period of limitation would be 3 years from the dates in 1959 and 1960 when the amounts were paid.
The petitioners could not obtain an extension of the period under section 30(a) of the , as article 62 of the Limitation Act, 1908, which governs a suit for recovery of tax or other levy illegally collected, prescribed the same period of limitation.
[840 F H; 841 A C] Shiva Prasad Singh vs Srish Chandra Nandi, (1949) L.R. 76 I.A. 244, 254, Sales Tax Officer vs Mukundlal Saraf , 1361, 1362, A. Venkata Subba Rao vs State of Andhra Pradesh ; , 612 620, State of Madhya Pradesh vs Bhailal Bhai & Ors. ; 274, Daryao vs State of U.P. ; , Sobhraj Odharmal vs State of Ralasthan, [1963] Supp.
1 S.C.R. 99, 111 and Her Highness Ruckmaboye vs Lulloobhoy Mottickchund, (185152) 5 M.I.A. 234, 251, referred to.
Per Mitter, J.: The Limitation Act does not in terms apply to proceedings against the State under article 32 in respect of violation of fundamental rights.
A person complaining of such infraction has.
one of three courses open to him.
He can file a suit, invoke article 226 or article 32Suits are governed by the Limitation Act.
In the matter of the issue of a writ under article 226 also, courts have refused to give relief in cases of long or unreasonable delay, although the Limitation Act does not apply, and the maximum period fixed by the Legislature for filing a suit is ordinarily taken to be a reasonable standard by which delay in seeking the remedy under article 226 can be measured.
There is no reason for applying a different test when a party comes to this Court under article 32.
There is public policy behind all statutes of limitation and a claim based on the infraction of fundamental rights ought not to be entertained if made beyond the period fixed by the Limitation Act for the enforcement of the right by way of suit, that is, although the Limitation Act does not apply, the period fixed by it should be taken to be a true measure of the time within which a person can be allowed to raise a plea successfully under article 32.
[853 C H; 854 A B] The petitioners in this case had not made a mistake in thinking that the money paid was due when in fact it was not due.
They not only opposed the claim of the sales tax authorities but filed a writ petition contending that there was a violation of article 19(1)(f).
They did not accept the decision of the single Judge but filed an appeal raising the same contention.
They complained about the violation of their fundamental rights, the illegality of the order of forfeiture and the unreason 827 able restriction on their fundamental rights under article 19(1)(f).
They protested against the order of forfeiture not only out of court but in court and only paid the amounts after the issue of legal process.
They were never influenced by a mistake of law and never 'failed to 'appreciate the correct position in law.
But the payments were made under coercion.
The period of limitation for a suit against Government to recover money paid under protest is governed either by article 16 or article 62 of the Limitation Act, 1908 that is one year or three years.
But taking the most favourable view that the period of six years fixed by article 120 of Limitation Act, 1908, would apply, that period would have expired in 1966.
The position is not different even if the is applied.
A claim for money paid under coercion would be covered by article 113 of the , giving a period of 3 years from January 1, 1964 the date of commencement of the 1963 Act.
Under section 30(a) of the , the period of limitation for a suit which was formerly covered by article 120 of the Act of 1908; would be covered by article 113 of the 1963 Act.
Therefore, the suit in the present case would have to be filed by January 1, 1967.
As the petitioners came to this Court in February 1968 long after the date when they could have properly filed a suit, the application under article 32 must be rejected.
[851 H; 852 A D, G H; 853 A B; 854 B H;, 855 A B] Kantilal Babulal & Bros.
H.C. Patel 2.1 S.T,C. 174, Sri Sri Shiba Prasad Singh, deceased, now represented by Kali Prasad Singha vs Maharaja Srish Chandra Nandi 76 I.A. 244, Sales Tax Officer vs Kanhaiya Lal Mukundlal Saraf, at 1363, Sales Tax Officer, Pilibhit vs Budh Prakash jai Prakash; , , State o/ Madhya Pradesh vs Bhailal Bhai ; , State of Kerala vs Aluminum Industries Ltd. 16 S.T.C. 689, and A. V. Subbarao vs The State of Andhra Pradesh [1965] 2 S.C.R. 577, referred to.
Per Sikri and Hegde, JJ.
(dissenting): The petition has to be allowed and the petitioners must be granted the relief prayed for.
Per Sikri, J.: Article 32(2) of the Constitution confers a judicial power on this Court, and like all judicial powers, unless there is an express provision to the contrary, it must be exercised in accordance with fundamental principles of administration of justice, and one such fundamental principle is that stale claims should not be given effect to.
[833 F G] The does not directly apply to a petition under article 32 and to invoke the analogy of the is not appropriate when dealing with petitions under article 32.
If a claim is barred under the , prima facie it is a stale claim but even if it is not so barred, it may not ' be entertained by this Court if on the facts of the case there is unreasonable delay.
To issue a writ, direction or order in the nature of mandamus certiorari or prohibition after a delay of 12 years or 6 years would, except when there are exceptional circumstances, be strange.
It is difficult to lay down a precise period, but a period of one year may be taken as the period beyond which the claim would be a stale claim unless the delay is explained.
The time spent in making representations to higher authorities may be taken as a good explanation for any delay.
Such a practice would not destroy the guarantee under article 32, because, the article nowhere lays down that a petition, however late, should be entertained.
[833 G; 835 C H] In the present case, the petitioners were mistaken in thinking that the money was liable to be paid under a valid law and hence under section 72 of the Contract Act, the petitioners would be entitled to the relief claimed.
The grounds urged before the High Court show that it never struck the petitioners that the provision could be challenged on the ground ulti 828 mately accepted by this Court.
If the petitioners had not moved the High Court but had paid on demand they would have been entitled to maintain the petition in this Court.
The position could not be worse became they exercised their right under article 226.
When a petitioner approaches a High Court and fails, it could not be said that payments made by him thereafter were not under a mistake of law, even if the point on which this Court ultimately strikes down the provision under which the payments were made was never raised in the High Court.
The petitioners discovered, like all assessees their mistake when this Court struck down section 12A(4) of the 1946 Act and they came to this Court within 6 months of that date and hence there was no delay.
[837 G H; 839 B E] Daryao vs State of U.P. ; , Amalgamated Coalfields Ltd. vs Janapada Sabha, Chindwara, A.I.R. 1964 S.C. 1013, 1018, Sales Tax Officer vs Kanhaiyalal, and Kantilal Babulal vs H.C. Patel, Sales Tax Officer, 21 S.T.C. 174, referred to.
Per Hegde, J.: In view of the decision of this Court in Kantilal Babulal vs
H.C. Patel, 21 S.T.C. 174 which struck down section 12A(4) or the 1946 Act, the impugned collection under section 21(4) of the 1953 Act was without the authority of law and consequently the exaction infringed the fundamental right of the petitioners under article 19(1)(f).
Hence the petitioners have a fundamental right to approach this ' Court under article 32 for relief and this Court has a duty to afford them the appropriate relief.
Since the right given to the petitioners under article 32 is itself a fundamental right and does not depend on the discretionary powers of this Court, as in 1be case of article 226, it is inappropriate to equate the duty imposed on this Court to the powers of Chancery Court in England or the equitable jurisdiction of Courts in the United States.
The fact that the petitioners have no equity in their favour is an irrelevant circumstance in deciding the nature of the right available to an aggrieved party under article 32.
This Court is charged by the Constitution with the special responsibility of protecting and enforcing the fundamental rights, and hence leaches on the part of an aggrieved party cannot deprive him of his right to get relief under article 32.
In fact, law reports do not show a single instance of this Court refusing to grant relief on the ground of delay.
If this Court could refuse relief on the ground of delay, the power of the Court under article 32 would be a discretionary power and the right would cease to be a fundamental right.
The provisions contained in the do not apply to proceedings under articles 226 and 32 and if these provisions of the are brought in indirectly to control the remedies conferred by the ConstitUtion, it would be a case of Parliament indirectly abridging the fundamental rights which this Court, in Golaknath 's case; , , held that Parliament cannot do.
The 'fear.
that forgotten claims and discarded rights against Government may be sought to be enforced after the lapse of a number of years if fundamental rights are held to be enforceable without any time limit, is an exaggerated one, for, after all, a petitioner can only enforce an existing right.
[856 D. F H; 857 A, B, D, G H; 858 A, D E, F H; 859 H] In this case the petitioners have an existing right even if their remedy under the ordinary law is barred.
This Court struck down section 12A(4) of the 1946 Act on a ground not put forward by the petitioners in the High Court but on a wholly different ground.
A mere impression of a party that a provision of law may be ultra vires cannot be equated to knowledge that the provision is invalid.
and the fact, that, after a futile attempt to get the provision in question declared invalid the petitioners gave up their fight and submitted to the law which was apparently valid is no proof of the fact that they knew that the provision in question was 829 invalid.
There is no reason for rejecting the plea of the petitioners that they became aware of the invalidity of the provision only after the decision of this Court in Kantilal 's case, and since the petition was filed very soon thereafter, the petitioners were entitled to relief.
[860 C G] State of M.P.v.
Bhailal Bhai; , , referred to.
(2) (By Full Court): The petition is not barred by res judicata.
Per Hidayatullah, C.J.
Where the order of the High Court under article 22% is not a speaking order or the matter has been disposed of on some ground other than on merits, at the threshold, this Courtmay entertain the application under article 32.
[831 B] Daryao vs State of U.P. ; , explained.
Per Sikri, Bachawat and Mitter, JJ.
: When a petition under article 226 is dismissed not on the merits but because of the laches on the party applying for ,the writ or because an alternative remedy was available to him, such dismissal is not a bar to a subsequent petition under article 32, except in cases when the facts found by the High Court might them selves be relevant under article 32.
[833 E F; 839 F G; 855 C D,F G] Daryao 's case; , and Joseph vs State of Kerala, ; , referred to.
Per Hegde.
J.: It is only when the right claimed by the petitioner in his petition under article 32 had been claimed in the High Court under article 226 and negatived by the High Court and that decision had become final as it was not appealed against, that the petitioner would not be able to agitate the right over again in this Court under article 32.
[856 B C] Daryao 's case; , , explained.
|
Appeals Nos. 2455 and 2540 of 1966.
Appeals by special leave from the judgment and order dated June 28, 1962 of the Madras High Court in Writ Appeal No. 113 of 1959 and Writ Petition No. 254 of 1960.
S.V. Gupte, M. Ranganatha Sastri, M.S.K. Sastri and M.S. Narasimhan, for the appellant (in both the appeals).
M.K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for respondent No. 1 (in both the appeals).
K.N. Mudaliyar, Advocate General for the State of Madras and A.V. Rangam, for respondents Nos. 2 and 3 (in both the appeals).
The Judgment of the Court was delivered by Bhargava, J.
The appellant, the South Arcot Electricity Distribution Company Ltd. (hereinafter referred to as "the Company"), was carrying on the business of distribution of electricity as a Licensee under the Government in South Arcot District in the State of Madras.
The Government of Madras, in exercise of the powers conferred on it by the Madras Electricity Supply Undertakings (Acquisition) Act.
No. 29 of 1954 (hereinafter referred to as "the Madras Act"), took over the appellant 's undertaking with effect from 1st of June, 1957.
The Company chose to be paid compensation on Basis A laid down in section 5 (1 ) of the Madras Act, with the result that all the property belonging to the Company, including the fixed assets, cash, security investments, and the like and all rights, liabilities and obligations as on the date of vesting vested or must be deemed to have vested in the Madras Government.
Under Rule 17 of the Madras Electricity Undertakings (Acquisition) Rules, 1954 (hereinafter referred to as "the Rules") framed by the Governor of Madras under the provisions of the Madras Act, all the staff of the Company employed immediately before the vesting date were retained by the Government and were continued provisionally for a period of 12 months from the date of vesting on the same terms and conditions of service as were applicable to them under the Company immediately before the date of vesting.
In respect of future employment of the workmen by the Madras Government, their conditions of service came to be regulated by section 15 of the Madras Act and the various conditions laid down in r. 17 of the Rules.
Subsequently, the employees of the Company numbering 352 claimed that they had become entitled to retrenchment compensation under section 25F read with section 25FF of the No. 14 of 1947 (hereinafter referred to as "the Act") and filed applications for computation of the cora 905 pensation payable to them under section 33C(2) of the Act before the Labour Court.
All these 352 applications were based on an identical claim and were heard by the Labour Court together.
Initially, the Company was the sole opposite party in these applications, but, later on, the State of Madras was impleaded as another opposite party.
In addition, the Electricity Board of Madras, to which the State of Madras had transferred the undertaking, was also impleaded as an opposite party.
The Company contested these applications on various grounds, inter alia pleading that there had been no break in the service of the employees.
or any change in the conditions of their service to their detriment, so that the employees were not entitled to claim any compensation. ' Another plea taken was that the applications were not maintainable under section 33C(2) of the Act, because the Labour Court was not competent to decide the question whether the workmen were entitled to retrenchment compensation when this claim of theirs was.
not accepted by the Company.
It was, in addition, pleaded that, even if the workmen were entitled to any compensation, the liability to pay that compensation Was not that of the.
Company, but of the State of Madras or the Electricity Board in view of the provisions of the Madras Act, under which all the liabilities of the Company had vested first in the State of Madras and subsequently in the Electricity Board.
The Electricity Board also contended that no liability for payment of retrenchment compensation had arisen and that, in any case, there was no obligation on the part of the Board to pay retrenchment compensation.
The Board supported the Company in the plea that the services of the employees had not been interrupted and that the terms and conditions of service were in no way less favourable after the vesting of the undertaking.
in the State of Madras or the Electricity Board.
It was further pleaded that a dispute had arisen between the Company and the GOvernment under section 13(1)(b) of the ' Madras Act as to which of the two was liable to pay retrenchment compensation if at all, and no relief could be given to the employees by the Labour Court until the said dispute was decided in accordance with the provisions of the Madras Act by arbitration.
On these pleadings, three preliminary objections were raised, viz., (1) that the notice wages and retrenchment compensation claimed in the applications were not benefits due to the employees within the meaning of section 33C(2) of the Act; (2) that, as retrenchment came under Chapter VA of the Act, it could only be decided by an Industrial Tribunal and not by the Labour Court; and (3) that, having regard to the fact that complicated questions of law and fact as to the liability of the Company or the Government or the Board had to be decided, it was not competent for the Labour Court to decide the matter summarily in proceedings under section 33C(2) of the Act and that the dispute must be decided by a civil court.
The Labour Court, by an order dated 3rd October, 1958, 906 over ruled these preliminary objections and directed that the applications be listed for being tried on merits.
The Company, thereupon, filed writ petitions under Article 226 of the Constitution in the High Court of Madras numbered as 820 and 842 to 1847 of 1958 seeking directions of the Court restraining the Labour Court from inquiring into these applications on merits on the ground that the Labour Court had no jurisdiction to entertain the applications from the employees.
A learned single Judge of the Court dismissed the writ petitions holding that the Labour Court had jurisdiction to decide the applications and that the controversy between the Company on the one side, and the Government of Madras and the Electricity Board on the other side, as to the party which had to bear the liability will have to be disposed of in proceedings taken separately from these proceedings under the Act.
Aggrieved by this decision, the Company preferred Writ Appeal No. 113 of 1959 in the Appellate Side of the High Court.
In the meantime, the Labour Court took up the applications for decision on merits and, since common questions were involved in all the applications, one of these applications C.P. No. 81 of 1957 was taken up as a test case for disposal by the Labour Court by consent of all parties concerned.
The Labour Court, by its order dated 4th February, 1960, held that the workmen concerned were entitled to retrenchment compensation in accordance with section 25FF of the Act, computed the amount due, and passed an order directing the Company to pay the amount.
The Company, thereupon, filed Writ Petition No. 254 of 1960 in the High Court of Madras for quashing this order of the Labour Court.
Writ Appeal No. 113 of 1959 and this Writ Petition No. 254 of 1960 were heard together by a Division Bench of the High Court which decided them by a common judgment and dismissed the Writ Appeal as well as the Writ Petition.
The Company then sought leave to appeal to this Court under article 133 of the Constitution.
The High Court granted a certificate in respect of its judgment in Writ Petition No. 254 of 1960, while rejecting the application for grant of certificate in respect of the same judgment insofar as it had disposed of Writ Appeal No. 1134 1959.
Civil Appeal No. 2540 of 1966 now before us has been filed by the Company in pursuance of that certificate granted by the High Court.
The Company further obtained from this Court special leave to appeal against the same judgment insofar as it governed Writ Appeal No. 113 of 1959 and in pursuance of that special leave granted by this Court, Civil Appeal No. 2455 of 1966 has been filed.
These appeals have been heard by us together and are now to be disposed of by this common judgment.
907 Mr. S.V. Gupte, learned counsel appearing for the Company raised the following three points in his arguments in these two appeals : (1) That the Labour Court as well as the High Court were not right in holding that the conditions laid down in the proviso to section 25FF of the Act were not satisfied and in thus accepting the claim of the workmen to compensation under the principal clause of that section.
(2) That the applications under section 33C(2) of the Act were not maintainable, because the question whether the workmen were entitled to retrenchment compensation was outside the jurisdiction of the Labour Court which was not competent to decide such a disputed question.
(3) That the High Court was wrong in holding that the question whether the liability to pay the retrenchment compensation fell on the Company or the State of Madras or the Electricity Board could not be decided by the Labour Court under section 33C(2) of the Act and had to be determined in other appropriate proceedings.
Section 25FF of the Act is as.
follows : "Where the ownership or management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workman who has been in continuous service for not less than one year in that undertaking immediately before such transfer shall be entitled to notice and compensation in accordance with the provisions of section 25Fi as if the workman had been retrenched: Provided that nothing in this section shall apply to a workman in any case where there has.been a change of employers by reason of the transfer, if (a) the service of the workman has not been interrupted by such transfer; (b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and (c) the new employer is, under the terms of such transfer or ' otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer.
" 908 The principal clause of this section clearly confers a right on every workman, who has been employed continuously for not less than one year in any undertaking, to receive retrenchment compensation in accordance with the provisions of section 25F of the Act as if the workman had been retrenched whenever the ownership or management of the undertaking is transferred, whether by agreement or by operation of law.
Consequently, in the present case, the employees, who presented the applications under section 33C(2) of the Act, clearly became entitled to receive retrenchment compensation in accordance with section 25F of the Act when, under the Madras Act, this undertaking stood transferred to the State Government from the Company.
This would be the legal right vesting in the workmen if the proviso does not apply to their cases, and it accrues irrespective of the fact that the workmen had not actually been retrenched.
The right under this principal clause is conferred on the basis of the legal fiction that the workmen are to be deemed to have been retrenched unless their services are continued in accordance with the conditions laid down in the proviso.
The only question that falls for determination in respect of the first point raised by Mr. Gupte thus, is whether the right which accrued to the workmen under the principal clause was defeated because of the compliance of the conditions laid down in the proviso.
The proviso lays down three conditions in clauses (a); Co) and (c) each one of which has to be satisfied before it can be held that the right conferred by the principal clause does not accrue to the workman.
In the present case, there is no doubt that the services of the workmen had not been interrupted by the transfer, so that condition (a) was clearly satisfied.
It has, however, been found by the High Court that conditions (b) and (c) of the proviso had not been satisfied.
In our opinion, it is unnecessary to go into the question whether condition (c) has or has not been satisfied, because it is very clear that condition Co) of the proviso is certainly not satisfied.
Under clause Co), the requirement is that the terms and conditions of service applicable to the workman after the transfer must not in any way be less favourable than those applicable to him immediately before the transfer.
On examination of the Madras Act and the Rules, it is manifest that the terms and conditions of service of the workmen have not remained as favourable under the State Government or the Electricity Board as they were when the workmen were employed by the Company.
Under clause (1) of section 15 of the Madras Act, the State Government is given the power to terminate the services of any workman after giving him three calendar months ' notice in writing or paying him three months ' pay in lieu of such notice.
It has not been shown to us on behalf of the Company that there was any such liability to termination of services of these workmen while they were employ 909 ed by the Company.
In the absence of any special conditions of service, the rights of the workmen were to be governed by the provisions of the Act under which the only right of the Company to terminate the services of these workmen was by retrenchment after complying with the requirements of section 25F of the Act.
On such termination, each workman was entitled not only to one month 's notice or wages for one month in lieu of notice, but was also entitled to receive, at the time of retrenchment, compensation which was to be equivalent to 15 days ' average pay for every completed year of continuous service or any part thereof in excess of six months.
It does not appear that, if the Government were to terminate the service of the same workman under section 15(1) of the Madras Act, the workman would be entitled to the same compensation which he would have received from the Company if he had been retrenched in accordance with the provisions of section 25F of the Act.
Thus, clause (1 ) of section 15 of the Madras Act itself introduces a condition of service which was less favourable to the workmen than the conditions applicable when they were employed by the Company.
Similarly,, clause (2) of section 15 of the Madras Act lays down the Workmen, whose services are retained by the Government, shall be governed by such rules as the Government may, from time to time, make in regard to them.
It is clear that, in exercise of high power, the Government can make rules altering the terms and conditions of service of the workmen retained by the Government, and this power can be exercised from time to time.
There was no such liability of change of conditions of service of the workmen while they were employed under the Company.
If the Company had desired to alter their conditions of service, the Company would have been required to comply with the provisions of either section 9A of the Act, or section 10 of the Industrial Employment (Standing Orders) Act No. 20 of 1946.
Obviously, the right of the Government of Madras as the new employer under section 15(2) of the Madras Act to change the conditions of service of the workmen from time to time, in its very nature, alters the conditions of service of the workmen to theft disadvantage.
Rule 17 of the Rules further shows that, immediately on the vesting of the undertaking in the State Government, the services of the workmen retained by the Government becomes provisional and the subsequent permanent employment of those workmen in the undertaking is dependent on the conditions laid down in that Rule.
This liability imposed on the workmen is clearly disadvantageous to those workmen who were in the permanent employ of the Company.
The same Rule also shows that the employees would not be entitled to bonus or other concessions not allowed to the servants of the Government, even if the workmen were entitled to bonus and the concessions from the Company.
The workmen also became liable to transfer to any 910 other place or post in the Government Electricity Department depending on exigencies of service.
These are instances of a number of conditions of service which became less favourable to the workmen on their becoming employees of the State Government when the undertaking vested in that Government by transfer from the Company.
In these circumstances, the requirements of the proviso to section 25FF of the Act are obviously not satisfied and that proviso cannot be invoked by the Company for the purpose of defeating the claim made by the workmen under the principal clause of that section.
Under that principal clause, the workmen became entitled to receive retrenchment compensation in accordance with the provisions of section 25F of the Act on the basis of the legal fiction envisaged that those rights would accrue to them as if the workmen had been retrenched.
Labour Court and the High Court were, therefore, right in holding that the workmen were entitled to claim retrenchment compensation in accordance with the provisions of section 25F of the Act because of the right accruing to them under section 25FF of the Act.
In this connection, an additional point urged by Mr. Gupte was that the principal clause of section 25FF of the Act does not lay down which of the two employers mentioned therein is liable to pay the retrenchment compensation and, consequently, where there is a dispute between the two employers, an application for computation of the benefit under section 25FF of the Act cannot be competently entertained and decided by a Labour Court.
It appears to us that the language of that principal clause makes it perfectly clear that, if the right to retrenchment compensation accrues under it, it must be a right to receive that compensation from the previous employer who was the owner up to the date of transfer.
It is implicit in the language of that clause.
The clause lays down that every workman mentioned therein shall be entitled to notice and compensation in accordance with the provisions of section 25F as if the workman had been retrenched.
Obviously, in such a case, the date of the deemed retrenchment would be the date when the ownership or management of the undertaking stands transfered to the new employer.
In the present case, that date would be the 1st of June, 1957, when the undertaking of the Company was taken over by the Government of Madras under the Madras Act.
If the workmen 's services are to be deemed to be retrenched on that very date, it is clear that, for purposes of determining who has retrenched the workmen and who is liable to pay the retrenchment compensation, the workmen could not become the employees of the new employer.
The employment under the new employer could only commence from the time when the ownership or the management of the undertaking vested in the State Government; but, simultaneously with this vesting, the workmen had to be deemed to be retrenched from service.
That 911 retrenchment could, therefore, be deemed to have been made only by the previous employer.
Further, it would be that previous employer who would be competent to give the notice in accordance with the provisions of section 25F of the Act.
The notice of retrenchment, which has to be deemed to have become effective on the date of vesting of the undertaking in the State Government, could not possibly be given by the State Government.
In these circumstances, the conclusion is irresistible that the claim under section 25FF of the Act to compensation accrues to the workman against the previous employer under whom he was employed until the date of transfer.
In the present case, therefore, the right to receive compensation clearly accrued under section 25FF of the Act against the Company and there was, therefore, no difficulty in the Labour Court exercising jurisdiction on that basis.
So far as the second point is concerned, it is fully answered by our decision in Chief Mining Engineer, East India Coal Co. Ltd. vs Rameswar and Ors.(1) where it was held : "It is clear that the right to the benefit which is sought to be computed must be an existing one, that is to say, already adjudicated upon or provided for and must arise in the course of and in relation to the relationship between an industrial workman and his employer. ' ' The view was further clarified and affirmed by this Court in State Bikaner and Jaipur vs
R.L. Khandelwal(2) where the Court took notice of the decisions of this Court in the case cited above and in Punjab National Bank Ltd. vs
K.L. Kharbanda,(a) Central Bank of India vs P.S. Rajagopalan and Others,(4) and Bombay Gas Company Ltd. vs Gopal Bhiva and Others, (5) and held : "These decisions make it clear that a workman cannot put forward a claim in an application under section 33C(2) in respect of a matter which is not based on an existing right and which can be appropriately the subject matter of an industrial dispute only requiring reference under section 10 of the Act.
" In the present case, we have already indicated, when dealing with the first point, that the right, which has been claimed by the various workmen in their applications under section 33C(2) of the Act, is a right which accrued to them under section 25FF of the Act and was an existing right at the time when these applications were (1) [1968] 1 S.C.R. 140.
(2) (3) [1962] Supp. 2 S.C.R. 977.
(4) ; (5) (1964] 3 S.C.R. 709.
S.Sup.
C.I./69 7 912 made.
The Labour Court clearly had jurisdiction to decide whether such a right did or did not exist when dealing with the application under that provision.
The mere denial of that right by the Company could not take away its jurisdiction, so that the order made by the Labour Court was competent.
The third and the last point raised by Mr. Gupte fails and could not be pressed in view of our decision that the right of 'the workmen, which has been adjudicated upon by the Labour Court in the applications under section 33C(2) of the Act, was a right accruing to them against the Company under section 25FF of the Act.
The right having initially accrued under this provision of the law against the Company, the Labour Court was clearly justified in computing the benefit under that right and laying it down that the liability was enforceable against the Company.
The Labour Court was concerned with the right claimed under the Act.
Whether, by virtue of the provisions or the terms of transfer of the undertaking from the Company to the Government, or by virtue of the provisions of the Madras Act, the Company is entitled to claim that this liability should be ultimately met by the State Government was a point which did not affect the right of the workmen to claim their compensation from the Company and the Labour Court was, therefore, not required to go into this question when dealing with applications under section 33C(2) of the Act.
The appeals, consequently, fail and are dismissed with costs payable to workmen only.
One heating fee.
The amount of interest which has accrued on the amount deposited in the Bank will be proportionately payable with the principal to the employees concerned.
G.C. Appeals dismissed.
| IN-Abs | The appellant Company was taken over by the Government of Madras in exercise of the powers conferred on it by the Madras Electricity Supply Undertakings (Acquisition) Act 1954.
All the property and assets of the company became vested in the Madras Government.
Under r. 17 of the Madras.
Government Undertakings (Acquisition) Rules, 1954 all the staff of the Company employed immediately before the vesting date were retained by the Government and were continued provisionally for a period of 12 months from the date of vesting on the same terms and conditions of service as were applicable W them under the Company immediately before the date of vesting.
In respect of the future, employment of the workmen by the Madras Government, their conditions of service were to be regulated by section 15 of the Madras Act and ' the various conditions laid down in r. 17 of the Rules.
Subsequently the workmen claimed that they had become entitled to retrenchment compensation under section 25F read with section 25FF of the and filed application for computation of the compensation payable to them under section 33C of the Act, before the Labour Court.
Initially the Company was the only opposite party to the applications but later the State of Madras and the Electricity Board of Madras to which the State had transferred the undertaking, were also made parties.
The Company and the Electricity Board raised certain preliminary objections to the jurisdiction of the Labour Court which did not find favour with that Court.
On merits the Labour Court held that the workmen were entitled to retrenchment compensation under section 25FF and directed the Company to pay the amount.
The High Court upheld the Tribunals orders on merits as well as on the question of jurisdiction.
The Company appealed to this Court.
The submissions on behalf of the appellant were: (i) That the Labour Court as well as the High Court were not right in holding that the conditions laid down in the.
proviso to section 25FF were not satisfied; (ii) that the applications under section 33C(2) of the Act were not maintainable because the question whether the workmen were entitled to retrenchment compensation was outside the jurisdiction of the Labour Court which was not competent to decide such a disputed question; (iii) That the High Court was wrong in holding that the question whether the liability to pay the retrenchment compensation fell on the Company or the State of Madras or the Electricity Board could not be decided by the Labour Court under section 33C(2) of the Act and had to be decided in other appropriate proceedings.
903 HELD: (i) The conditions of service of the workmen under section 15 of the Madras Act and under r. 17 were less favourable than their conditions of service had been under the company.
In the circumstances the requirements of el.
(b) of the proviso to section 25FF were obviously not satisfied and that proviso could not be invoked by the Company for the purpose of defeating the claim made by the workmen under the principal clause of that section.
Under the principal clause the workmen became entitled to receive retrenchment compensation in accordance with section 25F of the Act on She basis of the legal fiction envisaged that those rights would accrue to them as if the workmen had been retrenched.
The Labour Court and the High Court were therefore right in holding that the workmen were entitled to claim retrenchment compensation in accordance with the provisions of section 25F of the Act because of the right accruing to them under section 25FF of the Act.
[910 A C] The employment under the new employer could only commence from the time when the ownership or the management of the undertaking vested in the State Government; but simultaneously with that vesting, the workmen had to be deemed to be retrenched from service.
The retrenchment could, therefore, be deemed to have been made only by the previous employer.
Further, it would be the previous employer who would be competent to give the notice in accordance with the provisions of section 25F of the Act.
In these circumstances the conclusion was irresistible that the claim under section 25FF of the Act to compensation accrues to the workmen against the previous employer under whom he was employed until the date of the transfer.
In the present case therefore the right to receive compensation clearly accrued under section 25FF of the Act against the Company and there was, therefore, no difficulty in the Labour Court exercising jurisdiction on that basis.
[910 H 911 C] (ii) The right which had been claimed by the various workmen in their applications under section 33C(2) of the Act, was a right which accrued to them under section 25FF of the Act and was an existing right at the time.
when these applications were made.
The Labour Court clearly had jurisdiction to decide whether such a right did or did not exist when dealing with the application under that provision.
The mere denial of that right by the company cold not take away its jurisdiction, so that the order made by the Labour Court was competent.
[911 H 912 A] Chief Mining Engineer, East India Coal Co. Ltd. vs Ratneswar & Ors.
[1968] 1 S.C.R. 140, applied.
State of Bikaner and Jaipur vs
R.L. Khandelwal, , Punjab National Bank Ltd. vs
K.L. Kharbanda, [1962] Supp.
2 S.C.R. 977, Central Bank of India vs
P.S. Rajagopalan & Ors., ; and Bombay Gas Company Ltd. vs Gopal Bhiva and Ors. ; , referred to.
(iii) The Labour Court was concerned with the right claimed under the Act.
Whether by virtue of the provisions or the terms of transfer of the undertaking from the company to the Government or by virtue of the provisions of the Madras Act, the company was entitled to claim that this liability should be ultimately met by the State Government was a point which did not affect the right of the workmen to claim their compensation from the Company and the Labour Court was therefore: not required to go into the question when dealing with application under section 33C(2) of the Act: [912 'C E]
|
Appeal No. 1110 of 1965.
Appeal from the judgment and decree dated July 6, 1959 of the Patna High Court in First Appeal No. 235 of 1951.
Sarjoo Prasad and B.P. Jha, for the appellants.
C.B. Agarwala, P.K. Chatterjee and R.B. Datar, for the respondents (in Excepting respondents Nos.
15(b) to 15(d).
The Judgment of the Court was delivered by Bachawat, J.
This appeal arises out of Title Suit No. 12/9 of 1946 instituted in the Court of the First Additional Subordinate Judge, Darbhanga.
The plaintiffs claimed declaration of their title and possession in respect of 70 bighas of land in plot No. 1083 in village Siripur Majrahia.
They obtained settlements of the lands from the deity Shri Radhakrishan Jee Baldeojee.
The deity was the 16 annas proprietor of village Siripur Majrahia Pergana Jankhalpur, Tauzi No. 2794.
The river Karey flows between this village and the villages of Kazi Dumra and Shankarpur.
The contesting defendants were the landlords and tenants of villages Kazi Dumra and Shankarpur.
The deity was defendant No. 18 and was represented 'by one Tantreshwar Singh.
The plaintiffs claimed that in consequence of the changes in the channel of the river Karey the lands in suit were lost to villages Kazi Dumra and Shankarpur by diluvion and were annexed to plot No. 1083 in village Siripur Majrahia by gradual increment and accretioan.
The trial Court dismissed the suit.
It held that (1) the suit lands did not accrete to plots Nos. 1083 and 1089 in village Sirlput Majrahia due to slow, gradual and imperceptible changes in the channel of the river Karey, (2) there was no custom in the village by which the disputed lands became the property of the owner of those plots, (3) the deity Radha Krishanji Baldeoji or the owner of village Siripur Majrahia did not obtain possession of the lands in the manner ,alleged in the plaint, (4) the lands originally belonged to the proprietors of villages Kazi Dumra and Shankarpur and continued to be their property and (5 ) the plaintiffs failed to prove their title and possession in respect of the suit lands within 12 years before the date of the institution of the suit.
The plaintiffs filed F.A. No. 291 of 1951 in the High Court of Patna against the decree passed by the Trial Court.
The deity Shri Radha Krishanji Baldeoji, the original defendant No. 18 was 973 impleaded as respondent No. 23 in the appeal.
By an order dated January 24, 1952 the High Court appointed the Deputy Registrar as the guardian of the deity.
On February 18,.1952 the High Court passed the following order : "Two week 's further time is allowed to deposit D.R. guardian 's cost for respondent No. 23 (deity) failing which this appeal shall stand dismissed against him without further reference to a Bench." This peremptory order was not complied with and on the expiry of the two weeks the appeal stood dismissed 'against the deity.
At the hearing of the appeal the contesting defendants urged that the entire appeal became incompetent in view of the dismissal of the appeal against the deity.
The High Court accepted this contention and dismissed the appeal in its entirety.
The High Court held that there was a clear issue between defendant No. 18 and the contesting defendants as to whether the lands formed part of the village Siripur Majrahia, that the issue stood concluded against defendant No. 18 by the decree of the Trial Court, that the appeal had abated against defendant No. 18 and that as success in the appeal might lead to conflicting and inconsistent decrees, the appeal against all the defendants became incompetent.
The present 'appeal has been filed by the plaintiffs after obtaining a certificate from the High Court.
Clearly, the High Court was in error in holding that the appeal had abated either wholly or in part.
None of the parties to the appeal had died and there was no question of the abatement of the appeal.
Mr. C.B. Agarwala relying on the case of Munni Bibi vs Trilokinath(1) submitted that the decision of the Trial Court on the question whether the suit lands appertained to village Siripur Majrahia operated as res judicata between the deity and the contesting co defendants, that the appellate court could not record an inconsistent finding that the suit lands appertained to village Siripur Majrahia, and that in the circumstances, the entire appeal before the High Court became incompetent.
We are unable to accept these contentions.
The plaintiffs claiming as tenants of the deity sued the contesting defendants for declaration of their title and possession in respect of the suit lands on the allegation that the lands appertained to village Siripur Majrahia of which the deity was the proprietor.
The deity was not a necessary party to the suit.
It was joined as a defendant, but no relief was claimed against it.
The suit was dismissed on a finding that the suit lands did not appertained to village Siripur Majrahi 'a.
The plaintiffs filed an appeal against the decree impleading the deity as one of the respondents.
The appeal was dismissed against the deity for non(1) L.R. 58 I.A. 158.
974 payment of costs of its guardian ad litem.
The deity was not a necessary party to the appeal.
The plaintiffs were entitled to prosecute their appeal against the contesting defendants in the absence of the deity.
As soon as the appeal was filed by the plaintiffs in the High Court the decision of the Trial Court lost its character of finality and the question whether the suit lands appertained to village Siripur Majrahia became once again res sub judice.
The case of Munni Bibi vs Trilokinath(1) shows that a decision operates as res ludicata between co defendants if (1) there is a conflict of interest between them; (2) it is necessary to decide that conflict in order to give the plaintiffs the reliefs which they claim and (3 ) the question between the co defendants is finally decided.
In the present case, the third condition was not satisfied.
The question whether the suit lands appertain to Siripur Majrahia was not finally decided between the deity and the co defendants.
On the filing of the appeal by the plaintiffs, the question became once more subject of judicial inquiry between the deity and the contesting defendants.
Before the 'appeal was finally heard and decided, it was dismissed as against the deity for non payment of its guardian 's costs.
The appellate court did not give any decision on the merits of the case in the presence of the deity.
There is no final decision against the deity on the question of the title to the suit lands.
The decision of the 'appellate court against the contesting defendants will not lead to conflicting and inconsistent decrees.
The High Court was in error in holding that the appeal against the contesting defendants became incompetent.
In the circumstances the High Court ought to have decided the appeal before it on the merits.
Counsel for the parties agreed that the decision of the present appeal on the merits would abide by the decision in C.A. No. 140 of 1966 arising out of T.S. No. 29/11 of 1946.
That suit and T.S. No. 12/9 of 1946 out of which the present appeal arises were heard together by the Trial Court and disposed of by a common judgment.
In C.A. No. 140 of 1966 we have held that the disputed lands appertained originally to village Kazi Dumra and Shankarpur, that due to the recession of the river Karey the lands reformed in situ and that the property in the lands continued to remain with the proprietors of the lands in villages Kazi Dumra and Shankarpur.
The plaintiffs failed to prove that the deity Shri Radha Krishnaji Baldeoji came into possession of the disputed land as alleged in the plaint.
There was no issue on the question whether the deity had acquired title to the suit lands by adverse possession.
The plea of acquisition of title by adverse possession cannot be raised for the first time at the appellate stage.
The plaintiffs failed to establish acquisition of title of the deity to any portion cf the suit lands by adverse (1) L.R. 58 I.A. 158.
975 possession.
It follows that there was no merit in F.A. No. 235 of 1951.
Although the High Court did not decide this appeal on the merits, it is not necessary to remand the matter to the High Court.
Having regard to our findings in C.A. No. 140 of 1966, T.S. No. 12/9 of 1946 also must be dismissed.
In the result, the appeal is dismissed.
There will be no order to costs.
Y.P. Appeal dismissed.
| IN-Abs | The plaintiffs (appellants herein) obtained settlements of certain land owned by a deity in village Siripur Majrahia in Bihar.
The contesting defendants (respondents herein) owned lands in the villages of Kazi Dumra and Shankarpur which were separated from Siripur Majrahia by a river.
The plaintiffs claimed that in consequence of the changes in the channel of the aforesaid river the lands in suit were lost to villages Kazi Dumra and Shankarpur by diluvion and were annexed to their land in village Siripur Majrahia by gradual increment and accretion.
The deity was also made defendant No. 18 in the suit although no relief was claimed against it.
The trial court dismissed the suit and the plaintiffs appealed to High Court, again impleading the deity as a respondent.
They, however, failed to deposit the cost of the guardian ad litem of the deity appointed by the High Court and the Court thereupon dismissed the appeal as against the deity.
The contesting defendants urged at the hearing that the entire appeal had become incompetent in view of the dismissal of the appeal against the deity.
Accepting the contention the High Court dismissed the appeal.
It held inter alia, that the appeal had abated against the deity.
The plaintiffs filed appeal, with certificate, in this Court.
On behalf of the respondents reliance was placed on Muni Bibi vs Trilokinath and it was urged that the decision of the trial court on the question whether the suit lands appertained to village Siripur Majrahia operated as res judicata between the deity and the contesting co defendants, that the appellate court could not record an inconsistent finding that the suit lands appertained.
to village Siripur Majrahia and that in the circumstances, the entire appeal before the High Court had become incompetent.
HELD: (i) The High Court was in error in holding that the appeal had abated either wholly or in part.
None of the parties to the appeal had died and there was no question of abatement of the appeal.
[973 E] (ii) The deity was not a necessary party to the appeal and the plaintiffs were entitled to prosecute: their appeal against the contesting defendants in the absence of the deity.
[973 G H; 974 A B] (iii) The case of Muni Bibi vs Trilokinath shows that a decision operates as res judicata between co defendants if (1) there is a conflict of interest between them; (2) it is necessary to decide that conflict in order to give the plaintiffs the reliefs which they claim and (3) the question between the co defendants is finally decided.
In the present case the third condition was not satisfied.
The question whether the suit lands appertained to Siripur Majrahia was not finally decided between the deity and the co defendants.
On the filing of the appeal by the plaintiffs, the question became once more the subject of judicial enquiry between the deity and the contesting defendants.
[974 B D] Muni Bibi vs Trilokinath, L.R. 58 I.A. 158, referred to.
972 (iv) Before the appeal was finally heard and decided, it was dismissed as against the deity for non payment of its guardian 's costs.
The appellate court did not give any decision on the merits of the case in the presence of the deity.
There was no final decision against the deity on the question of title to the suit lands.
The decision of the appellate court against the contesting defendants would not lead to conflicting and inconsistant decrees.
The High Court was in error in holding that the appeal against the contesting defendants became incompetent.
[974 D E]
|
Appeal No. 61 of 1968.
Appeal under section 116 A of the Representation of the People Act, 1951 from the judgment and order dated August 21, 1967 of the Andhra Pradesh High Court in Election Petition No. 3 of 1967.
993 P. Ram Reddy and A.V.V. Nair, for the appellant.
R.K. Garg, D.P. Singh, S.C. Agarwal and Asif Ansari, for respondent No. 1.
The Judgment of the Court was delivered by Hidayatullah, C.J.
This appeal arises from the decision of the Andhra Pradesh High Court dated August 21, 1967 by which an election petition filed by the present appellant Goka Ramalingam to question the election of the answering respondent Boddu Abraham was dismissed.
The matter concerns the Cheriyal (Scheduled Caste) constituency in the election to the Andhra Pradesh Legislative Assembly held in February, 1967.
Three candidates had offered themselves for election.
Two of them we have already named, the third is one Devadanam.
The answering respondent obtained 15000 and odd, the appellant election petitioner 12000 and odd and Devadanam 7000 and odd votes.
The election petition was based only on one issue, namely, that the respondents who had stood for a scheduled caste Reserved seat had "converted themselves into Christianity long time back and they continue to profess the said religion Christianity even today.
" Under the Constitution (Scheduled Castes) Order, 1950, it is provided as follows: "(2) Subject to the provisions of this Order, the castes, races or tribes or parts of, or groups within, castes or tribes, specified in Parts I to XIII of the Schedule to this Order shall, in relation to the States to which those parts respectively relate, be deemed to be Scheduled Castes so far as regards members thereof resident in the localities specified in relation to them in those Pans of that Schedule.
(3) Notwithstanding anything contained ' in paragraph 2, no person who professes a religion different from the Hindu or the Sikh religion shall be deemed to be a member of a Scheduled Caste.
" It would therefore appear that if the answering respondent and Devadanam were not members of a named scheduled caste (in this case the Madiga caste) they were not eligible to stand for election for the Reserved Seat.
The case as put forward in the High Court was that these two candidates had themselves got converted into Christianity a long time ago and that they did not therefore profess Hindu religion although in the plea it is stated affirmatively that they profess Christian religion.
The case went to trial on this plea and the issues framed were as follows: "1.
Whether the respondents who admittedly once belonged to 'Madiga ' community embraced Christianity 994 and professed the religion of Christianity at the time of election and hence respondent No. 1 was not qualified to be chosen to fill the seat in the Assembly of the State as per section 5(a) read with Rule (3) of the Consittution (Scheduled Castes) Order, 1950 (C.O. 19 dated 10 8 59) ? 2.
Whether the nomination papers of both the respondents were improperly received and as a result thereof the result of the election has been materially affected? 3.
What is the effect of admission of respondent 2 in his W.S. as to his status on this election petition?" Evidence was led to prove that the answering respondent was converted to Christianity.
This evidence was not accepted by the High Court.
As regards the other respondent, he went out of the fight admitting that he was a Christian and nothing more need be said of him.
It appears that while this case was going on, the learned Judge was informed that a Register of all converted Christians was maintained by the church.
He accordingly sent for the Register and marked it as exhibit C 1.
In the judgment the learned Judge gives his order pertaining to this action.
It reads as follows: "I may mention here that since it came out in the evidence of R.W. 2 that the names of all converts to Christianity within the jurisdiction of Hanumakonda Baptist Mission would be entered in the General Record of the Field Association, Hanumakonda, and that register was flied as an exhibit in a suit pending in the District Court at Warangal, I summoned it and marked it as exhibit C 1.
I gave opportunity for the lawyers appearing on both sides to inspect the register and make their submissions.
The entries relating to Dharmasangaram village are to be found in pages 50 to 52 and 182.
It is true that the name of the 1st respondent is not found in this Record; but since this register does not appear to be an exhaustive and complete record of all the Christians in that area, I do not propose to rely on the entries in this register for any purpose." The Register was inspected by the parties.
They went into it with a view to finding out whether the answering respondent and his wife Chinna Mariamma had been converted or not.
There was no entry showing that they had been so converted.
It appears, however, that the Register did contain two entries show 995 ing the conversion of Boddu Kumaraiah and China Buchamma who are now said to be the father and mother of answering respondent.
An affidavit has also been filed from the Pastor of the Church in which it is stated that these entries refer to the parents of the answering respondent.
Even though the Register was in court and was open to inspection of the parties, care was not taken to discover these two names, with the result that the case was fought on the original plea and issue that the answering respondent was converted to Christianity.
That apparently was not a fact, because if he was born of Christian parents he did not need conversion.
The fact, however, is only alleged now before us and has not been subjected to proof.
The question therefore is whether in view of this fresh evidence, we should allow this appeal.
On a proper consideration of the entire matter we are of opinion that we cannot.
An application was made to us asking for amendment of the plea of conversion of the answering respondent into one of conversion of his parents to Christianity.
We have been unable to allow that petition, because it changes the nature of the case requiring fresh evidence to be taken and is filed also beyond the period of limitation prescribed for filing of election petitions.
That it does change the entire nature of the case is obvious, because instead of the plea that the answering respondent was converted to Christianity, it is now sought to be substituted a plea that the parents were converted to Christianity.
We should have understood such an application being made in the Court of trial when the Register was produced, because that might have been a matter not within the knowledge of the election petitioner till the register was produced.
But after the Register had been produced and it lay in the Court for nearly an year and had been inspected by the answering respondent, it does not lie in his mouth to say that he had no notice of the true facts.
He had notice of them because he had the register with him and the names of the alleged parents of the answering respondent are clearly mentioned therein.
In fact the register seems to be a well kept document written extremely legibly and there was no danger of any name having been overlooked.
Therefore we must consider this as a belated plea and reject it on the two grounds already mentioned by us.
Once the application for amendment is out the way, the question is whether the appeal of the election petitioner can be otherwise sustained.
Mr. Ram Reddy contended that under el.
(3) of the Presidential Order, it is sufficient to prove that if a person professes religion other than Hinduism or Sikhism it disentitles him to contest for a reserved seat.
He says that for whatever reason the answering respondent be regarded as a 986 Christian today or at any rate at the time he filed his nomination paper, he would be incompetent to stand for the election from the reserved seat if he professed a religion other than Hinduism " or Sikhism.
In other words, 'he wants to extract from the plea and the issue a very much narrower field for enquiry, namely, that the answering respondent was not a Hindu on that date.
This would have been a proper plea to take in the first instance.
It is because of clumsy blundering that the petitioner undertook a much greater burden than the law required him to take.
He should have pleaded only that the returned candidate was a Christian on the date he filed his nomination paper and therefore was not ,a Hindu and was not competent to stand for the Reserved Seat.
Instead he proceeded to demonstrate through his plea and his evidence that the returned candidate was himself converted to Christianity and failed.
In this view of the matter we do not think that we should allow him to change his front and narrow the field of enquiry to one which he should have adopted in the first instance.
Not having done so, we think that it is too late for him to change his case now.
For these reasons, we are constrained to dismiss the appeal.
We may say that it is an odd situation, because probably a Christian occupies a Reserved Seat, but this is the result of the vagaries of litigation which have to be carried on according to rules.
The rules do not permit us to give relief where the party himself is at fault in making a wrong plea and in not making the right plea in time.
But in the circumstances of the case, we think that the parties should be directed to bear their costs throughout.
V.P.S. Appeal dismissed.
| IN-Abs | The appellant and respondents were contestants for a reserved seat from 'a scheduled caste constituency for election to the State Legislative Assembly, and the first respondent was elected.
The election was challenged by the appellant on the ground that the respondent was not a member of scheduled caste because, he embraced Christianity and professed the Christian religion, and therefore, was not eligible to stand for election for the reserved seat.
During the trial, the High Court summoned a Register, containing the names of all converted Christians of the locality, which was maintained by the local church.
There was no entry showing that the first respondent was converted to Christianity.
On the issue whether the first respondent was converted to Christianity, the High Court, on a consideration of the entire evidence held that there were no proof of such conversion and dismissed the petition.
In appeal to this Court, a petition was flied alleging that the Register contained entries showing that the parents of the first respondent were converted to Christianity and it was prayed that the case should proceed on the plea of conversion to Christianity of the parents of the first respondent, in place of the original plea that the first respondent himself was so converted.
HELD: The prayer in the petition could not be granted because: (a) The plea changed the entire nature of t e case and required fresh evidence, (b) it was belated and beyond the period of limitation prescribed for filing of election petitions; and (c) the application should have been filed in the High Court itself, for, the Register was produced in the High Court and it was inspected by the parties who had thus ample opportunity to discover the basis for the new plea.
[995 D F] Under cl.
(3) of the Constitution (Scheduled Castes) Order, 1950, it would have been sufficient if the appellant pleaded and proved that the first respondent was a Christian that therefore he was not a Hindu and was not competent to stand for the reserved seat; but he chose to establish that the first respondent was himself converted to Christianity and failed to do so.
[996 B C]
|
iminal Appeal No. 7 of 1953.
Appeal by Special Leave from the Judgment and Order of the High Court of Judicature at Nagpur dated the 15th.
September, 1952, in Criminal Case No. 45 of 1951 from the Order of the Court of the Magistrate 1st Class, Hoshangabad, in Criminal Case No. 75 of 1949.
H.J. Umrigar, Rameshwarnath and Rajinder Narain for the appellants.
T. L. Shevde, Advocate General of Madhya Pradesh (T. P. Naik and I. N. Shroff, with him) for the respondent.
May 14.
The Judgment of the Court was delivered by MEHAR CHAND MAHAJAN C.J.
The facts giving rise to this appeal are these: The appellant, Harishankar Bagla, and his wife, Smt.
Gomti Bagla, were arrested at Itarsi, by the Railway Police on the 29th November, 1948, for contravention of section 7 of the Essential Supplies (Temporary Powers) Act, 1946, read with clause (3) of the Cotton Textiles (Control of Movement) 383 Order.
, 1948, having been found in possession of new cotton cloth " weighing over six maunds which cloth, it was alleged,was being taken by them from Bombay to Kanpur without any permit.
After various vicissitudes through which the chalan passed the case was eventually withdrawn by the High Court to itself on the 3rd of September, '1951, as it involved a decision of constitutional issues.
By its order dated the 15th September, 1952, the High Court upheld the provisions of sections 3 and 4 of the Essential Supplies (Temporary Powers) Act, 1946, as constitutional.
It also upheld the constitutionality of the impugned Order.
Section 6 of the Act was held to be inconsistent with the provisions of the Railway Act but it was held that its unconstitutionality did not affect the prosecution in this case.
The High Court directed that the prosecution should proceed and the records sent back to the trial Court for being dealt with in accordance with law.
Leave to appeal was given both to the appellants and the respondent and requisite certificates under articles 132 and 134 of the Constitution were granted.
This appeal along with the connected appeal No. 6 of 1953 is before us on the basis of the said certificates.
Mr. Umrigar, who appeared in this and the connected appeal, urged the following points for our consideration and decision: (1) That sections 3 and 4 of the Essential Supplies (Temporary Powers) Act, 1946, and the provisions of the Cotton Cloth Control Order contravened the fundamental right of the appellants guaranteed by article 19(1)(f) and (g) of the Constitution; (2) That section 3 of the Essential Supplies (Temporary Powers) Act, 1946, and in particular section 4 were ultra vires, the Legislature on the ground of excessive delegation of legislative power; (3) That section 6 having been found ultra vires, section 3 was inextricably connected with it and that both the sections should have been declared ultra vires on that ground; and (4) That the impugned Control Order contravened existing laws, viz., the provisions of section 27,28 and 384 41 of the Indian Railways Act, and was thus void in its entirety.
The respondent challenged the judgment of the High Court that section 6 of the Act was unconstitutional.
In our judgment, none of the points raised by Mr. Umrigar have any validity.
On the other hand, we are of the opinion that the High Court was in error in declaring section 6 of the Act unconstitutional.
Sections 3 and 4 of the Essential Supplies (Temporary Powers) Act, 1946, provide as follows: "3.
(1) The Central Government, so far as it appears to it to be necessary or expedient for maintaining or increasing supplies of any essential commodity, or for socuring their equitable distribution and availability at fair prices, may by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein (2) Without prejudice to the generality of the powers conferred by sub section (1), an order made thereunder may provide (a) for regulating by licences, permits or otherwise the production or manufacture of any essential com modity;. . (d) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption of any essential commodity; 4.
The Central Government may by notified order direct that the power to make orders under section 3 shall,in relation to such matters and subject to such conditions, if any, as may be specified in the direction, be exercisable also by (a) such officer or authority subordinate to the Central Government, or (b) such State Government or such officer or authority subordinate to a State Government as may be specified in the direction.
" Section 6 runs thus: "6.
Any order made under section 3 shall have effect notwithstanding anything inconsistent therewith 385 contained in any enactment other than this Act or any instrument having effect by virtue of any enactment other than this Act." Under powers conferred by section 3 the Central Government promulgated on 10th September, 1948, Cotton Textiles (Control of Movement) Order, 1948.
Section '2 of this order defines the expressions "apparel," " carrier," " hosiery," " cloth " and " textile commissioner.
" Section 3 of the order runs as follows: "3.
No person.
shall transport or cause to be transported by rail, road, air, sea or inland navigation any cloth, yarn or apparel except under and in accordance with (i) a general permit notified in the Gazette of India by the Textile Commissioner, or (ii) a special transport permit issued by the Textile Commissioner.
" Section 8 provides that the Textile Commissioner may, by notification in the Gazette of India, prescribe the manner in which any application for a special transport permit under this Order shall be made.
The Central Government has prescribed forms for application for obtaining permits and the conditions under which permits can be obtained.
The first question canvassed by Mr. Umrigar was that the provisions of section 3 of the Control Order infringed the rights of a citizen guaranteed in subclauses (f) and (g) of article 19(1) of the Constitution.
These sub clauses recognise the right of a citizen to dispose of property and to carry on trade or business.
The requirement of a permit to transport by rail cotton textiles to a certain extent operates as a restriction on the rights of a person who is engaged in the business of purchase and sale of cotton textiles.
Clause (5) of article 19 however permits such restrictions to be placed provided they are in the public interest.
During the period of emergency it was necessary to impose control on the production, supply and distribution of commodities essential to the life of the community.
It was for this reason that the Legislature passed the Essential Supplies (Temporary Powers) Act 50 386 authorising the Central Government to make orders from time to time controlling the production, supply and distribution of essential commodities.
Clause 3 of the Control Order does not deprive a citizen of the right to dispose of or transport cotton textiles purchased by him.
It requires him to take a permit from the Textile Commissioner to enable him to transport them.
The requirement of a permit in this regard cannot be regarded as an unreasonable restriction on the citizen 's right under sub clauses (f) and (g) of article 19(1).
If transport of essential commodities by rail or other means of conveyance was left uncontrolled it might well have seriously hampered the supply of these commodities to the public.
Act XXIV of 1946 was an emergency measure and as stated in its preamble, was intended to provide for the continuance during a limited period of powers to control the production, supply and distribution of, and trade and commerce in, certain commodities.
The number of commodities held essential are mentioned in section 2 of the Act, and the requirement of a permit to transport such commodities by road or rail or other means of transport cannot, in any sense of the term, be said, in a temporary Act, to be unreasonable restriction on the citizen 's rights mentioned in clauses (f) and (g) of article 19(1).
The High Court was therefore right in negativing the contention raised regarding the invalidity of the Control Order as abridging the rights of the citizen under article 19(1) of the Constitution.
Mr. Umrigar further argued that the Textile Commissioner had been given unregulated and arbitrary discretion to refuse or to grant a permit, and that on grounds similar to those on which in Dwarka Prasad vs The State of Uttar Pradesh (1), this Court declared void section 4(3) of the Uttar Pradesh Coal Control Order, section 3 of the Control Order in question should also be declared void.
This argument again is not tenable.
In the first place, the appellants never applied for a permit and made no efforts to obtain one.
If the permit had been applied for and refused arbitrarily they might then have had a right to attack the law on (1) A.T.R. ; 387 the ground that it vested arbitrary and unregulated power in the textile commissioner.
The appellants were not hurt in any way by any act of the textile commissioner as they never applied for a permit.
They were transporting essential goods by rail without a permit and the only way they can get any relief is by attacking the section which obliges them to take a permit before they can transport by rail essential commodities.
It may also be pointed out that reference to the decision of this Court in Dwarka Prasad 's case(1) is not very opposite and has no bearing on the present case.
Section 4(3) of the Uttar Pradesh Coal Control Order was declared void on the ground that it committed to the unrestrained will of a single individual to grant, withhold or cancel licences in any way he chose and there was nothing in the Order which could ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same.
Section 4(3) of the Uttar Pradesh Coal Control Order was in these terms: " The Licensing Authority may grant, refuse to grant, renew or refuse to renew a licence and may suspend, cancel, revoke or modify any licence or any terms thereof granted by him under the Order for reasons to be recorded.
Provided that every power which is under this Order exercisable by the Licensing Authority shall also be exercisable by the State Coal Controller, or any person authorized by him in this behalf In the present Control Order there is no such provision as existed in the Uttar Pradesh Coal Control Order.
Provisions of that Control Order bear no analogy to the provisions of the present Control Order.
The policy underlying the Order is to regulate the transport of cotton textile in a manner that will ensure an even distribution of the commodity in the country and make it available at a fair price to all.
The grant or refusal of a permit is thus to be governed by this policy and the discretion given to the Textile Commis sioner is to be exercised in such a way as to effectuate this policy.
The conferment of such a discretion (i) ; A.I.R. 1954 S.C. 225; 388 cannot be called invalid and if there is an abuse of the power there is ample power in the Courts to undo the mischief Presumably, as appears from the different forms published in the Manual, there are directions and rules laid down by the Central Government for the grant or refusal of permits.
The next contention of Mr. Umrigar that section 3 of the Essential Supplies (Temporary Powers) Act, 1946, amounts to delegation of Legislative power outside the permissible limits is again without any merit.
It was settled by the majority judgment in the Delhi Laws Act case (1) that essential powers of legislation cannot be delegated.
In other words, the legislature cannot delegate its function of laying down legislative policy in respect of a measure and its formulation as a rule of conduct.
The Legislature must declare the policy of the law and the legal principles which are to control any given cases and must provide a standard to guide the officials or the body in power to execute the law.
The essential legislative function consists in the determination or choice of the legislative policy and of formally enacting that policy into a binding rule of conduct.
In the present case the legislature has laid down such a principle and that principle is the maintenance or increase in supply of essential commodities and of securing equitable distribution and availability at fair prices.
The principle is clear and offers sufficient guidance to the Central Government in exercising its powers under section 3.
Delegation of the kind mentioned in section 3 was upheld before the Constitution in a number of decisions of their Lordships of the Privy Council, vide Russell vs The Queen (2), Hodge vs The Queen (3), and Shannon vs Lower Mainland Dairy Products Board (4)and since the coming into force of the Constitution delegation of this character has been upheld in a number of decisions of this Court on principles enunciated by the majority in the Delhi Laws Act case (1).
As already.
pointed out, the preamble and the body of the sections sufficiently formulate the legislative policy and the ambit and character of I I) ; (2) 7 A.C. 829.
(3) 9 A.C. II7.
(4) [I938] A.C. 708.
389 the Act is such that the details of that policy can only be worked out by delegating them to a subordinate authority within the framework of that policy.
Mr. Umrigar could not very seriously press the question of ' the invalidity of section 3 of the Act and it is unnecessary therefore to consider this question in greater detail.
Section 4 of the Act was attacked on the ground that it empowers the Central Government to delegate its own power to make orders under section 3 to any officer or authority subordinate to it or the Provincial Government or to any officer or authority subordinate to the Provincial Government as specified in the direction given by the Central Government.
In other words, the delegate has been authorized to further delegate its powers in respect of the exercise of the powers of section 3.
Mr. Umrigar contended that it was for the Legislature itself to specify the particular authorities or officers who could exercise power under section 3 and it was not open to the Legislature to empower the Central Government to say what officer or authority could exercise the power.
Reference in this connection was made to two decisions of the Supreme Court of the United States of America Panama Refining Co. vs Ryan (1) and Schechter vs United States (2).
In both these cases it was held that so long as the policy is laid down and a standard established by a statute, no unconstitutional delegation of legislative power is involved in leaving to selected instrumentalities the making of subordinate rules within prescribed limits and the determination of facts to which the policy as declared by the Legislature is to apply.
These decisions in our judgment do not help the contention of Mr. Umrigar as we think that section 4 enumerates the classes of persons to whom the power could be delegated or sub delegated by the Central Government and it is not correct to say that the instrumentalities have not been selected by the Legislature itself.
The decision of their Lordships of the Privy Council in Shannon 's case (3), completely negatives the contention raised regarding the invalidity of section 4.
(1) ; (3) (2) ; 390 In that case the Lt.Governor in Council was given power to vest in a marketing board the powers conferred by section 4A(d) of the Natural Products Marketing (British Columbia) Act, 1936.
The attack on the Act was that without constitutional authority it delegated legislative power to the Lt.Governor in Council.
This contention was answered by their Lordships in these terms: " The third objection is that it is not within the powers of 'the Provincial Legislature to delegate so called legislative powers to the Lt. Governor in Council, or to give him powers of further delegation This objection appears to their Lordships subversive of the rights which the Provincial Legislature enjoys while dealing with matters falling within the classes of subjects in relation to which the Constitution has granted legislative powers.
Within its appointed sphere the Provincial Legislature is as supreme as any other Parliament; and it is unnecessary to try to enumerate the innumerable occasions on which Legislatures, Provincial, Dominion and Imperial, have entrusted various persons and bodies with similar powers to those contained in this Act.
" The next contention that the provisions of the Textile Control Order operate as an implied repeal of sections 27, 28 and 41 of the Indian Railways Act and are therefore invalid is also not well founded.
The requirement of a permit by clause (3) and provisions of clause (4) of the Order which empower the Textile Commissioner to direct a carrier to close the booking or transport of cloth, apparel, etc., are not in direct conflict with sections 27, 28 and 41 of the Railways Act.
The Railways Act does not exclude the placing of a disability on a railway administration by the Government or any other authority.
This clause merely supplements the relevant provisions of the Railways Act and does not supersede them.
Similar observations apply to clause (5) which enables the Textile Commissioner to place an embargo on the transport of certain textiles from one area to another.
There is nothing in the provisions of the order which in any way overrides or supersedes the provisions of the different sections of the Railways Act referred to above.
391 The last contention of Mr. Umrigar that section 6 having been declared invalid, section 3 is inextricably mixed with it and should also have been declared invalid is also not valid, because apart from the grounds given by the High Court for holding that the two sections were not so interconnected that the invalidity of one would make the other invalid, the High Court was in error in holding that section 6 was unconstitutional.
Section 6 of the Act cited above declare, that an order made under section 3 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or any instrument having effect by virtue of any enactment other than this Act.
In other words it declares that if there is any repugnancy in an order made under section 3 with the provisions of any other enactment, then notwithstanding that inconsistency the provisions of the Order will prevail in preference to the provisions of other laws which are thus inconsistent with the provisions of the Order.
In the view of the High Court the power to do something which may have the effect of repealing, by implication, an existing law could not be delegated in view of the majority decision of this Court in In Re: Delhi Laws Act (1), where it was held that to repeal or abrogate an existing law is the exercise of an essential legislative power.
The learned Judges of the High Court thought that the conferment of power of the widest amplitude to make an order inconsistent with the pre existing laws is nothing short of a power to repeal.
In our opinion the construction placed on section 6 by the High Court is not right.
Section 6 does not either expressly or by implication repeal any of the provisions of pre existing laws; neither does it abrogate them.
Those laws remain untouched and unaffected so far as the statute book is concerned.
The repeal of a statute means as if the repealed statute was never on the statute book.
It is wiped out from the statute book.
The effect of section 6 certainly is not to repeal any one of those laws or abrogate then;.
Its object is simply to by pass them where they are inconsistent with the provisions of the Essential Supplies (Temporary Powers) (I) [1951) S.C.R, 747. , or the orders made thereunder.
In other words, the orders made under section 3 would be operative in regard to the, essential commodity covered by the Textile Control Order wherever there is repugnancy in this Order with the existing laws and to that extent the existing laws with regard to those commodities will not operate.
By passing a certain law does not necessarily amount to repeal or abrogation of that law.
That law remains unrepealed but during the continuance of the order made under section 3 it does not operate in that field for the time being.
The ambit of its operation is thus limited without there being any repeal of any one of its provisions.
Conceding, how ever, for the sake of argument that to the extent of a repugnancy between an order made under section 3 and the provisions of an existing law, to the extent of the repugnancy, the existing law stands repealed by implication, it seems to us that the repeal is not by any Act of the delegate, but the repeal is by the legislative Act of the Parliament itself.
By enacting section 6 Parliament itself has declared that an order made under section 3 shall; have effect notwithstanding any inconsistency in this order with any enactment other than this Act.
This is not a declaration made by the delegate but the Legislature itself has declared its will that way in section 6.
The abrogation or the implied repeal is by force of the legislative declaration contained in section 6 and is not by force of the order made by the delegate under section 3.
The power of the delegate is only to make an order under section 3.
Once the delegate has made that order its power is exhausted.
Section 6 then steps in wherein the Parliament has declared that as soon as such an order comes into being that will have effect notwithstanding any inconsistency therewith contained in any enactment other than this Act.
Parliament being supreme, it certainly could make a law abrogating or repealing by implication provisions of any pre existing law and no exception could be taken on the ground of excessive delegation to the Act of the Parliament itself.
There is no delegation involved in the provisions of section 6 at all and that section could not be held to be unconstitutional on that ground, 393 The result therefore is that in our opinion the provisions of sections 3, 4 and 6 of the Essential Supplies (Temporary Powers) Act, 1946, are constitutional and.
the impugned order is also constitutional.
Accordingly ' this appeal is dismissed, and the trial Court is directed to proceed expeditiously with the case in accordance with law.
Appeal dismissed.
| IN-Abs | Clause 3 of the Cotton Textile (Control of Movement) Order, 1948, promulgated by the Central Government under section 3 of the Essential Supplies (Temporary Powers) Act, 1946, does not deprive a citizen of the right to dispose of or transport cotton tex B tiles purchased by him.
It requires him to take a. permit from the Textile Commissioner to enable him to transport them.
The requirement of a permit in this respect cannot be regarded as an A unreasonable restriction on the citizen 's right under sub clauses (f) and (g) of article 19(1) of the Constitution.
The policy underlying the Control Order is to regulate the transport of cotton textiles in a manner that will ensure an even distribution of the commodity in the country and make it available at a fair price to all.
The grant or a refusal of a permit is to be governed by the policy and the discretion given to the Textile Commissioner is to be exercised in such a way as to effectuate this policy.
The conferment of such a discretion cannot be called invalid and if there is an abuse of power there is ample power in Courts to undo the mischief.
Messrs. Dwarka Prasad Laxmi Narain vs The State of Uttar Pradesh (([1954] S.C.R. 803) distinguished.
It was settled by the majority judgment in the Delhi Laws Act case ([1951] 'S.C.R. 747) that the essential powers of legislation cannot be delegated.
The Legislature must declare the policy of the law and the legal principles which are to control any given cases and must provide a standard to guide the officials or the body in power to execute the law.
The Legislature has laid down such a principle in the Act and that principle is the maintenance or increase in supply of essential commodities and of securing equitable distribution and availability at given prices.
The preamble and the body of the sections in the Essential Supplies (Temporary Powers) Act, 1946, sufficiently formulate the legislative policy and the ambit and the character of the Act is such that the details of that policy can only be worked out by delegating that power to a subordinate authority within the framework of that policy.
Therefore section 3 of the Act is not ultra vires the Legislature on the ground of delegation of legislative power.
Section 4 of the Act enumerates the classes of persons to whom the power could be delegated or sub delegated by the Central Government and it is not correct to say that the instrumentalities have not been selected by the Legislature itself.
Accordingly section 4 of the Act is not ultra vires on the ground of excessive delegation of legislative powers.
Shannon vs Lower Maintand Dairy Products Board ([1938] A.C. 708) applied.
382 The requirements of a permit by clause 3 and the provisions of clause 4 of the Central Order which empower the Textile Commissioner to direct a carrier to close booking or transport of cloth apparel, etc., are not in conflict with sections 27, 28 and 41 of the Railways Act.
These clauses merely supplement the relevant provisions of the Railways Act and do not supersede them. ' Section 6 of the Act does not either expressly or by implication repeal any of the provisions of the preexisting laws ; nor does it abrogate them.
Those laws remain untouched and unaffected so far as the statute book is concerned.
The repeal of a statute means that the repealed statute must be regarded as if it had never been on the statute book.
The effect of section 6 is not to repeal those laws or abrogate them but simply to by pass them where they are inconsistent with the provisions of the Essential Supplies (Temporary Powers) Act, 1946 or the orders made thereunder.
Even assuming that the existing law stands repealed by implication, such abrogation or repeal is by force of the legislative declaration contained in section 6 and is not by force of the order made by the delegate under section 3.
Accordingly there is no delegation involved in the provision of section 6 and it cannot be held uncon stitutional on that ground.
|
minal Appeal No. 207 of 1967.
Appeal by special leave from the judgment and order dated April 17, 1967 of the Andhra Pradesh High Court in Criminal Revision Petition No. 735 of 1965.
P. Ram Reddy and A. V.V. Nair, for the appellant.
G.S. Rama Rao, for the respondents.
The judgment of the Court was delivered by Shah, J.
K. Meerayya, K. Venkatanarayana respondents in this appeal and two others were charged before the Judicial Magistrate, IInd Class, Avanigadda, for offences under sections 323 and 324 I.P. Code for voluntarily causing injuries to Seetharamayya and Veeraraghavayya on June 22, 1964.
The Trial Magistrate convicted Meerayya and Venkatanarayana the first under the offence under section 324 and the second for the offence under section 323 I.P. Code.
In appeal to the Court of Session, 1006 Krishna Division, at Machilipatnam, the order was confirmed.
The High Court, in exercise of its revisional jurisdiction, set aside the order of conviction and sentence.
The State of Andhra Pradesh has appealed to this Court, with special leave.
The case raises a question of some importance in the administration of justice.
The findings recorded by the Trial Magistrate and confirmed by the Sessions Judge were that the respondents had committed assault upon Seetharamayya and Veeraraghavayya and that they could in law be properly convicted.
But it was urged that there was a bar against prosecution of the two accused Meerayya and Venkatanarayana because of the "principle of issue estoppel".
The plea is raised on the ground that the Station House Officer, Kodur Police Station, had instituted proceedings in the Court of the Sub Divisional Magistrate, Bandar, under section 107 ' Code of Criminal Procedure, against 96 persons, amongst whom were the two respondents, and an order under section 112 Code of Criminal Procedure was made stating that the persons named therein were indulging in acts of violence involving breach of public peace and tranquillity in the village of Salempalam and were endangering peace in the village, and that they had formed themselves into a party and were thereby disturbing the public peace and tranquillity by committing, acts of violence, and on that account they were required to show cause why each person named should not execute a bond for keeping the peace for a period of one year in the sum of Rs. 1,000 with two sureties in a like amount each.
In the order requiring the parties to show cause, four incidents were referred to the first of which is material.
It was recited that on June 22, 1964, 11 persons including the two respondents had beaten Seetharamayya and Veeraraghavayya with crow bars and sticks, and a case in Crime No. 20/64 under sections 148, 323 and 325 I.P.
Code had been registered and was being investigated.
The Sub Divisional Magistrate held an inquiry and was of the view that since the evidence led in support of the first incident was not supported by reliable evidence, and there were inherent discrepancies in the testimony of the witnesses and the recitals in the complaint, the first incident was not proved against any of the eleven persons.
It was urged that the order of the Sub Divisional Magistrate holding that the respondents were not concerned in the incident had become final and it was not open to the Judicial Magistrate, IInd Class, Avanigadda, to hold a trial against the respondents in respect of the same incident.
The Trial Magistrate rejected the plea, and the Sessions Judge agreed with him.
But in the view of the High Court since in the proceeding under section 107 of the ,Code of Criminal Procedure the incident which was made the subject matter of the complaint against the respondents in the Court of the Judicial Magistrate was one of the incidents 1007 relied upon and was held not proved, it was not open to the State to commence or continue a prosecution against the respondents in respect of the same incident.
In so holding, the High Court held that on the principle of "issue estoppel" approved by this Court in Manipur Administration vs Thokchom, Bira Singh(1) so long as the finding, that the respondents were not concerned in the incident, was not set aside by appropriate proceeding, no prosecution on any allegation legally inconsistent with that finding could be commenced against the respondents.
Counsel for the State contended that the rule of issue estoppel is inconsistent with the statutory provisions contained in section 403 of the Code of Criminal Procedure, and cannot be resorted to in criminal trials and that in any event the rule of issue estoppel had no application, since there was no "previous trial" of the respondents for any offence alleged to arise out of the incident in respect of which they were tried.
It was urged that it was not the law even recognised by the Australian Courts where the rule of issue estoppel had its origin that evidence on which a criminal proceeding was held cannot be utilised in any subsequent proceeding between the same parties.
The first contention raised by counsel for the State cannot be entertained in view of a large body of authority in this Court.
If the matter were res integra the argument that the Courts cannot travel outside the terms of the Code of Criminal Procedure : and extend the rule of autre fois acquit incorporated in section 403 of the Code of Criminal Procedure may have required serious consideration.
The following important rules emerge from the terms of section 403 of the Code,of Criminal Procedure: (1) An order of conviction or acquittal in respect of any offence constituted by any act against or in favour of a person does not prohibit a trial for any other offence constituted by the same act which he may have committed, if the Court trying the first offence was incompetent to try that other offence.
(2) If in the course of a transaction several offences are committed for which separate charges could have been made, but if a person is tried in respect of some of those charges, and not all, and is acquitted or convicted, he may be tried for any distinct offence for which at the former trial a separate charge may have been, but was not, made.
(3) If a person is convicted of any offence constituted by any act, and that act together with the consequences which re suited therefrom constitute a different offence, he may again be tried for that different offence arising out of the consequences, if (1) ; L 6 Sup C1169 13 1008 the consequences had not happened or were not known to the Court to have happened, at me time when he was convicted.
(4) A person who has once been tried by a court of competent jurisdiction for an offence and has been either convicted or acquitted shall not be tried for the same offence or for any other offence arising out of the same facts, for which a different charge from the one made against him might have been made or for which he might have been convicted under the Code of Criminal Procedure.
Section 403 of the Code of Criminal Procedure enacts the rule of autre fois acquit and autre fois convict applicable to criminal trials.
The rule is that so long as an order of acquittal or conviction at a trial held by a Court of competent jurisdiction of a person charged with committing an offence stands, that person cannot again be tried on the same facts for the offence for which he was tried or for any other offence arising there/fore.
But the rule of issue estoppel in criminal trials evolved by the High Court of Australia and approved by the Judicial Committee has been applied to criminal trials in India, apart from the terms of section 403 of the Code of Criminal Procedure.
Lord MacDermott in Sambasivam vs Public Prosecutor, Federation of Malaya(1) observed at p. 479: "The effect of a verdict of acquittal pronounced by a competent court on a lawful charge and after a lawful trial is not completely stated by saying that the person acquitted cannot be tried again for the same offence.
To that it must be added that the verdict is binding and conclusive in all subsequent proceedings between the parties to the adjudication.
The maxim "Res judicata pro veritate accipitur" is no less applicable to criminal than to civil proceedings.
Here, the appellant having been acquitted at the first trial on the charge of having ammunition in his possession, the prosecution was bound to accept the correctness of that verdict and was precluded from taking any step to challenge it at the second trial.
And the appellant was no less entitled to rely on his acquittal in so far as it might be relevant in his defence.
That it was not conclusive of his innocence on the fire arm charge is plain, but it undoubtedly reduced in some degree the weight of the case against him, for at the first trial the facts proved in support of one charge were clearly relevant to the other having regard to the circumstances in which the ammunition and revolver were found and the fact that they fitted each other." 1009 In Sambasivam 's case(1) the appellant was tried for the offence of being in possession of ammunition in violation of Reg.
4(1)(b) of the Emergency (Criminal Trials) Regulations, 1948.
He was acquitted of the charge.
Later he was tried for the offence of carrying a fire arm contrary to Reg.
4(1)(a) of the Emergency Regulations and was convicted by the Supreme Court of the Federation of Malaya.
An appeal was carried to the Judicial Committee and the legality of the conviction was challenged on the grounds, inter alia, that so long as the order of acquittal in respect of the carrying of ammunition stood, the facts proved in support of that charge were in the circumstances of the case clearly relevant to the second charge, and the appellant was entitled to rely upon the acquittal in so far as it was relevant to his defence.
The plea so raised was accepted by the Judicial Committee.
Pritam Singh vs The State of Punjab(a) this Court held that where a person has been tried under section 19(f) of the Arms Act and is acquitted because the prosecution has failed to establish the possession of a revolver by the accused as alleged, in a subsequent trial of the offence of murder, where the possession of the revolver was a fact in issue which had to be established, the prosecution could not ignore the finding at the previous trial.
In several later judgments of this Court the principle of issue estoppel has received approval: Manipur Administration vs Thokchom, Bira Singh(a).
Banwari Godara vs The State.
of Rajasthan(4).
Lalta & Ors.
vs The State of U.P.(5) It was also accepted in The Assistant Collector of Customs and another vs L.R. Malwani and another(x).
It is too late now to make a departure from the rule accepted by this Court.
In the American Courts also the rule of issue estoppel has received approval: Sealfron vs United States(7).
It is true that in Connelly vs Director of Public Prosecutions(8) decided by the House of Lords there was some difference of opinion amongst the Law Lords as to the applicability of the rule to criminal trials in the English Courts.
Our Criminal jurisprudence is largely rounded upon the basic rules of English Law though the procedure is somewhat different.
Trials by jury have been practically abolished and the cases are being tried by Judges.
Several charges arising out of the same transaction can be tried under the Code of Criminal Procedure together at one trial, and specific issues are always raised and determined (1) (2) L A.I.R. 1956 S.C. 415.
(3) ; (4) Cr. A. No. 141 of 1960 decided on Feb. 7, 1961.
(5) Cr. A. No. 185 of 1966 decided on Oct. 25, 1968.
(6) Cr.
15 & 35 of 1967 decided on Oct. 16, 1968.
(7) [1948] 332 U.S. Rep. 575.
(8) L.R. 1010 by the Courts.
Under the English system of administration criminal jaw, trials for serious offences are held with the aid of the jury and it is frequently impossible to determine with certitude the specific issues on which the verdict of the jury is founded.
In criminal trials under the Code of Criminal procedure, there is no uncertainty in the determination of issues decided.
Difficulties envisaged in Connelly 's case(1) in the application of the rule of issue estoppel do not therefore arise under our system.
But it is necessary to notice the true basis of the rule.
Dixon 1., in The King vs Wilkes(2) observed at pp.
518 519: " . it appears to me that there is nothing wrong in the view that there is an issue estoppel, if it appears by record of itself or as explained by proper evidence., that the same point was determined in favour of a prisoner in a previous criminal trial which is brought issue on a second criminal trial of the same prisoner.
There must be a prior proceeding determined against the Crown necessarily involving an issue which again arises in a subsequent proceeding by the Crown against the same prisoner.
The allegation of the Crown in the subsequent proceeding must itself be inconsistent with the acquittal of the prisoner in the previous proceeding.
But if such a condition affairs arises I see no reason why the ordinary rules of issue estoppel should not apply.
Such rules are not to be confused with those of res judicata, which in criminal proceedings are expressed in the pleas of autre fois acquit and autre fois convict.
They are pleas which are concerned with the judicial determination of an alleged criminal liability and in the case of conviction with the substitution of a new liability.
Issue estoppel is concerned with the judicial establishment of a proposition of law or fact between parties.
It depends upon well known doctrines which control the relitigation of issues which are settled by prior litigation .
" The rule, does not predicate that evidence given at one trial against the accused cannot again be given in the trial of the accused for a distinct offence.
As Lord Morris of Borty Y Gest observed in Connelly 's case(1) at p. 1325: " . there is no rule or principle to the effect that evidence which has first been used in support of a charge which is not proved may not be used to, support a subsequent and different charge, (1) (2) 77 C.L.R. 511.
1011 Can it be said in the present case that there has been a trial of the accused on an issue in a prior litigation, and an attempt is made to relitigate the same? It may be recalled that the respondents were not tried at any criminal trial in the previous case.
The earlier proceeding was for binding over the respondents and 94 others to keep the peace on the case that it was apprehended that they were likely to commit breach of peace or disturb public tranquillity.
The primary issue which the Court was called upon to determine was whether there was any apprehension of the breach of peace or disturbance of public tranquillity which necessitated the passing of the order requiring the respondents and others to give security.
It is true that in support of that order the Station House Officer in his report had relied upon four incidents, one of which specifically set out the details which formed the subject matter of ' the trial from which the present appeal arises.
But there was no trial of the respondents for an offence in the earlier proceeding and there was no order of conviction or acquittal.
The rule of issue estoppel cannot, in our judgment, be extended so as to prevent evidence which was given in the previous proceeding and which was held not sufficient to sustain the other for being used in support of a charge of an offence which the State seeks to make out.
The rule of issue estoppel prevents relitigation of the issue which has been determined in a criminal trial between the State and the accused.
If in respect of an offence arising out of a transaction a trial has been taken place and the accused has been acquitted, another trial in respect of the offence alleged to arise out of that transaction or of a related transaction which requires the Court to arrive at a conclusion inconsistent with the conclusion reached at the earlier trial is prohibited by the rule of issue estoppel.
In the present case, there was no trial and no acquittal.
The rejection of evidence given in the earlier proceeding to sustain an order for binding over the respondents to keep the peace does not preclude the trial of the respondents in respect of the specific incident which together with the other incident was sought to be made the basis of the order of binding over the respondents.
This Court in L.R. Malwani 's case(1) declined to apply the rule of issue estoppel to a case arising under the Sea Customs Act in which there was an inquiry held by the Collector of Customs and a criminal prosecution was then filed.
In our judgment, the High Court was in error in holding that the respondents could not be tried and convicted of offences under section 324 and 323 I.P. Code because in the earlier proceeding under section 107 of the Code of Criminal Procedure, evidence with regard to the incident out of which offences which are the subject matter of the present appeal was taken, and was regarded as insufficient to sustain the order.
(1) C:r, As.
15 & 35 of 1967 decided on Oct. 16, 1968, 1012 The appeal is allowed, and the order passed by the High Court is set aside.
As, however, the sentences passed by the learned Trial Magistrate and confirmed by the Court of Session were of short duration and the respondents have been released on bail, we do not think that they should be called upon to undergo the remaining sentences.
We reduce the sentences of imprisonment to the period already undergone.
The appeal is allowed and the order of the Session Court is restored, subject to the modification in the sentence of imprisonment.
R.K.P.S. Appeal allowed.
| IN-Abs | Proceedings were instituted under section 107 Cr.
P.C. against four persons including the two respondents and an order was made against them under section 112 Cr.
P.C. stating that they were indulging in various acts of violence involving breach of peace and requiring them to show cause why each of them should not execute a bond for keeping the peace.
This order referred to four incidents, the first of which was that on June 22, 1964, eleven persons including the two respondents had indulged i.n certain acts of violence as a result of which a case under sections 148, 323 and 325 I.P.C. had been registered.
After holding an inquiry, the Magistrate was of the view that the evidence led in support of the first incident was not reliable and the first incident was not proved against any of the eleven persons.
Subsequently the respondents were convicted at a trial of offences under sections 323 and 324 I.P.C. committed in the first incident in the order under section 112 Cr.
The Court of Session in appeal confirmed the conviction but the High Court, in revision, set it aside holding that on the principle of "issue estoppel" approved by this Court in Manipur Administration vs Thockchom Bira Singh, ; , since in the proceedings under section 107 Cr.
P.C. the incident which was made the subject matter of the complaint against the respondents in the Trial Court was one of the incidents relied upon and was held not proved, it was not open to the State to prosecute the respondents in respect of the same incident.
In appeal to this Court with special leave, it was contended that the rule of "issue estoppel" had no application in the present.
case, since there was no "previous trial" of the respondents for any offence alleged to arise out of the incident in respect of which they were tried; and furthermore, that the rule of issue estoppel was inconsistent with the statutory provisions contained in section 403 Cr.
P.C. and could not be resorted to in criminal trials.
HELD: (i) The High Court was in error in holding that the respondents could not be tried and convicted of offences under sections 324 and 323 I.P.C. because in the earlier proceeding under section 107 Cr. P.C., evidence with regard to the incident out of which the offences arose which were the subject matter of the present appeal was taken, and was regarded as insufficient to sustain the order.
The rejection of evidence given in the earlier proceeding to sustain an order for binding over the respondents to keep the peace did not preclude the trial of the respondents in respect 1005 of the specific incident which together with the other incidents was sought to be made the basis of the order of binding over the respondents.
The rule of "issue estoppel" prevents relitigation of the issue which has been determined in a criminal trial between the State and the accused.
If in respect of an offence arising out a transaction a trial has taken place and the accused has been acquitted, another trial in respect of the offence alleged to arise out of that transaction or of a related transaction which requires the Court to arrive at a conclusion inconsistent with the conclusion reached at the earlier trial is prohibited by the rule of issue estoppel.
In the present case there was no trial of the respondents for an offence in the earlier proceeding and there was no order of conviction or acquittal.
[1011 D F, H] (ii) Section 403 Cr.
P.C. enacts the 'rule of autre fois acquit and autre fois convict applicable to criminal trials.
The rule is that so long as an order of acquittal or conviction at a trial held by a court of competent jurisdiction of a person charged with committing an offence stands, that person cannot again be tried on the same facts for the offence for which he was tried or for any other offence arising therefrom.
But the rule of "issue estoppel" in criminal trials evolved by the High Court of Australia and approved by the Judicial Committee has been applied to criminal trials in India, apart from the terms of section 403.
[1008 C] Manipur Administration vs Thokchom, Bira Singh, ; ; Sambasivam vs Public Prosecutor, Federation of Malaya, ; Pritam Singh vs The State of Punjab, A.I.R. 1956 S.C. 415; Banwari Godara vs The State of RaJasthan, Cr. A. No. 141 of 1960 decided on Feb. 7, 1961; Lalta & Ors.
vs The State of U.P., Cr. A. No. 185 of 1966 decided on Oct. 25, 1968; The assistant Collector of Customs and another vs
L.R. Malwani and another, Cr. ,As.
15 & 35 of 1967 decided on Oct. 16, 1968; Sealfron vs United States, (1948) 332 U.S. Rep. 575 and The King vs Wilkes; , , referred to.
Connelly vs Director of Public Prosecutions, , distinguished.
|
Appeal No. 1869 1967.
Appeal under section 116 A of the Representation of the People Act, 1951 from the judgment and order dated October 24, 1967 of the Punjab and Haryana High Court in Election Petition 14 of 1967.
K.P. Bhandari and Harder Singh, for the appellants.
C.L. Lakhanpal and D.D. Sharma, for respondent No. 1.
The Judgment of the Court was delivered by Mitter, J.
In the election petition out of which the present appeal arises, the main question canvassed was, whether the nomination paper of respondent No. 8 (appellant No. 2 before this Court) was wrongly rejected.
It is admitted that if the rejection was wrong, the election cannot stand.
The petitioner challenged the election to the Lambi Assembly Constituency (reserved seat) in the district of Ferozepore.
There were eight candidates, the first respondent being the returned candidate.
The petition was filed by one of the unsuccessful candidates impleading the other seven candidates, and Kishan Lal whose nomination paper was rejected.
According to the petitioner, Kishan Lal was a Hindu and being a Chamar by caste he belonged to a scheduled caste within the meaning of paragraph 2 read with Part X of the Constitution (Scheduled Castes) Order 1950 issued under article 341 of the Constitution: he had filed a declaration under section 33(2) of the Representation of the People Act, stating his caste to be chamar covered by item 9 in Part X (Punjab) of the Schedule to the Order.
The said item reads as follows: "Chamar, Jatia Chamar, Reghar, Raigar, Ramdasi or Ravidasi.
" It was stated in the petition that the Returning Officer had at first accepted the nomination paper of Kishan Lal on 21st January 1967, but subsequently, on an objection having been raised by the first respondent on the ground that Kishan Lal was not a member of a Scheduled Caste, the proceedings were adjourned till the next day when after admitting evidence, the same was rejected on the plea that Kishan Lal was a mochi by caste.
The petitioner 's case was that Chamar and mochi were not two separate castes and the word 'mochi ' was applied to a chamar who actually started working in lwather.
On the pleadings the learned trial Judge framed four issues: 1.
respondent No. 8 Kishan Lal a Hindi Chamar by caste which is a scheduled :caste within the 999 meaning of Part X of the Schedule to the Constitution (Scheduled Castes) Order, 1950? 2.
Was the nomination paper or respondent No. 8 Kishan Lal accepted by the Returning Officer and it so, whether the Returning Officer had the power of reviewing his order? ' 3.
Has the nomination paper of respondent No. 8 Kishan Lal been wrongly rejected? If so, is the election of the returned candidate void? 4.
Is Chamar or Mochi one and the same caste and a scheduled caste within the meaning of Part X of the Constitution (Scheduled Castes) Order, 1950? The point canvassed before him with a good deal of force was that the Returning Officer had sought to review his own order passed on 21st January 1967 accepting the nomination paper and this, he was not competent to do.
The learned Judge did not accept that a finalised order had been reviewed.
An examination of the document tends to support the appellant 's argument about the nomination paper having been accepted at first but rejected subsequently.
The manner of recording ;the order is suggestive of the above.
It appears that the Returning Officer at first ' wrote the word "accepted ' and gave the date as 21 1 1967 to the left of his signature: the endorsement rejecting the nomination paper is by way of a post script abbreviated as "P.S." the last two lines curving over the signature.
Unfortunately,; however, for the petitioner, the Returning Officer, although he appeared in court to produce some documents, was not orally examined and we are therefore without his testimony on the subject.
Kishan Lal who came to give evidence in this case in support of the petition stated in his examination in chief that: "At the time of the scrutiny of the nomination papers for elections in 1967 the Returning Officer at first announced orders on my nomination papers accepting the same.
Then an objection was raised by respondent No. 1 Shiv Chand.
Thereafter the Returning Officer adjourned the matter to the next date on which after examining evidence led by the parties he rejected the nomination papers.
" Prima facie this goes to support the case of the petitioner, but in corss examination Kishan Lal stated: "At the time when the nomination papers were being scrutinised by the Returning Officer, an objection was raised when he was writing the order." 1000 This nullifies the effect of the statement in the examination inchief and suggests that this objection was raised before the order had been signed or announced.
This is strengthened by the evidence of Shiv Chand R.W. 7.
He said: "The Returning Officer had not announced that he had accepted the nomination papers of Kishan Lal but had written the word 'accepted '.
This I know because I was sitting next to him.
" On this evidence, it is not possible to hold that the Returning Officer had announced his decision accepting the nomination paper, but had reviewed his own order afterwards on objection being raised and let in evidence on the next day and rejected the nomination paper.
Before the learned trial Judge, a good deal of evidence was adduced and arguments advanced as to whether the words 'chamar ' and 'mochi ' were synonymous and even if Kishan Lal was held to be a mochi, there was no reason to exclude him from the fold of the caste of chamars in which case his nomination paper was wrongly rejected.
For this we have to refer to article 341 of the Constitution under el. 1 of which the President may, with respect to any State or Union Territory, and where it is a State, after consulting the Governor of the State, by public notification specify the castes, races or tribes or parts, or groups within castes, races or tribes which shall for the purposes of the Constitution, be deemed to be Scheduled Castes in relation to that State or Union Territory as the case may be.
This article empowered the President to specify not only the entire castes but tribes or parts or groups within castes, races or tribes which were to be treated as Scheduled Castes in relation to a particular caste.
So far as chamars and mochis are concerned, it will be noted from a reference to the Constitution (Scheduled Castes) Order, 1950 that the President was not of opinion that they were to be considered to belong to the same caste in all the different States.
For instance, in the States of Andhra Pradesh, Bihar, Gujarat, Kerala, Madhya Pradesh, Madras, Maharashtra, Mysore, Orissa, Rajasthan and West Bengal chamars and mochis were put on the same footing.
Before the Reorganisation of the Punjab Act of 1966 item 9 of Part X of the Order specifying the Scheduled Castes in the State read "Chamar, Jatia chamar, Reghar, Raigar, Ramdasi or Ravidasi." After the reorganisation of territories and creation of new States by the said Act the Scheduled Castes Order was amended pro 1001 viding for the specification of Scheduled Castes for the new States and territories.
The Constitution (Scheduled.
Castes) (Union Territories) Order of 1951 was also amended in 1966.
As a result of the above changes, the final position with regard to the Scheduled Castes was as follows.
Item No. 9 remained unaltered as regards the new States of Haryana and the Punjab.
Chamars and Mochis were put in the same class as regards the Union territory of Delhi and Himachal Pradesh, while the position in the Union territory of Chandigarh remained the same as in the old State of Punjab.
This shows that even when the subject of specification of Scheduled Castes engaged the attention of the President in 1966 he did not take the view that mochis should be classed together with chamars in so far as the State of Haryana, Punjab and Union territory of Chandigarh were concerned.
It is also clear that the question of inclusion of mochis in the Scheduled Castes was considered by him.
Apart from this, there are two decisions of this Court which conclude the point.
In Basavalingappa v.D. Munichinnappa and others(x) an election petition was filed challenging the election of the first respondent inter alia on the ground that he was not a member of any of the scheduled castes mentioned in the Constitution (Scheduled Castes) Order, 1950.
Respondent No. 1 claimed that he belonged to the scheduled caste listed as 'Bhovi ' in the Order.
The appellant, on the other hand contended that respondent No. 1 was a Voddar by caste and that Voddar was not a scheduled caste specified in the order and consequently, he could not stand for election from a scheduled caste constituency.
It was held by this Court that it was not open to anyone to seek for any modification in the order by producing evidence to.
show (for example) that though caste alone was mentioned in the order, caste B was also a part of caste A, and as such to be deemed to be included in caste A.
This Court also pointed out that "wherever one caste has another name it has been mentioned in brackets after it in the Order.
Therefore, generally speaking, it would not be open to any person to lead evidence to establish that caste B is part of caste A notified in the Order.
" In the peculiar circumstances of this case, evidence was allowed to be led to identify the caste specified in the Order because the Order referred to a Scheduled Caste known as Bhovi in the Mysore State as it was before 1956 and therefore it had to be accepted that there was some caste which the President intended to include after consultation with Rajpramukh in the Order, when the Order mentioned the caste Bhovi as a scheduled caste.
But when it was not disputed specifically that there was no caste (1) ; 1002 known as Bhovi in the Mysore State before 1956, the only course open to.courts was to find which caste was meant by Bhovi by taking evidence.
A point very similar to the one before us came up for consideration in this Court in Bhaiya Lal vs Harikrishen Singh and others(1).
There, the appellant 's election was challenged on the ground that he belonged to the Dohar caste and was not a chamar.
Dealing with this point, it was stated by this Court: ".
the plea that the Dohar caste is a subcaste of the Chamar caste cannot be entertained in the present proceedings in virtue of the Constitution (Scheduled Castes) Order, 1950.
" Reference was then made to article 341 of the Constitution cls. 1 and 2 and it was said: "in order to determine whether or not a particular caste is a scheduled caste within the meaning of article 341, one has to look at the public notification issued by the President in that behalf.
In the present case, the notification refers to Chamar, Jatav or Mochi and so in dealing with the question in dispute between the parties, the enquiry which the Election Tribunal can hold is whether or not the appellant is a Chamar, Jatav or Mochi.
The plea that though the appellant is not a Chamar as such, he can claim the same status by reason of the fact that he belongs to the Dohar caste which is a sub caste of the Chamar caste, cannot be accepted.
It appears to us that an enquiry of this kind would not be permissible having regard to the provisions contained in article 341." These judgments are binding on us and we do not therefore think that it would be of any use to look into the gazetteers and the glossaries on the Punjab castes and tribes to which reference was made at the Bar to find out whether mochi and chamar in some parts of the State at least meant the same caste although there might be some difference in the professions followed by their members, the main difference being that Chamars skin dead animals which mochis do not.
However that may be, the question not being open to agitation by evidence and being one the determination of which lies within the exclusive power of the President, it is not for us to examine it and come to a conclusion that if a person was in fact a mochi, he could still claim to belong to the scheduled caste of chamars and be allowed to (1) ; 1003 contest an election on that basis.
Quite a lot of evidence was adduced orally and also by documents before the learned trial Judge to show that Kriqhan Lal was a chamar and not a mochi.
The learned Judge examined the evidence thoroughly and we do not propose to do the same again.
In his view Krishan Lal was a mochi and not a chamar and we do not see any reason why we should come to any different conclusion.
Once we hold that it is not open to this Court to scrutinise whether a person who is properly described as a mochi also falls within the caste of chamars and can describe himself as such, the question of the impropriety of the rejection of his nomination paper based on such distinction disappears.
In this case, Krishan Lal was found to be a mochi and not a chamar and therefore his nomination paper was rightly rejected.
He tried to prove by evidence that he was a chamar but he did not succeed therein.
The appeal therefore falls, and is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | Appellant No. 1 filed a petition challenging the election of the first respondent from the Lambi Assembly Constituency ( 'reserved seat) in the district of Ferozepur, Punjab, at the 1967 general election.
It was urged in the petition that the nomination paper of appellant No. 2 had been wrongly rejected by the Returning Officer who had held that appellant No. 2 was a mochi and as such not a member of the chamar caste mentioned in item 9 of the Constitution (Scheduled Castes) Order, 1950 issued under article 341 of the Constitution.
It was also urged that the Returning Officer had at first accepted the nomination paper but had subsequently reviewed his own order.
The High Court dismissed the petition, whereupon an appeal was filed in this Court.
HELD: (i) On the evidence it was not possible to hold that the Returning Officer had after announcing his decision accepting the nomination paper reviewed his own order afterwards.
(ii) No ground had been made out for disturbing the conclusion of the trial court on the evidence that appellant No. 2 was a mochi and not a member of the chamar caste.
(iii) It was not open to this Court to scrutinise whether a person properly described as a mochi also fell within the caste of chamars and could describe himself as such.
The question was one the determination of which lay within the exclusive power of the President under article 341 of the Constitution.
[1003 B C] , Basavalingappa v.D. Munichinnappa & Ors. ; and Bhaiya Lal vs Harikrishen Singh & Ors., ; , applied.
Article 341 empowered the President to specify not only entire castes races or tribes but also parts or groups within castes, races or tribes which were to be treated as Scheduled Castes in relation to a particular State or Union Territory.
So far as chamars and mochis are concerned, a reference to the Constitution (Scheduled Castes) Order, 1950 shows that the President was not of opinion that they were to be considered to belong to the same caste in all the different States.
In several States chamars and mochis were put on the same footing but not so in the State of Punjab.
Even after the Reorganisation of the Punjab Act, 1966 when the question of specification of Scheduled Castes in the territories created came up for his consideration the President did not take the view that mochis should be classed with chamars in so far as the States of Haryana, Punjab and the Union Territory of Chandigarh were concerned though he directed that in the Union Territories of Delhi and Himachal Pradesh mochis and chamars were to be placed in the same group.
[1000 E, H; 1001 A D]
|
minal Appeal No. 183 of 1966.
Appeal by special leave from the judgment and order dated March 30, 1966 of the Mysore High Court in Criminal Revision Petition No. 384 of 1965.
R.B. Datar, for the appellants.
The respondent did not appear.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by special leave from a judgment of the Mysore High Court in which the only point involved is whether a private complaint could be entertained for the commission of an offence under section 220 of the Mysore Village Panchayats & Local Boards Act, 1959, hereinafter called the "Act".
The appellants who were the Vice Chairman and the Chairman of the Keladi village panchayat were convicted under the aforesaid section and sentenced to pay a fine of Pa. 50 and Pa. 40 and in default to undergo 7 days and 5 days ' simple imprisonment respectively.
A private complaint was filed against the appellants alleging that they gave bids at an auction held at the village panchayat and appellant No. 1 purchased a radio belonging to the panchayat for Pa. 35/ .
Appellant No. 2 also bid at the same auction for the radio.
According to section 220 of the Act no member or an employee of a panchayat shah directly or indirectly bid for or acquire interest in any movable or immovable property sold at such sale in connection therewith.
if any person contravenes this provision he is to be punished, on conviction, with a fine which may extend to Rs. 500/ .
Under Rule 16 of the Mysore Panchayat Secretaries ' Powers and Duties Rules, 1961 promulgated under the provisions of the Act, only the Secretary of the Panchayat has the power to file a complaint on behalf of the Panchayat.
The High Court was of the view that this Rule did not ' preclude persons 935 other than the Secretary from filing a complaint but it only debarred complaints being, made by others on behalf of the Panchayat.
Now Rule 16 may be reproduced.
: "The Secretary shall have power to file complaints and suits on behalf of the Panchayat and to conduct the proceedings on its behalf under the orders of the Panchayat." In K.M. Kanavi vs The State of Mysore(1) the appellant Kanavi, who was the president of Municipal Borough of Gadag Betgeri had been removed from Presidentship.
He refused to hand over the charge of all the papers and property which were in his possession relating to the Borough to the new President in spite of an order made by the Government under section 23A of the Bombay Municipal Boroughs Act 1925, hereinafter called the "Bombay Act" to that effect.
Pursuant to orders made by the Divisional Commissioner and the Deputy Commissioner the new President filed a complaint against Kanavi for an offence punishable under section 23A(3) of the Bombay Act.
The appellant was convicted and sentenced to pay a fine of Rs. 50/ .
A question arose whether the complaint filed by the new President was competent as it was not filed in accordance with the procedure laid down in that Act.
Section 200 of the Bombay Act provided that the Standing Committee and subject to the provisions of sub section
(3) the Chief Officer may order proceedings to be taken for the recovery of any penalties and for the punishment of any persons offending against the provisions of the aforesaid Act.
This Court was of the opinion that the complaint which had been filed by the new President was for initiating the proceedings for the punishment of Kanavi who had offended against the provisions of sub section
(2) of section 23A and as the new President was not the Chief Officer and he had not filed the complaint under any direction made by the Standing Committee the complaint could not be entertained.
In that case also the High Court had taken the view that section 200(1) was only an enabling section which gave the power to the Standing Committee and the Chief Officer to make a direction for taking of proceedings and it could not be held to be exhaustive of the authorities who could make directions for initiation of proceedings.
The High Court had taken notice of the fact that there was no provision in that Act forbidding cognizance of offences being taken except on a complaint made under a direction of the Standing Committee or the Chief Officer.
, This is what was observed by this Court : "We are unable to accept the interpretation put by the High Court on section 200(1) of the Act.
It is true that there is no specific provision in the Act laying down that ; 936 cognizance of an offence under the Act is not to be taken except on a Complaint filed in accordance with a direction made under section 200(1), but the scheme of the Act and the purpose of this provision in section 200(1) makes it clear that the legislature intended that such proceedings.
should only be instituted in the manner laid down m that sub section.
The word "may" was used only because the legislature could not have enacted a mandatory provision requiring the Standing Committee or the Chief Officer to make a direction for institution of proceedings in all cases.
This word was intended to give a discretion to the Standing COmmittee or the Chief Officer to make directions for taking proceedings only when they considered it appropriate that such a direction should be made and to avoid compelling the Standing Committee or the Chief Officer to make such direction in all cases.
The use of this word "may" cannot be interpreted as laying down that, if a proceeding for punishment of any person for contravention of any of the provisions of the Act is to be instituted, it can be instituted in any manner without complying with the requirements of section 200(1) of the Act.
If the interpretation put by the High Court on this provision is accepted, it would mean that this provision was totally unnecessary, because there would be no need to confer power on the Standing Committee or the Chief Off icer to make such directions if such directions could be made or proceedings instituted at the instance of any private individual.
We cannot accept the submission that this provision was made in the Act simply by way of abundant caution.
In fact, if the provision had been made with such an object in view, there is no reason why the power should have been expressed to be conferred on the Standing Committee and the Chief Officer only and not on the President of the Municipality.
We, consequently, hold that, if any proceeding for punishment of any person for contravention of any of the provisions of the Act is to be instituted, it must be instituted in the manner laid down in section 200(1) of the Act and in that manner only.
" It may be mentioned that the expression of the above opinion was based on a consideration of the previous decisions of this Court.
Following the ratio of the above decision it would be legitimate to hold that the complaint, in the present case, could be filed under Rule 16 only by the Secretary of the Panchayat and by no one else.
It may be.pointed out that in the Act section 213(3) is analogous to section 23A(3) of the Bombay Act.
On a parity of reasoning it could not be suggested that if there had been any 937 contravention of section 213(3) any voter or member of the public could have filed a complaint in the matter.
The other provisions also of the Act which follow, namely sections 214 to 219 indicate that it was never contemplated that a complaint for _infringe.me.at or contravention of the prohibition contained therein could be lodged before a magistrate having jurisdiction under section 233 by any private individual in the presence of a specific rule that the Secretary shall have the power to file a complaint on behalf of the Panchayat.
Most of these sections i.e. sections 217 and 218 postulate infraction of orders of the Panchayat for which the Panchayat alone would be interested in filing a complaint.
We axe satisfied that the scheme of the Act also supports the view which we are taking that a complaint could be flied only under Rule 16 of the Mysore Panchayat Secretaries ' Powers and Duties Rules, 1961 and could not have been filed by a private complainant.
The High Court seems to have relied on section 236 of the Act which deals with powers of police officers.
This section provides that any police officer may arrest any person committing in his presence any offence against any of the provisions of the Act or of any rule, regulation or bye law made thereunder.
The person arrested has to be produced before the nearest magistrate within a period of 24 hours of arrest.
The police officer effecting the arrest must give immediate information to the Chairman or the Secretary of the Panchayat of the commission of such offence and give all assistance in the exercise of his lawful authority.
The High Court was of the view that under the provisions of this section the police officer could submit a charge sheet under section 173 of the Criminal Procedure Code after necessary investigation for offences committed under the Act.
Chapter of the Act relates to establishment and constitution of Panchayats.
There are certain sections in it which by express words make offences committed under them cognizable but in the same Chapter there are other sections which do not contain any such provision; for instance, sections 15, 17,.
21 and 22 expressly provide that the offences committed under them would be cognizable but sections 16, 18, 19 and 20 do not contain any such provision.
In other words the offences committed under them must be deemed to be not cognizable.
Section 23 in the same Chapter says that no court shall take cognizance of an offence punishable under section 16 or section 17 or under section 19(2)(a) unless there is a complaint made by an order of or under authority from the Deputy Commissioner.
The High Court was, therefore, not right in saying that all offences committed under the various provisions contained in the Act would be cognizable owing to the general powers conferred on police officers by section 236.
Indeed that section gives only a limited power to the police officer to effect arrest if an offence is committed in his presence.
There is authority for the view that this will not make an offence cognizable within the meaning of section 4(f) 938 of the Criminal Procedure Code; vide Public Prosecutor(1) vs A.V. Ramiah.
In the absence of any express provision in section 220 with which we are concerned we doubt whether the offence committed under it would be cognizable and a police officer could carry on investigation in respect of it under Chapter XIV of the Criminal Procedure Code and finally submit a charge sheet under section 173 of that Code.
It may also be pointed out that in the present case we are not concerned with the powers which a police officer can exercise in respect of an offence committed under section 220 of the Act.
What has to be seen is whether a private person or an individual could file a complaint.
In the presence of Rule 16 and for the reasons given in K.M. Kanavi vs State of Mysore(2) we are of the opinion that it was the Secretary of the Panchayat who alone was competent to file the complaint.
It must be remembered that it would be the panchayat that would be largely interested in taking action against any of its members and employees for the contravention of section 220.
The Secretary would, therefore, be entitled to file a complaint on behalf of the panchayat.
The difficulty felt by the High Court that a Secretary who is subordinate to the Chairman may find it embarrassing to file a complaint against him can hardly be accepted as a serious hurdle in the way of coming to the conclusion at which we have arrived.
The Secretary has to act on behalf of the panchayat and it is the panchayat that would be vitally interested in preventing and stopping any contravention of provisions like section 220 of the Act.
The Secretary acts on behalf of the panchayat and the question of his subordination to any of its office bearers is of no consequence.
In the view we have taken the appeal is allowed and the conviction and sentence imposed on each of the appellants is set aside.
G.C. Appeal allowed.
(1) A.I.R. 1958 A.P. 392.
| IN-Abs | A private complaint was lodged against the appellants for an offence under section 220 of the Mysore Village Panchayats and Local Boards Act, 1959.
Rule 16 of the Mysore Panchayat Secretaries ' Powers and Duties Rules, 1961 provided that the Secretary shall have power to file complaints and suits on behalf of the Panchayat, and to conduct the proceedings on its behalf and on the orders of the Panchayat.
On their conviction the appellants went to the High Court and contended that in view of Rule 16 they could not be prosecuted on a private complaint.
The High Court decided against them on the view that the said Rule did not preclude persons other than the Secretary from filing a complaint but it only debarred complaints being made by others on behalf of the Panchayat.
Against the High Court 's judgment appeal by special leave was filed in this Court.
HELD: (i) In the presence of r. 16 and for the reasons given by this Court in R. M. Kanavi 's case which dealt with similar provisions.
under the Bombay Municipal Borough Act, 1925, it must be held that it was the Secretary of the Panchayat who alone was competent to file the, complaint.
Section 213(3) of the Mysore Act is analogous to section 23A(3) of the ' Bombay Act under which the offence fell in Kanavi 's case.
On a parity of reasoning it could not be suggested that if there had been any contravention of section 213 ( 3 ) any voter or member of the public could have filed a complaint in the matter.
The other provisions.
also of the Act which follow, namely, as.
214 to ' 219 indicate that it was never contemplated that a complaint for an infringement or contravention of the prohibition contained therein could be lodged before a Magistrate having jurisdiction under section 233 by any private individual in the presence of specific rule that the Secretary shall have the power to file a complaint on behalf of the Panchayat.
Most of these sections i.e. sq. 217 and 218 postulate infraction of orders of the Panchayat for which the Panchayat alone would be interested in filing a complaint.
Thus the scheme of the Act also supports the view that a complaint could be filed only under r. 16 of the Mysore Panchayat Secretaries ' Powers and Duties Rules, 1961 and could not have been filed by a private complaint.
[936 H 937 C] K.M. Kanavi vs State of Mysore, ; , followed and ' (ii) The High Court was not fight in saying that all offences committed under the various provisions contained in the Act would be cognizable owing to the general powers conferred on police officer by section 236 of the Act.
The section gives Only a limited power to the police 934 officer to effect arrest if an offence is committed In his presence.
The present case moreover did not relate to the powers which a police officer could exercise in respect of an offence under section 220 of the Act but to the question whether a private complaint could be filed.
[937 G 938 C] Public Prosecutor vs A. V. Ramiah, A.I.R. 1958 A.P. 392 referred to.
(iii) The difficulty felt by the High Court that a Secretary who is subordinate to the Chairman may find it embarrassing to file a complaint against him can hardly be accepted as serious.
The Secretary has to act on behalf of the Panchayat and it is the panchayat that would be vitally interested in preventing and stopping any contravention of the provisions of section 220 of the Act. 'The ' Secretary acts on behalf of the Panchayat and the question of his subordination to any one of its office bearers is of no consequence.
[938 D]
|
Appeals Nos.
1153 to 1160 and 1161 to 1168 of 1968.
Appeals by special leave from the judgment and order, dated November 16, 1967 of the Madhya Pradesh High Court in Misc.
Civil Cases Nos. 96 to 103 of 1967.
I. N. Shroff, for the appellant (in C.As.
Nos. 115 3 to 1160 of 1968) and the respondent (in C.As.
1161 to 1168 of 1968).
S.T. Desai, B.L. Neema and Anjali Varma, for the appellant (in C.As.
1161 to 1168 of 1968): and the respondent C.As.
1153 to 1160 of 1958).
N.D. Karkhanis and 11.
G. Ratnaparkhi, for the intervener (in C. Pa, Nos. 1153 to 1160 of 1968).
The judgment of the Court was delivered by Grover, J.
This judgment will dispose of two 'sets of cross appeals Nos.
1153 1160 & 1161 1168/68 which are from a common judgment of the Madhya Pradesh High Court and have been entertained by special leave.
The relevant assessment years for the purpose of levy of sales tax are from April 1, 1957 to March 31, 1958.
and April 1, 1964 to March 31, 1965.
For the assessment years prior to April 1, 1959 the enactment in force was the C.P. and Berar Sales Tax Act, 1947 (No; XXI of 1947) and for the subsequent two years it is the Madhya Pradesh General Sales Tax Act (Act No. 2 of 1959), which would be applicable.
material facts may be shortly stated, The assessee Madhya Pradesh Electricity Board hereinafter called the "Electricity Board? ' is a body constituted under section 5 of the Electricity Supply Act, 1948.
Under section 944 18 of that Act it was the general duty of the Electricity Board to promote coordinated development of the generation, supply and distribution of electric energy within the State of Madhya Pradesh in the most efficient and economical manner.
In the assessment years in question the Electricity Board sold, supplied and distributed electric energy to various consumers.
It also sold coal ash a waste product and Supplied steam to Nepa Mills of Burhanpur.
It further supplied specification and tender forms on payment to persons desirous of submitting tenders for the works undertaken by the Electricity Board.
It purchased articles like Gitti, Murram, sand etc.
from unregistered dealers.
It is common ground that under the provisions of Act XXI of 1947 and H of 1959 read with the ' Schedule contained therein sale of electricity is exempt from sales tax.
For the purpose of determining the gross turnover, however, the sale of electric energy is to be taken into account.
The Assistant Commissioner of Sales tax assessed the Electricity Board to tax on its turnover of sale of coal ash and specification and tender forms and the supply of steam to Nepa Mills.
The Board was further assessed to purchase tax on Gitti, Murram etc.
purchased from unregistered dealers.
In appeal the Deputy Commissioner, Sales Tax, upheld the assessment orders.
On second appeal the Sales Tax Tribunal which was the Board of Revenue, Madhya Pradesh, held that the Electricity Board was not a "dealer" within the meaning of that term as defined in the two Acts and that the coal ash was not produced for the purpose of sale with the result that sales of coal ash could not be subjected to tax.
As regards the supply of steam to Nepa Mills the tribunal, on examining the terms of the agreement under which the Electricity Board supplied the steam, came to the conclusion that such supply was an isolated transaction and that such activity which had been undertaken on no profit no loss basis could not be assessed to sales tax.
The specification and tender forms were held not to be marketable goods involving any profit element and for that reason could not be taxed.
As regards the purchase tax the tribunal held that as the Electricity Board was not a dealer in respect of the sale and supply of electric energy no purchase tax could be imposed on goods purchased by it and consumed "in furtherance of and in aid of the business activity of generating, supplying and distributing electricity.
" Both the Electricity Board and the Commissioner of Sales Tax.
Madhya Pradesh, filed applications requiring the Tribunal to refer to the High.
Court certain questions of law arising out of its common order.
The tribunal drew up a common statement of case and referred five questions of law.
On the first question the High Court 'held that the Electricity Board could not be held to be "dealer" as defined in section 2(c) of Act XXI of 19.47 or section 2(d) 942 of Act H of 1959 in respect of its activity of generation, distribution, sale and supply of electric energy.
On the second question it was held that as the Electricity Board regularly and continuously produced coal ash as a subsidiary product and sold it regularly it was a "dealer" in regard to the sale of coal ash and the sale, transactions relating to this product were liable to be assessed to sales tax.
The third question was answered in favour of the Electricity Board.
It was found that stem was not being supplied to the Nepa mills with profit motive although it fell within the definition of "goods" given in the two Acts.
As regards the specification and tender forms the High Court was of the view that the Electricity Board was not carrying on any business of selling such forms and therefore no sales tax could be levied in respect of them.
The fifth question was answered by holding that as the Electricity Board was not a "dealer" in respect of sale and supply of electric energy it was not entitled to purchase any taxable goods for consumption or use for producing such energy without paying sales tax to the selling dealer under section 4(6) of Act XXI of 1947 and section 7 of Act II of 1959 and therefore there.
was no liability to pay purchase tax.
Mr. Shroff, who has argued the appeals of the Commissioner of Sales Tax, has not quite properly and rightly pressed the matter relating to imposition of sales tax on supply of specification and tender forms.
Mr. S.T. Desai, who has.
appeared for the Electricity Board, after a certain amount of argument, has submitted that he had nothing much to say on the question relating to coalash except that it should be held to be exempt from payment of sales tax because electric energy is exempt from such tax as stated before.
As regards the fifth question relating to the imposition of purchase tax Mr. Desai has not pressed for any decision being given by us.
Arguments which have been addressed by both sides have therefore centered on question nos.
1 and 3 which are as follows : "(1) On the facts and circumstances of the case whether or not the Madhya Pradesh Electricity Board is a dealer within the meaning of section 2(c) of the C.P. & Berar Sales Tax Act, and section 2(d) of the Madhya Pradesh General Sales Tax Act, 1958, in respect of its activity of generation, distribution, sale and supply of electrical energy ? (2) (3) On the facts and circumstances of the case, whether or not steam is saleable goods and if they are saleable goods is the turnover representing the supply thereof liable to be assessed to sales tax m the hands of the assessee ?" 943 it is somewhat curious that both sides are almost agreed that the decision of the.
High Court on the first question is not correct.
Since enunciation of the true position is involved we proceed to give our opinion in the matter.
The definition of a "dealer" as given in the two Acts substantially is that any person who carries on the business of buying, selling, supplying or distributing the goods as a "dealer" and "goods" are defined by s.2(d) of Act of 1947 as meaning all kinds ' of movable property other than actionable claims . and include all materials articles and commodities whether or not to be used in the construction, fitting out, improvement or repair of immovable property.
The definition contained in section ~2(g) of Act II of 1959 is almost in similar terms except that there are certain additions with which we are not concerned.
Reference may be made, at this stage, to the definition of "movable property" which has not been defined in the two Acts given in section 2(24) of the Madhya Pradesh General Clauses Act.
It has been defined to mean "property of every description, except immovable property".
Section 2(18) of that Act says that "immovable property" includes land,.
benefits to arise out of land and things attached to the earth, or permanently fastened to anything attached to the earth.
" The High Court went into a discussion from the point of view of mechanics relating to transmission of electric energy.
It was of the view that electricity could not be regarded as an article or matter which could be possessed or moved or delivered.
It relied on certain decisions and referred to Entries Nos. 53 and 54 in List II of Seventh Schedule to the Constitution and held that electricity did not fall within the meaning of "goods" in the two Acts and therefore the Electricity Board could not be held to be a "dealer" in respect of its activity of generation, distribution, sale and supply of electric energy.
Mr. I.N. Shroff has relied on certain decisions in which the same point was involved as in the present case.
namely, whether electricity is "goods" for the purpose of imposition of sales tax. ' In Kumbakonam Electric Supply Corporation Ltd. vs Joint Commercial Tax Officer, Esplanade Division, Madras(1), the Madras High Court was called upon to decide whether electricity is "goods" for the purposes of the Madras General Sales Tax Act, 1959 and the .
After referring to the definition of "goods" as given in the , it was observed that under that definition goods must be property and it must be movable.
According to the learned Madras Judge any kind of property which is movable would fall within the definition of "goods" provided it was transmissible or transferable from hand to hand or capable of delivery which need not necessarily be in a tangible or a physical sense.
Reference was also (1) 14 S.T.C. 600.
L6 Sup.
C I.169 9 944 made to the definition given in the General Clauses Act which was quite wide and it was held that if electricity was property and it was movable it would be "goods".
The learned Judge found little difference between electricity and gas or water which would be property and could be subjected to a particular process, bottled up and sold for consumption.
It was observed that electricity was capable of sale as property as it was sold, purchased and consumed everywhere.
A "dealer" was defined by the practically in the same way as in the Madras General Sales Tax Act and it meant a person who carried on business of buying and selling goods.
In the opinion of the learned Judge the concept of dealer, goods and sale comprehended all kinds of movable property.
He further relied on certain decisions which have been cited before and which will be presently noticed.
A similar view was expressed by Tek Chand, J. of the Punjab & Haryana High Court in Malerkotla Power Supply Company vs The Excise & Taxation Officer, Sangrur, & Ors.(1) It was held that electric energy fell within the definition of "goods" in both the Punjab Sales Tax Act, 1948 and the .
According to the learned Judge electric energy has the commonly accepted attributes of movable property.
It can be stored and transmitted.
It is also capable of theft.
It may not be tangible in the sense that it cannot be touched without considerable danger of destruction or injury but it was perceptible both as an illuminant and a fuel and also in other energy giving forms.
Electric energy may not be property in the sense of the term "movable property" as used in the Punjab & Central General Clauses Acts in contra distinction to "immovable property" but it must fall within the ambit of "goods" "even if in a sense it was intangible or invisible".
As pointed out in the Madras case the statement contained in American Jurisprudence(2) recognises that electricity is property capable of sale and it may be the subject of larceny.
In Naini Tal Hotel vs Municipal Board(a) it was held that for the purpose of article 52 of the Indian Limitation Act electricity was property and goods.
In Erie County Natural Gas & Fuel Co. Ltd. vs Carroll(4), a question arose as to the measure of damages for a breach of contract to supply gas.
Lord Atkinson delivering the judgment of the Privy Council applied the same rule which is applicable where the contract is one for sale of goods.
In other words gas Was treated to be "goods".
The High Court, in the present case, appears to have relied on Rash Behari vs Emperor(5) in which approval was accorded to the statement in Pollock & Mulla 's Commentary on Sale Goods Act, 1913 that it was doubtful whether that Act was applicable to such "goods" as gas, water 'and electricity.
The context (1) 22 S.T.C. 325.
(2) 18 American Jurisprudence 407 (section 2 Electy.) (3) A.I.R. (1946) All. 502.
(4) (5) A.I,R. 945 which this matter is discussed in the Calcutta case is altogether different and distinguishable and what was being decided there was the scope and ambit of section 39 of the Electricity Act, 1910, As regards the Entries in List 11 of the Seventh Schedule to the Constitution, the relevant ones may be produced: "53.
Taxes on the consumption or sale of electricity.
Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I".
The reasoning which prevailed with the High Court was that a well defined distinction existed between the sale or purchase of "goods" and consumption or sale of electricity; otherwise there was no necessity of having Entry No. 53.
But under Entry 53 taxes can be levied not only on sale of electricity but also on its consumption which could not probably have been done under Entry 54.
It is difficult to derive much assistance from the aforesaid entries.
What has essentially to be seen is whether electric energy is "goods" within the meaning of the relevant provisions of the two Acts.
The definition in terms is very wide according to which "goods" means all kinds of movable property.
Then certain items are specifically excluded or included and electric energy or electricity is.
not one of them.
The term "movable property" when considered with reference to "goods" as defined for the purposes of sales tax cannot be taken in a narrow sense and merely because electric energy is not tangible or cannot be moved or touched like, for instance, a piece.
of wood or a book it cannot cease to be movable property when it has all the attributes of such property.
It is needless to repeat that it is capable of abstraction, consumption and use which, if done dishonestly, would attract punishment under section 39 of the .
It can be transmitted, transferred, delivered, stored, possessed etc.
in the same way as any other movable property.
Even in Banjamin on Sale, 8th Edn., reference has been made at page 171 to County of Durham Electrical, etc., Co. vs Inland Revenue(1) in which electric energy was assumed to be "goods".
If there can be sale and purchase of electric energy like any other movable object we see no difficulty in holding that electric energy was intended to be covered by the definition of "goods" in the two Acts.
If that had not been the case there was no necessity of specifically exempting sale of electric energy from the payment of sales tax by making a provision for it in the Schedules to the two Acts.
It cannot be denied that the Electricity Board carried on principally the business of selling, supplying or distributing electric energy.
It would therefore clearly fall within the meaning of the expression "dealer ' ' in the two Acts.
(1) 946 As regards steam there has been a good deal of argument on the question whether it is liable to be assessed to sales tax in the hands of the Electricity Board.
According to Mr. Shroff the Electricity Board carried on the business of selling steam to the Nepa Mills and that this has lasted for a number of years.
It has been submitted that simply because the Electricity Board does not have any profit motive in supplying steam it cannot escape.
payment of sales tax because the steam is nevertheless being sold as "goods".
The High Court was of the view that the water which the Nepa Mills supplied free to the Electricity Board became the property of the Board and in return for this free supply the Board agreed to give steam to Nepa Mills at a rate based solely on the coal consumed in producing steam.
The mills had also agreed to reimburse the Electricity Board for the loss sustained on account of the mills not taking the "full demand of steam".
According.
to the High Court there was no contract for the sale of steam as such and it was only for the labour and cost involved in its supply to the mills.
The High Court relied on the findings of the Tribunal on this point and held that the turnover in respect of steam was not taxable.
The tribunal in its order dated June 16, 1966 referred to certain conditions of working arrangement which was reduced to writing but which had not been properly executed as a contract which showed that the mills was supplying water free and the Electricity Board was making a pro rata charge of conversion of water into steam.
It seems to us that the High Court was right in coming to the conclusion, on the finding of the tribunal, that the real arrangement was for supplying steam on actual cost basis and in that sense it was more akin to a labour contract than to sale.
Mr. Shroff has argued that the document which was relied upon by the tribunal could not be looked at as it was neither admissible in evidence nor had it been properly executed as a contract between the Electricity Board and the mills and it happened to be a mere draft of an agreement which was proposed to be entered into.
It is too late for Mr. Shroff to take these objections because these should have been raised before the Tribunal and the High Court.
It is stated in Halsbury 's Laws of England, III Edn.
34, page 6 that "a contract of sale of goods" must be distinguished from a contract for work and labour.
The distinction is often a fine one.
A contract of sale is a contract whose main object is the transfer of the property in, and the delivery of possession of, a chattel as a chattel to the buyer.
Where the main object of work undertaken by the payee.
of the price is not the transfer of a chattel qua chattel, the contract is one for work and labour.
It has been laid down by this Court in The Government of Andhra Pradesh vs Guntur Tobaccos Ltd.(1) that in business transactions (1) 16 S.T.C. 240.
947 the works contracts are frequently not recorded in writing setting out all the covenants and conditions thereof, and the terms and incidents of the contracts have to be gathered from the evidence and attendant circumstances.
The question in each case is one about the true agreement between the parties and the terms of the agreement must be deduced from a review of all the attendant circumstances.
On the findings of the tribunal and the High Court we are of the opinion that the arrangement relating to supply of steam in return for the water supplied by the mills on payment of actual cost was not one of sale but was more in the nature of a works contract.
In the result the answer of the High Court to the first question is discharged and it is held that the Electricity Board is a "dealer" within the meaning of the relevant provisions of the two Acts in respect of its activities of generation, distribution, sale and supply of electric energy.
The answers to the second, third and fourth questions are affirmed.
The answer given by the High Court to the fifth question is discharged.
It is unnecessary to express any opinion on that question because Mr. Desai has not pressed for any decision being given by us and has accepted the liability in respect of the purchase tax as determined by the assessing authorities for the assessment orders in question.
The appeals are allowed to the extent indicated above.
In view of all the circumstances the parties are left to bear their own costs.
Appeals allowed in pan.
| IN-Abs | The assessee Electricity Board constituted under the Electricity Supply Act, 1948, supplied and distributed electric energy within the State of Madhya Pradesh.
In the assessment years in question the Electricity Board sold, supplied and distributed electric energy to various consumers, It also supplied steam to Nepa Mills.
The mill was supplying water free and the Electricity Board was making a pro rata charge of conversion of water into steam.
The mill had also agreed to re imburse the Board for the loss sustained on account of the mills not taking the full demand of steam.
In proceedings under the C.P. & Bearar Sales Tax Act, 1947 'and the Madhya Pradesh General Sales Tax Act, 1959 the question for consideration, inter alia, were (i) whether electricity was 'goodS ' within the meaning of the two Acts and whether the Board was a 'dealer ' within the, meaning of section 2(c) of the 1947 Act and section 2(d) of the 1959 Act; and (ii) whether the supply of steam amounted to 'sale ' 'and was therefore taxable.
The High Court, in reference, held that electricity was not 'goods ', that the Board was not a 'dealer"in electricity and that the supply of steam was not taxable as it was not supplied With 'a profit motive.
In appeal by special leave to this Court by the Commissioner of Sales Tax, HELD: (i) The Electricity Board carried on the business of selling, supplying and distributing electricity which fell within the meaning of the expression 'goods ' in the two Acts and was therefore a 'dealer '.
[945 H] The definition of "goods" is very wide and includes all kinds of movable property.
The term 'movable property ' when considered with reference to 'goods ' as defined for the purposes of sales tax cannot be taken in a narrow sense and merely because electric energy is not tangible or cannot be moved or touched, like, for instance, a piece of wood or a book, it cannot cease to be movable property when it has all the attributes of such property.
It is capable of abstraction, consumption and use which, if done dishonestly, would attract punishment Under section 39 of the .
It can be transmitted, transferred, delivered, stored, possessed etc.
in the same way as any other movable property.
If there can be sale and purchase of electric energy like any other movable object, it st be held that electric energy was intended to be covered by the definition of 'goods ' in the two Acts.
If that had not been the case there was no necessity of specifically exempting sale of electric energy from the payment of sales tax by making a provision for it in the Schedule to the two Acts.
[945.E H] 940 Kumbakonam Electric Supply Corporation Ltd. vs Joint Commercial Tax Officer, Esplanade Division, Madras, 14 S.T.C. 600, Malerkotla Power Supply Company vs The Excise & Taxation Officer, Sangrur & Ors.
22 S.T.C. 325, Naini Tal Hotel.
Municipal Board, A.I.R. 1946 All.
502, Erie County Natural Gas & Fuel Co. Ltd. vs Carroll, , County of Durham Electrical etc.
Co. vs Inland Revenue , referred to.
Rash Behari vs Emperor, A.I.R. 1936 Cal.
753 distinguished.
(ii) On the facts of the present case the arrangement relating to supply of steam in return of water supplied by the mills on payment of actual cost was not one of sale but was more in the nature of a workS ,contract Where the main object of work undertaken by the payee of the price is not the transfer of a chattel qua chattel, the contract is one for work and labour.
[946 G H] The Government of Andhra Pradesh vs Guntur Tobaccos Ltd., 16 S.T.C. 240, and HaLsbury 's Laws of England, HI Edn.
34 page 6, referred to.
|
minal Appeal No. 152 of 1967.
Appeal by special leave from the judgment and order dated November 19, 1966 of the Judicial Commissioner Court, Goa, Daman and Diu in Criminal Reference No. 103, of 1966.
R.N. Sachthey, for the appellant.
The respondent did not appear.
The Judgment of the Court was delivered by Grover, J.
The sole point for decision in this appeal by special leave is whether a complaint which had been filed against the appellant and four other persons by the respondent for various alleged offences could be entertained without necessary sanction being obtained for the prosecution of the appellant, who at the material time, was the Deputy Superintendent of Police, under section 197 of the Criminal Procedure Code.
The original complaint is not before us as it has not been included in the appeal record but the allegations contained therein are given in the judgment of the learned Judicial Commissioner.
The complainant alleged that on March 5, 1966 at about 4 p.m. accused Nos. 2 to 5 who were hawkers by profession and some other persons attempted to trespass on his land in Margao town with the intention of putting up stalls there.
The complainant having been threatened by them, sent his brother to the police station.
The police came and asked the hawkers to keep their handcarts at the place where they were kept before.
Later on at about 5 30 p.m. the appellant came to the spot and spoke to the complainant in a very arrogant tone.
The appellant informed the complainant that he was Deputy Superintendent of Police and that he had in his possession documents which proved that the land belonged to one Alma Ram.
The appellant asked the complainant to produce his documents of.
title but the complainant replied that those documents had been produced by him in some litigation in the civil courts.
The appellant is then alleged to have threatened the complainant that he would lock him up in case there was any interference with what the hawkers Wanted to do.
The appellant also beckoned accused Nos. 2 5 and other hawkers to enter upon the land.
When the complainant protested he was warned by the appellant that if he talked he would be slapped.
The appellant also assaulted him.
Thereafter the possession of the land was taken over by the hawkers.
The magistrate to whom the complaint was presented examined the complainant under section 200, Criminal Procedure Code 1015 and issued summons to answer the charges under sections 149, 341, 342, 352, 500, 503 and 504 read with section 34 against the appellant and other accused persons requiring them to appear on April 19, 1966.
The appellant filed a petition for revision under section 435 of the Code before the learned Sessions 'Judge in which the main point taken was that the previous sanction under section 197, Cr.
P.C., to prosecute the appellant was required which had not been obtained.
The learned Sessions Judge made an order recommending that the magistrate be directed to require the complainant to obtain the requisite sanction before prosecuting the appellant.
This matter was heard by a bench consisting of the Judicial Commissioner and the Additional Judicial Commissioner.
The Judicial Commissioner was of the view that there was no material on the record to come to the conclusion that the acts complained of would be protected by the provisions of section 197(1) of the Code.
The learned Additional Judicial Commissioner took a contrary view and held that sanction was necessary.
The order of the court was that there being no third Judge to resolve the difference of opinion, the order of the learned magistrate issuing the summons be confirmed in terms of proviso to section 7(2) of the Goa, Daman and Diu (Judicial Commissioner 's Court) Regulation, 1963.
It may be mentioned that in the statement recorded under section 200 of the Criminal Procedure Code, by the magistrate, the complainant made more or less the same allegations as were made in the complaint.
According to the learned Additional Judicial Commissioner in the statement made in court it was not affirmed that the complainant had been wrongly retrained or confined nor was it mentioned that he was actually assaulted in the sense that physical force was used against him.
The worst that could be said, according to the Additional Judicial Commissioner, was that the appellant had warned the respondent that he would be arrested if he interfered with the entry of the hawkers on the disputed land and that the appellant.
also made some gestures with the hand indicating threat of assault.
In our opinion it is not necessary to go into the allegations in the original complaint.
It would suffice to read the statement made by the complainant before the magistrate which is reproduced below: "I confirm the matter in my complaint.
On 5th instant, at about 4.00 p.m. the accused Nos. 2 to 5 attempted to trespass upon my plot situated near the market of this city with a view of setting upon thereon their mobile shops.
I, therefore, sent my brother to the Police, who came to the spot and sent the vendors away.
At about 5.30 p.m. on the same day Mr. Sinari, in civil dress turned up at that place.
At that time, I was sitting in the verandah of the shop of one Kharan 1016 gute situated at the same place.
He called me near him.
Thereafter he asked me whether I knew him, to this I replied in the affirmative.
After this, he identified himself as Dy.
Superintendent of Police and threatened me that if I interfered with vendors he would arrest me.
Subsequently, he directed the vendors to enter my plot and warned me that he should slap me on my face.
In case I oppose to this.
He told me further that he was dealing with the case, when I brought to his notice that my documents were lying with the Municipality and with the Court.
The same accused made some gestures of threats of assault with hands.
I kept myself mum in view of this unusual attitude and the vendors ' took possession of my pro The learned Judicial Commissioner as also the Additional Judicial Commissioner have discussed the case law on the subject exhaustively and have also summarised the principles deducible from the various pronouncements.
It seems to us that there is no difficulty in finding the true rule which has been laid down by numerous decisions including those of the Privy Council, Federal Court and this Court.
It is only in the application of the settled rule that certain amount of difficulty may be experienced owing to the peculiar facts of a particular case.
The language of section 197, Cr. P. Code clearly is that no court can take cognizance of an offence alleged to have been committed by any person belonging to the categories mentioned in the section which would include the appellant when he is accused of an offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty.
This Court observed in Ronald Wood Matham vs State of West Bengal(1) that the question whether sanction under section 197 was necessary for instituting proceedings on charges of conspiracy and of bribery stood concluded by the decisions of the Judicial Committee in H. H. B. Gill vs The King(2) and Phanindra Chandra Neogy vs The King(3) and must be answered in the negative.
so far as the appellant in that case was concerned.
After a full discussion of the case law the result was stated in Matajog Dubey vs
H.C. Bhari(4): thus: "There must be a reasonable connection between the act and the discharge of official duty; the act must bear such relation to the duty that the accused could lay a reasonable, but not a pretended or fanciful claim, that he did it in the course of the performance of his . . duty.
" 76 I.A. 10.
(4) ; , 934, 1017 At an earlier stage it had been observed that it did not matter if the acts exceeded were strictly necessary for the discharge the duty.
What had to be found out was whether the act and the official duty were so inter related that one could postulate reasonably that it was done by the accused in the performance of the official duty though possibly in excess of the needs and requirements of the situation.
In Amrik Singh vs State Pepsu(x), Venkatarama lyer J. speaking for the Court summed up the result of the various decisions on the subject and said that it was not every offence committed by a public servant which required sanction for prosecution under section 197(1) of the Code of Criminal Procedure nor even every act done by him while he was actually engaged in the performance of his official duties.
But if the act complained of was directly concerned with his official duties so that, if questioned, it could be claimed to have been done by virtue of the office, then sanction would be necessary and that would be so, irrespective of whether it was in fact, a proper discharge of his duties or not.
Reference may be made to Nagraj vs State of Mysore(2) in which the appellant, a Sub Inspector of Police, was committed to Sessions Court for trial on a complaint that he and another person had severely beaten one T and when he was forcibly taking him away and was requested by K to excuse T he wantonly fired on two persons.
Emphasis on the question of sanction has been laid on the rule that the jurisdiction of the court to proceed with the complaint emanates from the allegations made in the complaint and not from what is alleged by the accused or what is finally established in the case as a result of the evidence record We are unable to agree with the learned Additional judicial Commissioner that if the allegations of the complainant are taken to be correct it was established that the appellant held out threats to arrest the complainant or to give him a slap on his face in the discharge or purported discharge of his duties.
There are many matters on which there is complete absence of any material or information.
In the first place it is not clear in what capacity the appellant came to the spot.
According to the complainant he sent his brother to the police station because the hawkers were attempting to trespass on his land.
Normally it would be the officr in charge of the police station who would go to the spot to prevent any breach of peace or apprehended breach of peace.
Even if the appellant who was a superior officer could come to prevent any ugly situation arising between the complainant and the hawkers.
It is not established that the appellant came in the capacity of a police officer.
On the contrary the necessary implication in the statement of the complain [1955]:1 S.C.R.1302.
f2) 11964138.CR. 671.
1018 ant is that the appellant came in civil dress, wanted the hawkers to be put in possession of the disputed plot and actually directed them to enter the plot and warned the complainant that if he.
resisted he would be slapped in his face.
Until some more material is placed on the record it cannot be held that it was any part of the duty of the appellant to ensure that the hawkers were put_in possession of the disputed land.
It may be that the appellant was entitled to interfere and take proper steps if he apprehended any breach of peace but there is nothing whatsoever in the complainant 's statement which would show that any such situation existed which could justify interference by the appellant.
Ordinarily if a person is in possession of some property and other persons are threatening to dispossess him it is no part of the duty of a police officer to take sides and decide the dispute in favour of one party or the other or to force one party to give up possession to the other, even if he was satisfied that the party seeking to take possession was lawfully entitled to do so.
This the police officer could only do if there had been any direction by a competent court for rendering help in the matter of delivery of possession.
Whatever way the matter is looked at we are unable to hold on the basis of the allegations contained in the statement of the complainant that the acts alleged against the appellant were such as could be regarded to have been committed by him while acting or purporting to act in the discharge of his official duties.
It will be open to the appellant to establish during the course of further proceedings that the requisite sanction under section 197 must be obtained; but at this stage we concur in the view of the learned judicial Commissioner that no such sanction was necessary.
The appeal fails and it is dismissed.
G.C. Appeal.
dismissed.
| IN-Abs | A private complaint was filed against the appellant who was a Deputy Superintendent of Police.
According to the statement of the complainant there was a dispute between him and certain hawkers who wanted to trespass on his land and at his instance the police was informed.
The appellant came to the spot, threatened and assaulted him, and suggested to the hawkers to enter upon the load, whereupon the hawkers took possession of the land.
The Magistrate after recording the statement of the complainant issued summons to the appellant and others for answering charges under sections 149, 341, 342.
352, 500 and 504 of the Indian Penal Code read with section 34 thereof.
The appellant filed a petition for revision under section 435 Cr.
P.C. before the Sessions Judge in which the main point taken was that the previous sanction under section 197 Cr.
P.C. required for the prosecution of the appellant had not been obtained.
The Sessions Judge ordered that the complainant be asked to obtain the required sanction before prosecuting the appellant.
But the judicial Commissioner 's Court ordered that the order of the Magistrate issuing the summons be confirmed.
In appeal to this Court by special leave, HELD: The language of section 197 Cr.
P.C. clearly is that no court can take cognizance of an offence alleged to have been committed by any person belonging to the categories mentioned in the section which would include the appellant when he is accused of an offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty.
In the present case it was not clear in what capacity the appellant came to the spot.
On the basis of the statement of the complainant it was not established that he came in the capacity of a police officer.
Ordinarily if a person is in possession of some property and other persons are threatening to dispossess him it is no part of the duty of a police officer to take sides and decide the dispute in favour of one party or the other or to force one natty to give up possession to the other, even if he was satisfied that the party seeking to take possession was lawfully entitled to do so.
This the police officer could only do if there had been any direction by a competent court for rendering help in the matter of delivery of possession.
[In dismissing the appeal the Court observed that it would be open to the appellant to establish during the course of further proceedings that the requisite sanction under section 197 must be obtained.] Ronald Wood Mathams vs State of West Bengal, , H.B. Gill vs The ICing, 75 I.A. 41, Phanindra Chandra Neogv vs The King, 76 I.A. 10, Matalog Dubey vs H. C. Bhari; , , 1054 934, Amrik Singh vs State of Pepsu, ; and Nagraj vs State of Mysore, ; , referred to.
|
Appeal No. 632 of 1962.
Appeal by special leave from the judgment and order dated January 5, 1960 of the Allahabad High Court in Civil Revision No. 325 of 1957.
G.N. Kunzru, B.C. Misra, P.K. Chakravarti and Om Prakash, for the appellants.
J. P. Goyal and S.P. Singh, for the respondents.
This appeal by special leave is directed against the judgment of the Allahabad High Court (Dhavan, J.) allowing the revision under section 115, C.P.C., and dismissing the suit brought by the appellants hereinafter referred to as the plaintiffs.
The relevant facts for the purpose of ,appreciating the points raised before us are as follows: The four plaintiffs, out of which three are appellants before us the fourth having died, brought a suit for damages against the six defendants (one defendant had in the meantime died and four are respondents before us).
The allegations in the plaint, in brief, were that the plaintiffs and the defendants were members of an ,association called Parsi Zoroastrian Anjuman; that the defendants, alongwith some other members of the association, formed a group and each of them conspired among themselves to injure and harass the plaintiffs and a few others in various ways; that at a meeting held on May 5, 1954, in connection with the election of Trustees, when defendant N.A. Guzder occupied the chair, he gave a ruling that the plaintiffs Kershasp section Gandhi and B.T.J. Shapoorji, since deceased, were unfit candidates for the office of Trustees and thus prevented them from seeking election, and contrary to the rules of the Anjuman and without taking votes declared the defendant, F.J. Gandhi, and one A.F. Cama duly elected.
It was further alleged that on 961 July 3, 1954, another meeting of the Anjuman was held when the plaintiffs Khushro section Gandhi and Framroze section Gandhi were candidates for election to the office of the trustees, and defendant F.J. Gandhi gave a perverse ruling rejecting the nominations of the above plaintiffs and after taking votes declared G.T. Shappoorjee as duly elected trustee; that by the aforesaid rejections the plaintiffs had suffered an injury for which defendants Nos.
1 to 6 were jointly and severally liable and the plaintiffs were entitled to recover damages from the defendants.
The plaint was filed on January 21, 1955.
Before any written statement was submitted, on February 13, 1955 the sixth defendant section Rabadi, entered into a compromise with the plaintiffs.
The terms of the compromise were: "1.
I, Shavak Dorabjee Rabadi, defendant No. 6 have considered the subject matter of the suit and am sincerely sorry and apologise to the plaintiffs unconditionally for whatever I have done.
I realise that I was m error *and was misguided.
The plaintiffs above named accept the apology tendered by Shri Shavak Dorabjee Rabadi defendant No. 6 and the suit against him may be disposed of treating the aforesaid apology and its acceptance by the plaintiffs as a settlement of the dispute between the plaintiffs and the defendant No. 6. 3.
The plaintiffs do not claim any costs against the defendant No. 6 and defendant No. 6 will bear his own costs.
It is therefore prayed that the claim against defendant No. 6 may be disposed of in terms of the above settlement.
" A decree was passed in terms of this compromise against defendant No. 6.
On May 14, 1955, the other defendants filed a written statement and inter alia alleged: "That the release of defendant No. 6 Sri section Rabadi, an alleged joint tort feasor and the compromise entered into behind the back of the answering defendants with him in full settlement of their suit for damages, appears to be collusive and dishonest and the release by the plaintiffs of defendant No. 6 from his joint liability as a tort feasor has in law extinguished the plaintiffs ' rights to sue the others remaining defendants and claim damage from them." 962 It was further alleged that "the four plaintiffs could not be legally allowed to totalise the sum of their individual damage, alleged to have been suffered, and thereby procure the trial of the suit in the court of higher jurisdiction," and that the suit had been purposely over valued.
In a statement dated March 17, 1956, the plaintiffs clarified that the "damages are being claimed by the plaintiffs in respect of all the facts mentioned in the plaint and particularly as a result of the facts that have been mentioned in paragraphs 17 and 19 the plaint", and further "that on account of all the facts complained of each plaintiff is entitled to claim Rs. 10,100 as damages but the plaintiffs have claimed only Rs. 10,100 and have given up rest of the claim.
" Two of the issues framed by the Civil Judge, may be set out: "Issue No. 5.
What is effect of the compromise between plaintiffs and defendant No. 6, as against rights of the other defendants ? Is the suit not maintainable against other defendants ? Issue No. 11.
Is the court fee paid by the plaintiffs insufficient ?" By order dated September 18, 1956, the Civil, Judge held that the court fee paid by the plaintiffs was insufficient and that there was a deficiency of Rs. 905/12/ in the court fee which the plaintiffs had to make good.
The plaintiffs were given 15 days time to make good the deficiency.
Instead of paying the money the plaintiffs applied under O.VI, r. 17, C.P.C., for amendment of the plaint.
The plaintiffs stated in this application that they would in consideration of the order of the Court split the amount of Rs. 10,100/ into two portions claiming Rs. 5,050/ each in respect of the two separate incidents dated July 3, 1955, and May 5, 1955, respectively.
The defendants filed an application contending that as the plaintiffs had failed to make good the deficiency in the court fee within the time given, the plaint should be rejected in view of the provisions of the O. VII, r. 11, C.P.C. and section 6, U.P. Court Fees Act.
By order dated November 28, 1956, the Civil Judge allowed the plaintiffs ' application for amendment on payment of Rs. 30/ as costs, and also rejected the defendants ' application.
Against this order the defendants filed a revision.
Dhavan, J., first dealt with the point whether the plaintiffs could renounce a part of the claim instead of making good the deficiency in court fee.
He came to the conclusion that the suit contained four causes of action, and that the plaintiffs had to pay court fee on four separate causes of action of the value of Rs. 2,525/ each.
As the learned counsel for the plaintiffs had 963 given an undertaking to make good any deficiency in court fee, Dhavan, J., directed the plaintiffs to pay court fee on the four separate causes of action valued at Rs. 2525/ each.
He also directed an amendment to be made in the plaint.
The learned Judge felt that it would be in the interest of justice that the question covered by issue No. 5 being one of law should be decided by him in the revision.
It appears that the counsel for both parties conceded that the Court had power to decide the issue as the entire record was there, although the learned for the plaintiffs felt that the decision should be left to the Trial Court.
The learned counsel for the appellants contends before us that the High Court had no jurisdiction to decide issue No. 5 in a revision.
He says that the subject matter of the revision was the order of the Civil Judge dated November 28, 1956, and the High Court could not decide any other point and convert itself into an original court.
The learned counsel for the respondents tried to justify the decision regarding jurisdiction of the High Court under section 24, C.P.C.
This section inter alia, provides that the High Court may withdraw any suit, appeal or other proceeding pending in any Court subordinate to it and try and dispose of the same.
We are unable to appreciate how the order of the learned Judge can be justified under section 24.
He has not purported to withdraw 'any suit and try the same.
What he has done is to try an issue arising in a suit in a revision arising out of an interlocutory order.
It seems to us that the High Court, even if the parties conceded, had no power to decide the issue.
But if we set aside the order of the High Court and remit the case to the Civil Judge to try it according to law, the Civil Judge would feel handicapped in deciding the case properly because he will feel bound to follow the opinion given by the learned Judge on issue No. 5.
Under the circumstances we heard arguments on the issue.
Dhavan J., following the English Common Law, held that the decree against Rabadi was complete accord and satisfaction and the cause of action against all the defendants being one and indivisible, the decree operated as a bar against further proceedings against the remaining joint wrong doers.
Winfield on Tort (8th edn.) p. 661 states the English Law thus: "The liability of joint tort feasors is joint and several, each may be sued alone, or jointly with some or all the others in one action; each is liable for the whole damage, and judgment obtained against all of them jointly may be executed in full against any one of them.
At common law, final judgment obtained against one 964 joint tort feasor released all the others, even though it was wholly unsatisfied.
This was established in Brinsmead vs Harrison(1) and the reason put by Blackburn J., was Interest reipublicae ut sit finis litium.
Kelly C.B. urged that if the rule were otherwise, then in a second action the second jury might assess an amount different from that in the first action and the plaintiff would not know for which sum he should levy execution.
The rule was abolished by the Law Reform (Married Women and Tortfeasors) Act, 1935.
It has long been settled that the release of one joint tortfeasor releases all the others, because the cause of action is one and indivisible.
This rule has not been affected by the Act of 1935.
It applies to a release under seal and to 'a release by way o,f accord and satisfaction, and probably to nothing else.
A mere covenant or agreement not to sue, as distinguished from an actual release, does not destroy the cause of action, but merely prevents it from being enforced against the particular tortfeasor with whom it is made.
" That was not the law in England in the beginning.
The history of the law on this point is set out in William 's 'Joint Torts and Contributory Negligence ' (p. 35 footnote) as follows: "In Y.B. (1305) 33 35 E. 1, R.S. 7, it was apparently held that in trespass against four, a verdict against two did not of itself prevent continuance against the other two.
The verdict may not, however, have been embodied in a judgment.
The former rule appears more clearly from Y.B. (1342) 16 E. 3, 1 R.S. 171, where judgment against one did not bar the action against the others.
That the parties were joint tortfeasors appears plainly from the note from the record, ibid, 175 n. 7.
See also Y.BB, E. 3.
7b, pl. 4; (1412/ 13) H. 14 H. 4.22b, 131.
27; in the latter it is said that in trespass against two, if one be condemned and the plaintiff has execution against him with satisfaction, he shall be barred against the others thus implying that the mere judgment would not bar.
Hickman vs Machin (1605) 1 Ro.
896, (F) 4, 7, from which case, however (sub.
Hickman vs Payns), a different inference is drawn in Broome vs Wooton ; (1605) Yelv.
67, The first discussion of the question in the Year Books is in Y.B, (1441) M. 20 H. 6, 11a, pl. 24, where X had first sued A, B, and C in trespass and (1) 965 obtained judgment against A, who alone appeared to the writ; later X, not having levied execution under this judgment, sued B. Paston and Fulthorpe expressed opinions that he was not barred by the first judgment, but Newton C.J. thought that he was.
In Y.B. (1495)M. 11 Ii. 7.
5b, pl. 23 (Bro.
Trespas 428) it was said that one can release one joint tortfeasor after judgment ,against another without affecting that other; such a release would have been unnecessary if the judgment had discharged all other joint tortfeasors.
Y. BB.
(1474) T. 14 E. 4.
6a, pl. 2; (1475) T. 15 E. 4. 26b, pl. 3.
The rule was not settled in 1584, for it was then made a question whether even satisfaction following on judgment would discharge the others (above 9 n.2); and see Cocke vs Jennor (n.d.) Hob.
66; , , where it was said that if joint tortfeasors be sued in several actions, satisfaction by one would discharge the others; it was not said that judgment against one would discharge." The common law rule was first established by the case of Broome (Brown) vs Wooton(x) and the only reason given was that transit in rem judicatam.
Goldrel Foucard & Sons vs Sinclair and Russian Chamber of Commerce in London(2) Sargant, L regarded the rule in Brinsmead vs Harrison(a) highly technical.
The rule was changed in England by legislation vide The Law Reform (Married Women and Tortfeasors) Act, Pt.
II (25 & 26 Geo. 5, c. 30).
Section 6(1)(a) and (b) of that Act read as follows: "Where damage is suffered by any person as a result of a tort (whether a crime or not) (a) judgment recovered against any tortfeasor liable in respect of that damage shall not be a bar to an action against any other person who would, if sued, have been liable as a joint tortfeasor in respect of the same damage; (b) if more than one action is brought in respect of that damage by or on behalf of the person by whom it was suffered, or for the benefit of the estate, or of the wife, husband, parent or child of that person, against tortfeasors ,liable in respect of the damage (whether as joint tortfeasors or otherwise) the sums recoverable under.
the (1) ; (2) , 192, (3) , 966 judgments given in those actions by way of damages shall not in the aggregate exceed the amount of the damages awarded by the judgment first given; and in any of those actions, other than that in which judgment is first given, the plaintiff shall not be entitled to costs unless the court is opinion that there was reasonable ground for bringing the action.
" This provision has been adopted in other parts of the Commonwealth.
Recently in Egger vs Viscount Chelmsford(1) Lord Denning M.R., observed: "I cannot help thinking that the root of 'all the trouble is the tacit assumption that if one of the persons concerned in a joint publication is a tortfeasor, then all are joint tortfeasors.
They must therefore stand or fail together.
So much so that the defence of one is the defence of all; and the malice of one is the malice of all.
I think this assumption rests on a fallacy.
In point of law, no tortfeasors can truly be described solely as joint tortfeasors.
They are always several tortfeasors as well.
In any joint tort, the party injured has his choice of whom to sue.
He can sue all of them together or any one or more of them separately.
This has been the law for centuries.
It is well stated in Serjeant Williams ' celebrated notes to Saunders ' Report (1845 ed.) of Cabell vs Vaughan ; f g.
I. several persons jointly commit a tort, the plaintiff has his election to sue all or any number of the parties; because a tort is in its nature the separate act of each individual '.
Therein lies the gist of the matter.
Even in a joint tort, the tort is the separate act of each individual.
Each is severally answerable for it; and, being severally answerable, each is severally entitled to his own defence.
If he is himself innocent of malice, he is entitled to the benefit of it.
He is not to be dragged down with the guilty.
No one is by our English law to be pronounced a wrongdoer, or be made liable to be made to pay damages for a wrong, unless he himself has done wrong; or his agent or servant has done wrong and he is vicariously responsible for it.
Save in the case where the principle respondent superior applies, the law does not impute wrongdoing to a man who is in fact innocent." (1) , 264.
967 Gatley on 'Libel and Slander ' (Sixth Edition), in a footnote at p. 367, remarks regarding the approach of Lord Denning in Egger vs Chelmsford ( 1 ): "His approach is also not easy to reconcile with the law on the release o.f joint tortfeasors".
In the United States of America, in an early decision, Lovejoy vs Murray(2), the United States Supreme Court refused to follow the English Common Law.
Miller J. speaking on behalf of the Court, observed, after referring to Broome (Brown) vs Wooten ( 3 ) and other cases: "The rule in that case has been defended on two grounds, and on one or both of these it must be sustained, if at 'all.
The first of these is, that the uncertain claim for damages before judgment has, by the principle of transit in rem judicatam, become merged into a judgment which is of a higher nature.
This principle, however, can only be applicable to parties to the judgment; for as to the other parties who may be liable, it is not true that plaintiff has acquired a security of any higher nature than he had before.
Nor has he, as to them, been in anywise benefited or advanced towards procuring satisfaction for his damages, by such judgment.
This is now generally admitted to be the true rule on this subject, in cases of persons jointly and severally liable on contracts; and no reason is perceived why joint trespassers should be placed in a better condition.
As remarked by Lord Ellenborough, in Drake vs Mitchell, , 'A judgment recovered in any form of action, is still but a security for the original cause of action, until it be made productive in satisfaction to the party; and, therefore, till then, it can not operate to change any other collateral concurrent remedy which the party may have. ' The second ground on which the rule is defended is, that by the judgment against one joint trespasser, the title of the property concerned is vested in the defendant in that action, and therefore no suit can afterwards be maintained by the former owner for the value of that property, or for any injury done to it.
This principle can have no application to trespassers against the person, nor to injuries to property, real or personal, unaccompanied by conversion or change of (1)[1965] 1Q.B.D.248, (2) 18L. ed.
129,132 132 134.
(3) ; 968 possession.
Nor is the principle admitted in regard to conversions of personal property.
Prior to Brown vs Wootton, Cro.
73, the English doctrine seems to have been the other way, as shown by Kent, in his Commentaries, 2 Kent, Com. 388, referring to Shepherd 's Touchstone, Title, Gift; and to Jenkins, p. 109, ease 88.
We have already stated the only two principles upon which it rests.
We apprehend that no sound jurist would attempt, at this day, to defend it solely on the ground of transit in rem judicatam.
For while this principle, as that other rule, that no man shall be twice vexed for the same cause of action, may well be applied in the case of a second suit against the same trespasser, we do not perceive its force when applied to a suit brought for the first time against another trespasser in the same matter.
But in all such cases, what has the defendant in such second suit done to discharge himself from the obligation which the law imposes upon him, to make compensation ? His liability must remain, in morals and on principle, until he does this.
The judgment against his co trespasser does not affect him so as to release him on any equitable consideration.
It may be said that neither does the satisfaction by his co trespasser, or a release to his co trespasser do this; and that is true.
But when the plaintiff has accepted satisfaction in full for the injury done him, from whatever source it may come, he is so far affected in equity and good conscience, that the law will not permit him to recover again for the same damages.
But it is not easy to see how he is so affected, until he has received full satisfaction, or that which the law must consider as such.
We are, therefore, of opinion that nothing short of satisfaction, or its equivalent, can make good a plea of former judgment in trespass, offered as ,a bar in an action against another joint trespasser, who was not party to the first judgment." In India the English Law has been generally followed.
The learned counsel for the appellant relies on Ram Kumar Singh vs Ali Husain(1).
The facts in that case in brief were as follows.
The plaintiff sued several defendants jointly to recover damages (Rs. 325/ ) in respect of an alleged assault committed on him by (1) All. 173, 175, 969 and accepted Rs. 25/ representing his proportionate share of damages.
The High Court held: "The fact that one of several tortfeasors in the progress of a suit 'admits his liability ' as well as that of the other defendants and agrees to pay a sum of money in satisfaction of his liability does not exonerate the other defendants, who may be rouged responsible for the acts complained of, from liability.
In the case of Brinsmead vs Harrison(1), one of the tort leasors was sued for damages for trover of a piano and damages were recovered as against him.
In that case it was held that a suit against the other tortfeasor could not be sustained for the same cause of action, notwithstanding the fact that the judgment already recovered remained unsatisfied.
That is a very different case from the case before us.
In the case before us all the tortfeasors were sued in one and the same suit and judgment was not recovered only against the party who had admitted his liability in the progress of the suit and had agreed to pay a sum of money in satisfaction of his liability.
" This case was followed in Hat Krishna Lal vs Haji Qurban Ali(2).
But in these cases the decree was not passed first against the tortfeasor admitting liability.
The learned counsel for the respondent relies on Makhanlal Lolaram vs Panchamal Sheoprasad(5).
It was held in that case that "an accord and satisfaction in favour of one joint tortfeasor operates in favour of them all.
" Vivian Bose, A.J.C., observed: "An accord and satisfaction in favour of one joint tortfeasor operates in favour of them all; ; 9 QB 819, and ; , Odgers on Libel and Slander, Edn. 6, p. 521, Ratanlal on Torts, Edn. 10, p. 71.
The basis of these decisions is that where the injury is one and indivisible it can give rise to but one cause of action.
Consequently if satisfaction is accepted 'as full and complete and against one person it operates with respect to the entire cause of action.
" In Shiva Sagar Lal vs Mata Din(4) the facts as stated in the head note, in brief, were: "Plaintiff filed a suit to recover damages for malicious prosecution 'against five defendants of whom defendant 1 was a minor.
It was alleged that the other defendants had instigated defendant 1 to make a complaint against (1) (1871 72) L.R.7 C.P. 547.
(2) Luck.
(3) A.I.R. 1934 Nag. 226, 227.
(4) A.I.R. 1949 All.
970 the plaintiff.
Subsequently, the plaintiff filed an application that there had been a settlement between him and defendant 1 and he had consequently released him.
The application was allowed and defendant 1 was discharged.
" Following Duck vs Mayeu(1) it was held that the discharge ' of defendant 1 amounted merely to a covenant not to sue him and not to a release of all the joint tortfeasors.
The English Courts adopted this line of reasoning in order to soften the rigour of the common law, but in the present case it cannot be said that the compromise amounted to a covenant not to sue, as a decree was passed.
It seems to us, however, that the rule of common law prior to Brown vs Wooton(2) and the rule adopted by the United States Supreme Court is more in consonance with equity, justice and good conscience.
In other words, the plaintiff must have received full satisfaction or which the law must consider as such from a tortfeasor before the other joint tortfeasors can rely on accord and satisfaction.
This rule would recognise that the liability of tortleasors is joint and several.
What is full satisfaction will depend on the facts and circumstances of the case.
For example, the acceptance of Rs. 25/ in the case of Ram Kumar Singh vs
Ali Hussain(3) would not be a case of full satisfaction.
In this case an apology was received from the defendant Rabadi and accepted and embodied in 'a decree.
This cannot be treated to be a full satisfaction for the tort alleged to have been committed by the respondents defendants.
But this must be treated as 'an election on the part of the plaintiffs to pursue their several remedy against the defendant Rabadi.
The learned counsel for the respondents urges that if a decree is passed against them for damages, the defendant Rabadi, who compromised, would be liable to contribute in accordance with the rule laid down in Dharni Dhar vs Chandra Shekhar(4) in which it was held that the rule in Merry weather vs Nixon(5) did not apply in India.
It is not necessary to decide whether the Full Bench decision of the Allahabad High Court lays down the law correctly, because even if it is assumed that this is the law in India it would not affect the rights of the plaintiffs. ' In the result the appeal is allowed, the judgment ,and decree of the High Court set aside and the case remitted to the Trial Court.
He shall dispose of the suit in accordance with this judgment and law.
No order as to costs.
V.P.S. Appeal allowed.
(1) (2) ; (3) All. 173 (4) I.L.R. [1952] 1 All.
759 (F.B.).
| IN-Abs | A suit for damages was filed on the allegations that the plaintiffs and defendants were all members of an association and that the defendants committed a tort against the plaintiffs by conspiring and preventing the plaintiffs from being elected to the office of trustees of the association.
One of the defendants tendered an unconditional apology which was accepted by the plaintiffs and a decree was passed in terms of the compromise.
The other defendants, thereafter, filed written statements contending that the release of one of the defendants from his joint liability as a tort lessor extinguished the plaintiff 's rights against the remaining defendants and raised questions regarding valuation and court fees.
The trial court took up the issue regarding court fees, held there was a deficiency and granted time to the plaintiffs to make good the deficiency.
The plaintiffs, instead, applied for amendment of the plaint and the trial court allowed the application.
The High Court, in revision filed by the defendants gave appropriate directions regarding payment of court fee.
The High Court, also decided, with the consent of both sides, that the decree against one of the defendants namely, the compromise decree, was complete accord and satisfaction and that the cause of action against all the defendants being one and indivisible, the decree operated as a bar against further proceedings against the remaining defendants.
In appeal to this Court, it was contended that the subject matter of revision before the High Court being only the order of the trial court regarding court fee, the High Court had no jurisdiction to decide any other point.
HELD: (1) The High Court had no power to decide any other issue even if the parties had consented.
The order of the High Court could not be justified under section 24, Civil Procedure Code, because, it was not a case of the High Court withdrawing the case to itself and trying the same.
[9 '63 D E] (2) The High Court having decided the question of maintainability of the suit against the.
other defendants, the trial court would feel handicapped if the matter were to be remitted to it.
The appropriate procedure is for this Court to decide the question.
[963 E F] (3) The rule which is in consonance with equity, justice and good conscience and which also recognises that the liability of tort feasors is joint and several, is that, before the other joint tort feasors can rely on accord and satisfaction, a plaintiff must have received full satisfaction or L6Sup.
CI/69 10 960 what the law must consider as such from one of the tort feasors.
What is full satisfaction would depend on the facts and circumstances of each case.
[970 C E] In the present case, the apology which was embodied in a decree could not be treated as full satisfaction for the tort alleged to have been committed by the defendants.
But it must be treated as an election on the part of the plaintiffs to pursue their several remedy against the defendant tendering the apology.
[970 E F] Ram Kumar Singh vs Ali Husain, All. 173, Makhanlal Lolaram vs Panchamal Sheoprasad, A.I.R. ; Har Krishna Lal vs Haji Qurban Ali, Luck.
284 and Shiva Sagar Lal vs Mata Din A.I.R. 1949 All. 105; and English and American Law, referred to.
|
Appeal No. 98 of 1966.
Appeal from the judgment and order dated September 7, 1962 of the Punjab High Court, Circuit Bench at Delhi in Civil Revision Application No. 140 D of 1961. ' P. Sinha, G. Bhimsena Rao and M. 1.
Khowaja, for the appellants.
I. N. Shroff, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This appeal by certificate granted by the Circuit Bench of the Punjab High Court at Delhi is governed by the decision of this Court in Bahadur Singh vs Munl Subrat Dass(1).
(1) [1969] 2 S,C.R. 1041 The facts out of which the present appeal arises are these.
One Raghunath Sharma, predecessor m interest of the appellants hereinafter referred to as the plaintiff instituted on February 7, 1956, suit No. 53 of 1956 in the Court of Subject 1st Class, Delhi, for the eviction of his tenant, K.L. Bansal, hereinafter referred to as the defendant.
He gave three grounds for ejectment in the plaint: (1 ) that the premises were required bona fide by the plaintiff for occupation as residence for himself and other members of the family, and that he had no other, suitable accommodation to meet his bona fide residential requirements; (2) that the defendant already owned a house in Delhi which was suitable for him; and (3) that the defendant had defaulted in payment of rent.
The defendant flied a written statement denying these allegaltions.
Appropriate issues were framed on April 4, 1956.
On June 5, 1956, an application was filed by the plaintiff and the defendant that a compromise had been effected on the following terms: "(a) Decree for ejectment be passed in favour of the plaintiff against the defendant, the decree will be executable after the 31st December, 1958, if the defendant does not give possession till then.
(b) The standard rent of the premises be fixed at Rs. 40/ per mensem, instead of Rs. 50/ paid at present payable from the 1st July, 1956, till the defendant vacates the premises.
(c) The amount, in deposit with this Court be paid to the plaintiff which will be adjusted between the On July 6, 1956, the counsel for the parties and the plaintiff made a statement on solemn affirmation to the same effect, and on the same day the Court recorded the following order: "In view of the statement of the parties ' counsel and the written compromise, a decree is passed in favour of the plaintiff against the defendant.
" The decree was drawn up accordingly.
The defendant, however, did not vacate the premises ' on December 31, 1958.
On the other hand, he presented an application on February 16, 1959, under section 47, C.P.C., challenging the validity of the decree alleging that the same had been passed in contravention of the provisions of section 13 of the Delhi and Ajmer Rent Control Act, 1952 (XXXVIII of 1952), (hereinafter referred to as the Act) and hence the decree was a nullity.
He failed 1050 before the Sub Judge, 'and also 'on appeal before the Senior Sub Judge, Delhi.
The High Court, on revision, held that the decree was a nullity as the order passed on the basis of the compromise did not indicate that any of the statutory grounds mentioned in section 13 of the Act existed.
In Bahadur Singh 's case(1) this Court held that the decree passed on the basis of an award was in contravention of section 13(1) of the Act became the Court had passed the decree in terms of the award without satisfying itself that the ground of eviction existed.
Bachawat, J,.
speaking for the Court, observed that "on the plain wording of section 13(1) the Court was forbidden to pass the decree.
The decree is a nullity and cannot be enforced in execution." This Court, accordingly, declared inter alia that "the decree in so far as it directs delivery of possession of the premises to the landlord is a nullity and cannot be executed.
" The present case is also governed by the provisions of section 13(1) of the Act and, as we have said before, this appeal must fail, in view of the judgment of this Court in Bahadur Singh 's case(x).
In the result the appeal is dismissed but there will be no order as to costs.
R.K.P.S. Appeal dismissed.
| IN-Abs | The appellant plaintiffs filed a suit in February 1956, for the eviction the respondent on the ground that the premises were required for their own use, that the defendant already owned a suitable house of his own, and that the respondent had defaulted in payment of rent, after the defendant had flied a written statement and issues had been framed a joint application was made by them that a compromise had been effected.
The trial court decreed the suit in the plaintiff 's favour in terms of the compromise which provided inter alia, for the ejectment of the defendant after 31st December 1958, and fixed the standard rent as agreed.
The defendant, however, did not vacate the premises in December 1958, and presented an application in February 1959 under section 47 C.P.C., challenging the validity of the decree alleging that it had been passed in contravention of the provision of Delhi and Ajmer Rent Control Act, 1952 and contending that the decree was, therefore, a nullity.
He 'failed before the Sub Judge and also in appeal before the Senior Sub Judge.
However, the High Court in revision held in his favour.
appeal to this Court, HELD: The High Court has rightly held that the decree was a nullity as the order passed on the basis of the compromise did not indicate that any of the statutory grounds mentioned in section 13 of the Act existed.
[1050 B] Bahadur Singh vs Muni Subrat Dass, , followed.
|
Appeal No. 284 of 1967.
979 Appeal from the judgment ,and order dated December 23.
1964 of the Calcutta High Court in Appeal From Original Order No. 90 of 1964.
S.V. Gupte, K.P. Bhandare and D.N. Gupta, for the appellant.
S.R. Chari and fanardan Sharma, for respondeat No. 3.
P.K. Chatterjee and P.C. Chakravarti, for respondeat No. 4.
The Judgment of the Court was delivered by Shelat, J.
This appeal by certificate is directed against the judgment and order of the Division Bench of the High Court of Calcutta setting aside the order of a Single Judge of that High Court in a writ petition under article 226 of the Constitution.
The facts relevant for this judgment may first be set out.
The appellant company was at the relevant time carrying on business at various places in India including Calcutta as merchants, selling agents and manufacturers.
Its registered office is at Madras.
Its business at Calcutta was two fold: (1) as selling agents of certain companies, and (2) of conducting an engineering workshop at Kidderpore.
According to the company its agency business began to decline from 1954 and it had, therefore, to retrench some of its employees in that year.
The company consequently decided upon a policy of reorganising its business by giving accent to its manufacturing activities 'and of giving up the agencies ' held by it.
In pursuance of the said policy, the company relinquished between April 1, 1960 and September 30, 1961, 13 agencies in Bombay, 11 in Delhi, 8 in Madras and 11 in Calcutta.
It also closed down 3 of its branches in Northern India and 11 in South India.
The total staff engaged at Calcutta consisted of 75 employees in the workshop at Kidderpore and 225 in the Branch office.
Apprehending that the said policy would result in retrenchment, the third respondent union wrote to the Deputy Labour Commissioner requesting him to intervene stating that the Board of Directors and the company had declared their policy of surrendering agencies and that in the result the union feared that about 60 employees would be retrenched.
The Deputy Commissioner called for the comments of the company 's manager, who in his reply dated June 17, 1961 affirmed that the company had taken the said policy decision in consequence of which some of the employees would have to be retrenched.
On June 20,. 1961 the Deputy Commissioner held conciliation proceedings during which also the manager made it clear that in pursuance of the policy of reorganising its business the company had decided to give up cer 980 tain agencies.
On June 23, 1961 the union sent to the company its demands inter alia claiming (a) that the retrenchment must be fully justified, and (b) that transfer of service to other places in the company 's organisation should be offered to those who are willing to accept such transfer.
Neither in its letter to the Deputy Commissioner nor in the conciliation proceedings, nor in the demands of the union disputed the fact that the company had taken the said policy decision and that the decision would result in retrenchment.
Indeed, the said demands accepted the policy decision but called upon the company to pay certain amounts to those retrenched, to retrench only to the extent fully justified and to offer transfer to those retrenched.
On June 28, 1961 the company 'sent its comments on the union 's demands stating inter alia that (1) the company would pay one month 's wages in lieu of notice as also retrenchment compensation, (2) that 25 permanent and 17 temporary employees would be retrenched with effect from July 1, 1961, (3) that re employment of retrenched workmen would be governed by the provisions of sec.
25H, and (4) that the company 's policy being to recruit local persons at its branches, transfer from one place to another had not been frequently resorted by the company but the company would consider transfer of the employees concerned after employees retrenched at other branches had first been absorbed.
On June 29, 1961 the company_ gave the notice of retrenchment to the employees concerned, also a notice to the Commissioner of Labour and the Conciliation Officer under sec.
25F(c), paid one month 's wages to the employees concerned in lieu of notice and also retrenchment compensation.
The State Government by its order dated July 31, 1961 referred for adjudication to the Second Industrial Tribunal, Calcutta, the question whether retrenchment of the said 52 employees was ' justified and to what relief, if any, they were entitled.
In its statement of claim the union inter alia pleaded that the company had in a spirit of vindictiveness and to break the union retrenched the said.
employees, that with that mala fide end in view it gave up in the name of a policy of reorganisation agencies although they were profitable, creating thereby an artificial condition to show fall in business and surplus age in staff, that the company 's mala fides were apparent in that it gave up agencies in Calcutta only, that the company being dominated by persons from Madras its real object was to divert its resources to Madras from parochial and anti union considerations, that as a result of giving up the agencies the company had suffered in profits, that the work load of the remaining employees had increased, that there was in fact no real surplusage, and lastly, that the company had not followed while retrenching the principle of "last come.
first go".
The cornpany 's reply was that retrenchment was bona fide and in 981 accordance with law, that it had relinquished all the pharmaceutical agencies, general sales agencies except one, and a number of other agencies not only in Calcutta but also in Bombay, Delhi and Madras, that it had absolute right to decide which business it should continue and which to give up, that as a matter of business policy it had decided to discontinue the agency business with the result that retrenchment had become inevitable, that the union had indulged in incorrect, irrelevant and irresponsible allegations, that though the actual surplusage was 66, it had retrenched only 52 employees of whom 17 were temporary, and that the question whether the workload on the remaining employees had increased or not was irrelevant.
In support of its reply the company produced two statements.
exhibit D and E, showing the number of and places where branches were closed and the agencies relinquished.
The Calcutta branch had at the time 21 agencies out of which 11 were given up.
Prima facie, the surrender of so many agencies would result in surplusage of employees.
On these pleadings and the issues arising therefrom the only question before the Tribunal, therefore, was whether retrenchment of 52 employees was justified.
However, the union challenged not only the legality and propriety of the retrenchment but also the propriety and reasonableness of the said policy decision alleging absence of good reason.
for relinquishing agencies and further alleging that an artificial surplusage was caused for weakening the union and parochial considerations.
The Tribunal thought that these questions required elucidation by the company.
It held that though 11 agencies in all.
in Calcutta were given up, since two of them were given up July 1, 1961 and the third on August 1, 1961, only 8 agencies were given up before the notice of retrenchment.
The Tribunal, however, failed to observe that notices of giving up these three agencies were served by the company as early as May 1, 1961.
The Tribunal held that though agencies were surrendered in places other than Calcutta also, the company led no evidence that the staff was retrenched in these places also and whether such retrenched staff was absorbed in those places.
In the union 's statement of claim, however, no such question was raised, the only question raised being that no agencies were given up in places other than Calcutta.
Next, the Tribunal rejected the company 's case about its policy of reorganising its business.
The manager of the Calcutta branch gave evidence and also produced an extract from a speech of the managing director, East India Distilleries & Sugar Factores Ltd. of which the appellant company is a subsidiary.
The manager also gave certain other reasons which led the company to give up certain agencies.
The Tribunal, however, rejected this evidence on the ground that the manager could not give 982 evidence about the policy decision as that was the function of the Board of Directors, that the extract from the said speech reflected the policy of the East India Distilleries Co. but not necessarily of the appellant company and that the additional reasons given by the manager showed that the real reasons for giving up the agencies were those reasons and not the policy decision.
The rejection of the manager 's evidence was totally unwarranted and the finding that the pokey decision was not proved was contrary to the evidence on record.
As akeady stated, in the union 's letter to the Labour Commissioner, the union had based its request for intervention on the footing that it apprehended retrenchment as a result of the company 's said policy decision.
During conciliation proceedings also the manager had clarified that retrenchment was inevitable on account of the said policy decision.
Besides, there was no reason why the manager could not depose about the company 's said_decisiOn.
The additional reasons given by the manager were the reasons to show why of the 21 agencies the particular 11 agencies were surrendered.
The finding of the Tribunal that those agencies were not given up on account of the company 's said policy was not only unwarranted but was contrary to the evidence on record.
The further reasoning of the Tribunal that there could be no such policy decision because though the agencies were given up no corresponding development in manufacturing activities was taken up was also without foundation.
The evidence of the manager was that such development had already been launched in Madras and, about the time of his giving evidence, also at Kidderpore.
That evidence was not accepted as according to the Tribunal the development on the manufacturing side of the company 's business should have been contemporaneous with the surrender of the agencies in Calcutta.
The fact that such activities were also not undertaken in Kidderpore could not possibly be a reason for disbelieving the company 's case about the said policy.
To disbelieve the company 's case on the ground 'that no ,such ,manufacturing activity was undertaken in Calcutta was altogether unjustified.
The Tribunal next found that there could not be any real surplus age in the staff as the company had during the year 1960 made 17 appointments.
The Tribunal accepted the union 's case that this circumstance indicated that there was no need of retrenchment.
It rejected the company 's explanation that until retrenchment was decided upon and calculations were made about the extent of ' retrenchment, temporary appointments had to be made in place of those who retired or left the company 's service.
Even though the agencies were given up winding up work in connection with them would still require the same staff.
Besides, all.
the 17 temporary employees were ' included in ,the list of the retrenched employees.
As regards the statement exhibit G showing surplusage.
of 66 ' employees, the.
Tribu 983 nal questioned its correctness on the ground that although four agencies were given up in 1960 no retrenchment was made during that year, that on the other hand 17 temporary hands were engaged, that the evidence of the union 's secretary showed that after the retrenchment workload of the remaining employees had increased, and lastly, that retrenchment could have been avoided by transferring the employees concerned to other branches of the company.
Though the Tribunal gave a clear finding that the company had not resorted to retrenchment with the intention of victimisation, yet it held that "the allegations made by the union (as to parochial considerations) do not appear to be unfounded or unreasonable".
The reasons given for this observation were that the company 's head office was at Madras, that the chairman and the directors of the company were from Madras and that the agencies given up in Madras were less in number than in Calcutta.
On these findings the Tribunal held that the scheme of reorganisation was not sufficiently established, that mere surrender of agencies was no proof of such a scheme that therefore, a good case for retrenchment was not made out,.
that the company had failed to establish the exact number of surplus employees and the extent of retrenchment, that it failed to observe the principle laid down in sec.
25G, that the said notice dated June 29, 1961 was not in accordance with rule 77 of the West Bengal Industrial Disputes Rules, 1958 as the notice was of June 29, 1961 while retrenchment was to take effect from, July 1, 1961.
The Tribunal held that the retrenchment, therefore, was not with immediate effect, the proviso.
to that rule did not apply and a notice of one month, aS required by sub cl. 1 of ' that rule, was necessary and that not having been done the retrenchment was invalid as being in breach of sec.
25F(c).
In accordance with these findings the Tribunal ordered reinstatement and payment to the 52 employees of back wages as from July 1, 1961.
Aggrieved by this order the company,filed a writ petition for certiorari which was heard by a learned Single Judge of the High Court.
The learned Single Judge held that ' an employer has the right to reorganise his business in 'any manner he likes for the purpose of economy or convenience,.
that a Tribunal, therefore, cannot question its ' propriety, the only limitation being that it should be bona fide and not with the object of victimising employees.
He observed that though the Tribunal had found that the union had failed to establish victimisation or any unfair labour practice, it had, yet, come to an inconsistent finding that the probability that the union 's activity would be weakened by large scale retrenchment could not be ignored or overlooked.
The learned Judge found that in coming to this finding the Tribunal acted not upon evidence but on mere conjectures.
He also held that interview of the evidence the Tribunal Was in patent error in 984 rejecting the company 's case of relinquishment of agencies and the resultant retrenchment.
He further held that the finding of the Tribunal that the policy of reorganisation was not bona fide but was for parochial consideration was based on inferences for which there were no justifying premises.
Lastly, he held that the Tribunal 's finding that the company did not establish retrenchment of 52 employees was not justified as the ground given by it, namely, (1) that retrenchment could have been avoided by transferring the employees concerned to other centres, (2) that the principle of "last come first go" was not followed, and (3) that the procedure under sec.
25F(c) was not observed were not warranted by the evidence.
As regards the first ground, the learned Judge held that that ground was not sustainable.
As to the second ground he held that that being a finding of fact he could not substitute his own opinion in place of the Tribunal 's and remanded that part of the case to the Tribunal for further consideration.
Regarding the third ground, he found that the Tribunal was in error in holding that el. 1 of r. 77 of the said rules applied and that a month 's notice not having been given thereunder the retrenchment was invalid. ' He set aside the award and remanded the case to the Tribunal for the limited purpose of enforcing retrenchment according to the principle of "last come first go".
In appeal against the said judgment, a Division Bench of the High Court held that the High Court could interfere in a writ petition for certiorari with the Tribunal 's findings only within well recognized limits, such as, where the inferior tribunal has acted without jurisdiction or in excess of it or where it has acted illegally as when it acts in breach of the principles of natural justice or where there is an error of law apparent on record.
The superior court in such cases acts in supervisory and not appellate jurisdiction and therefore, cannot review findings of fact however erroneous they are.
The Division Bench found that the findings of the Tribunal that the company had failed to prove its scheme of reorganisation, that retrenchment was effected in Calcutta only, that the company was actuated by parochial considerations, and therefore retrenchment was not bona fide could not be said not to have been supported by evidence and that therefore the learned Single Judge was not competent to interfere with those findings.
Counsel for the company raised three contentions: (1) that since the Tribunal had held that there was no victimisation, its jurisdiction was limited to the consideration only whether the employees were retrenched within the meaning of sec.
2(00) of the Act and whether the employer 's obligations under sections 25F, 25G and 25H were complied with, (2) that the Tribunal had no juris 985 diction to consider the question whether the reorganisation scheme was for parochial considerations or otherwise, i.e., whether the scheme had merits, which opinion is entirely managerial, and (3) that some of the findings of the Tribunal were without legal evidence and based on mere surmises and therefore perverse.
The contention on behalf of the union, on the other hand, was that the scope of interference by the High Court in a certiorari petition was limited and only on certain well recognised grounds and that the learned Single Judge was not correct in allowing the petition, for, that meant interfering with findings of fact arrived at by the Tribunal.
The grounds on which interference by the High Court is available in such writ petitions have by now been well established.
In Basappa vs Nagappa(1) it was observed that a writ of certiorari is generally granted when a court has acted without or in excess of its jurisdiction.
It is available in those cases where a tribunal, though competent to enter upon an enquiry, acts in flagrant disregard of the rules of procedure or violates the principles of natural justice where no particular procedure is prescribed.
But a mere wrong decision cannot be corrected by a writ of certiorari as that would be using it as the cloak of an appeal in disguise but a manifest error apparent on the face of the proceedings based on a clear ignorance or disregard of the provisions of law or absence of or excess of jurisdiction, when shown, can be so corrected.
In Dharangadhara Chemical Works Ltd. vs State of Saurashtra(2) this Court once again observed that where the Tribunal having jurisdiction to decide a question comes to a finding of fact, such a finding is not open to question under article 226 unless it could be shown to be wholly unwarranted by the evidence.
Likewise, in the State of Andhra Pradesh & Ors.
section Sree Ram Rao(3) this Court observed that where the Tribunal has disabled itself from reaching a fair decision by some considerations extraneous to the evidence and the merits of the case or where its conclusion on the very face of it is so wholly arbitrary and capricious that no reasonable person can ever have arrived at that conclusion interference under article 226 would be justified.
The question for our determination, therefore, is whether the learned Single Judge was within the aforesaid well recognised limits when he set aside the award.
Before, however, we examine that aspect of the case we may first consider the scope of the Tribunal 's jurisdiction in cases of retrenchment arising under see.
25F of the Act.
In D. Macropollo & Co. vs Their Employees ' Union(4) this Court held that if a scheme of reorganisation has been adopted (1) ; (2) ; (3) ; (4) [1958] 2 L.L.J. 492.
986 by an employer for reasons of economy or convenience and it has been introduced in all the areas of its business, the fact that its implementation would lead to the discharge of some of the employees would have no material bearing on the question as to whether the scheme was adopted by the employer bona fide or not In the circumstances, an industrial tribunal considering the issue relating to retrenchment, should not attach any importance to the consequences of reorganisation.
The resulting discharge and retrenchment would have to be considered as an inevitable, though unfortunate, consequence of such a scheme.
It also held that where the finding of a tribunal is based on wrong and 'erroneous assumption of certain material facts, such a finding would be perverse.
A recent decision in Ghatge & Patil Concern 's Employees ' Union vs Ghatge & Patel (Transport) (P) Ltd.(x) was a case of an employer reorganising his business from conducting a transport business himself through employees engaged by him to conducting it through a contract system where under he let out his motor trucks to persons who, before this change, were his employees.
Admittedly, this was done because he could not implement some of the provisions of the .
The change over to the contract system was held by the Tribunal not to have been effected for victimising the employees.
The employees had voluntarily resigned and hired the employer 's trucks on contract basis.
It was held that a person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has, without the arrangement, no proper means of obeying.
In Workmen Subong Tea Estate vs The Outgoing Management of Subong Tea Estate(a).
this Court laid down the following propositions: (1) that the management can retrench its employees only for proper reasons, which means that it must not be actuated by any motive of victimisation or any unfair labour practice, (2) that it is for the management to decide the strength of its labour force, for the number of workmen required to carry out efficiently the work in his industrial undertaking must always be left to be determined by the management in its discretion, (3) if the number of employees exceeded the reasonable and legitimate needs of the undertaking it is open to the management to retrench them, (4) workmen may become surplus on the ground of rationalisation or economy reasonably or bona fide adopted by the management or on the ground of other industrial or trade reasons, and (5) the right to affect retrenchment cannot normally be challenged but when there is a dispute about the validity of retrenchment the impugned retrenchment must be shown as 'justified on proper reasons, i.e., that ' it was not capricious or without rhyme or reason.
(1) [1968] 1: S.C R., 300., (2) [1964] 5 S.C.R. 602.
987 Since this is an appeal arising from a writ petition for certiorari we also would not interfere with the conclusions arrived at by the Tribunal except on grounds on which the High Court could have done.
Mr. Gupte 's contention was that the findings of the Tribunal were beyond its jurisdiction, that they were unwarranted by evidence on record and were based either on wrong assumptions or mere conjectures without any foundation in the evidence, and therefore, this is a fit case for our interference.
It is not in dispute that the company gave up 11 out of its 21 agencies in Calcutta, that is, more than half of its agency business was given up during the years 1960 and 1961.
There was clear and unchallenged evidence that certain agencies were likewise given up in other places including Madras.
The manager gave evidence that this was done in pursuance of the policy decision taken by the company to reorganise its business by concentrating more on its manufacturing side than its agency business as the company found the agency business unprofitable on account of import restrictions and other reasons.
The Tribunal, however, rejected this evidence on the ground that the policy decision being the function of the Board of Directors, the manager was not competent to depose about it and that if the company wanted to establish it it should have produced a resolution of the Board and on that ground held that the company had failed to prove the said policy.
In the first place we fail wholly to appreciate the Tribunal 's view that the said policy could not be proved through the manager.
In the second place, in the very first letter of the union to the Deputy Labour Commissioner, as also during the conciliation proceedings, it was assumed that the company had taken such a decision, that consequently retrenchment was apprehended and that therefore that officer should intervene.
In these circumstances, the finding that the company had failed to establish its policy was not only beyond the scope of the enquiry before the Tribunal but totally invalid.
As held in J.K. Iron and Steel Co. vs Iron and Steel Mazdoor Union(x) the Tribunal had to confine itself to the pleadings and the issues arising therefrom and it was, therefore, not open to it to fly off at the tangent disregarding the pleadings and reach any conclusions that it thought as just and proper.
It is well established that it is within the managerial discretion of an employer to organise and arrange his business in the manner he considers best.
So long as that is done bona fide it is not competent of a tribunal to question its propriety.
If a scheme for such reorganisation results in surplusage of employees no employer is expected to carry the burden of such economic dead weight and retrenchment has to be accepted as inevitable, however unfortunate it is.
The Legislature realised this position and therefore provided by sec.
25F compensation to soften the blow (1)[1956] 988 of hardship resulting from an employee being thrown out of employment through no fault of his.
It is not the function of the Tribunal, therefore, to go into the question whether such a scheme is profitable or not and whether it should have been adopted by the employer.
In the instant case, the Tribunal examined the propriety of reorganisation and held that the company had not proved to its satisfaction that it was profitable.
The Tribunal then held (a) that the scheme was ' not reasonable inasmuch as the number of agencies given up in Madras was less than that in Calcutta, (b) that though development of manufacturing activity was taken up in Madras, no such activity was undertaken in Kidderpore, and (c) that the company should have developed its manufacturing activity in Kidderpore simultaneously with the surrender of the agencies.
It is obvious that while reorganising its business it is not incumbent on the company to develop its manufacturing side at the very place where it has surrendered its agencies, namely, Calcutta, nor to do so at the very same time.
These considerations which the Tribunal took into account were totally extraneous to the issue before it and the Tribunal ought not to have allowed its mind to be influenced by such considerations and thereby disabling itself from viewing the issue from proper perspective.
It was also beyond its competence to go.
into the question of propriety of the company 's decision to reorganise its business.
Having come to the conclusion that the said policy was not actuated by any motive of victimisation or unfair labour practice and therefore was bona fide, any consideration as to its reasonableness or propriety was clearly extraneous.
Therefore, its finding that the company had failed to establish that it was profitable was incompetent.
It is for the employer to decide whether a particular policy in running his business will be profitable, economic or convenient and we know of no provision in the industrial law which confers any power on the tribunal to inquire into such a decision so long as it is not actuated by any consideration for victimisation or any such unfair labour practice.
The finding that the policy decision was actuated by parochial considerations, namely, for transferring the company 's resources from Calcutta to Madras at the cost of the former, was without evidence and was entirely speculative.
Even assuming that the company had decided to concentrate its activity in Madras there is nothing in the industrial law to compel it to continue its business in Calcutta.
As regards the Tribunal 's finding that there was no surplusage in spite of the company having given up more than half of its agencies, the manager produced the statement, exhibit G, showing 'that on his calculations there would be a surplusage of 66 employees.
The Tribunal rejected the case of surplusage on the grounds that though 4 agencies were given up 989 in Calcutta in 1960 the company had during that year engaged 17 temporary employees, that there was overload of work on the remaining employees after retrenchment and that retrenchment could have been avoided by transferring the retrenched employees to other branches especially as their conditions of service included the liability of being transferred.
It is true that no retrenchment was carried out in 1960 and there was evidence of the union 's secretary that work had accumulated when he gave his evidence in January 1962.
These facts, however, would not by themselves mean that there was no surplusage and that retrenchment was unjustified.
As laid down in Workmen of Subong Tea Estate(x), it is for the management to decide the strength of its labour force to carry out efficiently the working of its undertaking.
If, as a result of reorganisation, the number of its existing employees exceeded the reasonable and legitimate needs of the undertaking the management, subject to its obligation to pay compensation, can effect retrenchment.
So long as retrenchment carried out is bona fide and not vitiated by any consideration for victimisation or unfair labour practice and the employer comes to the conclusion that he can carry on his undertaking with reasonable efficiency with the number of employees retained by him after retrenchment, the Tribunal ought not ordinarily to interfere with such decision.
, The fact that in 1960 17 temporary appointments were made or that the union 's secretary deposed that work had accumulated would not mean that the surplusage calculated by the manager was unjustified.
Accumulation of work at a given point of time, unless it is constant, may be seasonal or due to various reasons and not necessarily because there was no surplusage.
The management had worked out the surplusage which would occur in consequence of their giving up the agency business.
Barring the bare statement of the union secretary that work had accumulated and that employees were doing overtime work there was no rival data available to the Tribunal to come to the startling conclusion that there would be no surplusage at all even though a little more than half of the agency business was given up.
Such a conclusion could be arrived at only on the assumption that the accumulation of work was permanent, which assumption could not follow from the evidence.
As regards the company 's refusal to transfer the retrenched employees, the Tribunal 's finding was clearly against law.
The liability of an employee to be transferred and the right of the company to transfer him did ,not mean that there was a corresponding obligation on the company to transfer the employee to another branch.
No evidence was led by the union to show that if transferred, these workmen could have been absorbed at other places, either because there were vacancies or that the work there (1) ; 990 was the same as was done by them at Calcutta.
There was equally no evidence whether wage scales, dearness allowance and other conditions of service were the same in Madras and other centres.
It is true that the company had started developing its manufacturing business in Madras but the Tribunal made no enquiry whether these employees could have been fitted in the manufacturing work when they had done only administrative and other duties connected with the agency business, yet, the Tribunal drew the conclusion that because the company failed to transfer these employees to other centres retrenchment was not justified.
Equally the Tribunal 's decision on rule 77 was contrary to its provisions.
The rule by sub cl. 1 provides that when an employer finds it necessary to retrench any workman he shall at least one month before the date of actual retrenchment give notice thereof to the Labour Commissioner and to the Conciliation 'Officer.
The proviso to it states that where an employer retrenches any workman with immediate effect by paying him wages in lieu of notice he shall immediately after such retrenchment give notice thereof to the said officers.
Obviously, sub cl. 1 did not apply to the facts of this case.
It is true that the notice was given two days before the actual retrenchment and was not given "immediately".
But the Tribunal could not conclude that since the notice was not given immediately after retrenchment the proviso did not apply, and therefore, it would be sub cl. 1 which would be applicable and since one month 's notice was not given the retrenchment was invalid.
In our view such a conclusion was not only incorrect but contrary to the very object of the rule.
We are in agreement with the learned Single Judge that though the notice was not given immediately after the retrenchment but two days before it, the company had substantially complied with the requirements of the proviso.
The object of the proviso clearly is that where it is not possible, for an employer to give one month 's notice to the two authorities concerned by reason of his retrenching the employees with immediate effect, information should be supplied to the two officers immediately after such retrenchment.
H instead of giving such information after the retrenchment it is given two days before the retrenchment takes place it is hardly possible to say that the requirement of the proviso was not carried out.
So long as the object underlying the proviso was satisfied it did not make any difference that information was given a little earlier than the date when retrenchment took place.
We have no doubt in our mind that some of the findings arrived at by the Tribunal and which influenced its verdict were beyond its competence.
The rest were either speculative or contrary to the evidence on record and were consequently liable to 991 be set aside in a writ petition for.
certiorari.
The Division Bench of the High Court, therefore, was not correct in its view that the learned Single Judge could not interfere with those findings or that such findings did not fall under one or the other recognized grounds justifying the High Court 's interference.
In the result we allow the appeal, set aside the order passed by the Division Bench and restore the order passed by the learned Single Judge including his order of remand to the Tribunal to prepare a list of 52 persons liable to be retrenched in accordance with the principle of "last come first go".
In the circumstances of the case we do not make any order as to costs.
Appeal allowed.
L6Sup.
| IN-Abs | In pursuance of its policy of reorganising its business by concentrating more on manufacturing side than agency business, the appellant company gave up more than half of its agencies in Calcutta and some agencies in other places including Madras.
The Union representing the workmen wrote to the Labour Commissioner to intervene stating that due to the company 's said policy it feared retrenchment.
The company served notices on some of the employees for retrenchment to take effect two days thereafter.
Also notice was given to the Labour Commissioner and the Conciliation Officer as required under section 25F (c) of the Industrial Disputes Act.
On reference of the dispute to the Industrial Tribunal, the company justified the retrenchment and the Manager of the Calcutta branch gave evidence that retrenchment was done in pursuance of the said policy decision taken by the company.
The Tribunal held that a good case for retrenchment was not made out and ordered reinstatement.
The Tribunal did not accept the manager 's evidence holding that the development on the manufacturing side of the company 's business should have been contemporaneous with the surrender of agencies in Calcutta.
The Tribunal also held that the policy decision was actuated by parochial considerations for transferring the company 's resources from Calcutta to Madras, that there was overload of work on the remaining employees; that the retrenchment could have been avoided by transferring the retrenched employees to other branches specially as their conditions of service included the liability of being transferred; and that the retrenchment was in breach of a. 25F(c) as the notice of retrenchment was two days prior to the date of the retrenchment and not with immediate effect, the proviso to r. 77(1) of the West Bengal/ndustrial Disputes Rules, 1958, did not apply and a notice of one month, as required by sub el.
(1) of that rule, was necessary.
The company filed a petition for a writ of certiorari.
The Single Judge of the High Court set aside the. award and remanded the case to the Tribunal only for enforcing the retrenchment according to the principle of "last come first go".
The Division Bench of the High Court in appeal, agreed with the findings of the Tribunal and held that the Single Judge was not competent to interfere with those findings.
In appeal this Court, HELD: Some of the findings arrived at by the Tribunal and which influenced its verdict were beyond its competence.
The rest were either speculative or contrary to the evidence on record and were consequently liable to be set aside in a writ petition for certiorari.
(i) A writ of certiorari is generally granted when a court has acted without or in excess of its jurisdiction.
It is available, in those cases 977 where a tribunal though competent to enter upon an enquiry, acts in flagrant disregard of the rules of procedure 0r violates the principles of natural justice where no particular procedure is prescribed.
But a mere wrong decision cannot be corrected by a writ of certiorari as float would be using it as the cloak of an appeal in disguise but a manifest error apparent on the face of the proceedings based on a clear ignorance or disregard of the provisions of law or absence of or excess of jurisdiction, when shown, can be so corrected.
[985] Basappa vs Nagappa, ; , Dharangadhara Chemical Works Ltd. vs State of Saurashtra, [1957] S.C.R. 152 and Andhra Pradesh & Ors.
vs Sree Ram Rao, ; , followed.
(ii) The Tribunal wrongly rejected the company 's evidence on the ground that the policy decision being the function of the Board of Directors, the Manager was not competent to depose about it and that if the company, wanted to establish it, it should have produced a resolution of the Board.
In its letter to the Labour Commissioner and also during conciliation proceedings the union had assumed that the company had taken the said decision, that consequently, retrenchment was apprehended and that therefore that officer should intervene.
In these circumstances, the finding that the company had failed to establish its policy was not only beyond the scope of the enquiry before the Tribunal but totally invalid.
[987 D F] 1.
K. Iron and Steel Co. vs Iron and Steel Mazdoor Union, , followed.
(iii) It is within the managerial discretion of an employer to organise and arrange his business in the manner he considers best.
So long as that is done bona fide it is not competent for a tribunal to question its propriety.
If a scheme for such reorganisation results in surplusage of employees, no employer is expected to carry the burden of such economic tribuanaldead weight and retrenchment has to be accepted as inevitable.
however unfortunate it is.
The Legislature therefore, provided by section 25F compensation to soften the blow of hardship resulting from 'an employee being thrown out of employment through no fault of his.
The Tribunal having come to the conclusion that the said policy was not actuated by any motive of victimisation or unfair labour practice and therefore was bona fide, any consideration as to its reasonableness or propriety was clearly extraneous.
It is not the function of the Tribunal, to go into the question whether such 'a scheme is profitable or not and whether it should have been adopted by the employer.
So long as retrenchment carried out is bona fide and not vitiated by any consideration for victimisation or unfair labour practice and the employer comes to the 'conclusion that he can carry on his undertaking with reasonable efficiency with the number of employees retained by him after retrenchment, the Tribunal ought not ordinarily to interfere with such decision.
The fact that in the earlier year some temporary appointments were made or that the Union 's Secretary deposed that work had accumulated would not mean that the surplus age calculated by the manager was unjustified.
Accumulation of work at a given point of time, unless it is constant, may be seasonal or due to various reasons and not necessarily because there Was no surplusage.
[987 G, 989 D F] (iv) While reorganising its business, it is not incumbent on a company to develop its manufacturing side at the very place where it has surrendered its agencies, namely, Calcutta, nor to do so at the very same time.
These considerations which the Tribunal took into account were 978 totally extraneous to the issue beore it and the Tribunal ought not to have allowed its mind to be influenced by such consideration and thereby disabling itself from viewing the issue from proper perspective.
The finding that the policy decision was actuated by parochial considerations, namely, for transferring the company 's resources from Calcutta to Madras at the cost of the former, was without evidence and was entirely speculative.
Even assuming that the company decided to concentrate its activity in Madras there is nothing in the Industrial Law to compel it to continue its business in Calcutta.
[988 D, G] D. Marcropollo & Co. vs Their Employees Union , Ghatge & Patil Concern 's Employee 's Union vs Ghatge & Patil (Transport) (P) Ltd. [1968] 1 S.C.R. 300, and Workmen of Subong Tea Estate vs The Outgoing Management of Subong Tea Estate, ; , followed.
(v) The liability of an employee to be transferred and the right of the company to transfer him did not mean that there was a corresponding obligation on the company to transfer the employee to another branch.
No evidence was led by the Union to show that if transferred, these men could have been absorbed at other places, or that there were vacancies or that the work there was the same as was done by them at Calcutta.
There was no evidence whether wage scales, dearness allowance and other conditions of service were the same in Madras and other centres.
It is true that the company had started developing its manufacturing business in Madras but the Tribunal made_ no enquiry whether these employees could have been fitted in the manufacturing work when they had done only administrative and 'other duties connected with the agency business, yet the Tribunal drew the conclusion that because the company failed to transfer these employees to other centres retrenchment was not justified.
[989 G 990 A] (vi) Rule 77(1) of the West Bengal Industrial Disputes Rules, provides that when an employer finds it necessary to retrench any workmen he shall, at least _one month before the date of actual retrenchment, give notice thereof to the Labour Commissioner and the Conciliation Officer.
The proviso to it states that where an employer retrenches any workman with immediate effect by paying him wages in lieu of notice he shall immediately after such retrenchment give notice thereof to the said officers.
Though the notice of retrenchment was not given immediately after the retrenchment but two days before it, the company had substantially complied with the requirements of the proviso to r. 77(1).
The object of the proviso clearly is that where it is not possible for an employer to give one months notice to the two authorities concerned by reason of his retrenching the employees with immediate effect, information should be supplied to the two officers immediately after such retrenchment.
instead of giving such information after the retrenchment it is given two days before the retrenchment takes place it is hardly possible to say that the requirement of the proviso was not carried out.
So long as the object underlying the proviso was satisfied it did not make any difference that information was given a little earlier than the date when retrenchment took place.
[990 C]
|
Appeal No. 441 of 1965.
Appeal from the judgment and decree dated September 19, 1958 of the Mysore High Court in Regular Appeals Nos. 154 and 196 of 1952 53.
section Govind Rao and K. Rajendra Chaudhuri, for the appellants.
C.B. Aggarwala and R. Gopalakrishnan, for the respondents. 1084 The Judgment of the Court was delivered by Bhargava, J.
One Khanmull, whose legal representatives are the appellants in the present appeal, instituted Original Suit No. 59 of 1949 50 on 10th January, 1950 for recovery of amounts due to him on the basis of two simple mortgages dated 12th January, 1937 and 14th June, 1937 in the Court of the District Judge, Civil Station, Bangalore.
Both these mortgages were executed by three brothers, Ahmed Saleh Mohamed Sait (since deceased), Elias Saleh Mohamed Sait (respondent No. 1), and Mohamed Saleh Mohamed Sait (respondent No. 2), while their mother Rahamatbai alias Bhayabai joined them in the execution of the mortgagedeed of 14th June, 1937.
In the suit, in addition to respondents 1 and 2, Hajirabai widow of the deceased brother Ahmed Saleh Mohamed Sait, and their sisters, Ameenabai and Haneefabai, were also impleaded as defendants 3, 4 and 5.
Further, Khan Saheb Abdul Gani Saheb, and Khan Saheb Abdul Shakoor Saheb were impleaded as defendants 6 and 7 in their capacity of purchasers of the equity of redemption from the mortgagors.
On the foot of the first mortgage, the amount claimed was Rs. 51,200/ as principal and interest, while, on the foot of the second mortgage, the amount claimed as principal and interest was Rs. 60,200/ .
The contractual rate of interest was 1 per cent per mensem.
The trial court decreed the suit on 27th March, 1952, after applying the provisions of section 17 of the Mysore Money Lenders Act No. 13 of 1939 (hereinafter referred to as "the Act").
For the purpose of giving effect to.the provisions of section 17 of the Act, the trial court held that the principal amount of the two loans was Rs. 44,000/ , being the aggregate of the consideration shown in the two mortgage deeds, and, consequently, allowed as arrears of interest the sum of Rs. 44,000/ .
The preliminary decree was, therefore, granted for a sum of Rs. 88,000/ composed of Rs. 44,000/ as principal and Rs. 44,000/ as interest.
The excess interest claimed at the contractual rate of 1 per cent per mensem was disallowed on the ground of the maximum limit for the grant of the total amount of interest laid down in section 17 of the Act.
Thereupon, both the parties filed appeals in the High Court of Mysore.
The High Court held that the trial court had wrongly treated the amounts of Rs. 20,000/ and Rs. 24,000/ as the principal amounts of the original loans; and recorded a finding that the principal amounts, in fact, were Rs. 15,017 8 0 in respect of the first mortgage deed, 'and Rs. 22,954/ in respect of the second mortgage deed.
The High Court, thus, worked out the aggregate of Rs. 37,971/50P as the principal amount of the two loans advanced under these two mortgage deeds and, applying section 17 of the Act, granted a decree for this amount as principal together with the same amount as interest.
The High Court further held 1085 that this would be the arrears of interest to which the appellants would be entitled up to the date fixed for payment of the redemption money by the judgment of the High Court, that date being the 19th March, 1959.
The High Court also made a direction that the principal amount will carry interest at 6% per annum from the date fixed for redemption till realisation.
The appellants have now come up against this decree passed by the High Court by certificate granted by that Court.
In this appeal, Mr. Govinda Rao, learned counsel for the.
appellants, raised only two points.
The first point urged was that the High Court was wrong in re opening the accounts in respect of loans prior to.
the two mortgage deeds which formed the consideration for the two mortgage deeds in suit, and that the.
High Court should have held that the principal amount was Rs. 44,000/ for the two mortgages as decided by the trial Court.
The second point urged by learned counsel was that the High Court was wrong in fixing the dates up to which the arrears of interest could be calculated for being included in the decree and for prescribing future rates of interest.
It was urged that the arrears of interest envisaged by section 17 of the Act should be interpreted to mean arrears only up to the date of the institution of the. suit.
and the High Court should have granted future interest subsequently instead of granting future interest only with effect from the date fixed for redemption.
So far as the first point raised by learned counsel is concerned, it appears to us that it is totally misconceived, because the language of section 17 of the Act plainly justifies the view taken by the.
High Court.
Section 17, in prescribing the maximum amount of arrears of interest to be allowed, refers to "the principal of the original loan" and not "the principal of the loan".
If the latter expression had been used, it could have been argued in the present case that the sums of Rs. 20,000/ and Rs. 24 '000/which purported to be the principal amounts of the two loans evidenced by the two mortgage deeds in suit, were the principal amounts of the loans to be taken into account in working out the maximum amount of interest permissible under section 17 of the Act.
The expression "the principal of the original loan" makes it clear that, in determining the maximum amount of arrears of interest allowable, the Court must go behind the transaction of the loan and find out what was the actual cash originally advanced as principal and ignore all interest that may have been added subsequently to that original advance in order to make up the consideration for the loans in suit.
In the present case, therefore, the High Court was justified in looking at the transactions prior to the two mortgage deeds to find out what were the actual cash amounts origi 1086 nally advanced which, together with interest and after adjustment of accounts, formed the principal amounts for the two mortgagedeeds.
It was admitted by counsel for both parties before us that the figures accepted by the High Court as the principal amounts of the two loans are correct, if the original cash advances are treated as the principal amounts of the original loans.
It is, therefore, clear that, on the plain language of section 17 of the Act, the High Court was right in holding that the aggregate of the principal amounts of the original loans was only Rs. 37,971/50 P and.
not Rs. 44,000/ and, consequently, in awarding arrears of interest only to the extent of the same amount and not a larger amount.
On the second question, we are unable to agree with the view of the High Court that the arrears of interest mentioned in section 17 of the Act mean interest calculated up to the date fixed for redemption.
At the same time, we are also unable to accept the submission made on behalf 'of the appellants that the arrears of interest in this section mean arrears of interest up to the date of the suit.
It is to be noticed that the section is in the form of a directive to a Court not to pass a decree on account of arrears of interest for a sum greater than the principal of the original loan.
This language clearly gives an indication of the intention of the Legislature.
Obviously, the directive is to be carried out by the court at the time of passing the decree and, consequently, it would be at that time that the court will see how much it is awarding for arrears of interest.
The maximum prescribed for the arrears of interest must, therefore, be held to be the maximum amount in respect of interest payable up to the date of the decree when the court carries out the directire laid down in this section.
In the present case, the trial Court passed the decree on the 27th March, 1952 and, consequently, the amount of Rs. 37,971/50 P awarded as arrears of interest must be the arrears of interest due up to that date.
The High Court, in our opinion, was not correct in holding that these arrears of interest will cover interest due up the date fixed for redemption by the High Court.
In this connection, learned counsel for the respondents urged that the arrears of interest envisaged by section 17.
of the Act should be held to include interest due up to the date of the decree by the High Court, because that is the effective decree granting interest to the mortgagees; but this arguments overlooks the principie of law that the decree of an appellate Court takes effect from the date of the decree of the original court.
In this case, therefore, even though the High Court passed the appellate decree at a later date, that decree has to.
be deemed to have come into 1087 effect from 27th March, 1952 which was the date of the decree of the trial Court, so that no question can arise of holding that the arrears of interest under section 17 of the Act must be computed up to the date on which the High Court passed the decree.
The further point that arose was as to the interest which the appellants could claim after the date of the decree, viz. 27th March, 1952, on the amount decreed.
On behalf of the appellants, reliance was placed on Order 34, r. 11 of the Code of Civil Procedure and it was urged that interest.
should be allowed after that date in accordance with the provisions of that rule.
The High Court has expressed the opinion that, if interest is allowed under r. 11 of Order 34, C.P.C., it would be in conflict with section 17 of the Act; but we are unable to see any such conflict.
Section 17 of the Act confines itself to laying down the maximum of arrears of interest to be allowed up to the date of the decree and is not concerned with the interest that is to be allowed for the period thereafter.
Admittedly, the Code of Civil Procedure was applicable to this suit and, consequently, interest subsequent to the date of the decree had to be awarded in accordance with Order 34, r. 11, C.P.C.
Under r. 11(a)(i), interest would be payable on the principal amount found or declared due on the mortgage, from the date of the decree up to the date fixed for payment, at the rate payable on the principal, or, where no such rate is fixed, at such rate as the Court may deem reasonable.
In this case, the date of the decree by the trial Court was 27th March, 1952, while the date fixed for payment became 19th March, 1959 as a result of the decree of the High Court.
The interest for this period has to be calculated in accordance with r. 11(a)(i) of Order 34, C.P.C., on the principal amount of Rs. 37,971/50 P. As regards the rate, it is true that, under the mortgage deeds, the interest was payable @ 1% per mensem but, under the provisions of the Act read with the provisions of the Usurious Loans Act (Mysore Act IX of 1923), the fair interest payable on the loan would be @ 9 per cent per annum and it is at this rate that the interest must be calculated on this principal amount for this period.
In addition, under r. 11(a)(ii) of 0.34, C.P.C., interest @ 6% per annum has to be allowed on the amount decreed for costs, charges and expenses incurred by the appellants up to the date of the preliminary decree.
A further direction that is necessary is that interest under r. 11 (b) of 0.34.
C.P.C., will be payable up to the date of realisation or actual payment on the aggregate of the two principal sums just mentioned @ 6% per annum which must be deemed to be reasonable as interest at that rate is ordinarily awarded in all decrees in respect of future periods.
1088 The result is that the decree passed by the High Court will have to be amended in respect of calculation of interest in the manner indicated by us above.
The appeal is partly_ allowed to this extent.
In the circumstances of this case, we direct parties to bear their own costs of this appeal.
G.C. Appeal partly allowed.
| IN-Abs | The predecessor in interest of the appellants filed a suit under two mortgages claiming as principal and interest in respect of the first mortgage a sum of Rs. 51,200 and in respect of the second mortgage a sum of Rs. 60,200.
The trial court applying section 17 of the Mysore Money Lenders Act, 1939 held that the principal amount of the loan in the case of the first mortgage.
deed was the consideration shown therein, namely Rs. 20,000, and similarly the principal amount under the second mortgage was Rs. 24,000.
Accordingly the trial court passed a decree for the amount of Rs. 44,000 towards principal under the two mortgages and an equal amount as laid down in the aforesaid section 17, towards interest.
The High Court in appeal held that the principal amount of the original loan was Rs. 15,017 8 0 in respect of the first mortgage and Rs. 22,954 in respect of the second mortgage the aggregate being Rs. 37,971.50 Np.
The High Court therefore passed a decree for Rs. 37,971.50 Np.
as principal and the same amount as interest.
The High Court further held that this would be the arrears of interest to which the appellants would be entitled up to the date fixed for payment of the redemption money by its judgment.
The High COurt also made a direction that the principal amount would carry interest at 6% per annum from the date fixed for redemption till realisation.
The appellant in appeal to this Court by certificate urged: (i) that the High Court was wrong in reopening the accounts in respect of loans prior to the two mortgage deeds which 'formed the consideration for the two mortgage deeds in suit and it should have held, like the trial court, that the principal amount was Rs. 44,000 for the mortgages; (ii) that the arrears of interest under section 17 of the Act should be interpreted to mean arrears only up to the date of the institution of the suit, and the High Court should have granted future interest subsequently instead of granting it only with effect from the date fixed for redemption.
The Court also had to consider whether there was a conflict 'between O. 34 r. 11 of the Code of Civil Procedure and section 17 of the Act.
HELD: (i) Section 17, in prescribing the maximum amount of arrears of interest to be allowed, refers to "the principal of the original loan" and not "the principal of the loan".
If the latter expression had been used, it could have been argued in the present case that the sums of Rs. 20,000 and Rs. 24,000 which purported to be the principal amounts of the two loans evidenced by the two mortgage deeds in suit, were the principal amounts of the loans to be taken into account in 1083 working out the maximum amount of interest permissible under section 17 of the Act.
The expression "the principal of the original loan" makes it clear that, in determining the amount of arrears of interest allowable, the court must go behind the transaction of the loan and found out what was the actual cash originally advanced as principal and ignore all the interest that may have been added subsequently to that original advance in order to make up the consideration for the loans in suit.
In the present case therefore the High Court was justified in looking at the transactions prior to the two mortgage deeds to find out what were the actual cash amounts originally advanced which, together with interest and after adjustment of accounts formed the principal amounts for the two mortgage deeds.
(ii) Section 17 is in the form of a directive to a Court not to pass a decree on account of arrears of interest for a sum greater than the principal of the original loan.
Obviously, the directive is to be carried out by the court at the time of passing the decree and, consequently, it would be at that time that the court will see how much it is awarding for arrears of interest.
The maximum prescribed for the arrears of interest must, therefore be held to be the maximum amount in respect of interest payable up to the date of the decree when the court carries out the directive laid down in this section.
The decree of an appellate court takes effect _from the date of the decree of the original court, so that no question can arise of holding that the arrears of interest under section 17 of the Act must be computed up to the date on which the High Court passed the decree.
(iii) There is no conflict between O '.
34 r. 11 C.P.C. and section 17 of the Act.
Section 17 confines itself to laying down the maximum of arrears of interest to be allowed up to the date of the decree and is not concerned with the interest that is to be allowed for the period thereafter.
Admittedly the Code of Civil Procedure was applicable to the present suit and consequently interest subsequent to the date of the decree had to be awarded in accordance with O. 34 r. 11 C.P.C.
The interest under the mortgage deeds was payable @ 1% per mensem but under the provisions of the Act read with the provisions of the Usurious Loans Act (Mys.
Act ix of 1923) the fair interest payable on the loan would be @ 9 ' per cent per annum.
[The Court gave appropriate directions for the calculation of interest.]
|
Appeal No. 1577 of 1966.
Appeal from the judgment and order dated March 25, 1964 of the Madhya Pradesh High Court in Misc.
Petition No. 31 of 1963.
, I. N. Shroff 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 and the High Court of Madhya Pradesh and 1053 raises the question of the scope of jurisdiction of the Authority under the , 4 of 1936 (hereinafter referred to as the Act.) On the licence of the Barnagar Electric Supply and Industrial Company, of which respondent 1 was at all material times 'the managing director, having been revoked by the Madhya Pradesh Government and the company 's undertaking having been taken over by the Madhya Pradesh Electricity Board, respondent 1 served notices on the company 's employees that their services would no longer be required,as from October 1, 1962.
Thereupon the appellant on behalf of 20 employees of the company filed an application under sec.
15(2) of the Act to recover from respondent 1 wages for the notice month and retrenchment compensation mounting to Rs. 12,853.60P. payable to the employees under sec.
25FF of the .
On respondent 1 contesting the claim as also the jurisdiction of the Authority, the Authority raised certain preliminary.
issues, namely: (1) whether the said application was maintainable in view of the revocation of the company 's licence, (2) whether the Authority had jurisdiction to determine the liability of respondent 1 for retrenchment compensation before the amount thereof was ascertained under sec.
33C(2) of the and (3) whether in view of the services of the workmen not having been interrupted by the said transfer and the terms and conditions of service applicable to them after the said transfer being not in any way less favourable than ' before and the said Board as the new employer being liable after the transfer for compensation in the event of retrenchment, the employees were entitled to claim any compensation.
By his order dated May 21, 1963 the Authority held against respondent 1 on the question of jurisdiction.
Respondent 1 thereupon filed a writ petition in the High Court and Division Bench of the High Court held that sec.
15 of the Act did not apply and that the proper forum for such an application was a Labour Court under sec.
33C(2) of the .
This appeal challenges the correctness of this order.
Mr. Shroff for the appellant contended that after the amendment of the definition of 'wages ' in the Act by Act 68 of 1957 and the amended definition having now included "any sum which by reason of the termination of employment of the person employed is payable under any law,.
contract or instrument which provides for payment of such sum whether with or without deductions but does not provide for the time within which the payment is to be made" as wages, there could be no doubt that the legislature has conferred jurisdiction ' on the Authority under the Act to determine compensation payable under sec.
25FF of the in an application under sec.
15(2) of the Act and that therefore the High Court Was in error in quashing the order :passed by the Authority.
Mr, Chagla appearing for the 1054 Respondents 1 and 2 in ,the next appeal,on the other hand, contended (1 ) that the Authority under the Act was a special Authority with limited jurisdiction, that it has to deal only with the subject matters specified in the Act and its jurisdiction must therefore be strictly construed, and (2) that the Act and the deal with different subjects, provide different tribunals with different jurisdictions and therefore it is not possible to hold that Parliament which enacted both the Acts could possibly have contemplated that claim arising under the should be determined by a tribunal set up under a different Act.
On these contentions the first question ' which arises for determination is whether compensation payable under sec.
25FF of the can fall under the amended definition in sec.
2(vi)(d) of the Act and can be Called 'wages '.
The High Court.
thought that it was not but Mr. Shroff relied on certain decisions of ' this Court to contest that part of the conclusion of the High Court.
The , which as enacted in 1947, was a piece of 'legislation which mainly 'provided machinery for investigation and settlement of industrial` disputes, has since then undergone frequent modifications.
In 1953, by Act 43of that year Chapter VA consisting of secs.
25A to 25J was incorporated providing therein compensation for lay off and retrenchment.
It also provided a definition of retrenchment in sec.
2(00).
Chapter VA, as it then stood, did not expressly provide for compensation for termination of service on account of transfer of an undertaking by an agreement or as a result of operation of law or the closure of the undertaking.
Consequently, in Hariprasad vs Divikar(1) this Court held that retrenchment as defined in sec.
2(00) and the word 'retrenched ' in sec, 25F meant discharge of surplus labour or staff by the employer for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action and did not include termination of services of all workmen on a bona fide closure of an undertaking or on a change of ownership or management thereof.
This decision was followed first by an ordinance and then by Act 18 of 1957 incorporating in the Act the present sections 25FF and 25FFF.
It will he noticed that both these sections use the words " 'as 'if the workman had been retrenched".
The intention of the legislature was, therefore, clear that it did not wish to place transfer and closure 'on the same footing as retrenchment under sec.
25F. This is apparent also from the fact that it left the definition of retrenchment in sec, 2(00) untouched in spite of the decision in Hariprasad 's case(1).
The three sections, sections 25F, 25FF and 25FFF 'also ;show ' that while under sec.
25F.no retrenchment Can be made until Conditions therein set out are Carried.
out the other two sections do ' not lay down any such conditions.
All the ,three sections however, (1)[1957] S.C.R. 121.
1055 involve termination of service whether it results in consequence of retrenchment or transfer or closure, and notice and compensation in both sections 25FF and 25FFF have been provided for "in accordance with the provisions of sec.
(see M/s Harisingh Mfg. Co. Ltd. vs Union of India(1) and Anakapalla Co operative Agricultural and Industrial Society Ltd. vs Workmen(2).
That being the position a workman whose service is terminated in consequence of a transfer of an undertaking, whether by agreement or by operation of law, has a statutory right under sec.
25FF to compensation unless such right is defeated under the proviso to that section.
The same is the position in the case of closure under sec.
25FFF.
Such compensation would be wages as defined by sec.
2(vi)(d) of the Act as it is a "sum which by reason of the termination of employment of the person employed, is payable under any law . which provides for the payment of such sum whether with or without deductions but does not provide for the time within which the payment is to be made.
" Since sections 25FF and 25FFF do not contain any conditions precedent, as in the case of retrenchment under sec.
25F, and transfer and closure can validly take place without notice or payment of a month 's wages in lieu thereof or payment of compensation, sec.
25FF can be said not to have provided any time within which such compensation is to be paid.
It is well established that the words "in accordance with the provisions of sec.
25F" in sections 25FF and 25FFF are used only as a measure of compensation and are not used for laying down any time within which the employer must pay the compensation.
It would, therefore, appear that compensation payable under sections 25FF and 25FFF read with sec.
25F would be 'wages ' within the meaning of sec.
2(vi)(d) of the Act.
It must, however, be remembered that though such compensation falls within the definition of wages, cases may arise where it would not be a simple question of recovery of wages.
In the present case, for instance, the defence taken by respondent 1 was that he was not the person responsible for payment of compensation and that the right of the workmen was defeated by reason of the proviso to sec.
25FF being, according to him, applicable inasmuch as these workmen were continued in the employment by the said Board, the new employer, that therefore there had been no interruption in their employment, that the terms and conditions of service given to them by the new employer were in no way less favourable than those they.
had when the company was the employer, and that the new employer was responsible for payment of compensation if any retrenchment took place in future.
The question, therefore, is whether in view of the limited jurisdiction of the Authority under see.
15(2) of the Act, it was intended to deal with such questions, which in some cases might well raise complicated problems of both fact and law.
(1) ; (2) [1963] Supp.
(1) S.C.R. 730.
L 6Sup CI/69 16 1056 While considering the scope of jurisdiction of the Authority under sec.
15 of the Act it is relevant to bear in mind the fact that the right to compensation is conferred by the which itself provides a special tribunal for trying cases of individual workmen to whom compensation payable under Ch.
VA has not been paid.
Section 33C of that Act provides both a forum and the procedure for computing both monetary as well as non monetary benefits in terms of money and further provides machinery for recovery of such claims.
In Punjab National Bank Ltd. vs Kharbanda(1) this Court held that while sub sec.
1 of sec.
33C applied to cases where any money was due to a workman from an employer under a settlement, award or under the provisions of Ch.
VA and the amount was already computed or calculated or at any rate there could be no dispute about its calculation or computation, sub sec.
2 applied to benefits including monetary benefits conferred on a workman under an award, settlement etc.
, but which had not been calculated or computed and there was a dispute as to their calculation or computation.
The Court rejected the contention that sub sec.
2 applied only to a non monetary benefit which had to be converted in terms of money.
The Court also observed that sec.
33C was a provision in the nature of execution and where the amount to be executed was worked out or where it might be worked out without any dispute sub sec.
1 would apply, but where such amount due to the workman was not stated or worked out and there was a dispute as to its calculation, sub.sec. 2 would apply and the workman would be entitled to apply thereunder to have the amount computed provided he was entitled to a benefit, whether monetary or non monetary, which was capable of being paid in terms of money.
In the Central Bank of India Ltd. vs Rajagopalan(2) this Court held that where the right of a workman was disputed by his employer the Labour Court could go into the question as to whether he had a right to receive such a benefit.
Sub sec.
3 of sec.
33C under which the Labour Court can appoint a commissioner to take evidence for computing the benefit postulates that it has the jurisdiction to decide whether the workman claiming benefit was entitled to it where such right was disputed by the employer.
In Bombay Gas Co. Ltd. vs Gopal Bhiva(3) this Court held that the Labour Court could in an application under sec.
33C(2) go even into the question whether the award under which the workman had made a claim was a nullity.
Being in the nature of an executing court it could interpret the award and also consider the plea that the award sought to be enforced was a nullity.
It is thus clear that a workman whose claim, monetary or otherwise, is disputed by his employer can lodge such a claim before a specified Labour Court under sec.
33C and obtain an inexpensive and expeditious remedy.
The (1) [1962] Supp. 2 S.C.R. 977.
(2) ; (3) ; 1057 question then is whether for such a claim the legislature intended to provide alternative remedies both under the and the .
For deciding this question it is necessary to refer to some of the provisions of and the scheme of the .
The Act was passed to regulate the payment of wages to certain classes of persons employed in any factory or by a railway administration or by a person fulfilling a contract with a railway administration or in any industrial establishment to which a State Government by notification has extended the Act.
Section 3 lays down as to who shall be responsible for payment of wages.
Section 4 provides for the fixation of wage periods and sec.
5 lays down the time within which payment of wages has to be made.
Sec. 7 provides that wages shall be paid without any deductions except those authorised by the Act and sec.
8 provides that no fine shall be imposed on any employed person save in respect of such acts or omissions on his part as the employer with the previous approval of the State Government or the prescribed authority may have specified by notice.
Sections 9 to 13 lay down the deductions which an employer is authorised to make and the conditions under which such deduction can be made.
Section 13A provides for the maintenance of certain registers and records by the employer and sections 14 and 14A provide for appointment of inspectors under the Act, their powers and the facilities to be afforded by the employer to such inspectors.
Section 15 (1 ) provides for the appointment of a person to be the Authority under the Act to hear and decide for any specified area claims arising out of (a) deduction from wages or (b) delay in payment of wages of persons employed or paid in that area including all matters incidental to such claims.
Sub sec.
2 provides that "Where contrary to the provisions of this Act any deduction has been made from the wages of an employed person, or any payment of wages has been delayed, such person himself, or any legal practitioner or any official of a registered trade union or any inspector under this Act, or any other person acting with the permission of the authority . . may apply to such authority for a direction under sub sec.
" The first proviso to sub sec.
2 lays down a period of limitation of 12 months from the date of deduction or the due date of payment and the second proviso empowers the Authority to admit applications beyond the period of limitation on sufficient cause being shown.
Sub sec.
3 empowers the Authority to direct refund to the employed person of the amount deducted, or the payment of the delayed wages and also empowers it to award compensation specified therein without prejudice to any other penalty to which the employer guilty of unauthorised deduction or delay in payment is liable under the Act.
Under sub sec.
5 of sec.
15 the amount 1058 awarded by the authority can be recovered as if it were a fine imposed by a magistrate.
Section 20 provides for penalty for offences under certain provisions of sections 5, 7, 8, 9, 10 and 11 to 13 extending upto Rs. 500/ .
It is explicit from the terms of sec.
15(2) that the Authority appointed under sub sec.
1 has jurisdiction to entertain applications only in two classes of cases, namely, of deductions and fines not authorised under sections 7 to 13 and of delay in payment of wages beyond the wage periods fixed under sec.
4 and the time of payment laid down in sec.
This is clear from the opening words of sub sec.
2 of sec.
15, namely, "where contrary to the provisions of this Act" any deduction has been made or any payment of wages has been delayed.
These being the governing words in the sub sec.
the only applications which the Authority can entertain are those where deductions unauthorised under the Act are made from wages or there has been delay in payment beyond the wage period and the time of payment of wages fixed or prescribed under sections 4 and 5 of the Act.
Section 15(2) postulates that the wages payable by the person responsible for payment under sec.
3 are certain and such that they cannot be disputed.
In D 'Costa vs
B.C. Patel(1) this Court held after considering the scheme of the Act that the jurisdiction of the Authority under sec.
15 was confined to deductions and delay in payment of the actual wages to which the workman was entitled and that the Authority under the Act had no jurisdiction to enter into a question of potential wages, i.e., where the workman pleads that he ought to have been up graded as persons junior to him were upgraded and that he ought to have been paid wages on a scale paid to those so up graded.
This Court held that the Authority had jurisdiction to interpret the terms of a contract of employment to find out the actual wages payable to the workman where deduction from or delay in payment of such wages is alleged, but not to enter into the question whether the workman should have been up graded from being a daily rated worker to a monthly rated workman.
In Shri Ambica Mills Co. Ltd. vs
S.B. Bhatt(2) this Court again examined the scheme of the Act and held that the only claims which could be entertained by the Authority were claims arising out of deductions or delay made in the payment of wages.
The Court, however, observed that in dealing with claims arising out of deductions or delay made in payment of wages the Authority inevitably would have to consider questions incidental to these matters, but in determining the scope of these incidental matters care must be taken to see that under the guise of deciding incidental matters the limited jurisdiction was not unreasonably or unduly expanded.
Equally, care must also be taken (1) ; (2) [1961] 3 S.C.R. 220. 1059 to see that the scope of these incidental matters was not unduly curtailed so as to affect or impair the limited jurisdiction conferred on the Authority.
The Court declined to lay down any hard and fast rule which would afford a determining test to demarcate the field of incidental facts which could be legitimately considered by the Authority and those which could not be so considered.
It is true, as stated above, that the Authority has the jurisdiction to try matters which are incidental to the claim in question.
Indeed, sec.
15(1) itself provides that the Authority has the power to determine all matters incidental to the claim arising from deduction from or delay in payment of wages.
It is also true that while deciding whether a particular matter is incidental to the claim or not care should be taken neither to unduly expand nor curtail the jurisdiction of the Authority.
But it has at the same time to be kept in mind that the jurisdiction under sec.
15 is a special jurisdiction.
The Authority is conferred with the power to award compensation over and above the liability for penalty of fine which an employer is liable to incur under sec.
The question, therefore, is whether on the footing that compensation payable under sections 25FF and 25FFF of the being wages within the meaning of sec.
2(vi)(d) of the Act, a claim for it on the ground that its payment was delayed by an employer could be entertained under sec.
15(2) of the Act.
In our view it could not be so entertained.
In the first place, the claim made in the instant case is not a simple case of deductions having been unauthorisedly made or payment having been delayed beyond the wage periods and the time of payment fixed under sections 4 and 5 of the Act.
In the second place, in view of the defence taken by Respondent 1, the Authority would inevitably have to enter into questions arising under the proviso to sec.
25FF, viz., whether there was any interruption in the employment of the workmen, whether the conditions of service under the Board were any the less favourable than those under the company and whether the Board, as the new employer, had become liable to pay compensation to the workmen if there was retrenchment in the future.
Such an inquiry.
would necessarily be a prolonged inquiry involving questions of fact and of law.
Besides, the failure to pay compensation on the ground of such a plea cannot be said to be either a deduction which is unauthorised under the Act, nor can it fall under the class of delayed wages as envisaged by sections 4 and 5 of the Act.
It may be that there may conceivably be cases of claims of compensation which are either admitted or which cannot be disputed which by reason of its falling under the definition of wages the Authority may have jurisdiction to try and determine.
But we do not think that a claim for compensation under sec.
25FF which is denied by the employer on the ground that it 1060 was defeated by the proviso to that section, of which all the conditions were fulfilled, is one such claim which can fall within the ambit of sec.
15(2).
When the definition of wages was expanded to include cases of sums payable under a contract, instrument or a law it could not have been intended that such a claim for compensation which is denied on grounds which inevitably would have to be inquired into and which might entail prolonged inquiry into questions of fact as well as law was one which should be summarily determined by the Authority under sec.
Nor could the Authority have been intended to try as matters incidental to such a claim questions arising under the proviso to sec.
In our view it would be the Labour Court in such cases which would be the proper forum which can determine such questions under sec.
33C(2) of the which also possesses power to appoint a commissioner to take evidence where question of facts require detailed evidence.
Mr. Shroff, however, drew our attention to the decision in Uttam Chand vs Kartar Singh(1) a decision of a learned Single Judge of the High Court of Punjab, taking a view contrary to the one which we are inclined to take.
But that decision contains no reasons and is, therefore, hardly of any assistance.
In the result we agree with the High Court that the Authority had no jurisdiction under sec.
15(2) of the Act to try these applications.
The appeal consequently must fail and is dismissed.
But we make no order as to costs.
Appeal dismissed.
| IN-Abs | The State Electricity .
Board revoked the licence of a company and took over the undertaking.
The 1st respondent, who was the director of the company, served notices on the employees that their services would not be required.
Thereupon, the appellant filed an application under section 15(2) of the , on behalf of the employees, for recovering from the it respondent wages for the notice month and retrenchment compensation under section 25FF of the Industrial Disputes Act.
The 1st respondent contested the claim as well as the jurisdiction of the authority under the to deal with the application, on the ground 'that he was not the person responsible for payment of com pensation and that the right of the workmen was defeated by reason of the proviso to section 25FF of the Industrial Disputes Act, because there was no interruption in their employment and the new employer (the Electricity Board) was responsible for payment of the compensation.
But the Authority held against the 1st respondent.
The 1st respondent then filed a writ petition in the High Court and the High Court held that section 15 of the Act did not apply and that the proper forum for such an application was the Labour Court under section 33C(2) of the .
In appeal to this Court, on the questions: (1) Whether compensation payable under section 25FF of the can fall under the amended definition of wages in section 2(vi)d of the payment of Wages Act, as it is a 'sum which by reason of the termination of employment of the person employed, is payable under any law . which provides for the PaYment of such sum whether with or without deductions but does not provide for the time within which the payment is to be made ' and (2) Whether the authority under section 15 of the had jurisdiction to entertain the application, HELD: (1) The three sections, namely section 25F introduced into the , by Act 43 of 1951, and sections 25FF and 25FFF incorporated by Act 18 of 1957, involve termination of service in consequence of retrenchment, transfer and closure respectively.
In sections 25FF and 25FFF notice and compensation have been provided for 'in accordance with the provisions of section 25F '.
These words are used only as a measure of compensation and are not used for laying down any time within which the employer must pay compensation.
Since section 25FF unlike section 25F, does not contain any conditions precedent, it can be said not to have provided any time within which such compensation is to be paid.
Therefore, the compensation payable under section 25FF read with section 25F of the would be wages within the meaning of section '2 (vi)(d )of the Payment of.
Wages Act.
[1055 C E] 1052 M/s. Hatisingh Mfg. Co. Ltd. vs Union of India, ; and ,Anakapalla Co operative Agricultural and Industrial Society Ltd. vs Workmen, [1963] Supp. 1 S.C.R. 730, followed.
(2) The words 'where.
contrary to the provisions of the Act, in section 15(2) of the being the governing words, the Authority appointed under section 15(1) has jurisdiction to entertain applications only in two classes of cases, namely, of deductions and fines not authorised under sections 7 to 13 of.
the and of delay in payment of wages beyond the wage periods fixed under section 4 and time in payment laid down in section 5.
Section 15(1) provides that the Authority has the power to determine all matters incidental to the claim arising from deductions from or delay in payment of wages, but while deciding whether a particular matter is incidental to the claim or not.
care should be taken neither to unduly expand or curtail the jurisdiction of the Authority, because, the jurisdiction is a special jurisdiction.
Section 15(2) postulates that the wages payable by the person responsible for payment under section 3 are certain and such that they cannot be disputed.
[1058 B D] In the present case, (a) the claim was not a simple.
case of deduction/ions having been unauthorisedly made or payment having been delayed beyond the wage periods or the time of payment fixed under sections 4 and 5 of the Act; (b) In view of the defence taken by the 1st respondent, the failure to pay compensation did not fall under sections 4 and 5 of the Act; and (c) The claim for compensation denied by the employer in the circumstance could not fall within the ambit of section 15(2).
[1059 H] It could not have been intended that such matters could be tried by the Authority under the Act as matters incidental to the claim of compensation under section 25FF.
The proper forum would be the Labour Court which can decide such questions under section 33C(2) of the , since such court can go up into those matters fully, expeditiously and without expense.
[1060 C] Punjab National Bank Ltd. vs Kharbanda, [1962] Supp. 2 S.C.R. 977, Central Bank of India Ltd. vs Rajagopalan, ; , Bombay Gas Co. Ltd. vs Gopal Bhiva, ; , D 'Costa vs B.C. Patel, [1955] 1 S.C.R. 1353 and Shri Ambica Mills Co. Ltd. vs 5.
B. Bhatt ; , referred to.
|
iminal Appeal No. 33 of 1953.
Appeal under article 132(1) of the Constitution of India from the Judgment and Order, dated the 20th February, 1953, of the High Court of Judicature at Madras in Criminal Revision Case No. 1034 of 1953 (Criminal Reference No. 51 of 1953).
C. Daphtary, Solicitor General for India, V. K. T. C Chari, Advocate General for Madras (Porus A. Mehta and P. G. Gokhale, with them) for the appellant.
M. K. Nambiar, (section Subramanian, with him) for the respondent.
C.K. Daphtary, Solicitor General for India (Porus A. Mehta and P. G. Gokhale with him) for the Intervener (Union of India).
281 1954.
May 19.
The Judgment of the Court was delivered by MEHAR CHAND MAHAJAN C. J.
This is an appeal on a certificate under article 132(1) of the Constitution against the judgment of the High Court of Judicature at Madras dated the 20th February, 1953, holding that section 14 of the Fugitive Offenders Act, 1881, is void as it offends against the provisions of the Constitution being discriminatory in its effect.
The respondents, husband and wife, were apprehended and produced before the Chief Presidency Magis trate, Egmore, Madras, pursuant to warrants of arrest issued under the provisions of the Fugitive Offenders Act, 1881.
Mr. Menon is a barrister at law, and was practising as an advocate and solicitor in the Colony of Singapore.
Mrs. Menon is an advocate of the Madras High Court and was until recently a member of the Legislative Council of the Colony of Singapore.
Both of them came to India some time after July, 1952.
On the 22nd August, 1952, the Government of Madras forwarded to the Chief Presidency Magistrate, Madras, copies of communications that passed between the Government of India and the Colonial Secretary of Singapore requesting the assistance of the Government ' of India to arrest and return to the Colony of Singapore the Menons under warrants issued by the Third Police Magistrate of Singapore.
Mr. Menon was charged on several counts of having committed criminal breach of trust and Mrs. Menon was charged with the abetment of these offences.
The Menons, when produced before the Presidency Magistrate questioned the validity of their arrest.
They pleaded their innocence and contended that being citizens of India, they could not be surrendered as.
the warrants related to matters of a civil nature and had been given the colour of criminal offences merely for the purpose of harassing them out of political animosity and with a view to prejudice the Court against them and were issued in bad faith.
It was further urged that the provisions of the Fugitive Offenders Act under which action was sought to be taker against them were 282 repu gnant to the Constitution of India and were void and unenforceable.
The Presidency Magistrate expressed the view that by retaining the , and with it Chapter IV, the President of India may have intended to give effect to the Fugitive Offenders Act, 1881, but by the omission to adapt or modify it suitably it had become impossible to give effect to that intention, the provisions of the Act, as they are, being inconsistent with and repugnant to the sovereign status of the Indian Republic.
In view, however, of the provisions of section 432, Criminal Procedure Code, as amended by Act XXIV of 1951, he referred to the decision of the High Court the following questions of law: (1) Whether the Fugitive Offenders Act, 1881, applies to India after 26th January, 1950, when India became a Sovereign Democratic Republic; and (2) Whether, even if it applied, it or any of its pro visions, particularly Part II thereof, is repugnant to the Constitution of India and is therefore void and or inoperative.
The High Court held that section 14 of the Fugitive Offenders Act was inconsistent with the fundamental right of equal protection of the laws guaranteed by article 14 of the Constitution and was void to that extent and unenforceable against the petitioner.
The second question referred having thus been answered in favour of the respondents, it was not thought necessary to return any answer to the first question.
As above stated, a certificate under article 132(1) of the Constitution for leave to appeal to the Supreme Court against this decision was granted to the State of Madras.
The Union of India was allowed to intervene at their request.
The learned Solicitor General who argued the case on behalf of the Intervener as well as on behalf of the State of Madras conceded that the Fugitive Offenders Act, 1881, was not adapted by any specific order of the President, and that the Parliament in India had not enacted any Legislation on its lines.
He, however, contended that the omission to adapt the impugned Act 283 in no way affected the question whether it was in force as the law in the territory of India after the commencement of the Constitution.
Reliance was placed on article 372 (1) of the Constitution which is in these terms: Notwithstanding the repeal by this Constitution of the enactments referred to in article 395 but subject to the other provisions of this Constitution, all the law in force in the territory of India immediately before the commencement of this Constitution shall continue in force therein until altered or repealed or amended by a competent Legislature or other competent authority.
" And it was said that the impugned Act was the law in force in the territory of India immediately before the commencement of the Constitution and continued in force under the provisions of this article after its commencement.
It was also said that the adaptations made in the , by implication kept alive the Fugitive Offenders Act, 1881, and its different provisions.
In order to decide whether Part 11 of the Fugitive Offenders Act, 188 1, comprising sections 12 and 14 under the provisions of which the Menons are under arrest, has force after the coming into force of the Constitution, it is necessary to appreciate the relevant provisions of the Act.
The Fugitive Offenders Act, 188 1, as enacted by the British Parliament is sub divided into four parts and is comprised.
of 41 sections.
Part I of the Act concerns itself with offences mentioned in section 9.
Section 5 of this part provides that a fugitive when apprehended shall be brought before a Magistrate who shall hear the case in the same manner and have the same jurisdiction and powers, as near as may be, as if the fugitive was charged with an offence committed within his jurisdiction, and that if the endorsed warrant for the apprehension of the fugitive is duly authen ticated, and such evidence is produced as according to the law ordinarily administered by the magistrate raises a strong or probable presumption that the fugitive committed the offence mentioned in the warrant, and that the offence is one to which this part of this Act 284 applies, the magistrate shall commit the fugitive to prison to await his return, and shall forthwith send a certificate of the committal and such report of the case as he may think fit, if in the United Kingdom to a Secretary of State, and if in a British Possession to the Governor of that possession.
Section 12 which is the first section in Part II of the Act is in these terms : "This part of this Act shall apply only to those groups of British Possessions to which, by reason of their contiguity or otherwise, it may seem expedient to Her Majesty to apply the same.
It shall be lawful for Her Majesty from time to time by Order in Council to direct that this part of this Act shall apply to the group of British possessions mentioned in the Order, and by the same or any subsequent Order to except certain offences from the application of this part of this Act, and to limit the application of this part of this Act by such conditions, exceptions, and qualifications as may be deemed expedient.
" Section 14 which is directly in point so far as the respondents are concerned provides as follows : "The magistrate before whom a person so apprehended is brought, if he is satisfied that the warrant is duly authenticated as directed by this Act and was issued by a person having lawful authority to issue the same, and is satisfied on oath that the prisoner is the person named or otherwise described in the Warrant, may order such prisoner to be returned to the British Possession in which the warrant was issued, and for that purpose to be delivered into the custody of the person to whom the warrant is addressed, or any or more of them, and to be held in custody and conveyed by sea or otherwise into the British Possession in which the warrant was issued, there to be dealt with according to law as if he had been there apprehended.
Such order for return may be made by warrant under the hand of the magistrate making, it, and may be executed according to the tenor thereof" A comparison between the provisions of Part I and Part II of the Act makes it clear that with regard to 285 offences relating to which Part I has application a fugitive when apprehended could not be committed to prison and surrendered unless the magistrate was satisfied that on the evidence produced before him there was a strong or probable case against him, while in regard to a fugitive governed by Part II of the Act it was not necessary to arrive at such a finding before surrendering him.
There is thus a substantial and material difference in the procedure of surrendering fugitive offenders prescribed by the two parts of the Act.
The scheme of the Fugitive Offenders Act is that it classifies fugitive offenders in different categories and then prescribes a procedure for dealing with each class.
Regarding persons committing offences in the United Kingdom and British Dominions and foreign countries in which the Crown exercises foreign jurisdiction, the procedure prescribed by Part I of the Act has to be followed before surrendering them and unless a prima facie case is established against them they cannot be extradited.
Extradition with foreign States is, except in exceptional cases, governed by treaties or arrangements made inter se.
Extradition of offenders between the United Kingdom and the Native States in India is governed by the .
Under the provisions of that Act no person apprehended could be surrendered unless prima facie case was made out against him.
Extraditions inter se between British possessions, however, were dealt with differently by the Act.
They were grouped together according to their contiguity etc.
by an Order in Council and treated as one territory and this grouping was subject to alterations and modifications by Order in Council and conditions of extradition.
could also be prescribed by such an Order.
An Order in Council dated the 2nd January, 1918, .grouped together the following British Possessions and Protected States with British India for the purposes of Part II of the Act : Ceylon, Hongkong, the Straits Settlements, the Federated Malay States, Johore, Kedah and Perlis, Kelantan, Trengannu, Brunei, North Borneo and Sarawak.
The Order is these terms: 286 ",Whereas by an order of Her Majesty Queen Victoria in Council bearing date the 12th day of December, 1885, it was ordered that Part 11 of the Fugitive Offenders Act, 1881, should apply to the ,group of British Possessions therein mentioned, that is to say, Her Majesty 's East Indian Territories, Ceylon and the Straits Settlements; And whereas by the Straits Settlements and Protected States Fugitive Offenders Order in Council, 1916, as amended by the Straits Settlements and Protected States Fugitive Offenders Order in Council, 1917, it is ordered that the Fugitive Offenders Act, 1881, shall apply as if the Protected States named in the schedule to the first mentioned order were British Possessions ; And whereas by reason of their contiguity or the frequent intercommunication between them it seems expedient to His Majesty and conducive to the better administration of justice therein to apply Part II of the Fugitive Offenders Act, 1881, to the above named British Possessions and Protected States and such application has been requested by the Rulers of the said States ; Now therefore, His Majesty, by virtue of the powers in this behalf by the Fugitive Offenders Acts, 1881 and 1915, and otherwise in His Majesty vested is pleased, by and with the advice of His Privy Council, to order, and it is hereby ordered, as follows : On and after the first day of February, 1918, the herein before recited Order in Council of the 12th day of December, 1885, shall be revoked, without prejudice to anything lawfully done thereunder or to any proceedings commenced before the said date, and Part II of the Fugitive Offenders Act, 1881, shall apply to the group of British Possessions and Protected States hereunder mentioned, that is to say, British India, Ceylon, Hongkong, Straits Settlements, the Federated Malay States, Johore, Kedah and Perlis, Kelantan, Trengannu, Brunei, North Borneo and Sarawak.
" 287 By another Order in Council dated the 29th July, 1937, Burma which ceased to be part of British India was also included in the group of British Possessions and Protected States mentioned in the earlier Order in Council.
It is plain from the above provisions of the Act as well as from the Order in Council that British Possessions which were contiguous to one another and between whom there was frequent inter communication were treated for purposes of the Fugitive Offenders Act as one integrated territory and a summary procedure was adopted for the purpose of extraditing persons who had committed offences in these integrated territories.
As the laws prevailing in those possessions were substantially the same, the requirement that no fugitive will be surrendered unless a prima facie case was made against him was dispensed with.
Under the , also a similar requirement is insisted upon before a person can be extradited.
The situation completely changed when India became a Sovereign Democratic Republic.
After the achievement of independence and the coming into force of the new Constitution by no stretch of imagination could India be described as a British Possession and it could not be grouped by an Order in Council amongst those Possessions.
Truly speaking, it became a foreign territory so far as other British Possessions are concerned and the extradition of persons taking asylum in India, having committed offences in British Possessions, could only be dealt with by an arrangement between the Sovereign Democratic Republic of India and the British 'Government and given effect to by appropriate legislation.
The Union Parliament has not so far enacted any law on the subject and it was not suggested that any arrangement has been arrived at between these two Governments.
The , has been adapted but the Fugitive Offenders Act, 1881, which was an Act of the British Parliament has been left severely alone.
The provisions of that Act could only be made applicable to 288 India by incorporating them with appropriate changes into an Act of the Indian Parliament and by enacting an Indian Fugitive Offenders Act.
In the absence of any legislation on those lines, it seems difficult to hold that section 12 or section 14 of the Fugitive Offenders Act has force in India by reason of the provisions of article 372 of the Constitution.
The whole basis for the applicability of Part II of the Fugitive Offenders Act has gone; India is no longer a British Possession and no Order in Council can be made to group it with other British Possessions.
Those of the countries which still form part of British Possessions and which along with British India were put into a group may legitimately decline to reciprocate with India in the matter of surrender of fugitive offenders on the ground that notwithstanding article 372 of our Constitution India was no longer a British Possession and therefore the Fuogitive Offenders Act, 1881, did not apply to India and they were not bound in the absence of a new treaty to surrender their nationals who may have committed extraditable offences in the territories of India.
Indeed some of the other members of this group have also achieved independence.
Under section 12 of the Act it is not possible for His Majesty from time to time by Order in Council to alter the character of this group or its composition or to take any action as prescribed by that section.
Article 372 of the Constitution cannot save this law because the grouping is repugnant to the conception of a sovereign democratic republic.
The political background and shape of things when Part II of the Fugitive Offenders Act, 1881, was enacted and envisaged by that Act having completely changed, it is not possible without radical legislative changes to adapt that Act to the changed conditions.
That being so, in our opinion, the tentative view expressed by the Presidency Magistrate was right and though the High Court did not return the answer to the first question referred to it, in our judgment, the case can be shortly disposed of on that ground.
The contention of the learned Solicitor General that by reason of the adaptations made in the Indian and references wade therein to Extradition Act, 1903, the Fugitive Offenders Act, it should be held that the whole of the Fugitive Offenders Act including PartII had been adapted by the President does not seem to be well founded.
The scheme of the which was founded on the English Act is quite different.
It does not specifically keep alive any of the provisions of Part II of the Fugitive Offenders Act, 1881, and thefere is no adaptation of the Fugitive Offenders Act, 1881 within the four corners of the .
In these circumstances it is not possible to work out the sections of the Fugitive Offenders Act and apply them to the situation that has arisen after the coming into force of the Constitution of India.
Moreover clause 28 of the Adaptation of Laws Order, 1950, can have no application to such a case.
We do not think that it is necessary in the present case to enter into a discussion of the question whether British Possessions with which India was grouped under Part 11 of the Fugitive Offenders Act, 1881, should now be treated as foreign States qua India and that offenders apprehended can be surrendered under the or any other law, provided a prima facie case is made against them as the proceedings taken against the respondents were specifically taken Under section 14 of the Fugitive Offenders Act, 1881, and it is not the practice of this Court to decide questions which are not properly raised before it or which do not arise directly for decision.
For the reasons given above we uphold the decision of the High Court, though on a ground different from that on which that Court decided, in favour of the respondents.
The appeal therefore fails and is dismissed.
Appeal dismiesed.
| IN-Abs | After the achievement of independence and the coming into force of the new Constitution India became a Sovereign Demo cratio Republic and could not be described as a British Possession or grouped by an Order in Council amongst those Possessions within the meaning of section 12 of the Fugitive Offenders Act, 1881.
It became a foreign country so far as other British Possessions &re concerned and the extradition of persons taking asylum in India, having committed offences in British Possessions could only be dealt with by an arrangement between the Sovereign Democratic Republic of India and the British Government and given effect to by appropriate Legislation.
The (Act XV of 1903) has been adapted under the provisions of article 372 of the Constitution but this Act has not kept &live any of the provisions of the Fugitive Offenders Act, 1881, which was an act of the British Parliament and which has not been adopted and therefore section 12 and section 14 of the Fugitive Offenders Act, 1881, have no application to India.
|
l Appeal No. 1519 of 1968.
Appeal under section 116A of the Representation of the People Act, 1951 from the judgment and order dated May 28, 1968 of the Madras High Court in Election Petition 11 of 1967.
R.M. Seshadri and R. Gopalakrishnan, for the appellant.
section V. Gupte, A. C. Muthanna, S.S. JavaIi, Anjali K. Verma and O.C. Mathur, for respondent No. 1.
G. Ramanujam and A. V. Rangam, for intervener.
C.J., This appeal is directed against the judgment of the High Court of Madras, 28th May 1968, by which the election of the appellant Seshadri has been set aside.
The election in question was to the Madras Legislative Council from the Madras District Graduates Constituency.
That constituency consisted of 19,498 votes and the total votes polled were 12,153.
Since the voting was by a single transferable vote, three 1029 out of the five candidates were eliminated at different counts with the result that their votes were transferred to the second person named by the elector on the ballot.
At the final count the appellant Seshadri received 5643 votes and G. Vasantha Pai (his nearest rival) who is the first respondent in 'the appeal received 5388 votes.
Seshadri was, therefore, elected by a majority of 255 votes.
The election petition was filed by G. Vasantha Pai to question the election of Seshadri on many grounds.
Only one ground prevailed, namely, that he had employed cars which had been hired or procured for the conveyance of the voters to the polling booths which numbered 73 in this constituency.
The other charges were numerous but they need not be mentioned here because in our opinion this charge has been substantiated.
It may be mentioned that Seshadri filed a petition of recrimination but it was dismissed because he failed to furnish security required under the Act.
Later he corrected this mistake but the petition was not accepted because it was held to be delayed.
The learned Judge who ' heard the case held that instead of Seshadri, Vasantha Pai deserved to be declared elected under the law.
In this appeal, therefore, Seshadri contends that the decision in his respect was erroneous and in the alternative that in any event Vasantha Pal could not be declared as the successful candidate.
We shall deal with these two points separately.
It may further be mentioned that in the original order passed by the learned Judge he had not named Seshadri as guilty of corrupt practice.
By a subsequent order he reviewed his previous order and gave a declaration.
This point also will require to be considered in this judgment.
The allegation in the election petition was that a large number of motor cars were hired or procured from various sources for the conveyance of the voters to the polling booths.
These were sometimes occupied by persons wearing badges which bore the name of Seshadri and sometimes were received at the polling booths by persons who wore the same badges.
From this, it is inferred that the motor cars were used for the conveyance of voters by Seshadri as one of the contesting candidates.
Such conduct, if it is established, amounts to a corrupt practice under section 123(5) of the Representation of People Act.
The short question, therefore, on the first point is whether Seshadri was guilty of this corrupt practice.
The appeal has been fought by Seshadri on the grounds that the plea which was included on this head in the election petition was vague and not sufficiently definite so as to give him notice of the charge he had to meet, that a charge of corrupt practice is of the nature of a criminal charge and must therefore be 1022 proved by the election petitioner himself beyond all reasonable doubt, that there exists some room for doubt and therefore he should have the benefit of it and that the learned Judge who tried the case improved both the pleading on the subject and the evidence led by the election petitioner by calling certain witnesses and looking into documents which he had procured on his own behalf.
It is therefore contended that all the evidence which the learned Judge collected suo motu should not be locked at and the case of the petitioner should be confined to the bare plea which was raised in this case.
If this is so, says Seshadri, the election petition deserves to be dismissed because the case as found was not clear in the plea and was certainly lacking in the proof as required by law.
Since the matter is one fought primarily with regard to pleadings in the case, we shall begin by setting out the pleas which have been advanced by the election petitioner.
The plea consists of several parts.
The election petitioner states that the Swatantra Party and its agents conveyed the voters to and from the polling booths in certain cars hired or procured from M/s Kumarswamy Automobiles and T.S. Narayanan, Authorised Tourist Taxi Operators.
The petitioner goes on to say that the detailed analysis of the use of the cars and particulars of the user are given in a schedule attached to his petition.
That schedule names a large number of cars which were used and at many polling booths in different divisions for the purpose of carrying the voters to the polling booths.
Some of these cars came admittedly from the garage of Messrs. Kumarswamy Automobiles and some others from the other motor garage named by us or were loaned for the day by certain private owners including companies.
The essence of this plea is that cars were procured or hired for the conveyance of the voters.
There is, however, no mention in the plea as to who had hired the vehicles or caused them to be procured and it is this fact which has been made much of by Seshadri in the appeal before.
His contention is that without the particulars being sufficiently full and precise, it was not possible for him to controvert the case set up against him, particularly as the case of the election petitioner was supplemented by the learned Judge by calling at a later stage court witnesses who deposed to the connection between the cars and Seshadri.
We have, therefore, to determine first whether the plea which was raised was sufficient for the purpose of investigation before we go to see whether the plea has received adequate support through evidence.
Seshadri personally argued his appeal on two separate occasions.
On the first occasion he confined himself entirely to the pleas he expounded it and urged in support that the plea in the election petition did not allege anything nor did the evidence in 1023 support establish anything further.
But before the case concluded, Seshadri made a request to us that as he had misunderstood his own position with regard to the appeal, regard being had to certain observations of the Court, he had not argued the case fully on the first occasion and he should be allowed an opportunity to supplement his arguments by urging the points de novo.
Since Seshadri was conducting his case in person and appeared to be under some emotional stress, we felt that the ends of justice would be satisfied if we accorded him a second opportunity and this is how the case was set down again for hearing.
On the second occasion Seshadri supplemented his arguments with numerous citations from the law reports in support of two propositions, namely, that the particulars should be complete before the evidence could be looked into and secondly that amendment of the pleadings through evidence is not permissible.
It may be mentioned here that the evidence in the case discloses that not one, two or three cars were used but as many as 63 cars were employed.
This evidence has been weighed by the learned Judge.
He has gone critically into every aspect of it and come.
to the conclusion that many cars in fact were used.
The learned counsel for Vasantha Pai placed in our hands a tabulated statement of the evidence bearing upon the use of the cars and having looked into the judgment of the learned Judge as also the evidence with the aid of the tabulated statement, we are satisfied and it is sufficient to say for us that we entirely agree with the conclusion of the learned Judge that many cars were, in fact, used for conveyance of voters in this constituency.
The alternative suggestion that on some of the days an election from the Teachers ' Constituency was going on and that since the polling booths were sometimes located for the two constituencies in the same building, it is possible that the cars were used for that election and not this, does not merit any consideration.
The suggestion is extremely vague and the evidence even more tenuous.
It is said that one Varadachari was responsible for the hiring of the cars and that in our opinion does not stand either substantiated or any scrutiny.
We are therefore satisfied with the finding of the learned Judge in the High Court that cars that were employed for conveyance of voters and that they were in fact used in this constituency and none other.
The question then remains as to who was responsible for this? Now the plea on this subject, as we have said, is contained in several parts of the election petition.
One part we have summarised above.
The second part was that the Swatantra Party_ was supporting Seshadri and that the workers of the Swatantra Party were working strenously for his success.
From this it has been reasoned in the High Court that the Swatantra Party was an agent of Seshadri.
Its actions therefore would be his actions L6Sup.
C.I/69 14 1024 if he was a Consenting party.
In this connection it is also stated that Seshadri was being supported by some persons connected with him who helped him by procuring these vehicles for the conveyance of the voters.
In the schedule which is filed with the plaint a large number of cars is mentioned and the schedule shows in one of its columns to which polling booths were the voters carried.
It is too detailed to be reproduced here.
Suffice it to say that it contains names of six divisions and 17 polling booths.
It also mentions over two dozen cars which were so used.
In the body of the election petition, the petitioner further stated as follows: "Besides Tourist Taxis, the petitioner understands the Private Commercial Firms and Cinema Producers placed at the disposal of the first respondent their cars for conveying voters.
The persons who were conveying the voters were members of the Swatantra Party, who were acting as the Agents of the first respondent under the guidance in particular of Mr. H.V. Hande.
The Agents of the first respondent wore a distinctive badge with R.M. Seshadri printed in bold letters attached to a blue ribbon and pinned to their shirts.
They were either escorting the voters or receiving them at the polling stations specified above.
In Booth Nos. 60 to 65, prominent among the persons so escorting was Violin Mahadevan who had a badge pinned to his shirt and who the petitioner understands is a member of the Swatantra Party.
In Saidapet South, the petitioner states, the car MSS 3336 conveying the voters was in charge of an Advocate 's Clerk by name T.K. Vinayagam of No. 16, Karani Garden II Street, Saidapet, Madras 15.
The said Vinayagam was wearing a badge of Mr. Seshadri.
At Raja Annamalaipuram the petitioner learns that a green coloured Station Wagon MSP 5398 was in charge of Mr. Venkataraman, member of the Swatanthra Party and residing at 30, IV Main Road, Raja Annamalaipuram, Madras 28.
The petitioner states that in almost every polling booth, Tourist Taxis and cars engaged by the first respondent were being used by the Swatanthra Party Agents for conveying voters.
" Seshadri contends that in this plea only four names are mentioned, namely, H.V. Hande, Violin Mahadevan, T.K. Vinayagam and Venkatraman.
He starts therefore by analysing whether the connection between these persons and him had been successfully established and further whether they were responsible for 1025 conveying voters to the polling booths in the cars.
He examines critically the evidence of these witnesses before us and also the other evidence bearing upon the subject and contends that the evidence taken as a whole does not establish their connection with him or with the voters or with the cars.
We shall, therefore, begin by considering what was said about these persons by Seshadri.
In regard to Hande, Seshadri 's contention is that no other person had spoken about Hande excepting the petitioner (P.W. 33) and he spoke about him only in one place.
He therefore states that the evidence on this part is extremely insufficient because it depends upon the interested word of the petitioner himself.
He refers us to his deposition contained in pages 419 to 531 of the Paper Book, but he draws our attention in particular to certain passages where only one car was mentioned by him in connection with Hande.
That car was MSR 7065.
The evidence of the election petitioner was that as he was emerging from Doraiswamy Road he found that this car was going past him with a gentleman with a blue upper cloth.
The gentleman looked at him and he found that it was Hande.
According to Seshadri this evidence was not sufficient to show that Hande was conveying voters to the polling booth.
On this part of the case Seshadri is right because the evidence of the complicity of Hande with the hiring or procuring of the cars was not established nor his complicity with regard to the carriage of voters to the polling booths.
With regard to Vinayagam, Seshadri 's argument is that the fact is deposed to by the election petitioner himself who said that he had seen a car with a lady and a gentleman arriving at the polling booth and that a lawyer 's clerk opened the door and received them.
This car bore the number MSS 3336.
Support for this evidence is sought by the election petitioner through the evidence of Laxshaman Hegde (P.W. 15) who said that he had seen an Ambassador car carrying two voters just halting at the polling booth.
Two voters whom he knew from before came down from the car.
A 'short gentleman ' directed them to the polling booth.
Vasantha Pai then asked the witness if the person was known to the witness.
As he did not know the name of the gentleman he could not tell him but Vasantha Pai noted the number of the car.
This person who received the voters at the polling booth was later identified by the witness as Vinayakam.
The way in which he obtained this information has been given by him in his deposition.
He appears to have obtained it from the person concerned.
Whatever it may be, there is nothing incriminating in a worker of the party receiving a voter at the polling booth.
Polling agents cannot canvass within 100 meters but there is nothing to show in the law that they cannot open the door of a car in which a voter has arrived.
The gravamen of the charge, as Seshadri correctly points out was that Vinaya 1026 kam was wearing a badge such as we have described and that of course is a different matter and we are not concerned with it here.
On the whole, therefore, this evidence does not show that the cars were hired by Seshadri.
It only furnishes some link in the circumstantial chain to which we shall later refer and that in our opinion is the only use to which this evidence can be put.
The next person connected with the use of the car is Venkatraman.
Three persons deposed to his connection.
of these one is the election petitioner himself; the others are P.Ws. 23 and 27.
Seshadri argues that we should not believe these witnesses; one because he is himself a party and the other two because they were connected intimately with the prospects of Vasantha Pal.
K.V. Padmanabha Rao (P.W. 23) is said to be the junior of Vasantha Pal and was canvassing for him.
He was standing near the vehicle with a list, presumably of the voters, and at that time several vehicles arrived there.
He stated that he connected Venkataraman with Seshadri because he was moving about in the company of one Sivasankaran (Junior of Seshadri) in the IInd Main Road.
He had also seen him with Sivasankaran going with lists in his hand from house to house.
Later he found out from some of his friends what was the purpose of this visit and was told that they were asking the voters whether they needed any conveyance for the next day 's polling, as they had command over a large number of vehicles.
The latter part of the evidence is hearsay and Seshadri is perfectly right in claiming that it should not be accepted.
The fact remains that the witness did see Venkataraman moving with the clerk of Seshadri and therefore there is room for thinking that they were connected together.
T.L. Ram mohan (P.W. 27), it is said, was assisting Vasantha Pai.
He wrote a letter Ext.
P 109 and his evidence is also described as hearsay.
We need not therefore go by his evidence to reach the conclusion that the cars were hired by Seshadri or some one on his behalf.
We can only use this evidence if there were some other evidence to which it can be read as corroborative, because by itself it does not furnish proof of the hiring of vehicles by Seshadri.
it only shows that the vehicles were in fact used and that the vehicles were bringing voters to the polling booth.
The connection of Violin Mahadevan was deposed to by four witnesses.
V. Murali (P.W. 5) who works in the chamber of two lawyers Rao and Reddy admitted that he.was working for Vasantha Pai.
He also said that he saw Violin Mahadevan wearing the badge and standing near the polling booth.
He stated this to Vasantha Pai and communicated to him his own observation.
He admitted that he did not know Violin Maha .
devan from before but somebody had told him about him.
He could not name the voters who had been brought.
He saw that Violin Mahadevan was wearing the same badge which we have 1027 described and the voters were accosted by persons wearing the same badge and were received at the polling booth.
section Ramamurthy (P.W. 10) saw Venkataraman.
He admitted that he had not seen anybody brought by Venkataraman and he also did not know the names of the voters who were brought.
But the evidence of section Ramamurthy (P.W. 10) is sufficient to show that the voters did in fact come by cars to the polling booth.
Therefore to that extent, his evidence is material in determining whether the alleged corrupt practice was committed or not.
A. Sankaran (P.W. 20) also saw Violin Mahadevan receiving voters at the polling booths.
Seshadri contends that as the plea was limited to the naming of these four persons, it is clear that the plea as made was insufficient to bring home the charge which is now brought to his door, namely, that he had hired or procured these vehicles.
As has been said above, the hiring and procuring of the vehicles is a totally different matter.
These witnesses only speak to what they saw at the polling booths and their evidence is believable that voters were brought to the polling booth.
The question is by whom? The case then goes on to another point and that is: Where did the cars come from? Neither side had examined either Kumarswamy or the owner of the other garage or any other person.
The learned Judge then felt that he should examine some court witnesses and he summoned three, namely, Kumarswamy (C.W. 2), Krishnaswamy (C.W. 3) and one Ganesan (C.W. 1).
He also called for a report from the police as to whom the cars belonged and he perused the evidence of these three witnesses as also the report sent by the police and come to the conclusion that the hiring or procuring was by Seshadri himself.
A great deal of argument is therefore directed by Seshadri to exclude the evidence of these witnesses and the reference to the police to find out to whom the cars belonged.
In this connection Seshadri cites a number of ruling which he says show quite clearly that a plea cannot be allowed to be magnified particularly by evidence not brought by the parties, but at the instance of the Court.
This requires an examination closely.
The first contention of Seshadri is that the Court trying the election petition is limited by the law which is contained in the Representation of the People Act and the Rules made thereunder.
This law, according to him, confers no power upon the Presiding Judge to enter the arena to summon witnesses on his own behalf.
The learned Judge who summoned witnesses passed a very short order while doing so.
He did not refer to any law on the subject but extracted a passage from the trial of Warren Hastings in which it was stated that a Judge 'is not to be a dummy but is to take an active interest in the case.
Seshadri contends therefore that the action of the Judge in summoning the court 1028 witnesses was entirely erroneous and that this evidence should be excluded.
The Vower of a Civil Court to summon court witnesses is contained in O. XVI r. 14 of the Code of Civil Procedure.
Now the Representation of People Act enjoins that all the powers under the Code can be exercised and all the procedure as far as may be applicable to the trial of civil suits may be followed in the trial of election petitions.
It would appear therefore that in the absence of any prohibition contained in the law, the Court has the power to summon a court witness if it thinks that the ends of justice require or that the case before it needs that kind of evidence.
It must be remembered that an election petition is not an action at law or a suit in equity.
It is a special proceeding.
The law even requires that an election petitioner should not be allowed to withdraw an election petition which he has once made and that the election petition may be continued by another person, so long as another person is available.
The policy of election law seems to be that for the establishment of purity of elections, investigation into all allegations of real practices including corrupt practices at elections should be thoroughly made.
Here was a case where a large number of cars were used presumably for the purpose of carrying voters to the booths.
The question is: in the face of this voluminous evidence was it not open to the judge if evidence was available to establish who had procured or hired vehicles, to summon witnesses who could depose to the same ? In our opinion, such a power was properly exercised by the learned judge.
Although we would say that the trial should be at arms length and the Court should not really enter into the dispute as a third party, but it is not to be understood that the Court never has the power to summon a witness or to call for a document which would throw light upon the matter, particularly of corrupt practice which is alleged and is being sought to be proved.
If the Court was satisfied that a corrupt practice had in fact been perpetrated, may be by one side or the other, it was absolutely necessary to find out who was the author of that corrupt practice.
Section 98 of the Act itself allows the Court to name a person who is guilty of corrupt practice after giving him notice and this would be more so in the case of a candidate whose name.
appears to be connected with the corrupt practice, the proof whereof is not before the Court but can be so brought.
In such a ease we think that the court would be acting within its jurisdiction in using O. XVI r. 14 to summon witnesses who can throw light upon the matter.
Having disposed of this preliminarg objection, we are now in a position to consider the evidence which was brought; but before doing so, we must show its relevance to the pleas which had been raised in the case, because much discussion was made 1029 of the law of pleadings in the case.
We have pointed out above that the plea in essence was that cars were used for the purpose of conveying voters contrary to the prohibition contained in the Election Law.
The names of the booths and the divisions in which the booths were situated together with the particulars of the cars and the persons primarily concerned with cars at the polling booths have been mentioned.
It is true that the drivers of the cars or the voters themselves have not been examined.
But it has been sufficiently pleaded and proved that the cars were in fact used.
The connection of Seshadri with the use of the cars has been specifically pleaded.
In our opinion, the rest were matters of evidence which did not require to be pleaded and that plea could always be supported by evidence to show the source from where the cars were obtained, who hired or procured them and who used them for the conveyance of voters.
This is exactly what has happened in this case.
The learned Judge after reaching the conclusion that a large number of cars were used for conveying voters to the polling booths,.
felt impelled further to consider who was responsible for hiring them.
The names of the two garages were already given and there was the allegation that certain companies and cinema producers were also helping Seshadri by the loan of cars.
Since the name of Kumarswamy 's garage was mentioned, it was but natural for the Judge to have summoned the proprietor of the garage.
The proprietor of the garage came and gave the story about the use of the cars by some other candidate but not Seshadri.
lie however brought on record documents to show that the cars were hired on payment from his garage by one Krishnaswamy.
The next step was therefore to summon Krishnaswamy and he was therefore summoned and questioned.
Krishnaswamy admitted that he had hired these cars and paid bills amounting to a few thousand rupees.
It is obvious that these cars were not employed for any other purpose that day except for election work.
It is ridiculous to imagine that they were ordered for a picnic or for a marriage which did not take p1ace.
Therefore the inference was that Krishnaswamy had hired these cars to convey voters to the polling booths.
The question therefore boils down to this, for whom was Krishnaswamy working? Here we have the evidence of various types against Krishnaswamy.
Kumarswamy and Krishnaswamv have been amply proved in the ease to be connected with Seshadri.
Kumarswamv was shown exhibit c 2A. lie stated that it was an order form filled bV R. Krishnaswamy.
He also admitted that he had received payments and that the trip sheets of the cars were maintained for that date.
Those trip sheets are C 7 to C 36.
Now with regard to these trip sheets, it may be stated that in some of them there was mention that the cars were used for election work, but subsequently it was 1030 found that someone had rubbed out that entry.
We are not here to find out who was guilty of attempting to create evidence by rubbing this out.
The fact remains that some of the trip sheets still read clearly that the cars had been used for election work.
exhibit C 6 was the bill which was issued for these cars, and it was issued to Krishnaswamy.
Therefore the cars were engaged at least from Kumarswamy garage for conveying voters and they were hired by Krishnaswamy and he paid for them.
Now Krishnaswamy is connected intimately with Seshadri.
He was employed by two companies in which Seshadri was a Director.
A party was arranged in honour of Seshadri to celebrate his victory.
The arrangement for this was made by Krishnaswamy although the expenses for the party were paid by Seshadri by cheque.
Seshadri contends that his entire accounts were.
examined but it was not proved from those accounts that he had paid any money towards the hire of the cars.
It is not possible for anyone to say how Seshadri, if he was willing to pay for the cars, would have procured the money.
It would have been the worst thing for him to have paid the amount by cheque so that it could enter into the accounts.
Obviously such payments would be made in a way that they could not be traced back to the person actually paying the amount.
The connection, however, of Krishnaswamy with the hiring of the cars and with the celebration of the victory of Seshadri furnishes a very important link in the chain of reasoning.
It is quite clear to us that the Swatantra Party was in favour of Seshadri.
Seshadri relies upon finding which has been given by the Court in which it is stated that the Judge found that the first respondent, the Swatantra party and the persons mentioned therein acted as agents of the first respondent and committed corrupt practices under section 123(5) with which we are now dealing.
The argument was that this finding.
is somewhat obscure because it shows that the first respondent was the agent of the first respondent himself.
It seems to us that the learned Judge in recording this finding gave it unthinkingly taking the words from the plea in the petition.
It is quite clear that the learned Judge reaches the conclusion that the Swatantra party was working actively in support of Seshadri.
It is of course not proved, that he was the adopted candidate of the party nor is it proved that he had appointed any particular person as his agent, but it is quite clear that the Swatantra party was actively supporting him.
Thus there is the presence of the workers of the Swatantra party like Hande, Vinavakam, Violin Mahadevan and Venkatraman on the scene at the polling booths.
It may also be mentioned that in one of the trip sheets, one Kalyanasundaram had signed in token of the cars having been used.
This Kalyanasundaram was the polling agent of Seshadri.
The circumstantial 1031 evidence is now complete.
There is the hiring of the cars from the Kumaraswamy Garage by Krishnaswamy, the payment of money by Krishnaswamy to the garage, Krishnaswamy 's attachment to Seshadri because of his past connection and the further proof that he arranged the party on his behalf after his victory and the trip sheet was signed by Kalyanasundaram the polling agent of Seshadri.
The amount paid was so large that only a candidate would incur that expense, and no supporter.
If there was any doubt as to who hired or procured these cars, it is resolved by the concatenation of circumstances which clearly demonstrate that it could have been only Seshadri and no one else who had hired these vehicles.
We can infer this circumstantially even though direct evidence be not available.
In addition, there is the patent fact that Seshadri did not himself go into the witness box and clear these facts standing out against him although opportunity ' was offered.
It is true that Seshadri complained before us that the plea was vague, that it had been magnified by the evidence brought in this manner and the Court allowed the election petitioner to take advantage of the evidence so brought, but we have already held that the evidence was legitimately brought and that it could be led in the case.
As to the plea, we have already shown that it was sufficiently cogent to establish the connection between Seshadri and the hiring and procuring of the cars.
The missing links were supplied by that evidence by showing the connection of the only person who had hired the cars and paid several thousand rupees for their hire.
If that person is intimately connected with Seshadri, the conclusion is inescapable that it was Seshadri for whose benefit the cars were hired or procured.
In our opinion, the circumstantial chain of evidence is sufficient to show the connection between him and the use of the cars for the conveyance of voters.
As to the rulings which were cited before us, it is sufficient to say that each case is decided on its own facts, and circumstances.
It is true that better particulars can only be given by the party, but that is only where better particulars are required.
It was not necessary for Vasanta Pai to have pleaded his evidence in this behalf.
He made a very full plea by giving the numbers of the cars, by naming the polling booths at which voters were brought and by stating quite categorically that it was Seshadri who had procured these cars for the conveyance of voters.
Rest was matter of evidence and the facts had to be established by evidence.
It may be that without the evidence of Kumaraswamy and Krishnaswamy the case might have taken a different turn but we have already pointed out that the learned Judge very correctly brought these two persons intimately connected with the cars into the Case before him, and to give their version.
Their version is partly 1032 true and partly false and the false evidence was to exclude Seshadri from the charge.
In our opinion, this also demonstrates the connection between these persons and Seshadri which had been established in other ways through their own mouths.
We accordingly hold that this corrupt practice was brought home.
It remains to consider the argument of Mr. Gupte whether Vasanta Pai could be declared elected.
This will depend on our reaching the conclusion that but for the fact that voters were brought through this corrupt practice to the polling booths, the result of the election had been materially affected.
In a 'single transferable vote, it is very difficult to say how the voting would have gone, because if all the votes which Seshadri had got, had gone to one of the other candidate who got eliminated at the earlier counts, those candidates would have won.
We cannot order a recount because those voters were not free from complicity.
It would be speculating to decide how many of the voters were brought to the polling booths in the cars.
We think that we are not in a position to declare Vasanta Pai as elected, because that would be merely a guess or surmise as to the nature of the voting which would have taken place if this corrupt practice had not been perpetrated.
In the result therefore, we set aside the direction that Vasanta Pai is elected to the constituency.
There will inevitably have to be a fresh election in this constituency.
In so far as Seshadri is concerned, we think that he was properly named as guilty of corrupt practice although that order was incorporated by the learned Judge through a review.
It was his duty to have named persons who had been guilty of corrupt practice and he made this up later.
There is no need for any specific power for review since the power to name any person guilty of corrupt practice is already contained in the Act.
Whether it comes in the original judgment or by a supplementary or complementary order, is not much to the purpose; that order was correctly made.
In the result, the appeal fails and it will be dismissed with costs.
R.K.P.S. Appeal dismissed.
| IN-Abs | The appellant was elected to the Madras Legislative Council from the Madras District Graduates Constituency.
His election was challenged by the Respondent, his nearest rival candidate by an election petition alleging, mainly, that a large number of cars had been employed for the conveyance of voters to the polling booths in violation of section 123(5) of the Representation of the People Act, 1951.
The High Court held that the corrupt practice was established and set aside the appellant 's election.
It also declared the respondent elected in his place.
The original order passed by the High Court did not :name the appellant as guilty of corrupt practice but the Court, by a subsequent order reviewing its previous order, gave a declaration to that effect.
In the appeal to this Court, it was contended by the appellant that the plea in the petition regarding violation of section 123(5) was vague and not sufficiently defined so as to give him notice of the charge he had to meet, and furthermore, that the learned Judge who tried the case improved both the pleading on the subject and the evidence led by the election petitioner by calling certain witnesses and looking into documents which he had no power to do.
It was therefore contended that all the evidence which the learned Judge collected suo motu should not be looked at and if the case of the petitioner was confined to the bare plea raised, the petition would deserve to be dismissed because it was not clear in the plea and was lacking in proof.
HELD: dismissing the appeal: On the facts, the High Court had rightly found that many cars were employed for the conveyance of voters in the constituency.
The circumstantial chain of evidence was sufficient to show the connection between the appellant and the use of the cars for the conveyance of voters.
The corrupt practice under section 123(5) was therefore brought home.
A B] (i) The plea in the petition in essence was that cars were used for the purpose of conveying voters contrary to the prohibition contained in the Election Law.
The names of the booths and the divisions in which the booths were situated together with the particulars of the cars and the persons primarily concerned with cars at the polling booths had been mentioned.
The connection of the appellant with the use of the cars had been specifically pleaded.
Sufficient particulars of the allegation had therefore been given and the rest were matters of evidence which did not require to be pleaded.
(ii) The power of a Civil Court to summon court witnesses is contained in O. XVI r. 14 of the Co& of Civil Procedure.
The Representation of People Act enjoins that all the powers under the Code can be exercised and all the procedure as far as may be ,applicable to the trial 1020 of civil suits may be followed in the trial of election petitions.
The court trying an election petition therefore has the power to summon a Court witness if it thinks that the ends of justice require or that the case before it needs that kind of evidence.
The policy of election law seem to be that for the establishment of purity of elections, investigation into to be that for the nasal factices including corrupt practices at elections all allegations of malpractices include corrupt practices at elections should be thoroughly made.
In the present case a large number of cars were obviously used presumably for the purpose of carrying voters to the booths.
In the face of this voluminous evidence it was open to the judge, if evidence was available to establish who had procured or hired judge, summon witnesses who could depose to the same.
Such a vehicles, to exercised by the learned judge .
[1028 B F] (iii) In the present case it was not possible to reach the conclusion the voters were brought to the polling booths in violation of that 23(5), the result de the election had been materially affected.
In a single transferable vote, it is very difficult to say how the voting would have gone, because if all the votes which the appellant had got, had gone to one of the other candidates who were eliminated at the earlier counts, those candidates could have won.
The declaration of the respondent 's election would be merely a guess or surmise as to the nature of the voting which would have taken place if the corrupt practice had not been perpetrated and the High Court 's direction declaring him elected must therefore be set aside.
[1032 B D] (iv) The appellant was properly named as guilty of corrupt practice although the order was incorporated by the learned Judge through a review.
It was his duty to have named persons who had been guilty of corrupt practice and he made this up later.
There is no need 'for any specific power for review since the power to name any person guilty of corrupt Practice is already contained in the Act.
Whether it comes in the original judgment or by a supplementary or complementary order, is not much to the purpose that order was correctly made.
[1032 E]
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