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ON: Civil Appeals Nos. 2062 to 2064, 2072 and 2251 of 1968.
Appeals from the judgment and order dated July 3, 4, 1969 of the Gujarat High Court in Special Civil Applications Nos. 52 of 1969 etc.
and Writ Petitions Nos.
51, 52 and 57 to 60 of 1970.
Petitions under article 32 of the Constitution of India for the enforcement of fundamental rights.
B. Sen and 1.
N. Shroff, for the appellants (in C.A. No. 2062 of 1969) and respondent Nos. 2 to 4 (in V.P. Nos.
59 and 60 of 1970).
M. C. Setalvad and I. N. Shroff, for the appellants (in C.A. No. 2063 of 1969) and respondents Nos. 2 to 4 (in W.P. Nos. 51 and 52 of 1970.
I. N. Shroff, for the appellants (in C.A. Nos.
2064, 2072 and 2251 of 1969) and respondent Nos. 2 to 4 (in W.P. No. 57 and 58 of 1970).
section T. Desai, R. N. Bannerjee, K. M. Desai and Ravinder Narain, for respondents (in all the appeals) and the petitioners (in all the petitions).
B. D. Sharma and R. N. Sachthey, for respondent No. 1 (in all the petitions) The Judgment of the Court was delivered by Hegde, J.
These are connected proceedings.
Herein the validity as well as the interpretation of some of the provisions of the Bombay Provincial Municipal Corporation Act, 1949 (Act 59 of 1949) (to be hereinafter referred to as the Act) as amended from time to time by the Gujarat State comes up for consideration.
In these proceedings some of the Textile Mills of Ahmedabad are ranged against the State of Gujarat as well as the Municipal Corporation of the City of Ahmedabad.
They are seeking to get refund of some amounts paid as property tax, by them, which amounts according to them were illegally collected from them.
290 In order to understand the controversies involved in these proceedings, it is best to set out the course of events leading upto these proceedings.
Various Textile Mills which are involved in these cases will hereafter be referred to as the "companies".
These companies own immovable properties consisting of lands and buildings in the city of Ahmedabad.
The Municipal Corporation of the City of Ahmedabad (which will hereinafter be referred to as the "Corporation") in the purported exercise of its power under the Act and the rules framed thereunder assessed the immovable properties of the companies to property tax for the assessment years 1964 65 and 1965 66.
Those assessments were done on the basis of the method popularly known as "flat rate" method.
According to that method in valuing the lands, the value of plants and machinery were also taken into consideration.
The buildings were assessed on the basis of their floor area.
Those assessments were challenged by means of writ petitions under articles 226 and 227 of the Constitution before the High Court of Gujarat, by the companies.
Those petitions were dismissed by the High Court.
The aggrieved companies thereafter brought up the matters in appeal to this Court.
During the pendency of those appeals, the Corporation proceeded to assess those companies as well as others, to property tax for the assessment year 1966 67.
Those assessments were challenged before this Court by some of the companies by means of writ petitions under article 32 of the Constitution.
Meanwhile on the strength of the assessment made for the assessment years 1964 65 and 1965 66, the Corporation initiated proceedings for recovery of the taxes due under those assessments.
Some of the companies paid the tax assessed but some others including the New Manek Chowk Spinning and Weaving Mills Co. Ltd. did not pay the tax levied on them.
Hence the Officers of the Corporation resorted to the attachment 'of their properties.
At that stage, those companies challenged the validity of those attachment proceedings before the High Court of Gujarat under article 226 of the Constitution.
Those writ petitions were dismissed.
The High Court also refused to grant certificates under article 133(1) of the Constitution.
But the concerned companies appealed to this Court after obtaining special leave from this Court.
In those appeals, those companies prayed for an interim stay of the recovery proceedings.
This Court declined to stay the proceedings in view of the undertaking given on behalf of the Corporation to refund the tax collected within a month from the date of the judgment of this Court, if those companies succeeded in the writ petitions before this Court.
By its judgment dated February 21, 1967, this Court struck down the rules framed under the Act permitting the Corporation to value the lands and buildings on the "flat rate" method.
This, Court opined that it was not permissible for the Corporation to value the premises on the basis of the floor area nor could it take into consideration 291 the value of plants and machinery in determining the rateable, value of the lands and buildings.
That decision is reported in [1967]2, Supreme Court Reports p. 679 (New Manek Chowk Spinning and Heaving Mills Co. Ltd. and ors.
vs Municipal Corporation of the City of Ahmedabad and 'ors.
In view of that conclusion the assessments impugned in the writ petitions were set aside.
The judgment of this Court dealt with the validity of the assessment for the year 1966 67.
But at the time when that judgment was delivered, the appeals filed by some of the companies in respect of the assessment made for the years 1964 65 and 1965 66, were still pending in this Court.
On March 30, 1968, the State of Gujarat brought into force 'an Act entitled, Bombay Provincial Municipal Corporation (Gujarat Amendment) Act, 1968 (hereinafter referred to as the amending Act).
The appeals filed by the companies in this Court cam up for hearing on April15, 1968.
This Court allowed those appeals following its decision in New Manek Chowk Spg.
and Weaving Mills Co. Ltd. and ors.
case (supra).
When those appeals were heard neither the State of Gujarat, nor the Corporation brought to the notice of this Court, the provisions of the amending Act.
After the judgment of this Court in those appeals, the concerned companies called upon the 'Corporation to refund the amounts illegally collected from them as property taxes for the assessment years 1964 65 and 1965 66.
The Corporation did not respond to the demands made by those companies.
Hence they again moved the High Court of Gujarat under article 226 of the Constitution seeking writs of Mandamus against the Corporation and its Officers directing them to refund ' the amounts illegally collected from them and for a declaration that section 152A of the Act newly introduced by the amending Act is ultra vires the Constitution.
The High Court of Gujarat allowed those petitions.
That Court did not go into the vires of section 152A but on a construction of that provision, it came to the conclusion that the said provision did not permit the Corporation to withhold the amounts illegally collected.
The appeals with which we are concerned now were filed by the State of Gujarat and the Corporation against that decision.
During the pendency of those, appeals, the Corporation moved this Court to stay the operation of the judgment of the High Court pending disposal of those appeals.
Those applications came up for hearing on November.
5, 1969.
On that date, this Court stayed the operation of the.
judgment of the High Court of Gujarat on the Corporation undertaking to pay interest on the.
amounts in question at 6% per annum from the date on which they were collected till the date of refund in the event of the appeals failing.
A few days thereafter, the Corporation moved this Court to modify that order.
It wanted to resile from the undertaking given by it.
Hence this 292 Court modified its earlier order and dismissed the stay applications on December 9, 1.969.
On or about December 23, 1969 the Governor of Gujarat promulgated an Ordinance under article 213 of the Constitution entitled Bombay Provincial Municipal ,Corporation (Gujarat Amendment and Validating Provisions) Ordinance, 1969.
This Ordinance will be hereinafter referred to as "the Ordinance".
That Ordinance came into effect immediately.
By means of that Ordinance, a new sub section namely sub section
(3) was introduced into section 152A.
The effect of the insertion of sub section
(3) in section 152A is to authorise the Corporation and its ,Officers to refuse to refund the amount of tax illegally collected despite the orders of this Court as well as the Gujarat High Court till the assessment or reassessment of property tax is made in ,,accordance with the provisions of the Act as amended.
But under its provisions, the Corporation is required to pay interest at 6% on the amount ultimately found liable to be refunded.
In the writ petitions under consideration the validity of the aforementioned provision is challenged.
This, in brief is the history of these cases.
In these proceedings three questions of law arise for decision namely (1) What is the true scope of section 152A (2) Is that pro vision ultra vires any of the provisions of the Constitution and (3) Is sub section
(3) of section 152A (introduced by the Ordinance) violative.
of the Constitution? Section 152A reads as follows "(1) In the City of Ahmedabad if in respect of premises included in the assessment, book relating to Special Property Section, the levy, assessment, collection or recovery of any of the property taxes for any official year preceding, the official year commencing on the 1st April 1968 is affected by a decree or order of a court on the ground that the determination of the rateable value of the premises on the basis of rental value per foot of the floor area was not according to law or that sub rules (2) and (3) of rule 7 of the rules contained in Chapter VIII of Schedule A to this Act were invalid, then it shall be lawful for the Municipal Corporation of the City of Ahmedabad to assess or reassess in respect of such premises any such property tax for any such official year at the rates applicable for that year in 'accordance with the provisions of this Act and the rules as amended by the Bombay Provincial Municipal Corporations (Gujarat Amendment) Act, 1968, as if the said Act had been in force during the year for which 'any such tax is to be assessed or reassessed; and accordingly the readable value of lands and buildings in such 293 premises may be fixed and any such tax, when assessed or reassessed may be levied, collected and recovered by the said Corporation and the provisions of this Act and the rules shall so far as may be apply to such levy, collection and recovery and the fixation of rateable value and the assessment or reassessment, levy collection and recovery of any such tax under this section shall be valid: and shall, not; be called in question on the ground that the same were in any way inconsistent with the provisions of this Act and the rules as in force prior to the commencement of the said Act Provided that if in respect of any such premises the amount of tax assessed or reassessed for any year in accordance with the provisions of this section exceeds the, amount of tax which but for the decree or order of the court as aforesaid could have been assessed for that year in respect of the premises, then the amount of tax to be levied for that year in respect of the premises in accordance with the provisions of this section shall be an amount arrived at after deducting from the amount of tax so assessed or reassessed such amount as may be equal to the amount as so in excess.
(2) Where any such property tax in respect of any such premises is assessed or reassessed under subsection (1) for any official year and in respect of the same premises, the property tax for that year has already been collected or recovered, then the amount of tax so collected or recovered shall be taken into account in determining the amount of tax to be levied and collected under subsection (1) and if the amount already Collected or recovered exceeds the amount to be so levied and collected, the excess shall be refunded in accordance with the rules.
" We are in agreement with the High Court that this section does not empower the Corporation to retain the amounts illegally collected as property tax.
Under this section before a Corporation can retain any amount collected as property tax, there must be an assessment according to law.
What the section authorises, the Corporation is that, despite the fact that certain assessments have been set aside by courts, it shall be lawful for the Corporation to 'assess or reassess the premises concerned in those decisions to property tax for the concerned assessment years at the rates applicable for those years in accordance with the provisions of the Act and the rules as:amended by the amending Act as if the: said Act has been, in force during the years.
for which such tax is to assessed or reassessed and accordingly fix the rateable value of L 12 Sup CI 70 5 294 lands and buildings of those premises and assess or reassess the tax payable and when the tax is so assessed or reassessed, the tax so assessed may be levied, collected 'and recovered by the Corporation and for that purpose the provisions of the amending Act and the rules shall, so far as may, be apply to such collection and proceedings preceding those collections.
That provision further says that the fixation of rateable value so made and the collection and recovery of such tax shall be valid and shall not be called in question on the ground that the same were in any way inconsistent with the provisions of the Act and the rules in force prior to the commencement of the amending Act.
The section also authorises the Corporation to deduct from the amounts earlier illegally collected the tax assessed according to law.
All that the proviso to that section says is that the Corporation shall pay simple interest at the rate of six per centum for annum on the amount of excess liable to be refunded under sub section
(2) from the date of the decree or order of the court referred to in sub section
( 1 ) to the date on which such excess is refunded.
At this stage it may be noted that there had been no assessment orders even when these appeals were heard.
In view of our above conclusion that section 152A does not authorise the Corporation to retain the amounts illegally collected, it is unnecessary for us to examine the validity of that section.
This takes us to the validity of sub section
(3) of section 152A introduced into that section by means of the Ordinance.
That provision reads "Notwithstanding anything contained in any judgment, decree or order of any court, it shall be lawful, and shall be deemed always to have been lawful, for the Municipal Corporation of the City of Ahmedabad to withhold refund of the amount already collected or recovered in respect of any of the property taxes to which sub section (1) applies till assessment or reassessment of such property taxes is made, and the amount of tax to be levied and collected is determined under subsection (1 ) : Provided that the Corporation shall pay simple interest at the rate of six per cent per annum on the amount of excess liable to be, refunded under subsection (2), from the date of decree or order d the court referred to in sub section (1) to the date on which such excess is refunded.
" This is a strange provision.
Prime facie that provision appears to command the Corporation to refuse to refund the amount illegally collected despite the orders of this Court and the High Court.
295 The State of Gujarat was not well advised in introducing this provision.
That provision attempts to make a direct inroad into the judicial powers of the State.
The legislatures under our Constitution have within the prescribed limits, powers to make laws prospectively as well as retrospectively.
By exercise of those powers, the legislature can remove the basis of a decision rendered by a competent court thereby rendering that decision ineffective.
But no legislature in this country has power to ask the instrumentalities of the State to disobey or disregard the decisions given by courts.
The limits of the power of legislatures to interfere with the directions issued by courts were considered by several decisions of this Court.
In Shri Prithvi Cotton Mills Ltd. and anr.
vs The Broach Borough Municipality and ors.
(1) our present Chief Justice speaking for the Constitution Bench of the Court observed "Before we examine section 3 to find out whether it is effective in its purpose or not we may say a few words about validating statutes in general.
When a legislature sets out, to validate a tax declared by a court to be ille gally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively.
The most important condition of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal.
Granted legislative competence, it is not sufficient to declare merely that the decision of the court shall not bind.
for that is tantamount to reversing the decision in exercise of judicial power which the legis lature does not possess or exercise.
A court 's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances.
Ordinarily, a court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction.
Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact re moved and the tax thus made legal.
Sometime this is done by providing for jurisdiction where jurisdiction had not been properly invested before.
Sometimes this is done by re enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re enacted law." (1) 296 In Mehal Chand Sethia vs State of West Bengal(1), officer, J. speaking for the Court stated the legal position in these words, "The argument of counsel for the appellant was that although it was open to the State Legislature by an.
Act and the Governor by an Ordinance to amend the West Bengal Criminal Law Amendment (Special Courts) Act, 1949, it was incompetent for either of them to validate an order of transfer which had already been quashed by the issue of a writ of certiorari by the High Court and the order of transfer being virtually dead, could not be resuscitated by the Governor or, the: Legislature and the validating measures could not touch any adjudication by, the Court.
It appears to us that the High Court took the correct view and the Fourth Special Court had clearly gone wrong in its appreciation of the scope and effect of the.
Validating Act and Ordinance.
A legislature of a State is competent to pass any measure which is within the legislative competence under the Constitution of India.
Of course, this is subject to the provisions of Part HI of the Constitution.
Laws can be enacted either by the Ordinance making power of a Governor or the Legislature of a State in respect of the topics covered by the entries in the appropriate List in the Seventh Schedule to the Constitution.
Subject to the above limitations laws can be prospective as also retrospective in operation.
court of law can pronounce upon the validity of any law and declare the same to be null and void if it was beyond the legislative competence of the legislature or if it infringed the rights enshrined in Part III of the Constitution.
Needless to add it can strike down or declare invalid any Act or direction of a State Government which is not authorised by law.
The position of a Legislature is however different.
It cannot declare any decision of a court of law to be void or of no effect.
" Again Shah, J. (one of us) in Janpada Sabha, Chhindwara vs The Central Provinces Syndicate Ltd. and anr.
and State of Madhya Pradesh vs Amalgamated Coal Fields Ltd. and anr.
(2) ; speaking for the Constitution Bench explained the legal position in these words : "The relevant words which purported to validate the imposition, assessment and collection of cess on coal may be recalled they are 'cesses imposed, assessed or collected by the Board in pursuance of the notifications ' (1) Cr.
Appeal No. 75/69 decided on 10 9 1969.
(2) ; 297 notices specified in the Schedule shall, for all purposes, be deemed to be , and to have always been validly imposed, assessed or collected as if the enactment under which they were so issued stood amended at all material times so as to empower the Board to issue the said notifications/notices.
Thereby the enactments, i.e. Act 4 of 1920 and the Rules, framed under the Act pursuant to which the notifications and notices were issued, must be deemed to have been amended by the Act.
But the Act does not set out the amendments intended to be made in the enactments.
Act 18 of 1964 is a piece of clumsy drafting.
By a fiction it deems the Act of 1920 and the rules framed thereunder to have been amended without disclosing the text or even the nature of the amendments.
" Proceeding further, it was observed "On the words used in the Act, it is plain that the legislature attempted to overrule or set aside the decision of this Court.
That in our judgment, is not open to the Legislature to do under our constitutional scheme.
It is open to the Legislature within certain limits to amend the provisions of an Act retrospectively and to declare what the law shall be deemed to have been, but it is not open to the Legislature to say that a judgment of a court properly constituted and rendered in exercise of its powers in a matter brought before it shall be deemed to be ineffective and the interpretation of the law shall be otherwise than as declared by the Court.
" We are clearly of, the opinion that sub section
(3) of section 152A introduced by the Ordinance is repugnant to our Constitution.
That apart, the said provision authorities the Corporation to retain the ,amounts illegally collected and treat them as loans.
That ,is an authority to collect forced loans.
Such conferment of power is impermissible under our Constitution see State of Madhya Pradesh vs Ranojirao Shinde and anr.
( 4 ) In the result, the above appeals are 'dismissed with costs and the writ petitions allowed and section 152A(3) is struck down.
The petitioners are entitled to their costs in those petitions one hearing fee both in the appeals and in the writ petitions.
Y.P. Appeals dismissed.
| IN-Abs | The appellant Corporation assessed the immovable properties of the respondents to property tax for the year 1964 65 and 1965 66 on the basis of the 'flat rate ' method under the Bombay Provincial Municipal Corporation Act, 1949.
The assessments were challenged in the High Court but the petitions were dismissed.
While appeals were pending in this Court, the appellant initiated proceedings for the recovery of the taxes and attached the properties of the respondents.
The respondents challenged the attachment proceedings but their petitions were again dismissed.
In appeals against those orders in this Court the respondents prayed for interim stay, but this Court did not grant stay because the appellant undertook to return the amounts if the respondents succeeded.
This Court thereafter allowed the appeals by the respondents.
Meanwhile an amending Act entitled the Bombay Provincial Municipal Corporation (Gujarat, Amendment) Act, 1968, was passed introducing section 152A into the 1949 Act, but that provision was not brought to the notice of this Court.
However, when.
the respondents demanded refund of the amounts illegally collected from them the appellant did not comply and hence the respondents moved the High Court again.
Those petitions were allowed and the appellant appealed to this Court.
While the appeals were pending, the Bombay Provincial Municipal Corporation (Gujarat Amendment and Validity Provisions) Ordinance, 1969, was passed and sub section
(3) was introduced in s 152A. HELD : Under section 152A before a Corporation can retain any amount collected as property tax, there must be an, assessment according to law.
But in the present case there Were no 'assessment orders in accordance with the provisions of the 1949 Act and the rules as amended by the, Amending Act, 1968.
Therefore, the appellant was not entitled to retain, the amounts collected as the section does not authorise the Corporation to retain amounts illegally collected.
[293 G; 294 D] (2) Sub Section (3) of section 152A, commands the Corporation to refuse to refund the amount illegally collected despite the orders of this Court and the High Court.
It markes a direct inroad into the judicial powers of the State.
The Legislatures under the Constitution have, within prescribed limits, powers to make laws prospectively as well as retrospectively.
By exercise of those powers the legislature can remove the basis of a decision rendered by a competent, court thereby rendering the decision ineffective.
But, no legislature in this Country has power to ask the instrumentalities of the State to disobey or disregard the decisions given by courts.
Therefore, section 152A(3), introduced by the Ordinance is repugnant to the Constitution.
1294 H; 295 A C; 297 F] Shri Prithvi Cotton Mills Ltd. vs Broach Borough Municipality [1970] 1 S.C.R. Mahal Chand Sethia vs State of West Bengal Cr.
No. 75/69 dt.
289 10 9 69 and Janpada Sabha, Chhindwara vs Central Provinces Syndicate Ltd. and State of Madhya Pradesh vs Amalgamated Coal Fields Ltd. ; , followed.
The apart it authorises the Corporation to retain the amounts illegally collected and ' treat them as loans, that is, authorises the collection of forced loans which is impermissible under the Constitution.
State of Madhya Pradesh vs Ranojirao Shinde, [1968] 3 S.C.R. 489, followed.
|
Appeal No. 104 of 1953.
Appeal from the Judgment and Order dated the 28th day of March, 1952, of the High Court of Judicature at Bombay in Income tax Reference No. 39 of 1951 arising out of the Order dated the 23rd day of April, 1951, of the Income tax Appellate Tribunal in Income tax Appeal No. 5228 of 1950 51. 112 878 Jamshedji Kanga, (R. J. Kolah, M. M. Jhaveri and Rajinder Narain, with him) for the appellant.
M.C. Setalvad, Attorney General.
for India, (G. N. Joshi, with him) for the respondent.
October 28.
The Judgment of the Court was delivered by GHULAM HASAN J.
This appeal raises an interesting point of law under the Indian Income tax Act.
The question referred by the Tribunal to the High Court of Judicature at Bombay was stated thus: " Whether 60% of the dividend amounting to Rs. 2,750 received by the assessee from the two Tea companies is agricultural income and as such exempt under section 4(3) (viii) of the Act." Chagla C.J. and Tendolkar J., who heard the reference, answered the question in the negative by two separate but concurring judgments dated March 28, 1952.
The facts lie within a narrow compass.
The appellant, Mrs. Bacha F. Guzdar, was, in the accounting year 1949 50, a shareholder in two Tea:companies, Patrakola Tea Company Ltd., and Bishnath Tea Company Ltd., and received from the aforesaid companies dividends aggregating to Rs. 2,750.
The two companies carried on business of growing and manu facturing tea.
By rule 21 of the Indian Income tax Rules, 1922, made in exercise of the powers conferred by section 59 of the Indian Income tax Act, it is provided that "income derived from the sale of tea grown and manufactured by the seller in the taxable territories shall be computed as if it were income derived from business and 40% of such income shall be deemed to be income, profits and gains, liable to tax.
" It is common ground that 40% of the income of the Tea companies was taxed as income from the manufacture and sale of tea and 60% of such income was exempt from tax as agricultural income.
According to the appellant, the dividend income received by her in respect of the shares held by her in the said Tea companies is to the extent of 60% agricultural income in her hands and therefore pro tanto exempt from tax while the Revenue contends that dividend income is 879 not agricultural income and therefore the whole of the income is liable to tax.
The Income tax Officer and on appeal, the Appellate Assistant Commissioner both concurred in holding the whole of the said income to be liable to tax.
The Income tax Appellate Tribunal confirmed the view that the dividend income could not be treated as agricultural income in the hands of the shareholder and decided in favour of the Revenue, but ' agreed that its order gave rise to a question of law and formulated the same as set out above and referred it to the High Court.
The High Court upheld the order of the Tribunal but granted leave to appeal to this Court.
The question, we comprehend, is capable of an easy solution and can best be answered by reference to the material provisions of the Income tax Act.
Under section 2(1) 'agricultural income ' means: (a) any rent or revenue derived from land which is used for agricultural purposes, and is either assessed to land revenue in the taxable territories or subject to a, local rate assessed and collected by officers of the Government as such; (b) (i). . . (ii). . . . . . (iii). . . . . . (c). . . . . . " Sub section (15) of section 2 defines " total income" as total amount of income, profits and gains, referred to in sub section (1) of section 4 computed in the manner laid down in this Act, Section 3 authorises income tax to be charged upon a person in respect of the total income of the previous year.
Section 4 lays down that the total income of any previous year of any person to be charged must include all income, profits and gains, from whatever source derived and defines the scope of its application for purposes of tax.
Sub section (3) of the same section enacts certain exemptions upon the chargeability of the income and clause (iii) includes agricultural income in the category of exemptions.
Section 6 mentions the various heads of income, profits and gains, chargeable.
to income, tax 880 including in that category clause (v) 'income from other sources.
' It is common ground that dividend falls under this category.
In order, however, that dividend may be held to be Agricultural income it will be incumbent upon the appellant to show that, within the terms of the definition, it is rent or revenue derived from land which is used for agricultural 'purposes.
Mr. Kolah, for the appellant, contends that it is revenue derived from land because 60% of the profits of the company out of which dividends are payable are referable to the pursuit of agricultural operations on the part of the company.
It is true that the agricultural process renders 60% of the profits exempt from tax in the hands of the company from land which is used for agricultural purposes but can it be said that when such company decides to distribute its profits to the shareholders and declares the dividends to be allocated to them , such dividends in the hands of the shareholders also partake of the character of revenue derived from land which is used for agricultural purposes ? Such a position if accepted would extend the scope of the vital words I revenue derived from land ' beyond its legitimate limits.
Agricultural income as defined in the Act is obviously intended to refer to the revenue received by direct association with the land which is used for agricultural purposes and not by indirectly extending it to cases where that revenue or part thereof changes hands either by way of distribution of dividends or otherwise.
In fact and truth dividend is derived from the investment made in the shares of the company and the foundation of it rests on the contractual relations between the company and the shareholder.
Dividend is not derived by a shareholder by his direct relationship with the land.
There can be no doubt that the I initial source which has produced the revenue is land used for agricultural purposes but to give to the words 'revenue derived from land the unrestricted meaning, apart from its direct association or relation with the land, would be quite unwarranted.
For example, the proposition that a creditor advancing money on interest to an agriculturist 881 and receiving interest out of the produce of the lands in the hands of the agriculturist can claim exemption of tax upon the ground that it is agricultural income within the meaning of section 4, sub section (3) (viii), is hardly statable.
The policy of the Act as gathered from the various sub clauses of section 2(1) appears to be to exempt agricultural income from the purview of Income tax Act.
The object appears to be not to subject to tax either the actual tiller of the soil or any other person getting land cultivated by others for deriving benefit therefrom, but to say that the benefit intended to be conferred upon this class of persons should extend to those into whosoever hands that revenue falls, however remote the receiver of such revenue may be, is hardly warranted.
It was argued by Mr. Kolah on the strength of an observation made by Lord Anderson in Commissioners of Inland Revenue vs Forrest(1), that an investor buys in the first place a share of the assets of the industrial concern proportionate to the number of shares he has purchased and also buys the right to participate in any profits which the company may make in the future.
That a shareholder acquires a right to participate in the profits of the company may be readily conceded but it is not possible to accept the contention that the shareholder acquires any interest in the assets of the company.
The use of the word 'assets ' in the passage quoted above cannot be exploited to warrant the inference that a shareholder, on investing money in the purchase of shares, becomes entitled to the assets of the company and has any share in the property of the company.
A shareholder has got no interest in the property of the company though he has undoubtedly a right to participate in the profits if and when the company decides to divide them.
The interest of a shareholder vis a vis the company was explained in the case of Chiranjitlal Chowdhuri vs The Union of India and Others(1).
That judgment negatives the position taken up on behalf of the appellant that a shareholder has got a right in the property of the company.
It is true that the shareholders of the company have (1) ,710., (2) ; , 904.
882 the, sole determining voice in administering the affairs of the company and are entitled, as provided by the Articles of Association to declare that dividends should be distributed out of the profits of the company to the shareholders but the interest of the shareholder either individually or collectively does not amount to more than a right to participate in the profits of the company.
The company is a juristic person and is distinct from the shareholders.
It is the company which owns the property and not the shareholders.
The dividend is a share of the profits declared by the company as liable to be distributed among the shareholders.
Reliance is placed on behalf of the appellant on a passage in Buckley 's Companies Act, 12th Ed., page 894, where the etymological meaning of dividend is given as dividendum, the total divisible sum but in its ordinary sense it means the sum paid and received as the quotient forming the share of the divisible sum payable to the recipient.
This statement does not justify the contention that shareholders are owners of a divisible sum or that they are owners of the property of the company.
The proper approach to the solution of the question is to concentrate on the plain words of the definition of agricultural income which connects in no uncertain language revenue with the land from which it directly springs and a stray observation in a case which has no bearing upon the present question does not advance the solution of the question.
There is nothing in the Indian law to warrant the assumption that a shareholder who buys shares buys any interest in the property of the company which is a juristic person entirely distinct from the shareholders.
The true position of a shareholder is that on buying shares an investor becomes entitled to participate in the profits of the company in which he holds the shares if and when the company declares, subject to the Articles of Association, that the profits or any portion thereof should be distributed by way of dividends among the shareholders.
He has undoubtedly a further right to participate in the assets of the company which would be left over after winding up, but not in the assets as a whole as Lord Anderson puts it.
883 The High Court expressed the view that until a dividend is declared there is no right in a shareholder to participate in the profits and according to them the declaration of dividend by the company is the effective source of the dividend which is subject to tax.
This statement of the law we are unable to accept.
Indeed the learned Attorney General conceded that he was not prepared to subscribe to that proposition.
The ' declaration of dividend is certainly not the source of the profit.
The right to participation in the profits exists independently of any declaration by the company with the only difference that the enjoyment of profits is postponed until dividends are declared.
It was argued that the position of shareholders in a company is analogous to that of partners inter se.
This analogy is wholly inaccurate.
Partnership is merely an association of persons for carrying on the business of partnership and in law the firm name is a compendious method of describing the partners.
Such is, however, not the case of a company which stands as a separate juristic entity distinct from the shareholders.
In Halsbury 's Laws of England, Volume 6 (3rd Ed.), page 234, the law regarding the attributes of shares is thus stated : " A share is a right to a specified amount of the share capital of a company carrying with it certain rights and liabilities while the company is a going concern and in its winding up.
The shares or other interest of any member in a company are personal estate transferable in the manner provided by its articles, and are not of the, nature of real estate.
" In Borland 's Trustee vs Steel Brothers &,Co. Ltd.(1), Farwell J. held that "a share in a company cannot properly be likened to a sum of money settled upon and subject to executory limitations to arise in the future ; it is rather to be regarded as the interest of the shareholder in the company, measured, for the purposes of liability and dividend, by a sum of money . . . . . ." It was suggested that the dividend arises out of the profits accruing from land and is impressed with the same character as the profits (1) 884 and that it does not change its character merely because of the incident that it reaches the hands of the shareholder.
This argument runs counter to.
the definition of agricultural income which emphasizes the necessity of the recipient of income having a direct and an immediate rather than an indirect and remote relation with land.
To accept this argument will be tantamount to saying that the creditor recovering interest on money debt due from the agriculturist who pays out of the produce of the land is equally entitled to the exemption.
In fairness to Mr. Kolah it must, however, be stated that the contention was not so broadly put but there is no reason why one should stop at a particular stage and not pursue the analogy to its logical limits.
English decisions resting upon the peculiarities of the English Income tax law can hardly be a safe guide ,in determining upon the language of the Indian Income tax Act the true meaning of the words 'agricultural income. ' A few cases of the Privy Council decided with reference to the provisions of the Indian Income tax Act, however, deserve notice.
The first case, viz., Commissioner of Income tax, Bihar and Orissa vs Raja Bahadur Kamakshya Narayan Singh and Others(1), dealt with the question whether interest on arrears of rent payable in respect of land used for agricultural purposes is agricultural income and therefore exempt from income tax.
It was held that it was neither rent nor revenue derived from land within the meaning of section 2(1) of the Income tax Act.
Lord Uthwatt who delivered the judgment of the Privy Council used the following piquant language in coming to that conclusion : "The word derived ' is not a term of article Its use in the definition indeed demands an enquiry into the genealogy of the product.
But the enquiry should stop as soon as the effective source is discovered.
In the genealogical tree of the interest land indeed appears in the second degree, but the immediate and effective source is rent, which has suffered the accident of (1) 885 non payment.
And rent is not land within the meaning of the definition.
" The second case, viz., Premier Construction Co. Ltd. V. Commissioner of Income tax, Bombay City(1), dealt, with the nature of the commission of a managing agent of the company a part of whose income was agricultural income.
The assessee claimed exemption from tax on the ground that his remuneration at 10 per cent.
of the profits was calculated with reference to the income of the company part of which was agricultural income.
It was held that the assessee received no agricultural income as defined by the Act but that he received a remuneration under a contract for personal service calculated on the amount of profits earned by the employer, payable not in specie out of any item of such profits, but out of any moneys of the employer avail Able for the purpose, and that the remuneration therefore was not agricultural income and was not exempt from tax.
Sir John Beaumont in the above case observed : " In their Lordships ' view the principle to be derived from a consideration of the terms of the Income tax Act and the authorities referred to is that where an assessee receives income, not itself of a character to fall within the definition of agricultural income contained in the, Act, such income does not assume the character of agricultural income by reason of the source from which it is derived, or the method by which it is calculated. " In the third case, viz., Maharajkumar Gopal Saran Narain Singh vs Commissioner of Income tax, Bihar and Orissa(1), an annual payment for life to the assessee was not held to be agricultural income and therefore not exempt from tax where the annuity arose out of a transfer made by the assessee of a portion of his estate for discharging his debts and for obtaining an adequate income for his life it being held that it was not rent or revenue derived from land but.
money paid under a contract imposing personal liability on the covenantor the discharge of which was secured by a charge on (1) (2) 886 land.
But reliance was placed uponanother judgment of the Privy Council in the same volume at page 305 'in Commissioner of Income tax, Bihar and Orissa vs Sir Kameshwar Singh(1).
That was a case of a usufructuary mortgagee the profits received by whom were exempt from income tax on the ground that they were agricultural income in his hands.
Lord Macmillan, after referring to certain sections of the Act, observed that "the result of those sections is to exclude agricultural income altogether from the scope of the Act howsoever or by whomsoever it may be received.
" These observations must be held to be confined to the facts of that particular case which was a case of usufructuary mortgagee who had received profits directly from the land.
The obvious implication of the words used by Lord Macmillan was that whosoever receives profit from the land directly is entitled to the exemption.
Reference was also made to some English decisions but they have no bearing upon the present case as they were founded on the English Income tax law and the provisions of the particular statute.
The learned Attorney General also contended that the conclusion that dividend is not agricultural income also follows from the provisions of section 16, subsection (2) and the proviso to the Act.
According to him, this section compels the assessee to show in his return the whole dividend including the portion which is excluded on the ground of agricultural income.
We do not consider it necessary to express any opinion upon this contention as our conclusion reached as a result of the foregoing discussion is sufficient to dispose of the appeal.
We accordingly dismiss the appeal with costs.
Appeal dismissed.
| IN-Abs | Agricultural income as defined in a. 2(1) of the Indian Income.
tat Act, 1922, signifies income proximately derived from direct association with land by a person who actually tills the land or 877 gets it cultivated by others.
Agricultural income does not mean income which can be ultimately or indirectly traced to have connection with agricultural operations.
Even though a tea company growing and manufacturing top gets an exemption of 60 per cent.
of the profits as agricultural income in accordance with rule 24 framed under section 59 of the Act, it must be held that the dividend of such company is not derived by the shareholder owing to his direct connection with the land in which be% is grown and such dividend is not agricultural income within the meaning of section 2(1) of the Act and hence is not exempted from income tax under section 4(3)(viii) of the Act.
The dividend of a shareholder is the outcome of his right to participate in the profits of the company arising out of the contractual relation between the company and the shareholder and this right exists independently of any declaration of the dividend though until such declaration the enjoyment of the profits is postponed.
The shareholder by purchase of the share does not acquire any interst in the assets 'of the company till after the company is wound up.
The position of a shareholder of a company is altogether different from that of a partner of a firm.
A company is a juristic entity distinct from the shareholders but the firm is a collective name or an alias for all the partners.
Decisions based on the peculiarities of Income tax law of England are hardly safe guides for determining the true meaning of the term "agricultural income" Under the Indian Income tax Act, 1922.
Chiranjit Lal Chowdhuri vs The Union of India [1950] S.C.R. 869) followed.
Commissioners of Inland Revenue vs Forrest (1924) 8 T.C. 704, Borland 's Trustee vs Steel Brothers & Co. Ltd. L.R. , Commissioner of Income tax, Bihar and Orissa vs Baia Bahadur Kamakshya Narayan Singh and Others , Premier Construction Co. Ltd. vs Commissioner of lncome tax, Bombay City and Maharaj kumar Gopal Saran Narain Singh vs Commissioner of Income tax, Bihar and Orissa referred to.
|
Appeals Nos. 2380 and 2381 of 1966.
Appeals from the judgment and order dated January 7, 1966 of the Calcutta, High Court in Income tax References Nos. 7 and 176 of 1961.
section Mitra, section K. Aiyar, R, N. Sachthey and B. D. Sharma, for the appellant (in both the appeals).
A. K. Sen, O. P. Khaitan and B. P. Maheshwari, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Grover, J.
These appeals by certificate arise out of a common judgment of the Calcutta High Court in two Income tax References.
The assessee is a private limited company.
It carried on the business of banking and financing as also of managing agency.
Starch Products Ltd. was one of the various companies which was being managed by the assessee.
Starch Products had appointed the U.P. Sales Corporation Ltd. as its selling agent.
The assessee claimed to have stood guarantee for a loan of Rs. 6 lakhs which was advanced to the U.P. Sales Corporation Ltd. by the Gwalior Industrial Bank Ltd. The borrower failed to pay the loan which on August 2, 1948 stood at Rs. 5,60,199.
This amount was paid by the assessee pursuant to the guarantee.
Thereafter the assessee treated the U.P. Sales Corporation Ltd. as its debtor for the aforesaid amount.
That company went into liquidation and as the assessee could not recover anything from it a sum of Rs. 5,60,199 was written off in the books of the assessee company.
The claim was not entertained either by the Income tax Officer or the Appellate Assistant Commissioner.
Before the Income tax Officer the 359 said amount Was claimed as bad debt vide assessee 's letter dated September 12, 1957.
The Income tax Officer rejected the explanation furnished by the assessee for advancing such a large amount to a company whose financial position was far from satisfactory.
According to him the advance was not a bona fide money lending investment.
Subsequently it was sought to be established before the Income tax Officer, that an indemnity had been given to the Gwalior Industrial Bank Ltd. in the matter of the loan account of the U.P. Sales Corporation Ltd. and the payment had been made on its failure to clear the debt of the Bank.
According to the In come tax Officer the assessee was asked to produce evidence about the guarantee having been furnished but he was not satisfied that there was any directors ' resolution authorising the furnishing of a guarantee or that the document purporting to be a guarantee had been properly stamped or that there was other sufficient evidence to establish the transaction.
Before the Appellate Assistant Commissioner the only substantial ground taken was that the Income tax Officer had wrongly disallowed the claim &or bad debt amounting to Rs. 5,60,199.
The Appellate Assistant Commissioner considered the question of the aforesaid amount being an admissible deduction or allowance under section 10(2) (xi) of the Income tax Act 1922.
In his opinion the guaranteeing of a loan though made in the interest of the assessee 's business and is a matter of commercial expediency did not represent an advance made in the normal course of the assessee 's business.
Such an advance could have been made only if it had been made to the company managed by the assessee under a contractual obligation to guarantee the finances of the managed company.
According to him the claim for irrecoverable loan would have been also admissible if the assessee could establish that the loan represented an interest bearing advance made in the course of the assessee 's money lending business but that was not the case of the assessee.
And since the loan had been advanced to assist a concern having trade relations with one of the managed companies it could not be allowed as a permissible deduction.
The appellate tribunal did not agree with the finding of the Appellate Assistant Commissioner that the loss was not directly incidental to the assessee 's business.
This is what the tribunal stated in its order : "The Appellate Assistant Commissioner, in our opinion, failed to appreciate the special nature of the business carried on by the assessee.
This is not a case where any money was advanced by the assessee for the purpose of earning interest.
All that the assesses did was to stand surety for the money advanced by a Bank to the selling agent of one of its managed companies,.
If such a 3 60 guarantee was not given Messrs. Starch Products Ltd., one of the managed companies, would have had to give extended credit to the selling agent and this could be possible if the managed company in its turn was financed either by the managing agents or a third party.
It was to obviate the necessity of such borrowing by the managed company that the assessee company stood guarantee for the loan given by Gwalior Industrial Bank Ltd. to U.P. Sales Corporation Ltd. It was only on the failure on the part of the borrower, i.e. U.P. Sales Corporation Ltd., to fulfill its committment that the assessee as a guarantor came into the picture. ' There was, therefore, no question of earning of any interest on any money advanced.
It was in the larger interest of the assessee 's business that the guarantee was given.
The standing of surety for the sales Organisation of the managed company and the consequent loss arising therefrom was in our opinion germane to the assessee 's 'business.
It is now well established that a sum of money extended not of necessity and with a view to give a direct and immediate benefit to the trade but voluntarily and on the ground of commercial expediency and in order to indirectly facilitate the carrying on of the business, may yet be an allowable deduction in computing the profits and gains of the business.
" The Tribunal held that the assessee 's claim for the loss of Rs. 5,60,199 was an admissible deduction.
At the instance of the Commissioner of Income tax, the Tribunal referred the following question of law to the High Court: "Whether on the facts and in the circumstances of the case, the sum of Rs. 5,60,199 was an admissible deduction in computing the business profits of the assessee ?" Three other questions were referred to the High Court on an application made under section 66(2) of the Act.
It is unnecessary to refer to them as the real controversy has centred on the above question alone.
The High Court addressed itself to the question whether the amount in dispute fell within section 10(2) (xi) of the Act.
The finding of the Appellate Assistant Commissioner that the guarantee had in fact been furnished to the Bank was not disputed.
This is what the High Court said after referring to certain decided cases and the relevant portion of the Tribunal 's judgment : "We agree that it was in the larger interest of the assessee 's business that the guarantee was given and we 3 6 1 are of the opinion that the debt was incidental to the business of the assessee within the meaning of section 10(2)(xi) of the Act and such a debt was found to be irrecoverable in the relevant accounting year commencing on the 31st October 1951 and ending on the 18th October 1.952." While computing profits or gains of business under section 10 certain allowances have to be made under sub section
The allowance covered by clause (xi) thereof has to be made when the assessee 's accounts in respect of any part of his business, profession or vocation are not kept on the cash basis, of such sum, in respect of bad and doubtful debts, due to the assessee in respect of that part of his business, profession or vocation, ,and in the case of an assessee carrying on a banking or money lending business of such sum in respect of loans made in the ordinary course of such business as the Income tax Officer may estimate to be irrecoverable but not exceeding the amount actually written off as irrecoverable in the books of the assessee.
Now a bad debt means a debt which would have gone into the balance sheet as a trading debt in the business or trade.
It must arise in the course of and as a result of the assessee 's 'business.
The deduction claimed should not be too remote from the business carried on by the assessee.
In Madan Gopal Bagla vs Commissioner of Income tax West Bengal(1) the principle which was accepted was that the debt in order to fall within section 10(2) (xi) must be one which can properly be called a trading debt i.e. debt of the trade the profits of which are being computed.
It was observed that the assessee in that ease was not a person carrying on business of standing surety for other persons nor was he a money lender.
He was simply a timber merchant.
There was some evidence that he had from time to time obtained finances for his business by procuring loans on the joint security of himself and some other person.
But it was not established that he was in the habit of standing surety for other persons along with them for the purpose of securing loans for their use and benefit.
Even if such had been the case any loss suffered by reason of having to pay a debt borrowed for the benefit of another would have been a capital loss to him and not a business loss at all.
A businessman may have to stand surety for some one in order to get monies for his own business.
There may be a custom of the business by which that may be the only method whereby he could get money for the purpose of his own business.
If he is to discharge a surety debt and if any such custom is established it would be a business debt.
If the assessee has made a payment not voluntarily but to discharge a legal obligation which arises from his business.
he would be entitled to have the amount deducted as a bad debt under section 10(2)(xi); see Commissioner of Income tax Bombay vs (1) 362 Abdullabhai Abdulkadar(1).
In Essen Private Ltd. vs Commis sioner of Income tax(2) Madras, the appellant carried on business as a managing agent of several concerns.
Pursuant to the agreement with one of the companies managed by it, it advanced large sums of money to the managed company and also guaranteed a loan of Rs. 2 lakhs obtained by that company from a Bank.
The managed company failed in its business and upon the Bank pressing for payment the appellant in accordance with its guarantee made certain payments to that Bank.
The assessee had ultimately to write off certain sum in its books as bad debts and it claimed that allowance under section 10(1) (xi).
The Tribunal found that the advances to the managed company and the agreement guaranteeing the loan to the managed company were in pursuance its objects and were made in the course of its business and the claim was allowed.
That decision was finally affirmed by this Court.
In this case there was a cause in the memorandum of association by which the assessee was entitled to land monies and to guarantee the performance of contracts.
Similarly the managing agency agreement contained a clause about lending and advancing of money to the managed company.
It was found by the appellate tribunal that it was a part of the managing agency to provide funds to the managed company.
In the present case none of those facts have been found.
Neither the memorandum of association nor the managing agency agreement contained any such provision by which it could be said that the guaranteeing of the loan made by the Bank to the selling agents was done in the course of the managing agency business.
In our judgment the facts relied upon by the appellate tribunal and the High Court are barely sufficient for bringing the allowance claimed under section 10(2) (xi).
It may be mentioned that the case of the assessee was confined to that provision and no reliance was placed on any other provision under which such an allowance could be claimed.
There was no privity of contract or any legal relationship between the assessee and the selling agent.
Neither under customer nor under any statutory provision or any contractual obligation was the assessee bound to guarantee the loan advanced by the Bank to the selling agent.
It is difficult how it was in the interest of the assessee 's business that the guarantee was given.
There was even no material to establish that the managed company was under any legal obligation to, finance the selling agent or to guarantee any loans advanced to the selling agent by a third party.
It is incomprehensible in what manner the guaranteeing of the loan advanced to the selling agent indirectly facilitated the carrying on of the assessee 's business.
It is equally difficult to appreciate the observations of the High Court that it was in the larger interest of (1) (2) 363 the assessee 's business that the guarantee was given.
In our opinion the view of the appellate tribunal was based on a complete misapprehension of the true legal position.
The High Court also fell into the same error.
The allowance which was claimed did not fall within section 10(2) (xi).
No attempt was made nor indeed it could be usefully made to claim any allowance under section 10(2:) (xv)of the Act.
For the reasons given above the correct answer to the question referred should be in the negative and against the, assessee.
The appeals are thus allowed with costs and the judgment of the High Court is set aside.
One hearing fee.
G.C. Appeals allowed.
| IN-Abs | The assessee was a Private Limited Company.
It carried on the business of banking and financing as also of managing agency.
Starch Products Ltd., was one of various companies which was being managed by the assessee.
Starch Products had appointed the U.P. Sales Corporation Ltd., as its selling agent.
The assessee claimed to have stood guarantee for a loan of Rs. 6 lacs which was advanced to U.P. Sales Corporation Ltd., by the Gwali Industrial Bank.
The borrower failed to pay the loan which on August 2, 1948 stood at Rs. 5,60,199.
This amount was paid by the assessee pursuant to the guarantee.
Thereafter the assessee treated the U.P. Sales Corporation as its debtor for the aforesaid amount.
That company went into liquidation and as the assessee could not recover anything from it, a sum of Rs. 5,60,199 was written off in the books of the assessee company.
Before the Income tax Officer the said amount was claimed as a bad debt under section 10(2) (xi) of the Income tax Act, 1922.
The Income tax Officer rejected the claim.
The assessee 's appeal before the Assistant Commissioner failed.
The Appellate Tribunal, however, held that the guarantee given by the assessee was of indirect benefit to the assesse 's business because if it had not guaranteed the loan in question the company managed by it would have had to give extended credit to its selling agent which it could not have done without borrowing money either from the assessee or some third party.
In reference, the High Court also held that the guarantee was in the larger interest of the assessee 's business.
The Commissioner of Income tax appealed to this Court by special leave.
HELD : (i) While computing profits or gains of business under section 10 certain allowances have to be made under sub section
The allowance covered by cl.
(xi) thereof has to be made, when the assessee 's accounts in respect of any part of his business, profession or vocation are not kept on a cash basis, of such sum, in respect of the bad and doubtful debts, due to the assessee in respect of that part of his business profession and vocation and in the case of an assessee carrying an a banking or money lending business of such sum in respect loans made in the ordinary course of such business as the Income tax Officer may estimate to be irrecoverable but not exceeding the amount actually written off as irrecoverable in the books of the assessee.
A bad debt means a debt which would have gone into the balance sheet as a trading debt in the business or trade.
It must arise in the course of and as a result of the assessee 's business.
The deductions claimed should not be too remote from the business carried on by the assessee.
[361 B E] 12 Sup.
C 1/70 9 358 In the present case, neither the memorandum of association nor the managing agency agreement contained any such provisions by which it could be said that he guarantee of the loan made by the bank to the selling agents was done in the course of the managing agency business.
There was no privity of contract or any legal relationship between the assessee and the selling agent.
Neither under custom nor under any statutory provision or any contractual obligation was the assessee bound to guarantee the loan advanced by the bank to the selling agent. 'The guarantee could not be said to be indirectly in the interest of the assessee 's business, or as held by the High Court, in its larger interest.
The Tribunal and the High Court were, therefore, in error in holding that the sum in question was allowable as a deduction under section 10 (2) (xi).
[362 D E, F H] Madan Gopal Bagla vs Commissioner of Income tax, West Bengal, and Commissioner of Income tax, Bombay vs Abdullabhai Abdulkadar, , applied.
Essen Private Ltd. vs Commissioner of Income tax, 65 I.T.R. 625, distinguished.
|
Civil, Appeal No. 2272 of 1966, Appeal from the judgment and order dated January 6, 1966 of Calcutta High Court in Income tax Reference No. 211 of 1961.
section Mitra, A. section Nambiar, R. N. Sachthey and B. D. Sharma, for the appellant.
M. C. Chagla and P. K. Chatterjee, for the respondents 309 The Judgment of the Court was delivered by Hegde, J.
This is, an appeal by certificate, granted by the High Court of Calcutta under section 66A(2) of the Indian Income Tax Act, 1922 (to be hereinafter referred to as the Act) against the decision of that Court in a reference under section 66 (1) of that Act.
The two questions of law referred to the High Court by the tribunal are : (1) Whether section 16(3) of the Act was ultra vires the Central Legislature and (2) Whether on the facts and in the circumstances of the case, the income arising to the three minor sons of the assessee by virtue of their admission to the benefits of the partnership of Messrs. Ajitmal Kanhaiyalal was rightly included in the total income of the assessee under section 16 (3) (a) (iv) of the Act.
The assessee at whose instance those question were referred did not press for an answer in respect of question No. 1.
Therefore that question was not dealt with by the High Court.
Hence we need not go into that question.
The High Court answered the second question in favour of the assessee.
The facts necessary for the purpose of deciding the point in dispute as set out in the statement of the case submitted by the tribunal are as follows : The assessee Shri Ajitmal Parekh was a partner of the firma M/s. Ajitmal Kanhaiyalal having annas share therein.
He continued to be a partner of that firm till July 1, 1954 which was the last date of the accounting year of the firm, relevant for the, assessment year 1955 56.
On July 1, 1954, the assessee retired from the firm.
Thereafter he gifted to each of his four sons Rs., 75,000/ .
Out of his four sons, three were minors at that time.
There was a reconstitution of the firm with effect from July 2, 19.54 as evidenced by the partnership deed dated July 5, 1954.
The major son of the assessee became a partner of the reconstituted firm and his minor sons were admitted to the benefits of that partnership in the reconstituted firm.
The major son had 2 annas share.
His three minor brothers were admitted to the benefits of the partnership, each one of them having 2 annas share.
In the assessment year 1956 57, the Income tax Officer held that the income arising to the minors by virtue of their admission to the benefits of the partnership came within the purview of section 16(3) (a) (iv) of the Act.
He included that income in the total income of the assessee for that year.
In appeal the Appellate Assistant Commissioner substantially upheld the order of assessment made by the Income tax Officer but he held that the 2Supe Cl/7C 6 310 minors were entitled to only 1 9 pies share in the firm.
The assessee took up the matter in appeal to the Income tax Appellate 'Tribunal.
The tribunal upheld the decision of the Appellate Assistant Commissioner.
On the facts found by the tribunal, the High Court came to the conclusion that answer to question No. 2 should be in the negative and in favour of the assessee.
The tribunal found that the capital invested by the minors in the firm came from the gift made in their favour by their father, the assessee.
That finding was not open to question before the High Court nor did the High Court depart from that finding.
But on an interpretation of section 16(3) (a) (iv) the High Court opined that the answer to the question must be in favour of the assessee.
Section 16(3) (a) (iv) reads "In computing the total income of any individual for the purpose of assessment, there shall be included (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly.
(iv) from assets transferred directly or indirectly to the minor child, not being a married daughter by such individual otherwise than for adequate consideration.
" Before any income of a minor child can be brought within the scope of section 16(3) (iv), it must be established that the said income arose directly or indirectly from assets transferred directly or indirectly by its father.
There is no dispute that the assessee had transferred to each of his minor sons, a sum of Rs. 75,000,/ .
It may also be that the amount contributed by those minors as their share in the firm came from those amounts.
But the question still remains whether it can be said that the income with which we are concerned in this case arises directly or indirectly from the assets transferred by the assessee to those minors.
The connection between the gifts mentioned earlier and the income in question is a remote one.
The income of the minors arose as a result of their admission to the benefits of the partnership.
It is true that they were admitted to the benefits of the partnership because of he contribution made by them.
But there is no nexus between the transfer of the assets and the income in question.
it cannot be said that that income arose directly or indirectly from the transfer of the assets referred to earlier.
Section 16(3) of the Act created an artificial income.
That section must receive strict construction as observed by this Court in Commissioner of Income Tax, Gujarat vs Keshavlal Lallubhai Patel(1).
In our (1) 311 judgment before an income can be held to come within the ambit of section 16(3), it must be proved to have arisen directly or indirectly from a transfer of assets made by the assessee in favour of his wife or minor children.
The connection between the transfer of assets and the income must be proximate.
The income in question must arise as a result of the transfer and not in some manner connected with it.
V.P.S. Appeal dismissed.
| IN-Abs | The assessee was a partner in a firm.
On the last day of the accounting year of the firm, namely, 1st July 1954 he retired from the firm and gifted 'to each of his four sons Rs. 75,000.
The firm was reconstituted and the first son, who was a major, became a partner in the firm.
The other sons who were minors, became entitled to the benefits of the partnership because, they invested in the firm the amounts received by them as gifts from their father.
In the assessment year 1956 57 the Income tax Officer held that the income arising to the minors by virtue of their admission to the benefits of the partnership, came within the purview of section 16(3) (a) (iv) of the Income tax Act, 1922, and included that income in the total income of the assessee.
The order was confirmed by the Appellate Assistant Commissioner and the Tribunal, but the High Court on a reference, held in favour of the assessee.
In appeal to this Court, HELD : The section creates an artificial income and must be construed strictly, that is.
before an income can be held to come within the ambit of section 16(3) it must be proved to have arisen directly or indirectly from a transfer of assets made by the assessee in favour of the minor children.
The connection between the transfer and the income must be proximate.
It must arise as a result of the transfer and not in some manner connected with it.
[310 H; 311 A E] In the present case, the income of the minors arose as a result of their admission to the benefits, of partnershiip and there is no proximate nexus between the transfer and the income.
[310 G] C.I.T., Gujarat vs Keshavlal Lallubhai Patel, followed.
|
Appeals Nos.
23 5 and 236 of 1967.
Appeals from the judgment and order dated March 21, 1966 of the Mysore High Court in Income tax Referred Case No. 19 of 1964.
Jagadish Swarup, Solicitor General, G. C. Sharma and B. D. Sharma, for the appellant (in both the appeals).
R. Gopalakrishnan, for the respondent (in both the appeals).
353 The Judgment of the court was delivered by Grover, J.
These appeals by certificate arise out of a common judgment of the Mysore High Court in references made with regard to the assessments relating to the assessment years 1953 54 and 1954 55.
For the assessment year 1953 54 the assessee was served with a notice under section 22(2) of the Income tax Act 1922, hereinafter called the "Act", on March 5, 1954.
A similar notice was served in respect of the assessment year 1954 55 on June 5,.1954.
The assessee failed to file any return in compliance with the notices.
Thereupon he was served with notices under section 22(4) for both the assessment years and was required to produce accounts on specified dates.
None appeared on any one of those dates but applications were submitted praying for adjournment on certain grounds.
The Income tax Officer was not satisfied with the reasons given for seeking adjournments and he proceeded to make the assessment under section 23 (4) of the Act.
The assessee moved the Income Tax Officer under section 27 to reopen the assessments on the grounds given in the applications filed in that behalf.
The Income Tax ' Officer appeared to be satisfied that there was sufficient cause for noncompliance with the notices issued under section 22(4) of the Act but he was of the view that the assessee had been a habitual defaulter inasmuch as he had not submitted the return under section 22 (2) even for several preceding years for which the assessments had to be completed under section 23(4) of the Act.
He declined to reopen the assessment under section 27.
Appeals to the Appellate Assistant Commissioner were filed.
According to the Appellate Assistant Commissioner sufficient cause for non compliance with one of the statutory notices i.e. the notice under section 22(4) could not constitute 'sufficient cause for non compliance with any other statutory notice (in this case the notice under section 22(2)).
The appellate tribunal dismissed the appeals filed by the assessee upholding the view of the departmental authorities.
On the tribunal having declined to refer the questions of law which were sought to be referred the High Court directed the Tribunal to state a case and refer the following questions of law "Whether the Income Tax Officer having recorded a finding that there was sufficient cause for non compliance with the notice issued under Section 22(4), was not bound to cancel the assessment made under Sec.
23(4) and to proceed to make a fresh assessment even though there was no sufficient cause for non compliance with the notice under Sec.
22(2) ?" 354 The High Court answered the question in favour of the assessee.
Section 27 of the Act is in the following terms : section 27.
"Cancellation of assessment when cause is shown.
Where an assessee within one month from the service of a notice of demand issued as hereinafter provided, satisfies the Income Tax Officer that he was prevented by sufficient cause from making the return re quired by section 22, or that he did not receive the notice issued under sub section (4) of section 22, or sub section (2) of section 23, or that he had not a reasonable opportunity to comply, or was prevented by sufficient cause from complying with the terms of the last mentioned notices, the Income Tax Officer shall cancel the assessment and proceed to make a fresh assessment in accor dance with the provisions of section 23.
" Section 22 provides for return of income.
Sub section ( 1 ) relates to a general notice to be given each year by the Income Tax Officer by publication in the press or in the prescribed manner.
Subsection (2) relates to an individual notice.
According to sub section
(4) the Income Tax Officer may serve on any person who has made a return under sub section
(1) or upon whom a notice has been served under sub section
(2) a notice requiring him on a date to be specified to produce or cause to be produced such account or documents as the Income Tax Officer may require or to furnish in writing and verified in the prescribed manner in such form and on such points or matters as may be required for the purpose of the section including, with the previous approval of the Commissioner, a statement of assets and liabilities not included in the accounts.
Under section 23 if the Income tax Officer is satisfied without requiring the presence of the assessee or the production by him of any evidence that a return made under section 22 is correct and complete he has to assess the total income of the assessee on the basis of the return filed by him [sub. section (1)].
If he is not so satisfied he must serve a notice requiring the person who has made the return to attend at his office or to produce or cause to be produced any evidence on which such person may rely in support of his return [sub. section (2)].
Under sub section
(3) the Income tax Officer after hearing such evidence as may be produced by the person making the return in response to the notice issued under sub section
(2) or such other evidence as the Income tax Officer may require to be produced on specified points has to assess the total income of the assessee.
It is provided by sub section
(4) "If any person fails to make the return required by any notice given under sub section (2) of section 22 and 355 has not made a return or a revised return under subsection (3) of the same Election or falls to comply with all the terms of a notice issued under sub section (4) of the same section or, having made a return, fails to comply with all the terms of a notice issued under sub section (2) of this section, the Income Tax Officer shall make the assessment to the best of his judgment and determine the sum payable by the assessee on the basis of such assessment. .
The High Court considered that the provisions of section 27 were not cumulative but disjunctive and so the assessee could claim cancellation of the assessment on one of the grounds on which such cancellation could be sought under the section.
According to the High Court it followed that even if there was no sufficient cause for noncompliance with a notice issued under section 22(2) so long as there was sufficient reason for non compliance with the notice issued under section 22(4) the assessee could ask for the cancellation of the assessment.
In our judgment the view of the High Court cannot be sustained.
The clear import of section 23(4) is that on committing any one of the defaults mentioned therein the Income tax Officer is bound to make the assessment to the best of his judgment.
In other words if a person fails to make the return, required by a notice under section 22(2) and he has further not made return or a revised return under sub 5.
(3) of the same section the Income tax Officer must make an assessment under section, 23(4).
Similarly if that person fails to comply with all the terms of the notice issued under section 22(4) or if he fails to comply with all the terms of the notice issued under section 23(3) the Income tax Officer must proceed to make an assessment to the best of his judgment.
Section 27 empowers the Income tax Officer to cancel the assessment when sufficient cause is shown but such causer has to be shown for each default.
For the sake of illustration, if an assessee makes a default under section 22(2) by not filing a return, pursuant to a notice received under that section and he also does not comply with the notice under section 22(4) he must show sufficient cause for non compliance with both the provisions and he cannot get the assessment cancelled merely by showing good cause for one of the two defaults.
Although the word "or" which is disjunc tive is used in section 27 it has to be read in a reasonable and harmonious way and in conjunction with section 23(4).
It is inconceivable that the legislature could ever intended that in case of ' multiple defaults for each one of which an ex parte best judgment.
assessment has to be made the assessee can ask for cancellation of ' the assessment by merely showing cause for one of such defaults.
In our opinion the Bombay High Court in Chiranjilal Tibrewala vs 356 The Commissioner of Income tax, Bombay City II(1) was right in holding that in circumstances similar to the present case the assessee cannot ask for cancellation under section 27 of an assessment made under section 23 (4).
In this view of the matter the judgment of the High Court has to be set aside, and the question has to be answered against the assessee and in favour of the appellant.
The appeals are accordingly allowed with costs One hearing fee.
V.P.S. Appeals allowed.
| IN-Abs | Notices under section 22(2) of the Income tax Act, 1922, were not complied with by the respondent (assessee) and the Income tax Officer issued notices under section 22(4).
Since they were also not complied with the Income tax Officer made a best judgment assessment under section 23(4).
Thereupon, the assessee applied under section 27 for reopening the assessment.
The Income tax Officer found that there was sufficient cause for noncompliance with the notices under section 22(4), but, as there was no sufficient cause for non compliance with the notices under section 22(2), he declined to reopen the assessment.
The order was confirmed in ' appeal and by the Tribunal.
But the High Court held in favour of the assessee.
In appeal to this Court, HELD : Under section 23(4) on the assessee committing any of the defaults mentioned therein, namely, failure to make a return as required by a notice under section 22(2) or a revised return under section 22(3) or noncompliance with the terms of a notice under section 22(4) or failure to comply with the terms of a notice under section 23(2), the Income tax Officer is bound to make a best judgment assessment.
Section 27 empowers, the Income tax OfFicer to cancel the assessment when sufficient cause is shown; but, such cause has to be shown for each default.
Therefore, if the assessee makes default by not filing a return pursuant to a notice under section 22(2) and also does not comply with a notice under section 22(4) he must show sufficient cause for non compliance with both the provisions.
The Legislature could not have intended that in case of multiple defaults, for each one of which an ex parts best judgment assessment has to be made, the assessee can ask for cancellation of the assessment by merely showing cause for one of such defaults.
[355 D H] Chiranjilal Tibrewala vs Commissioner of Income tax, Bombay City H, , approved.
|
Appeals Nos.
2269 and 2270 of 1966.
Appeals by special leave from the judgment and order dated ' May 17, 1966 of the Commissioner of Wealth Tax, Andhra.
Pradesh in J. No. Wt.
3(4) and 3(5) of 1959 60.
A. K. Sen, B. P. Maheshwari and N. R. Kaitan, for the appellant (in both the appeals).
section Mitra, G. Das, R. N. Sachthey and B. D. Sharma, for the respondent (in both the appeals).
The Judgement of the Court was delivered by Shah, J.
In proceedings for determination of wealth tax for the assesment years 1957 58 and 1958 59 the appellant Com pany claimed depreciation allowance on plant, building and machinery at the rates prescribed under the Income Tax Act and the Rules framed thereunder.
The Wealth Tax Officer adopted the method prescribed by section 7 sub section
(2) of the Wealth Tax Act and ' admitted the value of the assets as shown in the certified balance sheets on the respective valuation dates.
In appeal, the Appellate Assistant Commissioner of Wealth Tax confirmed the order passed by the Wealth Tax Officer.
The, Company then moved revision applications before the Commissioner of Wealth Tax under section 25 of the Wealth Tax Act.
Against the order passed by the Commissioner of Wealth Tax rejecting the applications, the.
Company has filed these appeals under article 136 of the Constitution.
Against the orders of the Appellate Assistant Commissioner appeals lay to the Income tax Appellate Tribunal, but the Company preferred revision applications before the Commissioner.
We do not ordinarily encourage an aggrieved party to appeal directly to this Court against the order of a Tribunal exercising judicial functions under a taxing statute, and thereby to bypass the normal procedure of appeal and reference to the High Court, but in the present case, it appears to us that a question of principle of great importance arises.
We have entertained these appeals because in our judgment the, Commissioner of Wealth Tax has surrendered his authority and judgment to the Board of Revenue in deciding the questions which were sought to be raised by the Company in its revision applications.
Section 25 of the Wealth Tax Act provides insofar as it is, material "(1) The Commissioner may, either of his own ,notion or on application made by an assessee in this 306 behalf, call for the record of any proceeding under this Act in which an order has been passed by any authority subordinate to him, and may make such inquiry, or cause such inquiry to be made, and, subject to the provi sions of this Act, pass such order thereon, not being order prejudicial to the assessee, as the Commissioner thinks fit The power conferred by section 25 is not administrative it is quasi_judicial.
The expression "may make such inquiry and pass such order thereon" does not confer any absolute discretion on the Commissioner.
In exercise of the power the Commissioner must bring to bear an unbiased mind, consider impartially the objections raised by the aggrieved party, and decide the dispute according to procedure consistent with the principles of natural justice : he cannot permit his judgment to be influenced by matters not disclosed to the assessee, nor by dictation of another authority.
Section 13 of the Wealth Tax Act provides that all officers and other persons employed in the execution of this Act shall observe and follow the orders, instructions and directions of the Board.
These instructions may control the exercise of the power of the officers of the Department in matters administrative but not quasi judicial.
The proviso to section 13 is somewhat obscure in its import.
It enacts that no orders, instructions or directions shall be given by the Board so as to interfere with the discretion of the Appellate Assistant Commissioner of Wealth Tax in the exercise of his appellate functions.
It does not, however, imply that the Board may give any directions or instructions to the Wealth Tax Officer or to the Commissioner in exercise of his quasi judicial function.
Such an interpretation would be plainly contrary to the scheme of the Act and the nature of the power conferred upon the authorities 'invested with quasi judicial power.
The Commissioner appears, in our judgment, ' to have wholly misapprehended the true character of the jurisdiction with which he is by the Act entrusted and has surrendered his judgment to the directions of the Board of Revenue.
The order sheet of the Commissioner (at pp.
10 36 of the printed Paper Book) bears,eloquent testimony to the manner in which the Commissioner has merely carried out the directions of the Board of Revenue, instead of deciding the case according to his own judgment.
In entry dated December 31, 1959, there is a reference to the instructions contained in the Board 's Circular No. 7 D (WT) of 59 dated November 12, 1959 received on November 30, 1959.
Under entry dated April 28, 1960 there is again a reference to the Board 's Circular No. 7 D of 1959 suggesting the manner in 307 which depreciation has to be worked out for the purpose of determining wealth tax.
Again in the entry dated June 17, 1960 under item No. 4 it is stated that the Board 's instructions were, "specific on the point that no adjustment to depreciation relating to the period prior to March 31, 1957 should be made while determining the total wealth of an assessee on the basis of global valuation '.
Under entry dated August 7, 1963, recorded by the Inspector, it is stated that "upon reference to the Board for instructions, it was recommended that the petitions be kept pending decision of the matter till" it was decided by the High Court in which the same question was raised.
When on January 27, 1966, the Company requested that the applications be kept pending till the disposal of the reference application by the High Court for the assessment year 1959 60 in which a similar point was involved, the Commissioner was of the view that ' the application need not be kept pending, but still directed "write to the Board '.
A letter was written to the Board and the Commissioner acted according to the directions of the Board, There is another entry dated March 14, 1966 which refers to the letter of the Board agreeing that the revision applications for the two years may be rejected, It is unnecessary to refer to any more entries made in the case sheet maintained by the Commissioner of Wealth Tax.
From the inception of the proceedings the Commissioner of Wealth Tax put himself in communication with the Board of Central Revenue and sought instructions from that authority as to how the revision applications filed before him should be decided.
He exercised no independent judgment.
The Commissioner also recorded that the case did not require a personal hearing but since the Director of the Company had made a personal request for an interview it was "thought desirable" from "the point of view of public relations to give an interview.
" Here also the Commissioner misconceived the nature and extent of his jurisdiction.
Counsel appearing on behalf of the Commissioner of Wealth Tax in these appeals has not attempted to support the order under appeal.
We set aside the order passed by the Commissioner and direct that the revision applications be heard and disposed of according to law and uninfluenced by any instructions or directions given by the Board of Revenue.
The Company will get its costs in this Court.
One hearing fee.
R.K.P.S. Appeal allowed.
| IN-Abs | The Appellate Assistant Commissioner of Wealth Tax confirmed an orde Passed by the Wealth Tax Officer as regards the method adopted by the latter in dealing with a claim for depreciation allowance made by the appellant company in the course of its assessment to wealth tax.
The appellant company thereafter moved revision applications before the Com, missioner under section 25 of the Wealth Tax Act and the Commissioner rejected these applications on the basis of certain directions issued by the Board of Revenue.
On appeal to this Court by special Leave, HELD : The order passed by the Commissioner must be, set aside and 'the revision applications must be heard and disposed of according to law and uninfluenced by any instructions or directions given by the Board of Revenue.
[307 G H] It Was clear, on the facts, that from the inception of the proceedings, the Commissioner put himself in communication with the Board of Central Revenue and sought instructions from that authority 'as to bow the, revision applications filed before him should be decided.
He had exercised no independent judgment.
The Commissioner appeared to have misapprehended the true character of the jurisdiction with which he is by the Act entrusted and surrendered his judgment to the directions of the Board of Revenue.
[306 F G; 307 E G] The power conferred by section 25 is not administrative : it is quasi judicial.
In exercise of this power the Commissioner must bring to bear an unbiased mind.
consider impartially the objections raised by the aggrieved party.
and decide the dispute according to procedure consistent with the principles of natural justice; he cannot permit his judgement to be influenced by matters not disclosed to the assesseee, nor by dictation of another authority.
Any orders or instructions given by the Board and required to be followed under section 13 by officers employed in the, execution of the Act may control the exercise of their power in matters administralive but not quasi judicial.
Although the proviso to section 13, which.
is somewhat obscure in its import, enacts that no orders shall be given by the Board so as to interfere with the discretion of the Appellate Assistant Commissioner in the exercise of his appellate functions, it does not thereby imply that the Board may give such orders to the Wealth Tax Officer or to the Commissioner in exercise of his quasi judicial function, Such an interpretation would be plainly contrary to the scheme of the Act and the nature of the power conferred upon the authorities invested with quasijudicial power.
[306 B F] 305
|
l Appeals Nos. 1277 to 1279 and 1280 to 1282 of 1966.
Appeals by special leave from, the judgment and order dated ,October 14, 1966 of the Punjab High Court in Income tax Refer ence No. 16 of 1962.
B. Sen, section K. Aiyar, B. D. Sharma and R. N. Sachthey, for the appellant (in C.As.
1277 to 1279 of 1966) and the respondent (in C.As.
Nos. 1280 to 1282 of 1966).
Bishan Narain and A. N. Goyal, for the respondents (in C.As.
1277 to 1279 of 1966) and the appellants (in C.As.
Nos. 1280 to 1282 of 1966).
The Judgment of the Court was delivered by Shah, J.
Balkishan Das, Debi Prasad and Jai Ram Das were partners in a trading venture, conducted in the name of the 12 Sup.
C 1/70 11 390 Ambala Flour Mills, Ambala.
On April 29, 1948, Jai Ram Das commenced an action for dissolution and for account of the partnership business.
The Trial Court decreed the suit.
In appeal to the District Court, the decree was reversed.
On appeal under the Letters Patent from the judgment of a single Judge, the High Court of Punjab by order dated September 26, 1951 restored the decree of the Trial Court and declared that the partnership stood dissolved on April 29, 1948.
The High Court observed: ". notwithstanding the dissolution of 'the firm Debi, Parshad and Balkishan Dass carried on the business of the firm with the property of the firm.
On these facts, Jairarn Dass plaintiff is entitled at the option of himself to such share of the profits made since he ceased to be a Partner as may be attributable to the use of his share of the property of the firm or interest at the rate of six per cent per annum on the amount of his share in the property of the firm.
" During the pendency of the suit Balkishan Dass severed his connection with the business and the business was carried on thereafter by Debi Parshad alone.
In the assessment year 1950 51, Debi Parshad filed three returns of income (i) on 4 10 1950 in the status of a firm, (ii) on 14 4 1951 in the status of an individual and (iii) on 1 7 1951 in the status of firm consisting of Jai Ram Das and Debi Parshad, partners.
For the assessment year 1951 52, Debi Parshad filed a return in the status of an unregistered firm.
For the assessment year 1952 53 Debi Parshad submitted a return in the status of a Hindu Undivided Family.
The Income tax Officer assessed the Ambala Flour Mills in the three years of assessment in the status of "an association of persons".
In appeals by Debi Parshad, the Appellate Assistant Commissioner, "annulled" the , orders of ' assessment of the assessee in the status of association of persons be set aside and that the case be remanded to the Income tax Officer to assess the income as "the income of the family of Debi Parshad".
In appeals by Debi Parshad, the Income tax Appellate Tribunal confirmed the orders of the Appellate Assistant Commissioner annulling the assessment made by the Income tax Officer and directed that the direction for assessing the income in the hands of Debi Parshad be deleted.
The Tribunal referred the following three questions at the instance of the Commissioner of Income tax.
1 "Whether L. Debi Parshad was a stranger in respect of the income tax proceedings against Ambala Flour Mills ? 391 2.
Whether the Appellate Assistant Commissioner could give a direction in the case of Ambala Flour Mills to the effect that the income should be assessed in the hands of L. Debi Parshad after annulling the assessment in the case of Ambala Flour Mills 3.
Whether on the facts and in the circumstances of the case the appeals.
filed by Shri Debi Parshad were maintainable in law The High Court answered the first question in the negative; the second in the affirmative with the rider that the assessment against Debi Parshad "could only be in individual capacity"; and the third question in the affirmative.
Debi Parshad was competent to maintain the appeals filed by him to the Tribunal because by the order of the A appellate Assistant Commissioner, it was directed that he may be personally assessed by the Income tax Officer in respect of the Income of the Ambala Flour Mills.
Counsel for Debvi Parshad, however, contended that Debi Parshad was a stranger to the assessment proceedings and the, Appellate Assistant Commissioner had no jurisdiction to direct after setting aside the order of assessment that Debi Parshad be assessed personally in respect of the income of the Ambala Flour Mills.
The relevant provisions of the Income Tax Act may be: noticed.
The relevant provisions of section 31 of the Income Tax Act, 1922, are these : "In disposing of an appeal, the Appellate Assistant Commissioner may, in the case of an order of assessment : (a) confirm, reduce, enhance or annual the assessment; (b) set aside the assessment and direct the Income tax Officer to make a fresh assessment after making such further inquiry as the Income tax Officer thinks fit or the Appellate Assistant Commissioner may direct, and the Income tax Officer shall thereupon proceed of make such fresh assessment. . (4) "Where as the result of an appeal, any change in, the assessment of a firm or association of ' persons or new assessment of a firm or associa 392 tion of persons is ordered to be made, the Appellate Assistant Commissioner may authorise the Income tax Officer to amend accordingly any assessment made on any partner of the firm or any member of the association '.
All the returns have been filed by Debi Parshad but in dif ferent capacities.
The Income tax Officer was of the view that the business was carried on by an association of persons and the income from the business was liable to be brought to tax on that footing.
The Appellate Assistant Commissioner was of the view that the income belonged to Debi Parshad and he was liable to be assessed personally in respect of the income.
Evidently the Income tax Officer held that Debi Parsbad was a member of an association of persons.
Since the Appellate Assistant Commissioner set aside the ' order assessing the income in ' the status of " association of individuals", he had to give directions with regard to the assessment of the income, provided the assessment was not barred by the law of Limitation.
Section 34 subsection 3 prescribes for the period in which assessment proceedings shall be completed.
The section at the date of assessment by the Income tax Officer read as follows: "No order of assessment or re assessment, other than an order of assessment under section 23 to which clause (c) of sub section (1) of section 28 applies or an order of assessment or reassessment in cases falling within clause (a) of sub section (1) or sub section (IA) of this Section shall be made after the expiry of four years from the end of the year in which the income, profits or gains were first assessable: Provided further that nothing contained in this section limiting the time within which any action may be taken.
or any order, assessment or re assessment may be made, shall apply to a re assessment made under section 27 or to an assessment or re assessment made on the assessee 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".
The assessment of tax had according to the law at the rele vant time.
in force, ordinarily, to be completed by the Income tax Officer within four years from the last date of the year of assessment in which the income, was first assessable.
But to this 393 rule there were several exceptions.
If the assessment had to be made on the assessee or any person 'm consequence of or to give effect to any findings or direction contained in an order of the Appellate Assistant Commissioner or of the Appellate Tribunal or of the Commissioner in revision or of an order made in a reference, the assessment could be made even after the expiry of the four years.
The exception applied to an assessment made against the assessee or any person in consequence of, or to give effect to any finding or direction contained in the order of any superior tribunal, or 'the High Court or this Court.
This Court in section C. Prashar and another vs Vasantsen Dwarkadas and others(1) held that the second proviso to section 34(3) of the Incometax Act, 1922, insofar as it authorised the assessment or reassessment of any person other than the assessee after the expiry of the period of limitation specified in section 34 in consequence of or to give effect to a finding or direction given in an appeal, revision or reference arising out of the proceeding in relation to the assessee violated the provisions of article 14 of the Constitution and was invalid to that extent.
In a later case Income tax Officer, Award, Sitapur vs Murli dhar Bhagwan Das(1) this Court explained the connotation of the expression "any person" as used in section 34 sub section
(3) proviso 2 at p. 346 : "Theexpression 'any person ' in its widest connotation may take in any person, whether connected or not with theassessee, whose income for any year has escaped assessment, but this construction cannot be accepted, for the said expression is necessarily circum scribed by the scope of the subject matter of the appeal or revision as the case may be.
That is to say, that person must be one who would be liable to be assessed for the whole or a part of the income that went into the assessment of the year under appeal or revision.
If so construed, we must turn to section 31 to ascertain who is that person other than the appealing assessee who can be liable to be assessed for the income of the said assessment years.
A combined reading, of section 30(1) and section 31(3) of the Act indicates the cases where persons other than the appealing assessee might be affected by orders passed by the Appellate Commissioner.
Modification or setting aside 'of assessment made on a firm, joint Hindu family, association of persons, for a particular year may affect the assessment for the said year on a partner or partners of the firm, member or members of the Hindu Undivided family (1) ; (1) 394 or the individual, as the case may be.
In such cases,.
though the latter are not eo nomine parties to the appeal, their assessments depend upon the assessment of the former.
The said instances are only illustrative.
It is not necessary to pursue the matter further.
We would, therefore, hold that the expression 'any person ' in the setting in which it appears must be confined to a person intimately connected in the aforesaid sense with the assessments of the year under appeal.
" In Commissioner off Income tax, U.P. vs Kanpur Coal Syndi cate(1) this Court held that where the income tax Officer assessed the income of an association of persons under section 31(3).(b) the Appellate Assistant Commissioner was competent to set aside the assessment and to direct the Income tax Officer to assess the members individually.
The Court observed that the Appellate Assistant Commissioner bad under the Act plenary powers in disposing of an appeal, the scope of his powers being conterminous with that of the Income tax Officer: he can do what the Income tax Officer can do and can also direct the Income tax Officer to do what he has failed to do.
Debi Parshad had submitted the returns, and Debi Parshad, appealed against the order of assessment.
He could, in the circumstances of the case, not be called a stranger to the assessment.
The income earned by the assessee was assessed to tax as income of an association of persons, of which on the finding ,of the Income tax Officer, Debi Parshad was a member.
In making a direction against Debi Parshad the Tribunal did not exercise his powers qua a stranger to the assessment proceeding.
,Civil Appeal Nos. 1280 1282 of 1966 must therefore fail.
The Appellate Assistant Commissioner had directed that the income in the three assessment years be assessed in the hands of the family of Debi Parshad, apparently on the view that Debi, Parshad represented the Hindu Undivided family of Which he was a member.
The Tribunal set aside the direction to assess the income of the Ambala Flour Mills in the hands of Debi Parshad.
personally.
for in their view Debi Parshad was a stanger to the proceeding for assessment.
The High Court held, that the ,order of the Appellate Assistant Commissioner directing assessment of "the family of Debi Parshad" was "clearly unwarranted and could relate only ot Debi Parshad in his individual capacity".
Appeals Nos. 1277 to 1279 of 1966 were filed against that part of the order of the High Court by which they sought to ,modify the order of the Appellate Assistant Commissioner.
The (1) 395 High Court exercising advisory jurisdiction was incompetent to amend the order of the Appellate Assistant Commissioner.
But on the question referred to the High Court, no inquiry into the power of the Appellate Assistant Commissioner to make the impugned direction was competent.
The second question only related to the assessment of the income in the hands of Debi Parshad after annulling the assessment of the Ambala Flour Mills.
It was not contended before the Tribunal that the income of the Ambala Flour Mills could not be assessed in the hands of the family of Debi Parshad.
The competence of the Appellate Assistant Commissioner to make the direction was not and could not be referred to the High Court.
Appeals Nos. 1277 to 1279 of 1966 filed by the Commissioner therefore fail.
There will be no order as to costs in all the appeals.
G.C. Appeals dismissed.
| IN-Abs | D. B and J were partners in a firm which carried on the business entitled the Ambala Flour Mills.
On April 29, 1948 J filed a suit for the dissolution of the firm.
The litigation ended with the judgment of the Panjab High Court delivered on September 25, 1951.
According to the judgment the partnership stood dissolved with, effect from the date of the filing of the suit, but since the firm had continued to use J 's share in the property of the firm after that date he was held entitled to a corresponding shares in the profits of the firm after that date, or at his option, to interest at six per cent on the value of his share in the property of the firm.
During the pendency of the suit B also served his connection with the business which was thereafter carried on by D alone.
In the assessment year 1950 51 D filed three returns of income : (i) on 4 10 50 in the status of a firm; (ii) on 14 4 51 in the status of an individual; and (iii) on 1 7 51 in the status of a firm consisting of J and D partners.
For the assessment year 1951 52 D filed a return in the status of an unregistered firm.
For the assessment year 1952 53 D submitted a return in the status of a Hindu Undivided Family.
The income tax Officer assessed the Ambala Flour Mills in the three years of assessment in the status of an association of persons.
In appeals by D the Appellate Assistant Commissioner annulled the orders of assessment and remanded the case to the Income tax Officer with a direction that the income be assessed as the income of the family of D.
In appeals by D the Income tax Appellate Tribunal confirmed the order of annulment but ordered that the direction to assess the income in the hands of D be deleted.
The Tribunal 's order was based on the view that D was a stranger to the assessment proceedings.
At the instance of the Commissioner of Income tax the following questions were referred to the High Court : (i) Whether D was a stranger in respect of the income tax proceedings against Ambala Flour Mills ? (ii) Whether the Appellate Assistant Commissioner could give a direction in the case of Ambala Flour Mills to the effect that the income should be assessed in the hands of D after annulling the assessment in the case of the Ambala Flour Mills ? (iii) Whether on the facts and in the circumstances of the case the appeals filed by D were maintainable in law? 'Me High Court answered the first question in the negative, the second in the affirmative with the rider that the assessment against D 'could only be in his individual capacity '; and the third question in the affirmative.
Appeals were filed in this Court by both the parties.
In this appeal the Commissioner of Income tax questioned the order of the High Court by which they sought to modify the order of the Appellate Assistant Commissioner.
389 HELD : (i) The first and third of the questions referred to it were correctly answered by the High Court.
(a) D was competent to maintain the appeals filed by him to the Tribunal because by the order of the Appellate Assistant Commissioner it was directed that he may be personally assessed by the Income tax Officer in respect of the income of the Ambala Flour Mills.
[391 C D] (b) In making a direction against 'D ' the Appellate Assistant Commissioner did not exercise his powers qua a stranger to the assessment proceeding.
D had submitted returns and had also appealed against the orders of the assessment.
The income earned by the assessee was assessed to tax as income of an association of persons of which on finding of the Income tax Officer 'D ' was a member.
:Since the Appellate Assistant Commissioner set aside the order assessing the income in the status of association of individuals, he had to give directions with regard to the assessment of the income.
He was competent to give the directions in view of the provisions of section 31 read with section 34(3) of the Income tax Act, 1922 and the interpretation placed on the litter section by this Court in the cases of Murlidhar Bhagwan Das and Kanpur Coal Syndicate.
[392 G E; 394 D F] Commissioner of Income tax, U.P. vs Kanpur Coal Syndicate, and Income tax Officer, 'A Ward, Sitapur vs Murlidhar Bhagwan 'Das, , applied.
section C. Prashar and another vs Vasantsen Dwarkadas and others, , referred to.
(ii) The High Court exercising advisory, jurisdiction was incompetent to amend the order of the Appellate Assistant Commissioner.
On the question referred to the High Court, no inquiry into the power of the Appellate Assistant Commissioner to make the impugned direction was competent.
The second question only related to the assessment of the income in the hands of D after annulling the assessment of the Ambala Flour Mills.
it was not contended before the Tribunal that the income of the Ambala Flour Mills could not be assessed in the hands of the family of 'D The competence of the Appellate Assistant Commissioner to make the direction could not be and was not referred to the High Court.
[395 ,k C]
|
Appeals Nos. 2538 and 2539 of 1966.
Appeals by special leave from the judgment and order dated March 26, 1965 of the Calcutta High Court in Income tax Reference No. 120 oF 1961.
D. Pal, T. A. Ramachandran and D. N. Gupta, for the appel lant (in both the appeals).
B. Sen, section K. Aiyar and B. D. Sharma, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Shah,, J.
The appellant is a public limited company doing business as a dealer in diverse commodities, and also in stocks and shares.
The Company maintains ' its accounts according to the calendar year.
In the year of account 1949 the Company suffered a loss of Rs. 3,71,700 in the sale of share of public limited companies.
In proceedings for assessment of income tax for the assessment year 1950 51, the lncome tax Officer disallowed the claim to set off loss against the profits from transactions in other commodities in that year.
The appeal filed before the Appellate Assistant Commissioner was unsuccessful.
But the Appellate Tribunal upheld the claim of the Company.
In the meanwhile assessment for the year 1951 52 was com pleted, and the income of the Company was computed at Rs. 1,00,777.
In proceedings for assessment of income for the assessment year 1952 53 the Income tax Officer computed the income of the Company from its business at Rs. 3,39,899 and declined to take into account the loss suffered by the Company in the share transactions.
In the view of the Income tax Officer, even if the loss be treated as a trading loss it could not be set off against the business income of the Company, because the loss resulted from transactions in shares which constituted a business distinct from the business in other commodities.
384 In appeal against the order to the Appellate Assistant Com missioner, the order of the Income tax Officer was confirmed.
The Appellate Assistant Commissioner held that the business in shares and the business in other commodities were not the "same business" within the meaning of section 24(2) of the Income tax Act, 1922, as then in force.
He observed that a common capital, a common set of employees and a common set of accounts and common business premises are not the deciding factors in determining whether the various activities carried on by the assessee constituted one business or separate businesses :" it is the nature of the business which is "the main factor" and where separate profits or loss was ascertainable and the nature of the business was different, the activities could not be held to form one and single unit for the purposes of section 24(2) of the Indian Income tax Act.
The Tribunal disagreed with the Appellate Assistant Commis sioner.
The Tribunal observed that there was complete unity of control and shares were one of a number of commodities in which the Company dealt in the ordinary course of business.
There was, in the view of the Tribunal "no element of diversity or distinction or separateness about the transactions in shares".
Accordingly, the Tribunal upheld the claim of the appellant Company and directed that the loss be set off under section 24 (2) of the Indian Income tax Act then in force.
The Tribunal referred the following question to the High Court of Calcutta : "Whether on the facts and in the circumstances of the case, the business activities of the company to wit, dealings in shares and its dealings in other commodities and selling agency on commission basis constituted the same business within the meaning of section 24 (2) of the Indian Income tax Act ?" The High Court held, following their judgment in Shree Ramesh Cotton Mills Ltd. vs Commissioner of Income tax(1) that the "essential matters to be considered in determining whether the two businesses carried on by the assessee constitute the same business, is about the nature of the two commodities, the manner in which (1) 385 they are conducted being a secondary consideration".
They observed that "unity of control or management, the employment of the same or common finance, the user of the same business premises and the record of the transactions in the same set of books of accounts are matters to be considered only when it is found that two businesses of the same nature.
Merely because the transactions in shares consist of sales and purchase as to dealings in other commodities like sugar, molasses etc.
the two activities cannot be held to form one unit of business", and that the Tribunal erred in holding that because there was complete unity of control and shares formed a part of number of commodities in which the assessee dealt with, the whole trading activity formed one business.
Section 24(2) of the Indian Income tax Act, 1922, as in force in the relevant years, read as follows "Where any assessee sustains a loss of profits or gains, in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March, 1940, under the head "Profits and gains of business, profession or vocation" and the loss cannot be wholly set off under sub section (1), the portion not so set off shall be carried forward to the following year and set off against the profits and gains, if any, of the assessee from the same business, profession or vocation for that year, and if it cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following year, and so on; The section contemplated that the loss which could not be wholly set off against the other income under sub section
(1) could be Carried forward to the following year and set off only against the profits and gains, if 'any, from the same business.
There was difference of opinion among the High Courts as to the meaning of the words "same business".
It is unnecessary to refer to those authorities.
This Court in Commissioner of Income tax Madras vs 386 Prithvi Insurance Company Ltd.(1) set of the test for determining whether two lines of business constitute "same business" within the meaning of section 24(2) at the relevant time.
It was observed at p. 636 "A fairly adequate test for determining whether the two constitute the same business is furnished by what Rowlatt, J., said in Scales vs George Thompson & Co. Ltd. (1927) 13 Tax Cases 831 'Was there any inter connection, any interlacing, any inter dependence, and unity at all embracing those two businesses ? ' "That inter connection, inter lacing, inter dependence and unity are furnished in this case by the existence of common management, common business organisation, common administration, common fund and a common place of business.
" Applying that test in the present case there is no doubt that there is a common management of the share and stock business and other lines of business, unity of trading organization, common employees, common administration, a common fund and a common place of business.
We need not consider whether the ultimate decision of the High Court in Shree Ramesh Cotton Mills Ltd. 's case(2) on which reliance was placed is correct, but we are unable to agree with the High Court that the decisive test for determining whether the two lines of business constitute the same business is the nature of the two businesses.
In our judgment, the Tribunal was right in holding that the share business and other businesses carried on by the appellant Company constituted the same business within the meaning of section 24(2) as that section stood before it was amended in 1955.
Counsel for the Commissioner contended that the Commissioner had applied under section 66(2) to the High Court for calling (1) (2) 387 for a statement of the case from the Tribunal on the following question : "Whether there was any evidence in support of the Tribunal 's finding that there was complete unity of control and that shares formed a part of the commodities in which the assessee company deals regularly from year to year in the ordinary course of its business?" The High Court declined to make an order on that application calling for the statement of the case on the ground that the first ,question was "sufficiently comprehensive" and included inquiry into the question proposed.
In our judgment the decision of the Tribunal is amply supported by the evidence which is referred to in the order of the Tribunal.
Even if the question had been raised and statement of the case had been called for, it could not affect the ultimate result.
The answer to the question referred will be in the affirmative.
The appeals are allowed.
The Commissioner of Income tax to pay the costs of ' the Company in this Court and the High Court.
One hearing fee.
Y.P. Appeals allowed.
| IN-Abs | The assessee was a public limited company doing business as a dealer in diverse commodities and also in stocks and shares.
In the year of account 1949 the company suffered loss in the sale of shares of public limited companies.
In proceedings for assessment for the year 1950 51 the Income tax Officer declined to take into account the loss suffered.
In his view if the loss be taken as a trading loss it could not be set off against the business income of the assessee because the loss resulted from transactions in shares which constituted a business distinct from the business in other commodities.
On the question whether the loss could be taken into account and the set off given under section 24(2) of the Indian Income tax Act, 1922 in force in the year of assessment; this Court, HELD : The assessee was entitled to the set off.
Section 24(2) of the Indian Income tax Act, 1922 in force in the relevant year of assessment, contemplated that the loss which could not be wholly set off against the other income under sub section
(1) could be carried forward to the following year and set off only against the profits and gains, if any, from the same business.
A fairly adequate test for deter mining whether the two constitute the same business is 'was there any inter connection, any interlacing, any inter dependence, any unity ' at all embracing those two business ? ' [385 H, 386 A D] Applying this test in the present case there was no doubt that there was a common management of the share and stock business and other lines of business, unity of trading Organisation, common employees, common administration, common fund and a common place of business.
[386 E F] Commissioner of Income tax, Madras vs Prithvi Insurance Company Ltd., followed.
Scales vs George Thompson & Co. (1927) 13 Tax Cases 83 applied.
383 Shree Ramesh Cotton Mills Ltd. vs Commissioner of Income tax doubted.
|
l Appeals Nos.
2321 to 2324 of 1966.
Appeals from the judgment and order dated August 2, 1965 of the Madras High Court in Tax Cases Nos. 198 to 201 of 1962 (References Nos.
114 to 117 of 1962).
B.Sen, G. C. Sharma, R. N. Sachthey and B. D. Sharma, for the appellant (in all the appeals).
Gobind Das and Lily Thomas, for the respondents (in all the, appeals).
The Judgment of the Court was delivered by Shah, J.
Sri Ganapathy Mills Co. Ltd. distributed divident to its shareholders out of the business profits earned by it in the years ending December 31, 1953 and December 31, 1954.
The Company however carried in its accounts a large balance of unabsorbed depreciation admissible under section 10(2) (vi) and section 10 (2) (vi a) of the, Income tax Act, and on that account it had no taxable income in the relevant assessment years 1954 55 and 1955 56.
In assessing the income, of the shareholders for the, assessment years 1955 56 and 1956 57 the Income tax Officer rejected their claim for exemption from tax under section 15 C(4) of the Incometax Act, 1922, and brought the dividend income to tax.
order was confirmed by the Income tax Appellate Tribunal.
The Tribunal referred the following question to the High Court of Madras for opinion : "Whether on the facts and in the circumstances of the case, the assessees are entitled to the benefit of 436 S.15 C(4) in respect of the dividend income received from Sri Ganapathy Mills Co. Ltd., Tinnevelly ?" The High Court answered the question in the affirmative.
The ,Commissioner of Income tax has appealed to this Court with a ,certificate under section 66A(2) of the Income tax Act.
In the year ending December 31, 1953, the Company had ,earned in its business transactions a profit of Rs. 87,184, but it ,had no taxable profits, for the depreciation for the current and the previous years amounted to Rs. 2,83,343 which was an admissible allowance in the computation of income under section 10 of the Income tax Act.
Since full effect could not be given to the allowance, the Company was entitled to add to the depreciation for the following year the unabsorbed depreciation of Rs. 1,96,159 under section 10(2)(vi) proviso (b).
In the year ending December 31, 1954, the Company earned a profit of Rs. 4,36,821 ,and the depreciation admissible for the year was Rs. 2,41,809.
Taking into account the unabsorbed depreciation of the previous _year in computing the taxable income, it was found that the Company had suffered a loss of Rs., 1,147.
Accordingly the Company had no taxable profits in either of the two years and so tax was ,levied from the Company.
But the Company had still distributed dividend out of profits earned by it and the taxing authorities levied tax on the dividend received by the shareholders.
The answer to the question referred to the Tribunal depend , upon the true interpretation of section 15 C of the Indian Income tax Act, 1922.
Section 15 C of the Income tax Act.
insofar as it is ,relevant, provides " (1) Save as otherwise hereinafter provided, the tax shall not be payable by an assessee on so much of the profits or gains derived from any industrial undertaking to which this section applies as do not exceed ,six per cent per annum on the capital employed in the undertaking, computed in accordance with Such rules as may be made in this behalf by the Central Board of Revenue.
. . (3) The profits or gains of an industrial under,taking to which this section applies shall be computed in accordance with the provisions of section 10.
(4) The tax shall not be payable by a share holder in respect of so much of any dividend paid or deemed to be paid to him by an industrial undertaking 4 3 7 as is attributable to that part of the profits or gains on which the tax is not payable under this section. .
" The Company was an industrial undertaking to which section 15 C applied.
It had in the two relevant years derived from the industrial undertaking no profits or gains within the meaning of sub section
(1) read with sub section
(3) of section 15 C.
The profits or gains derived the industrial undertaking within the meaning of sub section
(1) of section 15 C are not business profits : they are taxable profits computed in accordance with the provisions of section 10 of the Income tax Act.
Under section 15 C(1) no tax is payable by the industrial undertaking on its taxable profits equal to six per cent per annum of the capital employed.
Sub section (4) of section 15 C exempts the shareholders of an industrial, undertaking to which section 15 C applies, from liability to pay tax in respect of the dividend paid or deemed to be paid as is attributable to that part of the profits or gains on which the tax is not payable under section 15 C (1).
Exemption under section 15 C(1) from payment of income tax is not related to the business profits: it is related to the taxable profits.
The language of sub section
(3) is clear : the profits or gains of an industrial undertaking have to be determined under section 10 of ,the Act.
Even if the undertaking has earned profits out of its commercial activity, if it has no taxable profits it cannot claim exemption from payment of tax under sub section
(1) of section 15 C; and it ' the undertaking cannot claim the benefit under sub section
(1) the shareholders will not get the benefit of sub section
(4), for there is no dividend paid which is attributable to that part of the profits or gains on which the tax was not payable by the undertaking.
The Company had no taxable profit in the year of accounts it did not accordingly qualify for exemption from payment of tax under sub section
(1) and since there was no such taxable profit, the dividend received by the shareholders could not be said to be attributable to that part of the profits or gains on which the tax was not payable under sub section
On the plain terms of section 15 C the shareholders cannot obtain the benefit of exemption from payment of tax.
We are unable to agree with the High Court that in deter mining the profits of the Company the unabsorbed depreciation of the previous years will not be taken into account.
Section 10 of the Income tax Act, insofar as it is relevant, provides : "(1) The tax shall be payable by an assessee under the head "Profits and gains of business, profession or vocation" in respect ' of the profits or gains of any business, profession or vocation carried on by him.
L12SupCI 70 14 438 (2) Such profits or gains shall be computed after making the following allowances, namely: .
. " Clause (vi) deals with depreciation allowance in respect of buildings, machinery, plant or furniture being the property of the assessee, at a sum equivalent to such percentage on the original cost thereof as may be prescribed.
Under cl.
(vi a) in respect of buildings newly erected, or of machinery or plant being new which had been installed after March 31, 1948, a further sum which is deductible in determining the written down value equal to the amount admissible under cl.
(vi) is allowable.
If the depreciation under cls.
(vi) and (vi a) cannot be given full effect in any year owing to there being no profits or gains chargeable for that year, or owing to the profits or gains chargeable being less than the allowance, then subject to the provisions of cl.
(b) of the proviso to sub section
(2) of section 24, the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance, for depreciation for the following year and deemed to be part of that allowance.
It tion of an year is to be deemed depreciation for the succeeding year into the account of which it is carried forward, and the aggregate of the depreciation for the year of assessment and the unabsorbed depreciation of the previous year is deemed to be depreciation allowance for the year of assessment.
The High Court, however, said that in computing the profits of the year of an industrial undertaking for determining whether the benefit of exemption under section 15 C(1) is admissible, the unabsorbed depreciation cannot be taken into account.
The High Court observed: "In effect, it computing the profits or gains for the purpose of section 15 C(1) and (4) the only allowances that could be made in respect of current year 's additional or extra depreciation under section 10(2) (vi a).
The set off of losses under section 24(2) and allowances in respect of unabsorbed depreciation both under section 10(2) (vi) and 10(2) (vi a) would not enter into the computation under section 15 C(3).
It is true that when the net result of assessment on the company is taken there is 'nil, profit and there might be no occasion at all for the application of section 15 C.
But, in our view, it does not follow from it that on that ground the benefit of that section can be denied to the shareholders if on a computation of the profits and gains of the industrial undertaking under 43 9 section 15 C(3), the company had made profits out of which dividends had been paid to its shareholders.
Where the company has 'nil, ' profits under its final assessment, the non application of section 15 C is not due the fact that it made no profits and it was not entitled to the benefit of section 15 C(1).
But, in view of the overall result of the assessment, there is no need for the company to claim exception under that provision, as there is no tax liability at all.
Viewed from this angle, we consider that the shareholders are entitled to take the position of the profits or gains of the company as computed under sub section (3) of section 15 C and subject to the limits provided by that sub section, and claim the benefit under section 15 C(4).
" The opinion of the High Court that in computing the profits of an industrial undertaking under section 10, unabsorbed depreciation for the previous years must be ignored, is inconsistent with the plain terms of section 10(2)(vi) proviso (b).
Again the assumption that the right to claim allowance of unabsorbed depreciation arises out of section 24(2) of the Act is in our judgment erroneous.
Under the scheme of section 15 C the profits or gains of an industrial undertaking must be determined under and in the manner provided by section 10 of the Income tax Act.
For that purpose all the allowances under sub section
(2) must be taken into account, and the resultant amount forms a component of the taxable profit.
If by proviso (b) to section 10 (2) (vi) the unabsorbed depreciation of the previous year is deemed depreciation for the subsequent year, there is no room for making any distinction between the unabsorbed depreciation for the previous year and the depreciation for the current year.
The right to appropriate the profits towards the unabsorbed depreciation of the previous year does not arise under section 24 ( 1); it arises by virtue of section 10 (2) (vi) proviso (b) We are also unable.
to agree with the High Court that if an industrial undertaking has distributed dividend, the shareholders will be entitled to exemption from payment of tax on that dividend, even if the Company is not entitled to claim exemption from liability to pay tax under sub section
(1) of section 15 C.
The right of the shareholders to obtain the benefit of exemption under section 5 C(4) depends upon the Company obtaining the benefit of exemption under sub section
(1) of section 15 C, for the exemption from payment of tax on the dividend received by the shareholders is admissible only in that part of the profits or gains on which the tax is not payable by the Company under sub section
440 Section 24(2) proviso (b) on which reliance was placed has, in our judgment, no application.
That proviso enacts "Provided that (b) where depreciation allowance is, under clause (b) of the proviso to, clause (vi) of sub section (2) of section 10, also to be carried forward,effect shall first be given to the provisions of this sub section.
" Sub section (2) of section 24 deals with "the carry forward of losses" and proviso (b) to section 24(2) sets out the sequence in which the losses carried forward and the depreciation allowance which remains unabsorbed in the previous year are to be allowed.
Whether any practical effect may be given to the terms of proviso (b) to section 24(2), in the view which this Court has taken in Commissioner of Income tax, Calcutta vs Jaipuria China Clay Mines (P) Ltd.(1) is a matter on which we need express no opinion.
If on its plain terms, proviso (b) to section 24(2) deals merely with priority and does not convert what is unabsorbed depreciation of the previous year which is deemed to be depreciation for the current year ', into loss for the purpose of carry forward," sub section
(2) of section 24 proviso (b) presents no difficulty in the present case.
This Court in Jaipuria China Clay Mines ' case(1) held that unabsorbed depreciation of past years cannot be kept out of accounts in determining the net income of an assessee for a particular year; it has to be set off against the profits from other heads.
In that case the assessee had for the year 1952 53 a total business income of Rs. 14,000 odd and the depreciation amounted to Rs. 5,360.
The assessee company had a large dividend incomes.
The tax payer claimed that the unabsorbed depreciation of the previous year should be deducted from the dividend income and the total income liable to tax be reduced.
The Income tax Officer rejected the claim.
This Court observed that the Income tax Act draws no distinction between the various allowances mentioned in section 10(2); they all have to be deducted from the gross profits and gains of a business.
Accordingly the ' unabsorbed depreciation of the past years must be added to the depreciation of the current year, and the aggregate of the unabsorbed depreciation and the current year 's depreciation must be deducted from the total income of the year relevant to the assessment year in question.
If the profits do not wipe out the depreciation, the profit and loss account would show a loss.
The Court further observed that "carry forward of depreciation is provided for" in section 10(2) (vi), and section 24(2) only deals with losses other than the losses (1) 441 due to depreciation.
That decision clearly establishes that depreciation in respect of a business has in the first instance to be set off as an allowance against the profits from the business, profession or vocation.
If the depreciation exceeds the profits and there is no other income from any other head, the depreciation may be carried forward to the next year.
If, there is a profit from some other head, then the unabsorbed depreciation of a particular year under the head "Profits and gains of the business, profession or vocation" will be set off against such other income.
In the case in hand, the Company had no other source of income.
The depreciation allowance admissible in the assessment years exceeded the business profits.
The Company had no taxable profit in the two years in question.
The Company could not claim exemption from payment of tax provided in section 15 C (1); and no dividend having been distributed out of the taxable profits there was no dividend attributable to that part of the profits which were exempt from tax in the 'hands of the shareholders.
The answer to the question submitted by the Tribunal is recorded in the negative.
The appeals must therefore be allowed.
Having regard to the Circumstances of the case, the Parties will bear their own costs in this Court and in the High Court.
| IN-Abs | Shri Ganapathy Mills Co. Ltd., Distributed dividend to its shareholders out of its business profits earned in the years ending December 31, 1953 and December 31, 1954.
The company, however carried in its accounts a large balance of unabsorbed depreciation admissible under section 10(2) (vi) & 10(2) (vi a) of the Income tax Act, 1922 and on that account it had no taxable income in the relevant assessment years 1954 55 and 1955 56.
In assessing the income of the shareholders for the assessment years the Income tax Officer rejected the claim for exemption from tax Linder section 15 C(4) of the Income tax Act and brought the dividend to tax.
This order was confirmed by the Income tax Appellate Tribunal.
The High Court, in a reference, held in favour of the assessees.
With certificate the Revenue appealed.
The question that fell for consideration were : (i) Whether the High Court 's view that unabsorbed depreciation of previous years must be ignored in computing the profits under section 10 and the Implied assumption that unabsorbed depreciation was carried forward and set off under section 22(4) were correct; (ii) Whether, the claim under section 15 C(4) could be made even when there was no taxable profit for which exemption could be claimed Linder section 15 C(4).
HELD : (i) Under proviso (b) to section 10(2) (vi) the unabsorbed depreciation in an year is to be deemed the depreciation for the succeeding year into the accounts of which it is carried forward and the aggregate of depreciation in the year of assessment and the unabsorbed depreciation of the previous year is deemed to be depreciation allowance for the year of assessment.
The opinion of the High Court that in computing the profits of an industrial 'undertaking under section 10, unabsorbed depreciation for the previous years must be ignored is inconsistent with the plain terms of the proviso.
[438 D E; 439 D] The right to claim allowance of unabsorbed depreciation does not arise out of section 24(2) of the Act.
Under the scheme of section 15 C(4) profits and gains of an industrial undertaking must be determined under and in the manner provided by section 10 of the Income tax Act.
For that purpose all the allowances under sub section
(2) are taken into account and the resultant amount forms a component of the taxable profits, By proviso (b) to section 10 (2) (vi), the unabsorbed depreciation in the previous year is deemed depreciation for the subsequent year, and there is no room for making any distinction between the unabsorbed depreciation for the previous year and the depreciation for the current year.
The right to appropriate the profits towards the unabsorbed depreciation in the previous year does not arise under section 24(2); it arises by virtue of section 10(2) (vi) proviso (b).
[439 D F] 435 (ii)The right of the shareholders to obtain benefit of exemption under 15 C(4) depends upon the company obtaining the benefit of exemption under sub section
(1) of section 157C for the exemption from payment of tax on the dividend received by the share holders is admissible only on that part of the profits or gains on which the tax is not payable by the com pany under sub section
[439 HI On this view it must be held that the claim of shareholders in the present case rightly disallowed by the taxing authorities.
[435 H; 441 D] [Proviso (b) 'to section 24(2 held inapplicable, with the observation that it deals merely with priority and does not convert what is unabsorbed depreciation of the previous year which is deemed to be depreciation for the current year into loss "for the purpose of carry forward".[440 D] Commissioner of Income tax, Calcutta vs Jaipuria China Clay Mines (P) Ltd., , referred to.
|
Appeal No. 2560 of 1966.
Appeal from the judgment and order dated May 11, 1966 of the Calcutta High Court in Income tax Matter No. 98 of 1962.
section T. Desai, G. C. Sharma and R. N. Sachthey, for the appellants.
D. K. De, A. N. Sinha, Rathin Das for P. K. Mukherjee, for respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by special leave from a judg ment of the Calcutta High Court answering the following question which was referred to it by the Tribunal in the negative and in favour of the assessee.
"Whether on the facts and in the circumstances of the case, the Income tax authorities were justified in imposing a penalty on the assessee under Section, 28 (1) (c) of the Income tax Act ?" The assessee during the assessment year 1947 48, the corresponding previous year being the financial year ending on March 31, 947 was a partner in the firm of M/s. Haji Sk.
Md. Hussain Md. Jan of Calcutta.
The Income tax Officer while making the assessment discovered an undisclosed bank account of the assessee with the Central Bank of India Ltd. Bettiah, Bihar.
It was found that a cash deposit of Rs. 87,000 had been made by the assessee on November 21, 1946 in that Bank.
He was asked to explain the source, of the amount of deposit.
According to his explanation all his relations got panicky during the communal riots in Bihar in the year 1946 and entrusted him with whatever cash amounts they had with them at that time for safe custody.
448 It was stated that a sum of Rs. 87,000 had been received in the following manner Zahir Hussain alias Md. Zahir (Cousin)Rs.
18,500/ Mohammad Jan (deceased father)Rs.
1,000 Mohd. Haniff (cousin) Rs.1,750 Khairunnessa Bibi (mother)Rs.23,000 Safihan Bibi (Sister) Rs.13,000 Fatema Bibi (Wife) Rs.15,750 Hasuia Bibi (Brother 's wife)Rs.12,000 ___________ Rs.87,000 ____________ These amounts which were received by the assessee from his relations were deposited by him in a fixed deposit account in the joint name of himself and his minor sons in the Bank at Bettiah.
The Income tax Officer did not accept the explanation of the assessee and held that the sum of Rs. 87,000 represented income from undisclosed sources.
He added the amount to the total income of the assessee in his personal assessment.
This addition was maintained by the Appellate Assistant Commissioner in appeal.
The Appellate Tribunal also agreed with the decision of ,the Income tax Officer and the Appellate Assistant Commissioner.
Penalty proceedings were initiated after the assessment and in due course the Income tax Officer imposed a penalty amounting to Rs. 66,000 on the assessee under section 28 (1) (c) for concealing income and deliberately furnishing inaccurate particulars.
The Appellate Assistant Commissioner in appeal held that the case clearly called for a penal action but he reduced the amount of penalty by Rs. 22,000.
Subsequently he rectified his order under section 35 and confirmed the penalty of Rs. 66,000 imposed by the Income tax Officer.
The assessee went up to the Appellate Tribunal in appeal.
The Tribunal took the view that penalty proceedings were of a criminal nature.
The onus lay on the department to show by adequate evidence that the amount of the cash stated to have been concealed by the assessee was of a revenue nature and was assessable as income and that the assessee had concealed it or deliberately furnished false particulars in regard thereto.
This onus, in the opinion of the Tribunal, was not ,discharged by the Income tax authorities by showing merely that the explanation given by the assessee in the assessment proceedings was found to be unacceptable.
The Income tax Officer, according to the Tribunal, must find some material apart from he falsity of the assessee 's explanation to support his finding that the receipt from undisclosed sources was income.
As no satisfactory evidence had been produced by the department to establish 4 49 that the amount in question represented the income of the assessee the Tribunal held that no penalty could be imposed.
Now penalty can be imposed under section 28 (1) (c) if the Income tax Officer, the Appellate Assistant Commissioner or the Appellate Tribunal in the course of any proceedings under the Income tax Act 1922 is satisfied that any person "has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income".
In the judgment under appeal reference has been made to the decisions of the various High Courts on the true ambit and scope of this provision and the burden in the matter of establishing concealment of particulars of income or deliberately furnishing inaccurate particulars of such income.
The majority of High Courts, namely, Bombay in Commissioner of Income tax, Ahmedabad vs Gokuldas Harivallabhdas(1), Gujarat in Commissioner of Income tax Gujarat vs L. H. Vora (2 ) and Patna in Commissioner of Income tax Bihar & Orissa vs Mohan Mallah(3) had expressed the view that proceedings under section 28 ( 1 ) (c) were of a penal nature and it was for the department to establish that the assessee was guilty of concealment of, the particulars of income.
The mere fact that the assessee had given a false explanation did not prove that the receipt necessarily constituted income of the assessee.
Allahabad High Court, however, in Moman Rain Rant Kumar(1) vs Commissioner of Income tax U.P. observed that where the explanation offered by the assessee in respect of an item of income shown as capital receipt was deliberately false it was open to the Income tax authorities to impose a penalty under section 2 8 (1) (c).
In the earlier judgment in Lal Chand Gopal Das vs Commissioner of Income tax U.P.(5) the Allahabad court had said that if a receipt was income but was disguised in the account or in the return as a non assessable receipt it was clearly a case of concealment of the particulars or of furnishing inaccurate particulars of income and a penalty under section 2 8 (1) (c) should be imposed on the assessee.
The first point which falls 'for determination is whether the imposition of penalty is in the nature of a penal provision.
The determination of the question of burden of proof will depend largely on the penalty proceedings being penal in nature or being merely meant for imposition of an additional tax,, the liability to pay such tax having been designated as penalty under section 28.
One line of argument which has prevailed particularly with the Allahabad High Court in Lal Chand Gopal Das(5) cage is that there was no essential difference between tax and penalty because the liability for payment of both was imposed as a part of the (1) (2) 56 I.T.R. 126.
(3) (4) 59 ].T.
P. 135.
(5) , 450 machinery of assessment and the penalty was merely an additional tax imposed in certain circumstances on account of the assessee 's conduct.
The justification of this view was founded on certain observations in C. A. Abraham vs Income tax Officer, Kottayam & Anr.(1).
It is true that penalty proceedings under section 28 are included in the expression "assessment" and the true nature of penalty has been held to be additional tax.
But one of the principal objects in enacting section 28 is to provide a deterrent against recurrence of default on the part of the assessee.
The section is penal in the sense that its consequences are intended to be an effective deterrent which will put a Stop to practices which the legislature considers to be against the public interest.
It is significant that in C. A. Abraham 's(1) case this Court was not called upon to determine whether penalty proceedings were penal or of quasi penal nature and the observations made with regard to penalty being an additional tax were made in a different context and for a different purpose.
It appears to have been taken as settled by now in the sales tax law that an order imposing penalty is the result of a quasi criminal proceedings; (Hindustan Steel Ltd. vs The State of Orissa(1).
In England also it has never been doubted that such proceedings are penal; Fattorini (Thomas) (Lanchashire) (Ltd., vs Inland Revenue Commissioner (3).
The next question is that when proceedings under section 28 are penal in character what would be the nature of the burden upon the department for establishing that the assessee is liable to payment of penalty.
As has been rightly observed by Chagla C.J., in Commissioner of Income tax, Ahmedabad v, Gokuldas Harivallabhdas (4) the gist of the offence under section 2 8 ( 1 ) (c) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income and therefore the department must establish that the receipt of the amount in dispute ,constitutes income of the assessee.
If there is no evidence on the record except the explanation given by the assessee which ,explanation has been found to be false it does not follow that the receipt constitutes his taxable income.
Another point is whether a finding given in the assessment proceedings that a particular receipt is income after rejecting the explanation given by the assessee as false would prima facie be sufficient for establishing in proceedings under section 28 that the disputed amount was the assessee 's income.
It must be remembered that the proceedings under section 28 are of a penal nature and the burden is on the department to prove that a particular amount (1) 41 (3) 1943 (11) I.T.R. (Supp.)50.
(2) C.A.S. 883 392/66 dt.
4 8 1969.
(4) 451 is a revenue receipt.
It would be perfectly legitimate to say that the mere fact that the explanation of the assessee is false does not necessarily give rise to the inference that the disputed amount represents income.
It cannot be said that the finding given in the assessment proceedings for determining or computing the tax is conclusive.
However it is good evidence.
Before penalty can be imposed the entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assessee had consciously concealed the particulars of his income or had deliberately furnished.
inaccurate particulars.
In the present case, it was neither suggested before the High Court nor has it been contended before us that apart from the falsity of the explanation given by the assessee there was cogent material or evidence from which it could be inferred that the assessee had concealed the particulars of his income or had deliberately furnished inaccurate particulars in respect of the same and that the disputed amount was a revenue receipt.
The question was, therefore, rightly answered by the High Court.
The appeal fails and it is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | The Income tax Officer, while assessing the respondent to tax discovered an undisclosed bank account of the 'respondent for a large sum.
He did not accept the explanation of the respondent as to the source of the amount and held that it represented income from an undisclosed source.
Thereafter he initiated penalty proceedings under section 28 and imposed a penalty which was confirmed by the Appellate Assistant Commissioner.
In appeal, the Tribunal held that penalty proceedings were of a criminal nature and that the burden lay on the department to show that the amount concealed was of a revenue nature and was assessable as income and that the onus was not discharged in the present case by merely showing that the assessee 's explanation was not accepted in the assessment proceedings.
The High Court agreed with the Tribunal.
In appeal to this Court, HELD.
(1) Penalty proceedings are included in the expression "assessment" and the true nature of a penalty is the imposition of an additional tax.
But, one of the principal objects of section 28 is to provide a deterrent against recurrence of default on the part of the assessee.
There fore, the section is a penal provision and the proceedings were of a penal nature.
[450 B C] C. A. Abraham vs Income tax officer, , explained.
Commissioner of Income tax, Ahmedabad vs Gokuldas Harivallabhdas , Commissioner of Income tax Gujarat vs L. H. Vora, and Commissioner of Income Tax Bihar and Orissa vs Mohan Mallah, , approved.
Moman Rain Ram Kumar vs Commissioner of Income tax, U.P., and Lal Chand Gopal Das vs Commissioner of Income tax, U.P., , not approved.
Hindustan Steel Ltd. vs State of Orissa, C.As.
883 892/66 dt. 4 8 1969 and Fattorini (Thomas) (Lanchashire) Ltd. vs Inland Revenue Commissioner, (1943) (11) I.T.R. Supp. 50, referred to.
(2)The gist of the offence under section 28(1)(c) is that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, and therefore, the department must establish that the receipt of the amount in dispute constitutes income of the assessee.
If there is no evidence on the record except the explanation has been found to be false, if does not follow that the receipt constitutes his taxable income.
[450 E G] 447 Commissioner of, Income tax, Ahmedabad vs
Gokuldas Harivallabhdas, , approved.
(3) 'Since the proceedings under section 28 are of a penal nature and the burden is on the department to prove that a particular amount is a revenue receipt, the finding given in the assessment proceedings that the assessee 's explanation is false and that the disputed amount represents income is evidence but is not conclusive.
Before penalty could be imposed the, entirety of circumstances must reasonably point to the conclusion that the disputed amount represented income and that the assesses , had consciously.
concealed the particulars of his income or had deliberately furnished inaccurate particulars.
[450 451 A C]
|
Appeal No. 350 of 1970.
Appeal by special leave from the judgment and order dated March 21, 1966 of the Madras High Court in O.S. Appeal No. 11 of 1962.
B. R. L. lyengar, M. V. Goswami, section R. Agarwala, A. T. M. Sampat and E. C. Agrawala, for the appellant.
U. P. Singh, Santok Singh, Ugra Shankar Prasad and Shiva Pujan Singh, for respondent No. 1.
section P. Sinha and M. I. Khowaja, for respondents Nos. 2 and 3.
The Judgment of the Court was delivered by Ray, J.
This appeal is by special leave from the judgment dated 21 March, 1966 of the Madras High Court dismissing the appeal preferred by the appellant against the decree holders ' application for execution of the decree.
The appellant is one of the judgment debtors brought on record as legal representative of a deceased judgment debtor Lala Baijnath Prasad.
Respondent No. 1 Lakshman Prasad Gupta was one of the plaintiffs.
Pratap Chand and Basudeb Prasad respondents Nos. 2 and 3 respectively are the sons of a judgment debtor Girdharilal Agarwala.
The plaintiff respondent Lakshman Prasad Gupta was married to the sister of Lala Bansilal.
Bansilal belonged to the joint family which consisted inter alia of the appellant 's father.
There were five 366 branches of the said joint family of the judgment debtors, three whereof were at Banaras, Calcutta and Naini and the other two were the branches of the descendants of Mohanlal and of Lala Baijnath Prasad, father of the appellant, respectively.
The said joint family had valuable properties in and around the town of Arrah in Bihar.
There are alleged to be valuable properties of the joint family also at Allahabad, Banaras, Bombay, Calcutta and Madras.
Some time in the year 1926 Lala Pratap Chand, one of the descendants of Mohanlal who was a grand uncle of Lala Bansilal filed a partition suit in the court of the Subordinate Judge at Allahabad.
A preliminary decree was passed in the said partition suit on 14 February, 1927.
An appeal was preferred and it was dismissed.
An amicable settlement was arrived at in the partition suit on 13 January, 1931 for partition of the properties into five equal lots and allotment of the shares.
Thereafter a Commissioner was appointed in the partition suit to go into accounts and prepare five lots.
The branches inter se raised disputes as to liability for loans alleged against the joint family.
The Commissioner prepared his report on 18 May, 1936.
Final decree was passed on 13 January, 1939.
An appeal was preferred against the said final decree in the partition suit to the High Court at Allahabad.
The appeal was disposed on 6 December, 1949.
The plaintiff Lakshman Prasad Gupta and six others filled suit No. 76 of 1937 in the Court, of the First Subordinate Judge at Arrah in Bihar and obtained a decree on 20 July, 1938 for Rs. 18,540 and for costs Rs. 1,840/4/ aggregating Rs. 20,380/4/ .
This decree was against Banwarilal and other members of the joint family to which the appellant 's father belonged.
The decree was transferred from Arrah to the Court of the Civil Judge at Allahabad where.
on 2 June, 1941 the decree holder commenced execution proceedings marked as Execution Petition No. 38 of 1941.
In that execution petition the decree holder prayed for attachment and sale of Shri Krishna Desi Sugar Works at Jhusi known as the Jhusi Sugar Mills in the District of Allahabad which belonged to the joint family.
The execution proceedings were according to the decree holders stayed under orders of the Allahabad High Court and after the stay order was vacated the execution proceedings were revived on 13 May, 1950.
The jhusi Sugar Mill was attached on 1 1 July, 1952 and it was sold on 19 February, 1955.
The sale was set aside on 31 May, 1955 pursuant to objections of the judgment debtors that the Jhusi Sugar Mill could not be sold because of the provisions of the U.P. Encumbered Estates Act, 1934.
It may be stated here that some time in the month of September, 1935 367 Baijnath Prasad filed an application before the Collector of Allahabad for protection and relief under the U.P.
Encumbered Estates Act of 1934 and it was registered as Encumbered Estates, Suit No. 25 of 1935.
Thereafter the decree holders on 17 March, 1956 made an application in the Arrah Court for transfer of the decree.
On 6, June, 1956, the Subordinate, Judge, at Arrah transferred the decree to the Madras High Court.
On 13 August, 1956 the decree holders, filed in the Madras High Court an application for attaching the properties of the joint family.
This application in the Madras High Court is the subject matter of the present appeal.
The matter was heard first by the Master of the High Court of Madras who held that the application for execution was barred by limitation.
An appeal from the decision of the Master was heard by the learned Single Judge of the Madras High Court who held that the application was not within the mischief of bar of limitation Thereafter Letters Patent Appeal was heard by a Division Bench of the Madras High Court.
The appeal is from the Bench decision upholding the judgment of the learned Single Judge.
Before the Master of the Madras High Court the contention on behalf of the judgment debtors was that the decree was passed on 20 July, 1 9 3 8 and therefore the execution petition filed on 1 3 August, 1956 was barred by limitation.
The decree holders on the other hand contended that the execution of the decree which commenced on 2 June, 1941 before the Civil Judge at Allahabad was stayed till the end of 1949 and was revived on 13 May, 1950 and finally disposed on 31 May, 1955, and, therefore, the execution petition filed on 13 August, 1956 was within time. 'he Master held that the decree holders had failed to prove as to from what point of time the execution of the decree was stayed pursuant to the order of the Allahabad High Court and also the time when the stay was vacated.
The application for execution was therefore found by the Master of the Madras High Court to be barred by limitation.
The learned Single Judge of the Madras High Court referred to the revival of execution proceedings before the Civil Judge at Allahabad on 13 May, 1950 and also the finding of the Civil Judge at Allahabad who in passing the final order on 31 May, 1955 setting aside the sale of the Jhusi Sugar Mill stated that the execution proceedings were stayed by orders of the High Court at Allahabad., The Civil Judge at Allahabad set aside the Sale because of the mandatory provisions of sections 7(2) and 9(5) of the U.P.
Encumbered Estates Act.
The Madras High Court placed reliance on Exhibits P 2, P 3 and P 3A on the question of stay of execu tion proceedings.
It may also be stated here that the judgment 3 68 debtor did not dispute the translation of those Exhibits P 3 and P 3A.
The Exhibits set out the orders of the Civil Judge at Allahabad.
Exhibit P. 2 is the judgment dated 31 May, 1955 passed by the Civil Judge setting aside the sale of the Jhusi Sugar Mill.
Exhibits P 3 and P 3A comprise the orders passed by the Civil Judge.
The three relevant orders in Exhibits P 3 and P 3A are dated 18 August, 1941, 23 August, 1941 and 30 August, 1941 in the said execution proceedings.
The order dated 18 August, 1941 was to the effect that the receivers were to be informed about the execution proceedings and their objections, if any.
The receivers were the receivers in the partition suit No. 4 of 1926.
The said order further recited that the orders of the High Court at Allahabad in the, partition suit were also received in the executing court.
The order dated 23 August, 1941 recited that the execution application of the decree holder was presented in the presence of the lawyers of the decree holder and the receivers.
Further, the order was that the request for permission should be submitted in suit No. 4 of 1926 namely, the partition suit of the defendants judgment debtors.
The order dated 30 August, 1.941 recorded by the Civil Judge at Allahabad was inter alia as follows : "The proceedings remain stopped on account of the injunction of the High Court.
Hence it was ordered that receivers should be informed accordingly.
Further steps will be taken after getting permission .
These orders are relied on by the decree holder to substantiate the case of stay of execution proceedings.
The contention which was advanced before the Madras High Court and repeated in this Court was that there was no absolute stay of the execution of the decree.
It was amplified to mean that the execution proceedings before the Civil Judge at Allahabad related only to one property and therefore the decree holders would not be entitled to claim benefit of exclusion of time by reason of partial stay of execution proceedings at Allahabad.
The Madras High Court rightly found that there was no evidence that the judgment debtors were possessed of other properties in Allahabad where the decree was being executed.
The Madras High Court rightly held that the decree holders were restrained by injunction issued by the Allahabad High Court from executing the decree and were therefore entitled to claim the benefit of section 15 of the Limitation Act in respect of the period of stay of execution of the decree.
It was contended by counsel for the appellant that the decree holder could start execution proceedings in Madras or in other States where the judgment debtors had properties.
Simultaneous 3 6 9 execution proceeding in more places than one is possible but the power is used sparingly in exceptional cases by imposing proper terms so that hardship does not occur to judgment debtors by allowing several attachments to be proceeded with at the same time.
In the present case, however, the important features are that a partition suit was instituted in the year 1926 among the defendants.
and receivers were appointed of the properties.
The judgment of the Allahabad High Court dated 6 December, 1949 disposing the appeals filed by the parties in the partition suit directed inter alia "that the parties will be put in possession of the immoveable properties at once, but the two receivers will be legally discharged only after they have accounted for the period they were in charge of the properties".
Counsel for the decree holder rightly relied on this portion of the judgment of the Allahabad High Court that this would fortify the construction that there was stay of execution of the decree.
In the present case, the effect of the order passed by the Allahabad High Court was recorded by the Civil Judge, Allahabad in his judgment dated 31 May, 1955 to amount to stay of execution proceedings.
The order of the Civil Judge, Allababad dated 30 August, 1941 was that "proceedings remain stopped on account of the injunction order issued by the High Court.
in the Madras High Court the parties proceeded on thee basis of the order as corded by the Civil Judge at Allahabad.
The order indicates that the stay of execution proceedings was in unqualified terms, namely, that the execution proceedings were stopped.
It is not possible to spell out any order of partial stay in the facts and circumstances of the present case as was contended by counsel for the appellant.
The order is on the contrary to the effect that there was an absolute, stay of execution proceedings.
It is, therefore, manifest that the execution proceedings before the Civil Judge at Allahabad were stayed and the decree holder was rightly found by the Madras High Court to the benefit of exclusion of time during which the execution, was stayed, Though the judgment debtors did not question before the Master of the Madras High Court the bona fides of the decree holder in prosecuting the execution proceedings, that contention was advanced before the learned Single Judge of the Madras High Court.
The learned Single Judge of the Madras High Court held that the decree holders commenced execution proceedings for sale of the Jhusi Sugar Mill for realisation of the decretal amount but the attempt of the decree holder failed because of the objections of R the judgment debtors under the provisions of the U.P. Encumbered Estate Act.
The sale was set a side by reason of the mandatory provisions of the statute.
The learned Single Judge of the Madras High Court rightly held that the decree holders prosecuted the exe 370 cution case in good faith and with due diligence and were entitled to protection under section 14 of the Limitation Act.
Before the Division Bench of the Madras High Court no argu ment was advanced touching the bona fides or good faith with which the execution proceedings were carried on.
Counsel for the appellant repeated the contention that the decree holders were guilty of lack of good faith and diligence.
It is not open to the judgment debtors to advance that contention having abandoned the same before the Division Bench of the Madras High Court.
We are furthermore of opinion that the conclusion of the learned Single Judge of the Madras High Court on that point is correct.
The other question which arise before the Madras High Court was whether section 15 of the Limitation Act, 1908 would apply to limitation prescribed in statutes other than the Limitation Act.
Section 48 of the Code of Civil Procedure until its amendment on the passing of the enacted that the decrees of the Civil Courts were to be executed within 12 years and not after that.
The present case is governed by section 48 of the Code of Civil Procedure as it stood prior to the deletion of that section along with the passing of the .
In section 15 of the Limitation Act, 1908 it is enacted that in computing the period of limitation prescribed for any suit or application for a decree execution of which has been stayed by injunction, the time of the continuance of the injunction shall be excluded.
In the Madras High ,Court it was argued that the word 'prescribed ' occurring in section 15 of the Limitation Act could apply only to cases of limitation prescribed by the First Schedule to the Limitation Act, 1908 with the result that the benefit of exclusion of time by reason of operation of stay could not be availed of in cases of limitation prescribed by section 48 of the Code of Civil Procedure.
The Madras High Court relied on the decision in Kandaswami Pillai vs Kannappa Chetty(1) which held that the expression 'prescribed ' in section 15(1) of the Limitation Act would apply not only to limitation prescribed in the First Schedule to the Limitation Act but also to limitation prescribed in general statutes like the Code of Civil Procedure.
That is the correct statement of law and counsel for the appellant did not advance any contention to the contrary.
It may, however, be stated that the effect of section 48 of the Code of Civil Procedure is not to supersede the law of limitation with regard to execution of decrees.
The Limitation Act prescribes a period of limitation for execution of decrees.
Section 48 of the Code of Civil Procedure dealt with the maximum limit of time provided for execution, but it did not prescribe the period within (1) 3 7 1 which each application for execution was to be made.
An application for execution was to be made within three, years from any of the dates mentioned in the third column of Article 182 of the Limitation Act 1908.
An application for execution of a decree would first have to satisfy Article 182 and it would also have to be found out as to whether section 48 of the Code of Civil Procedure operated as a further bar.
In the present case, there was stay of execution proceedings.
On 13 May, 1950 the execution proceedings were revived.
The judgment debtors did not challenge the order dated 13 May, 1950.
The judgment debtors impeached the sale only on a ground covered by the U.P. Encumbered Estates Act, 1934.
The judgment debtor further in impeaching the sale of Jhusi Sugar Mill did not advance before the Civil Judge at Allahabad any contention that any of the orders,of the Civil Judge at Allahabad reviving the execution proceedings, attaching the Jhusi Sugar Mill and directing the sale of the Sugar Mill was barred by limitation.
The principle of res judicata applies to execution procedings.
The judgment debtors in the present case did not raise any objection as to limitation in regard to execution of the decree before the Civil Judge at Allahabad.
On the contrary the judgment debtors asked for setting aside the sale on the basis of revival of execution proceedings.
The revival of execution was not challenged and the judgment debtors are thereby barred by the principle of rem judicate from questioning directly or indirectly the order dated 13 May, 1950 reviving the execution proceedings.
When the appellant made the application for special leave, the appellant referred to an affidavit affirmed by the appellant 's father on 12 February, 1957 in the execution proceedings in the Madras High Court.
The copy of the said affidavit annexed to the petition for special leave in this Court is in seven paragraphs.
In paragraph 6 of the said affidavit it is alleged that the decree is against 5 bran ches and the plaintiff Lakshman Prasad in collusion with the other branches excluded the other four branches and chose to proceed only against the appellant 's branch though the other four branches were possessed of vast properties.
The further allegations in paragraph 6 of the said affidavit are that the object of the plaintiff is to harass only one branch and the application is not bonafide.
The plaintiff respondent in answer to the petition for special leave affirmed an affidavit in this Court that paragraph 6 in the said affidavit was an interpolation and was not at all in existence in the affidavit filed in the Madras High Court.
The plaintiff respondent ti obtained a photostat copy of the said affidavit filled in the Madras High Court.
The photostat copy established that paragraph 6 was not there and further that the affidavit was affirmed at Allahabad bad on 12 February, 1957 and not at Madras.
Furthermore, the 372 affidavit was explained to the deponent Baijnath Prasad as will appear from the photostat copy as annexed to the petition whereas in the copy annexed to the petition for special leave there was no such statement.
It is a serious matter that the appellant asked for relief on the basis of false copies of affidavits.
An explanation was suggested in the affidavit of the appellant that the copy was annexed in accordance with the draft that had been sent by the Madras lawyer.
It is beyond comprehension as to how an incorrect copy would be sent by the Madras lawyer.
Counsel for the appellant realised the gravity of the situation and conceded that the matter should be proceeded, with on the basis as it paragraphs did not exist.
The appellant is guilty of lack of uberrimae fidei.
We have therefore proceeded on the basis that paragraph 6 did not exist in the copy of the said affidavit.
The Madras High Court upheld the order of the learned Single Judge entitling the decree holder to the exclusion of the period spent in prosecuting prior infructuous execution proceedings before the Civil Judge at Allahabad.
The decree holder was allowed to proceed with the execution proceedings and t he Madras High Court remitted the matter to the Master to consider the questions indicated in the judgment and the judgment debtors were allowed to raise objections to the executability of the decree apart from that of limitation as indicated in the judgment of the learned Single Judge.
We are of opinion that the Madras High Court is right in holding that the decree holder is entitled to the benefit of exclusion of time during which the execution proceedings were stayed by the order of the Allahabad High Court and the decree holder proceeded with the said execution proceedings in good faith and with the deligence.
For these reasons we are of opinion that the appeal fails.
The appellant will pay the costs to the respondents.
Y.P. Appeal dismissed.
| IN-Abs | The first respondent, in 1938, obtained a decree against the appellants branch of a joint family, and in 1941, commenced proceedings for the execution of the decree in Allahabad.
Meanwhile, in 1939, a final decree had been passed in a suit for partitioning the family properties among the members of the joint family, and the matter was taken up in appeal to the High Court of Allahabad.
Certain orders were passed by the High Court which were construed by the executing court in the years 1941 and 1942 as stay orders of the execution proceedings commenced by the respondent.
The High Court passed a final decree in the partition suit in December 1949, but did not immediately discharge the Receivers who were appointed during the pendency of the suit.
The respondent revived the execution proceedings in May 1,950 and a mill belonging to the joint family was attached and sold 'but the sale was set 'aside in 1955 as the appellant 's branch applied for relief under the U.P. Encumbered Estates Act, 1934.
Thereafter, in ' 1956, the decree in favour of the respondent was transferred to Madras High Court for execution and on 13th August, 1956, the respondent filed an execution application, for attainment of certain properties which fell to the appellant 's share.
High Court of Madras in Letters Patent Appeal held that the execution application was in time.
On the question whether the execution application dated 13th August, 1956, was in time, or barred by limitation, HELD : (i) The respondent bonafide pursued execution against the mill and since his good faith was not questioned before the Appellate Court it was not open to the appellant to do so in this Court.
[370 A, C] (ii) It was not possible to spell out any order of partial stay on the facts and circumstances of the present case.
The facts that the Receivers were not finally discharged in 1949 when the final decree by the High Court was passed in the partition suit, and the understanding of the parties and the executing court that execution was stayed by the High Court, indicate that the stay was in unqualified terms.
Therefore, the respondent could not have applied earlier 'for execution with respect to other property of the joint family either at Allahabad or at Madras.
[369 A C, D G] (iii) Further, when the execution proceedings were revived in May 1950 the executing court held that execution proceedings had been stayed till December 1949 and the appellant did not challenge the order of attachment and sale of mill on the ground that the proceedings were barred by limitation.
Therefore, the appellant was barred by the principle of res judicata from questioning the order of May 1950 on the ground of limitation.
[371 D E] 365 (iv) Section 15 of the Limitation Act states that in computing the period of limitation prescribed the time of the continuance of the injunction staying execution shall be excluded.
The word "prescribed" would apply not only to Limitation Act but also to the limitation prescribed in general statutes like the Civil Procedure Code.
Section 48 of the Code, as it then stood, laid down 12 years as the maximum limit of the period of execution but it did not prescribe the period within which each application for execution was to be made.
Such an application was to be made within three years from the dates mentioned in third column of Article 182 of the Limitation Act, 1908.
Therefore, an application for execution of a decree must first satisfy Article 182 and it would then have to be found out as to whether section 48 of the Civil Procedure Code operated as a further bar.
[370 C H; 371 A B] (v) Since the execution proceedings were stayed in the present case, the 'respondent was entitled to claim its benefit of section 15 of the Limitation Act in respect of the period of stay of the execution of his decree, from June 194.1 till end of 1949; and since the execution application of 1950 was finally disposed of in 1955, the present application filed in 1956 was within time.
[372 E]
|
l Appeals No. 1760 of 1967.
Appeals from the judgment and order dated February 1, 2, 1966 of the Bombay High Court in Income tax Reference No. 60 of 1961.
B. Sen, section K. Aiyar and B. D. Sharma, for the appellant.
M. C. Chagla and A. K. Verma, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by certificate from a judgment of the Bombay High Court in an Income tax reference.
The respondent Company which is the assessee carries on business of the manufacture and sale of yam and cloth in Bangalore.
In 1914 it started a Provident Fund for the benefit of the monthly rated employees and this fund was called "The Staff Provident Fund".
Subsequently another fund was started known as the "Work men Provident Funds".
These funds were, not recognised under the provisions of Chapter IXA of the Income tax Act, 1922 (hereinafter called the Act).
The employees,and the assessee made contributions to the two funds from time to time.
The Employees ' Provident Funds Act (to be referred to as the Provident Funds Act) came into force on 31st October, 1952.
The amounts standing to the credit of the two funds on that date so far as they are referable to the contributions by the Company stood as follows : (1) Staff Provident Fund: Company 's contributions upto 31 10 1952 89,605 9 2 Proportionate interest thereon 19,596 8 7 1,09,202 1 9 (2) Workmen 's Provident Fund : Company 's contribution upto 31 10 1952.
1,83,190 13 2 Proportionate interest thereon9,379 2 5 1,92,569 15 10 3,01,772 1 7 The assessee came within the first schedule to the Provident Fund Act and therefore it applied under section 17 for exemption from the operation of the provisions of that Act.
A provisional exemption was given on 1st July, 1953.
The assessee was, however, informed that pending the grant of exemption it need not make any payment of the accumulations to the Regional Provident Fund Commissioner, as was enjoined under the Provident 470 Fund Act.
Following some correspondence between the Com missioner and the assessee the latter sought cancellation of the exemption by, means of a letter dated 11th July, 1955.
The Provident Fund Commissioner cancelled the exemption granted under section 17, of the Provident Funds Act and required the assessee to comply with all its provisions and the Scheme framed thereunder and further to transfer all the provident fund 's accumulations to the Employees Provident Fund immediately.
In accordance with the communication from the Commissioner, the assessee transferred an amount which included a sum of Rs. 3,01,772 1 7 which represented the assessee 's contribution to the two funds upto 31st October, 1952.
The assessee claimed deduction in the assessment for the assessment year 1957 58 on account of the transfer of the amount of Rs. 3,01,772 1 7 to the Provident Fund Com missioner.
The Income Tax Officer disallowed this claim on the ground that the amount in question was allowable to be treated ,as capital expenditure ' under the provisions of section 58K of the Act.
An appeal was taken to the Appellant Assistant Commissioner but it failed.
The assessee appealed to the Appellate Tribunal.
The Tribunal held that there was a transfer of the fund to Trustees which came within the scope of Section 58K of the Act and therefore the amount was not deductible nor could the deductions be allowed under section 10(1) or Section 10(2 (xv).
The assessee sought reference and the following two questions were referred : (1) Whether the provisions of Section 58K of the Income tax Act apply to the transf er of the sum of Rs. 3,01,772 1 7 to the Regional Provident Fund Commissioner ? (2) If the answer to the above question is in the negative , whether the sum of Rs. 3,01,772 1 7 is allowable as a deduction in arriving at the commercial profits under section 10(1) or is an allowable deduction under section 10(2) (xv) of the Income tax Act in the computation of the assessable "business" profits.
The High Court examined in detail the provisions contained in Chapter IXA of the Act.
It was observed that the scheme of section 58K in that Chapter was that though an employer could not claim any allowance at the time he transferred his own accumulated contributions to the Provident Fund to the trustees,, he could claim exemption ' in respect thereof at the time his share of contributions was paid to the employee provided arrangements were made to deduct from those amounts the income tax payable by his employee.
The transfer of the fund contemplated under section 58K was a voluntary transfer by an employer of the Provident Fund maintained by him to the trustees to hold it in trust for 471 the benefit of his employees.
The High Court, however, proceeded to consider the matter even on the assumption that the transfer of the fund contemplated by section 58K(1) Would also include involuntary transfer.
According to the High Court the position that emerged on a consideration of the materials provisions of the Provident Funds Act and the Scheme framed thereunder was as follows : For the administration of the statutory Provident Fund which came into existence and stood constituted on the framing of the Scheme, a Board of trustees called the Central Board of Trustees was constituted.
On the framing of the Scheme and the constitution of the statutory Provident Fund the employers in the industries to which the Provident Funds Act applied were required to transfer the accumulated balances of the Provident Fund, if any, which had been maintained by them.
Similarly, trustees of the private Provident Fund constituted by an employer were also required to transfer the accumulated balances to the statutory Provident Fund.
Such employers were further required to make their own annual contributions according to the prescribed limit to that fund.
The Board of trustees and the Officers administering the fund were required to open a Provident Fund account and in that account a separate account was maintained of each member showing the balance to his credit containing the contributions of the employer.
The High Court was of the view that a trust in its true sense had not been constituted by the Provident Funds Act or the Scheme and that the transfer was not to the trustees but to the fund The first question was answered in the negative and in favour of the assessee.
The answer to the second question was given in the affirmative, it being held that the deduction claimed was allowable under section 10 (2) (xv) and that the provisions of section 10 (4) (c) did not 'operate as a bar to the claim made by the assessee for deduction of the amount in question.
Section 58K of the Act was in those terms "58K. TREATMENT OF FUND TRANSFERRED BY EMPLOYER TO TRUSTEE: (1) Where an employer who maintains a provident fund (whether recognised or not) for the benefit of his employees and has not transferred the fund or any portion of it, transfers such fund or portion to trustees in trust for the employees participating in the fund, the amount so transferred shall be deemed to be of the nature of capital expenditure; (2) When an employee participating in such fund is paid the accumulated balance due to him therefrom, any portion of such balance as repre 472 sents his share in the amount so transferred to the trustee (without addition of interest, and exclusive of the employee 's contributions and interest thereon) shall, (if the employer has made effective arrangements to secure that tax shall be deducted at source from the amount of such share when paid to the employee,) be deemed to be an expenditure by the employer within the meaning of [clause (xv)] of sub section (2) of section 10, incurred in the year in which the accumulated balance due, to the employee is paid.
For the application of sub section (1) the following conditions must be satisfied : (1) The employer should have maintained a Provident Fund for the benefit of his employees; (2) There should have been a transfer of such fund or portion thereof to trustees; (3) Such transfer should have been in trust for the employees participating in the fund.
It has not been shown that the view taken by the High Court that the transfer in the present case was not made to any trustees is unfounded.
But we need express no opinion on the point because in our judgment the third condition could not be regarded as having been satisfied.
The transfer was not made to trustees in trust for the employees participating in the fund.
The common statutory fund created under the Provident Funds Act is meant not for the employees of the assessee only but it is meant for employees of hundreds of other employers who are covered by that Act.
In other words the employees of the assessee alone did not participate in that fund.
It is very doubtful whether the Provident Funds Act and the Scheme thereunder can be said to create a trust in the sense in which that word is used in section 58K (1) merely because the Board managing the Scheme was called the Board of Trustees.
The members of the Board did not become trustees in the legal sense.
They were appointed to administer the fund which vested in them only for the purpose of administration.
It could well be said that the essential ingredient of a trust, namely, reposing of confidence by the author of the trust in the trustees for the purpose of carrying out his desires, wishes and directions and the acceptance of those obligations by the trustees was absent in the present case.
It is, however, not necessary to examine in detail this aspect of the matter because as observed before the fund under the Provident Funds Act, was not restricted to the employees of the assessee only and it could never 4 73 be said that they alone participated in that fund.
In such a situation section 58K could not be made applicable.
Hardly any argument was addressed on the decision of the High Court on the second question. ' The expenditure was in curred in the relevant accounting year.
It was something which had gone irretrievably.
The amount in question had been spent and paid out in the relevant year of 'accounting, and was therefore allowable as expenditure incurred exclusively for the purpose of the business.
It is not suggested that is was incurred for any other purpose.
The conditions, of section 10(2) (xv) had been fully satisfied in the present case.
In the result we concur in the answers given by the High Court.
The appeal fails and is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | The assessee company respondent herein carried on the business of ,manufacture and sale of yarn and cloth.
It started in 1914 a Provident Fund for the benefit of its monthly rated employees.
Subsequently, another fund was started.
These funds were not recognised under the pro visions of Chapter IXA of the Income tax Act, 1922.
The employees and the company made contributions to the two funds from time to time.
The Employees Provident Funds Act 19 of 1952 came into force on 31st October, 1952.
Under directions given by the Provident Fund Commissioner the assessee company transferred to the statutory Employees Pro vidend Fund all the accumulations in the two private funds maintained by it including its own contributions thereto made upto October 31, 1952.
The said contributions amounted to Rs. 3,01,772 1 7.
In income tax proceedings for the assessment year 1957 58, the company claimed deduction of the above amount of Rs. 3,01,772 1 7 from its income.
The Income tax Officer, the Appellate Assistant Commissioner as well as Income tax Appellate Tribunal disallowed the claim.
In reference how ever the High Court decided in favour of the Company.
The Commissioner of Income tax appealed to this Court.
The questions that fell for considerations were : (i) whether the payment in question by the assessee company was capital expenditure within the meaning of section 58K(1) of Income tax Act and (ii) whether the said payment could be allowed as a deduction under section 10(2) (xv) of the Income tax Act? HELD : (i) For the application of sub section
(1) of section 58K the following conditions must be satisfied : '(1) The employer should have maintained a Provident Fund for the benefit of his employees; (2) There should have been a transfer of such fund or operation thereof to trustees; (3) Such transfer should have been in trust for the employees participating in the fund.
[472 C D] In the present case the third condition was not satisfied.
The common statutory fund created under the Provident Funds Act was meant not for the employees of the assessee only but also for employees of hundreds of other employers who were covered by the Act.
It was not restricted to the employees of the assessee and it could never be said that they alone participated in that fund.
In such a situation section 58K was not applicable.
[412 E; H 473 A] (ii)The expenditure was incurred in the relevant accounting year.
It was something which had gone irretrievably.
The amount in question had been spent and paid out in the year of accounting, and was, therefore, 469 allowable as expenditure incurred exclusively for the purpose of, the business.
The conditions of section 10(2)(xv) had, therefore, been fully satisfied in the present case.
[473 B C]
|
iminal Appeal No. 31 of 1953.
Under article 132(1) of the Constitution of India from the Judgment and Order dated 20 1 1953 of the High Court of Judicature at Bombay in Criminal Revision Application No. 642 of 1952, 800 1.
C. Dalal and P. K. Chatterjee for the appellant.
M. C. Setalvad, Attorney General of India (P. A. Mehta and P. G. Gokhale, with him) for the respondent.
October 8.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
This is an appeal against the judgment of the High Court of Bombay dismissing a revision petition filed by the appellant against his conviction under section 7 of the Essential Supplies (Temporary Powers) Act No. XXIV of 1946.
The charge against the appellant was that on 6th April, 1951, he had transported 15 maunds of juwar from his village of Khanjroli to Mandvi without a permit, and had thereby contravened section 5(1) of the Bombay Food Grains (Regulation of Movement and Sale) Order, 1949.
The Resident First Class Magistrate of Bardoli who tried the case found him guilty, and sentenced him to imprisonment till the rising of the Court and a fine of Rs. 500.
The conviction and sentence were both affirmed by the Sessions Judge, Surat, on appeal.
The appellant thereafter took up the matter in revision to the High Court of Bombay, and there for the first time, took the objection that the Resident First Class Magistrate had no jurisdiction to try the case, because under section 2 of the Bombay Act No. XXXVI of 1947 the offence was punishable with imprisonment, which might extend to seven years, and under the Second Schedule to the Criminal Procedure Code, it was only the Sessions Court that had jurisdiction to try such offence.
The answer of the State to this contention was that subsequent to the enactment of the Bombay Act No. XXXVI of 1947, the Essential Supplies (Temporary Powers) Act bad undergone substantial alterations, and was finally recast by the Central Act No. LII of 1950; that the effect of these amendments was that Act No. XXXVI of 1947 had become inoperative, that the governing Act was Act No. LII of 1950, and that as under that Act the maximum sentence for the offence in question was three years, the Resident First Class Magistrate had jurisdiction over the offence.
801 The revision petition was heard by a Bench consisting of Bavdekar and Chainani JJ.
Bavdekar J. was of the opinion that the amendments to the Essential Supplies (Temporary Powers) Act including the re enactment of section 7 in Act No. LII of 1950 did not trench on the field covered by the Bombay Act No. XXXVI of 1947, which accordingly remained unaffected by them.
Chainani J., on the other hand, held that both Act No. XXXVI of 1947 and Act No. LII of 1950 related to the same subject matter, and that as Act No. LII of 1950 was a Central legislation of a later date, it prevailed over the Bombay Act No. XXXVI of 1947.
On this difference of opinion, the matter came up under section 429, Criminal Procedure Code, for hearing before Chagla C. J., who agreed with Chainani J, that there was repugnancy between section 7 of Act No. LII of 1950 and section 2 of the Bombay Act No. XXXVI of 1947, and that under article 254(2), the former prevailed ; and the revision petition was accordingly dismissed.
Against this judgment, the present appeal has been preferred on a certificate under article 132 (1), and the point for determination is whether contravention of section 5(1) of the Bombay Food Grains (Regulation of Movement and Sale) Order, 1949, is punishable under section 2 of the Bombay Act No. XXXVI of 1947, in which case the trial by the Resident First Class Magistrate would be without jurisdiction ; or whether it is punishable under section 7 of the Essential Supplies (Temporary Powers) Act, as amended by Act No. LII of 1950, in which case, the trial and conviction of the appellant by that Magistrate would be perfectly legal.
It is now necessary to refer in chronological sequence to the statutes bearing on the question.
We start with the Essential Supplies (Temporary Powers) Act No. XXIV of 1946 enacted by the Central Legislature by virtue of the powers conferred on it by 9 and 10, George VI, Chapter 39.
It applied to the whole of British India.
Section 3 of the Act conferred power on the Central Government to issue orders for regulating the production, supply and distribution of essential commodities, and under section 4, this power could be 802 delegated to the Provincial Government.
Section 7(1) provided for punishment for contravention of orders issued under the Act, and ran as follows: "If any person contravenes any order made under section 3, he shall be punishable with imprisonment for a term which may extend to three years or with fine or with both, and if the order so provides any Court trying such contravention may direct that any property in respect of which the Court is satisfied that the order has been contravened shall be forfeited to His Majesty: Provided that where the contravention is of an order relating to foodstuffs which contains an express provision in this behalf, the Court shall make such direction, unless for reasons to be recorded in writing it is of opinion that the direction should not be made in respect of the whole or as the case may be, a part of the property.
" The State of Bombay considered that the maximum punishment of three years ' imprisonment provided in the above section was not adequate for offences under the Act, and with the object of enhancing the punishment provided therein, enacted Act No. XXXVI of 1947.
Section 2 of the said Act provided (omitting what is not material for the present purpose) that "Notwithstanding anything contained in the Essential Supplies (Temporary Powers) Act, 1946, whoever contravenes an order made or deemed to be made under section 3 of the said Act shall be punished with imprisonment which may extend to seven years, but shall not, except for reasons to be recorded in writing, be less than six months, and shall also be liable to fine." This section is avowedly repugnant to section 7(1) of the Essential Supplies (Temporary Powers) Act.
Section 107 (2) of the Government of India Act, which was the Constitution Act then in force, enacted that, "Where a Provincial law with respect to one of the matters enumerated in the Concurrent Legislative List contains any provision repugnant to the provisions of an earlier Dominion law or an existing law with respect to that matter, then, if the Provincial law having been reserved for the consideration of the Governor General has received the assent of the Governor General, 803 the Provincial law shall in that Province prevail, but nevertheless the Dominion Legislature may at any time enact further legislation with respect to the same matter.
" On the footing that the subject matter of Act No. XXXVI of 1947 fell within the Concurrent List, the Bombay Government obtained the assent of the Governor General therefor, and thereafter it came into force on 25th November, 1947.
The position therefore was that by reason of section 107(2) of the Government of India Act, Act No. XXXVI of 1947 prevailed in Bombay over section 7 of the Essential Supplies (Temporary Powers) Act; but at the same time, it was subject under that section to all and any "further legislation with respect to the same matter", that might be enacted by the Central Legislature.
The contention of the State is that there was such further legislation by the Central Legislature in 1948, in 1949 and again in 1950, and that as a result of such legislation, section 2 of the Bombay Act No. XXXVI of 1947 had become inoperative.
In 1948 there was an amendment of the Essential Supplies (Temporary Powers) Act, whereby the proviso to section 7(1) was repealed and a new proviso substituted, which provided inter alia that, " Where the contravention is of an order relating to foodstuffs which contains an express provision in this behalf, the Court shall direct that any property in respect of which the order has been contravened shall be forfeited to His Majesty, unless for reasons to be recorded in writing it is of opinion that the direction should be made not in respect of the whole, or as the case may be, a part of the property.
" The Essential Supplies (Temporary Powers) Act was again amended in 1949.
Under this amendment, the proviso to section 7(i) was repealed, and a new clause substituted in the following terms: " (b) Where the contravention is of an order relating to foodstuffs, the Court shall (i) sentence any person convicted of such contravention to imprisonment for a term which may extend to three years and may, in addition, impose a sentence of fine, unless for 804 reasons to be recorded, it is of opinion that a sentence of fine only will meet the ends of justice; and (ii)direct that any property in respect of which the order has been contravened or a part thereof shall be forfeited to His Majesty, unless for reasons to be recorded it is of opinion that such direction is not necessary to be made in respect of the whole, or, as the case may be, a part of the property.
" Then came Central Act No. LII of 1950, under which the old section 7 was repealed and a new section enacted in the following terms: " (1) If any person contravenes any order under section 3 relating to cotton textiles he shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine; and any property in respect of which the order has been contravened or such part thereof as to the Court may seem fit shall be forfeited to the Government.
(2)If any person contravenes any order under section 3 relating to foodstuffs, (a)he shall be punishable with imprisonment for a term which may extend to three years and shall also be liable to fine, unless for reasons to be recorded the Court is of opinion that a sentence of fine only will meet the ends of justice ; and (b)any property in respect of which the order has been contravened or such part thereof as to the Court may seem fit shall be forfeited to the Government, unless for reasons to be recorded 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: Provided that where the contravention is of an order prescribing the maximum quantity of any foodgrain that may lawfully be possessed by any person or class of persons, and the person contravening the order is found to have been in possession of foodgrains exceeding twice the maximum quantity so prescribed, the Court shall (a)sentence him to imprisonment for a term which may extend to seven years and to a fine not less than 805 twenty times the value of the foodgrain found in his possession, and (b)direct that the whole of such foodgrain in excess of the prescribed quantity shall be forfeited to the Government.
Explanation: A person in possession of foodgrain which does not exceed by more than five maunds the maximum quantity so prescribed shall not be deemed to be guilty of an offence punishable under the proviso to this sub section.
(3)If any person contravenes any order under section 3 relating to any essential commodity other than cotton textiles and food stuffs, he shall be punishable with imprisonment for a term which may extend to three years, or with fine or with both, and if the order so provides, any property in respect of which the Court is satisfied that the order has been contravened may be forfeited to the Government.
(4)If any person to whom a direction is given under 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.
" It must be mentioned that while the amendments of 1948 and 1949 were made when section 107(2) of the Government of India Act was in force, the Constitution of India Act had come into operation, when Act No. LII of 1950 was enacted.
Article 254(2) of the Constitution is as follows: " Where a law made by the Legislature of a State specified in Part A or Part B of the First Schedule with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall,, if it has been reserved for the consideration of the President and has received his assent, prevail in that State : Provided that nothing in this clause shall prevent Parliament from enacting at any time any law with 806 respect to the same matter including a law adding to, amending, varying or repealing the law so made by the Legislature of the State.
" This is, in substance, a reproduction of section 107(2) of the Government of India Act, the concluding portion thereof being incorporated in a proviso with further additions.
Discussing the nature of the power of the Dominion Legislature, Canada, in relation to that of the Provincial Legislature, in a situation similar to that under section 107(2) of the Government of India Act, it was observed by Lord Was on in Attorney General for Ontario vs Attornery General for the Dominion(1), that though a law enacted by the Parliament of Canada and within its competence would override Provincial legislation covering the same field, the Dominion Parliament bad no authority conferred upon it under the Constitution to enact a statute repealing directly any Provincial statute.
That would appear to have been the position under section 107(2) of the Government of India Act with reference to the subjects mentioned in the Concurrent List.
Now, by the proviso to article 254(2) the Constitution has enlarged the powers of Parliament, and under that proviso, Parliament can do what the Central Legislature could not under section 107(2) of the Government of India Act, and enact a law adding to, amending, varying or repealing a law of the State, when it relates to a matter mentioned in the Concurrent List.
The position then is that under the Constitution Parliament can, acting under the proviso to article 254(2), repeal a State law.
But where it does not expressly do so, even then, the State law will be void under that provision if it conflicts with a later "law with respect to the same matter" that may be enacted by Parliament.
In the present case, there was no express repeal of the Bombay Act by Act No. LII of 1950 in terms of the proviso to article 254(2).
Then the only question to be decided is whether the amendments made to the Essential Supplies (Temporary Powers) Act by the Central Legislature in 1948, 1949 and 1950 are "furthers (1) 807 legislation" falling within section 107(2) of the Government of India Act or "law with respect to the same matter" falling within article 254(2).
The important thing to consider with reference to this provision is whether the legislation is "in respect of the same matter.
" If the later legislation deals not with the matters which formed the subject of the earlier legislation but with other and distinct matters though of a cognate and allied character, then article 254(2) will have no application.
The principle embodied in section 107(2) and article 254(2) is that when there is legislation covering the same ground both by the Centre and by the Province, both of them being competent to enact the same, the law of the Centre should prevail over that of the State.
Considering the matter from this standpoint, the first question to be asked is, what is the subject matter of the Bombay Act No. XXXVI of 1947? The preamble recites that it was "to provide for the enhancement of penalties for contravention of orders made under the Essential Supplies (Temporary Powers) Act, 1946.
" Then the next question is, what is the scope of the subsequent legislation in 1948, 1949 and 1950 ? As the offence for which the appellant has been convicted was committed on 6th April, 1951, it would be sufficient for the purpose of the present appeal to consider the effect of Act No. LII of 1950, which was in force on that date.
By that Act, section 7(1) of the Essential Supplies (Temporary Powers) Act as passed in 1946 and as amended in 1948 and 1949 was repealed, and in its place, a new section was substituted.
The scheme of that section is that for purposes of punishment, offences under the Act are grouped under three categories ,those relating to cotton textiles, those relating to foodstuffs, and those relating to essential commodities other than textiles or foodstuffs.
The punishments ' to be imposed in the several categories are separately specified.
With reference to foodstuffs, the punishment that could be awarded when the offence consists in possession of foodgrains exceeding twice the maximum prescribed is imprisonment for a term 808 which may extend to seven years, with further provisions for fine and forfeiture of the commodities.
In other cases, there is the lesser punishment of imprisonment, which may extend to three years.
Section 7 is thus a comprehensive code covering the entire field of punishment for offences under the Act, graded according to the commodities and to the character of the offence.
The subject of enhanced punishment that is dealt with in Act No. XXXVI of 1947 is also comprised in Act No. LII of 1950, the same being limited to the case of hoarding of foodgrains.
We are, therefore, entirely in agreement with the opinion of Chagla C.J. and Chainani J. that Act No. LII of 1950 is a legislation in respect of the same matter as Act No. XXXVI of 1947.
Bavdekar J. who came to the contrary conclusion observed, a .id quite correctly, that to establish repugnancy under section 107(2) of the Government of India Act, it was not necessary that one legislation should say "do" what the other legislation says "don 't", and that repugnancy might result when both the legislations covered the same field.
But he took the view that the question of enhanced penalty under Act No. XXXVI of 1947 was a matter different from that of punishment under the Essential Supplies (Temporary Powers) Act, and as there was legislation in respect of enhanced penalty only when the offence was possession of foodstuffs in excess of twice the prescribed quantity, the subject matter of Act No. XXXVI of 1947 remained untouched by Act No. LII of 1950 in respect of other matters.
In other words, he considered that the question of enhanced punishment under Act No. XXXVI of 1947 was a matter different from that of mere punishment under the Essential Supplies (Temporary Powers) Act and its amendments; and in this, with respect, he fell into an error.
The question of punishment for contravention of orders under the Essential Supplies (Temporary Powers) Act both under Act No. XXXVI of 1947 and under Act No. LII of 1950 constitutes a single subject.
matter and cannot be split up in the manner suggested by the learned Judge.
On this principle rests the rule 809 of construction relating to statutes that "when the punishment or penalty is altered in degree but not in kind, the later provision would be considered as superseding the earlier one." (Maxwell on Interpretation of Statutes, 10th Edition, pages 187 and 188).
"It is a well settled rule of construction", observed Goddard J. in Smith vs Benabo(1), "that if a later statute again describes an offence created by a previous one, and imposes a different punishment, or varies the procedure, the earlier statute is repealed by the later statute: see Michell vs
Brown(2), per Lord Campbell.
" It is true, as already pointed out, that on a question under article 254(1) whether an Act of Parliament prevails against a law of the State, no question of repeal arises; but the principle on which the rule of implied repeal rests, namely, that if the subject matter of the later legislation is identical with that of the earlier, so that they cannot both stand together, then the earlier is repealed by the later enactment, will be equally applicable to a question under article 254(2) whether the further legislation by Parliament is in respect of the same matter as that of the State law.
We must accordingly hold that section 2 of Bombay Act No. XXXVI of 1947 cannot prevail as against section 7 of the Essential Supplies (Temporary Powers) Act No. XXIV of 1946 as amended by Act No. LII of 1950.
The appellant also sought to argue that the subjectmatter of the legislation in Act No. XXXVI of 1947 was exclusively in the Provincial List, and that section 107(2) of the Government of India Act and article 254(2) of the Constitution which apply only with reference to legislation on subjects which are in the Concurrent List, have no application.
The very legislation on which the appellant relies, viz., Act No. XXXVI of 1947, proceeds, as already stated, on the basis that the subject matter is in the Concurrent List.
The appellant raised this question before the learned Judges of the Bombay High Court, and they rejected it.
In the application for, leave to appeal to (1) [1937]1 K.B. 5I8.
(2) 1 El.
and El.
267,274.
810 this Court which was presented under article 132(1), the only ground that was put forward as involving a substantial question as to the interpretation of the Constitution was, whether the Bombay Act No. XXXVI of 1947 was repugnant and void under article 254 of the Constitution.
No other question having been raised in the petition, we must decline to permit the appellant to raise this point.
In the result, the appeal fails and is dismissed.
Appeal dismissed.
| IN-Abs | Article 254(2) of the Constitution is, in substance, a reproduction of section 107(2) of the Government of India Act, 1935, the concluding portion whereof is incorporated in a proviso with further additions.
The principle embodied therein is that when there is legislation covering the same ground both by the Centre and by the State, both of them being competent to enact the same, the law of the Centre should prevail over that of the State.
Section 7 of the Essential Supplies (Temporary Powers) Act, 1946, was amended in 1948 and 1949 and thereafter by Act LII of 1950.
Held, that Act LII of 1950 is a legislation in respect of the same matter as Bombay Act (XXX VI of 1947) within the meaning of article 254(2) of the Constitution and therefore section 2 of Bombay Act XXXVI of 1947 cannot prevail as against section 7 of the Essential Supplies (Temporary Powers) Act as amended by Act LII of 1950.
It is a well settled rule of construction that if a later statute again describes an off once created by a previous one and imposes a different punishment or varies the procedure, the earlier statute is repealed by the later statute.
Attorniey Geneeral for Ontario vs Attorney General for the Dominion , Smith vs Benabo [1937] 1.
K.B. 518, and Michell vs Brown (I El. & El. 267, 274) referred to.
|
Appeal No, 695 of 1968.
Appeal from the judgment and order dated October 13, 1966 of the Andhra Pradesh High Court in Case Referred No. 74 of 1963.
N. A. Palkhivala and T. A. Ramachandran, for the appellant.
B. Sen, G. C. Sharma, R. N. Sachthey and B, D. Sharma, for the respondent.
M. C. Chagla, M. Shankar and K. Jayaram, for interveners Nos. 1 and 2. 5 2 4 N. D. Karkhanis and T. A. Ramachandran, 'for intervener No. 3.
The Judgment of the Court was delivered by Hegde, J.
This appeal by certificate arises from the judgment of the Andhra Pradesh High Court rendered in its advisory jurisdiction on a case stated by the Income tax Appellate Tribunal, Hyderabad Bench under section 26(1) of the (to be hereinafter referred to as the 'Act ').
The question referred for the opinion of the High Court was : "Whether the declaration by which the assessee has impressed the character of joint Hindu family property on the self acquired properties owned by him amounts to a transfer so as to attract the provisions of the Gift tax Act.
" The High Court following its earlier decision in Commissioner ,of Income tax, Hyderabad vs C. Satyanarayanamurthy(1); ,answered that question in the affirmative.
The material facts as could be gathered from the statement of the case submitted to the High Court are as follows : The assessee is the karta of his joint family.
The assessment year with which we are concerned in this case is 1959 60, for which the "previous year" is the year commencing on 23 10 1957 and ,ending on 10 11 1958.
The assessee owned movable and immovable properties which were his self acquisitions.
By a deed dated December 9, 1957, he threw into the common stock his houses bearing Nos.
6658 5 9 and 2731 situate at Imamba vidi, Secunderabad and a cash deposit of Rs. 1,50,000 in the firm of M/s. Goli Eswariah, Paper Merchants, Secunderabad.
In the books of account of the firm, necessary entries were made transferring the amount to the account a the family.
The Gift tax Officer treated that portion of the value of the properties so blended in which the assessee ceased to have a right on partition of the family as having been gifted by him to the family.
He rejected the contention of the assessee that his act of throwing his self acquired properties into the common stock did not amount to a gift under the Act.
In appeal, the Appellate Assistant Commissioner took the view that since the deed in question was not registered, there was no transfer of the immovable properties to the family and as such there was no gift of the two houses mentioned earlier but with regard to the sum of Rs. 1,50,000, he considered it as a gift and accordingly held that 3/4th of it was liable to be taxed under (1) 525 the provisions of the Act.
Thereafter the matter was taken up in appeal to the tribunal.
The tribunal by its order dated November 17, 1961 held that the act by which the assessee threw his self acquired properties to the family hotchpot did not amount to a transfer and hence it need not have been effected by a registered document.
It further held that where the copartner threw himself acquired properties into the hotchpot of the joint family, there was no element of transfer within the meaning of section 2, cl.
(xxiv) sub cl.
(d) of the Act.
At the instance of the Commissioner,Gift tax, Andhra Pradesh, the tribunal stated a case for the opinion.
of the High Court and submitted the aforementioned question for its opinion.
The High Court did not examine the question of law arising for decision afresh as it was bound by the earlier decision of that High Court in Commissioner of Income tax, Hyderabadv.
C. Satyanarayanamurthy(1) wherein that court had held that where a Hindu by a declaration has impressed on his self acquired property the character of joint family property, the same would .
amount to a transfer of property within the terms of section 2 (xxiv) (d) and as such is a gift as envisaged in section 2(xii) and section 4(a) of the.
The view taken in that case was that an act similar to the one we are called upon to consider in this case would amount to, a " 'transaction ' entered into by any person with intent thereby to diminish directly or indirectly the value 'of his own property and to increase the value of the property of any other person.
" On the question of law that we are required to, decide in this case, there is a sharp cleavage of judicial opinion.
The Andhra, Pradesh High Court in the case referred to earlier as well as in G. V. Krishna Rao and Ors.
vs First Additional Gift tax officer, Guntur(1) and the Allahabad High Court in Commissioner of Gift tax vs Jagdish Saran ( 3 ) have taken the view that when a coparcener in a Hindu Undivided Family governed by Mitakshara School throws his self acquired properties into common stock.
same amounts to a 'gift ' under the Act.
On the other hands a full bench of the Madras High Court in Commissioner of Gift tax, Madras vs P. Rangasami Naidu(4) and VR.
section RM.
Ramaswami Chettiar vs The Commissioner of Gift tax, Madras(,), a full bench of the Gujarat High Court in Dr. A. R. Shukla vs Comnzissioner of Gift tax, Gujarat("); a division bench of the Kerala High Court in P. K. Subramania lyer vs Commissioner of Gift tax, Kerala(1) and a division bench of the Mysore High Court in Smt.
Laxmibai Narayana Rao Nerlekar vs Commissioner of Gift tax(8) havetaken a contrary view.
(1) (2) 70 I.T.R. 812.
(3) Case 272 of 1964 '. (5) Tax Case No. 10 of 1966.(6)74 I.T.R. 167.
(7) I.T.R. 19.
526 To pronounce on the question of law presented for our decision, we must first examine what is the true scope of the doctrine of throwing into the 'common stock ' or 'common hotchpot.
It must be remembered that a Hindu family is not a creature of a contract.
As observed by this Court in Mallesappa Bandeppa Desai and Ors.
vs Desai Mallappa and Ors.(1) that the doctrine of throwing into common stock inevitably postulates that the owner of a separate property is a coparcener, who has an interest in the coparcenary property and desires to blend hi , separate property with the coparcenary property.
The existence of a coparcenary is absolutely necessary before a coparcener can throw into the common stock 'his self acquired properties The separate property of a member of a joint Hindu family may be impressed with the character of joint family property if it is voluntarily thrown by him into the common stock with the intention ' of abandoning his separate claim therein.
The separate property of a Hindu ceases to be a separate property and acquires the characteristic of a joint family or ancestral property not by any physical mixing with his joint family or 'his ancestral property but by his, own volition and intention by his waiving and surrendering his separate rights in it as separate property.
The act by which the coparcener throws his separate property to the common stock 'is a unilateral act.
There is no question of either the family rejecting or accepting it.
By his individual volition he renounces his individual right in that property and treats it as a property of the family.
As soon as he declares 'his intention to treat his self acquired property as that of the joint family, the property assumes the character of joint family property.
The doctrine of throwing into the common stock is a doctrine peculiar to the Mitakshara School of Hindu law.
When a coparcener throws his separate property into the common stock, he makes no gift under Chapter VII of the Transfer of Property Act.
In such a case there is no donor or donee.
Further no question of acceptance of the property thrown into the common stock arises.
Bearing in mind the true nature of the doctrine of throwing into the common hotchpot, we shall now proceed to examine the relevant provisions of the, Act to ascertain whether the act of the assessee can be considered as a gift under the Act.
Section 3 is the charging section.
It provides that subject to the other provisions contained in the Act, there shall be charged for every assessment year commencing on and from the 1 St day of April, 1958, a tax known as gift tax in respect of the gifts, if any, made by a person during the previous year (other than gifts made (1) [1961] 3 S.C.R.770.
5 2 7 before the 1st day of April 1957) at the rate or rates specified in the Schedule.
Gift is defined in section 2(xii) as follows : " "gift" means the transfer by one person to another of any existing movable or immovable property made voluntarily and without consideration in money or money 's worth, and includes the transfer of any property deemed to 'be a gift under section 4".
In this case we are not dealing with a deemed gift.
Therefore we need not consider the scope of section 4.
Before an act can be considered as a gift as defined, there must be a transfer of property by one person to another. 'Person ' is defined as including a Hindu Undivided Family in section 2(xviii).
Section 2(xxiii) says that 'property ' includes any interest in property, movable and immovable.
Section 22(xxiv) defines "transfer of property" thus : "Transfer of property" means any disposition, conveyance, assignment, settlement, delivery, payment or other alienation of property and, without limiting the.
generality of the foregoing includes. (a) the creation of a trust in property; (b) the grant or creation of Any lease, mortgage, charge, easement, licence, power, partners hip or interest in property; (c) the exercise of a power of appointment of property. vested in any person, not the owner of the property, to determine its disposition in favour of any person other than the donee of the power , and (d) any transaction entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person.
" The High Court relied on section 2 (xxiv) (d) in answering the question referred to it in favour of the Revenue.
It came to the conclusion that the act of the, assessee in throwing his self acquired properties into the common stock amounted to "a transaction entered into by him with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person".
It is true that the assessee 'by throwing his self acquired property into the common stock gave up his exclusive right in that property and in its place he was content to own that property jointly with the other members of his family.
We do not think that it is necessary in this case to consider whether the act of the assessee can be said to have "diminished 5 28 directly or indirectly the value of his own property and increased the value of the property" of his joint family because in our opinion that act cannot be considered as a "transaction entered into".
Clause (d) of section 2(xxiv) contemplates a "transaction entered into" by one person with another.
It cannot apply to a unilateral act.
It must be an act to which two or more persons are parties.
It is true that for the purpose of the Act, a Hindu Undivided Family can be considered as a "person".
But the assessee did not enter into any transaction with his family.
Therefore we are unable to agree with the High Court that the act of the assessee fell within the scope of section 2 (xxiv) (d) of the Act.
Section 2(xxiv(d) is similar to Paragraph (f) of section 4 of the Australian Gift Duty Assessment Act, 1941 42.
Interpreting that section in Grimwade and Ors.
vs Federal Commissioner of Taxation(1), the High Court of Australia observed that the transaction by a person referred to therein must be a transaction with some other person and that it cannot be a unilateral act.
Mr. B. Son, learned Counsel for the department contended that the said act should be considered as a 'disposition ' under the main part of section 2 (xxiv).
The word 'disposition ' is not a term of law.
Further it has no precise meaning.
Its meaning has to be gathered from the context in which it is used.
In the context in which that term is used in section 2(xxiv), it cannot mean to 'dispose of '.
Otherwise even if a man abandons or destroys his property, it would become a 'gift ' under the Act.
That could not have been the intention of the legislature.
In section 2(xxiv), the word 'disposition ' is used along with words "conveyance, assignment, settlement, delivery, payment or other alienation of property.
" Hence it is clear from the context that the word 'disposition ' therein refers to a bilateral or a multi lateral act.
It does not refer to a unilateral act.
In this connection reference may be usefully made to the decision of this Court in Commissioner of Income tax, Madras vs M. K. Stremann(2).
Therein the assessee first threw his private properties into the common stock and afterwards there was a partition amongst the members of the family which included his two minor sons and a minor daughter, represented by their mother.
The question arose whether the partition in question amounted to a transfer of assets by the assessee to the three minor children so as ' to attract the provisions of section 16(3) (a) (iv) of the Indian Income tax Act, 1922.
In that case, the Revenue did not contend in this Court that the act of the assessee throwing into common stock his self acquired properties amounted to transfer of assets by the assessee to his three minor children.
On the other hand, ,it contended that the partition that took place subsequently amounted to a transfer of assets of the assessee to his minor child (1) ; (2) 5 2 9 ren.
This Court overruled that contention.
Therein the contention of the Revenue appeared to have proceeded on the basis that the antecedent act of the assessee viz. throwing his self acquired properties to the common stock may not amount to a transfer of his assets to his minor children but the partition that followed amounted to such a transfer.
In that very case the Revenue appears to have contended before the High Court that the act of the assessee in throwing his self acquired properties into common stock amounted to a transfer of his assets to his minor children.
The High Court observed that when the separate property of a copar cener ceases to be his separate and becomes impressed with the character of coparcenary property, there is no transfer of that property from the coparcener to the coparcenary; it becomes joint family property because the coparcener who owned it until then as his separate property, has by the exercise of his volition, impressed it with the character of joint family or coparcenary property, to be held by him thereafter alongwith other members of the joint family; it is by his unilateral action that the property became joint family property; the transaction by which a property ceased to be the property of a coparcener and became impressed with the character of copes property, does not itself amount to a transfer; no transfer need precede the change and no transfer ensues either see M. K. Stremann vs Commissioner of Income tax, Madras(1).
We are in agreement with those findings.
For the reasons mentioned above, we allow this appeal, set aside the judgment of the High Court and answer the question referred to the High Court thus : The declaration by which the assessee has impressed the cha racter of joint Hindu family property on the self acquired properties owned by him did not amount to a transfer so as to attract the provisions of the Act.
The Revenue shall pay the costs of the appellant in this appeal.
G.C. Appeal allowed.
| IN-Abs | The appellant owned certain self acquired properties which by a deed dated December 9, 1957 he threw into the common stock of his Hindu Joint Family.
The Gift Tax Officer held that he had thereby made it gift taxable under the Gift Tax Act, 1958.
After proceedings before the authorities under the Act the question whether the appellant had made 'transfer ' of the property so as to attract the provisions of the Act was referred to the High Court of Andhra Pradesh.
Following its earlier decision in Satyanarayanamurthy 's case the High Court held that the act of ' the appellant amounted to a 'transfer ' within the terms of section 2(xxiv)(d) of the Act and therefore was a gift such as envisaged in section 2(xii) and section 4(a) of the Act.
In Satyanarayanamurthy 's case aforesaid, it had been held that an act similar to that of the appellant would amount to "a 'transaction ' entered into by any person with intent thereby to diminish directly or indirectly the value of his own property and to increase the value of the property of any other person".
With certificate appeal against the judgment of the High Court was filed in this Court.
HELD:The appeal must be allowed since the declaration by which the assessee had impressed the character of joint Hindu family property on the self acquired properties owned by him did not amount to a transfer ' so as to attract provisions of the Act, [529 F] A Hindu Joint Family is not a creature of contract.
The doctrine of throwing into common stock inevitably postulates that the owner of the separate property is a copartner who has an interest in the coparcenary property and desires to blend his separate property with the coparcenary property.
The separate property of a member of a joint Hindu Family may be impressed with the character of Joint Family property if it is voluntarily thrown by him into the common stock with the intention of abandoning his separate claim therein.
The act by which the coparcener throws his separate property to the common stock is a unilateral act.
By his individual volition he renounces his individual right in that property and treats it as a property of the family.
As soon as he declares his intention to treat his self acquired property as that of the Joint Family, the property assumes the character of Joint Family Property.
The doctrine of throwing into common stock is a doctrine peculiar to the Mitakshara School of Hindu Law.
When a coparcener throws his separate property into common stock he makes no gift under Ch.
VII of the Transfer of Property Act.
In such a case there is no donor or done.
Further no question of acceptance of the property thrown into the common stock arises.
[526 A F] 523 It was not necessary in the present case to consider whether the act of the assessee could be said to have "diminished directly or indirectly the ' value of his own property and increased the value of the property" of his joint family, because his act could not he considered as a "transaction entered into".
Clause (d) of section 2(xxiv) contemplates a "transaction entered into" by one person with another.
It cannot apply to a unilateral act.
it must be an act to which two or more persons are parties.
Even though under the Act the undivided 'family is a 'person ' the assessee did not enter into any transaction with his family.
Therefore, it was not possible to agree with the High Court that the act of the assessee fell within the scope of section 2(xxiv) (d) of the Act.
[528 A B] The assessee 's act could also not be considered as a 'disposition ' under the main part of section 2(xxiv).
The word 'disposition ' is not a term of law.
Further it has no precise meaning.
Its meaning has to be gathered from the context in which it is used.
In the context in which the term is used in section 2(xxiv), it cannot mean to "dispose of.
Otherwise, even if a man abandons or destroys his property it would become a "gift" under the Act.
That could not have been the intention of the Legislature.
In section 2(xxiv) the word 'disposition ' is used along with words "conveyance, assignment, settlement, delivery, payment or other alienation of property".
It is clear ' from the context that the word 'disposition ' therein refers to a bilateral or multilateral act.
It does not refer to a unilateral act.
[528 D F] Mallesappa Bandeppa Desai & Ors.
v, Desai Mallappa & Ors.
; , Grimwade & Ors.
vs Federal Commissioner of Taxation, ; , Commissioner of Income tax, Madras vs M. K. Stremann, and M. K. Stremann vs Commissioner of Income tax, , applied.
Commissioner of Gift Tax, Madras vs P. Rangaswami Naidu T.C. 272 of 1964 : R. section R. M. Ramaswami Chettiar vs The Commissioner of Gift Tax, Madras.
Tax Case No.10 of 1966, Dr. A. R. Shukla vs Commissioner of Gift Tax, Gujarati, and Smt.
Laxmibai Narayana Rao Nerlekar vs Commissioner of Gift tax, , approved.
Commissioner of income tax, Hyderabad vs C. Satyanarayanamurthy, , G. V. Krishna Rao, & Ors.
vs First Addl.
Gift Tax Officer, Guntur, and Commissioner of Gift Tax vs Jagdish Saran, 75 I.T.R. 529, disapproved.
|
No. 300 of 1969.
M. C. Chagla, N. A. Palkhivala, B. Datta, J. B. Dadachanji 0.
C. Mathur and Ravinder Narain, for the applicants.
H. R. Gokhale and section B. Wad, for the respondent.
The Judgment of the Court was delivered by Hidayatullah, C.J.
This petition is an off shoot of the decision of this Court on the constitutional validity of the Banking Companies (Acquisition of Transfer of Undertakings) Act, being Act 22 of 1969.
By a majority of ten Judges against one, 'this 513 Court declared the Act to be unconstitutional.
The decision of the Court was given on February 10, 1970.
On February 13, 1970 a meeting was organised by the Blitz National Forum at Vithalbhai Patel House at Delhi.
it was presided over by Mr. Mohan Kumarmanglam, an advocate of this Court.
According to the news items published the next day in the Hindustan Times, the Times of India and the Patriot, a number of persons spoke about the Act and the decision of this Court upon it.
Among the speakers were Mr. R. K. Khadilkar, Minister in the Ministry of Finance, Mr. A. section R. Shari, Mr. Kumarman glam, Mr. Prabhatkar, Mr. section M. Joshi, M.P., Mr. Bhupesh Gupta M.P. and Mr. V. K. Krishna Menon M.P.
These speakers criticised the decision. 'Mr. R. K. Khadilkar, the Hindustan Times, reported, said that such decisions 'do not enhance the prestige of the Judiciary ', that such acts on the part of the highest Court 'will only encourage Naxalites who have rejected constitutional means to bring about socialism ' and that the judgment would be treated with 'more and more contempt by ordinary people '.
He observed that the situation would be rectified by Parliament because ten Judges 'sitting in an ivory tower ' could not sit over the verdict of Parliament which represented the people.
The Times of India report said that Mr. Khadilkar said that 'Government would soon bring forward an amending measure to offset the dangerous implications for social progress of the community of the Supreme Court judgment in the Bank Nationalization case, that if necessary the issue whether Parliament or the Supreme Court was the final arbiter of the 'people 's will should be referred to the people and a mandate taken from them, and quoted Pandit Nehru that it was never the intention of the Constitution to make the Supreme Court 'the third house of correction '.
The Patriot reported that 'attempts to utilize community savings lying in banks for the welfare of the common man have been blocked by the judiciary ', that 'the Supreme Court could not be accepted as the third chamber of legislature ', that he did not "want to threaten the judiciary ' but Parliament would have 'to take steps to respect the feelings of the people for stabilizing democracy '.
Mr. Khadilkar also wished that the judiciary would take note 'of the changing situation and helped to transform the society for the benefit of the common man. ' The three reports also described what the other speakers had said at the meeting.
On February 26, 1970, two petitioners (Mr. Krishna Rao Kaushik M.P. and Lt. Col. H. R. Pasricha) swore an information based on the newspaper reports (with copies annexed) that a serious contempt of this Court was committed by Mr. R. K. Khadilkar inasmuch as his speech had a clear tendency to affect the dignity and prestige of this Court and there was danger of grave Sup.
Cl/70 4 514 mischief in the administration of justice and the confidence of the whole community in the administration of justice was bound to be undermined.
Two affidavits sworn in support were based on the newspaper, reports.
As some of the alleged observations, particularly those reported in the Hindustan Times, prima facie exceeded the bounds of legitimate criticism, a notice was issued to Mr. Khadilkar to show cause why action should not be taken against him.
In reply Mr. Khadilkar filed an affidavit denying the main allegations.
He stated in his affidavit as follows "I am a firm believer in the independence of judiciary as an integral part of our democratic polity.
I am in entire agreement with the sentiment expressed in para 1 of the petition, viz. that the., dignity of the Hon 'ble Supreme Court must be maintained and the administration of justice should not be allowed to be undermined in this country.
I have a deep faith in the social and economic objectives of our Constitution as enshrined in the Directive Principles of the Constitution and the democratic and constitutional methods of achieving them.
Indeed, by oath of office, I am duty bound to uphold these objectives of our Constitution.
" In reply to the specific charge of making statements tending to vilify the Judges and to bring the ' administration of justice into hatred and contempt, Mr. Khadilkar denied having made the statement attributed to him by the Patriot 'that attempts to utilize community savings in the banks for the welfare of the common man had been blocked by the judiciary ' and the statements attributed to him by the Hindustan Times to the effect that "(a) The majority decision in the Bank case "did not enhance the prestige of the Judiciary".
(b)Supreme Court judgment would be treated with "more and more contempt by ordinary people".
(c)The judiciary had persistently failed to interpret the Constitution and remained static.
(d)Ten Judges sitting in ivory tower could not sit in judgment over verdict of Parliament which represented the people.
" He asserted that he had said ". no aspersions should be cast on the judiciary and event bough the decision had far reaching consequences.
pointed out, that the judgment was cautiously worded and the learned Judges had not challenged 515 the authority of Parliament to bring forward a measure of nationalisation".
He claimed to have added: "No desire to cast aspersions on the judiciary and would very much like to see its prestige remained high and its image untarnished.
We cannot, however, avoid pointing out wherein according to us the decision is erroneous primarily by reason of its consequences for 'attempts at social reform.
" He explained what he had said by recalling his speech.
It is not necessary to quote his version.
He complained that the newspapers had picked out ideas but put them in their own words and that it was not always possible to contradict the newspapers.
He expressed his views on the institution of property as a fundamental right to which it is not necessary to refer here.
He concluded by saying "I may also state that in my comments on the Bank Judgment, no improper motives were attached to the Hon 'ble Judges.
There was no malice either against the Hon 'ble Judges or the institution of Supreme Court, the independence of which I honestly cherish.
" In support of his own affidavit, Mr. Khadilkar exhibited affidavits from Messrs. Mohan Kumarmangalam, A. section R. Chari and section M. Joshi.
In these affidavits (which are insissima verba) support was given to the denials of Mr. Khadilkar.
At an earlier hearing, the petitioners promised to file affidavits of reporters etc.
present at the meeting.
At the resumed hearing no affidavits were filed on the ground that the journalists following their code of conduct did nit wish to file any ' material unasked and request was, therefore, made to summon them in the interest of justice.
We did not think it necessary to prolong the hearing of the case as on the material before us there was nothing to contradict the affidavits which deny the accuracy of the newspaper reports.
We accordingly.
closed the case for orders.
There is no doubt that the Court like any other institution does not enjoy immunity from fair criticism.
This Court does not claim to be always right although it does not spare any effort to be right according to the best of the ability, knowledge and judgment of the Judges.
They do not think themselves in possession of all truth or hold that wherever others differ from then, it is so far error.
No one is more conscious of his limitations and fallibility than a Judge but because of his training and the assistance he gets from learned counsel he is apt to avoid mistakes more than others.
5 1 6 Further the supremacy of a legislature under a written Constitution is only within what is in its power but what is within its power and what is not, when any specific act is challenged, it is for the courts to say.
If that were realised much of the misunderstanding would be avoided and the organs of Government would function truly in their own spheres .
We are constrained to say also that while fair and temperate criticism of this Court or any other Court even if strong, may be actionable attributing improper motives, or tending to bring Judges or courts into hatred and contempt or obstructing directly or indirectly with the functioning of Courts is serious contempt of which notice must and will be taken.
Respect is expected not only from those to whom the judgment of the Court is acceptable but also from those to whom it is repugnant.
Those who err in their criticism by.
indulging in vilification of the institution of Courts, administration of justice and the instruments through which the administration acts, should take heed for they will act at their own peril.
We think this will be enough caution to persons embarking on the path of criticism.
With these words we order the papers to be filed.
| IN-Abs | At a public meeting held a few days after the decision of this Court on the constitutional validity of the Banking Companies (Acquisition of Transfer of Undertakings) Act 22 of 1969, K, a Minister in the Central Government, was reported by newspaper$ to have made certain critical remarks which, two petitioners before the Court contended constituted a serious contempt of this Court.
The petitioners swore an affidavit in support of their petition based on the newspapers reports.
As the Court considered that some of the alleged observations, prima facie, exceeded the bounds of legitimate criticism, a notice to show cause was issued to K.
In reply K filed an affidavit denying the main 'allegations and contending that he has been misreported.
In support of his own affidavit, three other affidavits were filed by persons present at the public meeting.
Although an application was made for summoning the reporters present at the public meeting, the Court did not consider it necessary to prolong the hearing of the case as on the material before the Court there was nothing to contradict the affidavits which denied the accuracy of the newspaper reports.
However, while closing the case, the Court observed : While fair and temperate criticism of this Court or any other court even if strong, may not be actionable, attributing improper motives, or tending to bring judges or courts into hatred and contempt or obstructing directly or indirectly the functioning of Courts is serious contempt of which notice must and will be taken.
Respect is expected not only from those to whom the judgment of the Court is acceptable but also from those to whom it is repugnant.
Those who err in their criticism by indulging in vilification of the institution of Courts administration of justice and the instruments through which the administration acts, should take heed for they will act at their own peril.
[516 B]
|
Appeal No. 376 of 1967.
Appeal from the judgment and decree dated December 8, 1965 of the Patna High Court in Misc.
Judicial Case No. 38 of 1962.
M. C. Chagla and R. C. Prasad, for the appellant.
Jagadish Swarup, Solicitor General, G. C. Sharma, R. N. Sachthey and B. D. Sharma, for the respondent.
The Judgment of the Court was delivered by Shah, J.
This appeal is filed with certificate granted by the High Court of Patna under section 66A(2) of the Indian Income tax Act, 1922.
The India Machinery Stores (P) Ltd. is a private company incorporated with the object of taking over the business carried on by the India Machinery and Mills Stores hereinafter called 'the vendors '.
By an agreement dated August 2, 1956, the Company agreed to purchase all the assets of the vendors, goodwill and the "book debts and other liabilities and claims against the Company" as on the date of transfer in consideration of allotment of 260 fully paid up shares of the Company of the nominal value of Rs. 2,60,000/ .
It was provided by cl. 4 of the agreement "That all assets of the vendors in respect of all its business shall be taken over at the book value standing in the books of accounts of the vendors as on the 1st August One Thousand Nine Hundred Fifty six.
" 541 In a proceeding for assessment to tax for 1958 59, the Income tax Officer found that in the books of the vendors the "value of stock" as on August 1, 1956 was Rs 1,77,285 while in the books of the Company the opening stock taken over by the Company was valued on the same day at Rs. 2,10,285.
The Income tax Officer held that the valuation by the Company, of the opening stock was in "clear violation of the terms of agreement between the vendors and the Company" and added a sum of Rs. 33,000 representing the difference between the value of the closing stock in the books of account of the vendors and the opening stock in the books of account of the Company.
The order was confirmed in appeal by the Appellate Assistant Commissioner and by the Income tax Appellate Tribunal.
The High Court of Patna recorded their answer in the affirmative on the following question referred by the Tribunal "Whether on the facts and circumstances of the case and upon a construction of the agreement of 2nd August, 1956, the Tribunal was justified in holding that the sum of Rs. 33,000 forms part of the assessable profits of the assessee Company ?" A Division Bench of the High Court certified the case under section 66A(2) of the Act as fit for appeal to this Court, observing "That the case fulfils all the requirements of section 66A(2) of the Indian Income tax Act, 1922, and, is a fit case for appeal to the Supreme Court.
" At the hearing of the appeal on behalf of the Commissioner of Income tax, it is contended that the appeal is incompetent, since the High Court in certifying the case as fit for appeal to this Court did not set out the question of law which this Court has to decide.
It was urged that the certificate or the order certifying the case must disclose that some substantial question of public or private importance arises in the case, and on that account the case is certified to be fit for appeal.
In our judgment, the contention must be accepted.
Section 66A of the Indian Income tax, Act, 1922, which was added by the Indian Income tax (Amendment) Act 24 of 1926 by sub section
(2) provides "An appeal shall lie to the Supreme Court from any judgment of the High Court delivered on a reference made under section 66 in any case which the High Court certifies to be a fit one for appeal to the Supreme Court.
,, 542 The phraseology of sub section
(2) of section 66A of the Income tax Act is substantially the same as used in section 109 (c) of the Code of Civil Procedure, 1908, article 133 (1) (c) and article 134(1) (c) of the Constitution.
The Judicial Committee in Delhi Cloth and General Mills Company Ltd. vs Income tax Commissioner, Delhi(1), observed ". it will be noticed that the appeal thereby given is by sub section
2 confined to a case which the High Court certifies "to be a fit one for appeal to His Majesty in Council".
These words are textually the same as the concluding words of section 109(c), of the Code of Civil Procedure, and coupled with the carefully limited referential words to the Code of Civil Procedure in sub section 3, suffice, in their Lordships ' judgment, to exclude from any right of appeal cases which fall within the requirements of section 1 1 0 of the Code, and are operative to confine that right to cases which are certified to be otherwise fit for appeal to His Majesty in Council." In Banarsi Parshad vs Kashi Krishna Narain & Ant .
(2) the Judicial Committee explained that the expression "certifies to be a fit one for appeal" in the Code of Civil Procedure is clearly intended to meet special cases such, for example, as those in which the point in dispute is not measurable by money, though it may be of great public or private importance.
To certify that a case is of that kind, though it is left entirely in the discretion of the Court, is a judicial process which could not be performed without special exercise of that discretion, evinced by a fitting certificate.
In Radha Krishn Das vs Rai Krishn, Chand(3) a Division Bench of the Allahabad High Court had issued a certificate stating that "though the valuation of the case was below Rs. 10,000 yet as regards the value and nature of the case it fulfilled the requirements of section 596 of Act No. XIV of 18 82 (Code of Civil Procedure)".
In that case the value of the subject matter was less than Rs. 10,000 and the Judicial Committee observed that even though section 596 was referred to there was nothing to show that the Judges who had issued the certificate "had exercised their judicial discretion upon the matter in deciding whether, in order to comply with section 595 (c) and section 600 the case was a fit one for appeal to Her Majesty in Council.
" On that ground the appeal was dismissed as incompetent.
(1) L.R. 54 1.
A. 421.
(2) L.R.28 I.A.11.
(3) I. R. 28 1.
A. 1821.
543; In Radhakrishna Ayyar vs Swaminatha Ayyar(1) the High, Court granted 'a certificate in a case in which the claim was, Rs. 4,560 due as rent.
The certificate recited : "It is hereby certified that, as regards the value of the subject matter and the nature of the question involved, the case fulfils the requirements of sections 109 and 1 1 0 of the Code of Civil Procedure, and: that the case is a fit one for appeal to His Majesty in Council." The Judicial Committee observed that where any certificate is ' granted certifying a case, it is of the utmost importance that the certificate should show clearly upon which ground it is granted.
Indealing with the argument that the case was covered by section 109 (c) of the Code of Civil Procedure, 1908, their Lordships observed "There is no indication in the certificate of what the nature of the question is that it is thought was involved in the hearing of this appeal, nor is there anything to show that the discretion conferred by section 109(c) was invoked or was exercised.
Their Lordships think. that these certificates are of great consequences, that they seriously affect the rights of litigant parties, and that they ought to be given in such a form that it is impossible to mistake their meaning upon their face." Again, the Judicial Committee observed in Commissioner of Income tax, Central Provinces & Berar vs Sir section M. Chitnavis(2) that when a certificate is granted under section 66A of the Income tax Act it must be on a question affecting not only a particular assessee ,and depending upon the state of the evidence in a particular case,, but a question of great public importance affecting assessees generally and depending upon general principles.
In granting the certificate the High Court merely observed that it was "a fit case for appeal to the Supreme Court" : they did not indicate the grounds which persuaded them to hold that it was a. fit case for appeal to this Court.
It would be conducive to better administration of justice if in certifying a case under section 66A(2) of the Indian Income tax Act as a fit case; for appeal, the High Court sets out the question of law which they regard as of great public or private importance which falls to be decided by this Court.
Mr. Chagla contended that the rules laid down by the Judicial Committee applicable to a certificate issued under section 109(c) of the Code of Civil Procedure, 1908, and under section 596 of the Code of 1882, in regard to appeals in civil matters have no bearing in determining the meaning of section 66A(2), for the High Court (1) L. R. 48 1.
A. 31.
(2) L. R. 59 I. A. 290.
544 exercises advisory jurisdiction on a reference on questions of law and on that account even if the question of law which in the view of the High Court arises is not stated in the certificate, it may be presumed when the High Court has certified a case to be fit for appeal, that a substantial question of law is involved, and the technical defect in the certificate may be.
ignored.
We are unable to accept that argument.
It is true that under section 66(1) & (2) of the Indian Income tax Act, 1922, only a question of law may be referred to the High Court for opinion, but the right to obtain a certificate under section 66A(2) arises only when in the proposed appeal a question of great public or private importance arises.
It cannot be held that because a question of law alone may be referred ,to the High Court under section 66 of the Indian Income tax Act, in the proposed appeal a question of law of great public or private importance necessarily arises.
Any other view, would make every ,opinion of the High Court in a reference under section 66 appealable to this Court.
In our view, the certificate granted by the High Court was defective.
It was also urged that a practice is fairly common in some of the High Courts to certify a case under section 66A(2) without recording any reasons or the grounds for certifying the case, and we may not penalize the Company when we are enunciating the true rule for the first time.
But the practice, in our judgment, was laid down many years ago by the decisions of the Judicial Committee that a ,certificate under section 66A(2) which does not set out precisely the grounds or raise a question of great public or private importance does not comply with the requirements of the Act.
The jurisdiction of this Court to entertain an appeal from the opinion recorded under the Indian Income tax Act arises only when a certificate is properly issued by the High Court or when this Court grants special leave under article 136 of the Constitution.
In our judgment, there is again no merit in the appeal.
By cl. 4 of the agreement dated August 2, 1956, it was expressly provided "That all assets of the vendors in respect of all its business shall be taken over at the book value standing in the books of accounts of the vendors as on the 1st August One Thousand Nine Hundred Fifty six.
" It is undisputed that the stock in trade was entered in the books of account of the vendors on the date of transfer of the undertaking at Rs. 1,77,285 and the Company valued the stock in trade at Rs. 2,10,285.
It is true that to the deed of transfer is annexed a Schedule of the assets and liabilities taken over by the Company and in the Schedule the value of stocks at Patna, Muzaffarpur and 545 Purnea is shown at Rs. 2,10,285.87.
No attempt was made to explain the discrepancy between the operative part of the agreement and the valuation shown in the Schedule.
The Income tax Officer was of the view that the Company had inflated the opening stock so as to reduce the ultimate profits.
That view was confirmed by the Appellate Assistant Commissioner and by the Tribunal.
No question of law arose out of the order of the Tribunal.
The reference itself was incompetent.
The appeal fails and is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | The appellant was a private limited company incorporated with the object of taking over the business carried on by another company.
By an agreement dated August 2, 1956, the appellant company agreed to purchase all the assets goodwill etc.
of the vendors.
By cl. 4 of the agreement it was provided that all assets of the vendors in respect of their business "shall be taken over at the book value standing in the books of accounts of the vendors" as on August 1, 1956.
The Income tax Officer in proceedings for the assessment year 1958 59 found that in the books of the vendors the 'value of stock ' as on August 1, 1956 was Rs. 1,77,285 but in the books of the appellant company the opening stock taken one was valued on the same day at Rs. 2,10,225.
The latter valuation also appeared in the Schedule annexed to the deed of transfer.
The Income tax Officer observed that the valuation by the appellant company of the opening stock was in "clear violation of the agreement between the vendors and the Company".
He accordingly added a sum of Rs. 33,000/ representing the difference between the value of the closing stock in the books of account of the vendors and the opening stock in the books of account of the Company.
The order was confirmed in appeal by the Appellate Assistant Commissioner and by the Income tax Appellate Tribunal.
In reference the High Court of Patna upheld the view taken by these authorities.
A Division Bench of the High Court certified the case under section 66A(2) of the Indian Income tax Act, 1922, observing that the case fulfilled all the requirements of the said section and was a fit case for appeal to the Supreme Court.
The Revenue contended in this Court that the certificate was incompetent as the question of law which had to be decided was not set out and no question of public or private importance had been disclosed.
HELD : (i) In granting the certificate the High Court merely observed that is was 'a fit case for appeal to the Supreme Court ' : they did not indicate the grounds which persuaded them to hold that it was a fit case for appeal to this Court.
It would be conducive to better administration of justice if in certifying a case under section 66A(2) of the Indian Income tax Act as a fit case for appeal, the High Court sets out the question of law which they regard as of public or private importance which falls to be decided by this Court.
[543 G] (ii) It is true that under section 66(1) and (2) of the Indian Income tax Act, 1922 only a question of law may be referred to the High Court for opinion, but the right to obtain a certificate under section 66A(2) arises only when in the proposed appeal a question of great public and private importance arises.
It cannot be held that because a question of law alone may be referred to the High Court under section 66 of the Indian Income tax Act.
in the proposed appeal a question of law of great public or private importance necessarily arises.
Any other view, would make every opinion of the High Court in a reference under section 66 appealable to this Court.
[544 B C] 540 The practice followed in some of the High court of issuing certificates under section 66A(2) without recording reasons or grounds for certifying the case would not justify a departure in the present case from the practice laid down, many years ago by decision of the Judicial Committee of the Privy Council according to which a certificate under section 66A(2) which does not set out precisely the grounds or raise a question of great public or private importance does not comply with the requirements of the Act.[544 E] Commissioner of Income tax, Central Provinces of Berar vs Sir section M. Chitnavis, L.R. 59 I.A. 290, followed.
Delhi Cloth and General Mills Company Ltd. vs Income tax Commissioner, Delhi, L.R. 54 I.A. 421, Banarsi Parshad vs Kashi Krishna Narain & Anr., L.R. 28 I.A. II, Radha Krishn Das vs Rai Krishn Chand, L.R. 48 I.A. 31 and Radhakrishna Ayyar vs Swaminatha Ayyar, L.R. 48 I.A. 31, applied.
(iii)The appellant made no attempt to explain the discrepancy in the valuation of the stock transferred.
The Income tax Officer was of the view that the company had inflated the opening stock so as to reduce the ultimate profits.
That view was confirmed by the Appellate Assistant Commissioner and by the Tribunal.
No question of law arose out of the order of the Tribunal.
The reference itself was incompetent.
[545 A B]
|
l Appeal No. 16 of 1970.
Appeal by special leave from the judgment and order dated May 22, 1969 of the Allahabad High Court in Civil Misc.
Writ No. 588 of 1966.
582 Jagadish Swarup, Solicitor General, R. N. Sachthey, and B. D. Sharma, for the appellants.
G. C. Sharma and P. K. Mukherjee, for the respondent.
The Judgment of the Court was delivered by Shah, J.
Jawahar Lal Rastogi hereinafter called 'the assessee is a Hindu Undivided Family which carries on the business of money lending at Lucknow and is also interested as a partner in different firms engaged in the business of manufacturing barbed wire, pharmaceuticals, etc.
On September 14, 1964, the Income tax Officer, Award, called upon the assesee to furnish within 10 days certain information with regard to its income and assets.
On September 17, 1964 the Income tax Officer submitted to the Commissioner of Income tax a report requesting that he be authorised to enter and search the premises of, the assessee.
The Commissioner by his order dated September 19, 1964, authorised entry and search after recording reasons for his belief that it was necessary to carry out the search.
On September 21 and 22, 1964, the premises of the assessee were searched and a large number of documents were seized and were taken away to the Income tax Officer.
The Income tax Officer also prepared inventories of the ornaments and other goods kept in the premises searched.
After the seizure of the books of account and other documents the case was fixed for hearing before the Income tax Officer on several occasions, but no substantial step was taken.
In May 1966 the assessee filed a writ petition in the High Court of Allahabad challenging the validity of the search made by the Department contending that it "was illegal and in excess of the power conferred by section 132 of the Income tax Act, 1961" and prayed that the documents seized may be ordered to be released.
The High Court of Allahabad considered the evidence appearing from the affidavits filed and observed that in the present case the assessee had established the following "points" : (1) The Income tax Officer was apparently interested in investigating transactions prior to 1953.
On September 14, 1964, the assessee was directed to furnish statements relating to four years ending on March 31, 1960, yet the Commissioner of Income tax issued letters of authorisation permitting Income tax Officer to seize documents relevant to nine assessment years; (2)The raid was ordered and organised before the expiry of the period of the notice; (3)More than 300 books and registers were seized during the raid and the Income tax.
Officers carried away thousands of promissory notes.
Some of the documents seized appear to be 583 irrelevant for assessment purposes and some of them were public documents.
(4)There is reason to believe that all or almost all the documents found on the premises were seized and carried away by the Income tax Officers; (5)Marks of identification were.
not placed on the documents inspite of the direction contained in the letters of authorisation; and (6)The documents seized during the raid were detained by the Income tax Officers for 19 months before, the petition was filed.
In the view of the High Court the circumstances of the case indicated that the Commissioner of Income tax and the Income tax Officers acted beyond "the legitimate scope of section 132 of the Act and there was force in the complaint of the assesse that the Allahabad High Court in Seth Brothers ' Case(1) was overtituted abuse of power conferred on Income tax authorities by section 132 of the Act".
In reaching its conclusion, the High .Court relied upon the judgment of the Allahabad High Court in Seth Brothers vs Commissioner of Income tax(1).
In this appeal filed by the Commissioner of Income tax with special leave, the Solicitor General contends that the decision of the Allahabad High Court in Seth Brothers ' Case(1) was overruled by this Court in Income tax Officer, Special Investigation Circle "B", Meerut vs Seth Brothers & Ors.(2) and on , that account the judgment under appeal is liable to be set aside.
In Seth Brothers ' case (2) this Court examined the scheme of section 132 in some detail and observed "The condition for entry into and making search of any building or place is the reason to believe that any books of account or other documents which will be useful for,.
or relevant to, any proceeding under the Act may be found.
If the Officer has reason to believe that any books of account or other documents would be useful for, or relevant to, any proceedings under.
the Act, he is authorised by law to seize those books of account or other documents, and to place marks of identification therein, to make extracts or.
copies, therefrom and also to make a note or an, inventory of any articles or other things found in the course of the search.
Since by the exercise of the power a serious invasion is made upon the rights, privacy and freedom of the taxpayer, the power must be (1) 584 exercised strictly in accordance with the law and only for the purposes for which the law authorises it to be exercised. . .
If the conditions for exercise of the power are not satisfied the proceeding liable to be quashed. . .
The Act and the.
Rules do not require that the warrant of authorisation should specify the particulars of documents and books of account : a general authonsation to search for and seize documents and books of account relevant to or useful for any proceeding complies with the requirement of the Act and the Rules.
It is for the officer making the search to exercise his judgment and seize or not to seize any documents or books of account.
The aggrieved party may undoubtedly move a competent court for an order releasing the documents seized.
In such a proceeding the Officer who has made the search will b e called upon to prove how the documents seized are likely to be 'useful for or relevant to a proceeding under the Act.
1 If he is unable to do so, the court may order that those document$ be released.
But the circumstance ;hat a large number of documents seized is not a ground for holding that all documents seized are irrelevant or the action of the officer is mala fide.
" It must, however, be stated that the findings that the action of the Commissioner of Income tax and the Income tax Officer amounted to "indiscriminate search" and was beyond the "legitimate scope of section 132" depends upon the evidence in each case and no general rule can be laid down in that behalf.
In the present case the High Court has noticed two important circumstances: (1) that where as the notice dated September 14, 1964, required the assessee to furnish statements rela ting to the four assessment years ending on March 31, 1960, the Commissioner of Income tax authorised search for a period ,of nine assessment years even before the period fixed by the notice had expired; and (2) that contrary to the plain terms ,of section 132(8) the Income tax Officer retained with him the books of account for a period exceeding 180 days.
Under section 132(2) as in force on the date on which the search and seizure took place stood as follows : "The books of account or other documents seized under sub section (1) shall not be retained by the Inspecting Assistant Commissioner or the Income tax 585 Officer for a period exceeding one hundred and eighty days from the date of the seizure unless the reasons for retaining the same are recorded by him in writing and the approval of the Commissioner for such retention is obtained : Provided. . .
By the Finance Act of 1965, sub section
(2) was re eracted as sub s (8) with the modification that for the words "Inspecting Assistant Commissioner or the Income tax Officer" the words "authorised officer" be substituted.
In the present case the premises of the assessee were searched on September 21 and 22, 1964, and the documents were retained till May 1966, i.e. for a period, of 19 months.
Our attention has not been invited to any order of the authorities recording reasons for retaining the documents seized after the expiry of 180 days, nor is there any approval of the Commissioner for retaining such documents.
The retention of the documents without complying with the requirements of the statute after expiry of the period of 180 days would be plainly contrary to law.
The Solicitor General said that it *as not urged before the High Court that because the authorised officer did not record reasons and the Commissioner did not approve retention of the documents after 180 days, the revenue, authorities were bound to release the documents.
Counsel submitted that failure to produce evidence on a matter not put in issue may not be regarded as a ground in support of an order releasing documents.
But the High Court has found that the documents seized during the raid were detained by the authorised officer for 19 months before the application was filed.
If it was the case of the Department that retention of the documents after the expiry of 180 days was supported by good and adequate reasons recorded by the Income tax Officer and the.
approval of the Commissioner as required by the Act was obtained, such record of reasons and approval would have been tendered in evidence.
It cannot be said that the attention of the parties was not directed to the circumstance that the Income tax Officer had failed to comply with the requirements of the Act.
The order recorded by the High Court must be sustained on the ground that the documents taken possession of were re tained without authority of law for a period exceeding 180 days contrary to the terms of section 132(8) as amended by the Income tax (Amendment) Act, 1965.
The appeal therefore fails and is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | On September 14, 1964 the Income tax Officer called upon the assessee to furnish within 10 days statements relating to four assessment years ending on March 31, 1960.
The assessee did not furnish the information by the 19th and on that date on the report of the Income tax Officer, the commissioner authorised the Income tax officer to search the premises of the.
On September 21st and 22nd the premises were searched and a large number of documents were seized and retained till May 1966, that is, for a period of 19 months.
In a writ petition field by the, assessee, the High Court, following its own.decision in Seth Bros. vs C.I.T., held that the search was 'indiscriminate and beyond the scope of section 132 of the Income tax Act.
In appeal to this Court, HELD : (i) The decision relied on by the High Court was overruled by,this Court in I.T.O. vs Seth Bros., 74 I.T.R. 836, but it was held that the power of search must be exercised strictly in accordance with the law and only for the purposes for which the law authorises it to be exer cised.
Whether the action of the Commissioner in a particular case amounted to indiscriminate search and beyond the scope of section 132 would depend on the evidence in the case [583 E; 584 E F] (2)In the present case, there was no order of the authorities recording reasons for retaining the documents seized beyond 180 days, nor was there any approval of the Commissioner for such retention.
Therefore the retention was contrary to the terms of section 132(8) of the Act as amended 'by the Income tax (Amendment) Act, 1965.
[585 C D] (3)Though failure to record reasons by the I.T.O. and want of approval by the Commissioner for retaining the documents beyond 180 days were not urged before the High Court as grounds for release of the documents, when it was found that the documents were retained for 19 months, the department should have tendered evidence of such record of reasons or approval by the Commissioner if it was the case of the department that the retention of the documents could be supported by such reasons or approval.
[585 E C]
|
iminal Appeal No.225 of 1969.
Appeal by special leave from the judgment and order dated December 18, 1962 of the Bombay High Court in Criminal Appeal No. 1426 of 1968 and confirmation Case No. 21 of 1968.
Yogeshwar Prasad, for the appellant.
section B. Wad and section P. Nayar, for the respondent.
The Judgment of the Court was delivered by Ray, J.
This appeal by special leave is against the judgment dated 18 December, 1968 of the High Court at Bombay dismissing the Appeal and confirming the conviction of Moti alias Narayan Sheshanna Yadav and Sheshanna Bhumanna Yadav accused No. 2 nd 3 respectively except that the conviction of accused No. 2 of the substantive offence of murder under section 302 was altered and accused No. 2 was convicted of an offence under section 302 read with section 120B as well as of offence under section 302 read with section 34 of the Indian Penal Code.
The High Court confirmed the sentence of death passed against accused No. 3 Sheshanna Bhumanna Yadav.
Accused No. 2 son of accused No. 3 was at the time of the judgment of High Court of 17 years of age.
The High Court reduced the punishment of accused No. 2 to rigorous imprisonment for life.
Accused No. 1 Hiralal was the domestic servant of Dr. Nanavati grandfather of the deceased Narendra.
Accused No. 2 is the son of accused No. 3.
Accused No. 1 Hiralal Jamnadas Joshi, accused No. 2 Moti alias Narayan Sheshanna Yadav and accused No. 3 Sheshanna Bhumanna Yadav were charged with having entered into crimi nal conspiracy with approver Dinkar Sakharam between 19 619 December, 1967 and 4 January, 1968 at Deolali Camp for the purpose of committing the murder of Narendrakumar and com mitted house breaking and thefts in the house of his grand father Dr. Nanavati and disposed of the property so 'Obtained and caused the evidence of murder to disappear with the intention of screening the offenders from lawful punishment and that these acts were done in pursuance of the said criminal conspiracy, an offence punishable under section 120B read with sections.
302, 454, 380, 414 and 201 of the Indian Penal Code.
Accused No. 1 to 3 were further charged with having committed the murder of Narendrakumar in complicity with ' approver Dinkar Sakharam and the said murder came to be committed in furtherance of common intention of all the accused an offence punishable under section 302 read with section 34 of the Indian Penal Code.
They were further charged under sections 201, 454,.380 and 411 of the Indian Penal Code.
Dr. Dalichand Nanavati the grand father of deceased Naren drakumar who met unnatural and unfortunate end at the hands of accused No. 2 and one Dinkar Sakharam, subsequently turned approver, resided at Deolali Camp at Dhondi Road in bungalow No. 17 for about 1 1 years.
He was a registered medical practitioner.
At the relevant time he was in pharmaceutical business for the manufacture of medicines.
The head office was at Bombay.
The branch was at Deolali.
The owner of bungalow No. 17 was Narsanna Bhumanna Yadav brother of accused No. 3.
Narsanna was a person of unsound mind and accused No. 3 was the holder of power of attorney.
Accused No. 3 resided at the rear portion of bungalow No. 17.
The, bungalow was agreed to be sold to Dr. Nanavati.
There were civil and criminal proceedings out of that transaction.
Bungalow No. 17 was eventually sold to a third party on 11 May, 1964.
In the sale deed it was said that possession of the portion in the occupation of Dr. Nanavati would be handed over to the vendee when the proceedings pending against Dr. Nanavati concluded.
Dr. Nanavati succeeded in those proceedings.
Therefore, possession could (not be given by the vendor to the vendee.
In the month of November, 1967 Dr. Nanavati 's wife left Deolali for Jodhpur.
Dr. Nanavati also left Deolali and went to his native place leaving his grandson Narendra, who was about 15 years of age in the care ' of his domestic servant accused No. 1.
The prosecution case was as follows.
Accused No. 3 thought that Dr. Nanavati 's departure from Deolali leaving his grandson Narendra at the bungalow in charge of the domestic servant was a good opportunity to commit theft of articles in the house of Dr. Nanavati and to murder his grandson Narendra 620 with a view to frightening Dr. Nanavati to vacate the bungalow Accused No. 3 called Dinkar on 19 December, 1967 and suggested to Dinkar that the latter should commit the murder of Narendra after 21 December, 1967 when Dr. Nanavati would .leave the bungalow and his grandson Narendra would be there with the domestic servant.
Accused No. 3 proposed a reward .to
Dinkar, namely,, a motor cycle and a further sum of Rs. 100 Accused No. 3 told Dinkar that the said accused had committed two murders prior to that date but nothing happened to him.
Dinkar at first expressed his inability to undertake the job.
Accused No. 3 then said that Dinkar should take accused No. 2 who was the son of accused No. 3 for the job.
Accused No. 2 and Dinkar started getting familiar and , 'friendly with Narendra.
They visited his house regularly.
They moved about with Narendra.
On 25 December, 1967 accused No. I the domestic servant of Dr. Nanavati left Deolali 'and went to Bombay.
Accused No. 2 and the approver Dinkar took Narendra out with the intention of murdering him but because of ,certain interruptions they could not muster courage to achieve that object.
On 27 December, 1967 accused No. 3 called Dinkar and told him and accused No. 2 that he was going to Nasik in connection with some court work and they should murder Narendra and that he would look to everything after his return from Nasik.
Nasik is about 5 or 7 miles from Deolali Accused No. 2 and Dinkar took Narendra to a lonely area beyond Barne 's High School on the pretext of collecting clothes from a washerman and went to the house of the latter and collected a couple of garments.
Thereafter they went to a grarden where they drank water and then went to a open field.
There they plucked fresh groundnuts and started eating them.
Accused 'No. 2 and Dinkar took Narendra to a jowar field.
Dinkar gave ,a blow with his hand on the neck of Narendra as a result of which Narendra fell down.
Accused No. 2 and Dinkar held Narendra tightly.
Dinkar set upon his abdomen and started ,choking his throat with both his hands and accused No. 2 gagged his mouth and nose.
Dinkar gave blows on Narendra 's abdomen.
After Narendra was choked for about 10115 minutes, be breathed his last.
Accused No. 2 then asked Dinkar to take out the key of the 'bungalow which he had seen Narendra putting in his pocket and Dinkar removed the key and gave it to accused No. 2.
Accused No. 2 scraped some earth and dug a small pit and placed Narendra in it, face downwards, and covered it with some loose earth.
Accused No. 2 and Dinkar then returned to the house of accused No. 3.
On being told that accused No. 2 and Dinkar had ac 621 complished the murder of Narendra accused No. 3 was happy and gave them Rs. 1 0 to celeberate the occasion by seeing a picture.
Accused No. 3 told accused No. 2 and Dinkar that the following day they must take out all the goods from the house of Dr. Nanavati and hand them over to him.
When Dinkar went to the house of accused No. 3 the following morning, Dinkar heard accused No. 2 and 3 saying that )Dr. Nanavati would not be able to live in that bungalow any ,longer.
Accused No. 2 and Dinkar then went to the bungalow of Dr. Nanavati and opened the lock with the key which had been removed from Narendra 's pocket.
Accused No. 2 and ' Dinkar locked the front door from outside and kept the back door ajar and removed a large number of articles which were in cupboards which they opened with the help of a bunch of keys which they found in the house.
Accused No. 2 and Dinkar again went to the bungalow of Dr. Nanavati on the subsequent day.
They removed two cycles and several other articles and.
handed them over to accused No. 3.
Accused No. 3 gave to the approver Dinkar a cycle and some of the property which had been recovered from the house of Dr. Nanavati.
Dr. Nanavati returned to Deolali along with his wife on 4 January, 1968.
They found the front door of the house locked.
They made enquiries.
Ultimately, they entered the house by breaking open the lock and found that Narendra was not in the house, that the whole house had been ransacked and the back door was ajar.
Dr. Nanavati reported the matter to the police.
Clue was furnished by a piece of cloth which had been stolen from the house of Dr. Nanavati.
That piece of cloth had been given by accused No. 3 to the approver Dinkar who gave it to a tailor named Thakur for stitching a pair of trousers for him.
Dr. Nanavati happened to go to the shop of Thakur and made enquiries about the piece of cloth which was found in the tailor 's shop.
Accused No. 2 and Dinkar took away the cloth from the tailor 's shop when they heard of the enquiries about the piece of cloth.
Dinkar gave some money to the tailor.
Dinkar and accused No. 2 raised some money by pledging a cycle which they had with them.
The police came to the tailor 's shop, made enquiries and ultimately accused No. 2 and Dinkar were arrested on 23 January, 1968.
Dinkar pointed out the place of the occurrence to the police on that day.
On 24 January, 1968 some human bones were found at that place.
On 25 January, 1968 accused No. 3 was arrested.
Dinkar and accused No. 2 made various statements and led the police to various places.
Several articles stolen from the house of Dr. Nanavati were recovered.
On 12 February, 1968 Dinkar made a full fledged detailed confession.
622 In the High Court three questions were canvassed.
First, whether there was corroboration in regard to the crime.
Secondly, whether there was corroboration in regard to accused No. 2 ,and 3 being guilty of the offence.
Thirdly, whether there was corroboration in regard to the approver 's story about the conspiracy and the common intention by way of a pre conceived plan to murder Narendra.
The High Court found that there was corroboration of the evidence which connected accused No. 2 3 not only with the offence of theft but also with murder.
The High Court also came to the conclusion that there was corroboration of the evidence of Dinkar in material particulars in regard to the connection of the accused with the crime and in regard to the conspiracy as well as the common intention.
The law with regard to appreciation of approver 's evidence is based on the effect of sections 133 and 114 illustration (b) .of the Evidence Act, namely, that an accomplice is competent 'to depose but as a rule of caution it will be unsafe to convict upon his testimony alone.
The warning of the danger of convicting on uncorroborated evidence is therefore given when the evidence is that of an accomplice.
The primary meaning of accomplice is any party to the crime charged and some one who aids and abets the commission of crime.
The nature of corroboration is that it is confirmatory evidence and it may consist of the evidence of second witness or of circumstances like the conduct of the person against whom it is required.
Corroboration must connect or tend to connect the accused with the time.
When it is said that the corroborative evidence must implicate the accused in material particulars it means that it is not enough that a piece of evidence tends to confirm the truth of a part of the testimony to be corroborated.
That evidence must confirm that part of the testimony which suggests that the crime was committed by the accused.
If a witness says that the accused and he stole the sheep and he put the skins in a certain place, the discovery of the skins in that place would not corroborate the evidence of the witness as against the accused.
But if the skins were found in the accused 's house, this wouldcorroborate because it would tend to confirm the statement that the accused had some hand in the theft.
This Court stated the law of corroboration ofaccomplice evidence in several decisions.
One of the earlier decision is Sorwan Singh vs State of Punjab( ') and the recentdecision is Lachi Ram vs State of Punjab( ').
In Sarwan Singh 's case( ')this Court laid down that before the court would look into the (1) ; (2) ; 623 corroborative evidence it was necessary to find out whether the approver or accomplice was a reliable witness.
This Court in Lachi Ram 's case( ') said that the first test of reliability of approver and accomplice evidence was for the court to be satisfied that there was nothing inherently impossible in evidence.
After that conclusion is reached as to reliability corroboration is required.
The rule as to corroboration is based on the reasoning that there must be sufficient corroborative evidence in material particulars to connect the accused with the crime.
In the present appeal, counsel on behalf of the appellant ;contended that there was no corroboration of the actual participation in the murder and secondly that accused No. 3 could be guilty of theft 'but not of murder.
The washerman said that Dinkar was his classmate and through Dinkar he came to know accused No. 2.
The washerman further said that he used to wash the clothes of accused No. 2 and on 27 December, 1967 Dinkar and accused No. 2 came to the washerman 's house to take out a few clothes which he had washed for them.
The washerman also said that Dinkar and accused No. 2 had with them a boy who was of fair skin and wore khaki shorts and a white shirt, Mohan Lal Boob, an agriculturist gave evidence that on 27 December, 1967 he was watering the crops.
Three persons turned up one of whom was accused No. 2 and the other was known to him by face and the third was a boy of 14 or 15 years of age, wearing khaki shorts and a shirt.
Mohan Lal Boob said that he saw all of them sitting down in the field, drank water and purchase radishes from a woman who was sitting nearby.
It may be difficult to find corroborative evidence of the actual killing.
Dinkar showed the place of occurrence.
Eventually, a few things were discovered there, namely, a shirt, a chain, a skull having the upper jaw with 13 teeth, a bone, bunch of hair.
These things were found on 28 January, 1968.
The shirt and the chain were identified by Dr. Nanavati and his wife to belong to Narendra.
A girl of 14 named Garadin Bride who was a classmate of Narendra said that Narendra wore a chain similar to the one that was shown.
The medical evidence was that the bones were those of a human being probably a male.
Beyond that the medical evidence does not assist the prosecution.
The ' High Court found that the death of Narendr 'a was not disputed because it was put to Dinkar in cross examination that it was Dinkar alone who killed Narendra.
Therefore, the medical evidence as to the skull and the bone is not of importance in view of the death of Narendra.
Dr. Nanavati en (1) ; 624 tered the house by breaking open the lock.
He found the back door left ajar.
The key which was produced by Dr. Nanavati was found to fit the lock though the lock could not be operated with the key in view of the fact that Dr. Nanavati had broken it open for gaining entry into the house.
There, is also evidence of Kisan Prasad that after Christmas day in 1967 he saw a dead body which had on it khaki shorts and white shirt.
If the murder of Narendra and the theft were not parts of the same transaction, Narendra would not have been taken out to the field to be murdered there to eliminate the possibility of detection.
The close proximity between murder and theft points to the inescapable conclusion that they formed part of the same transaction.
Narendra was seen alive by Kewal Ram, owner of the betel shop on 26th December, 1967.
Hira Lal, the domestic servant of Dr. Nanavati left Deolali on 25 December, 1967.
The theft could not have been committed before the murder because in that case there would be complaint by Narendra and the house in that case would also have been broken I open for committing the murder.
All these features prove that the murder and the theft formed the same transaction and were committed by the same persons.
Narendra was seen alive in the company of accused No. 2 and Dinkar.
That was the evidence of the washerman as also of the agriculturist Mohan Lal Boob.
These witnesses further identified the shorts and shirt of Narendra.
Accused No. 2 produced the piece of cloth which was iden tical with the cloth of the matteress cover produced by Dr. Nanavati.
Both the pieces of the cloth were of the identical design.
The pledging of the cycle by accused No. 2 is of significance.
The cycle was identified both by Dr. Nanavati and his wife.
The next piece of evidence is that accused No. 2 sold some utensils to Gadekar.
One of the utensils was found to have a name thereon scraped off.
There was also a piece of hand writing with the signature of accused No. 2 at the foot of it and that was the list of the articles sold to Gadekar.
There were some articles found from the tailor 's shop.
The evidence of the tailor was that that those articles were given by accused No. 2.
The discovery of the chain which Narendra wore was identified by Dr. Nanavati.
Accused No. 2 sold a cycle carrier to Rupvate on 16 January, 1968.
The sale of that article was discovered on 23 January, 1968.
Dr. Nanavati identified the cycle carrier.
That identification was not challenged.
All these pieces of evidence prove the connection of accused No. 2 with the crime.
With regard to accused No. 3 it is found that there were civil and criminal proceedings between him and Dr. Nanavati.
625 Accused No. 3 had the motive not only to make it impossible for Dr. Nanavati to stay in the bungalow but also to commit theft in his house.
Accused No. 3 gave several articles to a, person called Takalkar.
Takalkar bad dealings with accused No. 3 in the past.
Takalkar said that accused No. 3 gave him some pieces from silver idols and other silver articles and wanted money by disposing of the same.
Takalkar purchased the entire silver material from accused No. 3 for Rs. 175.
Takalkar also said that at the request of accused No. 3 he kept that bag of utensils in his godown and gave the key of the godown to accused No. 3 who afterwards returned the key The police cam, , to the shop of Takalkar and he was asked to produce the gunny bag which he did.
The articles in the gunny bag were taken and the articles excepting the lump of silver were identified by Dr. Nanavati and by his wife.
The identification was not challenged in cross examination.
It is obvious that silver lump could not be identified.
At this stage it is to be noticed as to whether there is evidence to connect accused No.3 with murder.
The transaction was one composite unit of murdering Narendra and committing theft.
The discovery of articles in the godown of Takalkar was as a result of a statement by accused No. 2.
The name of accused No. 3 was found in the note book of Takalkar.
The relationship of father and son between accused No. 3 and accused No. 2 is not to be lost sight of.
Accused No. 2 and 3 went together for the sale of cycle carrier to Rupvate.
The High Court rightly came to the conclusion that there was sufficient corroboration of the evidence of Dinkar in material particulars and that Dinkar was a reliable witness and it was proved that accused No. 2 and 3 were guilty of the offence, In view of the fact that there was capital sentence of accused No. 3 we went through the evidence to find out as to whether there was any infirmity in evidence.
We have found none.
The appeal therefore fails.
The accused will surrender to his bail.
if any.
V.P.S. Appeal dismissed.
| IN-Abs | Two accused father and son were convicted of the offence of murdering a young boy of 15 and the offences of house breaking and theft next day, of articles from the house of the grand father of the deceased in which the deceased was living alone at the time of his murder.
The evidence mainly consisted of that of the approver, The corroboration of the approver 's evidence as against one of the accused (the son) consisted of the following : (i) on the day of the occurrence, two witnesses saw the accused the approver and another (a young boy of 15) wearing khaki shorts and a white shirt; (2) a few days later another witness saw a dead body at the scene of the crime a field, with khaki shorts and a white shirt; (3) the grand father discovered the theft and the disappearance of his grandson when he returned to the house a week after the occurrence; (4) the approver, on the date of his arrest pointed out to the police the scene of the crime where, among other things a shirt, a chain, and some bones were found the shirt and chain were identified to be those of the deceased and according to the medical evidence the bones were those of a human being, possibly male; (5) the accused, after his arrest, produced to the police, a piece of cloth stolen from the house; (6) the evidence of pledge of a cycle and sale of a cycle carrier belonging to the grand father of the deceased; (7) sale of some utensils belonging to the grand father of the deceased, by the accused, after scrapping off the name; and (8) the finding of a cloth belonging to the grandfather of the deceased in a tailor 's shop.
which the accused hastened to take away, when he learnt that the grand father was questioning the tailor about the cloth.
As regards the other accused (the father) the corroborating evidence consisted of the following : (1) there were civil and criminal proceedings between him and the grand father of the deceased over the possession of the house : (2) he gave and sold several, articles and pieces of silver to a witness who was traced by the police as a result of the, statement of the accused (son).
The articles were produced before police.
and all of them except one lump of silver, were identified by ' the grandfather of the deceased as his articles; (3) it was this accused who gave the piece of cloth to the approver who gave it to the, tailor and which was hastily taken away by his son; and (4) he joined his son in the sale of cycle carrier.
On the question whether the corroboration was sufficient in law, HELD : In Sarwan Singh vs State of Punjab, ; and in Lachi Ram vs State of Punjab, ; , it was held that the court should be satisfied : (1) that the approver or accomplice was a reliable witness; (2) there must be reliable corroboration of the approver 's evidence; and (3) there must be sufficient corroborative evidence in material particulars to connect the accused with the crime.
The nature of 618 corroboration is that it is confirmatory evidence and may consist of the evidence of another witness or of circumstances, like conduct of the accused.
When it is said that corroborative evidence must implicate the accused in material particulars it means that it is not enough that a piece of evidence tends to confirm the truth of a part of the testimony to be corroborated.
It must confirm that part of the testimony which suggests that the crime was committed by the accused.
[622 E F; 625 A B] In the present case, apart from the relationship between the two accused, there was also close association in the disposal of the articles.
The close proximity of time between the murder and theft points to the inescapable conclusion that they formed part of the same transaction.
Since the transaction was one composite unit of murdering and committing theft, and it was found that the approver was a reliable witness, all the pieces of evidence afforded sufficient corroboration of the approver 's evidence in material particulars and proved that the accused were guilty ' of the offences with which they were charged.
[624 C D; 625 D, E]
|
Appeal No. 36 of 1968.
Appeal by special leave from the judgment and order dated November 19, 1963 of the Bombay High Court in Civil Revision Application No. 167 of 1959.
V. M. Tarkunde, P. C. Bhartari, O. C. Mathur and Ravinder Narain, for the appellant.
A. K. Sen, M. section Gupta and section L. Jain, for the respondent.
The Judgment of the Court was delivered by Ray, J.
This appeal is by special leave from the judgment dated 19 November, 1963 of the High Court of Bombay dismis sing the appellant defendant tenant 's application for revision in a decree for eviction of the defendant.
The appellant was tenant of the respondent.
On 28 April, 1954 the appellant filed an application under section II of the Bombay Rent Act for fixation of standard rent.
During the 627 pendency of the application the respondent landlady served a notice on the appellant in the month of March, 1955 terminating the tenancy on the ground that the appellant had failed to pay rent from I March, 1954.
On 25 April, 1955 a suit was filed for eviction of the appellant.
During the pendency of the suit on 29 June, 1956, the standard rent was fixed at Rs.55/7/ p.m.
The contractual rent was Rs. 85/ p.m.
When the suit came up for hearing on 5 October, 1956, it appeared that the appellant paid all the arrears of rent in accordance with the standard rent but did not pay the Costs of the suit.
The trial court passed an ejectment decree against the appellant.
The appellant preferred an appeal.
The appellate court took the view that the order of the trial court was justified under section 12(3)(b) of the Bombay Rent Act.
Section 12(3)(b) of the Bombay Rent Act provides that no decree in eviction shall be passed, if on the first day of the hearing of the suit or on or before such other date as the court may fix, the tenant pays or tenders.
in the court the standard rent and permitted increase in rent due, and thereafter continues to pay or tender in court regularly the said rent and permitted increase till the suit is finally decided and also pays costs of the suit as directed by the Court.
The appellant then filed an application for revision in the High Court.
The contention which was advanced in the High Court and repeated here was that the courts were in error in decreeing the suit for non payment of costs because the trial court had not passed any order fixing the amount of costs.
It was said that only when an order determining the amount of costs had been made by the court that the tenant could be said to be within the mischief of the provisions of the statute for non payment of costs so determined by the courts.
The High Court rightly rejected the contention for two reasons.
First, though a formal order as to costs was not made, yet the trial court had made an order directing the appellant to pay the amount of costs and the appellant did not pay the costs.
Secondly, the appellant stated before the trial court that the appellant was not in a position to tender what is described as "professional costs" and court costs of the suit.
It is indisputable that in the trial court the appellant not only admitted failure to pay costs but also inability to tender the costs.
The appellant could be entitled to protection against eviction only if the appellant complied with the provisions of the statute.
The appellant was required to tender not only the arrears of rent but .also the, costs of the suit.
In the trial court the appellant admitted non compliance with the provisions of the statute.
Therefore, the 628 trial court rightly held that the appellant was not entitled to any benefit or protection against eviction.
The appellate court held that because the appellant filed an application for fixation of standard rent and therefore there being a dispute between the parties regarding the standard rent no order in eviction could be passed under section 12(3) (a) of the Bombay Rent Act.
The appellate court, however, held that the case fell within the provisions of section 12(3) (b) of the Bombay Rent Act by reason of the failure of the appellant to pay costs of the suit.
Counsel for the appellant contended that the costs were deposited on 22 November, 1956 and therefore the High Court should have exercised discretion in favour of the appellant.
The High Court stated that the decree was passed on 5 October, 1956 and the appeal was filed on 18 October, 1956 and the amount of costs was not deposited with the filing of the memorandum of appeal.
The High Court concluded by stating that "the decree of the trial court was made on 5 October, 1956.
We are in the year 1963.
The attitude adopted by the petitioner is not such in which a discretion can be exercised in favour of the petitioner".
The High Court heard the application on 19 November, 1963.
Counsel for the appellant invited our attention to paragraph 13 of the application for review made in the High Court where the appellant alleged that on 7 December, 1956 the costs were paid.
No portion of the judgment of the High Court is open to any criticism for the obvious reason that when the memorandum of appeal was filed in the High Court on 18 October, 1956 the costs were not paid.
The application for review also indicates that when the matter was heard before the High Court it was not brought to the notice of the High Court that the costs were paid on 7 December, 1956 as alleged.
The appeal is from the judgment of the High Court.
It would be improper to interfere with exercise of discretion passed by the High Court when the matter was not brought to the notice of the High Court.
Discretion is exercised by the court in the facts and circumstances of the case.
Any interference with the exercise of discretion in the present case would be substituting the discretion 'of this Court on a set of facts which were never presented to the High Court.
The appellant was not entitled to any relief under the provisions of the Bombay Rent Act.
The High Court rightly rejected the application for revision.
The appeal fails and is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | In a suit for evicition on the ground of non payment of rent a decree was passed directing the tenant to pay the landlady 's costs, as, by that time, the tenant had paid all the arrears of rent as fixed; but the tenant did not pay or tender the costs.
Therefore, the court passed an order of eviction.
His appeal, a revision to the High Court, and a review petition to the High Court were all dismissed.
In appeal to this Court, HELD : (1) The tenant would be entitled to the protection under section 12(3) (b) of the, Bombay Rent Act, only if he complied with its provisions by paying or tendering not only the arrears of rent but also the costs of the suit.
Since the appellant admitted his inability to, comply with the provision, he could not claim protection against eviction.
[627 D, G] (2) Assuming that the costs were paid at a later date as alleged by the appellant, that fact was not brought to the notice of the High Court, and therefore this Court will not interfere with the exercise of discretion by the High Court in the set of facts and circumstances presented to the High Court. [628 F G]
|
minal Appeal No. 244 cf 1969.
Appeal by special leave from the judgment and order dated July 23, 1969 of the Punjab and Haryana High Court in Criminal Appeal No. 302 of 1969 and Murder Reference No. 25 of 1969.
Nur ud din Ahmad and R. L. Kohli, for the appellant.
R. N. Sachthev, for respondent No. 1.
Frank Anthony, section R. Agarwal and E. C. Agarwala, for respondent No. 2.
The Judgment of the Court was delivered by Dua, J.
In this appeal by special leave the appellant challenges his conviction and sentence under section 302, I.P.C. for the; murder of his brother in law (husband of his wife 's sister).
The occurrence is stated to have taken place on Sunday October 8, 1968 at about 4.45 p.m. near the clock tower in Ludhiana ' City.
601 It is not disputed that on August 13, 1968 the appellant Tapinder Singh, a business man and a Municipal Commissioner, had lodged a first information report (exhibit PR) with the police station, Sadar, Ludhiana against Kulwant Singh, deceased whom he described as.
his Sandhu (his wife 's sister 's husband) and one Ajit Singh, alleging that on the pretext of consulting him they had taken him in their car to the canal near the Agricultural College an after getting down from the car, when they had walked about 150 paces on the banks of the canal, the deceased Kulwant Singh, saying that he would teach the appellant a lesson, whipped out a clasp knife and attacked him.
Ajit Singh also shouted that the appellant should not be allowed to escape.
The appellant raised alarm and tried to run away.
" While endeavoring to ward off with his right hand the knife blow by Kulwant Singh the appellant 's right hand palm got wounded and started bleeding, Just at that moment Gurmel Singh, Sarpanch and Shamsher Singh, Lambardar, happened to pass that way in a car.
They stopped the car.
In the meantime Kulwant Singh and Ajit, Singh got into, their car and went away.
Pursuant to this report admittedly a criminal case was pending against the deceased when the occurrence in question took place.
Kulwant Singh, deceased, who had been arrested pursuant to that report, in a case under section 307/ 324, I.P.C., was actually on bail on the date of the occurrence.
According to the prosecution Gurdial Singh (P.W. 7), father of the deceased Kulwant Singh is employed, as Works Manager in the, Ludhiana Transport Company, which is a private concern and which plies buses on different routes in Ludhiana District.
Gurdial Singh is also a share holder of this Company.
The workshop, the office and the taxi stand of this Company are located in Sarai Bansidhar which faces the clock tower.
Gurdial Singh, in addition, owns two taxis which he runs on hire.
He also owns two private cars which are used both for personal requirements and as taxis.
The deceased used to look after these four vehicles.
The father and the son used to live together in Model Town.
The two taxis used to remain at the Taxi Stand about 100 yards away from the clock tower whereas the other two cars used to be parked at Gurdial Singh 's business premises.
On August 8, 1968 at about 4.45 p.m. the deceased was sitting on a Takhat posh at the Taxi Stand.
It being a Sunday the shops in the neighborhood were closed.
Sher Singh (P.W. 9) was standing close to the Takhat posh.
Harnek Singh, the driver of one of the taxis and Gurdial Singh were also present.
At the taxi stand there was at that time only one taxi belonging to Gurdial Singh.
The appellant came from the side of the railway station and fired at the deceased five shots from his pistol.
After receiving three shots the deceased dropped down and the remaining two shots hit him when he was lying.
The persons present there raised art 602 ,alarm, shouting 'Don 't kill; dont kill '.
The appellant, after firing the shots, briskly walked back towards the railway station.
The ,deceased who was bleeding profusely was taken in the taxi by Gurdial Singh, his father and Hamek Singh, the driver, to Dayanand Hospital where they were advised to take the injured to Brown 's Hospital because his condition was serious.
It is in evidence that some person had telephoned to the City Kotwali, Ludhiana on the day of the occurrence at about 5 30 p.m. informing the police authorities that firing had taken place at ax Stand, Ludhiana.
The person, giving the information on telephone, did not disclose his identity; nor did he give any further particulars.
When the police officer receiving the telephone message made further enquiries from him he disconnected the telephone.
This report was entered in the daily diary at 5.35 p.m.
The Assistant Sub Inspector, Hari Singh, along with_ Assistant Sub Inspectors Amrik Singh, Jagat Singh and Brahm Dev and constables Prakash ,Singh, Harbhajan Singh and Harbans Lal, left the police station in a government jeep for the Taxi Stand, Ludhiana near Jagraon Bus Stand on the Grand Trunk Road, about a furlong and a half away from the City Kotwali Police Station.
From there Hari Singh learnt that the injured man had been removed by some persons to Dayanand Hospital.
As it was rumored at the place of the occurrence that the appellant Tapinder Singh had shot at the deceased, Hari Singh deputed Amrik Singh and Brahm Dev to search for him.
Hari Singh himself, along with.sub Inspector Jagat Singh and the police constables left for Dayanand Hospital.
From there they went to the Civil Hospital and then they proceeded to C.M.C. Hospital at about 6 30 p.m.
On enquiry they were informed that Kulwant Singh had been admitted there as an indoor patient.
Hari Singh went upstairs in the Surgical Ward and obtained the report (exhibit PH/ 13) prepared by Dr. E. Pothan who was in the Surgical Ward where Kulwant Singh was lying.
The statement of Kulwant Singh (exhibit PM) was also recorded by him at about 6.50 p.m. in that ward and the same after being read out by him was thumb marked by Kulwant Singh as token of its correctness.
That statement was forwarded to the police station, City Kotwali for registration of the case under section 307, I.P.C. Exhibit PM was also attested by Dr. Sandhu, House Surgeon.
Hari Singh deputed Assistant Sub Inspector, Jagat Singh to arrange for a Magistrate for recording Kulwant Singh 's dying declaration in the hospital.
The statement of Gurdial Singh, father of the deceased was also recorded there at about 7.20 p.m. Jagat Singh, A.S.I. brought Shri Sukhdev Singh, P.C.S., Judicial Magistrate, First Class, to the Hospital at about 7.30 p.m The dying declaration was, however, recorded at about 8.30 P.m. because Kulwant Singh was not found to be in a fit 'state of health to make the statement earlier.
Kulwant Singh died 603 at the operation theatre the same midnight.
Pursuant to exhibit PH/ 13 first information report was registered and the appellant committed to stand his trial for an offence under section 302, I.P.C. The learned Additional Sessions Judge, believing Gurdial Singh (P.W. 7), Sukhdev Singh, Judicial Magistrate (p.
W. 10) and Mukhtiar Singh, H. C. (P.W. 6) held proved the motive for the crime viz., that the appellant suspected illicit intimacy between his wife and the deceased who was married to her elder sister.
According to the trial Judge the appellant for this reason bore a grudge against the deceased.
The three eye witnesses Gurdial Singh, (P.W. 7), Hamek Singh (P.W. 8) and Sher Singh (P.W. 9) were held to have given a true and correct account of the occurrence and being witnesses whose presence at the place of occurrence was natural their evidence, was considered trustworthy, which fully proved the case against the accused.
The dying declaration was also found to be free from infirmity and being categorical and natural the court considered it sufficient by itself to sustain the conviction.
The circumstantial evidence, including that of the recovery of blood stained earth from the place of occurrence, the recovery of blood stained clothes of the deceased, the fact of the accused having absconded and the recovery of the pistol and cartridges were also held to corroborate the prosecution story.
Omission on the part of the prosecution to produce a ballistic export was considered to be immaterial and it was held not to weaken or cast a doubt on the prosecution case because the oral evidence of eye witnesses to the commission of the offence impressed the court to be trustworthy and acceptable.
The trial court also took into consideration the allegations con the course of the committal proceedings in the court of Shri Mewa Singh, Magistrate, on November 20, 1968 to the effect, inter alia, tained in an application presented by Gurdial Singh (P.W. 7) in that an attempt was being made on behalf of the accused to tamper with the prosecution witnesses.
The trial court convicted the accused under section 302, I.P.C. and imposed capital sentence.
On appeal the High Court rejected the criticism on behalf of the accused that the occurrence had nottaken place at the spot and in the manner deposed to by the eye witnesses.
On a detailed and exhaustive discussion of the arguments urged before the High Court it came to this conclusion : ". . that there was motive on the part of the appellant to commit this crime, that the three eyewitneses produced by the prosecution are reliable, they were present at the time of the occurrence and have given a correct version of the incident and that the medical 604 evidence fully supports the prosecution and no suspicion is attached to it.
The deceased made more than one dying declaration and we are satisfied that they were not induced and that the deceased gave a correct version of the incident.
The suggestion made that Tapinder Singh has been roped in on suspicion in not correct because implicit in such an argument is the suggestion that the crime was committed by somebody else.
It was broad day light, the assailant must have been identified and consequently we are satisfied that the offence has been fully brought home to the appellant.
The place of the occurrence does not admit of any doubt because there is good deal of evidence on the record that blood was recovered from where the Takhat posh was kept by GurJial Singh and there is no suggestion that the blood was found from anywhere else.
The learned counsel has then urged that the offence does not fall under section 302, Indian Penal Code, but no reasons have been given as to why this is not an offence punishable under section 302, Indian Penal Code.
Learned counsel urged that something must have happened which induced Tapinder Singh to commit this crime.
There is nothing on the record, not even a suggestion, that anything happened.
Tapinder Singh came armed with a pistol and fired as many as five shots at Kulwant Singh, two of which he fired on his back when Kulwant Singh had falled on the ground.
The appellant, therefore, does not deserve the lesser penalty contemplated by law.
Consequently, we uphold the conviction and sentence imposed upon Tapinder Singh.
The appeal is dismissed and the sentence of death is confirmed.
" On appeal in this Court under article 136 of the Constitution, Mr. Nuruddin Ahmed, learned advocate for the appellant.
ad dressed elaborate arguments challenging the conclusions of the courts below on which they have sustained the appellant 's conviction.
He started with an attack on the F.I.R. based on the dying declaration.
According to the counsel, the information in regard to the offence had already been conveyed to the police by means of a telephone message and the police had actually statrted investigation on the basis of that information.
This argument was, however, not seriously persisted in and was countered by the respondents on the authority of the decision in Sarup Singh vs 605 State of Punjab(").
The telephone message was received by Hari Singh, A.S.I., Police Station, City Kotwali at 5 35 p.m. on September 8, 1969.
The person conveying the ' information did not disclose his identity, nor did he give any other particulars and all that is said to have been conveyed was that firing had taken place at the taxi stand Ludhiana.
This was, of course, recorded in the daily diary of the police station by the police officer responding to the telephone call.
But prima facie this cryptic and annoymous oral message which did not in terms clearly specify a cognizable offence cannot be treated as first information report.
The mere fact that this information was the first in point of time does not by itself clothe it with the character of first information report.
The question whether or not a particular document constitutes a first information report has, broadly speaking, to be determined on the relevant facts and circumstances of each case.
The appellant 's submission is that since the police authorities had actually proceeded to the spot pursuant to this information, however exiguous it may appear to the court , the dying declaration is hit by section 162, Cr.
This submission is unacceptable on the short ground that section 162(2), Cr.
P.C. in express terms excludes from its purview statements falling within the provisions of s.32 (1), Indian Evidence Act.
Indisputably the dying declaration before us falls within section 32(1), Indian Evidence Act and as such it is both relevant and outside the prohibition contained in section 162 (1), Cr.
The counsel next contended that the dying declaration does not contain a truthful version of the circumstances in which Kulwant Singh bad met with his death and, therefore, it should not be acted upon.
This argument is founded on the submission that the deceased did not meet with his death at the spot sworn by the prosecution witnesses and that none of these witnesses actually saw the occurrence 'because they were not present at the place and time where and when the deceased was shot at.
We are far from impressed by this contention.
The trial court and the High Court have both believed the three eye witnesses and have also relied on the dying declaration.
Normally, when the High Court believes the evidence given by the eye witnesses this Court accepts the appraisal of the evidence by that Court and does not examine the evidence afresh for itself unless, as observed by this Court in Brahmin Isharlal Manilal vs The State of Gujarat.
(1) "It is made to appear that justice has failed for reason of some misapprehension or mistake in the reading of the evidence by the High Court.
" (1) A.I.R. 1964 Punjab 508.
(1) Crl.
A. No. 120 of 1963 decided on August 10, 1965.
606 It was added in that judgment : "There must ordinarily be a substantial error of law or procedure or a gross failure of justice by reason of misapprehension or mistake in reading the evidence or the appeal must involve a question of principle of general importance before this Court will allow the oral evidence to be discussed.
" In the present case it was contended that the original document embodying the dying declaration is missing from the judicial record and it is suggested that the mysterious disappearance of this important document during the committal proceedings was intended to remove from the record the evidence which would have shown that this dying declaration could not legally constitute the basis of the F.I.R. and thereby frustrate the plea, of the accused that section 162, Cr.
P.C. operated as a 'bar to its admissibility.
The bar created by section 162(1), Cr.
P.C., as already noticed, is,inapplicable to dying declarations.
But, as the original dying declaration has somehow disappeared from the Judicial record and the case is of a serious nature, we undertook to examine the evidence in respect of the dying declaration.
The evidence of Shri Sukhdev Singh, Judicial Magistrate, as P.W. 10, is clear on the point.
The witness has repeated in court the statement made to him by Kulwant Singh which was recorded by the witness in Punjabi in his own hand.
An attempt was made by Mr. Nuruddin to persuade us to hold that Shri Sukhdev Singh 's statement is not trustworthy.
It was argued that there was no cogent reason for the Magistrate to permit the police officers to make a copy of the dying declaration.
This, according to the counsel, shows that the Magistrate acted in a manner subservient to the demands of the police officers and, therefore, his, statement should not be taken on its face value.
We do not agree.
The Magistrate, as observed by the High Court, is quite clear as to what the deceased had told him.
He has repeated the same in his statement in court.
Exhibit PJ has been proved by him as a correct account of the dying declaration recorded by.
It is not understood how the fact that the Investigating Officer was allowed to make a copy of the dying declaration could go against the Magistrate.
The dying declaration could legitimately serve as a guide in further investigation.
It was not argued that the dying declaration being a confidential document had to be kept secret from the Investigating Officer.
Our attention was drawn by the respondents to the application dated November 20, 1968(Ex.
PZ) filed by Gurdial Singh in the court Of Shri Mewa Singh, Magistrate, for expeditious disposal of the commitment proceedings.
In that application it was suggested that the defence had got removed ' the dying declaration and statements under section 164, Cr.
P.C. which 607 had presumably been destroyed.
According to the respondent 's suggestion it was the accused who was interested in the disappearance of the original dying declaration from the record.
In this connection we may point out that on October ' 27, 1968 Shri Mewa Singh, Magistrate, had lodged a report with the police under sections 379/400/201, I.P.C., alleging theft of the F.I.R., the, dying declaration and statements Of witnesses recorded under s.164 Cr.
P.C. in the case State vs Tapinder Singh.
For the disposal of this appeal it is unnecessary for us to express any opinion as to who is responsible for the disappearance of the dying declaration.
That question was the subject matter of a criminal proceeding and we have not been informed about its fate.
The dying declaration is a statement by a person as to the cause of his death or as to any of the circumstances of the transaction which resulted in his death and it becomes relevant under. section 32(1) of the Indian Evidence Act in a case in which the cause of that person 's death comes into question.
It is true that a dying declaration is not a deposition in court and it is neither made on oath nor in the presence of the accused.
It is, therefore, not tested by cross examination on behalf of the accused.
But a dying declaration is admitted in evidence by way of an exception to the general rule against the admissibility of hearsay evidence, on the principle of necessity.
The weak points of a dying declaration just mentioned merely serve to put the court on its guard while testing its reliability, by imposing on it an obligation to closely scrutinise all the relevant attendant circumstances.
This Court in Kushal Rao vs The State of Bombay( ') laid down the test of reliability of a dying declaration as follows : "On a review of the relevant provisions of the Evidence Act and of the decided cases in the different High Courts in India and in this Court, we have come to the conclusion, in agreement with the opinion of the Full Bench of the Madras High Court, aforesaid, (1) that it cannot be laid down as an absolute rule of law that a dying declaration cannot form the sole basis of conviction unless it is corroborated; (2) that each case must be determined on its own facts keeping in view the circumstances in which the dying declaration was made; (3) that it cannot be laid down as a general proposition that a dying declaration is a weaker kind of evidence than other pieces of evidence; (4) that a dying declaration stands on the same footing as another piece of evidence and has to be judged in the light of surrounding circumstances and with reference to the principles governing the weighing of evidence .
(5) that a dying (1) at pp.
568 569. 608 declaration which has been recorded by a competent magistrate in the proper manner, that is to say, in the form of questions and answers, and, as far as practicable, in the words of the maker of the declaration, stands on a much higher footing than a dying declara tion which depends upon oral testimony which may suffer from all the infirmities of human memory and human character, and (6) that in order to test the reliability of a dying declaration, the Court has to keep in view the circumstances like the opportunity of the dying man for observation, for example, whether there was sufficient light if the crime was committed at night; whether the capacity of the man to remember the 'facts stated had not been impaired at the time he was making the statement, by Circumstances beyond his control; that the statement has been consistent throughout if he had several opportunities of making a dying declaration apart from the official record of it; and that the statement had been made at the earliest opportunity and was not the result of tutoring by interested parties.
Hence in order to pass the test of reliability, a dying declaration has to be subjected to a very close scrutiny, keeping in view the fact that the statement has been made in the absence of the accused who had no opportunity of testing the veracity of the statement by cross examination.
But once the court has come to the conclusion that the dying declaration was the truthful version as to the circumstances of the death and the assailants of the victim, there is no question of further corroboration.
If, on the other hand, the court, after examining the dying declaration in all its aspects, and testing its veracity, has come to the conclusion that it is not reliable by itself and that it suffers from an infirmity, then, without corroboration it cannot form the basis of a conviction.
Thus, the necessity for corrobo ration arises not from any inherent weakness of a dying declaration as a piece of evidence, as held in some of the.
reported cases, but from the fact that the court, in a given case, has come to the conclusion that that parti cular dying declaration was not free from the infirmities referred to above or from such other infirmities as may be disclosed in evidence in that case.
" This view was approved by a Bench of five Judges in Harbans Singh vs State of Punjab.
( ') Examining the evidence in this (1) [1962] Supp. 1 S.C.R. 104.
609 case in the light of the legal position as settled by this Court we find that the dying declaration was recorded by the Magistrate within four hours of the occurrence.
It is clear and concise and sounds convincing.
It records : "Today at 4.45 p.m. my Sandhu (wife 's sister 's husband) Tapinder Singh fired shots with his pistol at me in the, presence of Harnek Singh, Sher Singh and Gurdial Singh at the taxi stand.
He suspected that I had illicit relations with his wife.
Tapinder Singh injured me with these fire shots.
" Considering the nature and the number of injuries suffered by the deceased and the natural anxiety of his father and others present at the spot to focus.
their attention on efforts to save his life we are unable to hold that he had within the short span of time between the occurrence and the making of the dying declaration been tutored to falsely name the, appellant as his assailant in place of the real culprit and also to concoct a non existent motive for the crime.
It is unnecessary for us to refer to the earlier declarations contained in exhibit PM, exhibit DC and exhibit PH/ 13 because the one recorded and proved by the Magistrate seems to us to be acceptable and free from infirmity.
If the dying decla ration is acceptable as truthful then even in the absence of other corroborative evidence it would be open to the court to act upon the dying declaration and convict the appellant stated therein to be the offender.
An accusation in a dying declaration comes from the victim himself and if it is worthy of acceptance then in view of its source the court can safely act upon it.
In this case, however, we have also the evidence of eye witnesses Gurdial Singh, (P.W. 7), Hamek Singh (P.W. 8) and Sher Singh (P. W. 9) whose testimony appears to us to be trustworthy and unshaken.
No convincing reason has been urged on behalf of the appellant why these three witnesses and particularly the father of the deceased should falsely implicate the appellant substituting him for the real assailant.
It is not a case in which, along with the real culprit, someone else, with whom the complainant has some scores to settle, has been added as a co accused.
The only argument advanced on behalf of the appellant was that the deceased was shot at somewhere else and not at the place where the prosecution witnesses allege he was shot at.
It was emphasised that these three witnesses were not present at the _place and time where the occurrence actually took place.
This submission is, in our view, wholly unfounded,and there is absolutely no material in support of it on the existing record.
The probabilites are clearly against it.
The fact that Hari Singh, A.S.I. (P.W. 2) went to the place of occurrence and from there he learnt from someone, 13Sup.
Cl/70 10 610 that the injured person bad been taken to Dayanand Hospital clearly negatives the appellant 's suggestion.
The fact that the A.S.I. did not remember the name of the person who gave this information would not detract from its truth.
On the contrary it appears to us to be perfectly natural for the A.S.I. in those circumstances not to attach much importance to the person who gave him this information.
And then, the short duration within which the injured person reached the hospital also shows that those who carried him to the hospital were closeby at the time of the occurrence and the suggestion that Gurdial Singh (P.W. 7), Hamek Singh (P.W. 8) and Sher Singh (P.W. 9) must have been informed by someone after the occurrence does not seem to us to fit in with the rest of the picture.
We are, therefore, unable to accept the appellant 's suggestion that the deceased was shot at somewhere else away from the place of the occurrence as deposed by the eye witnesses.
Some minor points were also sought to be raised by Mr. Nuruddin.
He said that the pair of shoes belonging to the deceased were left at the spot but they have not been traced.
The takhat posh on which the deceased was sitting has also not been proved to bear the marks, of blood nor a* the blood marks proved ,on the seats of the car in which the deceased was taken to the hospital.
The counsel also tried to make a point out of the omission by the prosecution to ' prove blood stains on the clothes of Gurdial Singh (P.W. 7) and Harmek Singh (P.W. 8) who had carried Kulwant Singh from the place of the occurrence to the hospital.
Omission to produce a. ballistic expert was also adversely criticised.
These, according to the counsel, are serious infirmities and these omissions militate against the prosecution story.
In our opinion, the criticism of the counsel assuming it to be legitimate, which we do not hold, relates to matters which are both insignificant and immaterial on the facts and circumstances of this case.
They do not in any way affect the truth of the main ,elements of the prosecution story.
On appeal under article 136 of the Constitution we do not think it is open to this Court to allow such minor points to be raised for the purpose of showing ,defects in appraisal of the evidence by the High Court and for ,evaluating the evidence for ourselves so as to arrive at conclusions different from those of the High Court.
The eye witnesses having been believed, these points lose all importance and cannot be pressed in this Court.
Considerable stress was laid on behalf of the appellant on the submission that according to the folder exhibit DC one Trilochan Singh was present in the hospital as a friend or relation of the injured person.
From this it was sought to be inferred that Gurdial Singh, father of Kulwant Singh, had not accompanied his 611 son to the hospital and that this would show that the eye witnesses are not telling the truth.
The argument seems to us to be without any basis and is misconceived.
In the first instance the name of Trilochan Singh on the folder has not been proved.
It is the contents of exhibit DC which have been proved by Dr. E. Pothan (P.W. I at the trial) who had appeared as P.W. 10 in the court of the Committing Magistrate.
Secondly in this document, as we have verified from the original record Gurdial Singh is actually mentioned as the father of the injured person.
We are, therefore, not impressed by the submission that Ex ' DC goes against the testimony of the eye witnesses.
Incidentally, exhibit DC also contains the precise information which was the subject matter of the dying declaration.
It appears that in order to discredit exhibit DC with respect to the information about the appellant being the assailant, the name of one Trilochan Singh (whose identity still remains unknown) was somehow made to appear on the folder but as it has not been legally proved and not referred to by any witness we need say nothing more about it.
This argument thus also fails.
The submission that the medical evidence contradicts the version given by eye witnesess also remains unsubstantiated on the record.
As a last resort it was contended that if the motive alleged by the prosecution is accepted then the sentence imposed would appear to be excessive.
In our view, the manner in which the five shots were fired at the deceased clearly shows that the offence committed was deliberate and pre planned.
We are unable to find any cogent ground for interference with the sentence.
The appeal accordingly fails and is dismissed.
G.C. Appeal dismissed.
| IN-Abs | The appellant was tried for murder, on the allegation that he caused the death of B by firing five shots at him from his pistol.
The testimony against him consisted of a dying declaration made by B, the statements of three eyewitnesses and some circumstantial evidence.
The trial court convicted the appellant and sentenced him to death.
The conviction and sentence were affirmed by the High Court.
In appeal by special leave before this Court the appellant contended : (i) that the information relating to the occurrence given to the police by telephone regarding which, an entry was made in the daily dairy must be treated as the first information report; (ii) that the dying declaration of deceased was inadmissible because it was hit by section 162 of the code of Criminal Procedure; (iii) that the dying declaration was unreliable; (iv) that the evidence in the case was not sufficient to justify the conviction of the appellant; (v) that, among other omissions, the non examination of the ballistic expert created a lacuna in the prosecution case; and (vi) that in view of the alleged, motive the appellant 's suspicion that the deceased had illicit relations with his wife the sentence should be reduced.
HELD : (i) The telephonic message recorded in the daily diary of the police station was a cryptic and anonymous oral message which did not in terms clearly specify a cognizable offence and could not, therefore, be treated as first information report.
The mere fact that this information was the first in point of time could not by itself clothe it with the character of first information report.
The question whether or not a particular document constitutes a first information report, has to be determined on the relevant facts and circumstances of each case.
[605 B C] (ii)Section 162 Criminal Procedure Code in express terms excludes from its purview statements 'falling within the provisions of section 32(1) of the Indian Evidence Act.
indisputably, the dying declaration in the present case fell within section 3(1) of the Indian Evidence Act and as such it was both relevant and outside the prohibition contained in s.162(1) Cr. P. C. [605 D E] (iii)(a) In view of the evidence of the Judicial Magistrate who recorded the dying declaration the mere fact that the original dying declaration had been stolen from the file, could not destroy its value.
Nor could the fact that the investigating officer was allowed to make a copy 6 00 of the dying declaration be interpreted to mean that the Magistrate was subservient to the police.
A dying declaration is not a confidential document and can legitimately serve as a guide in further investigation.
[606 D G] (b) A dying declaration is not a deposition in Courtand it is neither made on oath nor in the presence of the accused.
Itis therefore not tested in cross examination on behalf of the accused.
But a dying declaration is admitted in evidence by way of an exceptionto the general rule against the admissibility of hearsay evidence on the principle of necessity.
The weak points of the dying declaration merely serve to put the court on its guard while testing its reliability by imposing on it an obligation to closely scrutinise all attendant circumstances.
So scrutinised.
the dying declaration in the present case must be accepted as true.
[607 D E] (iv)If the dying declaration is acceptable as true then even in the absence of other corroborative evidence it would be open to the court to act upon the dying declaration and convict the appellant stated therein to be the offender.
An accusation in a dying declaration comes from the victim and if it is accepted then in view of its sources the court can safely act on it.
In the present case not only the dying declaration but the other evidence including that of three eye witnesses justified the conviction of the appellant.
[609 E F] (v)When the eye witnesses have been believed minor points such as non production of the ballistic expert lose all importance.
[610 E F] (vi)In view of the manner in which five shots were fired at the deceased,the murder was deliberate and pre planned and the plea for reductionof the sentence could not be accepted.
[611 E] Sarup Singh vs State of Punjab, A.I.R. 1964 Punjab 508, Brahmin Ishwarlal Manilal vs State of Gujarat, Cr.
A. No. 120/63 dt.
10 8 1965.
Kushal Rao vs State of Bombay, at pp.
568 569 and Harbans Singh vs State of Punjab, [1962] Sup. 1 S.C.R. 104, referred to.
|
iminal Appeal No.30 of 1970.
Appeal by special leave from the judgment and order dated June 19, 1969 of the Judicial Commissioner 's Court, Goa, Daman and Diu in Criminal Revision Application 23 of 1968.
M. C. Chagla, E. C. Agarwala and section R. Agarwal, for the appellant.
V. A. Seyid Muhammad and section P. Nayar, for the respondents.
The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave is from the judgment and order of the Judicial Commissioner, Goa, Daman & Diu, allowing the revision application under section 435 of the Indian Code of Criminal Procedure filed by the State.
The only point involved in this appeal is whether the order passed by the Lt. Governor dated November 6, 1963, was invalid.
This order reads as under : "ORDER GAD 74 63 25007 In exercise of the powers conferred by the Goa, Daman and Diu (Administration) Removal of Difficulties Order, 1962 and notwithstanding anything to the contrary contained in any law for the time being in force in this Territory, the Lieutenant Governor makes the following order : All criminal proceedings in relation to offenses committed prior to the date of coming into force of the Criminal Procedure Code shall be carried on under the law in force in the Territory before that date.
By order and in the name of the Lieutenant Governor of Goa, Daman and Diu." Before dealing with the question of the validity of this order it is necessary to give a few facts.
On December 20, 1961, Goa, Daman and Diu became part of the territory of India.
The residence of the appellant was raided on June 25, 1963, and 72 bars of gold were seized.
On November 1, 1963, the Goa, Daman and Diu (Laws) Regulation, 1962 (Regulation No. XII of 1962) hereinafter referred to as the Regulation was promulgated by the President and published in the Gazette on November 22, 1962.
The effect of section 3 of the Regulation, read with the Schedule, was inter alia to extend the provisions of the Code of Criminal Procedure, 1898, to Goa, Daman and Diu. 716 Section 3 (2) of the Regulation enabled the Lt. Governor to fix the date of coming into force of the Act in Goa, Daman and Diu.
It appears that by notification dated September 24, 1963, the date of the coming into force of the Indian Penal Code and the Code of Criminal Procedure was changed from October 1, 1963, to November 1, 1963.
Accordingly, it is the latter date on which the Code of Criminal Procedure came into force in Goa, Daman and Diu.
Section 7 of the Regulation provides: "Until the relevant provisions of the Code of Criminal Procedure, 1898, are brought into force in Goa, Daman and Diu, all offenses under any Act shall be investigated, inquired into, tried and otherwise dealt with according to the provisions of the corresponding law in force in Goa, Daman and Diu." The effect of section 7, as is clear from the section, was that offenses committed prior to the coming into force of the Criminal Procedure Code were to be investigated, inquired into, etc., under the provisions of the corresponding law in force in Goa, Daman and Diu.
Section 8 of the Regulation provides "If any difficulty arises in giving effect in Goa, Daman and Diu, to the provisions of any Act extended by this Regulation to that Union territory, the Central Government may, by order in the Official Gazette, make such provisions or give such directions as appear to it to be necessary for the removal of the difficulty.
" it appears that some difficulties were experienced by the Lt. Governor and he purported to pass the impugned order which we have set out above.
It will be noticed that the impugned order does not refer to section 8 of the Regulation but refers instead, to Goa, Daman and Diu (Administration) Removal of Difficulties Order, 1962.
We have seen this Order and it is common ground that this Order did not enable the Lt. Governor to pass the impugned order.
On April 20, 1966, a complaint was filed against the appel lant in the Court of Judicial Magistrate 1st Class, Margao, under the Defence of India Rules.
The prosecution was challenged on various grounds but these grounds failed before the Judicial Magistrate.
The order of the Judicial Magistrate is not on the record.
A revision was filed to the Sessions Judge, who first discussed the question of jurisdiction.
He held that by virtue of 717 the impugned order the procedure to be followed in the case is one laid down by the Portuguese Criminal Procedure Code and not by the (Indian) Code of Criminal Procedure, 1898.
On a revision filed by the State, the learned Judicial Com missioner came to the conclusion that the impugned order was ultra vires.
He agreed with the Government pleader that the impugned order was not in conformity with the 19612 Order [Goa, Daman and Diu (Administration) Removal of Difficulties Order] passed by the Central Government.
It is common ground that if a power subsists and the Lt.
Governor call justify the impugned order under any law, the appellant is not debarred from relying on that law.
It seems to us that section 8 of the Regulation clearly authorised the Lt. Governor to pass the impugned order.
The learned counsel for the State says that the word "diffi culty" in section 8 of the Regulation has to be interpreted in a very narrow sense and in this connection relies on the following observations of Hidayatullah, I., as he then was, in Jalan Trading Co. (Private) Ltd. vs Mill Mazdoor Union( '): "The order, of course, would be passed within the four comers of the parliamentary legislation and would only apply the Act to concrete cases as the courts do when they consider the application of an Act.
" He says that there was no concrete case arising in this case and, therefore, the impugned order cannot be justified by reference to section 8 of the Regulation.
But Hidayatullah, J., was in minority and Shah, J., speaking for the majority, proceeded on the basis that the section under consideration authorised the Government to determine for itself what the purposes of the Act were and to make provisions for removal of doubts or difficulties.
Shah, J., did not give any limited, meaning to the word "difficulty" in that case.
We may mention here that neither the appellant nor the res pondent has urged before us that section 8 of the Regulation itself is invalid.
It seems to us that difficulty was bound to arise in giving effect to the Code of Criminal Procedure because, this Code contemplates investigation and trial under the Code.
If investigations had been done under the Portuguese Criminal Procedure Code, unless there was some clear provision to deem that investigation as investigation under the Code of Criminal Procedure, fresh (1) ; ,59. 718 investigations under the Code of Criminal Procedure would have to be undertaken.
Be that as it may, whatever the difficulties which impelled the Lt. Governor to act, he was competent to make provisions to remove the difficulties.
We may mention that although section 8 of the Regulation enables the Central Government to remove the difficulty, by reading the definition of the "Central Government ' in the General Clauses Act, the Administrator of Goa, Daman and Diu is en titled to exercise the powers of the Central Government, and the Lt. Governor is the Administrator of Goa, Daman and Diu.
We are accordingly of the opinion that the impugned order is valid and the prosecution must be conducted in accordance with its provisions.
in the result the appeal is allowed, the judgment and order of the Judicial Commissioner set aside and that of the learned Sessions Judge restored.
V.P.S. Appeal allowed.
| IN-Abs | Under section 3(2) of the Goa, Daman and Diu (Laws) Regulation, 1962.
November 1, 1963, was the date fixed for coming into force of the Indian Po" Code and the Indian Code of Criminal Procedure in Goa, Daman and Diu.
Under section 8 of the Regulation if any difficulty arises in giving effect in Goa, Daman and Diu, to any Act extended to that territory the Central Government may make provision for the removal of the difficulty.
As some difficulties were experienced regarding the law relating to criminal procedure the Lt. Governor, on November 6.
passed an Order, not under section 8 of the Regulation, but in Purported exercise of the powers conferred by the Goa, Daman and Diu (Administration) Removal of Difficulties Order, 1962, to the effect that all criminal proceedings in relation to offenses committed prior to the date of coming into force of the Indian Criminal Procedure Code shall be carried on under the law in force in the territory before that date.
On June 25, 1963, some bars of gold were seized from the residence of the appellant and a complaint was filed against him, in 1966.
On the question of the procedure to be followed, the Judicial Commissioner, in revision, held that the Order of November 6, 1963 was ultra vires the Goa, Daman and Diu (Administration) Removal of Difficulties Order, 1962, and held that the procedure laid down in the Indian Criminal Procedure Code should be followed.
in appeal this Court, HELD:(1) 'Me Goa, Daman and Diu (Administration) Removal of Difficulties Order, 1962, does not enable the Lt. Governor to Pass the Order dated November 6, 1963.
But section 8 of the 1962 Regulation autborised him to pass the Order.
If the power subsists, and the Lt. Governor could justify the order under any law, the parties are not debarred from relying on it.
[717 B D] (2) Section 8 of the Regulation authorises the Government to make provision for removal of difficulties.
The word 'difficulty ' is not to be construed in the narrow sense of a difficulty with respect to a concrete case.
[1717 F] Majority opinion in Jalan Trading Co. (P) Ltd. vs Mill Afazdoor Union, ; , 59, followed.
(3) Under the definition of 'Central Government ' in the General clause% Act, the Lt. Governor, as the Administrator of Goa, Daman and Diu is entitled to exercise the powers of the Central Government, [178 B C] 715 (4) Therefore, the procedure to be followed in the present case is the one laid down by the Portuguese Criminal Procedure Code and not by the Indian Code of Criminal Procedure.
[718 C]
|
Appeals Nos. 2483 and 2484 of 1969.
Appeals by special leave from the judgment and order dated April 11, 1969 of the Allahabad High Court in Sales Tax References Nos.
580 and 581 of 1966.
J. P. Goyal and Sobhagmal Jain, for the appellants (in both the appeals).
C. B. Agarwala and 0.
P. Rana, for the respondent (in both the appeals).
The Judgment of the, Court was delivered by Shah, J. The appellants who are dealers in food grains supplied to the Regional Food Controller diverse quantities of wheat in compliance with the provisions of the U.P. Wheat Procurement (Levy) Order, 1959.
The Sales Tax Officer levied tax under the U.P. Sales Tax Act on the aggregate of the price of wheat by the appellants, rejecting the contention raised,by the appellants that the wheat supplied was not sold by them to the Controller.
In appeal the Assistant Commissioner (Judicial) Sales Tax held that the turnover resulting from supplies of wheat was not taxable since there was no "sale" within the meaning of the U.P. Sales Tax Act, 1948.
The order was confirmed by the Additional Judge (Revisions) Sales Tax.
The Additional Judge (Revisions) Sales Tax referred the following questions to the High Court of Allahabad for opinion (1) Whether the sales made to the Regional Food Controller under the U.P. Wheat Procurement (Levy) Order, 1959, are sales within the meaning of "sale" under section 2(h) of the U.P. Sales Tax Act ? (2) Whether in the circumstances of the case, the assesses are liable to pay sales tax on the sales made to the Regional Food Controller under the provisions of the U.P. Wheat Procurement (Levy) Order, 1959 ?" The questions raised were defective in form.
The word "sales" when it first occurs in Question No. (1 ) should be "supplies".
The expression "sales made" in Question No. (2) should be "on the price for wheat supplied".
We modify the questions accordingly.
The High Court of Allahabad, following their earlier judgment in Commissioner of Sales Tax,, U.P. Lucknow vs ) an Bilas 673 Ram Gopal(1) answered the two questions in the affirmative.
The appellants have appealed to this Court with special leave.
The expression "sale" is defined in section 2(h) of the U.P. Sales Tax Act, 1948 as meaning any transfer of property in goods for cash, deferred payment or other valuable consideration, but not including a mortgage, hypothecation, charge or pledge.
Power of the Provincial Legislature by virtue of Entry 48 List 11 of the Government of India Act, 1935, was restricted.
The, Legislature was competent to legislate for levy of tax only on transactions which were "sales" within the meaning of the Indian : State of Madras vs Gannon Dunkerley and Co. (Madras) Ltd.( ') M/s. New India Sugar Mills Ltd. vs Commissioner of Sales Tax, Bihar( ').
It was observed in M/s. New India Sugar Mills ' case( ') : "In popular parlance 'sale ' means transfer of property from one person to another in consideration of price paid or promised or other valuable consideration.
But that is not the meaning of 'sale ' in the .
Section 4 of the provides by its first sub section that a contract of sale of goods is a contract where the seller agrees to transfer the property in goods to the buyer for a price.
"Price" by cl.
(10) of section 2 means the money consideration for sale of goods, ,and "where under a contract of sale property in the goods is transferred from the seller to the buyer, the contract is called a sale, but where the transfer of the 'property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled, the contract is called an agreement to sell" [sub section (3) section 4].
It is manifest that under the a transaction is called sale only where for money consideration property in goods is transferred under a contract of sale.
Section 4 of the was borrowed almost verbatim from section I of the English 56 & 57 Vict.
c. 71.
As observed by Benjamin in the 8th Edn. of his work on 'Sale ', "to constitute a valid sale there must be a concurrence of the following elements viz. (1) parties competent to contract; (2) mutual assent; (3) a thing, the absolute or general property in which is transferred from the seller to the buyer; and (4) a price in money paid or promised".
It was also observed that the expression "sale of goods" in the Constitution must be understood in the same sense in which it is (1) (1969) All L.J. 424.
(2) ; (3) [1963] Suppl.
2 S.C.R. 459.
13Sup.
C 1/70 14 674 used in the .
The U.P. Legislature could therefore legislate for levy of sales tax on a transaction which amounted to a sale within the meaning of the , and not on any other transaction which was deemed by fiction to be a sale.
It is necessary then to determine whether the stocks of wheat supplied by the appellants in compliance with the provisions of the U.P. Wheat Procurement (Levy) Order, 1959 to the Regional Food Controller were sold to that Officer within the meaning of the definition of the word 'sale ' in section 2(h) of the U.P. Sales Tax Act, 1948.
The relevant provisions of the U.P. Wheat Procurement (Levy) Order, 1959, may first be read.
The preamble to the Order states : "Whereas the State Government is of the opinion that it is necessary and expedient so to do for maintaining the supplies of wheat and for securing its equitable distribution and availability at fair prices Now, THEREFORE, in exercise of the powers conferred by clauses (e), (f), (h), (i) and (j) of sub section (2) of section 3 of the (10 of 1955), the Governor of the State of Uttar Pradesh is pleased to make the following order Clause 3 provides "(1) Every Licensed dealer shall sell to the State Government at the controlled prices (a) Fifty (50%) per cent if wheat held in.
stock by him at the commencement of this Order; and (b) Fifty (50%) per cent of wheat procured or purchased by him every day beginning with the date of commencement of this Order and until such time as the State Government otherwise directs.
(2) The wheat required to be sold to the State Government under sub clause (1) shall be delivered by the licensed dealer to the Controller or to such other person as may be authorised by the Controller to take delivery on his behalf.
" Clause 4 confers powers of entry, search, seizure upon Enforcement Officers : insofar as it is material it provides "(1) Any Enforcement Officer may, with a view to securing compliance with this Order or to satisfying himself that this order has been complied with 675 (i) enter with such assistance as may be necessary any premises where he has reason to believe that wheat is procured, purchased or stocked , (ii)ask of any person all necessary questions; (iii) examine any books or documents; (iv) search any premises, vehicles, 'vessels and aircraft and seize wheat in respect of which he has reasons to believe that a contravention of the order has been, is being, or is about to be committed and thereafter take or authorise the taking of all measures necessary for securing the production of stocks so seized in a court and for their sale custody, pending such production.
By cl. 3 of the Order every licensed, dealer is directed to "sell" to the State Government 50% of the wheat held in stock by him on the date of the commencement of the Order at the "controlled prices".
Again out of the stock of wheat procured or purchased by him every day beginning with the date of commencement of the Order he is directed to "sell" 50% of that stock.
The Order enjoins the licensed dealer to deliver the quantities specified in subcl.
(1) of cl. 3 either to the Controller or to such other person as may be authorised by the Controller to take delivery on his behalf.
To ensure that the licensed dealer carries out his obligation the Enforcement Officers may enter any premises where they have reason to believe that wheat is procured, purchased or stocked, and may make necessary enquiries, examine any books or documents and search any premises, vehicles, vessels and aircraft and seize wheat in respect of which they have reason to believe that a contravention of the Order has been, is being, or is about to be, committed.
Obligation to deliver wheat of the quantity specified arises out of the statute.
The Order takes no account of the volition of the licensed dealers and until the State Government directs otherwise, of the Controller or the authorised officer.
The Order imposes an obligation upon the licensed dealer who is defined in cl. 2(d) as meaning a person holding a valid licence under the U.P. Food grains Dealers Licensing Order, 1959, to deliver the quantities of wheat specified in the Order.
The State Government is directed by the Order to pay for the wheat supplied at the controlled rate.
The source of the obligations to deliver the specified quantities of wheat and to pay for them is not in any contract, but in the statutory order.
In our judgment cl.
3 sets up a machinery for compul 676 sory, acquisition by the State Government of stocks of wheat belonging to the licensed dealers.
The Order, it is true, makes no provision in respect of the place and manner of supply of wheat and payment of the controlled price.
It contains a bald injunction to supply wheat of the specified quantity day after day, and enacts that in default of compliance the dealer is liable to be punished; it does not envisage any consensual arrangement.
It does not require the State Government to enter into even an informal con tract.
A sale predicates a contract of sale of goods between persons competent to contract for a price paid or promised : a transaction in which an obligation to supply goods is imposed, and which does not involve an obligation to enter into a contract, cannot be called a 'sale ', even if the person supplying goods is declared entitled to the value of goods, which is determined or determinable in the manner prescribed.
Assuming that between the licensed dealer and the Controller, there may be some arrangements about the place and manner of delivery of wheat, and the payment of " controlled price", the operation of cl. 3 does not on that account become contractual.
The High Court relied upon the following observations in Ram Bilas Ram Gopal 's case( ') "Analysing clause 3 of the Levy Order it is clear that a licensed dealer is obliged to sell to the State Government fifty, per cent of the wheat held in stock by him at the commencement of the Order, and thereafter fifty per cent of the wheat daily procured or purchased by him beginning with the date of commencement of the Order until such time as the State Government otherwise directs.
The price at which the wheat is sold is the maxi mum price fixed in the Wheat (Uttar Pradesh) Price Control Order, 1959 as notified by the Government of India.
Delivery of the wheat has to be given by the dealer to the Regional Food Controller or a person authorised by him in that behalf.
The dealer has no option but to sell the specified percentage of wheat to the State Government.
The State Government has also no option but to purchase fifty per cent of the wheat held in stock by the dealer at the commencement of the Levy Order.
As regards the wheat procured or purchased daily by the dealer thereafter, it is open to the State Government to say that from any particular date it will not purchase any or all of the specified percentage of wheat.
Therefore, as regards that wheat the Levy Order leaves it open to one of the parties, namely the State Government to decide when it will stop purchasing wheat from the dealer.
That in substance is clause 3 of (1961) All.
L.J. 424 677 the Levy Order and it embodies the total sum of obligations imposed on the dealer and the State Government.
All other details of the transaction are left open to negotiation.
It leaves it open to the parties to negotiate in respect of the time and the mode of payment of the price, the time and mode of delivery of wheat, and other conditions of the contract.
" Clause 3 of the Order compels the licensed dealer to deliver to the Controller or his authorised agent every day 50% of the wheat procured or purchased by him.
There is no scope for negotiations there.
Assuming that the Controller may designate the place of delivery and the place of payment of price at the controlled rate, and the licensed dealer acquiesces therein, or even when in respect of those two matters there is some consensual arrangement, in our judgment, supply of wheat pursuant to cl. 3 of the Order and acceptance thereof do not result in a contract of sale.
The High Court observed that ". .whatever compulsive or coercive force is used to bring about a transaction under clause 3 of the Levy Order, it must be traced to legislation.
It cannot be attributed to the State Government as a party to the transaction.
This, then, is clear.
There is nothing in the Levy Order which can be accused of vitiating the free consent of the parties as defined under Sec.
14 of the Indian Contract Act, when entering into the contract of sale.
" But these observations assume a contract of sale which the Order does not contemplate.
If there be a contract, the restrictions imposed by statute may not vitiate the consent.
But the contract cannot be assumed.
We may refer to certain decisions of this Court on which reliance was placed at the Bar.
In M/s. New India Sugar Mills ' case( ') under the Sugar and Sugar Products Control Order, 1946, a scheme was devised for equitable distribution of sugar.
The consuming States intimated to the Sugar Controller of India their requirements of sugar and the factory owners sent statements of stocks of sugar held by them.
The Controller made allotments to various States and addressed orders to the factory owners directing them to supply sugar to the States in question in accordance with the despatch instructions from the State Governments.
Under the allotment orders, M/s. New India Sugar Mills Ltd., in Bihar despatched stocks of sugar to the State of Madras.
The State of Bihar treated the transaction as a sale and levied tax thereon under the (1) [1963] Supp. 2 S.C.R. 459.
678 Bihar Sales Tax Act, 1947.
The tax payer contended that the supplies of sugar; pursuant to the directions of the Controller, did not result in sales, and that no tax was exigible on such transactions.
A majority of the Court observed that despatches of sugar pursuant to the directions of the Controller were not made in pursuance of any contract of sale.
There was no offer by the tax payer to the State of Madras, and no acceptance by the latter; the tax payer was under the Control Order compelled to carry out the directions of the Controller and it had no volition in the matter.
Intimation by the State of its requirements of sugar to the controller or communication of the allotment order to the assessee did not amount to an offer.
Nor did the mere compliance with despatch instructions issued by the Controller, which the assessee had not the option to refuse to comply with, amount to acceptance of an offer Or to making of an offer.
A contract of sale of goods postulates a voluntary arrangement regarding goods between the contracting parties.
It was held that in the case before the Court there was no such voluntary arrangement.
In two later decisions of this Court the true character of transactions in which supplies of commodities were made pursuant to Control Orders was examined.
In Indian Steel & Wire Products Ltd. vs State of Madras( ') the tax payer supplied certain steel products to various persons in the State of Madras pursuant to the directions given by the Steel Controller exercising powers under the Iron and Steel (Control of Production and Distribution) Order, 1941.
The authorities of the State of Madras assessed the turnover of the tax payer resulting from those transactions to sales tax under the Madras General Sales Tax Act.
The tax payer contended that the transactions of supply did not result in sales and were on that account not exposed to sales tax, because steel products were supplied pursuant to the directions of the Iron and Steel Controller made under cl.
10B of the Order there being no mutual assent between the parties to the transaction.
This Court held that the supplies were made pursuant to the directions issued under cl. 5 of the Order and not pursuant to the directions issued under cl.
10B of the Order.
It was observed that the Orders were in respect of goods not yet manufactured, whereas under cl.
10B directions could be given only in respect of goods already in stock, and since cl. 5 did not require the Controller to regulate or control every facet of a transaction between a producer and the person to whom the taxpayer supplied iron and steel products the transactions were consensual.
Clause 5 of the Order read as follows "No producer or stock holder shall dispose of or agree to dispose of or export or agree to export from British India any iron or steel, except in accordance with (1) ; 679 the conditions contained or incorporated in a general or special written order of the Controller.
" Clause 10B provided "The Controller may, by a written order require any person holding stock of iron and steel, acquired by him otherwise than in accordance with the provisions of clause 4 to sell the whole or any part of the stock to such person or class of persons and on such terms and conditions as may be specified in the Order." Comparing the terms of cl. 5 with the terms of cl. 10, the Court observed that liberty of contract in large measure was reserved to the producer or stockholder and to the purchaser in the matter of disposal of iron & steel.
The obligation imposed by cl. 5 was, it was said, not to dispose of or agree to dispose of or export or agree to export any iron or steel except in accordance with the conditions contained or incorporated in the order of the Controller and that since there was liberty of contract between the parties but subject to restrictions, the transaction could be regarded as a sale.
It was observed at p. 489 : "But under clause 5 he can authorise a producer or a stockholder to dispose of any iron or steel whether the same is in stock or not in accordance with the conditions contained or incorporated in a sp ecial or general written order issued by him.
In the instant case, as can be gathered from the correspondence already referred to, the order issued by the Controller could be complied with only after manufacturing the required material.
Hence, the order issued by the Controller could not have been issued under clause 10B." The Court then observed : ". . the area within which there can be bargaining between a prospective buyer and PA intending seller of steel products, is greatly reduced.
Both of them have to conform to the requirements of the order and to comply with the terms and conditions contained in the order of the Controller.
Therefore they could negotiate only in respect of matters not controlled by the order or prescribed by the Controller.
" The Court also observed : "It would be incorrect to contend that because law imposes some restrictions on freedom to contract, there is no contract at all.
So long as mutual assent is not completely excluded in any dealing, in law it is a con tract.
On the facts of this case for the reasons already 680 mentioned, it is not possible to accept the contention of the learned counsel for the appellant that nothing was left to be decided by mutual assent.
" The Court in that case distinguished the case in M/s. New India Sugar Mills ' case( ') and expressly reserved their opinion on the question whether supplies of goods pursuant to the directions issued under cl.
10B of the Order may be regarded as sales.
The decision in Indian Steel & Wire Products Ltd. 's case( ') does not justify the view that even if the liberty of contract in relation to the fundamentals of the transaction is completely excluded a transaction of supply of goods pursuant to directions issued under a Con trol Order may be regarded as a sale.
In Andhra Sugars Ltd. & Anr.
vs State of Andhra Pradesh & Ors.(3) again, in the view of the Court liberty of contract between parties to transactions relating to supply of sugarcane was not ruled out.
Under the Andhra Pradesh Sugarcane (Regulation of Supply and Purchase) Act, 1961, the occupier of a sugar factory had to buy sugarcane from cane growers in conformity with the directions of the Cane Commissioner.
Under section 21 of the Act the State Government had power to tax purchases of sugarcane for use, consumption or sale in a sugar factory.
Certain owners of sugar factories contended that "section 21 was invalid." They contended that they were compelled by law to buy cane from the cane growers, and since purchases made by them were not under agreements, the price paid for sugarcane could not be taxed under a statute enacted in exercise of the power in Entry 54 List II of the Seventh Schedule to the Constitution.
This Court held that under Act 45 of 1961 and the rules framed thereunder, the cane grower in the factory zone was free to make or not to make an offer of sale of cane to the occupier of the factory; if the cane grower made an offer, the occupier of the factory was bound to accept it, and the agreement resulting therefrom was recorded in writing and was signed by the parties.
,, The consent of the occupier of the factory was free as defined in section 14 of the Indian Contract Act.
The compulsion of law is it was said not coercion as defined in section 15 of the Act.
The agreements were enforceable by law and were regarded as contracts of sale as defined in section 4 of the Indian .
In a later decision of this Court, State of Rajasthan & Anr.
vs M/s. Karam Chand `happar & Bros. Ltd., (4) the assessee who had acquired monopoly rights to supply coal in Rajasthan and sold coal to the State of Rajasthan.
The Sales Tax Officer sought to (1) [1963] Supp. 2 S.C.R. 459.
(3) ; , (2) ; (4) , 681 tax the turnover from supplies of coal made to the State of Rajasthan.
It was held by this Court that the colliery Control Order super imposed upon the agreement between the parties the rate fixed by the Control Order and by reason of such super imposition of the rate fixed by the Control Order the mutual assent of the parties and the voluntary character of the transactions were not affected.
The decision of this Court ' in M/s. New India Sugar Mills ' case( ') was distinguished on the ground that there was in the case then in hand mutual assent between the parties, to the transaction of supply of coal.
The decision of the House of Lords in Kirkness (Inspector of Taxes) vs John Hudson & Co. Ltd.( ') is instructive.
In that case liability to pay income tax on the difference between the compensation received for requisition of certain wagons by the Minister of Transport was in issue.
A majority of the House held that there was no sale of the wagons and no income tax was payable.
Viscount Simonds observed ". the taxpayers ' wagons were not sold, and it would be a grave misuse of language to say that they were sold.
To say of a man who has had his property taken from him against his will and been awarded compensation in the settlement of which he has had no voice, to say of such a man that he has sold his property appears to me to be as far from the truth as to say of a man who has been deprived of his property without compensation that he has given it away.
Alike in the ordinary use of language and in its legal concept, a sale connotes the mutual assent of two parties.
So far as the ordinary use of language is concerned, it is difficult to avoid being dogmatic but, for my part, I can only echo what Singleton, L.J., said in his admirably clear judgment (1954)1 All E.R. at page 32): "What would any one accustomed to the use of the words 'sale ' or 'sold ' answer ? It seems to me that every one must say 'the taxpayer did not sell '." " On the date of the commencement of the U.P. Wheat Procure ment (Levy) Order, upon the licensed dealer was imposed a liability to deliver half the quantity of wheat on hand, and he had also to supply to the State Government 50% of the quantity of wheat procured or purchased by him every day beginning with the date of commencement of the Order.
If he failed to carry out the obligation he was liable to be penalized.
To ensure that he carried out his obligation his premises were liable to be searched and (1) [1963] Supp. 2 S.C.R. 459.
(2) 682 his property sequestered.
The order ignored the volition of the dealer.
We are unable to hold that there was any contract between the assessee and the State pursuant to which the goods were sold within the meaning of the U.P. Sales Tax Act.
The appeals are allowed.
The order passed by the High Court is set aside.
The answer to the two questions as reframed by us will be in the negative.
The appellants will be entitled to their costs in this Court and in the High Court.
One hearing fee.
Y.P. Appeals allowed.
| IN-Abs | The, assesses who were dealers in food grains supplied to the Regional Food Controller diverse quantities of wheat in compliance with the provisions of the U.P. Wheat Procurement (Levy) Order, 1959.
The Sales tax Officer levied tax under the U.P. Sales tax Act on the aggregate of the price of wheat supplied by the assesses, rejecting the assesses ' contention that the wheat supplied was not sold to the Controller.
In appeal, the Assistant Commissioner (Judicial) Sales Tax held the supply was not taxable since there was no "sale" within the U.P. Sales tax Act.
This order was confirmed by the Additional Judge (Revision) Sales Tax.
On reference, the High Court answered the question against the assesses.
Allowing the assesses ' appeal by special leave, this Court.
HELD : The supply, pursuant to cf. 3 of the U.P. Wheat Procurement (Levy) Order, 1959 and acceptance thereof, does not result in a contract of sale.
Clause 3 of the order sets up a machinery for compulsory acquisition by the State Government of stocks of wheat belonging to the licensed dealers.
The Order contains a bald injunction to supply wheat of the specified quantity day after day, and enacts that in default of compliance the dealer is liable to be punished; it does not envisage any consensual arrangement.
To ensure, that the dealer carries out his obligation his premises are liable to be searched and his property sequestered.
The order does not require the State Government to enter into even an informal contract.
Sale of goods predicates a contract of sale between persons competentto contract for a price paid or promised : a transaction.
in which an obligation to supply goods is imposed, and which does not involve an obligation to enter into a contract, cannot be called a 'sale ', even if the person supplying goods is declared entitled to the value of goods, which is determined or determinable in the manner prescribed.
Assuming that between the licensed dealer and the Controller, there may be some arrangement about the place and manner of delivery of wheat, and the payment of "controlled price," the operation of cl. 3 does not on that account become contractual.
[675 H 676 D] Commissioner of Sales Tax, U.P. Lucknow vs Ram Bilas Ram Gopal, [1969] All.
L.J. 424; State of Madras vs Gannon Dunkerlev and Co.,(Madras) Ltd; [1959]S.C.R. 379 M/s.
New India Sugar Mills Ltd. vs
Commissioner of Sales Tax, Bihar, [1963] Suppl.
2 S.C.R. 459; Indian Steel & Wire Products Ltd., vs State of Madras, ; ;Andhra Sugars Ltd. &Anr.
vs State of Andhra Pradesh & Ors.
; ; State ofRajasthan & Anr.
vs M/s. Karan Chand Thappar & Bros. Ltd. [1969] IS.C.R. 861, Kirkness (inspector of Taxes) vs john Hudson & Co. Ltd., [1955] A.C. 696 referred to. 672
|
ns Nos. 182 of 1969 and 42 to 45 of 1968.
Petition under article 32 of the Constitution of India for enforcement of the fundamental rights.
D. M. Parulekar and A. G. Ratnaparkhi, for the petitioners (in W.P. No. 182 of 1969).
section section Shukla, for the petitioners (in W.P. No. 42 to 45 of 1968.
section T. Desai, G. L. Sanghi, B. D. Sharma for section P. Nayar, for respondents Nos. 1 to 3 (in W.P. No. 182 of 1969) and the respondents (in W.P. Nos.
42 to 45 of 1968).
The Judgment of the Court was delivered by Ray, J.
These petitioners raise two principal questions.
First, whether the State of Maharashtra (hereinafter referred to as the State) is competent to enact the Maharashtra Industrial Development Act, + 1961 (hereinafter referred to as the Act): secondly, whether there is procedural discrimination between the Maharashtra Industrial Development Act, 1961 and the Land Acquisition Act, 1894, 721 The contentions of the petitioners are that.
the Act is for the incorporation, regulation and winding up of the Maharashtra Development Corporation (hereinafter referred to as the Corporation) and that the Corporation is a trading one and therefore the impugned legislation falls within Entry 43 of List I of the Seventh Schedule of the Constitution.
On behalf of the State it is said on the other hand that the Act is for the growth and development of industries in the State of Maharashtra and for acquisition of land in that behalf and the Corporation is established for carrying out the purposes of the Act, and, therefore,the legislation is valid.
The true character,scope and intent of the Act is to be ascertained with reference to the purposes and the provisions of the Act.
The Act is one to make a special provision for securing the orderly establishment in industrial areas and industrial estates of industries in the State of Maharashtra, and to assist generally in the Organisation thereof, and for that purpose to establish an Industrial Development Corporation, and for purposes con nected with the matters aforesaid.
The Corporation is established for the purpose of securing and assisting the rapid and orderly establishment and organisation of industries in industrial areas and industrial estates in the State of Maharashtra.
The Corporation consists of 8 members, two of whom are nominated by the.
State Government of whom one shall be the Financial Adviser to the Corporation, one member nominated by the State Electricity Board, one member nominated by the Housing Board and three members nominated by the State Government, from amongst person appearing to Government to be qualified as having had experience of , and having shown capacity in, industry or trade or finance or who are in the opinion of the Government capable of representing the interest of persons engaged or employed therein, and the Chief Executive Officer of the Corporation, who shall be the Secretary of the Corporation.
The functions of the Corporation shall, be generally to promote and assist in the rapid and orderly establishment, growth and development of industries in the State of Maharashtra and to establish and manage industrial estates at places selected by the State Government, develop industrial areas selected by the State Government for the purpose and make them available for undertakings to estab lish themselves, assist financially by loans industries to move their factories into such estates or areas, and to undertake schemes or works, either jointly with other corporate bodies or institutions, or 69Sup.
CI(P)71 2 722 with Government or local authorities, or on agency basis, in furtherance of the purposes for which the Corporation is established and all matters connected therewith.
An industrial area under the Act means any area declared to be an industrial area by the State Government by notification in the Official Gazette which is to be developed and where industries are to be accommodated.
An industrial estate under the Act means any site selected by the State Government, where the Corporation builds factories and other buildings and makes them available for any site selected by the State Government, where the Corporation means the carrying out of building, engineering, quarrying or other operations in, on, over or under land, or the making of any material change in any building or land, and includes redevelopment, but does not include mining operations.
Amenity under the Act includes road, supply of water or electricity, street lighting, drainage, sewerage, conservancy and such other conveniences as the State Government may by notification in the Official Gazette specify to be an amenity for the purposes of the Act.
We have referred to these expressions, industrial area, industrial 'estate, development and amenity in order to appreciate the general powers of the Corporation to discharge the functions of the Corporation in regard to the establishment, growth and development of industries, in the State.
These powers are to acquire and hold property, movable and, immoveable for the performance of any of its activities, and to lease, sell, "change or otherwise trans fer any property held by the Corporation on such conditions as may be deemed proper by the Corporation and also to purchase by agreement or to take on lease or under any form of tenancy any land, to erect such buildings and to "execute such other works as may be necessary for the purpose of carrying out its duties and functions, to provide or cause to be provided amenities and common facilities in industrial estates and industrial areas and construct and maintain or cause to be maintained works and buildings therefore, to make available buildings on hire or sale to industrialists or persons intending to start industrial undertakings, to construct buildings for the housing of the employees of such industries, to allot factory sheds or such buildings or parts of buildings, including residential tenements to suitable persons in the industrial estates established or developed by the Corporation, and to, do such other things and perform such acts as it may think necessary or expedient for the proper conduct of its functions, and the carrying into effect the purposes of this Act.
Broadly stated 'the functions and powers of the Corporation are to develop industrial areas and industrial estates by providing.
amenities of Toad, supply of water or electricity, street,.
lighting, 723 drainage, sewerage, conservancy and other conveniences, secondly to construct works and buildings, factory sheds and thirdly, to make available buildings on hire or sale to industrialists or persons intending to start industrial undertakings and to allot factory sheds, buildings, residential tenements to suitable persons in industrial estates established or developed by the Corporation and to lease, sell, exchange or otherwise transfer any property held by the Corporation on such conditions as may be deemed proper by the Corporation.
The development of industrial areas and industrial estates is intended to serve two objects.
In the first place, there is to be an orderly establishment and growth of industries in the Bombay Poona sector.
The second object is to secure dispersal of industries from the congested areas of the Bombay Poona sector to the under developed parts of the St ate.
The industrial areas are broadly classified into two categories, namely, first, those meant for engineering and other industries which are not obnoxious, and, secondly, those meant for chemical industries.
The establishment and growth of industries in the State is inextricably bound up with availability of land.
Available land in limited.
Such limited supply leads to speculation in land.
Power is therefore required for compulsory acquisition of land to achieve the purposes of the Act.
At the same time, land owners are not to be deprived of the legitimate benefit of reasonable increase in land values in a developing economy.
Development of chemical industries requires long stretches of pipelines to be laid for moving gas and other liquid , chemical products.
The growth of industries in the State by establishment of industrial areas and industrial estates also means laying pipelines for carrying gas, water, electricity and constructing sewerage and drains.
These amenities are essential.
The absence of amenities is envisaged and answered in the Act by empowering the Corporation to provide these essential amenities, facilities and conveniences.
The principal functions of the Corporation in regard to the establishment, growth and development of industries in the are first to establish and manage industrial, estates at selected places and secondly to develop industrial areas selected by the State Government.
When industrial areas are selected the necessity of acquisition of land in those areas is apparent.
The 'Act, therefore, contemplates that the, ate Government may acquire land by publishing a notice specifying the particular purpose for which such land is required.
Before: the publication of the notice the owner of the land is given an opportunity, to show cause as to 724 why the land should not be acquired.
The State after considering the cause shown by the owner the State Government may pass such orders as it deems fit.
When a notice is published for acquisition of land, the land, shall, on and from the date of such publication, vest absolutely in the State, Government free from all en cumbrances.
Where the land has be en acquired for the Corporation or any local authority, the State Government shall, after it has taken possession of the land, transfer the land to the Corporation or that local authority, for the purposes for which the land has been acquired subject to such terms and conditions which the State Government may deem fit to impose.
We have already noticed that for the purpose of the Act, namely, the establishment and development of industries in the State the Corporation will establish industrial estates and develop industrial areas.
Apart from establishing industrial estates and developing industrial areas the Corporation may dispose of any land acquired by the State Government and transferred to the Corporation without undertaking or carrying out any development thereof or transfer such land after undertaking or carrying out any development as it thinks fit.
These powers of the Corporation with respect to the disposal of land are to be exercised so far as practicable, that where the Corporation proposes to dispose of by sale any such land without any development having been undertaken or carried ,out thereon, the Corporation shall offer the land in the first instance to the persons from whom it was acquired if they desire to purchase it subject to such requirements as to its development and use as the Corporation may think fit to impose.
Against, the persons who are residing or carrying on business or other activities on any such land shall, if they desire to obtain accommodation on land belonging to the Corporation and are willing to comply with any requirements of the Corporation as to its development and use, have an opportunity to obtain thereon accommodation suitable to their reasonable requirements on terms settled with due regard to the price at which any such land has been.
acquired 'from them.
The other provisions in the Act are that the State Government may upon such conditions as may be agreed between the State 'Government and the Corporation, place at the disposal of the ,Corporation any land vested in the, State Government.
After any such land has been developed by, or under the control and super vision of, the Corporation, it shall be dealt with by the Corporation in accordance with the regulations made, and directions given by the State Government in this behalf.
Further, if Any land placed at the disposal of the Corporation is required at any time thereafter by the State Government, the Corporation shall replace 725 it at the disposal of the State Government upon such terms and conditions as may be mutually agreed upon.
There are two other important provisions in the Act.
In the first place, the State Government may issue to the Corporation such general or special directions as to policy as it may think necessary or expedient for the purpose of carrying out the purposes of the Act,_ and the Corporation shall be bound to follow and act upon such directions.
These directions will be in the field of ' establishment and management of industrial estates and development of industrial areas and carrying out the other powers of the Corporation in regard to the provision of amenities and common facilities, and assisting industrialists or industrial undertakings in.
obtaining buildings or factory sheds or residential tenements or land for development of industries.
The second important provision is that when the State Government is satisfied that the purposes for which the Corporation is established under the Act have been substantially achieved so as to render the continued existence of the Corporation in the opinion of the State Government unnecessary that Government may by notification in the Official Gazette declare that the Corporation shall be dissolved with effect , from such date as may be specified in the notification and the Corporation shall be deemed to be dissolved 'accordingly.
Upon such dissolution, all properties, funds and dues which are vested ' in or realisable by the Corporation shall vest in or be realised by the State Government and all liabilities enforceable against the Corporation shall be enforceable against the State Government.
It is in the background of the purposes of the Act and powers and functions of the Corporation that the real and true character of the legislation will be determined.
That is the doctrine of finding out the pith and substance of an Act.
In deciding the pith and substance of the legislation, the true test is not to find out whether the Act has encroached upon or invaded any forbidden field but what the pith and substance of the Act is.
It is true intent of the Act which will determine the validity of the Act.
Industries come within Entry 24 of the State List subject to the provision of Entry 7 and Entry 52 of the Union List of the Constitution.
Entry 7 of the Union List relates to industries declared by Parliament by law to necessary for the purpose of defence or for the prosecution of war.
Entry 52 of the Union List relates to industries, the control of which by the Union is declared by Parliament by law to be expedient in the public interest.
The establishment, growth and development of industries in the State of Maharashtra do not fall within Entry 7 and Entry 52 of the Union List.
Establishment, growth and development of industries in the State is within the 726 State List of industries.
Furthermore, to effectuate the purposes of the development of industries in the State it is necessary make land available.
Such land can be made available by acquisition or requisition.
The Act in the present case deals with acquisition of land by the State and on such acquisitions the State may transfer the land to the Corporation which again may develop it itself and establish industrial estates or may develop industrial areas.
Acqui sition or requisition of land falls under Entry 42 of the Concurrent List.
In order to achieve growth of industries it is necessary not ,only to acquire land but also to implement the purposes of the Act.
The Corporation is therefore established for carrying out the purposes of the Act. 'De pith and substance of the Act is establishment, growth and Organisation of industries, acquisition of land in that behalf and carrying out the purposes of the Act by setting up the Corporation as one of the limbs or agencies of the Government.
The powers and functions of the Corporation show in ' no ,uncertain terms that these are all in aid of the principal and predominant purpose of establishment, growth and establishment of ,industries.
The Corporation is established for that purpose.
When the Government is satisfied that the Corporation has substantially achieved the purpose for which the Corporation is established, the Corporation will be dissolved because the raison detre is gone.
We, therefore, hold that the Act is a valid piece of legislation.
The petitioners contended that the Corporation was a trading one.
The reasons given were that the Corporation could sell property, namely, transfer land; that the Corporation had borrowing powers , and that the Corporation was entitled to moneys by way of rents and profits.
Reliance was placed on the report of the Corporation and in particular on the income and expenditure of the Corporation to show that it was making profits.
These features of transfer of land, or borrowing of moneys or receipt of rents and profits will by themselves neither be the indicia nor the decisive attributes of the trading character of the Corporation.
Ordinarily, a Corporation is established by shareholders with their capital.
The shareholders have their Directors for the regulation and management of the Corporation.
Such a Corporation set up by the shareholders, carries on business and is intended for making profits.
When profits are earned by such a Corporation they are distributed to shareholders by way of dividends or kept in reserve funds.
In the present case, these attributes of a trading Corporation are absent.
The Corporation is established by the Art for carrying out the purposes of the Act.
The purposes of the Act are development of industries in the State.
The Corporation consists of nominees of the State Government, State Electricity Board and the Housing Board.
The functions and powers of the Corporation indicate 'that the Corporation is acting as I a wing of the State Government 727 in establishing industrial estates and developing industrial areas, acquiring property for those purposes, constructing buildings, allotting buildings, factory sheds to industrialists or industrial undertakings.
It is obvious that the Corporation will receive moneys for disposal of land, buildings and other properties and also that the Corporation would receive rents and profits in appropriate ,cases.
Receipts of these moneys arise not out of any business or trade but out of the sole purpose of establishment, growth and development of industries.
The Corporation has to provide amenities and facilities in industrial estates and industrial areas.
Amenities of road, electricity, sewerage and other facilities in industrial estates and industrial areas are within the programme of work of the Corporation.
The fund of the Corporation consists of moneys received from the State Government, all fees, costs and charges received by the Corporation, all moneys received by the Corporation from the disposal of lands, buildings and other properties and all moneys received by the Corporation by way of rents and profits or in any other manner The Corporation shall have the authority to spend such sums out of the general funds of the Corporation or from reserve and other funds.
The Corporation is to make provision for reserve and other specially denominated funds as the State Government may direct.
The Corporation accepts deposits from persons, authorities or institutions to whom allotment or sale of land, buildings, or sheds is made or is likely to be made in furtherance of the object of the Act.
A budget is prepared showing the estimated receipts and expenditure.
The accounts of the Corporation are audited by an auditor appointed by the State Government.
These provisions in regard to the finance of the Corporation indicate the real role of the Corporation, viz., the agency of the Government in carrying out the purpose and object of the Act which is the development of industries.
If in the ultimate analysis there is excess of income over expenditure that will not establish the trading character of the Corporation.
There are various departments of the Government which may have excess of income over expenditure.
The Corporation is not a Government company within the meaning of section 617 of the nor can the ' be said to apply to the Corporation because under the provisions contained in section 616 of the that Act will apply to a company governed by any special Act except in so far as the provisions of the are inconsistent with the provisions of such special Act.
The provisions of the Act in the present case in regard to incorporation, functions, powers and dissolution of the Corporation show that the purposes 728 and objects of the Act and the functions and powers of the Corporation are like the warf and weft of the fabric of development of industries by the State.
There are two provisions of the Act which are not to be found in any trading Corporation.
In the first place, the sums payable by any person to the Corporation are recoverable by it under this Act as an arrear of land revenue on the application of the, Corporation.
Secondly, on dissolution of the Corporation the assets vest in and the liabilities become enforceable against the State Government.
The underlying concept of a trading Corporation is buying and selling.
There is no aspect of buying or selling by the Corporation in the, present case.
The Corporation carries out the purposes of the Act, namely, development of industries in the State.
The construction of buildings, the establishment of industries by ' letting buildings on hire or sale, the acquisition and transfer of land in relation to establishment of industrial estates or development of industrial areas and of setting up of industries cannot be said to be dealing in land or buildings for the obvious reason that the State is carrying out the objects of the Act with the Corporation as an agent insetting up industries in the State.
The Act aims at building an industrial town and the Corporation carries out the objects of the Act.
The hard core of trading Corporation is its commercial character.
Commerce connotes transactions of purchase and sale of commodities, dealing in goods.
The forms 'of business transactions may be varied but the real character is buying and selling.
The true character of the Corporation in the present case is to act as an architectural agent of the development and growth of indus trial towns by establishing and developing industrial estates and industrial areas.
We are of opinion that the Corporation is not a trading one.
Counsel on behalf of the petitioners contended that there was procedural discrimination between the Land Acquisition Act and the Act in the present case.
It was said that there was a special procedure designed by the Land Acquisition Act for acquisition of land for the companies whereas in the ' present case the State was acquiring land for companies without adopting the procedure of , the Land Acquisition Act.
It is to be remembered that the Act in the present case is a special one having the specific and special pur pose of growth, development and Organisation of industries in the State of Maharashtra.
The Act has its own procedure and there is no provision in the Act for acquisition of land for a company as in the case of Land Acquisition Act.
In the present case, acquisition under the Act is for the purpose of development of industrial 729 estates or industrial areas by the Corporation or any other purpose in furtherance of the objects of the Act.
The policy underlying, the Act is not acquisition of land for any company but for the one.
and only purpose of development, Organisation and growth of industrial estates and industrial areas.
The Act is designed to have a planned industrial city as opposed to haphazard growth of industrial areas in all parts of the State.
The Act is intended to prevent ,.growth of industries in the developed parts of the State.
Industries are therefore to be set up in the developing or, new parts of the State where new industrial towns will be brought into existence.
The object of, the Act is to carve out planned areas for industries.
On one side there Will be engineering industries and on the other there will be chemical industries.
There will be localisation of industries with the result that the residents and dwellers of towns and cities will not suffer either from the polluted air or obnoxious.
chemicals of industries or the dense growth of industries and industrial population, within and near about the residential areas.
The Land Acquisition Act is a general Act and that is why there is specific provision for acquisition of land by the, State for public purpose and acquisition of land by the State for companies.
The present Act on the other hand is designed the sole purpose of development of industrial areas and industrial estates and growth and development of industries within the State.
Industrial undertakings or persons who are engaged in industries all become entitled to the ' facilities on such industrial growth.
Under the Land Acquisition Act acquisition is at the instance of and for the benefit of a company whereas under the present Act acquisition is solely by the State for public purposes.
The two acts are dissimilar in situations and circumstances.
The petitioners contended that the provisions as to compensation were a restriction on the judicial power of the Collector.
Section 33 of the Act deals with compensation.
The amount of compensation under the Act can be determined by agreement between the State Government and the person to be compensated.
Where on the other hand no such agreement can be reached, the State Government shall refer the case to the Collector.
That is subsection (3) of section 33 of the Act.
The proviso to that sub section is that no compensation exceeding such amount as the State Government may by general orders specify to b paid for such acquisition shall be determined by the Collector without the previous approval of the State Government or such officer as the State Government may appoint in that behalf.
This proviso was construed on behalf of the petitioners to be a fetter on the judicial powers of the Collector to determine compensation.
Subsection (5) of section 33 of ',.he
Act states that in determining the amount of compensation the Collector shall be guided by the pro 730 visions contained in sections 23 and 24 and other relevant provisions of the Land Acquisition Act These provisions indicate that if the Collector will determine an amount higher than what the State Government may by general orders specify, the approval of the State Government will be necessary.
There is no ceiling fixed by the Government.
Finally, there is an appeal to the Court from the decision of the Collector.
The decision of the Court will finally determine the amount of compensation.
We are of opinion that there is no restriction on the, powers of the Collector in the matter of determination of compensation, although the approval of Government may be necessary in the Government interest.
All the contentions advanced by the petitioners fail.
The petitions 'are dismissed with costs.
G.C. Petitions dismissed.
| IN-Abs | In a petition under article 32 of the Constitution of India the petitioners challenged the validity of the Maharashtra Industrial Development Act, 1961.
In support of the petition it was contended : (i) that the Maharashtra legislature was incompetent to enact the Act because the Act was for the incorporation, regulation and winding up of the Maharashtra Development Corporation which was a trading corporation; accordingly the impugned legislation fell within Entry 43 of List I (.Union List) or the Seventh Schedule of the Constitution; (ii) that there was a special procedure designed by the land Acquisition Act for acquisition of land for the companies whereas in the present case under the provisions of the impugned Act the State was acquiring land for companies without adopting the procedure of the Land Acquisition Act and thus there was procedural discrimination; (iii) that the proviso to section 33 of the impugned Act providing that no compensation exceeding such amount as the State Government may by general order specify to be paid for acquisition shall be determined by the Collector without the previous approval of the State Government or its nominee, was restrictive of the judicial power of the Collector.
HELD : (i) It is the true intent of the Act i.e. its pith and substance which will determine the validity of the Act.
Industries come within Entry 24 of the State List subject to the provision of Entry 7 and Entry 52 of the Union List of the Constitution.
Entry 7 of the Union list relates to industries declared by Parliament by law to be necessary for the purpose of defence or for the prosecution of war.
Entry 52 of the Union List relates industries the control of which by the Union is declared by Parliament by law to be expedient in the public interest.
The establishment, growth and development of industries in the State of Maharashtra does not fall within Entry 7 and Entry, 52 of the Union List.
Establishment growth and development of industries in the State is within the State List of industries.
The, pith and substance of the Act is establishment growth and development of industries, and acquisition of land in that behalf carries out the purposes of the Act by setting up the Corporation as one of the limbs or agencies of the Government. 'Me powers and functions of the Corporation show in no certain terms that these are all in aid of the principal and predominant purpose of establishment and growth of industries.
When the Government is satisfied that the Corporation has substantially achieved the purposes for which the Corporation is established, 720 the Corporation will be dissolved because the raison d 'etre is gone.
It must, therefore, be held that the Act is a valid piece of legislation.
[725 F 726 D] The contention that the Corporation was a trading one, or that it Was a Government company within the meaning of section 617 of the could not be accepted.
[Reason dissussed] The true character of the Corporation in the present case is to act as an architectural agent of the development and growth of industrial towns by establishing and developing industrial estates and industrial areas.
[727 B 728 F] (ii) The contention that there was procedural discrimination is between the present Act and the Land Acquisition Act could not be accepted.
The Maharashtra Industrial Development Act is a special one having the specific and special purpose of growth, development and Organisation ,of industries.
That Act has its own procedure.
Under the Land Acquisition Act acquisition is at the instance of and for the benefit of a company whereas under the present Act acquisition is solely by the State for public purposes. 'Me two acts arc dissimilar in situation and circumstances.
[728 H 729 E] (iii) The proviso to section 33 no doubt provides that where the amount of compensation determined by the Collector is higher than what the State Government may by general order specify the approval of the State Government is necessary, But sub section (5) of section 33 states that in determining the compensation the Collector shall be guided by the provisions contained in sections 23 and 24 and other relevant provisions of the Land Acquitition Act.
There is no ceiling fixed by the Government.
Further there is an appeal to the Court from the decision of the Collector.
The decision of the Court will finally determine the amount of compensation.
There is thus no restriction on the powers of the Collector in the matter of determination of compensation, although the approval of Government may be necessary in the Government interest.
[729 F 730 C]
|
iminal Appeal No. 39 of 1954.
Appeal by Special Leave from the Judgment and Order dated the 5th May, 1953, of the Lucknow Bench of Allahabad High Court in Criminal Revision No. 200 of 1952, arising out of the Judgment and Order, dated the 17th May, 1952, of the Special Magistrate, AntiCorruption for Uttar Pradesh at Lucknow in Case No. 40 of 1951.
Hardyal Hardy (K. L. Arora and section D. Sekhri, with him) for the appellant.
123 966 C. P. Lal for the respondent.
October 29.
The Judgment of the Court was delivered by JAGANNADHADAS J.
The appellant in this case was a clerk in the office of the Running Shed Foreman of the East Indian Railway at Kanpur.
He was convicted under section 161 of the Indian Penal Code and sentenced to rigorous imprisonment for one year and nine months, and also to a fine of Rs. 200.
The conviction and sentence have been upheld by the Sessions Judge on appeal and by the High Court in revision.
The charge against the appellant was that on the 6th of January, 1951, he accepted illegal gratification of Rs. 150 from the complainant, Gurphekan a retrenched cleaner in the Locomotive Department of the Railway, examined as P.W. 2 as a motive for getting him re employed in the Railway (by arranging with some superior officer).
There was an alternative charge under section 162 of the Indian Penal Code but it is no longer necessary to notice it since the conviction is for the main charge under section 161 of the Indian Penal Code.
The Special Police Establishment having received information of the demand of the bribe arranged for a trap and caught the appellant just at the time when he received the sum of Rs. 150 from the complainant and seized the amount.
The appellant admitted the receipt of the money but denied that he demanded or accepted it as a bribe.
His case was that the complainant had previously borrowed money from him and that this money was paid in discharge of the debt.
The Courts below have rejected the defence and accepted the prosecution case and conviction followed thereupon.
Learned counsel for the appellant has tried to persuade us, with reference to the evidence in the case, that the view taken by the Courts below is unsustainable.
It is unnecessary to notice this argument in any detail because this is an appeal on special leave and nothing so seriously wrong with the findings of fact have been shown, which call for interference by this 967 Court.
It is sufficient to notice the main legal arguments that have been advanced.
It is pointed out that the appellant though employed in the Railway was not himself a person who was in a position to give a job to the complainant nor is it shown that he had any intimacy or influence with any particular official who could give a job.
It is urged therefore that the offence, if any, committed by the appellant could only be one of cheating and not the receiving of a bribe.
This argument is without any substance.
By the terms of section 161 of the Indian Penal Code a person who is a public servant and accepts illegal gratification as a motive for rendering service, with any public servant as such, is guilty of the offence thereunder.
To constitute an offence under this section it is enough if the public servant who receives the money takes it by holding out that he will render assistance to the giver "with any other public servant" and the giver gives the money under that belief.
It may be that the receiver of the money is in fact not in a position to render such assistance and is even aware of it.
He may not even have intended to do what he holds himself out as capable of doing.
He may accordingly be guilty of cheating.
None the less he is guilty of the offence under section 161 of the Indian Penal Code.
This is clear from the fourth explanation to section 161 of the Indian Penal Code which is as follows : "A motive or reward for doing. ' A person who receives a gratification as a motive for doing what he does not intend to do (or as a reward for doing what he has not done) comes within these words.
" Illustration (c) to section 161 of the Indian Penal Code which runs as follows also elucidates this: A, a public servant, induces Z erroneously to believe that A 's influence with the Government has obtained a title for Z and thus induces Z to give A money as a reward for, this service.
A has committed the offence defined in this section.
" Thus where a public servant who receives illegal gratification as a motive for doing or procuring an 968 official act whether or not he is capable of doing it or whether or not he intends to do it he is quite clearly within the ambit of section 161 of the Indian Penal Code.
The next contention that has been raised is that the charge does not specify the particular public servant who was intended to be influenced by the appellant in consideration of his receiving the money.
It is urged that section 161 of the Indian Penal Code would not apply to such a case.
It is suggested that the phrase "with any public servant" in section 161 of the Indian Penal Code must relate to a specified public servant.
In the present case the evidence of the complainant and the finding of the High Court is that the appellant "purported to attempt rendering of a service to the complainant with another public servant, viz., the Head clerk at Allahabad." But even apart from such a finding there is nothing in the terms of section 161 of the Indian Penal Code requiring that the public servant contemplated therein must be a specified public servant.
The material portion of the section is as follows: " for rendering or attempting to render any service or disservice to any person, with the Central or Provincial Government or Legislature, or with any public ,servant as such.
" The phrase "Central or any Provincial Government or Legislature" does not contemplate any specified individual or individuals.
There is no reason why the phrase "any public servant" used in the same context should be taken to mean any specified public servant.
The gist of the offence under section 161 of the Indian Penal Code (in so far as it is relevant here) is the receipt by a public servant of illegal gratification as a motive or reward for the abuse of official position or function, by the receiver himself or by some other public servant at his instance.
There is, therefore, no substance in this argument.
The only serious argument that has been advanced and which requires a little closer examination is that there was no valid sanction for the prosecution.
There is no doubt that this is a case to which the Prevention 969 of Corruption Act, 1947 would apply and that by virtue of section 6(c) thereof the prosecution requires the sanction of the authority "competent to remove the appellant from his office.
" It is urged that this requirement was not satisfied on the facts of this case.
It has been pointed out that the appellant is a civil servant of the, Indian Union and that by virtue of article 311 (1) of the Constitution he cannot be removed by an authority subordinate to that by which he was appointed.
This appears also to be the position under rule 1705(c) of the Indian Railway Establishment Code, Volume 1 (1951 Edition) which is as follows: "No railway servant shall be removed (or dismissed) by an authority lower than that by which he was appointed to the post held by him substantively".
The sanction for the prosecution in this case was granted under exhibit 10 by one Shri L. R. Gosain, Superintendent Power, East Indian Railway, Allahabad.
The order of appointment of the appellant, Ex F, shows the Divisional Personnel Officer, East Indian Railways, Allahabad, as the appointing authority.
It may be mentioned that in the appeal before the Sessions Judge a contention was raised that the appointment of the appellant was in fact made by the Divisional Superintendent and that exhibit F was only signed by the Divisional Personnel Officer on his behalf The Sessions Judge found against this contention and the same has not been challenged before us.
What, however, is urged is that the Superintendent Power who gave the sanction for prosecution is not shown to be an officer not lower in rank than the Divisional Personnel Officer who made the appointment.
The question as to the validity of the sanction has been raised both before the Sessions Judge as well as before the High Court.
The High Court in considering the question appears to have merely satisfied itself that under the Railway Regulations, Shri L. R. Gosain, Superintendent Power, was a person competent to remove the appellant from his office within the terms of section 6 of the Prevention of Corruption Act.
The High Court does not appear to have considered the further question whether or not the requirements of article 31 1 (1) of the Constitution and 970 rule 1705(c) of the Railway Establishment Code have been satisfied with reference to the inter se position as between the authority who appointed the appellant and the authority who sanctioned the prosecution.
The learned Sessions Judge, however, has recorded a categorical finding that the Divisional Personnel Officer is in the same grade as the Superintendent Power.
His finding is in the following terms: "I, therefore, hold that the accused could be and was actually appointed by the Divisional Personnel Officer who is in the, same grade as the Superintendent Power.
It cannot therefore be said that the Superintendent Power Mr. L. R. Gosain was not authorised to remove the accused from service by virtue of rule 1705 and this argument advanced against the validity of sanction, exhibit 10, falls to the ground".
Learned counsel for the appellant urged that the requirement both of the Constitution and of the rule of the Railway Code, contemplates that the authority competent to remove must be either the very authority who appointed or any other authority directly superior to the appointing authority in the same department, We do not think that this contention is tenable.
What the Constitution requires is that a person should not be removed by an authority subordinate to the one by whom he was appointed and what the rule in the Railway Code prescribes is substantially the same, viz., "the authority competent to remove should not be lower than the one who made the appointment".
These provisions cannot be read as implying that the removal must be by the very same authority who made the appointment or by his direct superior.
It appears to us to be enough that the removing authority is of the same rank or grade.
In the present case it does not appear into which particular branch of the department the appellant was taken, in the first instance in 1944 under exhibit F.
But it is in the evidence of P.W. 4, the Head clerk of the office of the Divisional Superintendent, that the office of the Running Shed Foreman in which the appellant was a clerk in 1951 was directly under the Superintendent Power.
He was obviously the most appropriate officer to grant the sanction, 971 provided he was of a rank not less than the Divisional Personnel Officer.
Counsel for the appellant urges that the evidence does not support the finding of the learned Sessions Judge that Shri L. R. Gosain, Superintendent Power, was of the same grade as the Divisional Personnel Officer who made the appointment.
P. W. 4 in his evidence, however, quite clearly speaks to this as follows: "Divisional Superintendent is the head of the entire administrative division.
The Divisional Personnel Officer is under him.
The Superintendent Power and Superintendent Transport are also under him and also such other officers of the same rank. . .
Divisional Personnel Officer and the various Superintendents are officers of the same rank.
They are not subordinate to each other".
It has been commented that this should have been substantiated by the official records and not by oral evidence.
That no doubt would have been more satisfactory.
The learned Sessions Judge on appeal, in order to satisfy himself, has referred to the Classified List of Establishment of Indian Railways and the same has also been produced before us for our information.
This shows that both the Divisional Personnel Officer as well as Superintendent Power are officers in the senior scale drawing equal scales of pay, Rs. 625 50 1375.
This is an indication that they are officers of the same rank and confirms the oral evidence of P.W. 4 who being the Head clerk of the Divisional Superintendent 's office must be competent to speak about these matters.
It certainly cannot be said that the Superintendent Power who has granted the sanction for prosecution of the appellant at the time working under him, is of a rank or a grade lower than the Divisional Personnel Officer who appointed the appellant.
This matter would probably have been more satisfactorily clarified in the trial court if the question as to the validity of the sanction had been raised not merely with reference to the wording of section 6 of the Prevention of Corruption Act but also as read with article 311(1) of the Constitution and rule 1705(c) of the Railway Establishment 972 Code.
On the material we are not satisfied that there is any reason to reverse the findings of the courts below that the sanction is valid.
All the contentions raised before us are untenable.
This appeal must accordingly fail.
It has been represented to us that the appellant who has been refused bail by this court when leave to appeal was granted but has been granted bail subsequently has already served nearly six months of imprisonment in the intervening period, that he is a young man and has lost his job.
In the circumstances we consider that it is not necessary to send him back to jail.
The result, therefore, is that the appeal is dismissed subject to the modification of sentence of imprisonment.
We reduce the sentence of imprisonment to the period already undergone.
The sentence of fine stands.
| IN-Abs | When a public servant is charged under section 161 of the Indian Penal Code, and it is alleged that the illegal gratification was taken by him for doing or procuring an official act, it is not necessary for the Court to consider whether or not the accused as public servant was capable of doing or intended to do such an act.
In a case where the illegal gratification is alleged to have been received by the accused as a public servant for influencing some superior officer to do an act, the charge framed against such accused under section 161 of the Code need not specify the particular superior officer sought to be so influenced.
It view of article 311(1) of the Constitution of India and rule 1705(c) of the Indian Railway Establishment Code, Volume 1 (1951 Edition) a sanction under section 6(c) of the Prevention of Corruption Act, 1947 (as it existed prior to August 12, 1952) may be given either by the very authority who appointed the public servant or by an authority who is directly superior to such appointing authority in the same department.
But such sanction is also legal if it is given by an authority who is equal in rank or grade with the appointing authority.
Sanction is invalid if it is given by one who is subordinate to or lower than the appointing authority.
|
Appeal No. 381 of 1970.
Appeal from the judgment and order dated December 22, 1969 of the Delhi High Court in Civil Writ No. 746 of 1969.
Niren De, Attorney General and section P. Nayar, for the appellant.
Sardar Bahadur, Vishnu Bahadur, and Yougindra Khushalani, for respondent No. 1.
G. section Chatterjee, for respondent No. 2.
Hegde, J. 'In this appeal by certificate the only question that was canvassed before us was as regards the validity of the order contained in memorandum No. F. 16 42/68 S 1, dated August 13, 1969 issued by the Government of India, Ministry of Education and Youth Services, retiring the 1st respondent compulsorily from government service in exercise of the powers conferred under cl.
(j) of Fundamental Rule 56 with effect from August 14 1969.
That order was attacked before the High Court on various grounds.
The High Court rejected some of those grounds.
It did not find it necessary to decide ' a few others but accepting the contention of the respondent that in making the order, the appellant had violated the principles of natural justice, it held that the impugned order is invalid The High Court accordingly issued a writ of certiorari quashing that order.
Before us the only contention presented for our decision was whether the High Court was right in holding that in making the impugned order the appellant had violated the principles of natural justice.
No other contention was taken before us.
Hence we shall address ourselves only to that question.
793 Before proceeding to examine the contention above formulated it is necessary to set out the material facts.
The 1st respondent.
herein Col. J. N. Sinha successfully competed in the examination held by the Federal Service Commission in 1938 for the post of Extra Assistant Superintendent in the Survey of India Service.
After selection, he was appointed as an Extra Assistant Superintendent.
He worked as probationer for a period of three years and thereafter he was confirmed in that post in 1941.
During the second world war, he Volunteered for active service in the army and was granted an emergency Commission in the army.
He was granted a regular commission in the army with effect from October 23, 1942.
In exercise of the powers conferred by the proviso to article 309 of the Constitution, the President of India made on August 17, 1950 rules called the Survey of India (Recruitment from Corps of Engineering Officers) Rules, 1950 for regulating the recruitment and conditions of service of persons appointed from the Corps of Engineering Officers of the Defence Ministry to the Survey of ' India Class I Service.
Rule 2 of the said Rules provides for the recruitment of Military Officers to the Survey of India Class I Service and Rule 3 provides that the recruited officers will be on probation for two years which may be extended by the Government on the advice of the Surveyor General.
The 1st respondent was taken into the Survey of India Class I Service under Rule 2 of the aforesaid 1950 Rules as Deputy Superintendent Surveyor with effect from June 1951.
Thereafter the President of India in .exercise of the powers under the proviso to article 309, made on July 1, 1960 the Survey of India Class I (Recruitment) Rules, 1960 for regulating the recruitment of Survey of India Class I Service.
The 1st respondent was subsequently promoted firstly as Superintending Surveyor and then as Deputy Director.
After sometime he was promoted as Director and lastly as Director (Selection Grade).
The last mentioned promotion was made with effect from October 27, 1966.
On May 17, 1969, Fundamental Rule 56(j) was amended.
Thereafter on August 13, 1969, the Ministry of Education and Youth Services issued the impugned order.
The 1st respondent was given three months pay and allowances in lieu of three months notice prescribed in Fundamental Rule 56(1).
The 1st respondent being aggrieved by that order, challenged the validity of the same.
As mentioned earlier, the High Court accepted his plea.
The Union of India has appealed against that order.
Fundamental Rule 56(j) reads "Notwithstanding anything contained in this Rule the appropriate authority shall, if it is of the opinion that it is in the public interest so to do have the absolute right 794 to retire any Government servant by giving him notice of not less than three months in writing or three months pay and allowances in lieu of such notice (i) if he is in Class I or Class II Service or post the age limit for the purpose of direct recruitment to which is below 35 years, after he has attained the age of 50 years.
(ii) In any other case after he has attained the age of 5 5 years.
Provided that nothing in this clause shall apply to a Government servant referred to in clause (e) who entered Government service on or before 23rd July, 1966 and to a Government servant referred to in clause (f ) .
" The order impugned merely says that in pursuance of cl. 5 6 ,the President was, pleased to decide that in public interest the 1st respondent should retire from government service with effect from August 13, 1969 and that he would be given three months pay and allowances in lieu of three months notice provided in the said rule.
No reasons are given for compulsorily retiring the 1st respondent.
Admittedly no opportunity was given to him to show cause against his compulsory retirement.
The failure on ' the part of the concerned authority to give an opportunity to the 1st respondent to show cause against his compulsory retirement was held by the High Court to have amounted to a contravention of the principles of natural justice.
The validity of Fundamental Rule 56(j) was not questioned before the High Court nor before us.
Its validity is not open to question in view of the decision of this Court in T. G. Shivacharana Singh and Ors.
vs State of Mysore(1).
Fundamental Rule 56(j) in terms does not require that any opportunity should be given to the, concerned government servant 'to show cause against his compulsory retirement.
A government servant serving under the Union of India holds his office at the pleasure of the President as provided in article 310 of the Constitution.
But this "Pleasure" doctrine is subject to the rules or law made under article 309 as well as to the conditions prescribed under article 311.
Rules of natural justice are not embodied rules nor can they be elevated to the position of fundamental rights.
As observed by this Court in Kraipak and Ors.
vs Union of ' India(2) "the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice.
These rules can operate only in areas not covered by any law validly made.
In other words they do not supplant the law but supplement it.
" It (1) A. I. R. (2) A. I. R. 795 is true that if a statutory provision can be read consistently with the principles of natural justice.
the courts should do so because it must be presumed that the legislatures and the statutory authorities intend to act in accordance with the principles of naural justice.
But if on the other hand a statutory provision either specifically or by necessary implication excludes the application of any or all the principles of natural justice then the court cannot ignore the mandate of the legislature or the statutory authority and read into the concerned provision the principles of natural justice.
Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends upon the express words of the provision conferring the power, the nature of the power conferred, the purpose for which it is conferred / and the effect of the exercise of that power.
Now coming to the express words of Fundamental Rule 56(j), it says that the appropriate authority has the absolute right to retire a government servant if it is of the opinion that it is in the public interest to do so.
The right conferred on the appropriate authority is an absolute one.
That power can be exercised subject to the conditions mentioned in the rule. ' one of which is that the concerned authority must be of the opinion that it is in public interest to do so.
If that authority bona fide forms that opinion, the correctness of that opinion cannot be challenged before courts.
It is open to an aggrieved party to contend that the requisite opinion has not been formed or the decision is based on collateral grounds or that it is an arbitrary decision.
The 1st respondent challenged the opinion formed by the government on the ground of mala fide.
But that ground has failed.
The High Court did not accept that plea.
The same was not pressed before us.
The impugned order was not attacked on the ground that the required opinion was not formed or that the opinion formed was an arbitrary one.
One of the conditions of the 1st respondent 's service is that the government can choose to retire him any time after he completes fifty years if it thinks that it is in public interest to do so.
Because of his compulsory retirement he does not lose any of the rights acquired by him before retirement.
Compulsory retirement involves no civil consequences.
The aforementioned rule 56(j) is not intended for taking any penal action against the government servants.
That rule merely embodies one of the facets of the pleasure doctrine embodied in article 3 1 0 of the Constitution.
Various considerations may weigh with, the appropriate authority while exercising the power conferred under the rule.
In some cases, the government may feel that a particular post may be more usefully held in public interest by an officer more competent than the one who is holding.
It may be that the officer who is holding the post is not inefficient but the appropriate authority may prefer to have a more efficient officer.
It may further be 796 that in certain key posts public interest may require that a person of undoubted ability and integrity should be there.
There is no denying the fact that in all organizations and more so in government organizations, there is good deal of dead wood.
It is in public interest to chop off the same.
Fundamental Rule 56(j) holds the balance between the rights of the individual government servant and the interests of the public. 'While a minimum service is guaranteed to the government servant, the government is given power to energise its machinery and make it more efficient by compulsorily retiring those who in its opinion should not be there in public interest.
It is true that a compulsory retirement is bound to have some adverse effect on the government servant who is compulsorily retired but then as the rule provides that such retirements can be made only after the officer attains the prescribed age.
Further a compulsorily retired government servant does not lose any of the benefits earned by him till the date of his retirement.
Three months ' notice is provided so as to enable him to find out other suitable employment.
In our opinion the high Court erred in thinking that the compulsory retirement involves civil consequences.
Such a retirement does not take away any of the rights that have accrued to the government servant because of his past service.
It cannot be said that if the retiring age of all or a section of the government servants is fixed at 50 years, the same would involve civil consequences.
Under the existing system there is no uniform retirement age for all government servants.
The retirement age is fixed not merely on the basis of the interest of the government servant but also depending on the requirements of the society.
The High Court was not justified in seeking support for its conclusion from the decision of this Court in State of Orissa vs Dr. (Miss) Binapani 'Dei and ors.(1) and A. K. Krailpak vs Union of India( ').
In Binapani Dei 's case( ') Dr. Binapani Dei 's date of birth was refixed by the government without giving her proper opportunity to show that the enquiry officer 's report was not correct.
It is under those circumstances this Court held that the order refixing the date of birth was vitiated for failure to comply with the principles of natural justice.
Therein the impugned order took away some of the existing rights of the petitioner.
In Krapak 's case( '), a committee consisting of Chief Conservator of, Forest, Kashmir and others was appointed to recommend names of the officers from Kashmir Forest Service for (1) ; (2) A.I.R. 1970 S.C. 150. 797 being selected for the Indian, Forest Service.
The Chief Conservator of Forests, Kashmir was one of the candidates for selection.
Further it was established therein that some of the officers who competed with him had earlier challenged his seniority and consequently his right to be the Chief Conservator and that dispute was pending.
Under those circumstances this Court held that there was contravention of the principles of natural justice.
For the reasons mentioned above, we are unable to agree with the conclusion reached by the High Court that the impugned order is invalid.
We accordingly allow this appeal, set aside the judgment and decree of the High Court and dismiss the writ petition.
In the circumstances of the case we make no order as to costs.
[The Court by order dated November 18, 1970 and January 19, 1971 on an application for review filed by the respondent vacated its order dismissing the writ petition.
Instead, the proceedings were remanded to the High Court for decision on such points as were not, dealt with and decided in the judgment of that court.
Ed.] G.C. Appeal allowed.
Proceedings remanded.
| IN-Abs | The first respondent joined the post of Extra Assistant Superintendent in the Survey of India Service in 1938.
Later he was taken into the Class I Service of the Survey of India and rose to the post of Deputy Director.
He also officiated as Director.
On August 13, 1969 the President of India pleased by an order under Rule 56(j) of the Funda mental Rules to compulsorily retire the first respondent from Government service.
No reasons were given in the order.
The appellant challenged the order by a writ petition in the High Court.
The failure on the part of the concerned authority to give opportunity to the first respondent to show cause against his compulsory retirement was held by the High Court to have amounted to a contravention of the principles of natural justice.
Against the judgment of the High Court the Union of India appealed.
HELD : Rules of natural justice are not embodied rules nor can they be elevated to the position of fundamental rights.
As observed by this Court in Kralpak 's case these rules can operate only in areas not covered by any law validly made.
If a statutory provision can be read consistently with the principles of natural justice, the Courts should do so because it must be presumed that the legislatures and the statutory authorities intend to act in accordance with the principles of natural justice.
But on the other hand a statutory provision either specifically 'or by necessary implication excludes the application of any or all the principles of natural justice then the court cannot ignore the mandate of the legislature or the statutory authority and read with the concerned provision the principles of natural justice.
Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends upon the express words of the provision conferring the power, the nature of the power conferred, the purpose for which it is conferred and the effect of the exercise of the power.
[794 G 795 C] Fundamental Rule 56(i) does not in terms require that any opportunity should be given to the concerned Government servant to show cause against his compulsory requirement.
It says that the appropriate authority has the absolute right to retire a government servant if it is of the opinion that it is in the public interest to do so.
If that authority bona fide forms that opinion the correctness of that opinion cannot be challenged before courts, though it is open to an aggrieved party to contend that the requisite opinion has not been formed or the decision is based on collateral grounds or that it is an arbitrary decision.
The respondent had not challenged the impugned order on any of these grounds.
[795 D F] Compulsory retirement does not involve any civil consequence.
A person retired under Rule 56(i) does not lose any of the rights acquired 792 by him before retirement.
The rule is not intended for taking any penal action against government servants.
It merely embodies one of the facets of the pleasure doctrine embodied in article 310 of the Constitution.
The rule holds the balance between the, rights of the individual government servant and the interests of the public.
While a minimum service is guaranteed to the government servant, the government is given power to energise its machinery and make it more efficient by compulsorily retiring those who in its opinion should not be there in public interest.
Three months notice is provided to enable the retired employee to find out other suitable employment.
[795 G 796 B] On the above view of the law, namely, that no notice to show cause was required, the appeal must be allowed.
T. G. Shivacharana Singh vs State of Mysore, A.I.R. 1965 S.C. 280.
Kraipak and Ors.
vs Union of India, A.I.R. 1970, S.C. 150, State of Orissa vs Dr. (Miss) Binapani Dei and Ors., ; distinguished.
|
Appeals Nos. 326 and 327 of 1967.
Appeals from the judgments and orders dated May 3, 1966 of the Madhya Pradesh High Court in Misc.
Civil Cases Nos. 186 of 1963 and 39 of 1964.
M. C. Chagla, Ashoke Chitale and Rameshwar Nath, for the appellant (in both the appeals).
section C. Manchanda, G. section Sharma, R. N. Sachthey and B. D. Sharma, for the respondent (in both the appeals).
The Judgment of the Court was delivered by HEGDE, J.
The question of law arising for decision in these appeals by certificate under section 66A(2) of the Indian Income tax Act, 1922 (to be hereinafter referred to as the Act) is "Whether on the facts and in the circumstances of the case, the managing directors remuneration received by Sri Rajkumar Singh was assessable in his individual hands and not in the hands of the assessee Hindu Undivided Family ?" This question was referred by the Income tax Appellate Tribunal, Bombay Bench 'A to the High Court of Judicature at Bombay on an application made under section 6(1) of the Act by the Commissioner of Income tax, Madhya Pradesh.
The High Court has answered that question in favour of the Revenue.
As against that decision this appeal has been brought.
The assessee in this case is a Hindu Undivided Family and the concerned assessment year is 1954 55, the relevant accounting period being the year ending Diwali 1953 i.e., November 6, 1953.
Previously a Hindu Undivided Family was carrying on business under the name and style of Sarupchand Hukamchand.
That family was carrying on several businesses one of which was the management of certain mills.
That family disrupted on March 750 30, 1950.
The assessee is the branch of that family.
On March 31, 1950, a company under the name and style of Sarupchand Hukumamchand Private Ltd. was incorporated.
The capital of the company consisted of Rs. 5 crores divided into 20,000 preference shares of Rs. 1,000 each and Rs. 3,000 ordinary shares of Rs. 1,000 each.
The company itself was incorporated for the purpose of acquisition from M/s. Sarupchand Hukumchand, certain managing agencies, businesses, factories and properties and for that purpose to enter into an agreement with the said firm and to carry on business as managing agents of Rajkumar Mills Ltd., the Hukamchand Mills Ltd. and the Hira Mills Ltd. and the other businesses mentioned more particularly in the Memorandum of Association of the company.
The first Directors of the company were (1) Sir Hukamchand Saroopchandji (2) Rajkumarsingh Hukamchandji (3) Lady Kanchanbai Hukamchandji (4) Mrs. Premkumaridevi Rajkumarisinghji (5) Raja Bahadursingh Rajkumarsinghji (6) Rustomji Cowasji Jall.
The qualification prescribed for a director under article 53 was the holding of at least 10 shares in the company whether preference or ordinary or partly preference or partly ordinary.
article 55 provided that the Directors may from time to time, appoint one or more of their body to the office of managing Director or manager on such terms and at such remuneration as may be determined by the Directors.
In pursuance of the powers conferred on them under article 55, the Directors by their resolution dated March 31, 1950 appointed for the purpose of management of the business of the company Sir Hukumchand Rajoahadur, Rajkumar and Rajabahadur as managing Directors of ',he company on a remuneration of Rs. 5,0001 per month for each of them for their services.
Under article 63, the Directors were given certain powers for the management of the company.
they were subject to the control of the Board of Directors.
The three branches of the, original Hindu Undivided Family namely the branches of Sir Seth Hukumchand, Lady Kanchanbai and Sri Rajkumarsingh, were allotted 5,000 shares of the face value of Rs. 1,000 each.
The assessee 's branch represented by its Karta got 5,000 shares.
Rajkumar acquired 30 further shares in the name of his wife, Premkumari and 10 shares in the name of Rajabahadur.
The consideration for all these subsequent acquisitions was admittedly from the Hindu Undivided Family funds.
All the 5,030 shares were treated in the books, and the 751 balance sheet of the assessee family as its property.
The dividends in respect of these shares were also credited to the account of the family.
Sir Hukumchand died and after his death the other two continued to be the managing Directors.
For the years 1951 52, 1952 53 and 1953 54, the receipt of this Rs. 5,00011 per month received as remuneration was treated as the income of Rajkumar as an individual and assessed on that basis.
Similarly the remuneration received by Sir Hukumchand and Rajabahadur have been and continued to be assessed as their individual income.
In making the assessment of the assessee in the year 1954 55, the Income tax Officer referred to this item in the following words "It was claimed that the income from managing directors remuneration and from directors fees is assessable in his hands in individual capacity.
As was done in the early assessments also.
" For that reason he did not assess the sum of Rs. 60,000/and the sitting fee of Rs. 1,420/ received by Rajkumar in the account year relevant to the assessment year 1954 55 in the hands of the Hindu undivided family but they were assessed in, the hands of Rajkumar as an individual.
On January 10, 1961, the Commissioner of Income tax, in exercise of his power under section 33(B) issued a notice to the assessee to show cause why the assessment of the assessee for the assessment year 1954 55 should not be revised by treating the sum of Rs. 60,000/ plus Rs. 1,42O/ as the income of the assessee Hindu Undivided Family of which Rajkumar was the Karta.
The assessee opposed that notice.
He claimed the amount in question as his individual income.
The Commissioner did not accept the contention of the assessee and purporting to rely on the decision of this Court in Commissioner of Income tax, West Bengal vs Kalu Babu Lal Chand,(1) held that income was of the assessee.
He taxed the assessee accordingly.
Aggrieved by that decision, the assessee took ' us the matter in appeal to the Income tax Appellate Tribunal.
Before the tribunal, learned Counsel for the assessee conceded that the sitting fee of Rs. 1,420/ may be treated as the income of the assessee.
Hence the dispute centered round the sum of Rs. 60,000,/ received by Rajkumar as salary.
The tribunal upheld the contention of the assessee.
The tribunal after tracing the history of the Private Ltd.
Co. of Rajkumar was a Director and the manner in which the earlier assessments were made observed : "From the facts set out above it is clear that this is not a part and parcel of the same transaction or the same scheme of arrangement.
Whatever may be said of (1) 37 I. I. T. R. 123.; 752 the bigger Hindu undivided family, it was sheer accident of circumstances that the smaller Hindu undivided family came to hold these shares.
Both Rajkumar and Rajabahadur belong to the same branch and both of them are managing directors.
The managing directors were appointed by a resolution of the Board of Directors and they were subject to removal by the Directors at any time.
The appointment of managing director was not conditioned upon either Rajkumar or Rajabahadur acquiring these shares.
On the disruption of the larger Hindu undivided family the smaller Hindu undivided family got for its share certain shares.
Whatever may be said of the directors. ' fees, that having been now conceded as income of the Hindu undivided family, the same cannot be said of the managing directors ' remuneration.
The managing director holds office by virtue of the resolution of the Board of Directors.
He may not be a servant of the Company but still he receives his salary for his personal services.
The contribution of the capital may at best be considered as acquiring the qualification of a director.
It is not all people who hold shares that could automatically aspire +to be managing directors.
There is no evidence to show that Rajkumar and Rajabahadur were appointed managing directors on behalf of the family or that the income was earned by utilizing the joint family property or was detriment to the family property.
There is no material in this case to hold that the acquisition of the business or flotation of the company and the appointment of the managing directors were inseparably linked together.
As already noticed right up to the accounting year relevant to the present assessment year the income was treated as income of Rajkumar in his individual capacity.
It is true no doubt that there is no question of res judicata but this fact has certainly to be taken into consideration.
This income has been assessed under section 7.
It has been earned by Rajkumar for his services.
It has accrued in his hands.
It is open to him to give it over to the family and the mere fact that it was included in the family 's account or the balance sheet cannot in any event affect the question at issue. . .
Rajkumar was not appointed as managing director as a result of any outlay or expenditure of or detriment to the family property.
The managing directorship was an employment of personal responsibility and ability and the mere fact that certain qualification shares and other shares were property of the Hindu undivided 753 family was not the sole or even the main reason for his appointment to the responsible post of managing director.
We are clearly of the opinion therefore that the remuneration received by Rajkumar was assessable only in his hands as an individual and cannot be con sidered as and clubbed with the income of the Hindu undivided family." The High Court of Madhya Pradesh did not agree with the conclusion reached by the Income tax Appellate Tribunal.
It felt that in view of the, decision of this Court in Commissioner of Income tax, West Bengal vs Kalu Babu Lal Chand(1) the answer to the question referred to it should be in favour of the Revenue.
The question of law arising for decision in this case has been the subject matter of numerous decisions of this Court and of various High Courts.
But yet the law cannot be said to have been settled beyond controversy.
The two opposing view points to which we shall refer presently try to seek sustenance from one or the other decisions of this Court.
As far back as 1921 in Gokul Chand vs Hukum Chand Nath Mal( ') the Judicial Committee ruled "that there could be no valid distinction between the direct use of the joint family funds and the use which qualified the members to make the gains on his efforts".
In making this observation, the Judicial Committee appears to have been guided by certain ancient Hindu law texts.
That view of the law became a serious impediment to the progress of the Hindu society.
It is well known that the decision in Gokul Chand 's case( ') gave rise to great deal of public dissatisfaction and the central legislature was constrained to step in and enact the (30 of 1930) which nullified the effect of that decision.
Then came the decision of this Court in Commissioner of Income tax vs Kalu Babu Lal Chand.
(1) On the facts of that case, this Court held that the remuneration earned by Rohatgi as the managing director of a firm was the income of his Hindu Undivided Family.
The facts of that case were somewhat peculiar.
They were set out at p. 130 of the report.
It would be best to quote that passage which reads : "Here was the Hindu undivided family of which B. K. Rohatgi was the karta.
It became interested in the concern then carried on by Milkhi Ram and others under the name of India Electric Works.
The karta was one of the promoters of the company which he floated with a view to take over the India Electric Works as a going concern.
In anticipation of the incorporation of that company the karta of the family took over the (1) 69 Sup.
C.I. (P)/71 4 (2) 48, I. A. 162.
754 concern, carried it on and supplied the finance at all stages out of the joint family funds and the finding is that he never contributed anything out of his separate property, if, he had any.
The Articles of association of the company provided for the appointment as managing director of the very person who, as the karta of the family, had promoted the company.
The acquisition of the business, die flotation of the company and appointment of the managing director appear to us to be inseparably linked together.
The joint family assets were used for a cquiring the concern and for financing it and in lieu of all that detriment to the joint family properties the joint family got not only the shares standing in the names of two members of the family but also, as part and parcel of the same scheme, the managing directorship of the company when incorporated.
It is also signi ficant that right up to the accounting year relevant to the assessment year 1943 44, the income was treated as the income of the Hindu undivided family.
It is true that there is no question of res judicata but the fact that the remuneration was credited to the family is certainly a fact to be taken into consideration.
" The next came the decision of this Court in Mathura Prasad vs Commissioner, of Income tax( ').
The facts found in that case are more or less similar to those found in Kalu Babu Lal Chand 's case (2 ).
Those facts are : Mathura Prasad, the manager of his Hindu Undivided Family had entered into a partnership as representing his family of which he was the karta for the benefit of the family.
There was also no dispute that in the firm of Badri Prasad Jagan Prasad, the assets of the assessee family were ,vested.
The Tribunal found that Mathura Prasad, the manager, became a partner in the firm with the help of joint family funds and as partner he was entrusted with the management of the Agarwal Iron Works.
On the basis of those facts, it was held that the allowance received by Mathura Prasad was therefore directly related to the investment of the family funds in the partnership business.
In the course of the judgment, it was observed : " It was suggested that Mathura Prasad earned the allowance sought to be brought to tax because of the special aptitude he possessed for managing the Agarwal Iron Works, and the allowance claimed by him was not earned by the use of the joint family funds.
But no such contention was raised before the High Court.
We have been taken through the petition filed in the High (1) (2) 37 I.I.R. 123.
755 Court under section 66(2) of the Act, and there is no averment to the effect that Mathura Prasad had any special aptitude for management of the Agarwal Iron Works, and what was agreed to be, paid to him was as remuneration for performing services because of such aptitude.
" Then we come to the decision of this Court in Piyeare Lal Adishwar, Lal vs Commissioner of Income tax( '); Therein one Sheel Chandra, who was the karta of his Hindu Undivided family consisting of himself and his younger brother, furnished as security his family properties for being appointed the treasurer of a bank.
He would not have been appointed treasurer of the bank but for the security given.
In that case also, it was contended on behalf of the Commissioner of Income tax that the salary earned by Sheel Chandra was a family income and is liable to be taxed as such.
That contention was negatived by this Court.
From that decision it follows that it is not any add every kind of aid received from family funds which taints an income as family income.
Before 'an income earned by the exertions of a coparcener can be considered as a family income, a, direct and substantial nexus between the income in dispute and the family funds should be established.
On October 27, 1967, this Court rendered three different decisions namely V. D. Dhanwatey vs Commissioner of Income tax, M.p.(2), M. D. Dhanwatey vs Commissioner of Income tax, M.P.( ') and section RM.
Palaniappa Chettiar vs Commenr.
of Income tax, Madras (4 ) ; The facts in V. D. Dhanwatey 's case are : V. D. Dhanwatey as the karta of his Hindu undivided family was a partner of a firm.
His contribution to the capital of the firm belonged to the family.
Interest was payable on the capital contributed by each partner.
Under cl.
(7) of the deed of partnership the general management and supervision of the partnership business was to be in the hands of V. D. Dhanwatey.
Under cl.
( 1 6), he was to be paid monthly remuneration at the gross earning of the partnership business.
The question was whether the salary received by V. D. Dhanwatey was assessable in the hands of his Hindu Undivided Family.
On the above facts, the High Court held that the remuneration paid to V. D. Dhanwatey was only an increased share in the profits of the firm paid to V. D. Dhanwatey as representing his Hindu undivided family and hence the said amount was taxable in the hands of his undivided family.
By a majority decision this Court agreed with the view taken by the High Court.
This Court held that the remuneration paid by the firm to V. D. Dhanwate directly related to the invest (1) (3) (2) (4) 756 ments in the partnership business from the assets of the family and that there was real and sufficient connection between the investments from the joint family funds and the remuneration paid to him.
On that basis this Court ruled that the salary paid to V. D. Dhanwatey was assessable as the income of his Hindu Undivided Family.
The facts found in M. D. Dhanwatey 's case( ') were that M. D. Dhanwatey, as the karta of his Hindu undivided family was a partner in the firm.
His share in the capital of the firm was entirely contributed by the family.
Clause (5) of the deed, of partnership providedfor payment of interest to the partners on their share contribution.
Under Cl.
(8), he was to be the manager in charge of the works and under cl.
(16) he was to be paid a monthly remuneration.
The question was whether the salary received by him could be included in the total income of his Hindu undivided family.
This Court held that the salary received by him could be included in the total income of his Hindu undivided family.
In Pataniappa Chettiar 's case 2 the facts found are as fol lows : In 1934, the karta of a Hindu undivided family acquired 90 out of 300 shares in a transport company with the funds of the family.
There were initially four shareholders including the karta and two of them were directors.
On the death of one of them in 1941, the karta became a director of the company.
On the death of another, who was managing the business of the company, he became the managing director of the company in 1942.
At the relevant period he was entitled to a salary and a commission on the net profits of the company.
The managing director had control over the financial and administrative affairs of the company and the only qualification under its articles of association was the qualification of a, director, viz., the holding of not less than 25 shares in his own right.
The question was whether the managing director 's remuneration and commission and sitting fees received by the karta were assessable as the income of the family.
This Court held that the shares were acquired by the family not with the object that the karta should become the manazing director but in the ordinary course of investment and there was no real connection between the investment of joint family funds in the purchase of the shares and the appointment of the karta as managing director of the company.
The remuneration of the managing director was not earned by any detriment to the joint family assets.
Hence the amount received by the karta as managing director 's remuneration, commission and sitting fees were not assessable as the income of the Hindu undivided family.
(1) (2) 757 The next case decided by this Court was Commissioner Income tax, Mysore vs Gurunath Dhakappa(1).
Therein the karta of a Hindu Undivided family was a partner in a registered firm, representing his family.
He was appointed manager of the firm on a remuneration of Rs. 5001 per month.
For the assessment year 1960 61, he received a sum of Rs. 14,737/ from the firm including a sum of Rs. 6,000/ as, his salary for managing the firm 's business.
There, was no finding that the salary received, by the karta had directly related to the assets of the family utilised in the firm.
On the basis of those facts, this Court held that the sum of Rs. 6,OO0/ could not be treated as the income of the ' Hindu undivided family.
In the course of the judgment this Court observed "In the absence of a finding that the income which was received by Dhakappa was directly related to any assets of the family utilised in the partnership, the income cannot be treated as the income of the Hindu Undivided Family.
" Then we come to the decision of this Court in P. N. Krishna lyer vs Commissioner of Income tax, Kerala.
( ') Therein Krishna lyer, the karta of his Hindu undivided family received salary, commission and sitting fees as governing director of a private company which carried on transport business, The shares which qualified the karta to become a member of the company were purchased with the aid of joint family funds.
The entire capital assets of the company originally belonged to the joint family and were made available to the company in consideration of a mere promise to pay the amount for which the assets were valued.
dividends from shares of the value of Rs. 4,88,000 allotted to the karta by the company in consideration of valuable services rendered by him were also treated as belonging to the family.
The Tribunal held that the income from salary, commission and sitting fees earned by the karta was his separate income.
The High Court, on a reference, held that the income was assessable in the hands of the family.
On appeal this Court held that the question whether the income was the income of the Hindu undivided family or of the individual, was a mixed question of law and fact and the final, conclusion drawn by the tribunal from the primary evidentiary facts was open to challenge on the plea that the relevant principle has been misapplied by the tribunal.
On the facts of the case, this Court affirming the decision of the High Court held that the income was primarily earned by utilising the joint family assets or funds and the, mere fact that in the process of gaining the advantage an element of personal service or skill or (1) (2) 758 labour was involved did not alter the character of the Income.
Therein this Court further observed that in cases of this class the character of the receipt had to be, determined by reference to its source, its relation to the assets of the family of which the recipient was a member and the primary object with which the benefit received was disbursed.
Lastly we come to the decision of this Court in Commissioner of Income tax, Mysore vs D. C. Shah.
( ') Therein the respondent, a Hindu undivided family was the partner in two firms through its karta D. C. Shah.
The karta was paid by the two firms remuneration as a managing partner.
He was found to be a man of rich experience in the line of business which the two firms were carrying on.
Clause (8) of the partnership deed of the first firm provided that Shah who has been managing the business of the firm shall continue to act as managing partner for conducting the said business free from any interference of the other partners with power to manage, direct, appoint and/or remove, any one of the employees and/or do all other things including the right to draw cheques, to make, deliver and accept documents either legal or commercial in respect of the partnership business.
Clause (9) provided that Shah shall continue to be the managing partner for his lifetime or his retirement whichever is earlier.
In the deed of the second firm Clause (14) provided for appointment of another partner, K, as the managing partner and gave the managing partner powers similar to those in the deed of the other firm.
Clause (15) provided for Shah 's appointment after K 's retirement and Shah was appointed after his retirement.
No other partner was paid any salary in this firm.
On these facts this Court held that there was no real or sufficient connection between the investment of the joint family funds and the remuneration paid to Shah and that remuneration was not earned on account of any detriment to the joint family assets and the remuneration received by Shah as the managing partner of the two firms was not assessable as the income of his Hindu undivided family.
At first sight there appears to be conflict between the two lines of decisions namely Kalu Babu 's case, Mathura Prasad 's case; two Dhanwatey 's cases and Krishna Iyer 's case on one side Palaniappa Chettiar 's case, Dakappa 's case, and D. C. Shah 's case on the other.
The line that demarcates these two lines of decisions is not very distinct but on a closer examination that line can be located.
In order to find out whether a given income is that of the person to whom it was purported to have been given or that of his family, several tests have been enumerated in the aforementioned decisions but none of them excepting Kalu Babu 's case (1) 759 makes reference to the observations of Lord Sumner in Gokal Chand 's case that "in considering whether gains are partible, there is no valid distinction between the direct use of the joint family funds and a use which qualifies THe member to make the gains by his own efforts".
We think that principle is no more valid.
The other tests enumerated are : (1) whether the income received by a co parcener of a Hindu undivided family as remuneration had any real connection with the investment of the joint family funds; (2) whether the income received was directly related to any utilization of family assets; (3) whether the family had suffered any detriment in the process of realization of the income; and (4) whether the income was received with the aid and assistance of the family funds; In our opinion from these subsidiary principles, the broader principle that emerges is whether the remuneration received by the coparcener in substance though not in form was but one of the modes of return made to the family because of the investment of the family funds in the business or whether it was a compensation made for the services rendered by the individual coparcener.
If it is the former, it is an income of the Hindu undivided family but if it is the latter then it is the, income of the individual coparcener.
If the income was essentially earned as a result of the funds in vested the fact that a coparcener has rendered some service would not change the character of the receipt.
But if on the other hand it is essentially a remuneration for the services rendered by a coparcener, the circumstance that his services were availed of because of the reason that he was a member of the family which had invested funds in that business or that he had obtained the qualification shares from out of the family funds would not make the receipt, the income of the Hindu undivided family.
Applying the tests enumerated above to the facts found by the tribunal in the present case, there is hardly any room to doubt that the income in question was the individual income of Rajkumar.
He did not become the managing director of the firm for the mere reason that his family had purchased considerable shares in the firm.
He was elected as a managing director by the board of directors.
The tribunal has found that he received his salary for his personal services.
There is no material to hold that he was elected managing director on behalf of the family.
In the past the.
salary received by him was assessed as his individual income.
The same was the case as regards the salary received by the other managing ,directors.
The tribunal has found that he was not appointed as 760 managing director as a result of any outlay or expenditure of or detriment to the family property.
It has further found that the managing directorship was an employment of personal responsibility and ability.
In these circumstances we agree with the conclusions reached by the tribunal that the income in question cannot be treated as the income of the assessee.
For these reasons we are unable to agree with the High Court that the income in question can be held to be the income of the assessee.
Hence this appeal is allowed and in the place of the answer given by the High Court to the question referred to it, we answer that question as follows : On the facts and in the circumstances of the case the managing director 's remuneration received by Raj Kumar Singh was assessable as his individual income and not as the income of his Hindu undivided family.
The department shall pay the costs of the appellant both in this Court and in the High Court.
Hearing fee one set.
Y.P. Appeal allowed.
| IN-Abs | A Hindu undivided family carrying on management of a company disrupted into 3 branches, one being that of the assessee, and the shares of the company were more in the names of his family members.
The consideration for all these subsequent acquisitions was from the Hindu undivided family funds.
All the shares the previous and subsequent acquisition were treated in the books and the balance slice of the assessee family as its property and its dividends were also credited to the account of the family.
As Managing Director of the company the assessee received certain remuneration.
On the question whether the managing director 's remuneration received by the assessee was assessable in his individual hands or in the hands of the assessee 's Hindu undivided family, this Court HELD : The remuneration was assessable as the assessee 's individual income and not as the income of his Hindu undivided family.
The broad principle that has, to be applied in such cases is whether the remuneration received by the coparcener in substance though not in form was but one investment of the family funds in the business or whether it was a compensation made for the services rendered by the individual coparcener.
If it is the former, it is an income of the Hindu undivided family but if it is the latter then it is the income of the individual coparcener.
If the income was essentially earned as a result of the funds in vested the fact that a coparcener has rendered some service would not change the character of the receipt.
But if on the other hand it is essentially a remuneration for the services rendered by a coparcener, the circumstances that his services were availed of because of the reason that he was a member of the family which had invested funds in that business or that he had obtained the qualification shares from out of the family funds would not make the receipt, the income of the Hindu undivided family.
[759 D] Applying the tests enumerated above to the facts found by the tribunal in the present case, there was hardly any room to doubt that the income in question was the individual income of assessee.
He did not become the managing director of the firm for the mere reason that his family had purchased considerable shares in the firm.
He was elected as a managing director by the board of directors.
The tribunal had found that he received his salary for his personal services.
There was no material to hold that be was elected managing director on behalf of the family.
In the past the salary received by him was assessed as hi , individual income.
The same was the case as regards the salary received by the other managing directors.
The tribunal had found that he was not appointed as managing director as a result of any outlay or expenditure of or detriment to the family property.
It had further found that the managing directorship was an employment of personal responsibility and ability.
[759 G] 749 Commissioner of Income, tax, West Bengal vs Kalu Babu Lal Chand, ; Mathura Prasad vs Commissioner of Income tax , Piyeare Lal Adhishwar Lal vs Commissioner of Income tax, ; V. D. Dhanwatey vs Commissioner of income tax M.P. ;M.D.Dhanwatey vs Commissioner of Income tax M.P. ;S.RM.CT.
Palaniappa Chettiar vs Commissioner of Income tax,Madras ; Commissioner of Income tax, Mysore vs Gurunath Dhakappa, P. N. Krishna Iyer vs Commissioner of Incometax Kerala, , and Commissioner of Income tax, Mysore v.
D. C. Shah, 73, I.T.R. 692, explained.
Principle laid down in Gokul Chand vs Hukum Chand Nath Mal, 48,I.A. 162; held no more valid.
|
Appeal No. 2632 of 1969.
Appeal under section 116 A of the Representation of the People Act, 1951 from the judgment and order dated October 27, 799 1969 of the Allahabad High Court in Election Petition No. I of 1969.
G. N. Kikshit, for the appellant.
K. C. Sharma, M. section Gupta and section K. Dhingra, for respondent No. 1.
The Judgment of the Court was delivered by Bhargava, J.
This is an appeal by Manti Lal who was one of the candidates for election to the U.P. Legislative Assembly from Ahirori (Scheduled Caste) Constituency of Hardoi District, and who was defeated at that election by respondent No. 1 Parmai Lal.
The election was challenged on two principal grounds.
One ground was that respondent No. I was disqualified under section 8(2) of the Representation of the People Act, 1951 (hereinafter referred to as "the Act") for being chosen as a member of the Legislative Assembly, because he was convicted for offenses under sections 148 and 304 of the Indian Penal Code on 11th January, 1969, and was sentenced to imprisonment exceeding two years.
The other ground was that a number of ballot papers cast in favour of the appellant had been wrongly rejected instead of being counted in favour of the appellant, that some ballot papers were wrongly counted for respondent No. I instead of being rejected, and that some ballot papers were wrongly counted in favour of respondent No. 1 instead of being counted in favour of the appellant or other candidates.
The High Court of Allahabad framed three different issues in respect of this claim of wrong rejection or wrong counting of the ballot papers, In the written statement,respondent No. I pleaded that a number of ballot papers were wrongly counted in favour of the appellant instead of being counted in favour of the other candidates, that a number of ballot papers were wrongly rejected instead of being counted in favour of respondent No. 1, and, further, that a number of ballot papers were wrongly counted in favour of the appellant instead of being rejected.
The learned Judge, who tried the election petition, framed three issues in respect of these pleadings also which were put forward in the written statement and not by way of a petition of recrimination.
On the basis of examination of the ballot papers and the evidence before him, a finding was recorded that, after correcting the errors made in counting, the net result would ' be that the appellant will have a net gain of only 6 votes, while respondent No. I would have a net loss of 24 votes.
It appears that respondent No. I had received 13,508 votes, while the appellant had received 13,271 votes.
After taking into account the finding, the valid votes received by the appellant would total to 13,277, while respondent No. I would still have 13,484 valid ' votes, so that the election of respondent No. 1 could not be declared 800 void.
The appellant had claimed that, on a proper counting, . it would be found that he had a majority of votes, and had prayed for a declaration that he is the successful candidate.
On the finding recorded, both the prayers of the appellant failed.
The High Court further held that respondent No.
I was not disqualified under section 8 (2) of the Act and, consequently, his election was valid.
The petition having been dismissed by the High Court, the appellant has now come up in this appeal under section II 6A of the Act.
On the issue relating to disqualification, the facts that need be .noticed are that 9th January, 1969 was the last date for filing nominations in this constituency and respondent No. 1 was convicted two days later on 11th January, 1969 and sentenced, inter alia .to ten years ' rigorous imprisonment under section 304, I.P.C.
On 16th January, 1969, he filed an appeal against this conviction in the High Court.
Polling took place on 9th February, 1969 and the result was declared on 11th February, 1969.
Respondent No. 1 was declared as the successful candidate having secured the largest majority of votes.
On 30th September, 1969, his appeal was allowed by the High Court and his conviction and sentence were set aside.
At this time, the election petition was still pending.
In fact, the judgment in the election petition was delivered on 27th October, 1969.
On these facts, it is clear that, though the conviction of respondent No. 1 was recorded by the trial Court on 11th January ', 1969, he was acquitted on 30th September 1969 in appeal which acquittal had the effect of completely wiping out the conviction.
The appeal having once been allowed, it has to be held that the conviction and sentence were vacated with effect from the date on which the conviction was recorded and the sentence awarded.
In a criminal case, acquittal in appeal does not take effect merely from the date of the appellate order setting aside the conviction; it has the effect of retrospectively wiping out the conviction and the sentence awarded by the lower Court.
The disqualification relied upon by the appellant wag laid under section 8 (2) of the Act read with Article 102 (1 ) (e) of the Constitution.
The provision is that a person convicted by a court in India for any offence and sentenced ,to imprisonment for not less than two years shall be, disqualified .from the date of such conviction and shall continue to be disqualified for a further period of five years since his release.
The argument on behalf of the appellant was that, though respondent No. I was not disqualified at the time of filing of nomination, he was, in fact, disqualified on 9th February, 1969, the date of polling, as well as on 11th February, 1969, when the result, was declared, because his conviction had been recorded and he had been sentenced to ten years ' rigorous imprisonment on 11th January, 1969.
It was further urged that, though the appeal had been filed, that 801 appeal did not have the effect of Wiping out this conviction.
In these circumstances, it was urged that his election was void and should have been set aside on the ground of this disqualification.
This argument overlooks the fact that an appellate order of acquittal, takes effect retrospectively and the conviction and sentence are deemed to be set aside with effect from the date they were recorded.
Once an order of acquittal has been made, it has to be held that the conviction has been wiped out and did not exist at all.
The disqualification, which existed on the, 9th or 11th February, 1969 as a fact, was wiped out when the conviction recorded on 11th January, 1969 was set aside and that acquittal took effect from that very date.
It is significant that the High Court, under section 106 ( 1) (a) of the Act, is to declare the election of a returned candidate to be void if the High Court is of opinion that, on the date of his election, a returned candidate was dot qualified, or was disqualified, to be chosen to fill the seat under the Constitution or the Act.
It is true that the opinion has to be formed as to whether the successful candidate was disqualified on the date of his election; but, this opinion is to be formed by the High Court at the time of pronouncing the judgment in the elec tion petition.
In this.
case, the High Court proceeded to pronounce the judgment on 27th October, 1969.
The High Court had before it the order of acquittal which had taken effect retrospectively from 11th January, 1969.
It was, therefore, impossible for the High Court to arrive at the opinion that on 9th or 11th February, 1969, respondent No. 1 was disqualified.
The conviction and sentence had been retrospectively wiped out, so that the opinion required to be formed by the High Court to declare the election void could not be formed.
The situation is similar to one that could have come into existence if Parliament itself had chosen to repeal section 8 (2) of the Act retrospectively with effect from 11th January, 1969.
Learned counsel conceded that, if a law had been passed repealing section 8 (2) of the Act and the law had been deemed to come into effect from 11th January, 1969, he could not have possibly urged thereafter, when the point came up before the High Court, that respondent No. 1 was disqualified on 9th or 11th February, 1969.
The setting aside of the conviction and sentence in appeal has a similar effect of wiping out retrospectively the disqualification.
The High Court was, therefore, right in holding,, that respondent No. 1 was not disqualified and that his election was not void on that ground.
On the second point, the main argument of counsel for the appellant was that the High Court committed the error of framing three issues on the basis of pleadings in the written statement which challenged the correctness of the acceptance or rejection of ballot papers without any recrimination being filed by respondent L 169 Sup.
C I (P)/71 7 802 No. 1 under section 97 of the Act.
Counsel wanted to argue this question of law in detail, but we consider that, in the present case, 10 is not necessary to go into this point at all.
Even if the three issues framed on the basis of pleadings in the written statement are ignored, and account is taken only of findings recorded on the three issues framed on the basis of pleadings in the election petition, it would be found that respondent No. 1 still had a majority of valid votes, and the appellant could not claim that the election of respondent No. 1 be set aside and the appellant be declared as the successful candidate.
The findings of fact recorded by the Judge are that, under Issue No. 5, 18 ballot papers mentioned in Schedules III and IV should be counted as valid votes for the appellant, while 24 ballot papers were wrongly counted in favour of respondent No. 1.
Under Issue No. 3, the finding is that the appellant is entitled to add 111 valid votes in his favour and, under Issue No. 4, the finding is that 74 votes would be lost by respondent No. 1.
If these figures are accepted and taken into account, the appellant would receive 13,400 valid votes, being the total of 13,271 votes found in his favour at the time of declaration of the result and 129 votes which the appellant is entitled to add as a result of the findings on the three issues.
So far as respondent No. 1 is concerned, he loses 98 votes as a result of the findings recorded by the High Court; and, on deducting these votes from 13,508 received by him, respondent No. 1 is left with 13,410 votes.
Respondent No. 1, thus, has a majority of 10 votes, so that his election is valid. ' Counsel, however, challenged one finding recorded by the High Court in respect of 64 ballot papers which, the appellant had claimed, had been wrongly rejected and should have been counted in his favour.
These ballot papers have not been produced before us.
The learned Judge held that they were invalid votes because "thy bear no recognizable seal impression that might be said to have been made with the instrument supplied for marking the vote.
" The argument of counsel for the appellant is that, even on this finding recorded by the High Court, these votes should have been counted in his favour, because they cannot be held liable to rejection under rule 56(2) (b) of the Conduct of Elections Rules, 1961.
That sub rule runs as follows : "The returning officer shall reject a ballot paper if, to indicate the vote, it bears no mark at all or bears a mark made otherwise than with the instrument supplied for the purpose.
" The argument urged is that, according to the Judge, the impressions on these 64 ballot papers could not be identified with the seal supplied for marking the votes, which only leads to the inference that they may bear marks with that seal or may not.
For 803 rejection under rule 56(2)(b), there must be a definite finding that they bore marks made otherwise than with the seal supplied for the purpose.
In this case, the Returning Officer rejected the ballot pairs holding that the marks made on these ballot papers were mad otherwise than with the instrument supplied for the purpose.
The appellant challenged that decision of the Returning Officer in this election petition.
The burden lay on him to establish that the Returning Officer had wrongly rejected these ballot papers.
He could only succeed if he had proved that the marks made were with the instrument supplied for the purpose.
This the appellant failed to do.
In fact, the finding recorded by the learned Judge of the High Court amounts to holding that the marks made cannot be identified with the seal which was supplied for marking the votes and, consequently, an inference, follows that they must have been made by some other means.
On this finding, the learned Judge was quite correct in not upsetting the order of the Returning Officer rejecting these votes.
If these 64 votes are not counted in favour of the appellant, the appellants case fails for the majority of votes still remains in favour of respondent No. 1.
The appeal, therefore, fails and is dismissed with costs.
Y.P. Appeal dismissed.
| IN-Abs | The appellant challenged the election of the first respondent to the State Legislative Assembly on the grounds : (1) the respondent was disqualified under section 8(2) of the Representation of the People Act, because, on the date of his election he stood convicted 'for offenses under .the Penal Code, though later, he was acquitted by the High Court and (ii) the Returning Officer rejected some ' ballot papers cast in the appellant 's favour holding that the marks made on those ballot papers were made otherwise than with the instrument supplied for the purpose and that those ballot papers were therefore liable to rejection under r.56(2) of the Conduct of Election Rules, 1961.
The High Court dismissed the petition.
In appeal to this Court, HELD: Dismissing the appeal, (1) In a criminal case, acquittal in appeal does not take effect merely from the date of the appellate order setting aside the conviction, it has the effect of retrospectively wiping out the conviction and sentence awarded by the lower court.
The opinion whether a successful candidate was disqualified on the date of his election is to be formed by the High Court .at the time of pronouncing judgment in the election petition.
When the High Court had before it the order of acquittal which had taken effect retrospectively, it was impossible for the court to arrive at the opinion that on the date of election the respondent was disqualified.
The High Court was therefore, right in holding that the respondent was not disqualified and that his election was not void on the ground.
[800 F] (2) For rejection under r. 56(2)(d) there must be a definite finding that the ballot papers bore marks made otherwise than with the seal supplied for the purpose.
In the present case, the finding recorded by the High Court amounted to holding that the marks made could not be identified with the seal which was supplied for marking the, votes.
On this finding the High court was right in not upsetting the order of Returning Officer for rejecting these votes, and consequently an inference follows that they must have been made by some other means.
If these votes were not to be counted in favour of the appellant the appellant 's case had to fail, because, on the evidence recorded and the issues framed on the basis of the pleadings in the election petition the respondent had still a majority of valid votes.
[803 A]
|
minal Appeal No. 164 of 1967.
Appeal by special leave from the judgment and order dated October 14, 1966 of the Allahabad High Court, Lucknow Bench, in Criminal Appeal No. 425 of 1964.
O. P. Varma, for the appellant.
O. P. Rana, for the respondent.
The Judgment of the Court was delivered by Dua, J.
Subedar, appellant, has come up an appeal by special leave from his conviction under section 396 read with section 109, I.P.C. and sentence of life imprisonment imposed by the temporary Civil & Sessions Judge, Hardoi and affirmed on appeal by the Allabad High Court according to which the appellant 's case is covered by the second and third clauses of section 107, I.P.C. read with Explanation 2.
Seven persons, including the appellant, were tried, fixe under section 396, I.P.C. and Subedar, appellant, and Tota under section 396 read with section 109, I.P.C. The trial court convicted six and acquitted one.
The appeal of the convicted persons to the High Court failed.
In this Court only Subedar has appealed.
According to the courts below Subedar and Tota were not amongst the dacoits.
They are, however, stated to have assembled at the time of the dacoity which was committed on the night between the 21st and 22nd March, 1963.
Subedar, it is not disputed, is a first cousin of the victims of the dacoity (Gajodhar 828 and Chhotey Lal) and is a resident of village Zafarpur where the dacoity was committed.
Gajodhar, it may be stated, was killed during the course of the dacoity.
The circumstances on which the prosecution relied against Subedar in the High Court are (1) bitter enmity between Gajodhar and Chhotey Lal and, Subedar and Tota who are fast friends on the other; (2) the nature of the incident suggests that the primary object of the culprits was to commit the murder of Gajodhar and Chhotey Lal and touch the culprits did not succeed in killing Chhotey Lal his property was looted as an incidental venture; (3) on the evening preceding the night of dacoity, Subedar and Tota were seen in a grove south of the village within less than a mile from Zafarpur in the company of five or six persons including appellant, Gajju son of Chheda, armed with kantas, bhallas and lathis.
On the night following the dacoity was committed at the house of Gajodhar and Chhotey Lal when Gajodhar was killed and Chhotey Lal seriously injured and in the commission of that offence Gajju son of Chheda participated; (4) Subedar, who was inimical towards Gajodhar.
and Chhotey Lal tried to show false sympathy for them by raising an alarm at the time of dacoity; (5) on the following morning Subedar lodged first information report by way of Peshabandi in order to, put the police on wrong track.
None of these circumstances is, in our view, established on the record; nor can they be considered either singly or collectively to be sufficiently cogent to bring home to the appellant abetment of the offence under section 396, I.P.C. beyond the possibility of a reasonable doubt.
According to Chhotey Lal undoubtedly there was a dispute in regard to property between him and the appellant who is his first cousin and indeed court litigation was pending between them.
But it seems to be an exaggeration to say that there was bitter enmity between the parties.
In support of the second circumstance also we are unable to find any evidence on the record.
The inference seems to be conjectural, not supported by the material on the record on any rational basis.
The charge under section 396, I.P.C. also postulates murder in the course of the commission of dacoity and does not quite support the High Court 's view.
In any event it does not implicate the appellant.
After dealing with the last two circumstances we will turn to the third.
Subedar, it is conceded, actually lodged the first information report (exhibit Ka 7) on the, morning of 22nd March.
It was a writ 829 ten report covering nearly three printed pages.
Now, merely because there was some dispute or litigation pending in courts between the parties it does not follow that the report was lodged by the appellant with the object of misleading the police or in order to forestall suspicion against him.
From the contents of the report it is not possible to draw this inference.
There is nothing mis leading in it and certainly nothing indicative of a design to put the police on a wrong track.
In fact its detailed nature suggests.
that it must have emanated from the persons who had taken full account of the loss and had even evaluated the articles stolen.
The dacoity and murder it may be recalled was committed on the night between 21st and 22nd March.
The written information was given by Subedar on the morning of the 22nd at 6.15 a. M. at the police station about 7 miles away.
In these circumstances the suggestion of Peshabandi (to forestall suspicion) by the appellant seems to be wholly insupportable.
Chhotey Lal, who appeared as P.W. 2, admitted in his cross examination that Subedar, accused, had gone to the, police station to lodge a report regarding the occurrence in question.
Though he denied that he had sent Subedar to lodge the report he was constrained to admit that the following day at 9 or 10 O 'clock the Sub Inspector had also told him that Subedar had gone to the police station to lodge the report.
He also admitted that when the Sub Inspector informed him about Subedar having gone to lodge the report on his behalf he did not tell the Sub Inspector that Subedar was inimical to him and his report should, therefore , be shown to him for scrutiny The detailed nature of the report, the contents of which have not been show in to be incorrect, were presumably given to the appellant by Chhotey Lal.
These circumstances support rather than negative the theory that Chhotey Lal had sent Subedar for lodging the report.
There is, however, positive evidence in the statement of Dammar (P.W. 5) that Chhotey Lal had sent the appellant to lodge airport.
Dammar (P.W. 5) had also accompanied Subedar along with Lila Pradhan and the chowkidar.
We see no reason for disbelieving the testimony of P.W. 5.
P.W. 17 Chaudhari Ishrat Husain, Sub Inspector, has stated that Subedar was arrested by him on the 15th April, 1963 The statement of Babu Ram (P.W. 7) and Khanna (P.W. 8), the two witnesses on whose evidence the appellant is convicted were recorded by him on the 28th March, 1963.
It is, however, not known as to what they had stated during the investigation.
A day earlier on 27th March, 1963 P.W. 17 had actually framed a charge sheet against Jitta and Gajjoo son of Rupan Pasi.
On the,.
9th April, 1963 an application by Chhotey Lal was received by P.W. 17 in which suspicion was cast on Subedar and Tota.
Prior to 9th April, according this witness, he had no proof of these two persons having participated in the dacoity though he admits that he had already recorded Chhotey Lal 's statement before 9th April.
In fact Sub Inspector Deorary (P.W. 15) had recorded 830 Chhotey Lal 's statement as early as March 22, 1963 and it was from P.W. 15 that P.W. 17 took over the investigation.
P.W. 15 does not say that Chhotey Lal or anyone else suspected the, appellant The foregoing discussion strongly indicates that the implication of Subedar, appellant, was an after thought.
Circumstances nos.
4 and 5 have thus no basis and appear to be purely conjectural.
We may now appropriately refer to the statements of the, two witnesses whose sole, testimony appears to be the basis of the appellants conviction.
The third circumstance is found on their evidence.
Babu Ram (P.W. 7) whose statement was recorded in court on the 28th March, 1964 has deposed that about a year earlier he was returning to his village, from the Consolidation Office at Thomharwa in the evening when the sun was about to set.
Khanna and Bashir were with him.
When they reached near the big grove lying to the south of village Daulatpur, he saw five or Six persons in the grove.
Out of them he knew only Tota and with Subedar.
Others were not known to him.
They were armed ballam, kanta and lathis.
On the same night a dacoity was committed at the residence of Gajodhar and he was killed by the dacoits.
Khanna (P.W. 8) has deposed in similar terms.
The contradictions elicited in their cross examination would show that their statement on the question of the presence of the appellant in the grove, cannot be safely relied upon.
According to Babu Ram who had on the day in question gone from Katghara (which was also the village of Khanua, P.W. 8) to the Consolidation Office in village Thomharwa along with Khanna and Bashir, they had made merely oral request in regard to their grievance without subMitting any application.
Khanna (P.W. 8) has, on the other hand, stated that Bashir and Babu Ram met him only on his way back home.
He professes to have submitted his application but expresses ignorance about Babu Ram and Bashir having done so because they had not met him, in the Consolidation Office.
This contradiction on the facts and circumstances of this case is very material and casts a serious doubt on the veracity of their version in regard to the circumstances in which they profess to have seen the appellant I near the grove.
In their cross examination a suggestion was also thrown that Subedar had appeared as a defence witness in a case, against one Jailal, Chamar, in which case these two witnesses had appeared for the prosecution.
This suggestion was apparently intended to indicate the motive on the part of these two witnesses to falsely implicate the appellant.
The evidence of these two witnesses seems to us to be too infirm to carry conviction to their deposition that they saw the appellant as alleged.
It is indeed some what surprising how their evidence was accepted by the courts below, without appropriate scrutiny, in holding the presence of the appellant in the grove.
But even assuming that the appellant was seen by them as alleged, that by 831 itself is not sufficient to connect him with the offence charged.
It cannot be said that from this it follows as a necessary and the only rational or reasonable inference that the appellant was as abetter of the dacoity _and murder.
On a practical approach the reasonable possibility of his innocence cannot be ruled out.
The courts below have erroneously ignored this vital aspect.
At this stage we may refer to some evidence which was recorded in the High Court on appeal.
It appears that on behalf of the present appellant and Tota it was complained in the High Court by their counsel that the circumstance that these two accused persons had been seen with the culprits who Committed dacoity in question was not clearly put to them under section 342, Cr.
P.C. by the trial court, and that they were misled in their defence because the trial court had questioned them in a manner which suggested that they been charged with having actually committed dacoity along with the other culprits.
The High Court, therefore, summoned Subedar and Tota who were on bail.
This order was passed on 11th August, ' 1966.
Subedar was accordingly examined by the High, Court on the 24th August and was confronted with the statement of Babu Ram and Khanna (PWs 7 and 8).
The appellant denied that he was ever in the grove as stated by these witnesses and stated that he had enmity with them and added that they were police witnesses.
Subedar also expressed a desire to produce witnesses in his defence.
Lila Pradhan was in the circumstances examined by the High Court as D.W. 4.
It may be, recalled that according to Danunar, Lila Pradhan was also one of the persons who had gone to lodge the report with him and Subedar.
Lila Pradhan deposed in his examination in chief in the High Court that Chhotey Lal had asked Subedar to go and lodge a report in the police station about the dacoity in question.
Subedar also raised an alarm at the time of the dacoity.
This witness, after his cross examination by the counsel for the State., was examined by the High Court at some length He was village Pradhan for six years.
His statement seems to be a frank and straightforward.
From the evidence on the record we are also, inclined to think that the appellant must have been included in the original list of prosecution witnesses.
This view finds Support from the statement of Sub Inspector, Deorary, (P.W. 15) who had recorded the statements of Chhotey Lal and Dammar and of other witness" on the day following the. dacoity, P.W. 17 seems to us to have wrongly denied this fact.
Apart from the material which we have just discussed.
there is no other relevant material to which our attention has been invited or which we have come across on this record relevant to the case against Subedar.
From this it is crystal clear that there was no real suspicion against Subedar and that it was in April that be was involved as an afterthought presumably because of some other ulterior consideration.
Both the trial court and the High 832 Court seem to us to have completely gone wrong in convicting Subedar.
The respondent 's counsel strongly contended that this Court should not interfere On Special leave appeal under article 136 with the conclusions of the two courts below holding die appellant guilty.
We do not agree with this submission.
This Court undoubtedly does not normally proceed to review and reappraise for itself the evidence in criminal cases when hearing appeals under article 136.
But when the judgment under appeal has resulted in grave miscarriage of justice by some misapprehension or mistake in the reading of evidence or by ignoring material evidence, then it is not only empowered but is expected to interfere to promote the cause of justice.
Article 136 is worded in very wide terms and the power conferred by it is not hedged in by any technical hurdles.
This over riding and exceptional power has been vested in this Court to be exercised sparingly and only in furtherance of the cause of justice.
In the present case which depends only on circumstantial evidence, the courts below have completely ignored the warming given by this Court in Hanumant vs The State of Madhya Pradesh(1) against the danger of conjectures and suspicions taking the place of proof.
The caution was reiterated thus : "It is well to remember that in cases where the evidence of a circumstantial nature, the circumstances from which the conclusion of guilt is to be drawn should in the first instance be fully established, and all the facts so established should be consistent only with the hypothesis of the guilt of the accused.
Again the circumstances should be of a conclusive nature and tendency and they should be such as to exclude every hypothesis but the one proposed to be proved.
In other words, there must be a chain of evidence so far complete is not to leave any reasonable ground for a conclusion consistent with the innocence of the accused and it must be such as to show that within all human probability the act , must have been done by the accused." (PP 1097 8).
Of course,the evidence on basic or primary facts has to be approached in the ordinary practical way but the conclusions in the case of circumstantial evidence must necessarily point only to the guilt of the accused excluding any reasonable possibility of his innocence.
We are not satisfied that the evidence against the appellant in this case satisfies this test.
The appeal accordingly succeeds.
The order of the court below as against the appellant is set aside and the appellant acquitted.
Y.P. Appeal allowed.
(1) (1952) S.C.R. 1091.
| IN-Abs | Seven persons including S (the appellant) and T were tried together, five under section 396 I.P.C. and the appellant and T under section 396 read with section 109 I.P.C. The prosecution case depended only on circumstantial evidence and mainly on the testimony of two witnesses.
The trial court convicted six accused, including the appellant and acquitted one.
On appeal to the High Court by the convicted persons additional evidence was recorded and section and T were also reexamined as accused for explaining the prosecution evidence.
In the High Court prosecution relied on the following five circumstances against S and T : 1.
Bitter enmity between G and C on the one side and S and T who were fast friends on the other; 2.
The nature of the incident suggests that the primary object of the culprits was to commit the murder of G and C and having failed to kill C his property was looted as incidental venture; 3.
On the evening preceding the night of dacoity S and T were seen in the company of five or six persons including the accused Gajju armed with kanthas, ballas and lathis, 4.
S, who was inimical to G and C, raised false alarm at the time of dacoity to show false sympathy; and 5.
On the following morning after dacoity S lodged F.I.R. by way of Peshabadi for putting the police on wrong track.
The appeal was dismissed by the High Court.
According to both the courts below S and T were, not amongst the dacoits.
They were only stated to have assembled at the time of the dacoity.
S is a first cousin of G and C, two victims of the dacoity.
G was killed during the course of the dacoity.
On appeal by special leave in the Supreme Court counsel for the respondent State contended that it should not interfere with the conclusions of the two courts below holding the appellant guilty.
Disagreeing with this contention.
HELD: This Court undoubtedly does not normally proceed to review and reappraise for itself the evidence in criminal cases when hearing appeals under article 136.
But when the judgment under appeal has resulted in grave miscarriage of justice by some misapprehension or mistake in the reading of evidence or by ignoring material evidence then this Court is not only empowered but is expected to interfere to promote the cause 827 of justice.
Article 136 is worded in very wide terms and the power conferred by it is not hedged in by any technical hurdles.
This over riding and exceptional power has been vested in this Court to be exercised sparingly and only in furtherance of the cause of justice.
In the present case which depends only on circumstantial evidence.
the courts below have completely ignored the warning given by this Court in Hanumant vs The State of Madhya Pradesh [1952 S.C.R. 1091] against the danger of conjectures and suspicions taking the place of proof.
Evidence on basic or primary facts has of course to be approached in the ordinary practical way but the conclusions in the case of circumstantial evidence must necessarily point only to the guilt of the accused excluding any reasonable possibility of innocence.
[832 B].
After considering the evidence on the record, HELD : None of the five circumstances were established on the record; nor could they be considered either singly or collectively to be sufficiently cogent to bring home to the appellant abetment of the offence charged beyond the possibility of reasonable doubt.
The evidence in the case did not satisfy the test required in cases founded on circumstantial evidence.
The appeal was allowed.
|
iminal Appeal No. 56 of 1968.
Appeal from the judgment and order dated February 9, 1968 of the Kerala High Court in O.P. No. 5032 of 1967 (Contempt).
699 Y. K.Krishna Menon, D. P. Singh, N. Nettar and Y. J. Francis, for the appellant.
A. Y. V. Nair, for the respondent.
M. R. K. Pillai, for the intervener.
The Judgment of the Court was delivered by Hidayatullah, C. J.
Mr. E. M. section Naniboodiripad.
(former Chief Minister of Kerala) has filed this appeal against his conviction and sentence of Rs. 1000 fine or simple imprisonment for one month by the High Court of Kerala for contempt of Court.i Judgment, February 9, 1968, was by majority Mr. justice Raman Nair (now Chief Justice) and Mr. justice Krishamoorthy lyer formed the majority.
Mr. Justice Mathew dissented.
The case has been certified by them as fit for appeal to this Court under article 1 3 4 ( 1 ) (c) of the Constitution.
The conviction is based on certain utterances of the appellant, when he was Chief Minister, at a Press Conference held by him at Trivandrum, on November 9, 1967.
The report of the Press Conference was published the following day in some Indian newspapers.
The proceedings were commenced in the High Court on the sworn information of an Advocate of the High Court, based mainly on the report in the lndian Express.
The appellant showed cause against the notice sent to him and in an elaborate affidavit stated that the report 'was substantially correct, though it was incomplete in some respects. ' The offending parts of the Press Conference will be referred to in this judgment, but we may begin by reading it as a whole.
This is what was reported : "Marx and Engels considered the judiciary as an instrument of oppression and even today when the State set up his (sic) not undergone any change it continues to be so, Mr. Nambudiripad told a news conference this morning.
He further said that Judges are guided and dominated by class hatred, class interests and class prejudices and where the evidence is balanced between a well dressed pot bellied rich man and a poor ill dressed and illiterate person the judge instinctively favors the former, the Chief Minister alleged.
The Chief Minister said that election of Judges would be a better arrangement, but unless the basic state set up is changed, it could not solve the problem.
700 Referring to the Constitution the Chief Minister said the oath he had taken was limited only to see that the constitutional provisions are practiced. 'I have not taken any oath ' the Chief Minister said "that every word and every clause in the Constitution is sacred".
Before that he had also taken an oath, Mr. Nambudiripad said, holding aloft a copy of the Marxist party 's programme and read out extracts from it to say that the oath had always held that nothing much could be done under the limitations of the Constitution.
Raising this subject of Constitution and judiciary suo motu at the fag end of his Dews conference the Chief Minister said so many reports have appeared in the press that Marxists like himself, Mr. A. K. Gopalan, and Mr. Imbichi Baba (Transport Minister) were making statements critical of the judiciary "presumably with the idea that anything spoken about the court is contempt of court".
His party had always taken the view, the ' Chief Minister said that judiciary is part of the class rule of the ruling classes.
And there are limits to the sanctity of the judiciary.
The judiciary is weighted against . workers, peasants and other sections of the working classes and the law and the system of judiciary essentially serve the exploiting classes.
Even where the judiciary is separated from the executive it is still subject to the influence and pressure of the executive.
To say this is not wrong.
The judiciary he argued was only an institution like the President or Parliament or the Public Service Commission.
Even the President is subject to impeachment.
After all, sovereignty rested not with any one of them but with the people.
Even with regard to Judges confidential records are being kept why ? The judge is subject to his own idiosyncrasies and prejudices.
"We hold the view that they are guided by individual idiosyncrasies, guided and dominated by class interests, class hatred, and class prejudices.
In these conditions we have not pledged ourselves not to criticise the judiciary or even individual judgments.
" This did not mean, he explained that they could challenge the integrity of the individual judge or cast reflections on individual judgments, the Chief Minister contended.
He did not subscribe to the view that it was an aspersion on integrity when he said that judges are guided 701 and dominated by class hatred and class prejudices.
"The High Court and the Supreme Court can haul me up, if they want" he said".
The affidavit Which he filed later in the High Court explained his observations at the press conference, supplied some omissions and pleaded want of intention to show disrespect and justification on the ground that the offence charged could not be held to be committed, in view of guarantee of freedom of speech and expression under the Constitution.
He stated that his observations at the press conference did no more than give expression to the Marxist philosophy and what.
was contained in Chapter 5 of the Programme of the Communist Party of India (Marxist) adopted in November 1964.
His pleas in defence were accepted by Justice Mathew who found nothing objectionable which could be termed contempt Of court.
The other two learned Judges took the opposite view.
Judgment was entered on the ' basis of the majority view.
In explaining his press conference the appellant added that it did not offend the majesty of law, undermine 'the dignity of courts ' or obstruct the administration of justice.
Nor did it have any such tendency.
He claimed that it contained a fair criticism of the system of judicial administration in an effort to make it conform to the peoples ' objective of a democratic and egalitarian society based on socialism.
He considered that it was not only his right but also his duty to educate public opinion.
He claimed that the statement read as a whole amounted to a fair and reasonable criticism of the present judicial system in our country, hat it was not intended to be a criticism of any 'Particular judge.
his judgment or his conduct, and that it could not be construed as contempt of court.
He added that he had always enforced the judgments of the courts and shown respect to the judiciary and had advocated the independence of the judiciary and decried all attempt to make encroachments upon it.
Criticism of the judiciary, according to him, was his right and it was being exercised by other parties in India.
He denied that it was for the courts to.
tell the people what the law was and asserted that the, voice of the Legislatures should be supreme.
He, however, found is party at variance with the other parties in that according to he political ideology of his party the State (including all the three limbs the Legislature, the Executive and the Judiciary) was the instrument of the dominant class or classes, so long as society was divided into exploiting and exploited classes, and parliamentary democracy was an organ of class oppression.
He concluded that his approach to the judiciary was : (a) the verdicts of the courts must be respected and enforced; 702 (b) no aspersions should be cast on individual judges or judgments by attributing motives to judges; (c) criticism of the judicial system or of judges going against the spirit of legislation should be permissible; and (d) education of the people that the State (including the judiciary) was an instrument of exploitation of the majority by the ruling and exploiting classes, was legitimate.
These principles, he submitted, were not transgressed by him and also summed up his observations and the press conference.
The law of contempt stems from the right of the courts to punish by imprisonment or fines persons guilty of words or acts which either obstruct or tend to obstruct the administration of justice.
This right is exercised in India by all courts when contempt is committed in facie curaie and by the superior courts on their own behalf or on behalf of courts subordinate to them even if committed outside the courts.
Formerly, it was regarded as inherent in the powers of a Court of Record and now by the Constitution of India, it is a part of the powers of the Supreme Court and the High Courts.
There are many kinds of contempts.
The chief forms of contempt are insult to judges, attacks upon them, comment on pending proceedings with a tendency to prejudice fair trial, obstruction to officers of courts, witnesses or the parties, abusing the process of the court, breach of duty by officers connected with the court and scandalising the judges or the courts.
The last form occurs, generally speaking, when the conduct of a person tends to bring the authority and administration of the law into disrespect or disregard.
In this conduct are included all acts which bring the court into disrepute or disrespect or which offend its dignity, affront its majesty or challenge its authority.
Such contempt may be committed in respect of a single judge or a single court but may, in certain circumstances, be committed in respect of the whole of the judiciary or judicial system.
The question is whether in the circumstances of this case the offence was committed.
In arguing the case of the appellant Mr. V. K. Krishna Menon contended that the law of contempt must be read without en croaching upon the guaranteed freedom of speech and expression in article 1 9 ( I ) (a) of the Constitution, that the intention of the contemner in making his statement at the press conference should be examined in the light of his political views as he was at liberty to put them before the people and lastly the harm done to the 703 courts by his statements must be, apparent.
He admitted that it might be possible to say that the speech constituted contempt of court but submitted that it would be inexpedient to do so.
He stated further that the species of contempt called 'scandalising the court had fallen in desuetude and was no longer enforced in England and relied upon Mcleod vs St. Aubyn(1).
He further submitted that the freedom Of speech and expression gave immu nity to the appellant as all he did was to give expression to the teachings of Marx, Engels and Lenin.
Lastly, he contended that a general remark regarding courts in general did not constitute contempt of court and relied upon The Government Pleader, High Court, Bombay v, Tulsidas Subhanrao Jadhav (2 ) and the observations of Lord Denning M. R. in R. vs Metropolitan Police Commissioner(3).
It is no doubt true that Lord Morris in at p. 561 observed that the contempt of court known from the days of the Star Chamber as Scandalum Justiciae Curiae or scandalising the judges, had fallen into disuse in England.
But as pointed out by Lord Atkin in Andre Paul Terence Ambard vs The Attorney General of Trinidad and Tobago (4) the observations of Lord Morris were disproved within a year in The Queen vs Gray(5).
Since then many convictions have taken place in which offence was held to be committed when the act constituted scandalising a judge.
We may dispose of the Bombay case above cited.
The con temner in that case had expressed contempt for all courts.
Beaumonth C. J. (Wasoodew, J. concurring) held that it was not a case in which action should be taken.
The case did not lay down that there could never be contempt of court even though the court attacked was not one but all the courts together.
All it said was that action should, not be taken in such a case.
if the Chief Justice intended laying down the broad proposition contended for we must overrule his dictum as an incorrect statement of law.
But we think that the Chief Justice did not say anything like that.
He was also influenced by the unconditional apology and therefore discharged the rule.
Another case cited in 'this connection may be considered here.
In Criminal Appeal No. 110 of 1960 (In Re Basuddeo Prasad, Advocate, Patna High Court) decided on May 3, 1962, the offending statement was that many lawyers without practice ' get appointed as judges of the High Courts.
The remark was held by this Court not to constitute contempt of court.
The remark was made after the report of the law Commission was pub (1) (3) (2) I.L.R. (4) A.I.R. 1936 P.C. 141 at 143.
(5) at 40.
704 lished and this Court held that the person concerned, who was then the Secretary of the Indian Council of Public Affairs and an advocate, was entitled to comment on the choice of judges and that the remarks were within the proper limits of public criticism on a question on which there might be differences of, opinion.
In our judgment that case furnishes no parallel to the case we have here.
Each case must be examined on its own facts and the decision must be reached in the context of what was done or said.
The appellant has contended before us that the law of con tempt should be so applied that the freedom of speech and expression are not whittled down.
This is true.
The spirit underlying article 19 (1) (a) must have due play but we cannot overlook the provisions of the second clause of the article.
While it is intended that there should be freedom of speech and expression, it is also intended that in the.
exercise of the right, contempt of court shall not be committed.
The words of the second clause are "Nothing in sub clause (a) of clause (1) shall affect the operation of any existing law or prevent the state from making any law, in so far as such law imposes reasonable restrictions on the exercise of t he right conferred by the sub clause. . in relation to contempt of court, defamation or incitement to an offence." These provisions are to be read with articles 129 and 215 which specially confer on this Court and the High Courts the power to punish for contempt of themselves.
Article 19(1) (a) guarantees complete freedom of speech and expression but it also makes an exception in respect of contempt of court.
The guaranteed right on which the functioning of our democracy rests, is intended to give protection to expression of free opinions to change political and social conditions and to advance human knowledge.
While the right is essential to a free society, the Constitution has itself imposed restrictions in relation to contempt of court and it cannot therefore be said that the right abolishes the law of contempt.
or that attacks upon judges and courts will be condoned.
Mr. V. K. Krishna Menon read to us observations from Samuel Roth vs United States of America( '), Arthur Terminiello vs City of Chicago (2), Charlotte Anita Whitney vs People of the State of California( ') and New York Times Company vs L. B. sunivan (4 ) on the high toned objective in guaranteeing freedom of speech.
We agree with the observations and can only say that (2) 93 LM Ed. 1131 at 1134.
(1) 1 L. Ed.2d 1489 it 1506.
(3) 71 L. ed.
(4) II L. ed.
705 reedom of speech and expression will always prevail except where contempt is manifest, mischievous or substantial.
The question always is on which side of the line the case falls.
The Observations of this Court in Kedar Nath Singh vs State of Bihar(4) in connection with sedition do not lend any assistance because the topic there discussed was different.
Freedom of speech goes far but not far enough to condone a case of real contempt of court.
We, shall,, therefore, see whether there was any justification for the appellant which gives him the benefit, of the guaranteed right.
The appellant has maintained that his philosophy is based upon that of Marx and Engels.
Indeed he claims to be descended from the last philosophe and seeks to educate the exploited peoples on the reality behind class oppression.
As a Marxist Leninist he advocates the radical and revolutionary transformation of the State from the coercive instrument of exploiting classes to an instrument which the exploited majority can use against these classes.
In this transformation he wishes to make the state wither away and with the, state its organs, namely, the Legislature, the Executive and the Judiciary also to change.
He has justified the press conference as an exposition of his ideology and claims protection of the first clause of article 19(1) which guarantees freedom of speech and expression.
The law of contempt, he says, cannot be used to deprive him of his rights.
All this is general but the appellant attacked the judiciary directly as "an instrument of oppression" and the judges as "dominated by class hatred, class interests and class prejudices", "instinctively" favoring the rich against the poor, He said that as part of the ruling classes the judiciary "works against workers, peasants and other sections of the working classes" and "the law and the system of judiciary essentially serve the exploiting classes".
Even these statements, he claims, are the teachings of Marx, Engels and Lenin whose follower he is.
This was also the submission of his counsel to us.
The appellant is only partly right.
He and his counsel may be said to have distorted the approach of Marx, Engels and Lenin, and we proceed to explain how Marx believed man 's inherent rationalism and virtue and depended upon them to create a better society where there would be no injustice and oppression and everyone would be able to share the fruits of man 's labour and genius.
attacked all forms of social evils.
Hence his, sympathy for the neglected and the 'injured and insulted ' laboring masses.
Marx was neither first nor alone in this.
Before him the Judeo Christians demanded social justice, Others who preached social (1) [1962] 2 Supp.
S.C.R.769 706 equality and denounced social injustice were the Utopian Socialists and the Christian Socialists.
They had all pointed out inequalities of civilization based on urban industrial development.
We had thus Auguste Comte 's Cours de philosophie positive, Feuerbach 's History of New Philosophy and the writings of Hegel.
Marx 's contribution was to create a scientific and ethical approach to the problem of inequality.
He adopted the Hegelian dialectical form to explain how the capitalist society had arisen and showed how it would meet its fall.
His view was that it nursed within itself the germ of its own destruction.
In his classic book Das Kapital he disclosed the clues for the transition from capitalism to socialism.
His labour theory was that the capitalist did not give to labour a due share from the value of the goods produced by labour because of the iron law of wages and this left the surplus labour value thereby saved in the hands of the capitalist.
In this way the capitalist became an exploiter who grew rich on the exploited labour surplus and could indulge in what he called 'capitalist luxuries '.
The introduction of machinery 'further cut down labour value and increased unemployment leading to reduction of wages.
In this way the means of production passed into the hands of a few.
Marx saw that this led to tensions which Marx thought would ultimately destroy the capitalist system.
He saw the Revolution drawing nearer which would destroy 'classes ' and the exploitation of man by man. 'Mere was in his view one obstruction to the triumph of the working classes and that was government established by the capitalists who could frame laws to enforce the differences.
From this stemmed his hostility to the state, its government and its laws.
The Communist Manifesto, which spoke of class struggle, particularly between the bourgeoisie and the proletarians gave a history of the domination of the ruling classes converting everyone not belonging to itself into paid wage laborers.
He said that these reactonaries were gearing all production to their own benefit and power.
Describing the communists in this context, the Manifesto said that they had no separate interests but represented the proletariat as a whole, irrespective of nationalities and that the class struggle was universal.
The communists were to settle the lines of action and their aim was abolition of property not property of the common man but the bourgeois property of the capitalist created by surplus from wage labour and resulting in accumulation of capital in the hands of the capitalist.
According to the communists, this capital became not a personal but social power and the fight visualised in the Manifesto was the termination of its class character.
Wage labour would thus leave no surplus, nor would it lead to accumulation of more wage labour yielding still greater surplus but the gains of 707 production would go to enrich labour in the communist society.
Freedom according to the Manifesto.never meant the abolition property in to but the abolition of the bourgeois individuality.
hat was done away with was not property but the means of subjugating labour of others to one 's own use.
This in short is the communist thesis of social equality as one gathers from the Manifesto.
Next follow the steps for achieving the betterment of what Saint Simon described as the largest and poorest class.
Engels in his Analysis of Socialism explained the different types but we are hot concerned with them here.
The radicals ' appeal followed, the forces of reaction released in the 1880s by Tzar Alexander 111.
The Populists of Plekhanov were routed and driven out.
Then in 1890s the young intellectuals took up the cause of socialism and Marxism provided the answer where the moderation and escapism of the Populists had failed.
The former was based on a scientific approach while Populism was empiric and tended to make Russia, as Bulgakov wrote, 'a peasant and crude country '.
The Populists based themselves on the Peasant Communes.
The rise of Vladimir Lenin at this time determined the future of Marxism and his classic "the State and Revolution" appears to be in the mind of the appellant when he made his pronouncements.
We are doubtful if he has fully appreciated the literature, if he has read it.
Lenin 's teachings on the State had removed the distortions of Marxism from the minds of the people.
He quoted long extracts from Marx and Engels to establish his points.
Lenin first took up Engel 's Origin of the Family, Private Property and the State.
The State, according to Engels, was not the image and reality of Reason as Hegel had maintained before.
It was the product of society, a power standing above society like the Leviathan of Hobbes.
According to Lenin the State was the product and manifestation of the irreconcilability of class antagonism.
The State emerged when class antagonisms could not objectively be reconciled.
The distortion which had crept into Marxism was that the State was regarded as an organ for the reconciliation of the classes.
Lenin reinterpreted Marx and, according to him, the State could neither arise nor maintain itself if it were possible to reconcile classes.
Marx had thought of the State as an organ of class rule and an organ of oppression.
The views of the Menshiviks and other Socialist revolutionaries were exactly the converse.
The disputes which have arisen in our country over the inviolability of property as a fundamental right have the same foundations.
One side views that the chapter on Fundamental Rights reconciles, through itself, the basic and fundamental class antagonisms and the state is no longer required to play any part.
The other side would give to one of the organs of the state, namely, 708 the legislature, a continual power of readjustment through laws and amendments of the Constitution.
Both views do not accord with the Communist Manifesto and hence the distrust of the Constitution by the communists disclosed, by the appellant.
Lenin, however, though that the State degenerated into an, instrument for the exploitation of the oppressed classes ' 'and wielded special public powers to tax and maintain armies.
Engels thought that this made the State stand above society and the officers of the State were specially protected as they had the protection of the laws.
From this sprung his hostility to the State.
Engels summed it up thus "The State is by no means a power forced on society, from without, Neither as little is it 'the reality of the ethical idea ', 'the image and reality of reason ' as Hegel maintains.
The state is a product of society at certain stage of development; it is the admission that this society has become entangled in an insoluble contradiction with itself, that it 'is cleft into irreconcilable antagonisms which it is powerless to dispel.
But in order that these antagonisms, classes with conflicting economic might not consume themselves and society in sterile struggle, a power seemingly standing above society becomes necessary for the purpose of moderating the conflict, of keeping it within the bounds of 'order '.
And this power, arisen out of society, but placing itself above it, and increasingly alienating itself from it, is the state." Lenin resumed this thought further thus : "This expresses with perfect clarity the basic idea of Marxism on the question of the historical role and meaning of the state.
The State is the product and the manifestation of the irreconcilability of class antagonisms.
The state arises when, where and to the extent that class antagonisms objectively cannot be reconciled.
And, conversely, the exis tence of the state proves that the class antagonisms are irreconcilable." Having viewed the state in this way these writers from Marx to Lenin viewed it as the instrument for the exploitation of the oppressed classes.
The Paris Commune of 1871 had stated its conclusions how the state gets above society but it was blurred in a reactionary manner later by Kautsky in 1912.
Lenin cleared the misconception in an exposition of Engel 's philosophy : ". .As the state arose from the need to hold class same antagonisms in check, but as it arose, at the time, in the midst of the conflict of these classes, it is, as a 709 rule, the state of the most powerful economically dominant class, which through the medium of the state.
becomes also the politically dominant class and thus acquires means of holding down and exploiting the oppressed classes. . the modern representative state is an instrument of exploitation of wage labour by capital.
" Engels added further "In a democratic republic wealth exercises its power indirectly, but all the more surely 'first by means of the 'direct corruption of officials ' and second, by means of 'an alliance between the Government and Stock Exchange." Lenin gave the example that "at the present time, imperia lism and the domination of the banks have 'developed ' both these methods of upholding and giving effect to the omnipotence of wealth in democratic republics of all descriptions into an unusually fine art".
He concluded that "a democratic republic is the best possible political shell 'for capitalism" and that "it establishes its power so securely, so firmly, that no change whether of persons, of institutions, or of parties in the bourgeois democratic republic can shake it".
Therefore, Marx, Engels and Lenin thought in terms of 'withering away of the state '.
Although Lenin thought that Engel 's doctrines were an adulteration of Marxism, he was not right.
Marx himself believed this.
In his Poverty of Philosophy, Marx says ". .
The working class, in the course of development, will substitute for the old bourgeois society an association which will exclude classes and their antagonism, and there will be no more political power properly so called, since political power is precisely the official expression of antagonism in bourgeois society.
" Marx and Engels in the Manifesto had considered the true state to be 'the proletariat organised as the ruling class '.
It was the Kautskyites (the Dictatorship of the Proletariat) who, misunderstanding the doctrines of Marx, taught that the proletariat needed the state.
According to Marx the proletariat needed a state which must wither away leading to the dictatorship of the proletariat.
In this fight for power the Communist Manifesto gave a purely abstract solution.
It was substitution of the commune for the bourgeois state machinery and a fuller democracy.
The Army 710 was to be replaced by armed people, the officials were to be elected and also the judges.
The Commune was not to be 'a talking parliament ' but a 'working ' body '.
It was to be the executive and the legislature at the same time.
The principles were formulated by Engels thus "The necessity of political action by the proletariat and of its dictatorship as the transition to the abolition of classes and with them the state. . . ".
The thesis on the withering away of the state was to be accompanied by a restatement of the functions of the law.
Law made by the bourgeois rulers was castigated as involving class supremacy.
The Hegelian doctrine of the apotheosis of Reason was replaced by the invocation of economic necessity as the only foundation for laws.
The laws which preserved privileges were to go, laws which kept the power of the bourgeois above the people were to go, only laws creating equality and preserving society from internal decay and disruption to be tolerated.
In all the writings there is no direct attack on the judiciary selected as the target of people 's wrath.
Nor are the judges condemned personally.
Engels regarded the courts as one of the means adopted by the law for effectuating itself.
It was thus that he wrote "The centralised state power, with its ubiquitus organs, standing army, police, bureaucracy, clergy, and judicature organs wrought after the plan of a systematic and hierarchic division of labour originates from the days of absolute monarchy, serving nascent middle class society as mightly weapons in its struggles against feudalism".
This is not a castigation of the judiciary as being dishonestly ranged against the people but only a recital of a historic fact in feudal societies.
He only said that the judicial functionaries must be divested of 'sham independence ' which marked their subservience to succeeding governments, and, therefore, be elected.
In one of his letters to the Spanish Federal Council of the International Workingmen 's Association, London, February 13, 1871, he talked of the power of the possessing classes the landed aristocracy and the bourgeoisie and said that they kept the working people in servitude not only by their wealth got by the exploitation of labour but also by the power of the state, by the army.
the bureaucracy, and the courts.
He was not charging the .judiciary with taking sides but only as an evil adjunct of the administration of class legislation.
The fault was with the state 711 and the laws and not with the judiciary.
Indeed in no writing, which we have seen or which has been brought to our notice,, Marx or Engels has said what the appellant quotes them as saying.
We have summarized into a very small compass, many thousands of words in which these doctrines have been debated from Plekhanov to Lenin through the thoughts of Kautsky, Kerensky, Lasalle, Belinsky and others who attempted a middle line between the revisionism of Bernstein and the Bolshevik views of Lenin.
We have done so because Mr. V. K. Krishna Menon sneared that many people learn about communism through Middleton Murray! It will be noticed that in all these writings there is not that mention of judges which the appellant has made.
Either he does not know or has deliberately distorted the writings of Marx, Engels and Lenin for his own purpose.
We do not know which will be the more charitable view to take.
Marx and Engels knew that the administration of justice must change with laws and changes in society, there was thus no need to castigate the judges as such beyond saying that the judicial system is the prop of the state.
The courts in India are not sui generis.
They owe their existence, from, powers and jurisdictions to the Constitution and the laws.
The Constitution is the supreme law and the other laws are made by Parliament.
It is they that give the courts their obligatory duties, one such being the settlement of disputes in which the state (by which we mean those in authority) are ranged against citizens.
Again they decide disputes in which class interests are apparent.
The action of the courts when exercised against the state proves irksome to the state and equally when it is between two classes, to the class which loses.
It is not easily realized that one of the main functions of courts under Constitution is to declare actions, repugnant to the Constitution or the laws (as the case may be), to, be invalid.
The courts as well as all the other organs and institutions are equally bound by the Constitution, and the laws.
Although the courts in such cases imply the widest powers in the other jurisdictions and also give credit where it belongs they cannot always decide either in favour of the state or any particular class.
There are innumerable cases in which the decisions have gone against what may be described in the language of communism as the exploiting classes.
For those who think that the laws are defective, the path of reform is open but in a democracy such as ours to weaken the judiciary is to weaken democracy itself.
Where the law is silent the courts have discretion.
The existence of law containing its 712 own guiding principles, reduces the discretion of courts to a minimum.
The courts must do their duty according to their own, understanding of the laws and the obligations of the Constitution.
They cannot take their cue from sentiments of politicians nor even indirectly give support to something which they consider to be wrong against the Constitution and the laws.
The good faith of the judges is the firm bed rock on which any system of administration securely rests and attempt to shake the people 's confidence in the courts is to strike at the very root of our system of democracy.
The oft quoted anger of the Executive in the United States at the time of the New Deal and the threat to the Supreme Court (which the United States had the good sense not be pursue) should really point the other way and it should be noted that today the security of the United States rests upon its dependence on Constitution for nearly 200 years and that is mainly due to the Supreme Court.
The question thus in this case, is whether the appellant has said anything which brings him out of the protection of article 19 (I) (a) and exposes him to a charge of contempt of court.
It is obvious that the appellant has misguided himself about the true.
teachings of Marx, Engels and Lenin.
He has misunderstood the attack by them On state and the laws as involving an attack on the judiciary.
No doubt the courts, while upholding the laws and enforcing them, do give support to the state but they do not do so out of any impure motives.
They do not range themselves on the side of the exploiting classes and indeed resist them when the law does not warrant an encroachment.
To charge the judiciary as an instrument of oppression, the judge as guided and dominated by class hatred, class interests and class prejudices, in stinctively favoring the rich against the poor is to draw a very distorted and poor picture of the judiciary.
It is clear that it is an attack upon judges.
which is calculated to raise in the minds of the people a general dissatisfaction with, and distrust of all judicial decisions.
It weakens the authority of law and law courts.
Mr. V. K. Krishna Menon tried to support the action of the appellant by saying that judges are products of their environment and reflect the influences upon them of the society in which they move.
He contended that these subtle influences enter into decision making and drew our attention to the writings of Prof. Laski, Justice Cordozo, Holmes and others where the subtle influences, of one 's upbringing are described.
This is only to say that judges are as human as others.
But judges do not consciously take a view against the conscience or their oaths.
What the appellant, wishes to say is that they do.
In this he has been guilty, of a great calumny.
We do not find it necessary to refer to these 713 writings because in our judgment they do not afford any justification for the contempt which has patently been committed.
We agree with Justice Raman Nair that some of them have the exaggerations of the confessional.
Others come from persons like the appellant, who have no faith in institutions hallowed by age and respected by the people.
Mr. V. K. Krishna Menon exhorted us to give consideration to the purpose for which the statement was made, the position of the appellant as the head of a State, his sacrifices, his background and his integrity.
On the other hand, we cannot ignore the occasion (a press conference), the belief of the people in his word as a Chief Minister and the ready ear which many in party and outside would to him.
The mischief that his words would cause need not be assessed to find him guilty.
The law punishes not only acts which do in fact interfere with the courts and administration of justice but also those which have that tendency, that is to say, axe likely to produce a particular result.
Judged from the angle of courts and administration of justice, there is not a semblance of doubt in our minds that the appellant was guilty on contempt of court.
Whether he misunderstood the teachings to Marx and Engels or deliberately distorted them is not to much purpose.
The likely effect of his words must be seen and they have clearly the effect of lowering the prestige of judges and courts in the eyes of the people.
That he did not intend any such result may be a matter for consideration in the sentence to be imposed on him but cannot serve as a justification.
We uphold the conviction.
As regards sentence we think that it was hardly necessary to impose heavy sentence.
The ends of justice in this case are amply served by exposing the appellant 's ignorance about the true teachings of Marx and Engels (behind whom he shelters) and by sentencing him to a nominal fine.
We accordingly reduce the sentence of fine to Rs. 50/ .
In default of payment of fine he will undergo simple imprisonment for one week.
With this modification the appeal will be dismissed.
| IN-Abs | The appellant, who was the Chief Minister of Kerala at the time.
, at ' a press conference held by him on November 9, 1967, made various critical remarks relating to the judiciary referring to it inter alia as "an instrument of oppression" and the Judges as "dominated by class hatred, class prejudices", "instinctively" favoring the rich against the poor.
He also stated that as part of the ruling classes the, judiciary "works 'against workers, peasants and other sections of the working classes" and "the law and the system of judiciary essentially served the exploiting classes".
These remarks were reported in the newspapers and thereafter in proceedings commenced ' in the High Court the appellant was called upon to show cause why he should not be committed for contempt.
In an affidavit in reply the appellant stated that the reports were "substantially correct", though incomplete in some respects.
He supplied some omissions and pleaded want of intention to show disrespect to the judiciary and justification on the ground that the offence charged could not be held to be committed, in view of the guarantees of freedom of speech and expression under the Constitution.
He claimed that his observations did no more than give expression to the Marxist philosophy and what was contained in the programme of the Communist Party of India.
By a majority judgement the appellant was convicted for contempt of court and fined Rs. 1000/ or simple imprisonment for one month.
In appeal to this Court it was contended on behalf of the appellant that the law of contempt must be read without encroaching upon the guarantee of freedom of speech and expression in Article 19(1)(a) : and that the intention of the appellant in making his remarks at the press conference should be examined in the light of his political views which he was at liberty to put before the people; he sought to justify the remarks as an exposition of his ideology which he claimed was 'based on the teachings of Marx and Engels and on this ground claimed protection of The first clause of article 19(1).
HELD : Upholding the appellant 's conviction The law punishes not only act which do not fact interfere with the courts and administration of justice but also those which have that tendency, that is to say, are likely to produce a particular result.
, Judged from the angle of courts and administration of justice" there was no doubt that the appellant was guilty of contempt of court.
Whether he misunderstood the teachings of Marx and Engels or deliberately distorted them was not to much purpose.
The likely effect of his words must be seen and they clearly had the, effect of lowering the prestige of judges and courts 698 in the eyes of the people.
That he did not intend any such result may be a matter for consideration in the sentence to he imposed on him but could not serve as a justification.
It was obvious that the appellant had misguided himself about the true teachings of Marx, Engles and Lenin.
He had misunderstood the attack by them on state and the laws as involving an attack on the judiciary.
No doubt the courts, while upholding the laws and enforcing them, do give support to the state but they do not do so out of any impure motives.
They do not range themselves on the side of the exploiting classes and indeed resist, them when the law doe.
not warrant an encroachment.
To charge the judiciary as an instrument of oppression, the judges as guided and dominated by class hatred, class interests and class prejudices, instinctively favoring the rich against the poor is to draw a very distorted and poor picture of the judiciary.
It was clear that the appellant bore an attack upon judges which was calculated to raise in the minds of the people a general dissatisfaction with, and distrust of all judicial decisions.
It weakened the authority of law and law courts.
[712 E] While the spirit underlying Art 19)(1)(a), must have due play, the Court could not overlook the provisions of the second clause of that Article.
Its provisions are to be read with articles 129 and 215 which specially confer on this Court and the High Courts the power to punish for contempt of themselves.
Although article 19(1)(a) guarantees complete freedom of speech and expression, it also makes an exception in respect of contempt of court.
While the right is essential to a free society, the Constitution has itself imposed restrictions in relation to contempt of court and it cannot therefore be said that the right abolishes the law of contempt or that attacks upon judges and courts will be condoned.
[704, C] Samuel Roth vs United States of America, I L.Ed.2d 1489 at 1506; Arthur Terminiello vs City of Chicago.
; at 1134; Charlotte Anita Whitney vs People of the State of California, ; , New York Times Company vs L. B. Sulivan, 686; and Kedar ' Nath Singh vs State of Bihar, [1962] 2 Supp.
S.C.R. 769, referred to.
While it is true that Lord Morris in Mcleod vs St. Aubyn at p. 561 observed that the contempt of court known from the days of the Star Chamber as Scandalum Justiciae Curiae or scandalising the Judges, had fallen into disuse in England, as pointed out by Lord Atkin in Andre Paul Terence Ambard vs The Attorney General of Trinidad, and Tobago, A.I.R. 1936 P.C. 141 at 143, the observations of Lord Morris were disproved within a year in The Queen vs Gray.
at 40.
Since then many convictions had taken place in which offence was held to be committed when the act constituted scandalizing a Judge.[703 D] The Government Pleader, High Court, Bombay vs Tulsidas Subhanrao Jadhav, I.L.R. ; explained.
In re : Basudeo Prasad, Cr. Appeal No. 110 of 1960 decided on May 3, 1962; distinguished.
|
Appeals Nos. 262 to 265 of 1970.
Appeals by special leave from the judgment and order dated May 1, 1969 of the Allahabad High Court in Sales Tax Reference Nos. 249, 250, 251 and 571 of 1966 and Civil Appeals Nos. 266 and 267 of 1970.
Appeals by special leave from the judgment and order dated January 29, 1969 of the Allahabad High Court in Sales Tax Reference Nos. 604 and 603 of 1965.
H. R. Gokhale, Gobind Das, D. N. Mishra and B. P. Singh, for the appellant (in all the appeals).
C. B. Agarwala and 0.
P. Rana, for the respondent (in all the appeals).
732 The Judgment of the Court was delivered by Hegde, J.
These are connected appeals by special leave.
The only question raised in these appeals is whether 'Sarin Tooth Powder ' manufactured by M/s. Sarin Chemicals Laboratory is "cosmetic" or a "toilet requisite" as held by the High Court of Allahabad or it is an unspecified commodity liable to sales tax at all points of sale as held by the Additional Judge (Revisions) Sales Tax, Agra.
The contention of M/s. Sarin Chemical Laboratory who is the appellant in all the appeals is that the turn over relating to the sales of tooth powder is liable to be taxed at the rate of 3 pies per rupee under section 3 of the U.P. Sales Tax Act (to be hereinafter referred to as the Act) whereas Commissioner of Sales Tax, U.P. contends that the said turn over is liable to be taxed at single point under section 3(A) of that Act read with Entry 6 of the notification No. 905/X dated March 31, 1956.
The High Court has accepted the contention of the Commissioner.
In these appeals the assessee challenges the conclusion reached by the High Court and supports the view taken by the Additional Judge (Revisions) Sales Tax, Agra, who held that the tooth powder is an unspecified commodity liable to tax under section 3 of the Act.
Neither the expression 'cosmetic ' nor 'toilet requisite ' has been defined in the Act.
The dictionary meaning of the expression 'cosmetic ' (see Webster 's international Dictionary) is "A preparation to beautify or alter appearance of the body or for cleansing, coloring, conditioning or protecting skin, 'hair, nails, eyes or teeth".
The same dictionary gives the meaning of the expression "toilet" thus : 'an act or process of dressing, especially formerly of dressing hair and now usually cleansing and grooming of one 's person".
The word "toiletry" is explained in the said dictionary as meaning "an article or preparation used in making one 's toilet such as soap, lotion, cosmetic, tooth paste, shaving cream, cologne etc.
According to the dictionary meaning tooth powder is regarded both as an item of cosmetic and toilet: but as observed by this Court in Bamavatar Budhaiprasad vs The Asstt.
Sales Tax Officer, Akola and another(1), the names of articles, the sales and purchases of which are liable to be taxed given in a statute unless defined in the statute must be construed not in a technical sense but as understood in common parlance.
Therein this Court was called ' upon to consider whether 'betel leaves ' could be considered as 'vegetable ' under item No. 6 of Schedule II of the C. P. Berar Sales Tax Act, 1947.
In that case this Court observed that the word 'vegetable ' had not been defined in the Act and being a word of every day use, (1) 12, section T. C. 286; 733 it must be construed in a popular sense, meaning "that sense which people conversant with the, subject in matter with which statute is dealing would attribute to it.
" Applying that test this Court ruled that betel leaves cannot be considered as 'vegetable '.
In common parlance a tooth powder is considered as a toilet.
That meaning ,accords with the dictionary meaning, as well.
The question whether tooth powder can be considered as a toilet came up before the Madras High Court in V. P. Sanasundara Mudaliar vs State of Madras( ') and before the Bombay High Court in Commissioner of Sales Tax vs Vicco Laboratories(2).
Both the courts took the view that the tooth powder is a toilet.
The same view has been taken by the Allahabad High Court.
We are in agreement with that view In the result these appeals fail and they are dismissed with costs hearing fee one set.
Y.P. Appeals dismissed.
(1) 14.
section T. C. 943.
(2) 22.
section T. C. 169.
| IN-Abs | On the question whether tooth powder manufactured by the assessees was "cosmetic" or a "toilet requisite" liable to tax under section 3(A) of the U.P. Sales Tax Act, read with Entry 6 of Notification No. 905/X dated March 31, 1956/or whether it is an unspecified commodity liable to tax under section 3 of the Act, HELD : Tooth powder is a toilet and therefore taxable under section 3(A) of the U.P. Sales Tax Act, read with the Notification.
Neither the expression 'cosmetic, nor 'toilet requisite ' has been defined under the Act.
The names of articles, the sales and purchases of which are liable to be taxed given in a statute, unless defined in the statute, must be construed not in a technical sense but as understood in a common parlance.
In common parlance a tooth powder is considered as a toilet and that meaning accords with the dictionary meaning as well.
[732 E, H] Bamavater Budhaiprasad vs The Asstt.
Sales Tax Officer, Akola and Another, 12, S.T.C. 286, followed.
V. P. Sanasundara Mudaliar vs State of Madras 14, S.T.C. 943; Commissioner of Sales Tax vs Vicco Laboratories, 22 S.T.C. 169, approved.
|
iminal Appeal Nos. 211 & 212 of 1969 and Review Petition No. 37 of 1970.
Appeals by Special leave from the judgment of the Calcutta 7 High Court dated August 18, 1969 in Criminal Appeal No. 183 of 1961.
C. K. Daphtary and section K. Dholakia, for the petitioner.
V. A. Seyid Muhammad and section P. Nayar for the respondents.
The Judgment of the Court on August 18, 1970 was delivered by Sikri, J.
These appeals, by special leave, are directed against the judgment of the High Court at Calcutta whereby the High Court (A. K. Das and K. K. Mitra, JJ.) set aside the order of acuittal and convicted the appellants before us under section 23(1A) of the Foreign Exchange Regulation Act (VII of 1947) hereinafter refered to as the Act.
The appellant Girdharilal Gupta, and the appellant Puranmall Jain, were sentenced to rigorous imprisonment for six months each and to pay 750 a fine of Rs. 2,000/ each, in default, to rigorous imprisonment ' for a further period of three months each.
The appellant, Bhagwandeo Tewari was sentenced to rigorous imprisonment for three months and to pay a fine of Rs. 1,000/ , in default, to rigorous imprisonment for two months.
The firm was sentenced to pay a fine of Rs. 2,000/ .
It does not appear that any special leave was obtained on behalf of the firm.
In order to appreciate the contentions made before us it is ncessary to state the relevant facts.
On October 25, 1958, Customs Preventive Officer B. Roy examined a parcel (wooden case) which purported to contain Rasogolla, Achar, papar and dried vegetable, booked for Hongkong, to be taken by the Swiss Air of which the Indian Airlines Corporation was the ,cargo handling agent.
The articles had been declared to be worth Rs. 20/ but the freight which had been paid came to Rs. 127.73 nP.
This excited the suspicion of the Customs Preventive Officer, B. Roy, and on opening the parcel and breaking down the case, five hundred ten currency notes of the denomination of hundred rupees each, valuing Rs. 51,0001 , were found.
The name of the consignor was Ramghawan Singh at Karnani Mansion, Park Street, Calcutta, but on enquiry no trace could be found of this Ramghawan Singh at Karnani Mansion.
In the course of further investigation suspicion fell ,on M/s. Agarwala Trading Corporation of which the appellants Girdharilal Gupta and Fumanmall Jain were the partners and the appellant Bhagwandeo Tewri was an employee.
On January 22, 1959, the office of the firm at 191, Mahatma Gandhi Road and the alleged residence of the partners at 11 B Jatindra Mohan Avenue was searched.
The appellant, Bhagwandeo Tewari, on being identified by the Traffic Assistant of the Indian Airlines Corporation, Ambar Nath Sen, P.W. 4, and one loader of Thai Airways, section K. Battu, P.W. 26, was arrested.
Certain incriminating documents, including account slips and cash books of the firm were seized.
On June 3, 1959, a complaint was lodged at the instance of the Assistant Collector of Customs, Calcutta.
After stating the above facts it was alleged, in the complaint that sending out money in Indian currency was prohibited under section 8(2) of the Act and any attempt to do the same was punishable under section 23B of the, Act.
At the trial a number of witnesses were examined.
B. Roy, Customs Preventive Officer, gave evidence regarding the dis covery of Rs. 51,0001 in Indian currency notes, apart from Rasogollas, pickles, etc.
on October 25, 1958.
No cross examination was directed to show that this did not happen on October 25, 1958.
751 section A. D. Moira, Traffic Assistant of the Indian Airlines Corporation, P.W. 2, who checks freight and does other transshipment work in course of his duties at Dum Dum airport, deposed that he received the relevant documents on October 25, 1958, from Calcutta office.
H. , said that the documents were in the handwriting of N. Sen of the Freight Section of the Calcutta Office.
Armed with the letter of authority, he took the parcel to the Customs Officer and P.W. 1, B. Roy, asked him to open the parcel and currency notes of the value of Rs. 51,000/ , along, with other things were discovered.
R. R. Mukherjee, Traffic Officer of the Indian Airlines Corporation, P.W. 3, is another witness to the recovery of the currency notes.
P.W. 4, Ambare Nath Sen, was the Traffic Assistant in the Indian Airlines Corporation, who had typed out the consignment note in respect of this parcel after seeing the shipping bill (Ext. 1).
He identified the appellant, Bhagwandeo Tewari, as the, person who had handed over the shipping bill to him and the letter of authority, Ext. 11 He said that he .calculated the freight and received the freight, from this appellant.
He further said that this appellant signed the consignment notes in Hindi in his presence and he remembered having seen this appellant writing a postcard on the adjoining table while he was preparing the consignment notes.
He further stated that his immediate superior officer, P. K. Chatterjee, was also present at the time this consignment was being booked.
Apparently this is not the first time that hiss appellant had gone to the Indian Airlines Corporation because P.W. 4 says that seven days ahead of October 24, 1958, this appellant had called on him with another shipment although that consignment was booked by P. K. Chatterji.
Some days after October 25, 1958, this witness P.W. 4was taken by the Customs Officer to some place to find the man who is alleged to have booked the Parcel.
Two or three months thereafter he was again taken by the Customs Officers to another place in Burrabazar area, which was the place of Agarwal Trading Corporation, and he said that he Pointed out the appellant, Bhagwandeo Tiwari, as the one who had taken the Parcel to him on October 24, 1958.
He was cross examined in order to show that he could not remember customers.
He admitted that it was not always possible for him to remember all the men who came in contact with him in the course of his work, but 'he said that he had told C. R. Basu who wag investigating the case that the person who brought the parcel was an oldish man and lean one, and had also described his nose.
He further admitted that at the place he identified appellant Bhagwandeo Tiwari, he was the only oldish man there.
He 4 Ll 100SupCI/71 752 said that he did not think that he committed a mistake unless the man he identified had a double in the shape of a twin brother and the like.
He further admitted that he had been trying to recollect the appearance of the man to reconstruct in his mind the outline of his appearance as far as he could.
The evidence of P.W. 4 impresses us and there is no reason why we should not place reliance on his evidence.
P. K. Chatterjee, P.W. 5, speaks of the earlier visit of the appellant Bhagwandeo Tiwari as the person who called on him with the shipping bill on October 17, 1958.
C. R. Basu, P.W. 6, Officer of the Customs who investigated the case, said that after making enquiries he applied for the issue of search warrant to search the premises No. 191, Mahatama Gandhi Road.
He also applied for a search warrant to search the premises of the partners of the firm at 11 B, Jatindra Mohan Avenue.
He did not himself search 11 B, Jatindra Mohan Avenue, but went to execute the search warrant at 191, Mahatma Gandhi Road, where on the identification of P.W.4 he arrested the appellant Bhagwandeo Tiwari.
He then conducted the search of the premises in the presence of the witnesses and took into possession one Rokar, one khata bahi, one nakal bahi, the attendance register and three account slips which he marked 8, 9 and 10 (Ext.
9 and 9/1 and 9/2 respectively).
We may reproduce his evidence regarding the discovery of these account slips because a great deal of argument has been addressed to us on the recovery of these slips.
He stated "The three slips, about which I have spoken just now, are in the same condition to day as I found them on the day when they were seized.
The witnesses to the search I conducted are Radhesyam Gupta and Lalit Kumar Chandu Lal Parekh.
Here is the search list over my signature and the signature of the witnesses.
(Ext. 10).
" In his cross examined he stated "You are right that Exhibits 9, 9/1 and 9/2 are included in Serial No. 38 of the search list.
The search list does not mention the slips separately but only mentions loose sheets in 'a sealed parcel.
It has been urged that there is no evidence to show when the seal was opened.
It is suggested that these slips have been fabricated and planted.
No such question was put to the witnesses and we are 753 unable 'to presume that the investigating officer would go about fabricating account slips in order to rope in the appellants.
The prosecution produced two witnesses who had signed the recovery list.
The evidence of Radheshyam Gupta, P.W. 7, must be discarded because although he was examined before the Chief Presidency Magistrate he was not made available for cross examination.
The learned counsel, Mr. Bhattacharya, suggested that if this witness had been produced for cross examination he would have deposed against the prosecution.
We are unable to draw any such presumption.
The other witness was Lalit C. L. Parekh, P.W. 8.
He had signed the search list but on cross examination he stated that "Basu had taken slips of paper from the 'Agal Bagal ' of the guddy, by which I mean from underneath the Takia on the bed".
He further said that "bits of paper Basu found from a wooden case as well." He further stated as follows "You are right that Basu placed all these bits of papers at one and the same place.
How many pieces ? I cannot say.
I did not count.
By guess I can say that the number of bits of paper would run to 50 or 60. 1 signed all the pieces of paper which were found so.
" The learned counsel fastens on the last line and says that these slips do not bear the signature of Lalit C. L. Parekh, and therefore it is clear that these have been fabricated later.
We are unable to sustain this contention.
The witness had signed a number of documents including the search list and he pay well have thought that he had signed every piece of paper which was seized.
No such question was put to the investigating officer.
P.W. 11, N. R. Paul, who was the assistant attached to the Appraising Department of the Calcutta Customs deposed re garding the preparation of the shipping bill.
It appears that the shipping bill bore the words "Thai Airways Co." and these words were scored out and "Swiss Air" written in hand.
He could not say who corrected the entry but nothing turns on this because it may be that the original idea was to send the parcel by Thai Airways but later on for some reasons it was not possible to send that parcel through this airways.
The prosecution led evidence to show that as a matter of fact appellant Bhagwandeo Tiwari had approached some body in Thai Airways but we need not dwell on, this part of the case.
754 The prosecution also produced Shridhar Chatterjee, hand writing expert, who examined the signature reading as "Ram Chandra" writing in Hindi and in pencil in the two way bills, Ext. 3 and 4, and the specimen writing, He was of the opinion that the writer of the specimen writing was the writer of the signature "Ram Chandra" appearing in the airway bill.
We may mention that Bhagwandeo Tiwari is alleged to have signed as "Ram Chandra".
The expert also gave the opinion that.
the type written papers, Exts. 11 and IX had been typed on the same machine.
Exhibit 9/2, 'one of the seized account slips, is a very im portant document.
The official translation is printed in the records and reads: "Translation of EXT.9/2 dated 24 10 58. . . 2/8/ 4 cases Godown A/C 1 . . . /8/ 3 "opened below and goods brought.
In Cash (Paper Torn) cases bound (Pettis)(?). . . /4/ Case I ' (Illegible) /2/ Illegible (Paper tom) Cases (Pettis)(Illegi ble) 2 R.B. /151 for coming and going to I.A.C. Rs.223/8/. 4/51 127/73 HongkongShanghai (torn & illegible)" The High Court had to translate it again and the last line was translated into "Hongkong Lagaya" in, place of "Hongkong Shanghai".
In the account books of M/s. Agarwala Trading Corporation (Exts. 21 and 21/1) under the entries dated October 24, 1958, on which date the booking is alleged by the prosecution to have been done, on entry appears as follows: "Rs. 415/ Through Bhagwan Deo /8/ Colli (Janka) 115/ Rickshaw fare 2/ 14/ Cart Charge Rs. 1/8/ Through Ghanshyam & Pandey /4/ Bus fair 1/4/ Bus fair 1/4 Bus Tarm" It will be noticed that the same items appear in Ext.
The breakup in exhibit 9(2) is slightly different but in the account book 755 the four annas and two annas entries have been added to Rs. 2/8/to make Rs. 2/14/ as cart charge.
Again the entries in Ext.
9/1 are as follows "/1/ But hire for going home.
1/4/ Caine from home to Thai (?) Taxi /12/ Riksha hire from Thai /1/ Coolie /4/ Thai Office Colie ______________________ 2/6/ Rs. 147/10/ In Cash" The corresponding entry in the account books are as follows "Rs. 2/6/ (Bus fare /1/Taxi fare Rs. 1/4/ Rickshaw Rs. /12/ Cooli 151 " It is true that the entry of Rs. 127/73 which exists in Ext.
9/2 has not been carried over into the account books but perhaps that would have been even too much for an accountant to do.
He never dreamt that these entries, of Rs. 4/5/ and Rs. 2/6/ in the account books would be seized upon by the prosecution to complete the case against the appellants.
Be that as it may, the entries in the account books demolish the case of defence that these slips were fabricated and that they had nothing to do with the firm.
exhibit 9/2, on the other hand, clearly shows that somebody had gone to the I.A.C. office and paid /15/ for going and coming to the I.A.C. office and paid the incidental charges.
Mr. Bhattacharya, who followed Mr. Chagla for the appellants, contends that a serious question of law is involved, the question being that if an investigating officer conducts a search his evidence cannot be relied on unless it is corroborated.
It is a novel proposition and he has not been able to cite any authority or principle in support of it.
It all depends on the facts in each, case.
At any rate here we have the corroborative evidence of P.W. 8, who signed the search document and also the entries themselves in the account books and their tallying with the slips.
It was urged on behalf of the defence counsel that these slips could not be taken into consideration at all because they are not evidence.
We are unable to appreciate why they are not evidence.
These are part of the things discovered during search and 756 if the entries therein are carried into the account books there is no reason why these things could not be looked at.
The learned counsel has taken us through the judgments of the Chief Presidency Magistrate and the High Court.
We are in agreement with the conclusions arrived at by the High Court.
We have ourselves gone into the evidence as the High Court had reversed the order of acquittal and in one or two places made minor mistakes.
Mr. Chagla, while arguing on behalf of the partners, said that there was evidence that one, partner was not in Calcutta on the 24th or 25th October, 1958,as he was in Japan.
But even if we take this fact into consideration, which fact was not brought to the notice of the Chief Presidency Magistrate or the High Court, it does not help him at all.
Entries were made in the account books and it was the firm 's money which was spent and he being an active partner is clearly liable under section 23C(1) of the Act which reads : "23C(1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in charge of, and, was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly; Provided that nothing contained in this sub section shall render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to pre vent such contravention.
" This sub section deems the appellant Girdhari Lal Gupta guilty.
The question is : Has he proved that the contravention took place without his knowledge and he exercised due diligence to prevent such contravention ? What he said in his statement under section 342, Cr P.C., was that he alone looks after the affairs of the firm.
There is also no evidence to show that the contravention took place without his knowledge or that he exercised due diligence to prevent such contravention.
The entries were there in his account books and the only thing that, he had to say about these entries in his account books is that they pertain to the routine work of the firm.
Under the circumstances we are unable to exonerate him of the charge.
As far as the other partner, Puramnall Jain, is concerned ' he stated that he does not look after the affairs of the firm and further 757 that he stays all along at Sriganganagar in Rajasthan and does not stay in Calcutta.
The prosecution has not led any reliable evidence to prove that he took any active part in the conduct of the business of the firm.
In these circumstances we are inclined to give him the benefit of doubt and acquit him.
In the result the appeal of Puranmall Jain is allowed and he is acquitted of the charge.
Ms bail bond shall stand cancelled.
The appeals of Girdhari Lal and Bhagwandeo Tewari are dismissed.
[After the above judgment was delivered Review Petition No. 37 of 1970 was filed.
The judgment of the Court thereon was delivered on February 18, 1971 by] Sikri, C.J. We disposed of Criminal Appeals Nos. 211 and 212 of 1959 by our judgment dated August 18, 1970, whereby the appeals of Girdharilal Gupta, and Bhagwandeo Tewari against.
their convictions were dismissed.
Girdharilal Gupta put in this review petition stating that the counsel had omitted to bring to our notice the provisions of section 23C(2) of the Foreign Exchange Regulation Act, 1947 hereinafter referred to as the Act which has a vital bearing on the case.
The judgment in Criminal Appeal No. 211 of 1959 has, therefore, been re opened.
We may mention that Bhagwandeo Tiwari has not filed a review petition against his conviction, upheld by this Court.
Mr. Daphtary contends that on the facts, as found by us, the appellant, Girdhari Lal Gupta, does not come within the purview of section 23C(1) or section 23C(2) of the Act.
Sections 23C(1) and 23C(2) read as follows "23C. (1) If the person committing a contravention is a company, every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly : Provided that nothing contained in this subsection shall render any such person liable to punishment if he proves that the contravention took place, without his knowledge or that he exercised all due diligence to prevent such contravention.
23C. (2) Notwithstanding anything contained in sub section (1), where a contravention under this Act has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the 758 part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.
For the purposes of this section, (a) " company" means any body corporate and includes a firm or other association of individuals; and (b) "director", in relation to a firm, means a partner in the firm.
Mr. Daphtary contends that there is no evidence to show that the appellant was in charge of the conduct of the business of the firm at the relevant time and therefore, section 23C(1) does not apply.
He further says that as the appellant was abroad, the contravention took place without his knowledge.
We may mention, however, that the defence that he was abroad at the relevant time was not taken in the courts below.
At the time of the last hearing learned counsel produced the passport of the appellant before us from which it appears that he was abroad at that time and came back a few days after the alleged contravention.
Mr. Daphtary further contends that section 23C(2.) also does not apply because there is no evidence that the contravention took place with the consent or connivance of, or was attributable to any neglect on the part of, the appellant.
He referred to us a number of authorities of the High Courts in India which have interpreted similar provisions and we shall refer to them later.
It seems to us quite clear that section 23C(1) is a highly penal section as it makes a person who was in charge and responsible to the company for the conduct of its business vicariously liable, for an offence committed by the company.
Therefore, in accordance with well settled principles this section should be construed strictly.
What then does the expression "a person in charge and responsible for the conduct of the affairs of a company mean ' ? It will be noticed that the word 'company" includes a firm or other association and the same test must apply to a director in charge and a partner of a firm in charge of a business.
It seems to us that in the context a person 'in charge ' must mean that the person should be in over all control of the day to day business of the company or firm.
This inference follows from the wording of section 23C(2).
It mentions director, who may be a party to the policy being followed by a company and yet not be in charge of the business of the company.
Further it mentions manager, who 75 9 usually is in charge of the business but not in over all charge.
Similarly the other officers may be in charge of only some part of business.
In State vs section P. Bhadani(1), Kanhaiya Singh, J., in construing a similar provision of the Employees Provident Fund Act (1952).
Section 14A held that the first sub section would be confined only to officers in the immediate charge of the management of the company.
Later he observed that "it is, therefore, manifest that all the officers of the company not in direct charge of the management of the business are immune from the liability for the offence, unless they have contributed to its commission by consent, connivance or neglect." In R. K. Khandelwal vs State (2 D. section Mathur, J., in construing section 27 of the Drugs Act, 1940, a provision similar to the one we are concerned with, observed : "There can in directors who merely lay down the policy and are not concerned with the day to day working of the Company.
Consequently, the mere fact that the accused person is a partner or director of the Company, shall not make him criminally liable for the offences committed by the Company unless the other ingredients are established which make him criminally liable.
" In The Public Prosecutor vs R. Karuppian(3), Somasundaram J., while dealing with a case arising under the (section 17(1)) observed that the Secretary of the Co operative Milk Society, on the facts of the case, could not be held to be a person in charge of the Society.
On the facts of that case the business of selling milk was done by the clerk of the Society and the Secretary was only an honorary Secretary and was not coming to.
the Society daily.
The only evidence led by the prosecution on this part of the case was of one Sohan Lal Gupta who is a broker.
He stated in examination in chief : "Who exactly the proprietors of the said firm are, I cannot say.
But I can say this much that whenever I had been there I was referred to Girdharilal Gupta (accused No. 2) and Puranmal Jain (accused No. 3) as the Maliks of the firm.
I see accused No. 2 Girdharilal Gupta in court (identified him).
I know that Bhagwandeo Tewari (accused No. 4) is the Cashier of that firm.
I see him here in court (identifies accused No. 4).
(1) A.I.R. [1959] Pat.9.
(2) (3) A.I.R. [1958] Mad.
760 .lm15
I know of another employee of the firm the manager, Jagdish Prasad.
I know another employee of the firm the accountant, Shyamlal.
" The appellant in 'his statement under section 342, Cr.
P.C. stated thus "You ask me, Sir, if I have to say anything about the evidence led in this case to the effect that I happen, to be a partner of accused No. 1 firm.
To that, Sir, my answer is that I am. " The evidence to that end is correct.
I shall only add that I alone look after the affairs of _this firm." Mr. Daphtary says that on this evidence it cannot be held that the appellant was in charge of the conduct of the business.
We are unable to agree with him on this point.
The appellant has himself stated that he alone, looked after the affairs of the firm.
This means that the is in charge of the business of the firm within the meaning of the section though there may be a Manager working under him.
The question then arises whether the appellant was in charge of the conduct of the business of the firm at the time the contravention was committed.
He was not physically present, in Calcutta at the time of the commission of the offence and the prosecution evidence shows that one Jagdish Prasad.
was the manager of the firm.
It is true that the onus of proving that the appellant was in charge of the conduct of the business of the company at the time the contravention took place lies on the Prosecution, but when a partner in charge of a business proceeds abroad it does not mean that he ceases to be charge, unless there is evidence that he gave up charge in favour of another person ' Therefore, we must hold that the appellant was in charge of the business of the firm within the meaning of sec.
23C(1).
But while imposing sentence a Court might take notice of the fact that a person is being vicariously punished for an offence and if he shows that it is possible that the contravention of the Act took place without his knowledge or neglect a sentence of imprisonment may not be imposed.
In this case he was abroad at the time of contravention and it is possible that the contravention took place without his knowledge or because of lack of diligence.
It seems to us that on the facts of this case a sentence of fine of Rs. 2,000/ will meet the ends of justice.
The learned counsel for the respondent State urges that this is not a case fit for review because it is only a case of mistaken judgment.
But we are unable to agree with this submission 761 because at the time of the arguments our attention was not drawn.
, specifically to sub section 23C(2) and the light it throws on the interpretation of sub section
In the result the review petition is partly allowed and the judgment of this Court in Criminal Appeal No. 211 of 1969 modified to the extent that the sentence of six months ' rigorous.
imprisonment imposed on Girdharilal is set aside.
The sentence , of fine of Rs. 2,000/ shall, however, stand.
G.C. Ordered accordingly.
| IN-Abs | An air parcel declared by the consigner to contain rasogollas and other edibles was found to contain Rs. 51,000 worth of Indian currency notes.
The parcel was booked to be sent from Calcutta to Hong Kong.
The consignor 's name as given.
on the parcel was found to be false and on investigation the suspicion of the customs authorities fell on the appellants two of whom were partners in a firm, the third being an employee of the firm.
The office of the firm was searched.
Certain incriminating documents including account slips and cash books of the firm were seized.
In a complaint filed by the Assistant Collector of Customs against the appellants and their firm it was alleged that sending out money in Indian currency was prohibited by section 8(2) of the Foreign Exchange Regulation 7 of 1947 and any attempt to do the same was punishable under section 23B of the Act.
The trial court acquitted the appellants but the High Court in appeal convicted them under section 23(1A).
By special leave appeals were filed in this Court.
Judgment was delivered on August 18, 1970.
Thereafter review petition No. 37 of 1970, was filed.
A further judgment in respect of the contention raised therein as to the interpretation of section 23C(i) was delivered on February 18, 1971.
HELD : (i) The proposition that if an investigating officer conducts a search his evidence cannot be relied on unless it is corroborated is a novel one with no principle or authority to support it.
It all depends on the facts of each case.
In the present case there was the corroborative evidence of P.W. 8 who signed the search document and also the entries themselves in the account books and their tallying with the slips.
[755 G] (ii) There was no substance in the argument that the account slips could not be taken into consideration because they were not evidence.
These were part of the things discovered during search and if the entries therein were carried into the account books there was no reason why they could not be looked at [755 H] (iii) In the context of section 23C(1) a person 'in charge ' must mean that the person should be in over all control of the day to day business of the company or firm.
The inference follows from the wording of section 23C(2).
It mentions director who may be a. party to the policy being followed by 749 a company and yet not be in charge of the business of the company.
Further it mentions manager who usually is in charge of the business not in over all charge.
Similarly the other officers may be in charge of only some part of the business.
[758 G 759 A] State vs section P. Bhadani, A.I.R. 1959 Pat. 9, R. K. Khandelwal vs State and Public Prosecutor vs R. K. Karuppian, A.I.R. 1958 Mad.
183, referred to.
In the present case the appellant G had himself stated that he alone looked after the affairs of the firm.
This meant that he was in charge within the meaning of the section though there may be a manager working under him [760 C D] When a partner in charge of a business proceeds abroad it does not mean that he ceased to be in charge, unless there is evidence that he gave up charge in favour of another person.
Therefore it must be held that the appellant was in charge of the business of the firm within the meaning of section 23C(1).
[760 E F].
In view of the fact that G was abroad at the time of contravention it was possible that the contravention took place without his knowledge or lack of diligence.
He was being vicariously punished.
In such a case a. sentence of imprisonment may not be imposed but a sentence of fine only would meet the ends of justice.
[760 G] (iv) As regards appellant P the prosecution had been unable to prove by any reliable evidence that he took any active part in the conduct of the business of the firm.
He must therefore be given the benefit of doubt and acquitted.
[757 A] (v) The case was fit for review because at the time of arguments the attention of the court was not drawn specifically to sub section 23C(2) and the light it throws on the interpretation of sub s.(1).
[761 A]
|
Appeal No. 435 of 1970.
Appeal by special leave from the judgment and order dated March 28, 1969 of the Assam and Nagaland High Court in Civil Rule No. 183 of 1965.
932 Naunit Lal, for the appellant.
M. C. Chagla, P. K. Goswami and R. Gopalakrishnan,for the respondent.
B. Datta, for the intervener.
The Judgment of the Court was delivered by Shah J.
The Assam Tea Company Ltd owns,teagardens in the village of Nazira in the State of Assam.
By a notification dated June 16, 1909, the Government of Bengal (which then had territorial jurisdiction over the territory now within the State of Assam) constituted a Town Committee at Nazira adjacent to the tea garden of the, Company.
In 1923 the Legislature enacted the Assam Municipal Act 1 of 1923.
Section 328 of the Act provided for the constitution of notified areas.
By sub section
(1) of section 328 the Provincial Government was authorised by notification, to signify its intention to declare that with respect to some or all of the matters upon which a municipal fund may be expended, improved arrangements are required within a specified area.
After issuing such a notification the Government was competent, after six weeks from the date of Publication, and after considering the objections, if any, to declare, by notification.
, the specified area or any portion thereof to be a notified area.
Section 4 of the Act authorised the Provincial Government by notification, inter alia, to signify its intention to include within a municipality any local area in the vicinity of the same or exclude from a municipality any local area comprised therein.
Any inhabitant of any part of a local area defined in a notification published under section 4, was entitled by virtue of section 5 to raise objections to the proposed action.
The Government would, after considering the objections, inter alia, include the local area or any part thereof within the municipality or exclude it therefrom.
The provisions of sections 4 and, 5 were not of their own force applicable to a notified area constituted under section 328 but by virtue of cl.
(d) of, sub section
(1) of section 330 it was competent to the Provincial Government to extend to any notified area the provisions of any section of the Act.
By sub section
(3) of section 330 it was provided : "For the purposes of any section of this Act which may be extended to a notified area, the town committee constituted for such area, under section 329.
shall be deemed to be a Municipal Board under this Act and the area to be a municipality.
" Notifications were issued from time to time applying certain provisions of the Assam Municipal Act, 1923.
In 1951 the Government of the State of Assam issued a notification applying sections 4(1) 933 (b)& (c) and 5(1) &_(2) (b) of the Assam Municipal Act, 1923 to the notified area committee including the Nazira Town Committee.
But no notification under section 328 of the Assam Municipal Act, 1923 extending the boundaries of the Nazira Town Committee area was issued.
In 1957 the Assam Municipal Act, 1923 was repealed and was replaced by the Assam Municipal Act 15 of 1957.
On January 6, 1964 notification was issued under section 4 (1) (b) of Act 15 of 1957 to revise the boundaries of the notified area at Nazira, and thereby included a part of the tea estate belonging to the Assam Tea Co. Ltd. in the Nazira Town Committee area.
Objections submitted by the Assam Tea Company Ltd. were, considered and overruled and the Government of Assam by notification dated September 30, 1964, incorporated within the Nazira Town Committee area a part of the area of the tea garden belonging to the Company.
The Company then filed a petition in the High Court of Assam challenging the validity of the notification.
The High Court was of the view that the Company had provided all amenities and facilities which a municipality may provide, and since it did not appear that any "improved arrangements" could be provided by the Town Committee the notification issued by the Government was "colourable legislation" and was liable to be struck down insofar as it related to the area of the tea estate belonging to the Company.
We have considered in appeal No. 2052 of 1969 State of Assam vs The Amalgamated Tea Estates Co. Ltd. & Ors.the, correctness of this decision and we have rejected it.
But Mr. Chagla appearing on behalf of the Company contended that the notification dated January 6, 1964 signifying the intention of the State Government to include the area belonging to the Company with in the Nazira Town Committee and the final notification dated September 30, 1964, were unauthorised, because the provisions of sections 4 and 5 of the Assam Municipal Act 15 of 1957 were not extended to the Nazira Town Committee by notification issued under sub section
(3) of section 336 of the Assam Municipal Act.
Counsel invited our attention to section 2 of the Assam Municipal Act, 15 of 1957 as originally enacted.
By section 2 of that Act the Assam Municipal Act, 1923 was repealed; and by cl.
(b) of the proviso to that section it was provided " all municipalities constituted, limits defined.
regulations and divisions made, licenses an notices issued, taxes, tolls, rates and fees imposed or assessed, budgets passed, assessments made, plans approved, permissions or sanctions granted, under the Assam Municipal Act, 1923, shall so far as they are in force at the commencement of this Act, be deemed to have been respectively constituted, defined, issued, imposed, assessed, passed, made, approved or granted under this Act, and shall 934 remain in force for the period, if any, for which they were so constituted, defined, issued, imposed, assessed, passed, made, approved or granted.
" Counsel said that under the proviso, notifications issued under the: Act of 1923 were not saved and it was for the first time by the Amending Act of 1958 that the notifications issued under the Act of 1923 were sought to be saved, notwithstanding the repeal of the Assam Municipal Act of 1923.
But no retrospective operation was given to the Amending Act of 1958.
Counsel submitted that this attempt on the part of the Legislature to save notifications issued under the Act of 1923 was ineffective.
It is true that for the existing cl.
(b) of the proviso to section 2 by the new clause substituted "all municipalities constituted, limits defined, regulations and divisions made, all rules and bye laws, notifications, orders, appointments and assessments made, licences and notices issued, taxes, tolls, rates and fees imposed or assessed, budgets passed, plans approved, permissions or sanctions granted, contracts entered into, suits instituted and proceedings taken under the Assam Municipal Act, 1923" are saved from the repeal.
But the Amending Act of 1958 came into force on June 13, 1958, when it was published in the Assam Gazette.
The attempt to save notifications issued under the Act of 1923 by the Assam Municipal (Amendment) Act 17 of 1958 is therefore ineffective.
It is unnecessary to consider whether, as suggested by counsel for the State of Assam, by virtue of section 3 3 6 (3 ) once a notification under section 4 of the Act of 1923 was issued, for all purposes a Town Committee became a municipality and on that account the notification continued to remain in operation.
In our judgment, under the provisions of the Assam General Clauses Act, 1915, section 26 saves the notification in question.
Section 26 provides, inter alia : "Where any enactment is repealed and re enacted with or without modification, then, unless it is otherwise expressly provided, any appointment, notification, order, scheme, rule, form, or by law, made or issued under the repealed enactment, shall so far as it is not inconsistent with the provisions re enacted, continue in force and be deemed to have been made or issued under the provisions so reenacted. .
There is no express provision in the Act 15 of 1957 which supersedes the notification issued in 1995 under the Act of 1923, nor is the continuance of the notification inconsistent with any provision in the new Act.
The notification must, therefore, be deemed to have remained in force and the State Government was competent in exercise of the power conferred upon it by section 4 of Act 15 of 1957 935 to include within the area of Town Committee any local area contiguous to the same.
We are here dealing only with the validity of the notification issued by the State Government, and not with the validity of the, demand for licence fee or other taxes levied by the notified Town Committee.
Nothing in this judgment will affect the right of the Company to challenge the validity of the demand for such taxes in appropriate proceedings.
The appeal is allowed and the order passed by the High Court is set aside.
The petition is dismissed with costs throughout.
In all these three appeals there will be one hearing fee.
| IN-Abs | Under ss.4 and 5 of the Assam Municipal Act, 1923, the Provincial Government was authorised to signify its intention to include within a municipality any local area in its vicinity, and, after considering.
any objections to the proposed action to so include the area.
Section 328 provided for the constitution of notified areas.
Sections 4 and 5 were not applicable to a notified area but the Provincial Government could extend to any notified area any section of the Act by virtue of section 330(1)(d).
Under section 330(3), for the purpose of any section so extended, the town committee constituted for such notified area would be deemed to be a Municipal Board.
In 1957, the 1923 Act was repealed and was replaced by the Assam Municipal Act, 1957.
The respondent owned tea gardens in the village of Nazira.
In 1909, a town committee was constituted at Nazira adjacent to the tea garden.
In 1951, by a notification issued by the Government of Assam, s.4(1)(b) and (c), and s.5(1) and (2)(b) of the 1923 Act were extended to the notified area committee including the Nazira Town Committee.
On January 6, 1964, a notification was issued under the 1957Act to revise the boundaries of the notified area at Nazira, and after considering the objections of the respondent on September 30, 1964, by a final notification, a part of its tea estate was incorporated within the Nazira Town Committee.
On the question whether notifications dated January 6, 1964 and September 30, 1964 were unauthorised, because, sections 4 and 5 of 1957 Act, corresponding to sections 4 and 5 of the 1923 Act, were not extended to the notified area on these dates, HELD : There is no express provision in the 1957 Act which supersedes the notification issued in 1951 under the 1923 Act nor is the continuance of the notification inconsistent with any provision in the 1957 Act.
Therefore, under section 26 of the Assam General Clauses Art, 1915, the 1951 notification continues in force and must be deemed to have been issued under the 1957 Act.
Hence, the State Government was competent, in exercise of the power conferred upon it by the 1957 Act, to include within the area of the Town Committee any local area contiguous to it.
[934 H; 935 A]
|
Appeal No. 36 of 1967.
Appeal by special leave from the judgment and order dated August 25, 1966 of the Punjab High Court, Circuit Bench at Delhi in Letters Patent Appeal No. 36 D of 1966.
Bishan Narain, R. Mahatingier and Ganpat Rai, for the appellant.
R. H. Dhebar and section P. Nayar, for respondent Nos. 1 and 3.
In 1943 he mortgaged the said property with possession in favour of one K. B. Bunyad Hussain but obtained a lease thereof at the same time from the mortgagee and continued to reside therein as tenant.
In November 1949, the mortgagee left for Pakistan a whereupon the Custodian of Evacuee Property under the (hereinafter referred to as the Administration Act) declared him to be an evacuee and his interest in the said property as the mortgagee as evacuee, property.
The appellant alleged that sometime in November 1949 the 853 Custodian forcibly dispossessed him and either allotted or let out, or allowed the said premises to be occupied by certain persons.
In 1954, the appellant made an application to the Competent Officer under the (hereinafter referred to as the Separation Act) for separating his interest as the mortgagor and tenant in the said property.
In those proceedings a sum of Rs. 1,45,735/ was ultimately held to be due as the mortgage debt under the said mortgage.
The appellant claimed that he was entitled to obtain vacant possession of the said property against payment by him of the mortgage debt.
The claim was rejected on the ground that there was no agreement between the appellant and the Custodian for getting the vacant possession and also on the ground that the Competent Officer, under the Separation Act, had no power to direct the Custodian to hand over to the appellant vacant possession.
From that time onwards the appellant made diverse applications to the Competent Officer and the Appellate Officer under the Separation Act for obtaining vacant possession against payment of the mortgage debt.
In one such application made in 1958 he alleged that a compromise had been arrived at between him and the Custodian under which he would pay the, mortgage, debt and the Custodian thereupon would simultaneously hand over to him vacant possession.
By his order dated March 23, 1959, the Appellate Officer, however, held that no such compromise had been entered into by the Custodian and that the correspondence between the appellant and that authority merely indicated that what was agreed to was that upon the appellant lodging certain verified claims an open portion shown as A, B, C and D in the plan of the property would be handed over to him.
On this finding the Appellate Officer dismissed the appellant 's application as he had neither paid the mortgage money nor put in the verified claims as suggested in the said correspondence and confirmed the order of the Competent Officer under which the property had been ordered to be sold in the absence of any agreement with the ' Custodian or the payment of the mortgage debt.
The appellant then filed a writ petition in the High Court of Punjab (in the Circuit Bench at Delhi) for quashing the said order of sale and for a direction to the Competent Officer to hand over vacant possession against payment by him of the mortgage debt.
A learned Single Judge dismissed the petition holding that the Competent Officer had no jurisdiction to order such vacant possession against the Custodian or against the tenants or allottees inducted on the property by the Custodian.
The Letters Patent appeal against that judgment and order was also dismissed.
The appellant then filed the present appeal after obtaining special leave from this Court.
854 It is not disputed that until the time when the Competent Officer passed his order for sale of the property and the Appellate Officer confirmed it the appellant had not paid the mortgage amount, nor was there any agreement between him and the Custodian where under the latter would hand over vacant possession of the property against payment of the mortgage debt.
However, it is conceded by counsel for respondents 1 and 3 that the appellant has since then paid the entire mortgage debt and the Competent Officer has under section 10 of the Separation Act accepted that amount.
Two questions on these facts, therefore, arise, for deter mination; (1) whether the order for sale passed by the Competent Officer and confirmed by the Appellate Officer was rightly passed although the appellant had repeatedly offered to pay the mortgage debt on condition, however, that he would be given vacant possession at the same time, and (2) assuming that the Competent Officer had no power to direct the Custodian to hand over vacant possession, what was the effect of the repayment of the mortgage debt by the appellant since then and the acceptance thereof by the Competent Officer.
The rights in the property in question which vested in the Custodian were those of the mortgagee on his being declared an evacuee and his rights as such mortgagee in the property in question as evacuee property.
Under the the interest which the Custodian could claim was the interest in the property transferred to the mortgagee for securing repayment of the money advanced by him.
Since the mortgage was usufructuary, the mortgagee, and after his having been declared an evacuee, the Custodian, could claim and retain possession till the mortgage debt was paid and the mortgage was discharged.
If the property is let out in the meantime, the mortgagee and those claiming his interest therein are entitled to receive the rents and profits accruing front the property in lieu of interest or towards part payment of the mortgage debt.
Under section 60 of that Act, the mortgagor has a right at any time after the principal amount has become due to require the mortgagee on payment or tender of the mortgage debt (a) to deliver to him the mortgage deed and all other documents relating to the mortgaged property which are in the mortgagee 's possession or power, (b) to deliver possession where the mortgagee is in possession of the mortgaged property and (c) to retransfer the mortgaged property to him or to such third person as he may direct at his cost.
Under section 76, the mortgagee in possession.
has to manage the property as a person of ordinary prudence would manage it if it were his own.
Under section 83, the mortgagor, provided his right of redemption is not barred, may deposit in the court where he might have instituted a suit for redemption to the account of the mortgagee the mortgage debt then due.
The court thereupon has to issue a notice to the mort 855 gagee and on the mortgagee stating the amount due to him and his willingness to accept the money so deposited in full discharge of the mortgage debt, pay the amount to the mortgagee on his depositing the mortgage deed and all other documents relating to the mortgaged property.
Where the mortgagee is in possession of the property, the court before paying the amount has to ask him to deliver possession thereof to the mortgagor.
When the mortgagor has tendered or deposited in court the.
mortgage debt together with interest thereon and has done all that is to be done by him to enable the mortgagee to take such amount out of court, and a notice, as aforesaid, has been served on the mortgagee under section 83 interest ceases to run.
If the mortgagee thereafter refuse& to accept the amount so deposited or to deliver the mortgage deed and other documents or possession of the property where it is in his possession, the remedy of the mortgagor is to file a suit for redemption.
The position, therefore, is that upon the mortgage being paid off, the mortgagor is entitled to have the property restored to him free from the mortgagee 's security.
The repayment of the debt would be made against delivery of possession and of the mortgage deed and other documents, and these have to be simultaneous transactions.
A tender of the mortgage deed or a deposit thereof in court conditional upon the mortgagee than and there delivering possession or executing reconveyable, if required, and handing over the deeds would be a good tender so that if it were to be refused interest would cease running.
It follows that a mortgagee is not permitted to deal with the property in such a way that upon discharge of the debt the property cannot be restored.
[see Fisher.
& Lightwood 's Law of Mortgage (8th ed.) p. 482].
Is the position of a mortgagor any the different than under the by reason of the evacuee property legislation ? In other words, could not the appellant have tendered to the Competent Officer the mortgage amount due by him on condition that he should be given physical and not merely symbolical possession of the mortgaged property.
Upon the mortgagee being declared an evacuee and his interest as such mortgagee in the premises in question evacuee property, his interest in the mortgaged property vested under section 8 of the Administration Act in the Custodian from the date of the notice issued under section 7 of the Act.
Under section 8 (4) any person in possession of the mortgaged property would be deemed thenceforth to be holding the property on behalf of the Custodian and would be bound on demand by him to surrender possession to him.
The Act having under section 4 an overriding effect on any other law for the time being in force or any instrument having effect by virtue of any such Act, the Custodian, under the powers conferred on him by, section 10, could take all such measures he might consider necessary, 856 for securing, administering, preserving and managing any evacuee property including transferring "in any manner whatsoever" the evacuee property "notwithstanding to the contrary contained in any law or agreement relating thereto".
Under s.12, the Custodian is empowered, notwithstanding anything contained ,in any other law for the time being in force, to cancel any allotment, terminate any lease or amend the terms of such lease or agreement under which any evacuee property is held or occupied by a person whether such allotment, lease or agreement was granted or entered into before or after the commencement of the Act.
Under sub section
3, he is authorised to eject such person and take possession, if such person fails to surrender possession on demand made by him in the manner provided by section 9 i.e., by even using such force as would be necessary for taking possession.
It is conceded by the respondents that under these powers the Custodian had taken over posses sion of the mortgaged property and the property has since then been in possession of persons who were either allotted portions of it or, who were inducted therein as tenants by the Custodian.
It is also conceded that the Custodian has refused, notwithstanding demands made by the appellant, to evict these persons from the property and hand over vacant possession to the appellant even on the appellant tendering the mortgage amount.
This was presumably done by reason of the fact that though section 12 empowers him ' to cancel an allotment or a tenancy made or created by him, r. 14(2) of the Administration of Evacuee Property (Central) Rules, 1950 lays down that in the case of a lease or an allotment granted by the Custodian he may evict a person on a ground justifying eviction of a tenant under a law relating to the Rent Control or for any violation of the conditions of the lease or allotment.
From the provisions dealing with the vesting of the evacuee property, the powers of the Custodian, appeals and revisions from his order and the overriding nature of the provisions of the Act it is clear that the Administration Act is a self contained code.
In 1951, Parliament passed the , LXIV of 1951 (hereinafter referred to as the Separation Act).
The statement of objects and reasons shows that it was passed on account of the difficulty of administering evacuee properties in which there were both evacuee and non evacuee interests and to solve the hardship felt by non evacuees, who by reason of such properties being in possession of the Custodian, were unable to obtain satisfaction of their claims in view of the prohibitive provisions of the Administration Act and in particular its section 17.
The Act, as its long title declares, was passed for the separation of interests of evacuees from those of non evacuee persons in composite properties.
Sections 4 and 5 of the Act provide for the appointment of Competent Officers and their jurisdiction.
Sec. 7 provides for submission of claims by a person claiming interest in 857 a composite property.
(e) of sub section 2 requires that where a claim is made by a mortgagor the total amount due on the mortgage debt and the particulars necessary to determine the same should be set out in such a claim.
Sec. 8 provides for an inquiry to be made by the Competent Officer and provides that the order to be made by him shall contain, amongst other things, the amount due to the evacuee in a case where the claim is made by a mortgagor.
Sub section
2 of section 8, however, provides that where the Custodian has determined that the property in question or any interest therein is evacuee property, such determination is binding on the competent officer.
The proviso to that sub section lays down that nothing contained in sub section 2 shall debar the competent officer from determining the mortgage debt in respect of, such property or any interest therein or from separating the interest of the evacuee from that of the claimant under section provides that notwithstanding anything to the contrary in any law or contract or any decree or order of the civil court or other authority, the competent officer may, subject to any rules that may be made in this behalf, take all such measures as he may consider necessary for the purpose of separating the interest of the evacuee from those of the claimant in any composite property and in particular may "(b) in the case of any claim of a mortgagor or a mortgagee, (i) pay to the Custodian or the claimant the amount payable under the mortgage debt and redeem the mortgaged property; or (ii) sell the mortgaged property for satisfaction of the mortgage debt and distribute the sale proceeds thereof; or (iii) partition the property between the mortgagor and the mortgagee having regard to the share to which the mortgagee would be entitled in lieu of his claim;" Cl.
(c) empowers him to adopt a combination of all or some of these measures.
The proviso to the section provides that in any case where the claimant is a mortgagor and tenders the amount due, the competent officer shall accept the same in full satisfaction of the mortgage debt.
The competent officer, by virtue of the proviso, is thus under an obligation, where the claimant is a mortgagor and tenders the mortgage amount due, to accept such amount in full satisfaction of the mortgage debt and thereupon interest on the mortgage amount would cease to run.
Under cl.
(b), he is also empowered in such a case to redeem the mortgaged property.
The argument was that where the mortgage amount is tendered by the mortgagor and the competent officer accepts it in satis 858 faction of the debt due under the mortgage, the mortgage debt is satisfied, interest thereon ceases to run and the mortgage is discharged.
Consequently, there would be no question of the com , petent officer adopting any of the measures provided in sub cls.
(ii) and (iii) of cl.
(b) of the section, that is to say, there could be no occasion for him either to sell the property for satisfaction of the mortgage debt or to partition the property between the mortgagor and the mortgagee, as, on satisfaction of the mortgage debt the mortgage is discharged and the mortgagee 's interest in the mortgaged property ceases or comes to an end.
The only measure which in that event he can adopt would be that, under cl.
(b) (i), i.e, to pay to the Custodian the mortgage debt and redeem the mortgaged property.
It was said that that being the position under section 10, the appellant was entitled to tender the mort.
gage amount in satisfaction of the debt due under the mortgage on condition that the mortgage should be redeemed and possession of the property given to him.
The Competent Officer in the proceedings before him under section 7 was bound to accept the mortgage amount and redeem the mortgaged property.
The argument would be valid if section 10 had been untrammelled and the powers given therein to the Competent Officer were not made subject to the rules which may be made under the Act.
The Legislature, it seems had a purpose in making the powers contained in section 10 and their exercise by the Competent Officer subject to the rules.
It must have been aware of (i) that the Administration Act is, as aforesaid, a self contained code, (ii) that the Custodian appointed thereunder is not an authority subject to the power or control of the Competent Officer, and (iii) that the Administration Act, by sections 10 and 12 thereof, confers several powers on the Custodian including the power to transfer the property vested in him.
He can therefore, create a lease or grant allotment and thus induct on the property tenants or allottees.
Under section 12 of that Act the Custodian has been empowered to cancel or terminate a lease or allotment.
But no such power is conferred on the Competent Officer either under section 10 or under any other section of the Separation Act, nor have the powers of the Custodian been made subject to the powers of the Competent Officer or his orders.
On the other hand, it would appear from a reading of the provisions of the Separation Act that the object of enacting it was to enable non evacuees to have their interests separated in composite pro perties and to grant power to the competent officer to achieve that object.
But we do not find anywhere in either of the two Acts any provision by which the Custodian is made subject to the, power or control of the Competent Officer or enabling the Competent Officer to pass any order which would curtail or otherwise affect the powers of the Custodian.
It would seem that the two Acts have different objects and schemes and the authorities established under them are independent of each other.
The powers conferred 859 on the Competent Officer had, therefore, to be so provided that they could be exercised in harmony and consistently with the pro ' visions of the Administration Act and the duties and functions of the Custodian thereunder.
It was for that reason that the Legislature laid down in section 10 of the Separation Act that the powers conferred Thereunder on the Competent Officer were to be subject to the rules made under that Act.
Had it not been so, there would have resulted a conflict in the exercise of the respective powers given to the Custodian and the Competent Officer by the two.
Acts, and consequently, are in the smooth working out of the provisions of the two Acts.
Rule II B of the Rules made under the Separation Act pro vides that a Competent Officer "having regard to the provisions of the proviso to section 10 of the Act" shall, for the purpose of separating the evacuee interest from other interests in a composite property, adopt any of the measures in the order of preference set out therein.
(b) of that rule provides that in the case of a claim by a mortgagor or a mortgagee (1) where both the Custodian and claimant agree, the Competent Officer can exercise the powers.
conferred on him under sub cl.
(i) or sub cl.
(iii) of cl.
(b) of section 10 of the Act and (ii) where there is no such agreement, he can sell the mortgaged property for satisfaction of the mortgage debt and distribute the sale proceeds thereof.
The effect of this rule read in conjunction with section 10 of the Act, however harsh it may apparently seem to be, is that though the Competent Officer has to accept the mortgage amount tendered by a mortgagor and thus discharge the mortgage debt and interest thereupon ceases to run on the principal amount and though he can adopt any one of the measures set out in section 10, including redemption of the mortgage, he cannot order such redemption and direct the Custodian to deliver vacant possession of the property in the absence of an agreement between the Custodian and the mortgagor claimant.
It follows that in the absence of such agreement the mortgagor claimant cannot demand from the Competent Officer that the latter should accept the mortgage amount tendered by him and direct simultaneous delivery of possession of the mortgaged property.
The power to redeem the mortgaged property being subject to rule II B (b), the only thing that the Competent Officer can at the most do is to order symbolical possession, but he cannot direct the Custodian to give vacant possession.
The reason is clear, for, such an order would in effect be an order directing the Custodian to cancel the leases or allotments granted by him and eject the tenants or allottees from the property.
Such an order would at once be in conflict with r. 14 of the Administration of Evacuee Property (Central) Rules, 1950.
That rule provides that while, exercising his power under section 12 of that Act, namely, the power to cancel or vary the terms of a lease or allotment, the Custodian, 860 in the case of a lease or allotment granted by him, can evict a person only on any of the grounds justifying eviction of a tenant under any rent control law for the time being in force in the State concerned or for any violation of the conditions of the lease or the allotment.
4 of that rule further lays down that before cancelling or varying the terms of the lease or before evicting any less the Custodian must serve a show cause notice on such lessee and afford him a reasonable opportunity of being heard.
If the Custodian is satisfied on hearing the concerned lessee that he is not liable to eviction under a rent control Act in force in the State where the property is situate or has not contravened any of the provisions of the lease, he cannot cancel the lease nor can he evict the lessee except only as provided by cl.
(5) of that rule on the ground that such eviction is necessary or expedient for the preservation or proper administration or management of such property or for carrying out any other object of the Act.
He, therefore, cannot evict a tenant or an allottee on the ground that it is necessary to do so for the separation of an interest of a non evacuee mortgagor as that would not be one of the purposes of the Administration Act.
The result which emerges from the discussion of the relevant provisions of the two Acts and the rules thereunder made is (i) that though the Competent Officer must accept the mortgage amount when tendered by a mortgagor and the mortgage debt thereupon would be satisfied, he cannot exercise the power to redeem the mortgaged property and order the Custodian to deliver up its vacant possession to the mortgagor in the absence of any ' :agreement between the mortgagor and the Custodian, and (ii) that in exercising his jurisdiction under section 10 the Competent Officer cannot direct the Custodian to cancel or vary the terms of the leases or allotments made or granted by him, firstly because he has no such power under section 10 or any other provision of the Separation Act, and secondly, because such an order would amount to compelling the Custodian to act in a manner contrary to the provisions of the aforesaid r. 14.
The exercise of the power to redeem being subject to the rules, it would not be competent for the Competent Officer, by reason of r. II B (b), to order delivery of possession by the Custodian in the absence of an agreement between him and the mortgagor claimant.
In view of this position, the appellant could not have insisted that he would tender or pay the mortgage debt only against delivery of vacant possession of the property in the absence of any agreement between him and the Custodian.
The only thing which, the Competent Officer could do in the circumstances was to accept the mortgage amount whereupon interest would cease to run.
It is not in dispute that the appellant, insisting as he was 861 all throughout upon being given vacant and not merely symbolical possession, did not actually tender or make payment of the mortgage debt.
The mortgage debt, therefore, remained outstanding.
The mortgage also stood intact, and therefore, the only measure which the Competent Officer could adopt and which in fact he, adopted was to order sale of the property and satisfy the mortgage debt from the sale proceeds thereof.
The order which he passed and which was confirmed by the Appellate Officer was in the circumstances then prevailing validly and competently made.
The appellant 's grievance against it, therefore, could not be sustained.
[of in this connection the position of an auction purchaser as decided in Ek Nawas Khan vs The Competent Officer(1)].
But it is conceded that since the passing of the said order the appellant has, paid up the full mortgage amount and the Competent Officer has, as he was bound to do under section 10, proviso, accepted that amount.
Presumably that amount has been paid by him to the Custodian.
Therefore, the mortgage debt is no longer outstanding.
Though this event has happened after the impugned order was passed,, we must in fairness take notice of the fact that the mortgage debt is no longer outstanding and the mortgaged property is now free from the mortgagee 's security, and therefore, from the interest vested in the Custodian.
It is true that the Com petent Officer, as already stated, can adopt any of the three measures set out in section 10(b) of the Separation Act or adopt a combination of all or some, of them, but as emerging from the discussion, above, he cannot redeem the property and order delivery of vacant possession in the absence of an agreement between the Custodian and the appellant.
That is quite clear.
But the order of sale passed by him and confirmed by the Appellate Officer also cannot secondly, because he can order sale only for satisfaction of the mortgage debt and for distribution of the sale proceeds thereof ' between the mortgagor and the mortgagee.
There being now no question of the satisfaction of the mortgage debt since it now stands satisfied and the property being now freed from the mortgagee 's security, the order for sale ' cannot stand and cannot be allowed to stand.
At the same time the Competent Officer cannot order the Custodian to deliver vacant possession although the appellant has paid the mortgage amount and the Competent Officer has accepted it in satisfaction of the mortgage debt.
In view of sections 10 and 12 of the Administration Act, the powers and duties of the Custodian thereunder and under the rules made under that Act, the provisions of section 10 of the Separation Act and r. II B of the rules made thereunder, the only thing that could be offered and given to the appellant was symbolical possession of the property.
Such a result, no doubt, would be inconvenient, and may even (1) A.T.R. 1960 All.
862 appear to be harsh and unfair as the appellant would be driven to file proceedings for eviction of tenants and allottees now in possession of the property.
(see The All India Film Corporation Ltd. vs Raja Gyan Nath) (1).
In view of the payment of the mortgage amount by the appellant and the acceptance of it by the Competent Officer, the order directing sale has now become untenable and has, therefore, to be set aside.
The mortgage stands discharged and the Competent Officer is bound to direct symbolical possession of the mortgaged property to the appellant.
To this extent the appeal succeeds.
The order for costs of the appeal would ordinarily follow the result, but in view of the fact that the Competent Officer was entitled to pass the order of sale in the circumstances then prevailing it is fair and equitable, though his order is set aside, that the parties should bear their own costs.
V.P.S Appeal allowed in part.
(1) (1970] 2 S C.R. 581.
| IN-Abs | The appellant executed a usufructuary mortgage of his house and continued to reside in it as a tenant under a lease obtained from the mortgagee.
In 1949, the mortgagee left for Pakistan.
He was declared an evacuee and his mortgagee interest in the mortgaged property vested in the Custodian under section 8 of the .
Under section 12, the Custodian evicted the appellant and allotted it to others as tenants.
In spite of demands by the appellant and the appellant tendering the mortgage amount, the Custodian refused to hand over vacant possession of the house to the appellant.
The appellant applied to the Competent Officer under the .
The Officer determined the mortgage debt due from the appellant and the appellant claimed vacant possession against tender of payment by him of the amount.
The Officer rejected the claim and ordered the sale of the property under s.10(b)(ii) of the Separation Act, for satisfaction of the mortgage debt.
Thereafter, the appellant paid the entire mortgage debt and the Competent Officer accepted the amount.
On the question whether the appellant was entitled to vacant possession and have the order of sale set aside, HELD:(1) Section 4 of the gives to that Act an overriding effect in relation to any other law for the time being in force, and hence the law under the Transfer of Property set, is not applicable.
Though s.12 of the Act empowers the Custodian to cancel an allotment or a tenancy, created by him, under r.14(2) of the Administration of Evacuee Property (Central) Rules, 1950, the Custodian can evict a person only on a ground justifying eviction of a tenant under a law relating to rent control or for any violation of the conditions of the lease or allotment.
The Custodian could not, therefore, give vacant possession of the property to the appellant on his tender of payment of the mortgage amount.
[855 H; 856 A B, D F] (2) The , was passed on account of the difficulty of administering evacuee properties in which there were both evacuee and non evacuee interests and to resolve the hardship felt by non evacuees, who by reason of such properties being in the possession of the Possession were unable to obtain satisfaction of their claims in view of the prohibitive provisions of that Act.
But there is no provisions by which the Custodian is made subject to the power or control of the Competent Officer or which enables the Competent Officer 852 to pass an order which would curtail or otherwise affect the powers of the Custodian.
Though under s.10(b)(i) of the Separation Act, the Competent Officer can pay to the Custodian the mortgage debt and redeem the mortgaged property, his power is subject to the rules made under that Act.
[856 F G; 858 B C, G H] (3) Reading the relevant provisions namely, section 12 of the and r. 14 of the Rules made thereunder, and section 10 of the Separation Act and r. 11B of the rules made thereunder, together, the position is : (i) that though the Competent ' Officer must accept the mortgage amount when tendered by a mortgagor and the mortgage debt is thereupon satisfied, he cannot exercise the power to redeem the mortgaged property and order the Custodian to deliver up its vacant possession to the mortgagor in the absence of any agreement between the mortgagor and the Custodian; (ii) that the Competent Officer can order sale only for satisfaction of the mortgage debt and for distribution of the sale proceeds between the mortgagor and mortgagee.
Since in the present case, the mortgage amount had been paid by the appellant and accepted by the Competent officer, the order directing sale is unten able and should be set aside; and (iii) that in exercising his jurisdiction under section 10, the Competent Officer cannot direct the Custodian to cancel or vary the terms of the leases or allotments made or granted by him.
Therefore the Competent Officer can direct only symbolical possession of the mortgaged,property to be given to the appellant, however, harsh and unfair it may apparently be.
[860 D G; 861 B, E H; 862 A C] The All India Film Corporation vs Raja Gyan Nath, referred to.
|
Appeal.
2259 of 1969.
Appeal under section 38 of the from the order dated October 26, 1969 of the Disciplinary Committee of the Bar Council of India in D.C. Appeal No. 18 of 1968.
C. K. Daphtary, A. section R. Chari, J. B. Dadachanji, O. C. Mathur, Ravinder Narain and section Swarup, for the appellant.
, V. section Desai and B. D. Sharma,, for respondent No. 1. M. C. Bhandare and section B. Wad, for Respondent No. 2.
V. A. Seyid Muhammad and section P. Nayar, for.
Attorney General for India.
A. V. Rangam, for Advocate General for the Tamil Nadu.
M. C. Setalvad, Rameshwar Nath, for Bar Council of India.
O. P. Rana, for Advocate General for the State of U.P. A. G. Pudissery, for Advocate General for the State of Kerala.
K. Baldev Mehta, for Advocate General for the State of Rajasthan.
A. P. section Chauhan, A. D. Mathur and N. P. Jain, for Bar Council U.P. Sukumar Ghose and G. section Chatterjee, for the Advocate General for the State of West Bengal.
P. Parmeswara Rao, for Advocate General for the Andhra Pradesh.
I. N. Shroff, for Advocate General for the State of Madhya Pradesh.
J. C. Medhi, Advocate General for the State of Assam and Naunit Lal, for the Advocate General for the State of Assam.
HIDAYATULLAH, C.J., and MITTER J. on behalf of SHELAT J.and himself delivered separate judgments.
VAIDIALINGAM andRAY JJ.
delivered separate dissenting opinions.
Hidayatullah, C.J.I agree with the judgment delivered by my brother Mitter but in view of the importance of the question and the difference between my brethren I have chosen to express myself separately.
872 We heard this appeal on a preliminary point raised by the appellant that the appeal of the Advocate General of Maharashtra filed before the Bar Council of India was incompetent as the Advocate General did not fall within the expression a person aggrieved ' to whom alone is given the right of appeal under section 37 of the of 1961, against the orders of the Disciplinary Committee of the Bar Council of the State.
The facts necessary to bring out the controversy may be briefly stated.
The appellant is an advocate from Maharashtra.
The Bar Council of the State of Maharashtra had called upon him suo motu to show cause why he should not be held guilty of misconduct.
It appears that the appellant was convicted before a Summary Court in London on a charge of pilfering some articles from departmental stores and sentenced to a fine.
The record of the proceedings in London was not before the Bar Council of the State and action was taken on the basis of a brief report of the incident in a newspaper.
The appellant explained before the disciplinary committee of the Bar Council of the State that he was the victim of a misunderstanding but as he had no means of defending himself effectively, he was found guilty and received a light sentence of fine.
He explained how he had fallen into this unfortunate predicament and did not know how to extricate himself.
The order of the Summary Court was not a speaking order and the proceedings were summary.
The disciplinary committee were satisfied that there was no reason to hold him guilty of professional or other misconduct.
They, therefore, ordered that the proceedings be filed.
The Advocate General of the State, who was sent a notice of the proceedings, as is required by the second sub section of section 35, and had appeared before the committee, purporting to act under section 37 of the Act filed an appeal before the Bar Council of India.
It was heard by the disciplinary committee of the Bar Council of India.
The advocate objected that the Advocate General had no locus standi to file the appeal.
The objection was overruled and the appeal was accepted.
The advocate was held guility of misconduct and suspended for a year from practice.
The advocate now appeals under section 38 of the Act to this Court.
His appeal raises questions of merit but he contends at the threshhold that the Advocate General was not competent to file the appeal under section 37 of the Act.
The point in controversy before the disciplinary committee of the Bar Council of India and now before us, is a short one.
It is : whether the Advocate General can be said to be a person aggrieved ' by the order of the disciplinary committee of the Bar Council of the State Having heard this point in detail we took time to consider.
I am of the opinion that it must be held in favour 873 of the advocate and the order of the disciplinary committee of the Bar Council of India, now under appeal before us, must be: set aside on this short ground without going into the merits of the case.
Section 37 of the reads "37.
Appeal to the Bar Council of India.
(1) Any person aggrieved by an order of the disciplinary committee of a State Bar Council made under section 35 may, within sixty days of the date of the communication of the order to him, prefer an appeal to the Bar Council of India.
(2) Every such appeal shall be heard by the disciplinary committee of the Bar Council of India which may pass such order thereon as it deems fit.
" The expression a person aggrieved ' is not new, nor has it occurred for the first time in the .
In fact it occurs in several Indian Acts and in British Statutes for more than a hundred years.
In the latter a right of appeal to a person aggrieved ' is conferred in diverse contexts.
It occurs in the Ale House Act, the Bankruptcy Acts, Copyright Act, Highway Act, Licensing Acts, Milk and Dairies (Amendment) Act, Rating and Valuation Act, Summary Jurisdiction Act, Union Committee Act, Local Acts, in certiorari proceedings and the Defence of Realm Regulations to mention only a few.
The list of Indian Acts is equally long.
As a result of the frequent use of this rather vague phrase, which practice, as Lord Parker pointed out in Dealing Corporation vs Jones(1), has not been avoided, in spite of the confusion it causes, selections from the observations of judges expounding the phrase in the context of these varied statutes were cited before us for our acceptance.
The observations often conflict since they were made in different contexts and involved the special standing of the party claiming the right of appeal.
Yet these definitions are not entirely without value for they disclose a certain unanimity on the, essential features of this phrase, even in the diversity of the contexts.
The font and origin of the discussion is the well known definition of the phrase by James L.J. in In Re Sidehotham exhibit j. Sidebotham(2).
It was observed that the words person aggrieved ' in section 71 of the Bankruptcy Act of 1869 meant : " not really a person who is disappointed of a benefit which he might have received, if some order had been (1) L. R. (2) C. A 874 made.
A person aggrieved, must be a man who had suffered a legal grievance, a man against whom a decision has been pronounced which had wrongfully deprived him of something or wrongfully refused him something or wrongfully affected his title to something.
" The important words in this definition are a benefit which he might have received ' and a legal grievance ' against the decision which wrongfully deprives him of something ' or affects his title to something.
The definition was held in later cases to be not exhaustive and several other features of the phrase were pointed out.
Thus under the Bankruptcy Acts, where the Board of Trade summoned to support the validity of the appointment of a trustee, went before the judge, and failed, it was considered a person aggrieved ' on the principle that a person who is brought before the Court to :submit to its decision, but not a person who is heard in a dispute between others must be treated as a person aggrieved ' (see In Re Lamb exhibit, p. Board of Trade(1) per Lord Esher).
Here again the words to notice are brought before the court to submit to its decision that, is to say, a person who is in the nature of a party as contra distinguished from a person who is next described as a person who is heard in a dispute between others.
To distinguish between these two positions Ist may refer to a few more decisions.
In In Re Kitson, exhibit p. Sugden (Thomas) & Sons Ltd.(2), it was further explained that. "the mere fact that an order is wrongly made does not of itself give a grievance to a person not otherwise aggrieved." (per Phillimore J.) It was added that a person deprived of the fruits of litigation which he had instituted in the hope for them, is a person aggrieved '.
Similarly, a creditor who did not wish an adjudication order, to be made was held not to be a person aggrieved See In Re Brown exhibit p. Debtor vs Official Receiver(3).
The utmost that this series of cases goes is to be found in the observations of James L.J. in Ellis exhibit p. Ellis(4) that even a person not bound by the order of adjudication must be treated as a person aggrieved ' if the order embarrasses him.
In a later case (In Re Woods exhibit P. Ditton) (5) Cotton L.J. held that even so the person must be aggrieved by the very order and not by any of the consequen ces that ensue.
This was clarified in R. vs London County Keepers of the Peace and Justices(6), by Lord Coleridge C.J. while (1) at 812.
(3) [1943] Ch. D. D. 177.
(5) C.A. 79. (2) at 112 114.
(4) (6) at 361.
875 dealing with the Highway Act, denying the right of appeal in these words "Is a person who cannot succeed in getting a conviction against another a person aggrieved ? He may be annoyed at finding that what he thought was a breach of the law is not a breach of law; but is he aggrieved because some one is held not to have done wrong ? It is difficult to see that the section meant anything of the kind.
The section does not give an appeal to anybody but a person who is by the direct act of the Ma gistrate aggrieved that is who has had something done or determined against him by the Magistrate.
" These observations again show that the person must himself suffer a grievance, or must be aggrieved by the very order because it affects him.
Two cases which may usefully be seen in the same context may next be mentioned.
In Jennings vs Kelly(1) in relation to the Government of Ireland Act 1920, Lord Wright did say that if a person was treated in certiorari proceedings as a competent party and notice was served on him as being a proper party he would be a person aggrieved. ' The point to bear in mind is that the person must be treated as a party.
However the force of the observation was considerably weakened because the party there was ordered to pay costs and the right of appeal was held to be available on that limited ground.
Further qualification is to be found in In Re Riviere where Lord Selborne observed pro ratione voluntas; the applicant must not come merely saying I do not like this thing to be done, it must be shown that it tends to his injury or to his damage, in the legal sense of the word.
" The locus standi of the person aggrieved must be found from his position in the first proceeding and his grievance must arise from that standing taken with the effect of the order on him.
These cases are of course far removed from the one before me and as Branwell L.J. observed in Robinson vs Currey(2) the expression is nowhere defined and, therefore, must be construed by reference to the context of the enactment in which it appears and all the circumstances.
He pointed out that the words are ordinarily English words, which are to have the ordinary meaning put upon them., (1) [174] A. C. 206.
(2) , 470.
C. A. 876 From these cases it is apparent that may person who feels disappointed with the result of the case is not a Person aggrieved.
He must be disappointed of a benefit which he would have received if the order had gone the other way.
The, order must cause him a legal grievance by wrongfully depriving him of something.
It is no, doubt a legal grievance and not a grievance about material matters but his, legal grievance must be a tendency to injure That the order is wrong or that it acquits some one who he thinks ought to be convicted does not by itself give rise to a legal grievance.
These principles are gathered from the cases cited and do not, as I shall show later, do violence to the context in which the phrase occurs in,the .
Although I am aware that in Seven Oaks Urban District Council vs Twynham(1) Lord Hewart C.J. uttered words of caution, again emphasised by Lord Parker C.J. in Ealing Corporation vs Jones(2), in applying too readily the definitions given in relation to other statutes but I do not think I am going beyond what Lord Hewart C.J. said and what Lord Parker C.J. did in the case.
Lord Parker observed ".
As Lord Hewart C.J. pointed out in Seven Oaks Urban District Council vs Twynam : But as has been said again and again there is often little utility in seeking to interpret particular expressions in one statute by reference to decisions given upon similar expressions in different statutes which have been enacted alio intuitu.
The problem with which we are concerned is not, what is the meaning of the expression aggrieved ' in any one of a dozen other statutes, but what is its meaning in this part of this statute ? ' Accordingly, I only look at the cases to which we have been referred to see if there are general principles which can be extracted which will guide the court in approaching the question as to what the words person aggrieved ' mean in any particular statute.
" If I may say respectfully I fully endorse this approach.
I am now in a position to examine the Advocates ' Act but before so I must refer to a case near in point to this case, than any considered before.
The case is reported in Attorney General of Gambia vs Pierrie Saar N 'jie(3).
A legal practitioner was held guilty of professional misconduct but was acquitted on appeal and an appeal was taken to the Judicial Committee against the decision of the West African Court of Appeal.
This involved consideration of (1) , 443.
(3) (2) L. R. 877 whether the Attorney General could be said to be a person aggrieved '.
The facts need to be stated a little fully as both sides rely upon the observations of Lord Denning and they need to be explained carefully.
A barrister (a member of the English Bar) and also a Soli citor (the two professions appear to be united in the Gambia) practising in the Supreme Court of the Gambia was charged with professional misconduct and an order was made, September 22, 1958, by the Deputy Judge (Abbot J.) striking off his name from the roll of that Court, and directing that the matter be reported to the Masters of the Bench of his Inn.
On June 5, 1959 the West African Court of Appeal (Bairamian, Ag.
P, Hurley Ag.
J.A. and Ames Ag.
J.A.) set aside the order on the ground that the Deputy Judge had no jurisdiction.
The Attorney General of the Gambia thereupon sought leave to appeal to Her Majesty in Council but this was refused.
Then a petition was made for.
special leave.
Special leave was granted subject to the preliminary objection by the respondent that no appeal lay at the inst ance of the Attorney General.
The preliminary objection was rejected.
Section 31 of the West African (Appeal to Privy Council) Order in Council 1949 under which special leave was asked reads : ,Nothing in this order contained shall be deemed to interfere with the right of His Majesty upon the humble petition of any person aggrieved by any judgment of the court, to admit his appeal therefrom upon such con ditions as His Majesty in Council shall think fit to impose.
In the Gambia disciplinary jurisdiction over barristers and solicitors is embodied in Rules of the Supreme Court 1928.
Under those rules the Supreme Court ' Judge (and there is only one) admits and enroll barristers and solicitors of the Court, and Schedule I, Order 9, r. 7 says that : "The Judge shall have power, for reasonable cause, to suspend any barrister or solicitor from practising within the jurisdiction of the court for any specified period, or order his name to be struck off the roll of court.
" Then there is the West African Court of Appeal and it hears appeals from the Supreme Court ' in civil and criminal matters.
In an earlier case in which a certain Mr. Mccauley was struck off the roll of the Supreme Court of Sierra Leone and Mr. Mccauley sought to appeal to.
the Full Court of West Africa it was ruled 878 by the Full Court that the decision of the Chief Justice was not a decision of the Supreme Court ' and was, therefore, not appealable and that the only remedy was to obtain special leave to appeal to the Privy Council (see W. E. A. Mccauley ' vs Judges of the Supreme Court of Sierra Leone and Anr.(1).
The legislature ' then added section 14 which provided: "An appeal shall lie to the Court of Appeal from any order of the judge suspending a barrister or solicitor of the Supreme Court from practice or striking his name off the roll, and for the purposes. of any such appeal any such order shalt be deemed to be an order of the Supreme Court.
" The words of the section show that the legislature did not regard a decision in disciplinary matters as a judgment of a court but only deemed it to be so.
The Full Court on the appeal of N 'Jie from the order of the Deputy Judge held that a Deputy Judge could not deal with any matter which was not a proceeding in the court in the exercise of judicial power.
The Judicial Committee held that this was exercise, of judicial power.
Then the preliminary objection was considered.
The objection was that the Attorney General had no locus standi not being a person aggrieved.
This was overruled by the Judicial Committee.
Lord Denning referred to the definition of James L.J. in In Re Sidebotham exhibit p. Sidebotham,(2) and said that if the definition were to be regarded as exhaustive and were held applicable, an aggrieved person ' would be only a person who was a party to a lis, a controversy inter partes and had a decision given against him.
The Attorney General would not come within this restricted definition as there was no suit between two parties when disciplinary proceedings were started ex mero motu by the court or at the instance of the Attorney General or some one against a legal practitioner.
But the definition of James L.J. was not exhaustive and the words person aggrieved, were of wide import and should not be subjected to a restricted interpretation.
They included not a busy body but certainly one who had a genuine grievance because an order had been made which prejudicially affected his interests.
Posing the question did the Attorney General have a sufficient interest ', the Judicial Committee answered he had.
The Attorney General in a Colony represented the Crown as the guardian of public interest and it was his duty to bring before the Judge a case of misconduct to warrant action.
Then Lord Denning proceeded to distinguish two kind , of cases to determine if the Attorney General would be a person aggriev (1) L. R. (2) A.) 879 ed. ' The first was a case where the judge acquitted the practitioner.
In such a case no appeal was open to the Attorney General under the Supreme Court Ordinance, and Lord Denning added "He has done his duty and is not aggrieved".
In other words, he did not come within the words of the 3 1 st section of the Order in Council.
The Attorney General could not, therefore, ask for special leave as a person aggrieved '.
But the case was different if the judge found the practitioner guilty and a Court of Appeal reversed the decision on a ground which went to the root of the jurisdiction of the judge or was otherwise a point in which the public interest was involved.
In that case the Attorney General was a person aggrieved '.
The observations of Lord Denning clearly meant that the Attorney General could not pose as a person aggrieved ' to seek to bring a simple case of acquittal for reversal by the Judicial Committee under the 31st section of the Order in Council for he could not be regarded as a person aggrieved '.
The remark was made perhaps to repel an argument that every case of acquittal would make the Attorney General an aggrieved person '.
Lord, Denning said that this was not the true position.
The Attorney General could only move the judge and there his duty ended.
The law gave him no express right of appeal and he could not claim to be a person aggrieved '.
He could only invoke the 3 1 st section if he could make out his grievance and it was found to be as a person representing the Crown and the guardian of public interest seeking to get reversed a decision which struck at the root of the jurisdiction of the disciplinary judge, by denying that the Deputy Judge was exercising judicial power under section 7 of the Supreme Court Ordinance.
The Crown was aggrieved by this decision and the, Attorney General representing the Crown was an aggrieved person.
The scheme of the law under which the disciplinary action was taken and the appeal to the Privy Council was brought gave the true connotation of the expression person aggrieved '.
In those cases in which no question of public interest was involved the Attorney General even if he had moved the judge and got an adverse decision could not be regarded as aggrieved but in a case in which, apart from the merits of the case against the practitioner, some grave I question of public importance was involved, the Attorney General representing the Crown could be regarded as.
a person aggrieved '.
It was presumably after reading this case and understanding it as I have done, that the Advocate General set about making 880 out a question of public importance.
He did not seem only to get the decision overturned on facts.
This is what he said : "The appellant has filed this appeal as the Advocate General of Maharashtra.
Under the , (as under the ), the Advocate General represents the public interest in every disciplinary inquiry.
Under sec.
35 of the , the Advocate General is entitled to notice in respect of every disciplinary inquiry, is entitled to have an opportunity of being heard before the disciplinary committee passes any order.
This appeal raises very important questions of principle as regards the effect of a conviction of an Indian Advocate of an offence recognised by all civilised countries as an offence involving moral turpitude.
The question raised also related to the requirements of natural justice in a criminal court, and the effect of the judgments of the Supreme Court on the subject.
It raises the further question whether an Indian Advocate convicted of an offence involving moral turpitude by a Court outside India is immune from disciplinary action because a minor dif ferences of procedure in such countries where such trial has been held, in complete accord with principles of natural justice.
The profession of an advocate is an honourable profession and the disciplinary provisions of the are designed to secure that per guilty of offences involving moral turpitude are subject to appropriate disciplinary action.
" It is obvious that the Advocate General has attempted to use the observations of Lord Denning in the Gambia case and wishes to plead that he enjoys a special position in the Bar and under the and therefore is entitled to appeal as a ' person aggrieved '.
This was the line adopted by Mr. M. C. Setalvad, counsel for the Bar Council of India.
On the other band, Mr. V. section Desai appearing for the Advocate General argued that the Advocate General having notice of disciplinary proceedings, in any event, must be treated as a person aggrieved ' within sections 35 and 38 of the .
I shall consider the narrow question presented by Mr. Setalvad latter.
I shall first take up for consideration the larger question and the more general ,application of the expression person aggrieved. , In support of his contention Mr. V. section Desai cited three cases from this Court, one from the Judicial Committee and one from the Bombay High Court.
They all relate to disciplinary proceedings and I may begin by considering them.
881 The case of the privy Council reported in Advocate General of Bombay & Ors.
vs Phiroz Rustamji Bharucha(1) was next cited.
It was an application for special leave by the Advocate General of Bombay in a proceeding relating to professional misconduct of an advocate.
The standing of the Advocate General was questioned.
The report in the Bombay Law Reporter Series(2) reproduces more fully the arguments than.
the official report and we were referred to the arguments.
The point was not debated and there does not appear to be a pronouncement on this point either during the course of argument or in the judgment since special leave was refused on another ground.
Mr. Desai says that if the Judicial Committee had found substance in this objection they would have ruled out the Advocate General on this ground alone.
There is no reason to think that the objection was considered at all.
I cannot derive any assistance from this ruling because the prerogative of the Crown to grant special leave as of grace in any case was always there irrespective of the standing of the Advocate General.
The Privy Council often granted special leave and even heard appeals on certificates wrongly granted.
(See Sevak Jeranchod Bhogilal vs Dakore Temple Committee(2) and the cases collected in Halsbury Laws of England (3rd Edn.) Vol.
9 p. 380 paragraph 886 note (h).
This prerogative the Judicial Committee has exercised on behalf of the Crown particularly in cases of general interest see ibid p. 379 section 885 note (s).
The provisions of the former section 112 of the Code of Civil Procedure show the extent of the prerogative.
Therefore.
because the Privy Council refused special leave on one ground rather than another cannot import a rejection of the objection as to the standing of the Advocate General.
Next we have an unreported decision of a Division Bench of this Court reported in B. M. Madani vs Commissioner of Work men 's, Compensation.
Bombay(3).
In that case the anneal was taken by the Commissioner for enhancement of penalties against the delinquent advocate and the penalty was in fact increased.
This Court held that he was entitled to do so as a person aggrieved.
The Particular misconduct was committed in relation to a claimant before the Commissioner.
The Advocate had pocketed the travelling allowance granted by the Commissioner to the widow of a deceased workman.
There may be some doubt whether the Commissioner was a person aggrieved ' by the Denalty imposed in the first instance but I do not pursue this matter.
The case can be justified on the dictum in some cases that a party which moves the court or a Person brought before the court to be bound by its order May be a person aggrieved.
, See for example the case of the Official Receiver in Re Payne Ex p. Castle Mail Packets (1) (2) A. I. R. 1915 P. C. 155.
(3) C. A. 877 of 1968 decided on October 10, 1968.
69Sup.
CI(P)71 12 882 Co.(1), and In Re Lamb exhibit p. Board of Trade already considered by me.
Madani 's case does not help to resolve the dispute centering round the Advocate General.
The next case is reported in Bhataraju Nageshwara Rao vs The Hon 'ble Judges of the Madras High Court and others(2).
That case arose under the Bar Councils Act, 1926 when the Judges exercised disciplinary power.
In the case before the Supreme Court the Judges of the Madras High Court were shown as respondents.
This Court observed at page 1064 as follows "Before parting with this appeal we desire to say that it appears to us that it was wholly wrong and inappropriate for the appellant to have made the Honourable Judges of the Madras High Court respondents to this appeal.
It appears that in some cases involving contempt of Court the Honourable Judges have been made parties.
It is not necessary for us to express any opinion on this occasion as to the propriety of that procedure in contempt cases but we are clearly of the opinion that in an appeal arising out of a proceeding under the Bar Councils Act the appropriate parties should be the advocate concerned, the complainant, if any, the Bar Council or the secretary thereof and the Advocate General of the State concerned to whom notice have to be issued under section 12(3) of the .
" This does not advance the case of the Advocate General of Maharashtra any further.
The last case of this Court is Municipal Corporation of the City of Bombay vs Chandulal Shamaldas Patel and Ors.(8).
In land acquisition cases started for the benefit of the Municipal Corporation certain notifications issued under the Land Acquisition Act were set aside by the High Court, and the Municipal Corporation sought to appeal.
It was held not to be a person grieved '.
This case, even if I were to accept it as correctly decided, does not assist us in relation to our Act passed with a different intent and purpose and using the words in another context.
The last case is from Bombay but it did not discuss the point and cannot be held to have laid down a precedent.
It is useless to refer to it.
I now proceed to examine the larger question whether by rea son of the provisions of the the Advocate General of the State enjoys such position that he must necessarily be treat (1) C. A. (2) ; (3) C. A. No. 1716 of 1967 decided on August 1, 1970.
883 ed as a person aggrieved entitling him to file an appeal.
For this purpose we have to examine critically the provisions of the Act to discover if the claim can be entertained.
The was passed to amend and consolidate the law relating to legal practitioners and to provide for the constitution of bar Councils and an All India Bar.
It replaced the earlier Acts governing the legal profession particularly the .
Prior to the passing of the , the enrollment and discipline of legal practitioners was in the hands of the courts and in the case of the advocates the High Court entertained and determined cases of misconduct against them.
Now this jurisdiction is completely transferred to the Bar Councils of the States and the Bar Council of India.
In the Bar Councils of the States (except Delhi) the Advocate General of the State is an ex officio member.
In Delhi the Additional Solicitor General takes the place of the Advocate General.
Other members are elected.
In the Bar Council of India, the Attorney General and the Solicitor General are ex officio members and the other members are elected one each by the State Bar Councils.
In the Union Territory of Delhi the Additional Solicitor General is ex officio member.
The functions of the Advocate General are not different from those of the other members in so far as the affairs of the Bar Council are concerned.
The only matters where the Advocate General, the Attorney General and the Solicitor General and the Additional Solicitor General are mentioned are these.
The Act gives a right of pre auidence over other advocates to the Attorney General, the Solicitor General, the Additional Solicitor General and the Advocate General.
The right of pre audience gives them a standing for hearing of cases but does not confer on them any other rights.
The magniloquent phrases such as Leader of the Bar, Keeper of the Conscience of the Bar have no meaning neither now, nor before under the Bar Councils Act of 1926.
They are just honorific titles given by courtesy but are not grounded on law.
Indeed the Keepers of the Conscience of the Bar are the Bar Councils and the Leader of the Bar may be someone who may even have refused to accept Advocate Generalship.
The functions of the Bar Councils of the States and the Bar Council of India throw some light on the remaining functions of the Advocate General and may first be seen.
Section 6 of the Act lays down the functions of the State Bar Council and section 7 those of the Bar Council of India.
Apart from certain administrative functions.
which these councils, which, are bodies corporate, perform, their functions in relation to the Bar are somewhat different.
Both have their own rolls and they prepare and 884 maintain the rolls.
The State Bar Council entertains and determines cases of misconduct of advocates oil its roil and safeguards the rights, privileges and interests of advocates on its roll.
The Bar council of India lays down the standards of professional conduct and etiquette of, advocates, the procedure to be followed by its disciplinary committee and the disciplinary committee of each of the State Bar Councils.
The Bar Council of India also safeguards the rights and privileges and interests of advocates and exercises general supervision and control over State Bar Councils.
It also deals with and disposes of any matter arising under the which may be referred to it by a State Bar Council.
There are other functions which relate to the education etc.
of those who wish to join the legal profession.
The Bar Council of India maintains a common roll of advocates.
The Bar Councils also decide in relation to their rolls all questions of seniority.
The State Bar Councils and the Bar Council of India constitute one or more disciplinary committees and under Chapter V questions of the conduct of advocates on their respective rolls are referred to them.
The disciplinary committee of the Bar Council of India exercises superior powers inasmuch as it hears appeals from the orders of the disciplinary committees of the State Bar Councils and may even of its own motion withdraw for inquiry before itself for disposal, any proceeding for disciplinary action against an advocate pending before the disciplinary committee of any State Bar Council.
The disciplinary proceedings commence both before the State Bar Council and the Bar Council of India on a complaint or otherwise made respectively to the State Bar Council or the Bar Council of India.
The Bar Councils in either case refer them for disposal to their respective disciplinary committees.
The disciplinary committee in each case can reject the complaint summarily, but if it proceeds to hear the matter further it causes a notice thereof to be sent to the advocate concerned and to the Advocate General of the State or the Attorney General of India, as the case may be.
The disciplinary committee after giving the advocate concerned and the Advocate General or the, Attorney General, as the case may be, an opportunity to be heard" makes an order either dismissing the complaint or where the proceedings are found to be not fit for consideration and are started at the instance of the Bar Council, ordering that they may be filed.
The committee may, if the advocate is found guilty, reprimand him or suspend him from practice for such period as it deems fit, or may remove him altogether from the roll of advocates.
The Advocate General or the Attorney General, as the case may be, need not appear personally but may appear through an advocate.
885 From the decision of the disciplinary committee of the State Bar Council an appeal lies to the bar Council of India which is heard by the disciplinary committee of the Bar Council of India which may pass such orders thereon as it deems fit.
From the decision or the disciplinary committee of the Bar Council of India an appeal lies to this Court.
The appeals can be taken by a ' person aggrieved ' by the order of the disciplinary committee of tile State Bar Council or the Bar Council of India, as the case may be.
It is in this context that we have to determine whether the Advocate General can be regarded as a person aggrieved '.
In view of the common roll maintained by the, Bar Council of India it appears to me that if anybody represents the Bar it would be the Bar Council of India and in the case of the States, the Bar Council of the, State.
The Advocate General has no right to speak on behalf,, of the body of the advocates as if he represented them and their interests.
Neither is this privilege expressly conferred on him, nor can it be implied from any of the provisions of the Act.
The question, therefore, arises : in what capacity does the Advocate General appear before a disciplinary committee ? It is obvious that he is not a prosecutor on behalf of the Bar Council because if he was one, his presence would be more necessary at the stage at which the disciplinary committee considers in limini to decide whether the matter should be proceeded with at all.
The next question is : why is he summoned at all ? In my opinion, the Advocate General is not noticed and brought before the court because he is a prosecutor or is to be bound by the order of the disciplinary committee.
He represents no interest there and is heard merely because he is the chief counsel of the State and therefore his assistance at the hearing is useful.
The fact that he need not appear by himself and may appear through an advocate renders his position a little weaker in the matter of his grievance If he is to be treated as a perso n aggrieved ' he must argue the case himself.
The fact that he appears through a counsel shows that the intention is merely to have the opinion of a person who is neither siding with the complainant nor with the advocate and who will thus have unbiased and impartial approach to the case.
The Advocate General is generally a lawyer of some standing having made a mark in the profession and his contribution to the deliberations of the disciplinary committee is welcome because thus the disciplinary committee is helped to reach a proper conclusion.
If he is not a person summoned to be bound by the order but a person who is heard in a dispute between others merely to be of assistance in reaching the right conclusion he can hardly have a grievance.
The Advocate General must after he has done his duty leave the matter to the complainant and the advocate or the 886 Bar Council to take the matter further if they choose.
In no event the Advocate General is in the nature of a party having independent rights which he can claim are injured by the decision.
The decision does not deny him anything nor does it ask.
him to do anything.
It is thus that Lord Denning says that in these disciplinary proceedings the Attorney General is not ' a party as in a lis and after the decision, his duty ends.
Lord Denning points this out clearly by saying that the Attorney General in that case could not have been aggrieved by the order of the Deputy Judge if he had acquitted the delinquent advocate in that case The Attorney General 's interest was found by Lord Denning in relation to the Crown and the Colony and that too for the special reason that appeal court had denied that the Deputy Judge possessed jurisdiction to hear the case.
In our country the Advocate General does not represent the Executive or the Legislature or the Judiciary in.
disciplinary proceedings before the disciplinary committee.
His function is advisory and more akin to an amicus curiae He is not to take sides except in so far his arguments lend weight to the case of the one side or that of the other.
Beyond that he is not interested in the dispute either in his personal capacity or in his capacity as an Advocate General.
He does not represent the Government in these proceedings.
If the Government was interested the notice would have gone to it.
In other statutes, where the Central Government is vitally interested, as for example, in the Chartered Accountants Act, the notice does not go to the Advocate General but to Government and the government appears through the Advocate General.
The Advocate General under the Act finishes his duty when the hearing is over and he cannot be considered to be a party interested or a perso n aggrieved '.
I do not find anything in the Act which indicates that the Advocate General is to be treated as a person aggrieved ' by a decision whether in favour of the advocate or against him.
Indeed it would have been the easiest thing to give a right of appeal to the Advocate General eo nomine without including him in the compendious phrase a person aggrieved '.
If he is not noticed, the order would be held to deny him something which the law entitled him to.
That is quite different.
The larger proposition contended for by Mr. Desai is therefore not acceptable to me.
This brings me to the narrow ground on which Mr. Setalvad very properly rested the case of the Bar Council of India.
That narrow ground is that in this case there were several Points of general public interest which needed to be solved and therefore, if the decision of the disciplinary committee of the State Bar Council was wrong, the Advocate General in the public interest could take the matter further.
I do not think that I can subscribe to this approach either in this case.
The Advocate General presented his views that a conviction in England showed moral turpitude 887 in the advocate.
I do not think that this inference necessarily follows.
The advocate explained that he was held guilty in a summary court and received a small fine because he was not in a position to prove his innocence before the Magistrate.
Now in disciplinary proceedings the advocate was not estopped from questioning the charge that be was guilty of corrupt practice.
In a civil proceeding the decision of a criminal court is not res judicata.
To give an example, if a person is involved in a traffic offence in which some one is injured he may in the criminal court receive a light sentence but if he is sued in a civil court for heavy damages he pan plead.
and prove that he was not negligent or that accident was due to the contributory negligence of the defendant.
The decision of the criminal court would not preclude him from raising this issue before the civil court.
The advocate here explained that he was held guilty before the Magistrate in the circumstances in which he was placed.
The. fact of his conviction, as well as his full statement bearing on his conduct were before the disciplinary committee of the State Bar Council.
They had to choose between the two, that is to say, the result of a summary trial Without going into merits and proof of the misconduct.
Having examined the advocate and seen the record, the disciplinary committee of the State Bar Council chose to accept the plea of the advocate and held that he was not guilty.
They were also satisfied that the summary proceedings in the criminal trial in England offended against the principles of natural justice.
They were entitled to this view on which much can be said on both sides.
If the Advocate General 's view of the case was not accepted by the disciplinary committee he could not have any grievance.
He could not make this into his own cause or a cause on behalf of persons he did not represent.
He had done his duty and the matter should have rested there.
For this reason I am of the view in this case the Advocate General was not a person aggrieved, within the meaning of section 37 of the even on the narrow ground and the appeal filed by him before the disciplinary committee of the Bar Council of India was incompetent.
The conclusion which I have reached does not mean that I have gone into the merits of the advocate 's plea.
Nor does it indicate that 1, sitting as a judge.
would have accented the plea of the advocate, if I were to decide the ease on facts.
That is a matter quite beside the point.
I refer to the plea because it was raised and was accepted by his peers on the ' disciplinary committee.
I would.
therefore, allow the appeal and set aside the order of the disciplinary committee of the Bar Council of India.
888 Mitter,J.
On the basis of a news item in the Times of India of August 27, 1966 the Bar Council of Maharashtra in exercise of its powers under section 35 of the issued a notice to the appellant to face an inquiry into his conduct by its disciplinary committee.
The said committee exonerated the appellant of the charge levelled against him and held that he was not guilty of any misconduct, professional or otherwise.
Relying on the provisions of section 37 of the said Act the Advocate General of Maharashtra who had appeared before the said committee preferred an appeal to the Bar Council of India.
The Disciplinary Committee of the Bar Council of India disagreed with the finding of the disciplinary committee of the Bar Council of Maharashtra observing that the conduct of the appellant which was investigated into before the State Bar Council was quite undeserving of an advocate and directed his suspension from practice, for a period of one year.
The appellant has come tip in appeal to this Court, and has urged a preliminary point that the appeal by the Advocate General to the Bar Council of India was incompetent and the finding and order of the disciplinary committee of the said body ought to be set aside on that ground alone without our going into the facts of the case.
Notice of this hearing was given to the Advocates General and the Bar Councils of all the States as also the Attorney General of India and we have had the benefit of arguments advanced before us not only on of the Advocate General for the State of Maharashtra but also ' on behalf of the Bar Council of India, the Attorney General of India and some of the Advocates General of the States.
The determination of this question depends on the interpretation of section 37 of the (hereinafter referred to as the Act ') "(1) Any person.
aggrieved by an order of the disciplinary committee of.
a State Bar Council made under section 35 may, within sixty days of the date of the communication of, the order to him, prefer an appeal to the Bar Council of India.
(2) Every such appeal shall be heard by the disciplinary committee of the.
Bar Council of India which may pass such order thereon, as it deems fit.
" To put the matter in a nut shell the question is, "Is the Advocate General of a State who appears before the disciplinary committee of a State Bar Council in pursuance of a notice given ' to him under section 35(2) of the Act a person aggrieved ' within the meaning of the words used in section 37 ?". 889 To decide this question we have to look into the Act to find out the role of the Advocate General of a State in proceedings of this kind.
The object of the Act is to amend and consolidate the law relating to legal practitioners and to provide for the constitution of Bar Councils and an All India Bar.
All the States and the Union territories are to be under the jurisdiction of named State Bar Councils and there is also to be a Bar Council of India for the territories to which the Act is extended.
Generally speaking a State Bar Council is to consist of a number of members including the Advocate General of the State ex officio, while the Attorney General of India ex officio is to be a member of the Bar Council of India.
The other members of the Bar Councils are to be elected in terms of the Act.
Under section 6 the functions of a State Bar Council are to be inter alia (a) to admit persons as advocates on its roll; (b) to prepare and maintain such roll; (c) to entertain and determine cases of misconduct against advocates on its rail.
section 7 lays down the functions of the Bar Council of India which are to be inter alia : (a) to prepare and maintain a common roll of advocates: (b) to lay down standards of professional conduct and etiquette for ' advocates; and (c) to lay down the procedure to be followed by its disciplinary committee and the disciplinary committee of each State Bar Council.
Under section 9 a Bar Council has to constitute one or more disciplinary committees each of which is to consist of three perso ns of whom two are to be persons elected by the Council from amongst its members and the third is to be a person co opted by the Council from amongst advocates possessing the qualifications specified in the proviso to sub s.(2) of section 3 but is not a member of the council.
section 15 empowers Bar Councils to make rules to carry out the purposes of the Act.
Chapter III of the Act containing sections 16 to 28 provides for admission and enrollment of advocates.
the determination of their seniority etc.
The right of an advocate to practice is dealt with in Chapter IV.
Chapter V which contains sections 35 to 44 deals with conduct of advocates.
The relevant provisions thereof are set out as under "35(1) Where on receipt of a complaint or otherwise a State Bar Council has reason to believe that any advocate on its roll has been guilty of professional or 890 other misconduct, it shall refer the case for disposal to its disciplinary committee.
(2) The disciplinary committee of a State Bar Council, if it does not summarily reject the complaint.
shall fix a date for the hearing of the case and shall cause a notice thereof to be given to the advocate concerned and to the Advocate General of the State.
(3) The disciplinary committee of a State Bar Council after giving the advocate concerned and the Advocate General an opportunity of being heard, may make any of the following orders, namely: (a) dismiss the complaint or, where the proceedings were initiated at the instance of the State Bar Council, direct that the proceedings be filed; (b) reprimand the advocate; (c) suspend the advocate from practice for such period as it may deem fit; (d) remove the name of the advocate from the State roll of advocates.
(5) Where any notice is issued to the Advocate General under sub section (2) the Advocate General may appear before the disciplinary committee of the State Bar Council either in person or through any advocate appearing on his behalf.
Supra.
Any person aggrieved by an order made by the disciplinary committee of the Bar Council of India under section 36 or section 37 may, within sixty days of the date on which the order is communicated to him, prefer an appeal to the Supreme Court and the Supreme Court may pass such order thereon as it deems fit.
" S.42 gives the disciplinary committee of a Bar Council the same powers as are vested in a civil court under the Code of Civil Procedure in respect of various matters including the summoning and enforcing the attendance of any person and examining him on oath, requiring discovery and production of documents etc.
and under sub section
(2) all proceedings before a disciplinary committee of a Bar Council are to be deemed judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal 891 Code.
section 43 empowers the disciplinary committee of a Bar Council to make such order as to costs of any proceedings before it as it may deem fit.
section 44 gives the disciplinary committee power to review any order passed by it of its own motion or otherwise.
The above provisions of the Act make it clear that subject to a right of appeal to this Court under section 38 the inquiry into charges of misconduct against an advocate are to be in the exclusive jurisdiction of the Bar Councils.
Any complaint against the conduct of an advocate has to be preferred before a State Bar Council and when the council has reason to believe on the strength of such complaint that an advocate on its roll has been guilty of professional or other misconduct, it has to refer the case for disposal to its disciplinary committee.
The council can take such a step of its own motion.
Section 35(1) shows that it is not obligatory on the State Bar Council to refer each and every complaint to the disciplinary committee.
It has to be satisfied that there is a prima facie case for investigation,.
It can throw out a complaint if the same appears to be frivolous.
Sub section
(2) of section 35 shows that it is not incumbent on the disciplinary committee of a State Bar Council to proceed further with the matter if it takes the view that the complaint is without substance.
It is not obliged to call upon the advocate concerned to.
explain his conduct or to inform the Advocate General that it has rejected the complaint summarily.
It is only when the disciplinary committee is satisfied that the complaint ought not to be rejected out of hand that it has to fix a date for the hearing of the case and give notice thereof to the advocate concerned and to the Advocate General of the State.
It is mandatory on the disciplinary committee to give such a notice to both.
Sub sections
(3) and (5) of section 35 go to show that it is not incumbent on the Advocate General to appear at the hearing and that it is within his discretion to appear either by himself or through another advocate of his choice and place his viewpoint before the disciplinary committee.
He is not a party to the proceedings but he has a right to appear and to make submissions both on questions of fact and questions of law.
section 3 7 does not in terms lay down who can prefer an appeal from the order of the disciplinary committee of the State Bar Council.
There can be no doubt that the advocate agianst whom an order is made would be a person aggrieved.
The State Ba Council cannot be such a person as the order is made by itself acting through its disciplinary committee.
A member of the public may make a complaint to the State Bar Council against an advocate on the ground of loss or damage or any serious Prejudice caused to him by the advocate, be it negligence or fraud e.g. collusion with the opponent or misappropriation of 892 any moneys belonging to him and there does not seem to be any justifying cause for holding that he is not a person aggrieved by an order which dismisses his complaint.
The question arises as to whether the Advocate General is a person aggrieved because the disciplinary committee does not take the same view of the matter as himself, be it for or against the advocate.
To place the Advocate General in the category of "person aggrieved ' one must be able to say that the disciplinary committee committed an error which it was his duty to attempt to set right because of some function attributable to him as the Advocate General or some obligation cast upon him by the Act or the general law of the land to safeguard and maintain standards of conduct of advocates laid down by the Bar Council of India.
Generally speaking, a person can be said to be aggrieved by an order which is to his detriment, pecuniary or otherwise or causes him some prejudice in some form or other.
A person who is not a party to a litigation has no right to appeal merely because the judgment or order contains some adverse remarks against him.
But it has been held in a number of cases that a person who is not a party to suit may prefer an appeal with the leave of the appellate court and such leave would not be refused where the judgment would be binding on him under Explanation 6 to section 11 of the Code of Civil Procedure.
We find ourselves unable to take the view that because a person has been given notice of some proceedings wherein he is given a right to appear and make his submissions, he should without more have a right of appeal from an order rejecting his contentions or submissions.
An appeal is a creature of statute and if a statute expressly gives a person a right to appeal, the matter rests there.
Innumerable statutes both in England and in India give the right of appeal to "a person aggrieved" by an order made and the provisions of such statutes have to be construed in each case to find out whether the person preferring an appeal falls within that expression.
As was observed in Robinson vs Currey(1) the words "person aggrieved" are ordin ary English words which are to have the ordinary meaning put upon them '.
According to Halsbury 's Laws of England (Third Edition, Vol. 5) page 29 foot note "h" "The expression is nowhere defined and must be construed by reference to the context of the enactment in which it appears and all the circumstances (1) 993 Attempts have however from time to time been made to define the expression in various cases.
In Ex parte Sidebotham In re Sidebotham(1) it was observed by James, L.J. "But the words Person aggrieved ' do not really mean a man who is disappointed of a benefit which he might have received if some other order had been made.
A person aggrieved ' must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something, or wrongfully refused him something, or wrongfully affected his title to something.
" The above definition of James, L.J. was described by Esher, M.R. in Ex Parte Official Receiver In Re Reed, Bowen & Co.( as not "an exhaustive definition".
His Lordship added "It is an affirmative definition of a person who may appeal, and at all events it includes a person who has asked for a decision for which he had a right to ask.
and has been wrongfully refused.
" The Queen, vs The Keepers of the Peace and Justices of the County of London (3) was a case of an appeal by an informant against the judgment of a justice of the peace upon the hearing of an information or complaint by the vestry of the parish against a person for unlawfully and wilfully obstructing the free passage of a certain highway.
The relevant section provided: "If any person shall think himself aggrieved by.
any order, conviction, judgment, or determination made, or by any matter or thing done by any justice or other person in pursuance of this Act. such person may appeal to quarter sessions.
" In holding that an informant had no right of appeal Lord Coleridge C.J. said: "Is a person who cannot succeed in getting a conviction against another a person aggrieved ? ' He may be annoyed at finding that what he thought was a breach of law is not a breach of law; but is he aggrieved ' because some one is held not to have done wrong ? It is difficult to see that the section meant anything of that kind." In Rex vs London Quarter Sessions Ex parte Westminster Cor poration(4) a borough council whose cancellation of the registration of a street trader had been reversed by a magistrate on (1) 14 ch. D. 458 at 465.
(3) , 361.
(2) at 178.
(4) 512 K. B. 508 894 appeal by the trader concerned under section 25 of the London County Council (General Powers) Act, 1947 was held not to be a person aggrieved by an order of a court of summary jurisdiction within the meaning of section 64 of the Act.
The argument advanced on behalf of the corporation was that it had a public administrative duty to perform in the regulation of the streets and Having been interfered with in the execution of that duty by the decision of the magistrate, they were persons aggrieved by his order.
One of the grounds for refusal of the application by Lord Goddard, C. J. was that the order made did not directly,affect the borough council in such a way as to make them "a person aggrieved" within the meaning of the section.
According to the learned Chief Justice what the statute did was "to substitute the opinion of the magistrate for the opinion of a borough council".
It was said that the court of summary jurisdiction had to take into account the same matters as the borough council had to take into account, and if the court thinks that the cancellation of the licence is not justified, it can restore the licence to the street trader.
If the court of summary jurisdiction refuses to grant a licence, then the street trader is a person aggrieved, because his livelihood is affected, or an order is made directly affecting him.
The case of Sevenoaks Urban District Council vs Twynam(1) was relied upon by counsel appearing for, the Advocate General of Maharashtra support his argument that even a person who had no proprietary or pecuniary interest in the subject matter of the litigation might be a person aggrieved so as to give him a right to appeal.
The statute in this case was however worded very differently from the statutes which came up for consideration in the cases noted earlier.
section 68(1) of the Public Health Act, 1925 laid down that: "Where for the purpose of relieving or preventing congestion of traffic it appears to the local authority to be necessary to provide within their district suitable parking places for vehicles" then that authority may, subject to certain conditions, provide those parking places and might acquire land suitable for use as a parking place.
The proviso to the section however laid down that no such order shall authorise the use of any part of a street so as unreasonably to prevent access to any promises adjoining the street, or the use of the street by any person entitled to the use thereof, or so as to be a nuisance, or be made in respect of any part of a street without the consent of the authority or person responsible for the (1) [9291] 2 K. B. 440 at 444.
895 maintenance of the street.
Sub section
(2) of the section provided that where a local authority proposes to acquire and for the purpose of using it as a parking place they are to give notice of the proposal specifying the land and notify the date within which any objection is to be sent to them and the notice is to state that a right of appeal was conferred by the section.
Sub s.(3) provided that before carrying into effect any proposal of which notice was required to be given the local authority shall consider any objection which was sent to them in writing.
There was no limit there as to the kind of person making the objection, or the kind of objection which might be raised.
The respondent, a rate payer, duly gave notice under sub s.(3) on various grounds but he did not allege the infringement of any personal legal right and he objected in his capacity as a rate payer and as a member of the public on grounds common to them all.
The urban council considered the objection and informed him of their decision to proceed with the scheme.
The respondent appealed to petty sessions which allowed his objection.
The appellant appealed to quarter sessions and took the preliminary objection that the respondent was not a person aggrieved because he had alleged no infringement of any legal right personal to him.
Referring to the dicta of James L.J., Esher M.R. and Lopes L.J. in the above cases Lord Hewart C.J. observed: "I think this respondent did ask for a decision for which he had a. right to ask.
He did give notice of an objection of which he was entitled to give notice, but the person making the objection is not to have an appeal unless he satisfies two conditions : (1) that he is the author of the objection, and (2) that he is aggrieved by the refusal in the sense that he has a special and individual right infringed.
It seems to me that upon the fair construction of this sub section, which is by no means a common kind of statutory provision, what is meant is that a person may make an objection and is entitled to a decision upon it, and if the decision is adverse to him, he may, it he thinks fit and subject to the usual consequences, appeal from it to a petty sessional court, and so appealing, may, in consequence of other statutory provisions, appeal, if need be, to the court of quarter sessions." According to Avory J. "There is no limit there [in sub section
(3)] of the kind of person or the kind of objection which may be made.
it proceeds that after so considering the objection, they 896 are to give notice of their decision to the person by whom the objection was made, and any person who is aggrieved by such decision may appeal.
I cannot help thinking that on the plain words of that statute it was intended to give a right of appeal to any person who has made an objection to the proposal and has received notice that objection has been overruled.
" In Ealing Corporation vs Jones(1) Lord Parker C.J. remarked that it was easier to say what will not constitute a person aggrieved than it was to say what "person aggrieved" included.
He observed that a person was not aggrieved when being a public body it had been frustrated in the performance of one of its public duties.
He amplified this by saying that "If costs have been awarded in a case against a local authority, it is clear on the authorities that the local authority would be an aggrieved person.
Equally, if the result of the decision has been to put some legal burden on the public body concerned, that has been held to make it a person aggrieved.
" According to Donovan J. in the same case "The word aggrieved ' connotes some legal grievances, for example, a deprivation of something, an adverse effect on the title to something, and so on, and I cannot see that this is so here.
The local planning authority has simply been told that it cannot enforce the discontinuance of the present use of this land by the appellant by means of an enforcement notice under section 23.
" If one is to be guided merely by the provisions of the Advo cates Act it is difficult to see how the Advocate General can be a person aggrieved because the State Bar Council takes the view, whatever be its reasoning, that an advocate on its roll has not been guilty of any misconduct.
The entertaining of complaints, the inquiry into them and the punishment to be meted out to the advocate are all concerns of the Bar Council.
The Advocate General no doubt is entitled to a hearing if the complaint is not rejected summarily.
The statute expects him to take a fair and impartial attitude.
He has to render all assistance to the Bar Council so that a proper decision may be arrived at.
His role is not that of a prosecutor : nor is he a defence counsel on behalf of the advocate.
He is not interested in getting the advocate punished any more than he is interested in seeing that the character of a fellow member of, the Bar is cleared even if his conduct be unworthy of an advocate.
(1) at 390.
897 The Act does not make it obligatory on him to take part in the proceedings where he thinks that the facts of the case are so plain that his assistance is not called for.
It is only when he feels that a case requires a careful investigation and proper elucidation of the facts or the exposition of the law on the subject that he is called upon to render all assistance in the proceedings.
When he chooses to do.
so he does his duty by appearing at the hearing and putting before the disciplinary committee the facts in their proper perspective and advancing the proper inference to be drawn therefrom.
Once he does so there is an end of the matter so far as he is concerned.
He cannot have any grievance because the decision of the Bar Council is ' against his submission or not to his liking.
The question then arises as to whether any, duty is cast on the Advocate General by reason of his position to question the decision of the Bar Council if he feels it in the general interest of the members of the Bar or a wider public to do so.
article 165(2) of the Constitution epitomizes the functions and duties of the Advocate General in the following words: "It shall be the duty of the Advocate General to give advice to the Government of the State upon such legal matters and to perform such other duties of a legal character, as may from time to time be referred or assigned to him by the Governor and to discharge the functions conferred upon him by or under the Constitu tion or any other law for the time being in force. '.
A notable instance of his statutory duties is furnished by Order XXVII A of the Code of Civil Procedure.
By the provisions of section 91 of the Code of Civil Procedure no suit for a declaration and injunction in the case of a public nuisance can be instituted except by him or with his consent.
Similar powers are given and duties cast on him by section 92 C.P.C. in the case of trusts created for public purposes.
Section 526 A of the Code of Criminal Procedure gives an Advocate General power to apply to the court for the committal or transfer of a case to the High Court where any person subject to the Naval Discipline Act or to the Army Act or to the Air Force Act is accused of any of the offences specified therein.
It is not open to the Advocate General to intervene in any suit or legal proceeding apart from the provisions of the Code of Civil Procedure because he thinks public interest is involved in the matter.
Treating the matter historically, it may be said that in many respects the position of an Advocate General before 1950 was very similar to that of the Attorney General in England.
Sections 100 and III of a statute of 1813, 53 George M, C. 155.
L169Sup.
CI(P)/71 13 898 enabled the Advocates General to exhibit to, the respective Supreme Courts of Judicature at any of the Presidencies or to the Recorder 's Court at Bombay any information or information for breaches of Revenue laws etc.
as might be taken by the Attorney General in the court of Exchequer in England or in the nature of action or actions at law or of a bill or bills in equity as occasion might require against any person or persons residing within such jurisdiction as His Majesty 's Attorney General for the time being was by law authorised to exhibit.
The wording of section Ill shows that its object was to dispel doubts which had arisen about the competency of the Advocate General or Principal Law Officer of the East India Company to take such action.
, section 114 of the Government of India Act, 1915 empowered the Advocate General for any Presidency to take on behalf of His Majesty such proceedings as might be taken by His Majesty 's Attorney General in England.
section 65(2) of the Government of India Act, 1935 laid down that it was the duty of the Advocate General to give advice to the Provincial Government upon such legal matters and to perform such other duties of a legal character as may from time to time be referred or assigned to him by the Governor.
The position of the Attorney General in England is stated by Hood Phillips on Constitutional and Administrative Law (Fourth Edition) at p. 316 to be as follows : "The Law Officers consist of the Attorney General and Solicitor General for England, and the Lord Advocate and Solicitor General for Scotland.
They are regarded as the heads of the Bar in their respective countries, and as such are referees on points of professional etiquette.
The learned author goes on to note at p. 317 "The Attorney General represents the Crown in civil proceedings.in which it is specially concerned.
His consent is necessary for the prosecution of certain offences, e.g. under the Official Secrets Acts.
In criminal proceedings he or the Solicitor General, or their deputies, prosecute in important cases.
It is the practice for the Attorney General to lead in treason and important constitutional cases.
He may also file ex officio criminal information, though this procedure is now rarely used.
He may stop the trial of an indictment by entering a none prosequi.
He may also take over certain proceedings on the relation of private individuals (relator actions) e.g. public nuisance etc. .
The Attorney Generalls procedural privileges include the right to demand a trial at Bar privilege i.e. now, before a Divisional 899 Court), and the right to choose the venue for any civil or criminal proceedings in which the Crown is concerned. ' Anson in his treatise on Law and Custom of the Constitution Volume II, Part I (4th Edition, 1935) describes the Attorney General, the Solicitor General and the Lord Advocate and the Solicitor General for Scotland as the chiefs of the legal profession in their respective countries and states that in England and Northem Ireland they represent the Bar when the Bar takes collective, action.
So far as England is concerned neither the Attorney General nor the Solicitor General appears to have had for a very long time any function to discharge or any duty to perform when the, conduct of a barrister or a solicitor was called in question.
The power of inquiry was delegated by the Judges to the Inns of Court so far as barristers were concerned and as regards solicitors the matter has for some time been delegated to the Law Society.
It may not also be out of place to note the history of the legislation in India with regard to enquiries against members of the legal profession prior to the Act of 1961.
Under clause 10 of the Letters Patent of the High Court of Calcutta of the year 1865 the High Court was to have power to make rules for the qualification and admission of proper persons to be advocates, vakils and attorneys at law and was to be empowered to remove or suspend them from practice on reasonable cause.
The Letters Patents of other High Court contained provisions.
The appears to have been the earliest Indian statute on the subject.
Under section 13 of this Act the High Court was empowered after such enquiry as it though fit, to suspend or dismiss any pleader or muktyar who was guilty of fraudulent or grossly improper conduct in the discharge of his professional duty.
The Bar Councils came into existence for the first time under the Bar Councils Act, 1926.
But even under this Act the power to, reprimand, suspend or remove from practice any advocate of the High Court charged with professional or other misconduct was left with the High Court under section 10(1).
section 10(2) laid down the procedure to be adopted by the High Court when a complaint was made to it by any Court or by the Bar Council or by any other person that an advocate had been guilty of misconduct.
The High Court could summarily reject the complaint or refer the case for enquiry to the Bar Council or after consultation with the Bar Council refer it to the Court of a District Judge and it also might.
of its own motion refer any case where it had reason to believe.
that any advocate had been so guilty.
Under section 11 it was the duty of a committee of the Bar Council to inquire into a complaint made under section 10, Under section 12(2) of the Act the finding of a Tribunal on an inquiry referred to the Bar Council was to be forwarded to the High Court through the Bar Council and the finding of a District Court on such inquiry was to be forwarded 900 to the High Court direct with a copy to the, Bar Council.
section 12(3) of the Act contained a provision somewhat similar to section 35(3) of the Act of 1961.
The hearing was however to take place before the High Court, which I had to give notice of the date fixed for the purpose to the advocate concerned, to the Bar Council and to the Advocate General and to afford them an opportunity of being heard before orders were passed in the case.
Under the Act of 1926 the Advocate General appeared on the scene only after the Bar Council had recorded its finding.
The significant departure in the Act of 1961 from the analogous provision of the Act of 1926 is that the Advocate General is given notice of hearing of the case.
By itself this cannot affect any change in his position as regards an inquiry into the conduct of an advocate.
It would be reasonable to hold that while passing the statutes of 1926 and 1961 the Legislature thought that the Advocate General should be heard inasmuch as he occupied the position of a general referee on points of professional etiquette very much like the Attorney General in England.
However that may be, once he does the duty enjoined upon him by the statute of making such submissions as he thinks proper at the hearing his functions qua the inquiry come to an end.
As a referee he has no further interest in the matter.
If the disciplinary committee of, the Bar Council makes an order against the advocate which the Advocate General considers harsh and unreasonable in the circumstances of the case, he is not called upon to file an appeal to protect the interests of the advocate.
Neither is he interested in prosecuting the matter further if he takes the view that the punishment meted is not commensurate with the misconduct of the advocate.
Elaborate reference was made at the Bar to the decision of the Privy Council in Attorney General of the Gambia vs Pierre Sarr N 'Jie(1).
In that case the conduct of the respondent, a member of the English Bar admitted to practice as a barrister and solicitor of the Supreme Court of the Gambia was found to dishonourable and as such an order striking his name off the roll of the court was made by the deputy Judge with a direction that it should be reported to the Masters of the Bench of the Inn to which he belonged.
The Chief Justice of the Supreme Court of the Gambia had criticised the conduct of the barrister severely in the course of a trial held before him and had sent a copy of his judgment to the Attomey General of the Gambia.
The AttorneyGeneral served a notice of motion on the barrister for an enquiry to be, made by the Chief Justice but as the Chief Justice was the only Judge of that Court he recommended that some one other than himself should be appointed as a deputy Judge to hold the (1) , 630.
901 inquiry.
The Deputy Judge ordered his name to, be struck off the roll.
His order was however set aside by the West African Court of Appeal not on merits but on the ground that a Deputy Judge had only jurisdiction to represent the Chief Justice in the exercise of his judicial powers and according to the Court of Appeal the power to strike the name of a legal practitioner off the roll was not a judicial power.
The Attorney General of the Gambia appealed to Her Majesty in Council.
The question of the maintainability of the appeal was also canvassed before the Board.
With regard to inquiries into the conduct of barristers and solicitors in the Crown colonies Lord Denning who delivered the judgment of the Privy Council, said "by the common, law of England the Judges have the right to determine who shall be admitted to practice as barristers and solicitors, and as incidental thereto the judges have the right to suspend or prohibit from practice.
In England this power has for a very long time been delegated, so far as barristers are concerned, to the Inns of Court; and, for a much shorter time, so far as solicitors are concerned, to the Law Society.
In the colonies the Judges have retained the power in their own hands, His Lordship went on to remark at p. 631 "When the judges exercise this power to suspend or expel, they do not decide a suit between the parties.
There is no prosecutor as ' in a criminal case, nor any plaintiff as in a civil suit.
The judges usually act on their own initiative, ex mero motu, on information which has come to their notice, or to the notice of one or other of them in the course of their duties.
" Further, "When a legal practitioner is suspended or struck off by the judges of a colony, he has always been at liberty to petition Her Majesty in Council to restore him." Rejecting the argument that the Attorney General had, no locus standi to petition for special leave to appeal as he was not a person aggrieved, the Board referred to section 31 of the Order in Council, 1949 which gave very wide powers to His Majesty in Council to entertain the petition of any person aggrieved by any judgment of the court and to admit his appeal upon such conditions as His Majesty in Council would think fit to impose.
On the facts of the case the Board held that the Attorney General had a sufficient interest in the matter because the order made by the 902 West African Court of Appeal prejudicially affected his interests.
The reasoning of the Board was as follows: "The Attorney General in a colony represents the Crown as the guardian of the public interest.
It is his duty to bring before the Judge any misconduct of a barrister or solicitor which is of sufficient gravity to warrant disciplinary action.
True it is that if the judge acquits the petitioner of misconduct, no appeal is open to the Attorney General.
He has done his duty and is not aggrieved.
But if the Judge finds the practitioner guilty of professional misconduct and a Court of Appeal reverses the decision on a ground which goes to the jurisdiction of the judge, or is otherwise a point in w hich the public interest is concerned, the Attorney General is a person aggrieved ' by the decision and can properly petition Her Majesty for special leave to appeal.
" It is clear that Lord Denning considered the denial of jurisdiction of the deputy Judge to be a matter of public interest and therefore held the Attorney General, as the Crown 's representative, to be a person sufficiently interested as to be a person aggrieved.
That surely is not the position here, nor is an Advocate General the representative of the Government.
Neither the Constitution nor the holds him as the representative of the Government or as a person representing the public interest.
Whatever may be the, position of the Attorney General in a colony as a representative of the Crown, he is not the guardian of the public interest in India in any matter except as provided for in the statutes.
He like any other person may draw the attention of the Bar Council to any misconduct of an advocate which according to him merits disciplinary action.
The Act of 1961 provides for notice to be given to him of all such proceedings and gives him a right to appear at the hearing but once the hearing is over and a finding recorded he has done his duty and cannot be said to be aggrieved within the meaning of the expression used in section 37.
It is only because the Attorney General for the Gambia had an interest in seeing that the Court of Appeal did not reverse the decision of the Deputy Judge on a ground which went to the jurisdiction of the Judge or was otherwise a point in which the public interest was concerned that the Board held that he was a person aggrieved.
Our attention was drawn to a decision of the Judicial Com mittee in Advocate General Bombay vs Phiroz Barucha(1) where the Privy Council entertained an appeal by the Advocate General (1) 37 B.L.R. 722.
903 of Bombay against an advocate who had been found by the High Court of Bombay to have been guilty misconduct but against whom no disciplinary action had been taken by the Judges.
Although there was a good deal of discussion Lit the Bar about the maintainability of the appeal which was sought for by special leave, the Board remarked that the circumstances were not such as to justify it in advising His Majesty to grant such special leave principally on the ground that the question was one of the exercise of statutory discretion by the Judges as to whether the circumstances of the case as established before the High Court called for any disciplinary action and the Board felt that the action of the High Court in exercising their discretion in the way they had done was not such as His Majesty would be advised further to consider.
This decision does not help the Advocate General of Maha rashtra because it did not decide the point as to the maintainability of the appeal.
It is well known that the Judicial Committee was never chary in granting special leave to appeal when it felt that the justice of the case demanded a further hearing.
Mr. Daphtary appearing for the appellant very fairly drew our attention to an observation of this Court in Bhataraju Nageswara Rao vs The Hon 'ble Judges of the Madras High Court(1) which was a case of an appeal by special leave from an order of the High Court at Madras under section 12 of the debarring the advocate for a period of five years on charges of misconduct which were held by the High Court as proved.
In the ultimate paragraph of the judgment this Court recorded its strong disapproval of the frame of the appeal in that the Judges of the High Court had been made respondents to it.
They however went on to observe that "in an appeal arising out of a proceeding under the Bar Councils Act the appropriate parties should be the advocate concerned, the complainant, if any, the Bar Council or the secretary thereof and the Advocate General of the State concerned to whom notices have to be issued under section 12(3) of the .
" With great respect we find ourselves unable to concur in the above so far as the Advocate General is concerned.
It does not appear that any argument was advanced about the proper parties to the appeal before this Court and the point as to whether the Advocate General was a person aggrieved was neither raised nor argued.
The only party to appear before this Court wag "the Judges of the High Court.
" (1) [1955] 1.S.C.R. 1055,1064 904 It appears that the Advocate General of Maharashtra felt in this case that the disciplinary committee of the Maharashtra Bar Council had gone wrong and that there was a question of principle involved as regards the effect of a conviction of an Indian advocate of an offence recognised by all civilised countries as an offence involving moral turpitude and that, the question also related to the requirements of natural justice in a criminal court.
Every day courts of law are called upon to decide questions of law inter partes which may be of general importance to the public.
The Advocate General cannot prefer an appeal merely because the question is one of considerable importance to the public inasmuch as he is not a party to it and he has no locus standi to do so even in a case where the statute only gives him an opportunity of appearing at a hearing and making his submissions.
A decision by the disciplinary committee cannot necessarily be said to raise a point of public interest merely because the Advocate General feels that it is erroneous or that he himself would have arrived at a different conclusion.
That at best is his personal opinion as regards the conduct of an advocate who has to deal with the public and the non acceptance thereof does not make him a person aggrieved.
An Advocate General in India is not the guardian angel of the Bar, nor is he the champion of public interest in any matter save as specified in a statute.
In conclusion we hold that the appeal by the Advocate General of Maharashtra to the Bar Council of India was incompetent and this appeal should be allowed and the finding of the Bar Council of India set aside.
Vaidialingam, J.
With respect, I am not able to agree with the views expressed by My Lord, and Mr. Justice Mitter That the appeal filed by the Advocate General of Maharashtra before the Bar Council of India was incompetent.
The preliminary point that has been argued before us in this appeal relates to the maintainability of the appeal by the Advocate General of Maharashtra before the Bar Council of India under section 37(1) of the Advocates Act 1961 Act 25 of 1961 (hereinafter referred to as the Act) against the order of the Disciplinary Committee of the Bar Council of Maharashtra (hereinafter referred as the Committee) dated October 19, 1968 holding the appellant not guilty of any professional misconduct.
It is not necessary to refer to the allegations of professional misconduct made against the appellant as this appeal has yet to be heard on merits.
Against the order of the Committee, acquitting the appellant, the Advocate General of Maharashtra Sri H. N. Seervai, filed 905 under section 37(1)D.C.Appeal No. 18 of 1968 before the Bar Council of India.
The said appeal was heard by the Disciplinary Committee of the Bar Council of India (hereinafter referred to as the.
Appellate Committee) as required by section 37(2) of the Act.
A preliminary objection was raised on behalf of the appellant that the Advocate General was not competent to prefer the appeal as he was not the complainant nor were the proceedings for taking disciplinary action initiated at his instance and he is not "any person aggrieved ' under section 37(1).
The State Bar Council, which initiated the proceedings was apparently satisfied with the decision of its Committee and did not take any further action.
In, short,.
according to the appellant, the Advocate General was not "any person aggrieved", under section 37(1) of the Act.
The appeal was, also contested by the appellant on merits.
The Appellate Com mittee by its order dated October 26, 1969 overruled the preliminary objection and held that the Advocate General was competent to maintain the appeal under section 37(1).
By the same order the Appellate Committee disagreed with the findings of the Committee and found the appellant guilty of professional misconduct and ordered his suspension from practice for a period of one year.
The appellant was also directed to pay the costs of the proceedings.
It is this order of the Appellate Committee that is the subject of the appeal before us.
As stated earlier, we have heard arguments only on the question of the maintainability of the appeal at the instance of the Advocate General of Maharashtra before the Bar Council of India.
As the question raised was a fairly important one, notice had been issued to the Attorney General of India, the Bar Council of India, the Advocates General and the Bar Councils of the States.
Advocates General of most of the States were represented by counsel.
The Attorney General of India, the Bar Council of India as well as.
the Bar Council of Maharashtra were also represented by counsel before us.
The question posed for our consideration is whether the, Advocate General of a State comes within the expression "any person aggrieved" in section 37(1) of the Act.
Mr. Daphtary, learned counsel for the appellant, drew our attention to the various provisions of the Act and pointed out that matters concerning the legal profession have now been entrusted to the State Bar Councils and the Bar Council of India and them powers to take disciplinary action have also been vested in them.
Whatever may have been the position once occupied by the.
Advocate General vis a vis the legal profession, that has now been changed by the Act.
His appearance in disciplinary matters is only to assist the Committee and he has no further interest in 906 those proceedings.
Whether an Advocate is acquitted or convicted is no concern of the Advocate General, because he is not interested in the actual decision of the Committee.
Hence the Advocate General cannot be considered to be "any person aggrieved by any order of the Committee so as to be eligible to file an appeal under section 37 of the Act.
In this connection Mr. Daphtary referred us to several English decisions where the expression person aggrieved ' has been considered and interpreted with references to the statutes in which those expressions occur.
Relying on the principles laid down in those decisions, to which reference will be made later, Mr. Daphtary pointed out that the expression perso n aggrieved ' should not be interpreted as covering every person who is disappointed or dissatisfied with a decision rendered by a Committee.
On the other hand, the counsel urged, that in order to be considered as a person aggrieved ' that person must be one who has suffered a legal grievance, a man against whom a decision has been pronounced and which has wrongfully deprived him of something or wrongfully refused him something, or wrongfully affected his title to something.
An appeal must be by the party who has endeavored to maintain the contrary of that which has taken place.
The counsel further pointed out that the Advocate General is a public officer and cannot be considered to be a party to the proceedings before the Committee.
The Advocate General may be even annoyed with the decision of the Committee acquitting an Advocate, but that will not make him a person aggrieved '.
Considerable reliance was placed by Mr. Daphtary on the observations of Lord Denning in Attorney General of the Gambia vs Pierre Sarr N 'Jie(1) to the effect that the Attorney General in a colony represents the Crown as the guardian of the public interest and that it is his duty to bring before the Judge any misconduct of a barrister or solicitor which is of sufficient gravity to warrant disciplinary action and that if the Judge acquits the practitioner of misconduct, no appeal is open to the Attorney General, who has done his duty and is not aggrieved.
But if, on the other hand, a Court of Appeal reverses the decision holding a practitioner guilty of professional misconduct, on a ground which goes to the jurisdiction of the Judge or is otherwise a point in which the public interest is concerned, the Attorney General is a perso n aggrieved ' by the decision and can properly petition Her Majesty for special leave to appeal.
Drawing support from these observations Mr. Daphtary urged that in this case, the Committee had acquitted the appellant and the Advocate General having appeared through counsel before the Committee has done his duty, and as such he cannot be considered to be aggrieved.
No question of jurisdiction of the Committee or any point in which the public interest is (1) [1961] Appeal Cases 617.
907 concerned arose for decision in the appeal filed by the Advocate General, so as to make the appeal competent even within the limited rule laid down by Lord Denning.
Mr. V. section Desai, learned counsel appearing for the Advocate General of Maharashtra and Mr. M. C. Setalvad, learned counsel appearing for the Bar Council of India have supported the decision of the Appellate Committee holding in favour of the competency of the appeal filed by the Advocate General as "any person aggrieved" under section 37 of the Act.
The counsel appearing for the Attorney General, the Bar Council of Maharashtra and the Advocates General represented before us have supported this view.
Mr. V. section Desai pointed out that the Act is a self contained Code, and that the various decisions where the expression perso n aggrieved ' has been interpreted must be appreciated in the particular context in which those expressions occur in the statutes which were before the Courts.
The reasoning in those decisions may furnish a guide but cannot be applied ipso facto when interpreting section 37 of the Act.
The expression " any person aggrieved" in section 37 of the Act will have to be understood and interpreted in the context in which it appears, having due regard to the scheme of the Act.
The counsel also referred us to certain decisions bearing on this matter, to which we shall refer in due course.
Mr. M. C. Setalvad, learned counsel, appearing for the Bar Council of India urged in particular that the Advocate General is a responsible person and is the highest Law Officer of the State.
The legal profession is very closely associated with the administration of justice by the Courts.
The Bar, in that context has to come into contact with the public to assist them in legal matters.
This responsible position occupied by the legal profession has to be properly safeguarded and that could be done only by insisting that its members are persons of high character and integrity and who observe rules of professional etiquette.
The Act has made it obligatory to give notice in the disciplinary proceedings to the Advocate General and give him an opportunity of being heard.
The purpose for which the highest Law Officer of the State, the Advocate General, is brought in not only in the Act, but also in the of 1926 (Act 38 of 1926) (hereinafter referred to as the Bar Councils Act) is to subserve the public interest, namely, of seeing that the integrity and honesty of the legal profession are maintained and that proper decisions are given in disciplinary proceedings.
There may be cases of inadequate punishment or even harsh punishment being awarded by the Committee.
The Advocate General in proper cases can bring up such matters before the Bar Council of India.
Mr. Setalvad further pointed out that there is no restriction placed in section 37 denying the right of the Advocate General to file an appeal against the orders of the Committee.
Having due regard to the scheme of the Act 908 and particularly of sections 35 and 37, the Advocate General comes within "any person aggrieved" and hence he was competent to file the appeal.
I have given careful consideration to the various aspects placed before us by all the learned counsel and I am of the view that the decision of the Appellate ' Committee holding that the appeal filed by the Advocate General of Maharashtra was competent is correct.
I am further of the view that the expression "any person aggrieved" in section 37 will have to be interpreted in the context in which it appears, having due regard to the provisions of the Act and its scheme.
Considered in this manner, it has to be held that the Advocate General comes within "any person aggrieved" in section 37.
The decisions relied on by Mr. Daphtary have, no doubt, interpreted the expression person aggrieved ' occurring in the particular statutes which came up for consideration in those decisions, but in my opinion it will not be safe to adopt in toto the interpretation so placed, no doubt on the identical expression occurring in different statutes when construing the said expression in the Act before us.
As pointed out by Lord Parker C.J. in Ealing Corporation vs Jones(1) cases which have interpreted similar expressions, can be looked into "to see if there are general principles which can be extracted which will guide the court in approaching the question as to what the words person aggrieved ' mean in any particular statute.
" I will make a brief reference to the decisions cited for the appellant later.
But before doing so, it is desirable to refer to some of the provisions of the Act itself, so that the scheme of the Act will become evident, and that will throw considerable on the interpretation of section 37.
Before I refer to the Act, I think it desirable to advert to some of the provisions of the Bar Councils Act.
Even at the outset I may point out that the scheme of the Bar Councils Act was different.
In the Bar Councils Act, the disciplinary jurisdiction over Advocates was vested in the High Court [vide section 10(1)].
Under section 10 (2) the High Court,.
if the complaint is not summarily rejected by it, had to refer the case for inquiry either to the Bar Council or after consultation with the Bar Council, to the Court of a District Judge.
When a case is referred for inquiry to the Bar Council under section 1 1, the case was to be inquired into by the Committee of the Bar Council, referred to as the Tribunal, and that Tribunal consisted of the particular number of person mentioned in section II (2) appointed for the purpose by the Chief Justice.
The High Court had power to make rules under section 12(1) prescribing the procedure, to be followed in the conduct of inquiries.
The finding of the inquiry by the Tribunal had to be forwarded to the High Court.
On receipt of the finding, the High Court had to fix (1) 909 a date for hearing of the case.
Under section 12(3) it was obligatory to give notice, amongst other persons, to the Advocate General of the day fixed for hearing; and it was also further obligatory to give the Advocate General an opportunity of being heard before orders.
were passed.
Under section 12(4) the High Court could pass final orders or refer the case back for further inquiry., Under sub section
(5) the High Court had also power, when passing final orders to give directions regarding payment of costs.
I am only referring to the material provisions of the Bar Councils Act to show that the High Court was then the disciplinary authority and the function of the Committee of the Bar Council was only to submit a finding after conducting an inquiry as directed by the High Court.
It is however to be noted that the Advocate General then was not associated in the inquiry proceedings before the Tribunal of the Bar Council; but he was entitled to be given notice of the date fixed for hearing and also to be heard in the proceedings before the High Court after receipt of the finding submitted by the Committee of the Bar Council.
Those provisions clearly establish the important position occupied by the Advocate General and recognised by the Bar Councils Act.
The scheme is slightly different when we come to the Act.
The State Bar Councils and the Bar Council of India have been made autonomous units and various functions regarding the legal profession have been entrusted to them.
Taking disciplinary action against the delinquent members of the Bar and conducting inquiries are all part of their functions.
Barring a provision of a right to appeal to the Supreme Court under section 38 of the Act, the Courts are completely out of picture so far as the legal profession is concerned.
The Act was one to amend and consolidate the law relating to legal practitioners and to provide for the constitution of the Bar Councils of the States and the Bar Council of India.
Section 3 makes provisions for the State Bar Councils.
Under sub section (2) the Advocate General of the State is an ex officio member.
Similarly the Additional Solicitor General of India is an ex officio member of the State Bar Council of Delhi.
Section 6 (1 ) enumerates the functions of the State Bar Councils.
One of the functions under cl.
(c) relates to entertaining and determining cases of misconduct against advocates on the roll of the State Bar Council.
Section 7 similarly enumerates the functions of the Bar Council of India.
Under cl.
(c), the Bar Council of India has got the power to lay down the procedure to be followed by its Disciplinary Committee and the Disciplinary Committees of each State Bar Councils.
Section 9 deals with the Bar Council constituting one or more Disciplinary Committees in the manner indicated therein.
Section 23 gives a right of pre audience to the Attorney General of India, the Solicitor General of India, the Additional 910 Solicitor General of India and the Advocate Generals of the States, as mentioned in sub sections 1 to 4 respectively.
Chapter V deals with the "conduct of Advocates" and contains the group of sections 35 to 44.
Section 35 deals with the punishment of Advocates for misconduct and is as follows "Section 35 : Punishment of advocates for mis conduct: (1) Where on receipt of a complaint or otherwise a State, Bar Council has reason to believe that any advocate on its roll has been guilty of professional or other misconduct, it shall refer the case for disposal to its dis ciplinary committee.
(2) The disciplinary committee of a State Bar Council, if it does not summarily reject the complaint,shall fix a date for the hearing of the case and shall cause a notice thereof to be given to the advocate concerned and to the Advocate General of the State.
(3) The disciplinary committee of a State Bar Council after giving the advocate concerned and the Advocate General an opportunity of being heard, may make any of the following orders, namely (a) dismiss the complaint or, where the proceedings were initiated at the instance of the State Bar Council, direct that the proceedings be filed; (b) reprimand the advocate; (c) suspend the advocate from practice for such period as it may deem fit; (d) remove the name of the advocate from the State roll of advocates.
(4) Where an advocate is suspended from practice under clause (c) of sub section (3), he shall, during the period of suspension, be debarred from practicing, in any court or before any authority or person in India.
(5) Where any notice is issued to the Advocate General under sub section (2), the Advocate General may appear before the disciplinary committee of the State Bar Council either in person or through any advo cate appearing on his behalf." Similarly section 36(1) deals with the disciplinary powers of the Bar Council of India.
Sub section (2) confers powers on the 911 Appellate Committee of its own motion to withdraw for inquiry for itself any disciplinary action against an advocate pending before the Committee and dispose of the same.
Sub section (3) provides for the Appellate Committee when disposing of a case under section 36 observing, so far as may be, the procedure laid down in section 35.
It further provides that references to the Advocate General in section 35 are to be construed as references to the Attorney General of India.
Sections 37 and 38 which provide for an appeal to the Bar, Council of India and to the Supreme Court effectively run as follows 'Section 37 : Appeal to the Bar Council of India.
(1) Any person aggrieved by a order of the, disciplinary committee of a State Bar Council(under section 35) may, within sixty days of date of the communication of, the order to him, prefer an appeal to the Bar Council of India.
(2) Every such appeal shall be heard by the disciplinary committee of the Bar Council of India which may pass such order, thereon as it deems fit.,, "Section 38.
Appeal to the Supreme Court: Any person aggrieved by an order made by the disciplinary committee of the Bar Council of India under section 36 or section 37 may, within sixty days of the date on which the order is communicated to him, prefer an appeal to the Supreme Court and the Supreme Court may pass such order thereon as it deems fit." Section 42(1) deals with powers of the disciplinary committee of a Bar Council with regard to the various matters provided for in cls.
(a) to (f).
Section 43 provides for making of orders as to costs by the disciplinary committee of a Bar Council.
Section 44 gives powers of review to the disciplinary committee of a Bar Council.
Section 48A, in Chapter VI, deals with the revisional.
powers of the Bar Council of India.
It will be, seen from sections 3 (2) (a), 23 (4) and 35 that the, Advocate General of the State is given by the Act a very important and responsible position.
Some discussion took place before us whether the Advocate General can be considered to be the person who is charged with the duty of safeguarding the professional integrity of the members of the Bar, when powers and duties in that regard have been conferred under the Act on the 912 State Bar Councils.
I do not think it necessary to go into that aspect as I think a# inquiry in that regard is not relevant for the present purpose of construing section 37.
Nor can the analogy of the Attorney General in a colony representing the Crown, being the guardian of public interest, as stated by Lord Denning in Attorney General of the Gambia vs Pierree Sarr N 'Jie(1) be brought in for interpreting section 37 of the Act, as we are only concerned to find out the right given to the Advocate General by the Act.
So far as that is concerned, I am satisfied that the Act has given due recognition to his status by virtue of his being the highest Law in the St ate, as the Advocate General and who may be trusted to place a disinterested and dispassionate view before the Committee to enable it to come to a proper decision having due regard to the Advocate concerned, as well as the entire legal profession to which he belongs.
Apart from his being under s '.
3 (2) (a) an ex officio member of the State Bar Council, section 23 (4) gives him a right of pre audience over all other advocates.
Coming to section 35, read with section 37, which has been extracted earlier, the main features that emerge therefrom are as follows (1), The State Bar Council can suo moto or on receipt of a complaint, when it has reason to believe that an advocate has been guilty of professional or other misconduct refer the case to its committee.
(2) If the Committee does not summarily reject the complaint, it is bound to fix a date for hearing of the case, and it is also further bound to give notice of the date of hearing, apart from the advocate concerned, to the Advocate General of the State.
(3) The Committee is bound in, the inquiry to give an opportunity of being heard both to the advocate concerned and the Advocate General.
After such an inquiry the Committee can pass one or other of the orders enumerated in clauses (a) to (d) of section 35.
(4) The Advocate General may appear before the Committee in person or through an advocate appearing on his behalf.
(5) The orders of the Committee have to be communicated to the Advocate General and the advocate concerned.
(1) 913 (6) Against the orders passed under section 35, any person aggrieved is entitled to file an appeal under section 37, to the Bar Council of India.
While under the Bar Councils Act, the Advocate General was associated with the disciplinary proceedings only when the matter was being decided by the High Court, after receipt of the findings submitted by the Tribunal of the Bar Council, it is significant to note that under the Act, the Advocate General is associated with the disciplinary proceedings right from the stage of inquiry by the Committee.
Under sub section (2) of section 35 the Committee is bound to give notice of the date of hearing not only to the Advocate concerned but also to the Advocate General of the State.
It will be noted that disciplinary proceedings may have been occasioned because of a complaint made by a third party or may have been initiated suo Moto by the State Bar Council.
In whatever manner the proceedings may have been initiated, the Advocate General is entitled to be given notice of the date of hearing.
It cannot be a formal and empty notice, to the Advocate General, because sub section (3) clearly indicates that the Advocate General should be given an opportunity of being heard.
It is significant to note that sub section (3) of section 35 which, deals with the giving of am opportunity of being heard both to the advocate concerned and the Advocate General does not make any distinction in the opportunity so afforded to both of them.
The same opportunity that the Advocate concerned has under sub section
(3) is also afforded to the Advocate General.
It is not necessary to go to the extent of holding that there is a "lis" before the Committee and that the Advocate General is a "party" in the sense that expression is ordinarily understood in law.
The advocate concerned win be interested in disputing the allegations made or charges levelled against him and he will be entitled to lead evidence in support of his plea.
If there is a complainant, he will of course lead evidence to support his case.
The Advocate General, on the other hand, is also entitled to place before the Committee all aspects of the matter including facts that may be in favour of the advocate whose conduct is under inquiry.
This is because of the important position occupied by him.
It may be that the Advocate General may not be able to appear personally and participate in all the disciplinary proceedings and that is why provision has been made in section 35(5) enabling the Advocate General to appear either in person or through any advocate appearing on his behalf.
Just as the Advocate concerned will have an opportunity of examining his witnesses and cross examining the witnesses produced against him, the Advocate General or the counsel appearing on his behalf will also have a right of cross examining the witnesses produced in the case so as to elicit information about the charge of professional misconduct levelled against the advocate concerned.
The 9 SupCI/71 14 914 Advocate General need not be vindictive and take sides as a party to a litigation and see that the advocate is found guilty.
On the other hand, by virtue of the special and dispassionate role occupied by him, he will be able during the inquiry to place such materials or evidence which will enable the Committee to come to a proper and correct finding, in the interest of both the legal practitioner and legal profession to which he belongs.
It is in this context of the close association of the Advocate General with the disciplinary proceedings that the expression person aggrieved ' in section 37 has to be interpreted.
There can be no controversy .
that an appeal will lie against the various orders that the Committee may pass as enumerated in cls.
(a) to (d) of section 35 (3).
The question is at whose instance the appeal will lie.
If the complaint is dismissed, the complainant will be a person aggrieved ' who can file an appeal under section 37.
In fact it has been held by this Court in B. M. Madani vs Commissioner of Workmen 's Compensation, Bombay(1) that when proceedings are initiated on a complaint by a party and the Committee after finding the advocate guilty of the charges, passed an order reprimanding with a warning, an appeal filed by such a complainant before the Appellate Committee only on the question of sentence imposed, was competent as, the complainant was a person aggrieved '.
Similarly, an order adverse to the advocate concerned, can be the subject of appeal at his instance.
There is no controversy that the order passed by the Com mittee was communicated to the Advocate General.
As already pointed out a series of steps is contemplated under section 35; reference to the Committee, of a case of professional misconduct; notice of the, date of hearing to be given to the Advocate General; Advocate General being given an opportunity of being heard at the hearing; the Advocate General being entitled to appear before the Committee either in person or through an Advocate; his being entitled to be communicated with a copy of the order passed by the Com mittee.
It is in that context and for these purposes that I have considered the meaning of the expression "any person aggrieved" in section, 37 (1).
The fact that the Advocate General does not allege an infringement of any legal rights of his own is of no consequence.
The particular preceding in which the Advocate General is given a right to participate relates to an inquiry into the allegations of misconduct against an advocate.
Upon a fair construction of section 37 read with section 35 of the Act, the Advocate General, in my opinion is "any person aggrieved" and as such was entitled to file the appeal under section 37 (1 ) against the order passed by the Committee.
The same reasoning will apply to the Attorney General of India under section 38.
(1) (Civil Appeal No. 877 of 1968 decided on 8 10 1968).
915 It may be that in a particular case the Advocate General may feel that the findings arrived at in favour of the advocate by the Committee is not justified by the evidence and that decision will have to be reconsidered by the Appellate Committee; or it may even be that in a particular case the sentence imposed by the Committee may not be commensurate with the guilt of the advocate; or it may also be that the sentence imposed on an, advocate by the Committee is very harsh or the finding of guilt is not correct.
Under such and similar circumstances in the interests of the Advocate and the legal profession, the Advocate General will be competent to bring up the matter before the Appellate Committee so that justice may be done.
In this context the observations of Lord Hewart C.J. in Sevenoaks Urban District Council vs Twynam(1) are apposite.
The question before the Court in that decision was whether an objector to a proposal made by a local authority to acquire land in order to provide parking place for vehicles and whose objections were overruled was a person aggrieved ' under section 68(3) of the Public Health Act 1925 and as such entitled to appeal.
It was found that the objector alleged no ground of objections personally to himself.
Nevertheless it was held that such an objector was a person aggrieved ' and entitled to appeal.
Lord Hewart C.J. at page 443 states : "The question therefore is : Is it true to say that in these circumstances and within the meaning of (this part of this statute this respondent was a person. aggrieved ' ? Now undoubtedly those words, a person aggrieved ', have very often been considered, and, if one looked at the mere terms apart from their context and apart from the particular circumstances, it would have been, quite easy to marshal decisions of contradictory import.
But as has been said again and again there is often little utility in seeking to interpret particular expressions in one statute by reference to decisions given upon similar expressions in different statutes which have been enacted alio intuitu.
The problem with which we are concerned is not, what is the meaning of the expression aggrieved ' in any one of a dozen other statutes, but what is its meaning in this part of this statute ? It is a little important to see what this part of this statute is dealing with.
" The above extract has been quoted with approval by Lord Parker C.J. in Ealing Corporation vs Jones( ').
I have already indicated earlier that the problem before us whether the Advocate General is a person aggrieved ' under section 37 (1) (2) [1959] 1. Q. D. 384.
916 of the Act will have to be tackled with reference to the scheme and provisions of the Act and that is exactly what I have done and arrived at the conclusion that he is a person aggrieved.
Mr. Daphtary argued that when the Committee consisting of members of the legal profession, has decided in favour of the Advocate, the Advocate General can have no grievance.
This,in my view is really begging the question.
Why did the Legislature then bring in the Advocate General at all and why has it associated him in disciplinary proceedings from the very beginning of the inquiry ? That and other circumstances, already pointed out by me, bring him under section 37 as "any person aggrieved." Mr. Daphtary then urged that if the Advocate General was expected to safeguard the interest of the Advocate and the legal profession by seeing that proper decisions are given by the Committee, that purpose is not served when powers have been given to the Committee under section 35(2) to summarily reject a complaint and the Advocate General will have no remedy against such rejection.
The short answer to this contention is that a right of appeal must be specifically conferred by statute.
Section 37(1) gives a right of appeal against an order passed under section 35.
The orders which could be passed after hearing the case are enumerated in clauses (a) to (d) of section 35 (3).
It is not necessary for me to express any opinion whether an order summarily rejecting a complaint can also be the subject of an appeal under section 37(1) as that section is in very wide terms.
In any event, Mr. Daphtary 's contention will only amount to this viz., that the Advocate General is not associated at the stage of summary rejection of a complaint.
That circumstance does not militate against the view already expressed by me.
Probably the Legislature may have felt that if there is any wrongful summary rejection of a complaint it could be set right by the Bar Council of India under section 48A.
But once the Committee decides to hear the cases and passes an order under section 35, the Advocate General gets a right of appeal under section 37(1).
Mr. V. section Desai referred us to the decision of the Judicial Committee in Advocate General of Bombay and others vs Pitamberdas Gokuldas Mehta and others(1) wherein, according to him, an appeal by the Advocate General of Bombay against the decision of the High Court of Bombay Pleaders Act was entertained by the Judicial Committee.
He has also referred us to the discussion between the Court and counsel in the said decision reported in Advocate General of Bombay vs Phiroz Rustomji Bharucha(2) which, according to him, will show that though an objection about the locus standi of the Advocate General to file an (2) 37 Bombay Law Reporter 722.
(1) Indian Appeals 235.
917 appeal under such circumstances was raised, but was not accepted by the Judicial Committee.
I have gone through both the reports and there is no indication that the question of maintainability of an appeal by the Advocate General was decided one way or the other by the Judicial Committee.
Mr. Daphtary has referred us to the decisions in Re. Side botham(1), in re.
Reed, Bowen & Co.,(2), The Queen vs The Keepers of the Peace and Justices of the County of London(3), Rex.
vs London Quarter Sessions(4) and Ealing Corporation vs Jones(5), wherein the expression person aggrieved ' occurring in different statutes came up for interpretation.
The principles that emerge from those decisions appear to be that a person aggrieved ' must be a person who has suffered a legal grievance or who has claimed a title to something and his claim has been negatived or who has maintained to the contrary in the proceedings or litigation.
It has been further held in some of those decisions that the said expression does not take in any person who may be affected by the order or who may feel disappointed or even annoyed at the decision.
In the view that I take that the expression person aggrieved ' in section 37 of the Act has to be interpreted in the light of the provisions of and scheme of the Act as well as the context in which those expressions appear.
I do not think it necessary to consider in great detail those decisions which have been rendered on different statutes.
The decision in The Municipal Corporation of the City of Ahmedabad vs Chandulat Shamaldas Patel and others(6) referred to by Mr. Daphtary, in my opinion, does not assist the appellant.
In that decision it was held that when certain notifications issued under the Land Acquisition Act were set aside by the High Court, the Municipal Corporation, on whose behalf the ;acquisition was being made by the Government, cannot be considerd to be a person aggrieved ' entitled to challenge the order of the High Court.
An additional reason has also been given against the competency of the appeal that even an order for costs has not been passed against the Municipal Corporation.
That decision was rendered on the scheme of the Land Acquisition Act, and so does not help the appellant.
It was urged on behalf of the appellant that if the Advocate General was really intended to be given a right of appeal under section 37 (1), the Legislature should have used the expression any person including the Advocate General aggrieved by an order.
(1) 14 Chancery Davison 458.
(3) (5) [1959] I. Q. D. 384.
(2) 19 Q. B. 174.
(4) [1951] 2 K. B. D. 508.
(6) (Civil Appeal No. 1716 of 1967 decided on 1 8 1970) 918 I am of the view that it was unnecessary to make any such provision because the expression as it stands clearly takes within its fold the Advocate General also.
This leaves me with the decision in Attorney General of the Gambia vs Pierre Sarr N. 'Jie(1) which has been very strongly relied on by Mr. Daphtary.
One Mr. X a member of the, English Bar was admitted to practice as a barrister and solicitor of the Supreme Court of Gambia.
The Deputy Judge made an order striking his name off the roll of that Court.
This decision was reversed by the West African Court of Appeal on the ground that the Deputy Judge had no jurisdiction in the matter.
The Attorney General of Gambia sought leave to appeal to Her Majesty in Council; but the West African Court of Appeal declined to grant him leave on the ground that notice had not been given in due time to Mr. X.
The Attorney General then made a petition to Her Majesty for special leave to appeal from the judgment of the West African Court of Appeal, setting aside the order of the Deputy Judge as well as refusing to grant leave to appeal.
The Attorney General 's petition was granted; but liberty was reserved to Mr. X to raise the preliminary point that no appeal lay at the instance of the Attorney General.
During the course of arguments the Judicial Committee rejected the preliminary objection.
It is to be noticed that against the decision of the Deputy Judge striking his name off the roll, Mr. X filed an appeal to the West African Court of Appeal under section 14 which was as follows "An appeal shall lie to the Court of Appeal from any order of the Judge suspending a barrister or solicitor of the Supreme Court from practice or striking his name off the Roll and for the purposes of any such appeal any such order shall be deemed to be an order of the Supreme Court.
" I am particularly referring to this decision because certain observations of Lord Denning on which reliance has been placed by Mr. Daphtary will have to be understood with reference to this provision of law.
Exercising jurisdiction under this section, the West African Court of Appeal set aside the order of the Deputy Judge.
In the first instance the Attorney General sought leave to appeal to Her Majesty in Council from the West African Court of Appeal under section 5 of the West African (Appeal to the Privy Council) Order in Council.
1949, which is as follows "Applications to the, court for leave to appeal shall be made by motion or petition within 21 days from the date of the judgment to be appealed from, and the (1) 919 applicant shall give the opposite party notice of his intended application." The West African Court of Appeal declined to grant leave to appeal to the Attorney General on the ground that notice had not given within the time mentioned in the above order to Mr. X.
The Attorney General made an application to the Judicial Committee for special leave to appeal from the two orders mentioned above of the West African Court of Appeal.
That petition was filed under section 31 of the West African (Appeal to Privy Council) Order in Council, 1949, which runs as follows "Nothing in this order contained shall be deemed to interfere with the right of His Majesty upon the humble petition of any person aggri eved by any judgment of the Court to admit his appeal therefrom upon such condi tions as His Majesty in Council shall think fit to impose.
" The question that arose before their Lordships was whether the Attorney General was a person aggrieved ' under the above order.
In discussing this question Lord Denning at page 634 observes : ". .
The words person aggrieved ' are of wide import and should not be subjected to a restrictive inter pretation.
They do not include, of course a mere busy body who is interfering in things which do not concern him: but they do include a person who has a genuine grievance because an order has been made which prejudicially affects his interests.
Has the Attomey General a sufficient interest for this purpose? Their lordships think that he has.
The Attorney General in a colony represents the Crown as the guardian of the public interest.
It is his duty to bring before ' the judge any misconduct of a barrister or solicitor which is of sufficient gravity to warrant discriplinary action.
True it is that if the judge acquits the practitioner of misconduct, no appeal is open to the AttorneyGeneral.
He has done his duty and is not aggrieved.
But if the judge finds the practitioner guilty of professional misconduct, and a Court of Appeal reverses the decision on a ground which goes to the jurisdiction of the judge, or is otherwise a point in which the public interest is concerned, the Attorney General is a person aggrieved ' by the decision and can properly petition Her Majesty for special leave to appeal.
It was for these reasons that their Lordships rejected the preliminary objection and held that the Attorney General was a 920 person aggrieved ' by the decision of the West African Court of Appeal.
" The observations made in the above extract, in my opinion, have to be related to the particular provision of the order in Council which the Judicial Committee was considering.
In the case before the Judicial Committee, the Attorney General had initiated the disciplinary proceedings against the Barrister.
Under section 14, there was only a very limited right of appeal and that too in favour of the barrister or solicitor in respect of the orders mentioned therein.
The Attorney General, though he may have been the complainant under section 14 had no right of appeal if the barrister was acquitted.
That is why Lord Denning states that it is true that if the Judge acquits the practitioner of misconduct no appeal is open to the Attorney General.
This view, with respect, is correct because section 14 does not give a right of appeal to the Attorney General.
Lord Denning, no doubt, has further stated that the Judicial Committee has rejected the preliminary objection in view of the fact that it was of the opinion that in the case before it a question of jurisdiction or a point of public interest is involved and therefore, the Attorney General is a person aggrieved.
I have already indicated that there are no restrictions or limitations imposed in section 37 of the Act giving a right of appea l only to the advocate who may have been found guilty.
On the other hand, the words "any person aggrieved" in section 37 are very wide, and as observed by Lord Denning in the opening part of the above extract these words should not be subjected to a restrictive interpretation.
In the view that I take that the Advocate General has an unqualified right of appeal under section 37(1) I do not think it necessary either to refer to article 165 of the Constitution nor do I think it necessary to consider the further question whether the appeal filed by the Advocate General before the Bar Council of India relates to any question of jurisdiction or a point of public interest.
To conclude, the appeal filed by the Advocate General of Maharashtra before the Appellate Committee was competent and this point has to be held against the Appellant.
The result will be that the appeal before us will have to be heard on merits.
RAY, J.
I agree with Vaidialingam, J. I desire to express my separate opinion in view of the importance of the question raised in this appeal.
This is an appeal from the order dated 26 October, 1969 of the Disciplinary Committee of the Bar Council of India suspending the appellant from practice for a period of one year.
921 An appeal to the Disciplinary Committee of the Bar Council of India was preferred by Shri H. M. Seervai, Advocate General of Maharashtra against the order dated 17 October, 1968 of the Bar Council of Maharashtra holding that the appellant was not guilty of professional misconduct or otherwise.
Before the Disciplinary Committee of the Bar Council of India a preliminary objection was taken by AdiPheroz Shah Gandhi as to the maintainability of the appeal preferred by the Advocate General of Maharashtra.
The appellant pressed the same preliminary objection in this Court, namely, that the Advocate General of the State of Maharashtra could not prefer an appeal against an order of the Disciplinary Committee of the State Bar Council.
The relevant provision for appeal to the Bar Council of India is to be found in section 37 of the (hereinafter referred to as the Act).
There are two sub sections of section 37.
The first sub section enacts that any person, aggrieved by an order of the Disciplinary Committee of the State Bar Council made under section 35 may, within sixty days of the date of the communication of the order to him, prefer an appeal to the Bar Council of India.
Sub section (2) of section 37 states that every such appeal shall be heard by the Disciplinary Committee of the Bar Council of India.
The present appeal is under section 38 of the Act which con fers right of appeal to the Supreme Court by any person aggrieved by an order made by the Disciplinary Committee of the Bar Council of India.
The entire controversy in this appeal centers on the meaning of the words any person aggrieved by an order of the Disciplinary Committee of the State Bar Council ' occurring in sub section (1) of section 37 of the Act.
The same words also occur in section 38 of the Act.
Mr. Daphtary on behalf of the appellant contended first that the Advocate General did not represent public interest and could not therefore be said to be a person aggrieved by an order of the Disciplinary Committee.
Secondly, that the provisions in section 35 of the Act that the Advocate General was entitled to a notice from the Disciplinary Committee of the date of hearing and the provision that the Advocate General was entitled to be heard by the Disciplinary Committee could not have the effect of making the Advocate General a party, and, thirdly, the Advocate General was an impartial person and his duty would end by making submissions, if any, before the Disciplinary Committee and he would 922 not be a person aggrieved either by an order of dismissal of a complaint against the Advocate or by any order passed against the Advocate.
Notices were given to the Attorney General and the Advocates General of different States in view of the importance of the question involved in this appeal.
Mr. V. section Desai on behalf of the Advocate General of Maharashtra, Mr. Setalvad on behalf of the Bar Council of India, Dr. Seyied Muhammad on behalf of the Attorney General, Mr. Datar counsel for the Maharashtra State Bar Council of India, Dr. Seyied Muhammad on behalf of the of other States all contended that the Advocate General would have the right under the Act to prefer an appeal as a person aggrieved by an order of the Disciplinary Committee of a State Bar Council.
Various decisions were cited at the Bar to illustrate the meaning of the words person aggrieved '.
One group of decisions is based on the locus classics in Re.
Ex parte Sidebotham(1).
The other line of decisions is to be found in Ex parte Official Receiver, In Re. Reed.
Bowen & Co.(2) and Sevenoaks Urban District Council vs Twynam(3).
James, J. in the case of Ex parte Sidebotham said that "a person aggrieved ' must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something, or wrongfully refused him something, or wrongfully affected his title to something." Lord Esher, M. R. on the other hand in Ex parte Official Receiver In Re.
Reed, Bowen & Co.(2) said that the meaning given by James, L.J. to the words person aggrieved ' would not be an exhaustive definition and the words would include a person who has asked for a decision for which he had a right to ask, and has been wrongfully refused.
In the Sevenoaks(3) case Lord Hewart, C.J. said "that when a person might make an objection and was entitled to a decision upon it he would, if the decision was adverse to him be, able to appeal".
These decisions indicate that the words person aggrieved ' would have different shades of meaning in accordance with the tenor of the relevant statute.
The observations of James, L.J. in the case of Ex parte Sidebotham turn on the meaning of the words person aggrieved ' occurring in the English Bankruptcy Act, 1914 which, inter alia, provided that the orders of the Court in bankruptcy matters except in cases specially excluded were subject to appeal at the instance of any person aggrieved even if he had not appeared in the court below.
It is in the context of the English Bankruptcy Act that creditors, trustees, administrators of a debtor (1) (3) [1929] 2 Y. B. 404.
(2) 923 or bankrupt would have a legal grievance against whom a decision has been pronounced which has wrongfully deprived him of something, or wrongfully refused him something, or wrongfully affected his title to something.
Lord Hewart, C.J., in Sevenoaks case(1) said "the problem is not what is the meaning of the expression person aggrieved ' in one or dozen statutes but what is its meaning in this part of the Statute".
In that case the relevant provision of the Public Health Act conferred a power on a local authority to provide within that district suitable parking place for vehicles.
The statute further in that case contemplated a notice of the proposal to acquire land for using it as a parking place and objections, if any.
to such proposal.
When objections were made, the local authority would have to consider them.
In the Sevenoaks case the Urban Council considered the objection of a rate payer and thereafter proceeded with the scheme of the parking place.
Lord Hewart, C.J. in giving meaning to the words person aggrieved ' in that case said that first a person was an author of an objection, and, secondly, he was aggrieved by the refusal of his objection.
It was held that a special individual right was infringed.
In the Sevenoaks(1) case there was neither a pecuniary nor a proprietary grievance.
The action of the local authority in providing a parking place invited objections.
It is the refusal of that objection which constituted a grievance and it was a grievance sustainable in law.
Mr. Daphtary relied on the observations of James, L.J. in Re. Sidebotham (2) that a, disappointed person would not be a person aggrieved ' and also on the observations of Lord Coleridge in Queen vs Keepers of the Peace and Justices of the County of London (3 ) that one would not be an aggrieved person because someone was held not to have done wrong.
In other words, it was said that the Advocate General would make submissions or advance contentions and the non acceptance by the Disciplinary Committee of such submissions would not constitute either a legal grievance or rejection of a remedy asked for.
Mr. Daphtary also leaned heavily on the decision of the Judicial Committee in Attorney General of Gambia vs Pierre Sarr N ' Jie(4) in support of two propositions.
First, that the Judicial Committee found in the Gambian case that in the colonies the Attorney General represented the Crown and was therefore the guardian of the public interest.
Mr. Daphtary submitted that the Advocate General did not represent public interest in our country and therefore could not be said to be a guardian of public interest.
Secondly, the Judicial Committee in the Gambian case said that in (1) (3) (2) (4) 924 relation to disciplinary proceedings if a legal practitioner was acquitted of misconduct no appeal was open to the Attorney General because he had done his duty and was not aggrieved.
Extracting that proposition from the Gambian case Mr. Daphtary submitted that similarly the Advocate General could not have any grievance where an Advocate was acquitted.
The purpose and the provisions of the will determine whether the Advocate General is a person aggrieved within the meaning of the relevant sections in the Act.
It may not be out of place to refer to the Bar Councils Act, 1926 which dealt with disciplinary conduct of practitioners.
Prior to the the High Court under the Bar Councils Act, 1926 had power to suspend any advocate from practice whom it found guilty of professional or other misconduct.
Under the said 1926 Act upon receipt of a complaint made to it by any court or by Bar Council or by any other person that any Advocate had been guilty of misconduct, the High Court if it did not summarily reject the complaint referred the case for enquiry to the Bar Council or after consultation with the Bar Council to the Court of a District Judge and the High Court might of its own motion refer any case in which it had reason to believe that any such Advocate had been so guilty.
If any case was referred under the Bar Councils Act, 1926 for enquiry, the case was to be enquired into by the Committee of the Bar Council which was called the Tribunal.
The Tribunal consisted of not less than three and not more than five members of the Bar Council appointed for that purpose by the Chief Justice or Chief Judge of the High Court, and one of the members so appointed was the President of the Tribunal.
The finding of a Tribunal was forwarded to the High Court through the Bar Council and the finding of a District Court was to be forwarded direct to the High Court with a copy to the Bar Council.
On receipt of the finding the High Court was to fix a date for the hearing of the case and notice of the date so fixed was to be given to the Advocate concerned and to the Bar Council and to the Advocate General.
The High Court was also required under the statute to afford the Advocate concerned and the Bar Council and the Advocate General an opportunity of being heard before orders were passed in that case.
Mr. Desai relied on the provisions of the Bar Councils Act, 1926 to show that under the said Act notice was to be given to the Advocate General and that the Advocate General was entitled to be heard and he relied on a decision of the Judicial Committee in Advocate General of Bombay vs Phiroz Bharucha(1) and the decision of this Court in Bhataraju Nageshwara Rao vs The, Hon 'ble Judges of the Madras High Court & Ors.
(2 ) in support of two (1) 62 I. A. 235: (2) ; 925 propositions, namely, that the Advocate General could prefer an appeal and in an appeal preferred by the Advocate concerned, the Advocate General would be a respondent to such an appeal.
In Bharucha 's case(1) certain Advocates were members of Associations declared unlawful by Government and they were convicted of offences punishable under section 17(1) of the Criminal Law Amendment Act, 1908.
The High Court did not take any steps, against the Advocates an the ground that it did not consider that membership of an unlawful Association would render the Advocates unfit for the exercise of the profession.
The Advocate General of Bombay made applications for special leave before the Judicial Committee to appeal against the decision of the High Court.
The Judicial Committee did not grant any special leave and agreed with the view of the High Court.
No question was raised in the applications before the Judicial Committee as to the maintainability of the applications for special leave.
It should be noticed that under the Bar Councils Act there was no provision for any appeal.
Mr, Desai rightly relied on the decision of the Judicial Committee not for an actual decision that the, Advocate General had a right of appeal but for the purpose of showing that the Advocate General had not only locus standi to make an application for leave but also could be said to have been aggrieved by an order in relation to professional misconduct of an Advocate.
The Judicial Committee would not have entered into the merits of the. case if the Advocate General had no right to apply for leave to, appeal.
The decision of this Court in Bhataraju 's case(2) was to the effect that in an appeal preferred to the Supreme Court by an Advocate against whom an order of suspension was passed by the High Court under section 12 of the Bar Councils Act, the proper respondents would be the complainant, if any, the Bar Council and the Advocate General of the State concerned and not the High Court.
The appeal to this Court in Bhataraju 's case(2) was by special leave.
This Court held that the Advocate General, the Bar Council and the complainant would be parties to the appeal on the ground that notices under the Bar Councils Act had been issued top those persons.
The decisions of this Court and the Judicial Committee both indicate, that the Advocate General under the Bar Councils Act had locus standi in making an application for leave to appeal and being a respondent to an appeal preferred by the Advocate.
The position held by the High Court under the Bar Councils Act, 1926 is now occupied by the Bar Council under the Advo cates Act.
There are State Bar Councils and there is also a Bar Council of India.
Every Bar Council is a body corporate.
The (1) 62 I.A. 2350 (2) ; 926 functions of the State Bar Council are inter alia to admit persons as advocates on its roll; to prepare and maintain such roll; to entertain and determine cases of misconduct against advocates on its roll; to safeguard the rights, privileges and interest of advocates on its roll.
The functions of the Bar Council of India are to lay down standards of professional conduct and etiquette for advo cates, to lay down the procedure to be followed by the Disciplinary Committee of the Bar Council of India and the Disciplinary Committees of the State Bar Councils, to safeguard the rights, privileges and interests of advocates.
A Bar Council is empowered under the Act to constitute one or more Disciplinary Committees.
Sections 35 to 44 deal with conduct of Advocates and powers of th e Disciplinary Committees of the State Bar Councils as also of the Bar Council of India.
Under section 35 of the Act where on receipt of a complaint or otherwise a State Bar Council has reason to believe that any advocate on its roll has been guilty of professional or, other misconduct, it shall refer the case for disposal to its Disciplinary Committee.
The Disciplinary Committee of a State Bar Council, if it does not summarily reject the complaint, shall fix a date for the hearing of the case and shall cause.
a notice thereof to be given to the advocate concerned and to the Advocate General of the State.
The Disciplinary Committee of a State Bar Council after giving the advocate concerned and the Advocate General an opportunity of being heard, may dismiss the complaint or reprimand the advocate, suspend the advocate from practice for such period as it may deem fit, or remove the name of the advocate from the State roll of advocates.
Where any notice is issued to the Advocate General, the Advocate General may appear before the Disciplinary Committee of the State Bar Council either in person or through any advocate appearing on his behalf.
These provisions establish first that the Advocate General is entitled to a notice of the date of hearing, secondly, that no order can be made by the Disciplinary Committee without giving an opportunity to the Advocate General of being heard, and, thirdly, that the Advocate General may appear in person or through any advo cate.
It cannot be said that the Advocate General is appearing as a friend of the Court.
The right of the Advocate General to appear is based on statute.
The word may ' is used to indicate the choice of the Advocate General to appear in person or through any advocate.
He may choose not to appear at all.
But when the Advocate General does appear, he does so by virtue of the statutory rights and powers conferred on him.
It is, therefore, necessary to know as to why notice under the Act is given to the Advocate General and why he is to be heard before an order is made by the Disciplinary Committee.
The Judicial Committee in the Gambian case found that the name of N 'Jie was struck off the roll of barristers and solicitors of 927 the Supreme Court of Gambia by an order of Abbott, J., Deputy Judge of the Supreme Court in the Colony of Gambia.
The Deputy Judge had jurisdiction to represent the Chief Justice in the exercise of his judicial powers.
The power to strike the name of the legal practitioner off the roll was held by the Judicial Committee not to be a judicial power but an administrative one of the Chief Justice of the Supreme Court of Gambia.
Therefore, the order of Abbott, J. was without jurisdiction.
The West African Court of Appeal under those circumstances set aside the order of Abbott, J. The Attorney General of Gambia thereupon preferred an appeal to the Judicial Committee.
An appeal to the Privy Council lay under section 31 of the West African (Appeal to Privy Council) Order in Council, 1949.
Broadly stated, the pro vision was to the effect that any person aggrieved by any judgment of the Court could prefer ail appeal to His Majesty.
The Judicial Committee construed the words person aggrieved ' occurring in section 31 of the West African Order in Council, 1949 not to be subjected to a restrictive interpretation but to include a person who has a genuine grievance because an order has been made which prejudicially affected his interest.
The Attorney General of Gambia was found to have sufficient interest for the purpose and the interest was held to be a public one which the Attorney General represented.
The Judicial Committee also said that if the Judge found the practitioner guilty of misconduct and the West African Court of Appeal of Gambia reversed the decision which went to the jurisdiction of the Judge, or was otherwise a point in which public interest was concerned, the Attorney General would be a person aggrieved by the decision.
The Judicial Committee construed the words perso n aggrieved ' to include the Attorney General of Gambia as representing the public interest.
The most significant feature in sections 35 and 36 of the Act is that the Disciplinary Committee does not either give any notice to or hear the complainant.
On the contrary notice is given under section 36 to the Attorney General and under section 35 to the Advocate General.
The Disciplinary Committee without giving the Attorney General in one case and the Advocate General in another case an opportunity of being heard cannot pass any order against the Advocate concerned.
The Attorney General under Article 76 of the Constitution and the Advocate General under Article 165 of the Constitution have to discharge the functions conferred on them by or under the Constitution or any other law for the time being in force.
The concerns the Advocate and it is in the fitness of things that the Attorney General and the Advocate General of a State are heard as persons representing the profession which assists the litigant public and the courts in the administration of justice.
The Attorney General and the Advocates General of States are persons of high standing 928 and with long experience in the profession and it is indisputable that they will ever adopt any partisan attitude in proceedings before the Disciplinary Committee.
The gives special preeminence to the Attorney General and the Advocate General in disciplinary proceedings because it is not an attempt of the Disciplinary Committee to redress the grievance of an individual complainant but to find out whether there is any breach of professional standard and conduct.
The high tradition, dignity and purity of the Bar is to be maintained.
The Attorney General and the Advocate General are heard because they are heads of their respective Bar and the proceedings affect discipline and dignity of the Bar and touch the professional conduct of an Advocate.
They are not parties to a lis '.
They have no personal or pecuniary or proprietary interest in the matter.
It is manifest that their locus standi and interest is based on professional code of conduct and for the purpose of upholding the purity of the Bar and preservation of correct standards and norms in the profession.
The Attorney General and the Advocates General will uphold the professional discipline, dignity and decorum and that is why no order is made by the Disciplinary Committee without giving them an opportunity of being heard.
The issue before the Disciplinary Committee is whether there has been professional misconduct and the question has to be looked at purely from the point of view of profession.
The profession touches the public on the one hand and the courts on the other.
On no other basis could the presence of the Advocate General be explained.
In a recent decision of this Court in B. M. Madnani vs Com missioner of Workmen 's Compensation, Bombay(1) the Commis sioner of Workmen 's Compensation preferred an appeal for en hancement of penalties against the Advocate concerned.
This Court held that the Commissioner was entitled to maintain the appeal as a person aggrieved.
Mr. Daphtary at one stage contended that a complainant would not be a person aggrieved within the meaning of the relevant section of the to prefer an appeal.
The decision of this Court repels that submission.
It may not be out of place to notice that the Act uses the words person aggrieved ' and not the words party aggrieved '.
First in disciplinary proceedings there is no party.
It is a matter touching the professional conduct of the Advocate.
The enquiry is by the Disciplinary Committee.
The Advocate is heard.
The Attorney General in one case and the Advocates General in other cases are heard.
They are heard not because they are parties but because they represent the interest of the profession.
They represent the standards to be maintained in the profession.
Suppose, (1) C.A. No. 877 of 1968 decided on October 10, 1968.
929 the Disciplinary Committee held proceedings without giving notice to the Advocate General or made an order Without giving the Advocate General an opportunity of being heard.
In either Case the Advocate General would be a person aggrieved.
Would the participation by the Advocate General in the proceedings before the Disciplinary, Committee alter the position ? Neither.
on logic nor on principle could it be said that the Attorney General and the Advocates General who have the right to be heard could not be persons aggrieved by the decision.
If they have the right to be heard they may have grievance as to the result of the hearing.
The Attorney General and the Advocates General receive notice and are entitled to be heard by virtue of the provisions in the statute.
They are performing statutory duties.
They are not contemplated in the statute as ordinary counsel.
It was not them intention of the statute that they would be merely neutral observers before the Disciplinary Committee and they would have no duty to perform.
They would have to express their views one way or the other.
It is true that they would be completely free from personal favour or disfavour in these matters touching the professional conduct.
Their presence before the Disciplinary Committee is explicable only on the ground of adhering to the correct professional code.
It would therefore be open to them Attorney General and the Advocate General to take the view that in a matter of sufficient gravity a completely inadequate punishment would not be in public interest of the profession.
Similarly,if the punishment is severe in a case, which did not merit such.action, the Attorney General and the Advocate General would be persons aggrieved to have it corrected.
To accede to the contention of Mr. Daphtary that the words, 'person aggrieved ' refer only to Advocates would be misreading the provisions.
The words person aggrieved ' will be referable to,the Advocate concerned, the complainant and the Attorney General or the Advocate General as the case may be.
The Attorney General and the Advocate General will be persons aggrieved because they are interested in maintaining the professional rectitude.
The Attorney General and the Advocate General have the right of pre audience.
Such right determines that they are leaders of the profession in their respective fields.
They will ask formatting the proper standards of professional ethics.
It is from that point of view that the Attorney General and the Advocate General will be aggrieved persons when they will find that them interest of the Bar, the, public interest have not been proper safeguarded by decisions of the Disciplinary Committee of the Bar Council.
169 Sup CI/(P) 71 15 930 For these reasons I am of opinion that the Advocate General of the State of Maharashtra is competent to appeal as a person aggrieved under section 37 of the .
ORDER In accordance with the opinion of the majority, the appeal is allowed and the order of the Bar Council of India is set aside.
There shall be no order as to costs.
| IN-Abs | The appellant was an advocate from Maharashtra.
He was convicted by a Summary Court in London on a charge of pilfering from a Departmental Store and was sentenced to pay a fine.
The State Bar Council called upon him sou motu to show cause why he should not be held guilty of misconduct.
he submitted his explanation and the Disciplinary Committee of the Bar Council was satisfied that there was no reason for holding him guilty of professional misconduct.
The Advocate General of the State who was sent a notice of the proceedings as required by section 35(2) of the , and bad appeared before the Disciplinary Committee, filed an appeal to the Bar Council of India under section 37 of the Act, under which, any person aggrieved by an order of the Disciplinary Committee of the State Bar Council made under section 35 of the Act, may prefer an appeal to the Bar Council of India.
The appellant objected that the Advocate General had no locus standi to file the appeal.
The objection was overruled by the Disciplinary Committee of the Bar Council of India and the appellant was found guilty of professional misconduct.
in appeal to this Court, on the question of the competency of the Advocate General to file the appeal under section 37.
HELD : (Per Hidayatullah.
C.J., Shelat and Mitter, JJ.) The was not a person aggrieved, within the meaning of 37 and therefore, the appeal filed by him was incompetent and hence, finding of the Disciplinary Committee of the Bar Council of India should be get aside.
[887 H; 904 E] (Per Hidayatullah C.J.) (1) The expression person aggrieved ' must be construed by reference to the context of the enactment in which it and all the circumstances.
Under the Act, disciplinary proceedings before a State Bar Council commence on a complaint to it or suo motu and are referred to its Disciplinary Committee.
The Disciplinary Committee can reject the matter summarily; but if it proceeds to hear it further, notice thereof is sent to the concerned advocate and to the advocate General of the State.
The Advocate General may appear personally or by counsel.
If the Disciplinary Committee after giving the Advocate and the Advocate General an opportunity to be heard holds hat the Advocate is not guilty of any misconduct it makes an order it her dismissing the complaint, or where the proceeding was started by in Bar Council makes an order that the matter may be filed.
If it finds the advocate guilty it may either reprimand the advocate or suspend 864 the advocate from practice for a specified period or remove his name from the roll of Advocates.
From the decision of the Disciplinary Committee of the State Bar Council an appeal lies to the Bar Council of India at the instance of a person aggrieved '.
The appeal is heard by the Disciplinary Committee of the Bar Council of India and from its decision an appeal lies to this Court.
[884 E H; 885 A B] (a) In these proceedings before the disciplinary committee the Advocate General is not in the nature of a party having independent rights which lie can claim nor is he injured by the decision.
The decision does not deny him anything nor does it ask him to do anything.
He is also not intended to be bound by the decision.
He does not represent the Bar nor has he a right to speak on behalf the body of the advocates.
Such a privilege is neither expressly conferred on him nor can it be implied from the provisions of the Act.
[885 C D; 886 A B] (b) In the State Bar Councils (except in Delhi), the Advocate General of the State is an ex officio member, but his functions are not different from those of other members.
He has a right of pre audience, but the does not confer any other right on him.
When the Committee considers in limini to decide whether the matter should be proceeded with at all, the Advocate General 's presence is not considered necessary.
Therefore, the Advocate General is not a prosecutor on behalf of the Bar Council.
He is noticed and brought before the Committee because he is the Chief Counsel of the State and therefore his assistance at the hearing is useful.
He is generally a lawyer of some standing having made a mark in the profession and his contribution to the deliberations of the Disciplinary Committee is welcome, because, thus the Disciplinary Committee is helped to reach a proper conclusion.
The fact that he can appear through counsel shows that the intention is merely to have his opinion as an amicable curiae who is neither siding with the complainant nor with the Advocate and who will thus have an unbiased and impartial approach to the case.
He must after he has done his duty leave the matter to the complainant and the advocate or the Bar Council to take the matter further if they choose.
[883 C, E F; 885 E H; 886 A] (c) If he is not a person summoned to be bound by the order but a person who is heard in a dispute between others merely to be of assistance in reaching the right conclusion he can hardly have a grievance.
Any person who feels disappointed with the result of a case is not a person aggrieved '.
He must be disappointed of a benefit which he would have received if the order had gone the other way.
The order must cause him a legal grievance by wrongfully depriving him of something or must have a tendency to injure him.
That the order is wrong or that it acquits some one who he thinks ought to be convicted does not by itself give rise to a legal grievance.
[876 A C] Therefore, it cannot be said that by reason of the provisions of the , the Advocate General of the State enjoys such a position that be must necessarily be treated as a person aggrieved ' entitling him to file an appeal.
[882 H; 886 G] In re.
Sidebotham exhibit Sidebotham, (1880) 14 Ch. D. 458(C.A.).
In re.
Lamb Exp.
Board of Trade, [1894] 2 O.B.D. 805, 812, In re.
Kitson,, Exp.
Sugden (Thomas) & Sons, Ltd. , 112 114.
Brown Exp.
Debtor vs official Receiver Ellis Exp.
Ellis (1876)2 Ch.
D. 779, In re.
Words Exp.
Dalton (1874)40 L.T. 297(C.A.), R. vs London County Keepers of Peace and Justice , Jennings vs Kelly, In 865 re.
Reviere , Robinson vs Currey , 470 (C.A.); Seven Oaks Urban District Council vs Twynham , ' 443, Eating Corporation vs Jones L. R. , B. M. Madani vs Commissioner of Workmen 's Compensation Bombay, C.A. 877 of 1968 decided on October 10, 1968 and Municipal Corporation of the City of Bombay vs Chandulal Shamldas Patel, C.A. 1716 of 1967 decided on August 1, 1970, referred to.
(2) It could not be said that in the present case there were several points of general public interest which needed to be solved and therefore, if the decision of the Disciplinary Committee of the State Bar Council was wrong, the Advocate General, in public interest, could take the matter further.
[886 G H] Unlike the position of an Attorney General in a Crown Colony, the Advocate General of a State in India does not represent the Executive or the Legislature or the Judiciary, or the Central Government in disciplinary proceedings before the Disciplinary Committee.
The magniloquent phrases such as Leader of the Bar, Keeper of the, Conscience of the Bar have no meaning neither under the nor under the Bar Councils Act, 1926.
They are just honorific titles given by the courtesy but are not grounded on law, the keepers of the conscience of the Bar being the Bar Councils.
[883 F G; 886 C D] In the present case,the appellant was not precluded from questioning the charge in the disciplinary proceedings because of the decision of the Criminal Court in London.
His explanation was accepted by the Disciplinary Committee of the State Bar Council.
They were also satisfied that the summary proceedings in the criminal trial in England offended against the principles of natural justice, and that therefore, the conviction of the appellant in England did not show any moral turpitude in the appellant.
If the Advocate General 's view on these matters were not accepted by the Disciplinary Committee he could not have any grievance.
He could not make it his own cause or a cause on behalf of others whom he did not represent.
He had done his duty and the matter should have rested there.
[887 C F] Attorney General of Gambia vs Pierre Saar N 'Jie, [1961] A.C. 617 (P.C.) referred to.
(3) (a) The facts that in Advocate General of Bombay vs Phiroz Rustamji Barucha the standing of the Advocate General to apply for special leave in a proceeding relating to professional misconduct of an Advocate was questioned before the Privy Council, but that the Privy Council refused special leave on a different ground cannot import a rejection of the objection as to the standing of the Advocate General.
[881 E] (b) The observations in B. Nageshwara Rao vs The Hon 'ble Judges of the Madras High Court, ; that in an appeal arising out of a proceeding under the Bar Councils Act, it was inappropriate to make the Judges respondent, and that the appropriate parties should be the concerned Advocate the complainant (if any), the Bar Council and the Advocate General of the State, do not advance the case of the Advocate General in this case.
[882 E] (Per Shelat and Mitter, JJ.) (1) A State Bar Council consists of a number of members including the Advocate General of the State ex officio.
Under the provisions of the , subject to a right of appeal to this Court under section 38, inquiries into charges of misconduct against L169CI/71 11 866 advocates are to be in the exclusive jurisdiction of the Bar Councils.
If a complaint is received against an Advocate it is referred to the Disciplinary Committee of the Bar, Council or the Bar Council can take such a step suo motu.
It is however not obligatory to refer each and every com plaint but only when the Bar Council is satisfied that there is a prima facie case for investigation.
if it is not so satisfied it can throw out the complaint as frivolous.
And it is only when the Disciplinary Committee does not summarily reject the complaint that a date has to be fixed for its hearing and notice there of must be given to the advocate concerned and the Advocate General of the State but it is not incumbent on the Advocate General to appear in person; he can appear through another advocate and place his view point before the Disciplinary Committee.
The Advocate and a complainant who makes allegations against an advocate are persons aggrieved entitled to file an appeal under section 37 if an order is made against the advocate, or the complaint is dismissed by the Disciplinary Committee.
But the State Bar Council cannot be such a person as the order is made by itself and acting through its Disciplinary Committee.
[889 B C; 891 B C] Generally speaking a person is said to be aggrieved by an order which is to his detriment, pecuniary or otherwise or causes him some prejudice in some form or other.
A person who is not a party to a litigation has no right of appeal merely because the judgment or order contains some adverse remarks against him.
A person who is not a party to a suit may prefer an appeal,, with the leave, of the appellate court when the judgment would be binding on him.
But because a person has been given notice of some proceedings wherein he is given a right to appear and make his submissions, he does not without more, have a right of appeal from an order rejecting his contentions or submissions.
To place the Advocate General in the company of "persons aggrieved" one must be able to say that the Disciplinary Committee committed an error which it was his duty to attempt to set right because of some function attributable to him as the Advocate General or some obligation cast upon him by the Act or the general law of the land to safeguard and maintain standards of conduct of Advocates laid down by the Bar Council of India.
[892 B F] (a) The Advocate General is entitled to a hearing if the complaint is not rejected summarily.
But it is not obligatory on him to take part in the proceedings.
It is only when he feels that a case requires a careful investigation and proper elucidation of the facts or the exposition of the law on the subject that he is called upon to render assistance.
He has to take a fair and impartial attitude and render all assistance to the Bar Council to enable it to arrive at a proper decision.
His role is not that of a prosecutor nor is he a defence counsel on behalf of the advocate.
Ms duty is to put before the Disciplinary Committee the facts in their proper perspective and to advance the proper inference to be drawn.
Once he does so there is an end of the matter so far as he is concerned; and he cannot have any grievance because the decision of the Bar Council is against his submission or not to his liking '.
[896 G H; 897 A C] (b) Article 165(2) of the Constitution epitomizes the functions and duties of the Advocate General.
It lays down that he has to discharge the functions conferred upon him by or under the Constitution or any other law for the time being in force.
It is not open to the Advocate General to intervene in any suit or legal proceeding apart from the provisions of the Codes of Civil and Criminal Procedure, merely because he thinks public interest is involved in the matter.
Considering the matter 867 historically, the Legislature, while passing the Bar Councils Act, 1926, and the , thought that the Advocate General should be heard inasmuch as he occupied the position of a general referee on points of professional etiquette very much like the Attorney General in England.
Once he does this duty enjoined upon him by the statute.
of making such submissions as he thinks proper at the hearing, his functions qua the enquiry come to an end.
As a referee he has no further interest in the matter, and if the Disciplinary Committee makes an order against the advocate which the Advocate General considers harsh and unreasonable he is not called upon to file an appeal.
Neither is he interested in prosecuting the.
matter further if he takes the view that the punishment meted out is not commensurate with the misconduct of the advocate.
[897 D E, G H; 900 C F] Robinson vs Currey, , Ex parte Sidebotham.
In re Sidebotham, 465, Ex parte Official Receiver.
In re Read, Brown & Co. , 178, the Queen vs Keepers of the Peace and Justices of the County of London, , 361; Rex vs London Quarter Sessions, Exparte Westminster Corporation , Seven Oaks Urban District Council vs Twynham, , Ealing Corporation vs Jones, , 390, referred to.
(2) The Advocate General of a State in India is not a representative of the Government.
Neither the Constitution nor the holds him so nor is be a person representing public interest, unlike the Attorney General in a Crown Colony ' except as provided in statutes.
He may draw the attention of the Bar Council to any misconduct of an advocate and appear at the hearing.
Once the hearing is over and a finding is recorded he has done his duty and be cannot be said to be aggrieved within the meaning of section 37.
Every day courts of law are called upon to decide questions of law inter parties which may be of general importance to the public.
The Advocate General cannot prefer an appeal merely because the question is one of considerable importance to the public inasmuch as he is not a party to it; and he has no locus stand to do so, even in a case where the statute only gives him an opportunity of appearing at a hearing and making his submission.
A decision of the Disciplinary Committee cannot necessarily be said to raise a point of public interest merely because the Advocate General feels that it is erroneous or that he himself would have arrived at a different in India is not the guardian angel of the Bar, nor is he the champion of public interest in any matter save as specified in a statute.
[902 D G; 904 B E] Attorney General of Gambia vs Pierre Saar N ' Jie, , referred to.
(3)(a) The decision of the Judicial Committee in Advocate General, Bombay vs Phiroz Barucha, 37 B.L.R. 722 (P.C.) does not help the Advocate General, because it did not decide the point as to the maintain ability of the appeal.
[903 C D] (b) It did not appear that any argument was advanced in Nageswara Rao vs The Hon 'ble Judges of the ' Madras High Court; , , 1064 about the proper parties to the appeal before this Court arising from proceedings under the Bar Councils Act; and the point as to Whether the Advocate General was a person aggrieved was neither raised nor argued.
Therefore.
the observation in the case that 868 the Advocate General of the state is an appropriate party in the appeal should, not be accepted.
1903 G H] (Per Vaidialingam and Ray, JJ.
dissenting) : The appeal filed by the Advocate General of Maharashtra was competent as he was a person aggrieved ' under section 37 of the .
[908 B C; 920 G H] (Per Vaidialingam, J.) : (1) The question whether the Advocate General is a person aggrieve& under section 37 of the will have to be tackled with reference to the, scheme and provisions of the Act. ' Under the Act, the State Bar Councils and the Bar Council of India have been made autonomous units and various functions regarding the legal profession have been entrusted to them including taking disciplinary action against delinquent members and conducting inquires.
Barring a ,right of appeal to this Court under section 38 the courts are completely out of the picture.
Under sections 3 (2) (a), 23 (4) and 35, the Advocate General of the State is given a very important and responsible position and the Act has given due recognition to his status by virtue of his being the highest law officer in the State, and as one who may be trusted to place a dis interested and dispassionate view before the Disciplinary Committee to enable it to come to a proper decision with respect to the advocate concerned and the legal profession.
Apart from being an ex officio member of the State Bar Council, he has also a right of pre audience over other advocates.
[909 D G; 911 G H; 912 B D; 916 A] Under sections 35 and 37, (i) the State Bar Council can suo motu or on receipt of a complaint, when it has reason to believe that an advocate has been guilty of professional or other misconduct, refer the case to its Disciplinary Committee (ii) If the Committee does not summarily reject the complaint, it is bound to fix a date for its hearing and also bound to give notice to the advocate and the Advocate General of the State; (iii) The Committee is bound to give an opportunity of being heard to the Advocate and the Advocate General and there is no distinction in the opportu nity so afforded to both of them; (iv) The Advocate General may appear in person or through counsel; (v) the Committee can pass one or other of the orders enumerated in section 35(a) to (d) and the orders have to be communicated to the Advocate General also, and under section 37, any person aggrieved ' is entitled to file an appeal to the Bar Council of India.
Unlike under the Bar Councils Act, the Advocate General is associated with the disciplinary proceedings right from the stage of the inquiry by the Committee.
The notice to the Advocate General cannot be a formal and empty notice, because he should begin an opportunity of being heard.
Even though there may be no lis ' and the Advocate General may not be a party ' in the usual sense, he is also entitled, like the advocate against whom the inquiry is being conducted, to place before the Committee all aspects of the matter in favour of and against the advocate.
He is allowed to appear by counsel, because, he may not be able to appear personally and participate in all the disciplinary proceedings.
He need not be vindictive or take sides, but by virtue of his special and dispassionate role he will be able to place all relevant material to enable the Committee to come to a proper and correct finding.
[912 D H; 913 A H: 914 A B] (a) The fact that the Advocate General does not allege an infringement of any legal rights of his own is of no consequence.
It may be that in a particular case the Advocate General may feel that the finding arrived at either in favour of the advocate or against him or the punishment imposed on the advocate, is not justified by the evidence on record.
Under such and similar circumstances the Advocate General will be competent, as a person aggrieved, to bring up the matter before the Appellate Committee so that justice may be done. [914 G; 915 A C] 869 Sevenoaks Urban District Council,v.
Twynham [1929] 2 K B. 440 Ealing Corporation vs Jones [1959] 1 Q.B. 584, Madani vs Commissioner of Workmen 's Compensation, Bombay, C.A. 877 of 1968 decided on October 10, 1968.
Sidebotham , The Queen vs The Keepers of the, Peace and Justices of the County of London, , Re.
Reed, Brown & Co. 19 Q.B. 174, Rex vs London Quarter Sessions and Municipal Corporation of the City of Bombay vs Chandulat Shamaldas Patel, C.A. 1716 of 1967 decided on August 1, 1970, referred to.
(b) The fact that the Legislature provided that the Advocate General should be associated with the disciplinary proceedings from the very beginning of the inquiry brings him under section 37 as a person aggrieved ' and hence the fact that the Committee decided in favour of the Advocate has no bearing on the question.
[914 G H] (c) The fact that the Advocate General is not given notice before rejecting a complaint summarily does not militate against the view that he is a person aggrieved ' because, probably, the Legislature felt that if there was a wrongful summary rejection of a complaint, it could be set right by the Bar Council of India under a. 48A by exercising its signal powers.
[916 FF] (d) In this view it is unnecessary to mention the Advocate General specifically a person aggrieved ' in a. 37.
[918 A] (2) Ile analogy of the Attorney General in a Colony representing the Crown and being the guardian of public interest as stated in Attorney General of Gambia vs Pierre Sarr N ' Jie (1961) A C. 617 cannot be brought in for interpreting s.37 of the , and the observations therein must be related to the particular legal provisions which were considered.
But even that decision recognised that the words person aggrieved ' are very wide and should not be subjected to any restrictive interpretation.
(912 A B; 920 A B, E] (3) The decisions in Advocate General of Bombay vs Pitambardas Gokuldas, 62 I.A. 235 and Advocate General of Bombay vs Phiroz Rustomji barucha, 37 B.L.R. 722(P.C.) do not decide the question one way or the other, [917 A D] (Per Ray, J.) : (1) The purpose and the provisions of the determine whether the Advocate General is a person aggrieved within the meaning of s.37 of the .
Under the Act, a State Bar Council is empowered to constitute a Disciplinary Committee.
Where on receipt of a complaint or otherwise a State Bar Council has, reason to believe that an advocate on its roll is guilty of professional misconduct it shall refer the case for disposal to its Disciplinary Committee, and if the Committee does not summarily reject it, a date of hearing shall be fixed.
The provisions relating to inquiries into professional misconduct of an advocate, establish first that the Advocate General entitled to a notice of the date of hearing, secondly, that no order can be made by the Disciplinary Committee without giving him an opportunity, and thirdly that he may appear in person or through an advocate and that he has a right of preaudience.
He may not choose to appear but if he does appear, his right is based on statute; and he does not appear as a mere friend of the court.
He is heard because he is the head of the Bar in the State and the proceedings affect the discipline and dignity of the Bar and touch the professional 870 conduct of an advocate.
Under article 165 of the Constitution the Advocate General.has to discharge the functions conferred on him by the Constitution or any other law in force.
The concerns an advocate and it is in the fitness of things that the Advocate General of the State is heard as a person representing the profession which assists the litigant public and the courts in the administration of justice.
He is usually a person of high standing and experience and will pot adopt any partisan attitude in the proceedings.
The purpose of the inquiry is not to redress the grievance of an individual complainant in fact sections 35 and 36 do not contemplate any notice to the complainant but to find out whether there is any breach of professional standards and conduct.
[926 C H; 827 F H; 928 A C] (a) It is not the intention of the statute that he would be merely a neutral observer before the Disciplinary Committee and that he would have no duty to perform.
He would have to express his views, and if in a matter of sufficient gravity a totally inadequate punishment is imposed or if the punishment is too severe the Advocate General would be a person aggrieved ', to have it corrected.
The words person aggrieved ' will be referable to the Advocate, complainant, and the Advocate General or Attorney General as the case may be.
The Advocate General and the Attorney General will be persons aggrieved because they are interested in maintaining professional rectitude.
[929 C G] (b) Further if the proceedings were held without notice to the Advocate General or without giving him an opportunity of being heard he would be a person aggrieved.
His participation in the proceedings does not alter the position.
If he has a right to be heard, he may have a grievance as to the result of the hearing.
[929 A B] Re.
Exparte Sidebotham ; Exparte Official Receiver, In re.
Reed Bowen, , Sevenoaks Urban British Council vs Twynhan (192 9) 2 K. B. 104, Queen vs Keepers of the Peace and Justices of the County of London, and Madani vs Commissioner of Workmen 's Compensation, Bombay, C.A. 877 of 1968 decided on October 10, 1968, referred to.
(2) In disciplinary proceedings there is no party in the usual sense.
The Advocate General is not a party to a lis ' and has no personal or pecuniary or proprietary interest in the matter.
That is why the Act uses the words person aggrieved ' and not party aggrieved '.
But he is heard, not because he is a party, but because he represents the interest of the profession and for the purpose of upholding its purity and the preservation of correct standards and norms.
From this point of view he will be an aggrieved person when he finds.
that the interests of the Bar, which is a matter of public interest, is not properly safeguarded by the Disciplinary Committee.
In Attorney General of Gambia vs Pierre Saar N ' Jie.
the Judicial Committee construed the words person aggrieved ' as not to be subjected to a restrictive interpretation but to include a person who has a genuine grievance because an order has been made which prejudicially affected his interest, and that the words would include the Attorney General of Gambia as representing the public interest.
[927 E F; 928 C D, G H; 929 G H] (3) The decisions of the Judicial Committee in Advocate General of Bombay vs Phiroz Barucha, 62 I.A. 235 and of this Court in B. Nageshwara Rao vs The Hon 'ble Judges of the Madras High Court, ; indicate that the Advocate General under the Bar Councils Act, 1926 had locus standi to prefer an appeal.
[925 D E, G] 871
|
iminal Appeal No. 80 of 1953.
Appeal by Special Leave granted by the Supreme Court by its order dated the 9th February, 1953, from the Judgment and Order dated the 23rd September, 1952, of the High Court of Judicature at Bombay in Criminal Appeal No. 828 of 1952 arising out of the Judgment and Order dated the 27th March, 1952, of the Court of Stipendiary Magistrate, Ahmedabad, in Summary Case No. 3029 of 1954.
Rajni Patel and M. section K. Sastri for the appellant.
M. C. Setalvad, Attorney General of India, and (Porus A. Mehta and P. G.Gokhale, with him) for the respondent.
October 29.
The Judgment of the Court was delivered by BOSE, J.
This case is unimportant in itself, for a small fine of Rs. 50 (Rs. 25 on each of two counts) has been imposed for a couple of breaches under section 52 (f) of the Bombay Shops and Establishments Act, 1948, read with rule 18(5) and (6) of the Rules framed under 888 the Act.
But the question involved is of general importance in the State of Bombay and affects a large number of similar establishments, so in order to obtain a clarification of the law, this has been selected as a test case.
The appellant is the owner of a small establishbment called the Honesty Engineering Works situate in Ahmedabad in the State of Bombay.
He employs three workers.
He does business in a very small way by going to certain local mills, collecting orders from them for spare parts, manufacturing the parts so ordered in his workshop, delivering them to the mills when ready and collecting the money therefor.
No buying or selling is done on the premises.
The question is whether a concern of this nature is a "shop" within the meaning of section 2(27) of the Act.
The learned trying Magistrate held that it was not and so acquitted.
The High Court, on an appeal against the acquittal, held it was and convicted.
It is admitted that the appellant maintains no "leave registers" and gives his workers no "leave books" and it is admitted that the Government Inspector of Establishments discovered this on 12th January, 1951, when he inspected the appellant 's works.
If his establishment is a "shop" within the meaning of section 2(27) he is guilty under the Act; if it is not, he is not guilty.
"Shop" is defined as follows in section 2(27): " 'Shop ' means any premises where goods are sold, either by retail or wholesale or where services are rendered to customers, and includes an office, a store room, godown, warehouse or work place, whether in the same premises or otherwise, mainly used in connection with such trade or business but does not include a factory, a commercial establishment, 'residential hotel, restaurant, eating house, theatre or other place of public amusement or entertainment".
As we have said, it is admitted that no goods are sold on the premises and it is also admitted that no services are rendered to customers there, for the manufacture of spare parts for sale elsewhere cannot be regarded as "services rendered.
" 889 The learned Attorney General contends that the definition should be read as follows: Shop includes a work place mainly used in connection with such trade or business. " He says that the word "such" in the phrase "such trade or business" relates back to the opening words of the definition which read " any premises where goods are sold.
" He argues that the emphasis is on the words "goods are sold" and not on the word "premises" because a trade or business relates to the buying and selling of goods and is not confined to the premises where that occurs.
He admits that the main portion of the definition which relates to "premises where goods are sold" cannot exclude the "Premises" element and that unless there are premises on which goods are sold, the main portion of the definition cannot apply, e.g., in the case of a street hawker or of a man who totes his goods from house to house and sells them at the door.
But he contends that the main definition is extended by including in it matter which would not be there without the words of extension and in that portion the em phasis ceases to be on the "premises" and shifts to the nature of the business; provided there is a business of selling, any work place wherever situate "mainly used in connection with it" will fall within the definition.
The other side relies on the ejusdem generis rule.
The argument runs that the trade or business contemplated by the main portion of the definition is not any business of selling wherever and however conducted but only those trades where the selling is conducted on defined premises.
The learned counsel contends that the very idea of a shop in that connotation betokens a room or a place or a building where goods are sold.
The rest of the definition merely links on the main definition ancillary places, such as store rooms, godowns, work places, etc., which are mainly used in connection with the "business", and "business" means the kind of business defined in the earlier part of the definition, that is to say, not business in general, nor even the business of selling in general, but that portion of the business Of Selling which is confined to selling on,some defined premises.
To illustrate this graphically, the 890 business of selling in general may be regarded as a big circle and the business of selling on defined premises as a small portion which is carved out of the larger whole.
The second part of the definition is linked on to the carved out area and not to the circle as a whole.
The word "such" confines what follows to what has gone before and what has gone before is not the trade of selling in general but only that part of the trade of selling which is carried on defined premises.
Counsel argues that there is no justification for ignoring the limitation which the Legislature has placed on the main portion of the definition and holding that "such" relates to a much wider classification of "selling" which the main portion of the definition not only does not envisage but has deliberately excluded.
We think that as a matter of plain construction this is logical and right.
The learned Attorney General went on to contend that even if this is a possible view, his view is also tenable and therefore when we have two possible interpretations we must choose the one which best accords with the policy of the Act.
Taking us through the Act he pointed out that this is a piece of social legislation designed partly to prevent sweated labour and the undesirable employment of women and young children and partly to safeguard the health and provide for the safety of workmen and employees.
He con tended that this object would be partly frustrated if small establishments of this kind are placed outside the purview of the Act, for their number is very large and the persons employed in them are entitled to, and require, just as much protection as those more happily placed in larger concerns.
We have considered this carefully and are of the opinion that the fear is groundless because there is express provision in the Act for such contingencies.
Under section 5 the State Government can by mere notification in the Official Gazette extend the Act to any establishment or class of establishments or any person or class of persons to which or whom the Act or any of its provisions does not for the time being apply In our opinion, the Legislature did not intend to rope 891 in small establishments of this kind in the first place but reserved power to the State Government to do that when desirable by the very simple process of notification in the Official Gazette.
In reaching this conclusion we are influenced by the policy of the Central Legislature on an allied topic.
We do not intend to break the general rule that points to the undesirability of interpreting the provisions of one Act by those of another passed by a different Legislature, but as we have already decided the question of construction and interpretation and are now considering only the general policy of the State Legislature, we deem it right to view the matter in its larger aspect for the special reasons we shall now enumerate.
Now the Central Act, the Factories Act of 1948, was passed on the 23rd of September, 1948.
The Bombay Act, though entitled Act LXXIX of 1948, was not passed till the following year, namely, on 11th January, 1949.
The Bombay Legislature had the Central Act in mind when it passed its own legislation because section 2(27) says that a "shop" shall not include a "factory" and section 2(9) defines a " factory " as any premises which is a factory within the meaning of section 2 of the Central Act or which is deemed to be a factory under section 85 of that Act.
Under the Central Act (section 2(m) no establishment can be a factory unless it employs more than ten workmen or unless it is artificially converted into a " factory " within the meaning of this definition by a notification in the Official Gazette.
Had it not been for the fact that the appellant employs less than ten workmen, his concern would have been classed as a factory under the Central Act and would then have been excluded from the definition of "shop" in the Bombay Act, for the appellant carries on a manufacturing process in his workshop with the aid of power: that is not disputed.
The Central Legislature undoubtedly had the intention of excluding small concerns like this from the purview ,of the Central Act except where Government decided otherwise, and as there is this reference to the Central Act.
on this very point in section.2(27) we think.
, in view of the way that section 2(27) is worded, that ,Was also the intention of the Bombay Legislature, 892 Therefore, even on the assumption of the learned Attorney General that two interpretations of section 2(27) are possible, we prefer the one which, in our opinion, better accords with the logical construction of the words used.
The learned High Court Judges were influenced by matters which we consider inconclusive.
The appellant applied for registration under the Bombay Act and in the statement made under section 7 he called his establishment a "workshop" and described the nature of his business as a " factory ".
The learned Judges considered that this imported an admission that his establishment was a " shop " because of the use of the word "shop" in "workshop".
This might have raised an inference of fact against the appellant had nothing else been known but when the facts are fully set out as above and admitted, the appellant 's opinion about the legal effect of those facts is of no consequence in construing the section.
No estopped arises.
The appellant explained that the matter seemed doubtful, so, to be on the safe side and avoid incurring penalties for non registration should it turn out that his concern was hit by the Act, he applied for registration.
It is to be observed that though he applied on 12th April, 1949, he was not registered till 4th May, 1950, and the certificate was not given to him till 8th January, 1951.
The present prosecution was launched on 4th April, 1951.
Government itself seems to have been in doubt.
However, that is neither here nor there.
What we think was wrong was placing of the burden of proof on the appellant, in a criminal case, because of a so called admission.
The learned High Court Judges also advert to the fact that though the appellant 's concern was registered as a "shop" he made no protest and did not have recourse to section 7(3) of the Act.
We do not think section 7(3) has any application.
The appeal is allowed.
The conviction and sentence are set aside and the judgment of the learned trying Magistrate acquitting the appellant is restored.
The fines, if paid, will be refunded.
| IN-Abs | The appellant, the owner of a small establishment in Ahmedabad, employs three workers, does business in a very small way by going to certain local mills, collecting orders from them for spare parts, manufacturing the parts so ordered in his workshop, delivering them to the mills when ready and collecting the money therefor.
No buying or selling is done on the premises.
Hold, that a concern of this nature is not a shop within the meaning of section 2(27) of the Bombay Shops and Establishments Act, 1948,
|
Appeal No, 85 of 1967.
Appeal by special leave from the judgment and decree dated August 19, 1966 of the Bombay High Court, Nagpur Bench in Special Civil Application No. 831 of 1965, W. section Barlingay and A. G, Ratnaparkhi, for the appellant, M. section Gupta and section K. Dhingra, for respondent No. 1.
The appellant was a 'protected lessee within the meaning of that expression contained in the Berar Regulation of Agricultural Leases Act, 1951 (Act 24 of 1951 75 (hereinafter called the Berar Act) in respect of the suit lands bearing survey No. 23 of an extent of 7 acres and 4 gunthas under the 5th respondent herein, who was then the original owner of the lands.
The 5th respondent served on the appellant (hereinafter called the tenant) a notice dated December 28, 1955 under section 9(1) of the Berar Act terminating the I tenancy of the appellant on the ground that he required the lands for personal cultivation; and he also submitted an application to the Revenue Officer under section 8(1)(g) of the Berar Act for an order determining the tenancy.
The 5th respondent obtained an order from the Revenue Officer on May IS, 1956 directing the tenant to surrender possession of the lands.
The 5th respondent in pursuance of the order of the Revenue, Officer obtained possession of the lands on April 4, 1957 and continued in such possession till June 21, 1961, on which date he transferred the suit lands to the first respondent ',hereinafter to be referred as the landlord) and got, .in exchange 8 acres in survey No. 33 plus an amount of Rs. 13,000/ .
in the meanwhile on December 30, 1958 the Bombay Tenancy and Agricultural Lands (Vidarbha Region and Kutch area) Act of 1958 (Act No. XCIX of 1958) (hereinafter called the Bombay Act) came into force.
The tenant filed an application under section 52 of the Bombay Act before the Naib Tahsildar, Achalpur, against respondent Nos. 1 and 5 for restoration of the possession of the suit lands on the ground that the original owner, the 5th respondent, had eased to cultivate the lands personally within the period of 12 years after obtaining possession of the lands on April 4, 1957.
The Naib Tahsildar by his order dated November 14, 1962 dismissed the application on the ground that section 52 does not apply and hence the application was not maintainable.
On appeal by 'the tenant, the Special Deputy Collector, Amravati by his order June 30, 1964 reversed the decision of the Naib Tahsildar and directed the landlord to restore possession of the lands as prayed for by the tenant.
The first respondent 's revision challenging the order of the Special Deputy Collector was dismissed on August 5, 1965 by the, Maharashtra Revenue 'Tribunal.
The Revenue Tribunal while dismissing the revision petition, inter alia, held that the tenant was a protected lessee and that in pursuance of the proceedings taken by the 5th respondent in terms of the notice tinder section 9(1) of the Berar Act, the tenant was deprived of the lands and his tenancy rights on the ground of personal cultivation by the then owner of the lands.
The Tribunal further held that as the 5th respondent had transferred the suit lands in favour of the first respondent on June 21, 1961.
, the former must be considered to have failed to use the lands for the purposes specified in his notice within 12 years from the date on which lie took, possession and in consequence the tenant 76 was entitled to be restored to possession under section 52 of the Bombay Act.
On this reasoning the Revenue Tribunal confirm ed the order of restoration passed by the Special.
Deputy Collector in favour of the tenant.
The first respondent filed a writ petition under article 227 of the Constitution, being Special Civil Application No. 831 of 1965, in the High Court of Bombay (Nagpur Bench) challenging the orders restoration.
passed against him by the Special Deputy Collector and the Maharashtra Revenue Tribunal.
The High Court by its judgment and order dated August 19, 1966 has set aside the orders of the Special Deputy Collector and the Revenue Tribunal, thus restoring the order of the Naib Tahsildar, land has dismissed the application for restoration tiled by the tenant.
The tenant challenges the decision of the High Court in this appeal by special leave.
The High Court in its order under appeal has recorded the following findings The, original owner, the 5th respondent, was entitled to terminate the lease of the tenant by giving a notice under section 9(1) of the Berar Act.
He accordingly terminated the tenancy by giving notice dated December 23, 1955.
After initiating proceedings under section 8(1)(g) read with section 19(1) of the Berar Act, the owner also obtained possession of the lands on .April 4, 1957.
Under the Berar Act there was a duty cast on 'the landlord to cultivate, the lands personally for a period of 2 years and in this case the 5th respondent has complied with this requirement.
As possession was taken from the tenant by the 5th respondent when the Berar Act was in operation and :as the latter had cultivated the lands for a period of 2 years, as required by section 9(6) of the Berar Act, the tenant had ceased to have any rights after the expiry of the period of 2 years and.
hence section 52 of the Bombay Act was not applicable and it follows that the application for restoration under that section filed by the tenant was not maintainable.
The position is concluded ,against the tenant by an earlier Full Bench decision of the High ,Court reported in Saraswatibai Babji Tukaram Umarkar vs Bhikamchand Peemsukhdas,(1) wherein it had been held that when possession of the lands had been taken before coming into force of the Bombay Act, the rights and liabilities of the parties are governed by the Berar Act and that section 52 of the Bombay Act has no retrospective operation.
On these findings the High Court allowed the writ petition of the first respondent.
Dr. Barlingay, learned counsel for the appellant, has urged that having due regard to the scheme of the Berar and Bombay Acts, the High Court 's view that section 52 of the Bombay Act has no .application, is erroneous.
In this case.
he pointed out that the (1) 77 Bombay Act has come into force on December 30, 1958 even before the expiry of the period of two years from April 4, 1957, on which date the original owner, the 5th respondent, had entered into possession after terminating the lease.
Section 52 ' of the Bombay Act contains provisions substantially similar to section 9(6) of the, Berar Act which was repealed and the only change was that the Bombay Act enlarged the period for which the landlord was required to continue to cultivate land personally from two years to 12 years.
As the enlarged period under the Bombay Act has come into operation before the expiry of the shorter period under the Berar Act, which was repealed, the landlord was bound to conform to the requirements of the larger period provided under the Bombay Act.
In this case the 5th respondent had transferred the suit lands to the first respondent on June 21, 1961 and hence there has been a failure in law on the part of the 5th respondent to utilise the lands for the purpose of personal cultivation for the period mentioned in section 52 of the Bombay Act and so the said section fully applies and the dismissal of the tenant 's application for restoration by the High Court is.
opposed to the mandatory provisions of the Bombay Act.
The counsel, further pointed out that the Full Bench decision, on which the present judgment of the High Court is .rested, is not applicable for the reason that the Full Bench was dealing with a case where the period provided under section 9(6) of the Berar Act had already expired before the coming into force of the Bombay Act, whereas in the case on hand even before the expiry of that two years ' period the Bombay Act has come into force.
This material difference has not been noted in the present order by the High Court.
He further urged that if the Full Bench decision applies, as held by the High Court, it should be held.
by this Court that the Full Bench decision is not correct.
Mr, M. section Gupta.
learned counsel for the first respondent, landlord, raised a preliminary objection to the hearing of the appeal and prayed for cancellation of the special leave granted by this Court on January 11, 1967.
According to him the appellant has made deliberately certain false statements in his application for grant of special leave.
We will revert to this aspect a little later.
On merits Mr. Gupta contended that the obligation of his client 's transferor, the 5th respondent, after obtaining possession of the lands from the tenant under the Berar Act was only to cultivate the lands for two years.
Admittedly in this case the 5th respondent had cultivated the lands for the said period of two years and the obligation incurred by him under section 96) of the Berar Act having been duly complied with, 78 pointed out that section 132 deals with repeals and savings.
Subsection (1) had repealed the enactments specified in Schedule I to the extent specified in column No. 4 of the said Schedule.
Schedule I shows that the Berar Act has been repealed in its entirety.
Notwithstanding the repeal sub section (2) has saved certain matters and on of the matters so saved is the obligation or liability already incurred before the commencement of the Bombay Act.
The 5th respondent, who had incurred the obligation or liability to cultivate the lands for two years under the Berar Act before the commencement of the Bombay Act, has discharged the said obligation or liability and hence the tenant has no further rights which he can enforce.
He also urged that section 52_protects even cases where possession has beer.
taken after the coming into force of the Bombay Act on the basis of an order for restoration obtained under the Berar Act.
In support of 'his contention he relied on the decision in Ramchandra vs Tukaram and others(1).
Before we deal with the merits we will now dispose of the preliminary objection raised by Mr. Gupta praying or cancellation of special leave granted by this Court.
According to the learned counsel the appellant has deliberately made certain false ,statements in the application for grant of special leave and has misguided the Court.
He drew our attention to the statements made in paragraph 6 of the application wherein the appellant has stated that the 5th respondent had transferred the suit lands in favour of the first respondent on June 21, 1961 by taking in exchange 8 acres of land plus a sum of Rs. 30,000/ .
Again in paragraph 10 of the petition the appellant has stated that his claim in these proceedings is for restoration of possession of the lands measuring 7 acres and 4 gunthas, the market value of which happens to be more than Rs. 20,000/ and that this fact is further strengthened because of the 5th respondent exchanging his lands with the first respondent for a sum of Rs. 30,000/ plus 8 acres of land.
The appellant has filed an affidavit stating that the statements contained in the special leave petition 'are true and correct to the best of my personal knowledge '.
From these statements Mr. Gupta pointed out that it is clear that the appellant has categorically stated that the value of the lands concerned in this, appeal is over Rs. 20,000/ and he has also specifically stated that the suit land% were exchanged for Rs. 30,000/ plus 8 acres of lands and these statements have been affirmed to be true to the personal knowledge of the appellant.
Mr. Gupta pointed out that these statements regarding valua tion are absolutely false to the knowledge of the appellant as will (1) (1966) 1.S.C.R. 594 79 be clear from the value given in the writ petition filed by the first respondent in the High Court.
In para 1 of the writ petition the first respondent has stated that the 5th respondent after transfering the suit lands of 7 acres and 4 gunthas has taken in exchange from him 8 acres of land and a sum of Rs. 13,000/ , thus making a total of Rs. 19,000/ .
In the affidavit filed along with the writ petition the first respondent has again stated that the amount received from him along with 8 acres of land as Rs. 13,000/ the total value of the lands being only Rs. 19,000/ .
He also drew our attention to the recitals in the judgment printed in the appeal records wherein the exchange has been stated as being of 8 acres of land plus a sum of Rs. 13,000/ .
In view of these circumstances, the counsel points out that the statements made by the appellant, which have been affirmed to be true to his knowledge about valuation of the suit lands being over Rs. 20,000/ and the exchange having been obtained of 8 acres and Rs. 30,000/ are false and have been deliberately made to mislead the Court so as to obtain special leave making it appear that the requirement regarding valuation is satisfied.
Mr. Gupta drew out attention to the decisions of this Court, namely, Hari Narain vs Badri Das(1), Sita Bai vs Sonu Vanji Wani and ors.(2) and section R. Shetty vs Phirozeshah 'Nusserwanji Golabawalla and another(3).
Mr. Gupta pointed out that in all these decisions when there has been false statements made on material particulars or matters of importance either on facts or about valuation, this Court bad cancelled special leave already granted.
The proposition enunciated by Mr. Gupta that the statements in the special leave application should not contain any untrue or false statements either in material particulars or on matters of importance or about valuation is certainly laid down in those decisions and the requirement in this regard cannot be over emphasised.
In Hari Narain vs Badri Das(1), this Court held that the special leave petition contained inaccurate, untrue and misleading statements and cancelled special leave already granted.
This Court observed at page 209 as follows : "It is of utmost importance that in making material statements and setting forth grounds in applications for special leave, care must be taken not to make any statements which are inaccurate, untrue or misleading.
In dealing with applications for special leave, the Court naturally takes statements of fact and grounds of fact contained in the petitions at their face value and it would be unfair to betray the confidence of the Court by making statements which are untrue and misleading." (1) ; (2) C.A. No. 982 of 1965 decided on 25 4 1968.
(3) G.A. No. 155 of 1963 decided on 25 4 1963.
80 From the facts in that case it will be seen that the material statements made in the special leave petition were false.
In Sita Bai vs Sonu Vanji Wanil and ors.
(1) this Court held that in the special leave petition there was a misrepresentation of facts on a matter of importance, though it was not possible to say that when granting special leave these untrue facts had misled the Court.
It has been further emphasised in this decision that the appellant had deliberately made untrue statements on matters of importance and that they were not the result of inadvertence.
Similarly in section R. Shetty vs Phirozeshah Nusserwanji Golabawalla and another(2) a statement had been made regarding the value of the subject matter as being above Rs. 20,000/ though the suit had been valued only in the sum of Rs. 5001 and court fee paid on that valuation.
This Court held that the statements of valuation in the plaint, namely, Rs. 5001 cannot be reconciled with the statement regarding valuation in the special leave application and this Court took the view that the valuation has been deliberately inflated with a view to getting over the preliminary hurdle as regards valuation.
In this view special leave granted was revoked.
If it is held that there has been an untrue averment regarding material statements or a false statement on matters of importance or a deliberate untrue statement regarding valuationhas been made to mislead this Court, it cannot be gainsaid that thespecial.
leave granted by this Court will have to be revoked.
Dr. Barlingay pointed out that there has been nountrue or false statement made by his client on any material particular nor has any statement been deliberately made to mislead the Court so as to enable his client to obtain special leave.
On the other hand, the counsel pointed out, that the certified copy of the judgment of the High Court furnished to his client and which, has been filed in this Court clearly shows that in the said copy the, High Court has stated that the 5th respondent obtained an exchange from the first respondent 8 acres of land plus a sum of Rs. 30,000/ .
That mistaken value given in the High Court judgment has been adopted in the special leave petition.
The points that have been raised in the special leave petition are all I questions of law relating to legal effect of possession under the Berar Act after coming into force of the Bombay Act.
The valuation.
given in the certified copy of the High Court judgment was incorporated in the special leave petition filed as early as January 11.
He further pointed out that on March, 28, 1967 his client had moved the High Court for correcting the High Court 's (1) Civil Appeal No. 982 of 1965 decided on 25 4 68.
(2) CIVIL Appeal No. 155 of 1963 decided on 5 4 1963 81 judgment by deleting the valuation of Rs. 30,000/ and substitute the same by correct figure of Rs. 13,000/ .
The counsel for both the parties agreed before the High Court that the figure of Rs. 30,000/ contained in the judgment was an error and that the correct figure should be Rs. 13,000/ .
The High Court accordingly by its order dated April 17, 1967 corrected the judgment by stating that the valuation of Rs. 30,000/ should be corrected to Rs. 13,000/ .
That order was passed nearly three months after the special leave application was filed in this Court.
In view of the fact that his client and the counsel acting for him, at the time of drafting the petition for special leave adopted the valuation given in the certified copy of the High Court 's judgment, Dr. Barlingay pointed out that there has been no untrue or false statement given by his client so as to justify revocation of.
the leave already ranted.
We have given due consideration to all these aspects presented before us by both the learned counsel and we are of the view that in the particular circumstances of this case it cannot be said that the appellant is guilty of making any false or untrue statement on any material particulars or matters of importance or regarding valuation.
The mistake committed by the appellant regarding valuation was the result of the mistaken value given by the High Court itself in its judgment, which was corrected only long afterwards.
No doubt, the appellant who is a party to the proceedings should have been a little more careful, but that does not disclose any deliberate attempt on his part to mislead this Court.
Further the statement regarding valuation is not of much consequence in this case because the questions arising for decision are really points of law regarding applicability of either the Berar or Bombay Acts.
Therefore, Mr. Gupta has not been able to make out a case for cancelling the special leave already granted.
We will now proceed to consider the appeal on merits.
The suit land was originally in the Vidarbha Region, which before the passing of Bombay Act of 1958 was part of the state of Madhya Pradesh and the tenancy of the appellant was governed by the Berar Act.
As proceedings had been taken by the 5th respondent for evicting the appellant and for possession of the land under the Berar Act, it is necessary to refer to some of the material provisions of that statute.
Section 2(h) defines a protected lessee as 'a protected lessee within the meaning of section 3.
Section 3 enumerates various lessees who are protected lessees.
There is no controversy that the appellant before us was a protected lessee under the Berar Act.
Section 8(1) enumerates in cls.
(a) to (g) the (,rounds on which 82 the lease of a land held by a protected lessee can be got terminated under the orders of a Revenue Officer.
One of the grounds for eviction is provided under cl.(g) of section g(1), namely lessee having been served with the notice by a landholder as provided,, in section 9.
Section 9 deals with the right of the landholder to terminate the lease of a protected lessee.
Sub sections (1) and (6) of the said section which are material for the present purpose are as follows : "Right of landholder to terminate lease of a protected lessee.
Section 9 (1).
Notwithstanding anything contained in section 8 the landholder may terminate the lease of a protected lessee by giving him notice in writing delivered not less than three months before the commnence ment of the next agricultural year stating therein the reasons for such termination and the description of the area in respect of which it is proposed to terminate the lease, if the landholder requires the lands for cultivating the land personally.
Section 9(6).
If on re entering upon any land after termination of the lease of a protected lessee in accordance with this section, a landholder fails at any time during such period as may be prescribed to utilise the land for the purpose for which the lease was terminated, the dispossessed lessee may apply to the Revenue Officer to put him in possession of the land from the commencement of the agricultural year next following : and the Revenue Officer shall, after hearing the landholder and making such enquiry as he deems fit, put the lessee in possession of the land if he is satisfied of the, failure and also award him such sum by way of compensation as the Revenue Officer may consider sufficient.
" Section 19 (1) provides for a landholder applying to the Revenue Officer to eject a protected lessee against whom an order for the termination of the lease had been passed under sections 8 or 9.
Section 22 gives power to the State Government to make rules as stated therein.
Under cl.
(3) of section 22 (2) rules can be made regarding 'the period under sub section (6) of section 9 '.
Rules have been framed under section 22 and in particular r. 9 prescribes 'such period as that of two years '.
Hence it will be seen that section 9(6) read with r. 9 requires the landholder who terminates the tenancy of his protected lessee on the ground that the land was required 83 by him for his personal cultivation, to cultivate the land personally for a period of two years.
Under the Berar Act, after having entered upon the land, if the landholder fails to cultivate the land personally during the above period, then section 9(6) confers a right on the former protected lessee to apply to the Revenue Officer for being restored to possession.
We have already indicated that the Bombay Act came into force on December 30, 1958.
The material provisions to be referred to in the said statute are sections 52(1) and 132.
Section 52(1) runs as follows : "Landlord to restore possession if be fails to cultivate within one year : Section 52(1) : Where after terminating the tenancy of any land under section 9 of the Berar Regulation of.
Agricultural Leases Act, 1951, or under sections 38, 39 or 39A of this Act, the landlord has taken possession of such land and he fails to use the land for the pur pose specified in the notice given under the said section 9 or as the case may be within one year from the date on which he took possession or ceases to use it at any time for any of the aforesaid purposes within twelve years from the date on which he took such possession, the landlord shall forthwith restore possession of the land to the tenant whose tenancy was terminated by him, unless he has obtained from the tenant his refusal in writing to accept the tenancy on the same terms and conditions or has offered in writing to give possession of the land to the tenant on the same terms and conditions and the tenant has failed to accept the offer within three months of the receipt thereof : Provided that no refusal of the tenant shall be valid unless it has been verified before the Tahsildar in the prescribed manner.
" Section 132 relates to repeals and savings.
Sub section 1 states that the provisions of the enactments specified in Schedule I are repealed to the extent specified in column 4 of the said Schedule.
It may be stated at this stage that one of the enactments so repealed was the Berar Act in its entirety.
Sub section 3 is not relevant.
Sub section 2 of section 132 on which reliance has been placed by both the parties is as follows : "Repeals and Savings : Section 132(2) : Nothing in sub section (1) shall, save as expressly provided in this Act, affect or be deemed to affect 84 (i)any right, title, interest, obligation or liability already acquired, accrued or incurred before the commencement of this Act, or (ii)any legal proceeding or remedy in respect of any such right, title, interest, obligation or liability or anything done or suffered before the commencement of this Act, and any such proceedings shall be instituted, continued and disposed of,, as if this Act had not been passed.
" We have already referred to the fact that the 5th respondent had issued the necessary notice terminating the tenancy of the appellant on December 28, 1955 under section 9(1) and after initiating proceedings under section 8 ( 1) (g) read with section 19 (1), he obtained an order for possession as against the appellant from the Revenue Officer on lay 15, 1956, and had also obtained possession of the lands on April 4, 1957.
All these proceedings were under the Berar Act before the coming into force of the Bombay Act.
The 5th respondent continued in such possession of the lands till June 21, 1961, on which date he transferred the suit lands to the first respondent in exchange for certain other lands.
The appellant filed an application for restoration seeking relief on the ground that the 5th respondent had ceased to be in possession of the lands within twelve years from April 4, 1957.
Therefore the short question that arises for consideration is whether section 52 of the Bombay Act applies to those lands the possession of which was obtained by the landlord under section 9 of the Berar Act but in respect of which the period of two years ' disability as imposed under section 9(6) read with rule 9 of the Rules was not over before the coming into operation of the Bombay Act.
From the scheme of the Berar and Bombay Acts, it will be noted that while section 52 of the Bombay Act enlarged the period of personal cultivation to 12 years, the Berar Act had provided for personal cultivation only for a period of 2 years.
Under the Berar Act if the landlord does not personally cultivate for 2 years., the tenant can apply for restoration of possession from the landlord.
Similarly under the Bombay Act, if the landlord had ceased to cultivate the land within a period of 12 years, from the date of taking possession, the tenant can apply for restoration.
We have already referred to the fact that Mr. Gupta, learned counsel for the respondent, has relied on the decision of this Court in Rainachanadra vs Tukaram and others(1) in support of his (1) ; 85 proposition that section 52 of the Bombay Act applies, even to cases where possession has been taken after the coming into force of the Bombay Act in pursuance of an order for restoration obtained by the landlord under the Berar Act.
We have gone 'through the above decision and we are of the opinion that it does not lay down any such proposition.
The question that arose for consideration therein was a totally different one.
In that case, one X was a protected lessee under the Berar Act and the landlord had terminated the tenancy under section 9(1) on the round of personal cultivation and had also submitted an application to the Revenue Officer under section 8 (1) (g) for an order terminating the tenancy.
The Revenue Officer determined the tenancy by order dated July 2, 1957 and made it effective from April 1, 1958.
But before the latter date, Ordinance No. 4 of 1957 was pro mulgated, which in turn was replaced by the Bombay Act IX of 1958.
The said Act had imposed a ban on eviction of tenants and had also stayed all such proceedings pending on the date of commencement of the said Act.
The landlord had applied on May 15, 1958 to the Naib Tahsildar for an order for restoration of possession of the land by the tenant.
The Bombay Act.
which repealed the Berar Act and the Bombay Act No. IX of 1958, came into force on December 30, 1958, on which date the application filed by the landlord for restoration was pending before the Naib Tahsildar.
There was a controversy is to the nature of relief that could be granted to the landlord.
Having due regard to section 132(2)(ii) and (3) of the Bombay Act, this Court held that the application, filed by the landlord for restoration of possession on the basis of the order obtained under section 8 ( 1 ) (g) of the Berar Act, and which was pending when the Bombay Act came into force must be treated as an application under section 19 of the Berar Act and had to be tried and disposed of by the appropriate authority.
This Court further held that the application of the landlord being a pending proceeding in respect of a right acquired before the Bombay Act, it had to be continued and disposed of as if the Bombay Act had not been passed.
It was further held that in so disposing of the application, treating it as one under section 19 of the Berar Act.
there was no scope for the application of the conditions and restrictions prescribed by sub sections (3) and (4) of section 38 of the Bombay Act as those provisions do not apply to proceedings to enforce rights acquired when the Berar Act was in operation.
This judg ment, in our opinion, does not support the landlord in the case before us.
We have already referred to the fact that the High Court.
in its order tinder appeal, has held that section 52 of the Bombay Act does not apply to the present case as the landlord had cultivated the land for two years though a part of that period "?as after the 86 commencement of the Bombay Act.
The High Court has also stated that section 52 of the said Act will have no application to the case on hand inasmuch as the landlord had obtained possession on April 4, 1957 long before the coming into force of the Bombay Act.
For this proposition, the High Court has relied on an earlier decision of a Full Bench of the same Court in Saraswatibai Babji Tukaram Umarkar vs Bhikamchand Premsukhdas(1).
According to Dr. Barlingay, the High Court 's view that even it ' a landlord completes the period of two years personal cultivation, as required under section 9(6) of the Berar Act, after the coming into force of the Bombay Act, the larger period provided under section 52 does not apply, is not correct.
We have already stated that Dr. Barlingay has further urged that the Full Bench decision of the Bombay High Court does not apply and if that applies, the said decision must be he Id to be erroneous.
As the decision under appeal is substantially rested on the decision of the Full Bench, it is necessary to examine the scope of the Full.
Bench decision.
But we may straight way say that the High Court 's view that the Full Bench has held that section 52 will not apply to ' cases where the two years ' period is completed even after the Bombay Act came into force is not correct, because the Full Bench has not laid down any such proposition.
The Full Bench has only held that section 52 applies to cases where a landlord takes possession of the land on determination of a tenancy either under section 9 of the Berar Act or under.ss.
38, 39 or 39A of the Bombay Act after the latter Act has come into force.
The facts in the Full Bench case were briefly a,, follows : X, a landlord obtained possession on July 3, 1955 of certain lands from his tenant under the Berar Act on the ground that he required the same for personal cultivation.
After the death of X on October 28,1955, his heirs inherited the, property and continued in possession of the same till February 9. 1959, on which date they sold the lands to one section After purchase by section the original tenant applied under section 52 of the Bombay Act for restoration of possession on the ground that the landlord had ceased to use the property for a period of 1.2 years as required by the section.
The heirs of X and the purchaser S, were both made parties to the said application and relief was asked for against both of them.
At this stage it may be mentioned that the Bombay Act came into force on December 30, 1958.
From the facts stated above, it will be seen that the landlord had obtained possession from the tenant on July 3. 1955 and lie and his heirs had completed the requirement of section 9(6) of the Berar Act, namely, two years personal cultivation Oil July 3. 1957, long before the Bombay Act came into force.
After (1) 87 having completed the said two years period, the heirs were in, possession not only on the date of the coming into force of the Bombay Act, but also till the date of sale to section (February 9, 1959).
The question naturally arose whether section 52 of the Bombay Act will apply when the two years ' period under the Berar Act had expired before December 12, 1958.
There appears to have been earlier single Judge 's decisions of the Bombay High Court holding that section 52 of the Bombay Act will apply to cases where possession has been taken after the Bombay Act had come into force and also to cases where the period of 2 years ' personal cultivation by the landlord had been completed even before the coming into force of the Bombay Act.
Mr. Justice Wagle, before whom the matter came in the first instance expressed doubt about the correctness of the earlier decisions.
Mr. Justice Wagle was inclined to take the view that section 52 of the Bombay Act would apply only to those lands, the possession of which was obtained by the landlord under section 9 of the Berar Act.
but in respect of which the period of two years ' disability as imposed under section 9(6) read with r. 9 of the Rules was not over before the coming into force of the Bombay Act.
As the learned Judge was inclined to take a view, which was in conflict with the previous view of the Bombay High Court, he referred the matter to a Division Bench, which in turn referred the matter to the Full Bench.
From what is stated above, it will be seen that in that case, possession of the lands was taken by the landlord, from the tenant under the Berar Act and the two years ' period as required under section 9(6) of the said Act had also expired before the coming into force the Bombay Act.
The transfer in favour of section No. doubt, was made long after December 28, 1958.
In the case before us the landlord had obtained possession under the Berar Act on April 4, 1957 and he bad not completed the two years ' period under section 9(6) of the Berar Act on December 30, 1958.
We are only referring to these dates to show that the Full Bench decision did not have occasion to directly tackle the problem that arises for consideration before us.
But nevertheless there are certain broad principles laid down in that decision, the correctness of which will have to be considered by us.
The Full Bench, posed the following two questions for consideration : "1.
Whether the provisions of section 52 of the Bombay Tenancy and Agricultural Lands, (Vidarbha Region and Kutch Area) Act, 1958 are attracted to cases where the lease of a protected lessee had been determined by the landholder under section 9 of the Berar Regulation of Agricultural Leases Act, 1951 and possession thereof taken prior to the date the. 88 new.
Tenancy Act came, into force and the landholder continued to personally cultivate the land on the date the new Act came into force.
2.If the answer to the first question is in the affirmative,.
whether the expiry of two years prior to the coming into force of the new Act would have any bearing on the application of section 52.
" The first question, it will be noted, refers to the effect of taking possession by the landlord before December 30, 1958 and his still being in possession on the date of the coming into force of the Bombay Act.
The second question refers to the effect of the expiry of two years prior to the coming into force of the Bombay Act.
So far as the first question is concerned, the learned Judges held that section 52 of the Bombay Act would be attracted only to Such cases where a landlord takes possession after determination of tenancy either under section 9 of the Berar Act or under sections 38, 39, force.
So far as the second question is concerned, the learned Judgeshave not expressed any opinion on the ground that it does not 'survive on the View expressed by them on the first question.
It will be noted from a reading of the Full Bench judgment that the learned Judges have placed considerable emphasis for the applicability of section 52 of the Bombay Act about the landlord taking possession after the Bombay Act has come into force.
If possession had been taken before December 30, 1958, according to the Full Bench, section 52 does not apply; whereas if possession is taken after the said date, the said section will apply.
For coming to this conclusion the Full Bench has given considerable importance to the fact that section 52 refers also to sections 38, 39 and 39A of the Bombay Act and that it uses the expression "landlord has taken possession of such land and he fails to use the land.", These expressions, according to the Full Bench, can refer only to cases of lands taken possession by a landlord after the Bombay Act has come into force as section 52 is not retrospective.
In our opinion, the Full Bench has too broadly stated the principles regarding the circumstances under which section 52 of the Bombay Act will apply.
If taking possession of the land by the landlord after December 30, 1958, is the sole test for the applicability of section 52, the position, in our view, will be very anomalous.
For instance if a landlord had taken possession on December 29.
1958, section 52 will not apply and the requirement of two years ' personal cultivation may not also become necessary as the Berar 89 Act stands repealed as on December 30, 1958.
Similarly if the landlord had taken possession and had also complied with the requirement of two years ' personal cultivation long before December 30, 1958, but nevertheless if he is in possession of the land on December 30, 1958, according to the Full Bench, section 52 will stand attracted.
No doubt the Full Bench has not answered the second question posed before it, but the reasoning of the decision will be to that effect if the test of possession on December 30, 1958 is the only criteria.
We are of the opinion that the question of section 52 being retrospective or not has no material bearing in interpreting that section.
That section had necessarily to refer sections 38, 39 and 39A as they were also provisions enabling a landlord to get possession from a lessee.
It is in the light of these matters that the expressions occurring therein have to be given their natural meaning.
The Full Bench has misinterpreted that section.
In interpreting section 52, in our opinion, section 132 (2) (i) will be helpful.
The obligation of the landlord when he takes possession of the land from the tenant under the Berar Act is to cultivate it personally for two years and once the landlord complies with that requirement before the Bombay Act came into force, the tenant 's right to get restoration stands extinguished as the landlord has discharged his obligation.
Section 52 of the Bombay Act extends the period of personal ,cultivation to 12 years to all cases to which it applies.
If the 'landlord had taken possession under the Berar Act, there was an obligation on him to cultivate personally for two years and if he has not so cultivated, the tenant had acquired a right to be restored to possession.
That right which has been acquired by the tenant or accrued to him before the commencement of the 'Bombay Act is saved under section 132(2) (i).
Similarly, if the landlord had cultivated the lands personally for the required period, before the Bombay Act came into force, the landlord had acquired a right not to be disturbed from his possession thereafter.
That right again, which has been acquired by landlord or accrued to him has been saved under section 132(2) (i).
Having due regard to the provisions of the statutes and what has been stated by us earlier the position is that if the landlord on December 30, 1958 had completed the two years period of personal cultivation, his right not to be disturbed is continued and preserved under section 132(2) (i) of the Bombay Act.
Again if the landlord in pursuance of an order obtained under the Berar Act, takes possession, after the commencement of the Bombay Act, section 52 applies to him and his original obligation to cultivate personally for two years under the Berar Art gets L235 Sup.
CI/71 7 90 extended by the 12 years period provided under that section.
If he ceases to so cultivate within the period of 12 years from his taking possession, the tenant gets a right to apply for restoration of the land.
The several aspects enumerated above have not been consi dered by the Full Bench of the Bombay High Court and it has rested its decision for applying section 52 by applying the sole test whether the landlord has taken possession before or after December 30, 1958.
Such a test is not warranted by the provisions of both the statutes read together.
A fair reading of section 52 also, in our opinion, leads to the same conclusion.
Section 52 provides for: (i) the tenancy being terminated under section 9 of the Berar Act; (ii)the landlord taking possession of such land on the basis of such termination of the tenancy; (iii)the landlord failing to use the land for the purpose specified in the notice under section 9 of the Berar Act; (iv)failure to use the land for the purpose mentioned in the notice within one year from the date on which he took possession; (v) the landlord ceasing to use the land for the purpose for which he obtains possession within 12 years of his taking possession.
To the case of a landlord who had already completed two years personal cultivation before December 30,, 1958, the requirement of his failing to use the land for the purpose specified in the notice under section 9 within one year from the date of his taking possession, will have no application whatsoever.
The normal and reasonable construction to be placed upon section 52 is that it will apply only to cases of lands, the possession of which was obtained by the landlord under section 9 of the Berar Act, but in respect of which the period of two years disability imposed under section 9(6) read with r. 9 of the Rules was not over before the coming into force of the Bombay Act.
In respect of such landlords, section 52 enlarges the period for which he is required to personally cultivate the lands.
In this respect we are inclined to agree with the view of Mr. Justice Wagle.
To conclude section 52 applies to all cases where possession is taken by the landlord on or after December 30, 1958 on the basis of an order obtained under the Berar Act.
It applies to 91 cases where possession had been taken by a landlord under the Berar Act but the two years period of personal cultivation had not been completed when the Bombay Act came into force.
The instances of obtaining possession under sections 38, 39 or 39A of the Bombay Act have not been considered by us in this appeal.
It follows that section 52 of the Bombay Act applies to the case before us, as the landlord had not completed two years ' personal cultivation on December 30, 1958, the date on which the Bombay Act came into force.
He had taken possession on April 4, 1957, and the two years ' ptriod will expire only on April 4, 1959.
In the meanwhile the Bombay Act had come into force on December 30, 1958.
Under s.52 the period of personal cultivation had been extended to 12 years from the date of taking possession.
But as the 5th respondent, who obtained possession for personal cultivation had transferred the suit lands to the 1st respondent on June 21, 1961, on which date the 12 years period had not expired, the appellant tenant was entitled to apply for restoration on the ground that the said landlord had ceased to cultivate the lands for the required period as provided under section 52.
In the result the judgment and order of the High Court are set aside and the orders of the Special Deputy Collector and the Maharashtra Revenue Tribunal are restored and the appeal allowed.
Though normally costs should follow the event, in this case though the appellant succeeds we decline to award him costs, as we are of the view that he should have been more careful in giving the valuation in the special leave petition.
V.P.S. Appeal allowed.
| IN-Abs | Section 9(6) of the Berar Regulation of Regulation of Agricultural Leases Act, 1951, read with rule 9 of the Rules made thereunder required a land holder, who terminated the tenancy of his protected lease on the ground that the land was required by him for his personal cultivation, to cultivate the land personally for a period of 2 years.
It the land holder failed to do so then the section conferred a right on the former protected lessee to apply to the Revenue Officer for being restored to possession.
On December 30, 1958, the Bombay Tenancy and Agricultural Lands (Vidarbha Region and Kutch Area) Act of 1958 came into force.
Under section 132 of ' the Bombay Act.
the Berar Act was repealed but certain rights acquired or accrued before the commencement of the Bombay Act were saved.
Under section 52 of the Bombay Act, if the landlord had ceased to cultivate the land within a period of 12 years from the date of taking possession, the tenant can apply for restoration, that is, the period of 2 years Linder the Berar Act was enlarged to 12 years.
The appellant was a protected lessee within the meaning of the expression in the Berar Act, in respect of certain lands.
The landlord obtained possession of the lands on April 4, 1957 on.
the ground that he required the lands for personal cultivation.
He continued in possession of the lands till June 21, 1961, on which date he transferred the lands to the first respondent.
The tenant thereupon filed in application under section 52 of the 'Bombay, Act.
The application was dismissed but the tenant 's appeal was allowed.
The appellate order was confirmed in revision by the ' 'Revenue Tribunal.
The first respondent filed a writ petition and the High Court set aside the order of the Revenue Tribunal.
The certified copy of the judgment of the High Court, by mistake, showed the valuation of the lands ,it a very much higher value than the value given by the appellant in the writ petition.
The appellant obtained special leave from this Court mentioning the enhanced valuation in his application for special leave.
On the questions : (1) Whether the special leave granted by this Court should be cancelled on the ground that the appellant made a false statement in regard to valuation; and (2) whether section 52 of the Bombay Act applies, HELD : (1) In the particular circumstances of this case, though the appellant should have been more careful, it cannot be said that he was guilty of making any false or untrue statement on any material particulars deliberately to mislead the court.
Further, the statement regarding valua tion was lot of Much consequence in this case because the questions raised are points of law regarding the applicability of section 51 of the Bombay Act.
[81 D F] Hari Narain vc.
Badri Das ; Sita Bai vs Sonu Vanji Wani & Ors.
C.A.No. 982/65 dt. 25 4 68 and section R. Shetty vs Phirozeshah Nusserwanji Golabawalla & Anr,.
V.A., No. 1551/63 clt.
5 4 61, referred to.
L235SLtp.
CI(P)71 74 (2) Section 52 of the Bombay Act applies to the facts of this case.
[91 B] If a landlord, in pursuance of an order obtained under the Berar Act,. takes possession after the commencement of the Bombay Act, section 52 applies to him and his obligation to cultivate personally for two years under the Berar Act gets extended to 12 years period provide( ' under that section.
[90 A B] If the landlord had taken possession of the land under the Berar Act before the commencement of the Bombay Act, there was an obligation on him to cultivate personally for two years and if he had not so cultivated, the tenant would have acquired a right to be restored to possession.
That right, so acquired by the tenant or accrued to him, before the commencement of the Bombay Act, is saved under section 132(2) (i) of the Bombay Act.
Similiarly, if the landlord had cultivated the land personally for the required period before the Bombay Act came into farce the landlord would have acquired a right not to be disturbed from his possession thereafter.
That right again, which had been acquired by the landlord or accrued to him is saved Linder section 132(2(i).
[89 E H] Therefore, section 52 applies to cases in which possession was obtained by the landlord under section 9 of the Berar Act but in respect of which the period of two years disability imposed under section 9(6) read with r. 9 of the rules was not over before the coining into force of the Bombay Act.
[90 F H] The decision of this Court in Rain Chandra vs Tukaram, ; does not lay down that section 52 of the Bombay Act doe, , not apply to case , where possession has been taken after the Bombay Act had come into force in pursuance of an order 'for restoration obtained by the landlord under the Berar Act.
[85 A B] In the Full Bench decision of the Bombay High Court in Saraswatibai Babji Tukaram Umakar vs Bhikamchand Premsukhdas, , the possession of the land was taken by the landlord from the tenant under the Berar Act and the two year, , period as required under section 9(6) of that Act had also expired before the coming into force of the Bombay Act.
The principle, that applicability of section 52 of the Bombay Act depends solely upon the date on which the landlord takes possession, that is, whether before or after the Bombay Act came into force, was to broadly stated in the decision.
[86 H; 88 G H]
|
Appeals Nos.
1250 and 1251 of 1966.
Appeals by special leave from the judgments and decrees dated April 1, 1965 of the Punjab High Court in Civil Regular Second Appeals Nos. 138 and 139 of 1964.
105 K.L. Gosain and Janardan Sharma, for the appellants (in both the appeals).
Naunit Lal, for the respondents Nos. 1 to 7 and 9 (in both the appeals).
The Judgment of the Court was delivered by Hegde ' J.
The appellants in these appeals are the representatives of the mortgagees of the suit properties.
The respondents in both these appeals claim to represent the interest of the mortgagors.
Civil Appeal No. 1250 of 1966 arises from Suit No. 280 of 1961 in the court of Senior Sub Judge, Rohtak and Civil Appeal No. 1251 of 1966 arises from Suit No. 334 of 1961 on the file of the same judge.
Both the suits were suits for redemption.
The trial court dismissed both the suits on two grounds viz. (1) that Kura, the person from whom the plaintiffs claim to have purchased the rights of the mortgagors was incapable of entering into a contract as he was insane.
Hence the sale deeds executed by him are void and (2) the claim for redemption in respect of the various mortgages sought to be redeemed excepting the one executed on April.
26, 1912 is barred by limitation.
The learned District Judge allowed the appeals and decreed both the suits excepting as regards the mortgage dated January 20, 1878.
In second appeal Capoor J. of the Punjab High Court confirmed the decision of the learned District Judge.
The Letters Patent Appeals filed by the appellants were summarily dismissed.
Thereafter these appeals were brought after obtaining special leave from this Court.
Both the learned District Judge as well as the learned Judge of the High Court have concurrently come to the conclusion that there is no satisfactory evidence to show that Kura was insane at the time he sold the suit properties to the plaintiffs.
This is a finding of fact and we see no reason to go behind it.
The only other ground on which the appellants are resisting the plaintiffs ' claim to redeem the mortgages in question is that according to them the claim for redemption is barred by limitation.
For dealing with that question, it will be convenient to take up the two appeals separately.
In Suit No. 28 1, the plaintiffs sought redemption of four different mortgages.
Those mortgages were said to have been executed on the following dates: (1) April 26, 1912; (2) December 21, 1895; (3) December 18, 1901 and (4) January 20, 1879.
235Sup.
CI/71 106 The original mortgage deeds or even their registration copies have not been produced.
The execution of those mortgages have been sought to be proved on the basis of certain mutation proceedings, The courts below have relied on those proceedings to prove the factum of the mortgages sought to be redeemed.
The execution of those mortgages was not challenged before us.
So far as the suit relating to the mortgage executed on January 20, 1878 (property described in plaint Item No. 4), the plaintiffs sought to withdraw their suit on the ground that they are not able to prove their case on the basis of the material in their possession.
The learned trial judge did not permit them to withdraw that part of their suit.
He dismissed the plaintiffs ' claim in that regard.
His judgment was upheld in appeal as well as in second appeal.
That part of the plaintiffs ' case was not pressed before us.
Now coming to the mortgage said to have been executed on April 26, 1912 (the concerned property is described in plaint Item No. 1), the claim for redemption is admittedly within time as the suit was filed on November 27, 1961, the period of limitation being 60 years.
This leaves us with mortgages said to have been executed on December 21, 1895, (relating to plaint Item No. 2) and on December 18, 1901 (relating to plaint Item No. 3).
We shall first take up the mortgage said to have been executed on December 21, 1895.
Prima facie the suit in respect of this property is barred by time but it is said that in view of the acknowledgment made by mortgagors under the original of exhibit P 5 dated 22.6.1906, the suit is within time.
There is no satisfactory material to show that Ex.
P 5 relates to the mortgage in question.
It is not necessary to go into that question in detail as in our opinion, it was impermissible for the courts below to rely on Ex.
P 5 for the purpose of acknowledgment exhibit P 5 is a certified copy of a statement said to have been made in a mutation proceeding.
Its original has not been produced.
No witness has been examined to speak to the fact that the persons who are shown to have signed the original have in fact signed the same or those persons were the mortgagors or their representatives.
The signature on the original cannot be proved by production of a certified copy.
Nor can the courts raise any presumption under section 90 of the Evidence Act in that regard see Harihar Prasad Singh and anr.
vs Mst. of Munshi Nath Prasad and Ors.(1) The High Court and the 1st appellate court erroneously thought that they could presume that the persons mentioned as the executants in the copy have signed the original on the strength of section 44 of the Punjab Land Revenue Act and section 1 1 4 (e) of the Evidence Act.
Section 44 of the punjab Land Revenue Act deals with the presumption as regards an entry (1) ; 107 in the record of rights.
Herein we are not concerned with any entry in the record of rights.
We are, concerned with the genuineness of the, signature in the original of exhibit P 5 and the identification of the persons who signed it.
Hence that section affords no aid.
Section 114(e) of the Evidence Act says that court may presume that judicial and official acts have been regularly performed.
Herein we are not concerned with the regularity of the performance of any official act.
The identification of an executant or genuineness of a signature in a statement filed before an official as nothing to do with the regularity of his act unless it is shown that he had a duty to identify the person who signed it and further to take the signature in his presence.
Therefore exhibit P 5 cannot serve as an acknowledgment,of the mortgage.
Hence the plaintiffs claim to redeem the mortgage in respect of item No. 2 of the plaint must fail.
Now coming to plaint item No. 3, the plaint shows that the mortgage in question was executed on December 18, 1901, The original mortgage deed or its registered copy has not been produced.
For the proof of execution of the mortgage the plaintiffs relied on exhibit P 8, a certified copy of a mutation proceeding.
That copy shows that the mutation in question was ordered on 12th June 1901.
Therefore the concerned mortgage must have been executed earlier than that date.
It appears that the plaintiffs have deliberately given a wrong date of the mortgage in the plaint with view to bring the suit within the period of limitation.
I The learned District Judge has opined that the claim for redemption of this item of property is also within time in view of exhibit P 8.
Here again no evidence was led to show that the original statement was signed either by the mortgagors or by their representatives.
The original was not produced in court.
exhibit P 8 is only certified copy.
By merely producing a copy, it cannot be said hat the plaintiffs have succeeded in proving that the signature in original statement is that of the mortgagors or their represents gives.
As discussed earlier the plaintiffs cannot take the benefit of section 90 of the Evidence Act or section 44 of the Punjab Land Revenue Act or section 114(e) of the Evidence Act to prove that the original was signed by the mortgagors or their representatives.
Hence the plaintiffs ' claim in respect of plaint item No. 3 must also fail.
In the result Civil Appeal No. 1250 of 1966 is partly allowed and the plaintiffs ' claim for redemption of plaint items Nos. 3 and 4 is dismissed and the decree for redemption of plaint item No 1 is upheld.
Now we shall take up Civil Appeal No. 1251 of 1966 arising from Suit No. 334 of 1961.
Therein redemption of two mort gages said to have been executed on June 19, 1894 and May 15, 1896 was sought.
Prima facie the suit is barred by limitation.
108 But it was contended and that contention was accepted by the appellate court and the High Court that the suit is within time in view of (1) the acknowledgments made by the mortgagors or their representatives on several occasions, the last of which was on June 25, 1919 and (2) in view of the application made by the plaintiffs respondents under section 4 of the Redemption of Mortgages (Punjab) Act, 1913 (Act No. 11 of 1913).
We shall first take up the question of acknowledgments.
The acknowledgments in question were ought to be proved by production of certain certified copies.
The originals of those copies were not produced.
No evidence was led to show that the originals were signed either by the mortgagors or by their representatives.
For the reasons earlier mentioned those copies cannot serve as acknowledgments.
Now coming to the application made under section 4 of the Redemp tion of Mortgages (Punjab) Act, 1913, the same was made on May 16, 1959 and it was dismissed on April 18, 1961.
There in the parties were referred to a civil suit.
Even if the period taken in prosecuting the said application is excluded in computing the period of limitation, the suit for redemption is admittedly barred.
But what was urged on behalf of the plaintiffs is that in view of section 12 of the Redemption of Mortgages (Punjab) Act, 1913, the plaintiffs were entitled to bring the suit within one year from April 18, 1961, the date on which their application was dismissed.
There is no dispute that for the suit contemplated by the aforesaid section 12, the period of limitation prescribed is one year from the date of the order.
The dismissal of the petition in this case was made under section 10 of the Redemption of Mortgages (Punjab) Act, 1913.
Therefore the order made on that application comes within the scope of section 12.
But the real question is whether section 12 enlarges the period of limitation for a redemption suit.
That section to the extent material for our present purpose reads as follows "Any party aggrieved by an order made under sections 6, 7, 8, 9, 10 and 1 1 of this Act may institute a suit to establish his rights in respect of the mortgage; but, subject to the result of such suit, if any, the order shall be conclusive.
" This section merely provides that a summary order made under sections 6, 7, 8, 9, 10 and 1 1 of the Redemption of Mortgages (Punjab) Act, 1913 becomes final unless a suit to establish the rights of the mortgagors is instituted within the prescribed period.
From this provision we are unable to hold that in view of that section, the period of limitation fixed for redemption of mortgages can be enlarged.
Several decisions of the Lahore High Court holding that if a suit as required by section 12 is not filed within the time prescribed then the right of redemption will be lost even if the time prescribed under the Limitation Act for instituting a suit for 109 redemption has not expired.
It is not necessary to go into the correctness of those decisions though prima facie we are inclined to accept their correctness, because they merely Jay down that if ' any party aggrieved by an order under sections 6, 7, 8, 9, 10 and 11 of the Redemption of Mortgages (Punjab) Act, 1913 does not institute a suit to establish his rights in respect of the mortgage within the time prescribed his right to sue for redemption is lost.
Those decisions do not support the contention of the plaintiffs that a mortgagor whose application for redemption under section 4 of the aforesaid Act is dismissed can file a suit for redemption of the mortgage even though the limitation prescribed for such a suit had expired, if only he files that suit within a period of one year from the date of the order dismissing his petition under section 4.
No decision taking that view was brought to our notice.
What is made conclusive by section 12 is the order made by the Collector if the suit as contemplated by section 12 is not instituted within the prescribed time.
That provision does not lend any support for the contention that if an application which fulfils the requirements (4 section 4 is brought then the period of limitation prescribed for a redemption suit becomes irrelevant.
For the reasons mentioned above Civil Appeal No. 1251 of 1966 is allowed and the plantiffs ' suit No. 334 of 1961 is dismissed.
Appellants had falsely pleaded that Kura was insane.
Because of that plea the plaintiffs had to adduce considerable evidence.
Taking into consideration the various circumstances appearing in these cases we think it would be appropriate to direct the parties to bear their own costs throughout.
V.P.S. Appeals allowed.
| IN-Abs | Suits were filed by the representatives of the mortgagors to redeem ,certain mortgages beyond 60 years from the dates of the mortgages.
In order to get over the bar of limitation the plaintiffs relied upon certain acknowledgments made by the mortgagors.
The acknowledgments were alleged to have been made more than 30 years ago in mutation proceedings and certified copies of the statements were produced.
With respect to .Some mortgages, applicants were made under section 4 of the Redemption of Mortgages (Punjab) Act, 1913, and they were dismissed under section 10.
It was contended that the suits filed with respect to those mortgages were within time under section 12 of that Act, because, they were filed within one year of the date of the dismissal of the applications.
HELD : (1) As the originals of the acknowledgments were not produced and no witness was examined to speak to the fact that the persons who we 're shown to have signed the originals have in fact signed them or that they were the mortgagors or their representatives, there was no proof of the signatures; and the Court cannot raise any presumption under section 90 of the Evidence Act.
[106 F G] Harihar Prasad Singh vs Mst.
of Munshi Nath Prasad ; , followed.
Section 114(e) of the Evidence Act does not apply because the identification of an executant or the genuineness of a signature in a statement filed before an official has nothing to do with the regularity of his act, unless he had a duty to take the signature in his presence and to identify the person who signed.
[107 B C] Section 44 of the Punjab Land Revenue Act deals with the presumption as regards entries in the record of rights, but this case is not concerned with any such entry.
[107 A] (2)Section 12 of the Redemption of Mortgages (Punjab) Act, 1913, merely provides that a summary order made under sections 6 to II of that Act becomes final unless a suit to establish the rights of the mortgagors is instituted within the prescribed period of one year.
From this provision it cannot be held that the period of limitation fixed for redemption of mortgages is enlarged.
[108 G H]
|
Appeal No. 1460 of 1969.
Appeal by special leave from the judgment and decree dated January 16, 1969 of the Gujarat High Court in Letters Patent Appeal No. 31 of 1966.
S.T. Desai, M. H. Chhatrapati, P. N. Tiwari and O. C. Mathur, for the appellants.
D. Y. Patel and I. N. Shroff, for respondents Nos. 1 and 3.
R. H. Dhebar, B. Datta and section P. Nayar, for respondent No. 2.
The Judgment of the Court was delivered by Bhargava, J.
The predecessors in interest of plaintiff respondents 1 to 3 gave, in 1895, land, bearing Serial Nos. 503 and 506 of Asarva within the limits of Ahmedabad Municipal Corporation, on lease for a period of 49 years at an annual rent of Rs. 199/ , to three persons, Shri Ramchandra Ambaram, Pardesi Sukhlal Anandram and Mehta Bogha Mugatram.
These original lessees, during the currency of the lease, made transfers of their rights and also granted sub leases.
A number of chawls and some other buildings were constructed on the land and some of them were let out on rent.
In 1945, the lessors, after serving notice on the occupants to give vacant possession, filed a suit for recovery of possession.
The suit was decreed on 8th July, 1946 on the basis of a consent decree as against some of the occupants including the four defendant appellants.
In the agreement, on the basis of which the decree was passed, it was agreed that the defendant appellants will continue in possession of the property for a period of five years and will hand over possession after the expiry of this period of five years.
For this period, they undertook to pay mesne profits every month at various rates on the lands in their possession.
Between them, the four appellants were required to pay @ Rs. 227 10 0 per mensem making up an annual amount of mesne profits of Rs. 2,731 8 0.
Similar terms were included 173 in the consent decree against other defendants who joined the compromise on the basis of which the decree was passed on 8th July, 1946.
The remaining defendants in the suit entered into a later compromise and,, as a result, another consent decree was passed on ' 28th January, 1949 against those defendants.
Under this decree, these remaining defendants were also entitled to continue in, possession for a period of five years from the date of the decree, but were required to pay mesne profits for this period.
All the defendants governed by the two decrees dated 8th July, 1946 and28th January, 1949, had to pay between them mesne profits monthly which worked out to an amount of Rs. 7,314 8 0 per annum.
Before, the expiry of the period of five years prescribed by either of the two decrees, the Custodian of Evacuee Property, in 1950, took possession of all the properties, as one of the decreeholders had become an evacuee.
After the property was released by the Custodian of Evacuee Property, an application was filed by the decree holders on 26th March, 1953 for execution of the consent decree dated 8th July, 1946 and, in that execution, possession was sought against the appellants of the property which was in .their possession.
Subsequently, a number of suits were filed for recovery of mesne profits also.
The Execution Court directed eviction of the appellants after over ruling the various objections ' raised by them in the execution proceedings.
The decision of the Execution Court on the objections taken by the appellants was challenged in appeal before the District Judge, in second appeal before a single Judge of the High Court of Gujarat, and by a Letters Patent appeal before a Division Bench.
All the Courts rejected the objectic raised by the appellants and upheld the order of the Execution Court directing delivery of possession.
It is against the judgment of the Division Bench in Letters Patent appeal in this execution that the appellants have come up to this Court in this appeal by special leave.
It is unnecessary for us to mention all the various objections that were taken at various stages by the appellants in the Execution Court, in the Court of the District Judge, or before the single Judge or the Division Bench in the High Court.
Only three of the points raised have been urged before us and, therefore, we are called upon to deal with these three points only.
The first point raised is that the decree which was passed on 8th July, 1946 was a nullity, because it was passed in contravention of section 11 ( 1 ) of the Bombay Rent Restriction Act No. XVI of 1939 (hereinafter referred to as "the Act").
This objection has been over ruled by the High Court on 'the ground that the provisions of the Act were not attracted by the lease in question on the expiry of which the suit for ejectment was decreed under the 174 consent decree dated 8th July, 1946.
Counsel appearing for the appellants urged that the terms of the decree passed as well as the terms contained in the lease deed of 1895 show that the Act was applicable because the land, to which the suit for ejectment related, was covered by the definition of "premises" to which the Act applies.
The expression "premises" is defined in section 4(2) of the Act as meaning (a) any building or part of a building let separately for any purpose whatever, including any land let therewith, or, (b) any land let separately for the purpose of being used principally for business or trade.
Admittedly, the lease of 1895 was not in respect of any building or part of a building let separately for any purpose whatever.
Reliance was placed on section 4 (2) (b) of the Act on the contention that the land had been let for the purpose of being used principally for business or trade.
Having gone through the documents relied upon by counsel for the appellants, we are unable to accept this submission.
In the plaint of the suit, as well as in the decree dated 8th July, 1946, there is no mention of the purpose for which the land was let out by the lease of 1895.
Reliance was,, however, placed on one of the pleadings in the plaint which had been reproduced in the decree in which the plaintiff respondents recited one of the terms of the lease in the following words : "On the expiry of the period of 49 years, the land shall be handed over without raising any dispute or objection or causing any obstruction, after removing whatever structures that might have been erected thereon and after making it as clear as it is." The argument was that this pleading indicates that the land was let out for making structures and those structures could only be utilised by being let out on rent.
This purpose would constitute business or trade.
We are unable to see any justification for such an inference.
The mere fact that there was a mention that structures that might have been erected will be removed can in no way lead to a reasonable conclusion that the principal purpose of the lease was the use of the land for business or trade.
Reference, in this connection, was also made to the terms of the lease of 1895; but we are unable to hold that it establishes the case of the appellants that the lease was taken principally for the purpose of using the land for business or trade.
All that the lease mentions is that it is for constructing houses and, at a later stage, 175 there is a mention that "in the said fields, the lessees could construct houses in any manner or use it in any manner.
" The other parts of the lease, on which reliance has been placed are as follows : 1.On the land of those fields we can build houses in any manner and we will receive income thereof and you will not raise any dispute or obstruction in respect thereof.
We can spend any amount on the construction of those houses which we will not demand from you for whatever reason nor we will have the right to deduct from rent payable to you.
2.If any houses are constructed thereon, we will remove the superstructures.
If we do not remove the structures then you will be the owners of the said structures.
If you take them, then we and our heirs and representatives will not object.
" We are unable to find even in these quotations from the lease any mention that the land is going to be used principally for the purpose of business or trade.
The lease does mention that it was being taken for constructing houses. 'Mere was no mention at all, however, of the manner in which the constructed houses were to be utilised.
Further, there is a clear option given to the lessees that they could us, , the land in any manner if they did not construct any houses.
These are terms on the basis of which it cannot be said that the land was being let out for business purposes.
The submission of counsel for the appellants was that, if the purpose was to construct houses and let them out on rent, that would constitute the use of the land for the purpose of business inasmuch as the lessees would be earning income from letting out those houses.
We are unable to accept this submission, because we do not think that the word "business ' or "trade" used in the definition of "premises" in section 4 (2) (b) of the Act comprehends within it a lease which is merely for constructing houses.
Learned counsel cited before us a number of decisions of Indian and English Courts, including decisions of the Privy Council and this Court,, in which the scope of the word "business" was interpreted.
That interpretation was given in connection with the word "business" as used either in income tax law or in the terms of a covenant or the Companies Act, etc.
We do not consider that it will be at all profitable to refer to them when interpreting the word "business" or "trade" as used in section 4(2) (b) of the Act, because none of those interpretations will cover a case similar to the one before us, where the lease was merely a permissive one giving a right to the lessees to construct houses and let them out or to use the land in any manner.
When the purpose of the lease 176 was expressed in this way, it is impossible to hold that the principal use, to which the land was to be put by the lessees, was business or trade.
As a consequence of this interpretation, it has to be held that the Act was not applicable to the lease of 1895 and, therefore, no question arises of the decree of 8th July, 1946 being invalid on the ground of contravening section 11 ( 1 ) of the Act.
The second point urged by learned counsel was that, by the consent decree itself, a new tenancy was created which was to continue for five years and, in the, meantime, the Bombay Rents Hotel & Lodging House Rates Control Act, 1947 came into force and the appellants were protected from ejectment under the provisions of that Act.
The consent decree does not state that a new tenancy is being created.
The argument was that the terms of that consent decree should be interpreted as indicating an intention to create a new tenancy. ' We are unable to find any such terms.
On the face of it, all that the, consent decree envisaged was that, though the judgment debtors were liable to immediate eviction, the decree holders agreed to let them continue in possession for a period of five years.
Since this concession was being granted as a special case, the decree holders insisted that mesne profits should be paid at a much higher rate so much so that between all the defendants, governed by the two decrees of 8th July, 1946 and 28th January, 1949, the amount payable as mesne profits became Rs. 7,314 8 0 per annum which had no relation with the original rent of Rs. 199/ per annum for the entire land fixed by the lease of 1895" In fact the decree holders sought further protection by requiring the judgment debtors to pay the mesne profits in monthly instalments, and the instalments were so fixed that the mesne profits due for five years were to be paid within a period of three years.
There was the further clause that, in case of default of payment of the mesne profits, the defaulting judgment debtors could be immediately called upon to deliver possession.
These terms can, in no way, be interpreted as creating a new tenancy constituting the decree holders as landlords and the judgmentdebtors as their tenants.
The terms of the consent decree neither constituted a tenancy nor a licence.
All that the decree holders did was to allow the judgment debtors to continue in possession for five years on payment of mesne profits as a concession for entering into a compromise.
The argument advanced must, therefore, be rejected.
Reference was made by learned counsel for the appellants, in support of his argument, to a decision of the Bombay High Court in Gurupadappa, Shivlingappa Itgi vs Sayad Akbar Sayad Budan Kadri(1), but that case, in our opinion, has no application.
In (1) 52 B.L.R. 143. 177 that case, in the consent decree itself, the first clause was that the defendant admits that he is a monthly tenant of the plaintiff and is to continue in possession till January 31, 1948.
This clause specifically and clearly, in the language used, made it manifest that the defendant was a monthly tenant and was to continue in that capacity in possession.
It was in these circumstances that it was held that a new tenancy had been created from the date of the consent decree.
In the case before us, the terms of the consent decree are in no way comparable with the terms used in the consent decree in that case.
The language used in the consent decree in the present case contains no indication of any intention to create a tenancy, so that the Bombay Rent Control, Act.
1947 could never apply to the case of the appellants.
The third point raised by learned counsel was that, since there was one single suit based on the lease of 1895 for ejectment of persons in possession, there could be only one single decree in that suit and the Court was incompetent to pass two separate decrees on 8th July, 1946 and 28th January, 1949.
Counsel, in this connection, relied on the provisions of rules 1 and 12 of Order XX of the Code of Civil Procedure which relate to the pronouncement of judgment and the Court passing a decree in a suit.
These rules have really no relevance.
On the other hand, rule 3 of Order XXIII, C.P.C., clearly envisages a decree being passed in respect of part of the subject matter of the suit on a compromise, and rule 6 of Order XII, C.P.C., permits the passing of a judgment at any stage without waiting for determination of other questions.
Thus, it is clear that, in the same suit, there can be more than one decree passed at different stages.
In the present case, the first decree of 8th July, 1946, was based on a compromise between the plaintiffs and some of the defendants, while the second decree dated 28th January, 1949 decided the rights of the remaining defendants.
Th. , two decrees were separate and independent and neither of them could be treated as a nullity.
In these circumstances, the Execution Court was right in re jecting all the objections raised by the appellants and in directing delivery of possession.
The appeal fails and is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | The predecessors in interest of the respondents, leased certain land at an annual rent of Rs. 199, in 1895 for 49 years.
The lease was a permissive one and gave right to the lessees to construct houses and let them out or to use the land in any manner.
The original lessees, during the currency of the lease made transfers of their rights and also granted sub leases.
A number of chawls and other buildings were constructed on the land and were let out.
The respondents terminated the lease and sued for recovery of possession in 1945.
A compromise was entered into with the appellants, who were some of the occupants, and a consent decree was passed on 8th July 1946.
Another consent decree was passed against the remaining defendants on 28th January 1949.
Under the two decrees the defendants were allowed to remain in possession for 5 years from the dates of the respective decrees and they bad also to pay monthly mesne profits which worked out to more than Rs. 7,000 per annum, and that amount was so fixed that the mesne profits due for the 5 years were to be paid in 3 years.
There was also a clause that in case of default, the defaulting judgment debtors could be immediately called upon to deliver possession In 1953, the respondents sought possession by executing the consent decree dated 8th July 1946.
On the questions : (1) Whether the decree contravened the provisions of the Bombay Rent Restriction Act, 1939, as the leased land was 'premises ' within the meaning of section 4(2)(b) of that Act; (2) whether the consent decree created a new tenancy which was protected by the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947; and (3) whether the passing of two separate decrees was illegal as the court was not competent to do so.
HELD : (1) 'Premises ' is defined in section 4(2) (b) as any land let separately for the purpose of being used principally for business or trade.
The words 'business or trade ' do not comprehend a lease which is merely for constructing houses.
The terms of the lease, in the present case, do not establish that the lease was taken principally for using the land for 'business or trade. ' [174 C D ; 175 G H] The mere fact that there was a mention in the pleadings that any structure that might have been erected would have to be removed, would in no way lead to the conclusion that the principal purpose of the lease was to build structures and that the structures should be utilised for being let out on rent and thus constitute business or trade.
Therefore tile decree did not contravene the provisions of the Bombay Rent Restriction Act.
[174 F G; 175 D E; 176 A] 172 (2)On the face of it, all that the consent decree envisaged was that though the judgment debtors were liable to immediate eviction, the decree holders agreed to let them continue in possession for a period of 5 years, and, since the concession was granted as a special case, the decree holders insisted on payment of mesne profits at a much higher rate.
The terms of the consent decree could in no way be interpreted as creating a new tenancy constituting the decree holders as landlords and the judgment debtors as their tenants.
[176 C E, F G] (3)Order 23, r. 3 and 0. 12, r. 6 of the Civil Procedure Code envisage that in the same suit there can be more than one decree passed at different stages [177 D F]
|
CTION: Civil Appeal No. 460 of 1970.
Appeal by special leave from the judgment and order dated May 20, 1969 of the Allahabad High Court in Special Appeal No. 1177 of 1968.
M. C. Chagla and R. Gopalakrishnan, for the appellant.
V. A. Seyid Muhammad, P. C. Chandi, B. D. Sharma and section P. Nayar, for the respondents.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by special leave from a judgement of the Allahabad High Court dismissing a writ petition by which the appellant challenged the validity of a warrant issued by the Assistant Collector, Central Excise, Allahabad, authorising the Superintendent Central Excise, Varanasi, to enter certain premises, search the same and seize the documents therefrom.
The appellant, which is a public limited company having its registered office at Calcutta, owns and runs a factory known as Sahu Chemicals and Fertilisers at Varanasi where chemicals such 94 as ammonia and soda ash are manufactured.
In February 1962 excise duty was fixed on manufacture of ammonia for the purpose of fertilisers at Rs. 25/ per metric ton, the rate being Rs. 125/ per metric ton if it was used for other purposes.
The notification by which the aforesaid duty was payable was later withdrawn by means of another notification dated March 1, 1964 and thereafter no excise duty was required to be paid on the manufacture of ammonia.
For the period from May 1962 to the beginning of March 1964 the appellant had paid duty at the rate of Rs. 25/ per metric ton on the ground that ammonia had been utilised for the purpose of manufacture of chemical fertiliser.
The Central Excise authorities, however, had received information that part of the ammonia had been utilised for purposes other than the manufacture of fertilizers on which higher duty of Rs. 125/ per metric ton was payable.
It was considered that there had been evasion of duty.
On May 11, 1968, the Assistant Collector issued a warrant for the search and seizure of goods and documents pursuant to which the premises of the factory at Varanasi were searched on May 11, 12 and 13, 1968 and various documents were seized.
The writ petition was heard in the first instance by the learned single judge who dismissed it.
In appeal his judgment was upheld by the Division Bench.
Three contentions were raised before the Division Bench; the first was that section 1.2 of the , hereinafter called, the "Act" was void as the powers delegated to the Central Government by the legislature were excessive and beyond permissible limits.
The second point was that the having been repealed it was not open to the Central Government under section 12 of the Act to apply section 105(1) of the to the Act and the notification dated May 4, 1963 by which this was done was illegal and ultra vires.
The, third was that the search and seizure made by the respondents under the impugned authorisation dated August 11, 1968 and the authorisation itself were not in accordance with the provisions of section 105 of the .
Section 12 of the Act is in the following terms: section 12.
Application of the provisions of Act VIII of 1878 to Central Excise Duties.
The Central Government may, by notification in the official Gazette declare that any of the provisions of the relating to the levy on and exemption from customs duties, drawback of duty, warehousing offences and penalties, confiscation, and procedure relating to offences and appeals, shall, with such modifications and alterations as it may consider necessary or desirable to adapt them to the circumstances, be applicable in regard to 95 like matters in respect of the duties imposed by section 3.
" When the Act was enacted section 172 of the which could be applied to the Act under section 12 provided : S.172.
"Any Magistrate may, on application by a Customs Collector, stating his belief that dutiable or prohibited goods (or any documents relating to such goods) are secreted in any place within the local limits of the, jurisdiction of such Magistrate, issue a warrant to search for such goods.
Such warrant shall be executed in the same way and shall have the same effect, as a search warrant issued under the law relating to Criminal Procedure.
" It may be mentioned that the words "or documents" were inserted by the Sea Customs Amendment Act 1955.
After the enactment of the by the notification dated May 4, 1963 as amended by the Notification dated February 6, 1965 amongst other provisions of the , sub section (1) of section 105 and section 1, IO were made applicable with certain modifications of a minor nature under section 12 of the Act.
The material part of these sections are reproduced below ; "section 105(1) Power to search premises. (1) if the Assistant Collector of Customs, or in any area adjoining the land frontier or the coast of India an officer of Customs specially empowered by name in this behalf by the Board, has reason to believe that any goods liable to confiscation or any documents or things which in his opinion will be useful for or relevant to any proceeding under this Act are secreted in any place, he may authorise any officer of customs to search or may himself search for such goods, documents or things." "section 110(3).
The proper officer may seize any document or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act.
" On the first point it has been urged on behalf of the appellant that section 12 of the Act gave unrestricted and unlimited power to the Central Government to modify or alter the provisions of the and to apply the provisions of that Act with such modifications and alterations as the Central Government might consider appropriate.
Modification, it has been pointed out, may be permissible, and may not fall within the vice of excessive delegation because the basic structure is not changed but alteration, it is suggested, has a much wider connotation and it emm 96 braces even the changing of the essential pattern of a thing or object.
Such a power inherently involves the making of changes even in regard to matters pertaining to legislative policy.
In our opinion the above contention is purely of academic interest in the present case.
In the notifications which were issued applying, inter alia, section 105 (1) and section 1 10 of the no such changes have been made as can possibly fall within the meaning of the word "alterations".
It has been pointed out in the previous decisions of this Court that the power to restrict and modify does not import the power to make essential changes.
It is confined to alterations of a minor character and no change in principle is involved.
See In re Delhi Laws Act, 1912.(1) It was conceded before the High Court and has not been urged before us that the word "modifications" could not be taken as con ferring on the Central Government any legislative power which was in excess of the permissible limits.
Objection was taken only with regard to the word "alterations" but that word must be understood in the sense in which it was open to the legislature to employ it legitimately and in a constitutional manner.
No question is thus involved of delegation either of any essential legislative functions or any change of legislative policy.
The second contention has hardly any merit.
Section 8(1) of the General Clauses Act provides that where any Central Act repeals and re enacts with or without modification any provision of a former enactment then references in any such enactment or in any instrument to the provision so repealed shall, unless a different intention appears, be construed as references to the provision so re enacted.
By virtue of this provision it cannot be disputed.
that in section 12 of the Act the can be read in place of the .
An attempt has been made to argue that section 12 of the Act empowers incorporation of the provisions of in the Act itself and whenever a notification is issued under it such provisions of the as have been applied become incorporated as in integral part of the Act.
Section 8 of the General Clauses Act would not be applicable to a case of such incorporation and it can only apply if section 12 can be regarded as containing a reference to the provisions of the .
In Secretary of State for Indian in Council vs Hindusthan Cooperative Insurance Society Ltd. (2) it was accepted as a settled rule of construction that where a statute is incorporated by reference into a second the repeal of the first statute does not affect the second.
The law laid down by the Privy Council can have no applicability to the present case.
Section 12 of the Act did not bodily lift, as it were, certain provisions of the and incorporate (1) ; (2) 58 I.A.259.
97 them as an integral part of the Act.
It only empowered the Central Government to apply the provisions of the with such modifications and alterations as might be considered necessary or desirable by the Central Government for the purpose of implementation and enforcement of section 3 of the Act.
No exception could be taken to the view of the High Court that section 12 contained a provision delegating limited powers to the Central Government to draw upon the provisions of the for the purpose of implementing section 3 of the Act.
in The Collector of Customs, Madras vs Nathella Sampathu Chetty & Another(1) this Court examined at length the meaning and effect of incorporation by reference of one statute into another and discussed the Privy Council case referred to before in detail.
Section 8(1) of the General Clauses Act, it was pointed out, 'dealt with reference or citation of one enactment in another without incorporation.
The usual or recognised formulae generally employed to effect incorporation were considered; for instance the words used in section 20 of 53 and 54 Vict.
70 Housing of the Working Classes Act, 1890, the words used were " shall, for that purpose, be deemed to form part of this Act in the same manner as if they were enacted in the body thereof." In 54 and 55 Vict.
19, section 1(3), the language employed was,: "The provisions of section 134 of the said Act (set out in the schedule) shall apply as if they were herein enacted.
" It is unnecessary to mention the other provisions because a comparison of the recognised formulae with the text of section 12 of the Act shows that the provisions of the were not meant to be incorporated in the Act and were only to be applicable to the extent notified by the Central Government for the purpose of the duty leviable under section 3.
Another aspect which has been presented under the second contention is that the impugned notification is bad and stands vitiated because under the previous notification which applies section 172 of the it was a Magistrate who had to bring his judicial mind to bear on the expediency or desirability of issuing a warrant for search whereas under the present notification after the enactment of the it is the Assistant Collector of Customs who performs executive functions and who has been empowered to issue the warrant for search and seizure.
The decision of this Court in Collector of Customs & Excise.
Cochin & Ors.
vs A. section Bava(2) has been sought to be pressed into service in support of the argument that extension of section 105 (1), (1) ; (2) 98 is illegal.
In that case the provisions of section 129 of the had been applied under section 12 of the Act.
Section 129 dealt with the procedure relating to appeals and required an appellant to deposit pending the appeal the duty or penalty imposed and empowered the appellate authority, in its discretion, to dispense with such deposit pending the appeal in any particular case.
There was a provision in the Act itself, section 35, which gave an unfettered right of appeal to a person aggrieved by any decision or order made under the Act.
It was in these circumstances that it was held that section 129 of the could not be made applicable so as to whittle down the substantive right of appeal conferred by section 35 of the Act.
The ratio of that decision can afford no assistance to the appellant in the present case.
By the notification issued under section 12 of the Act after the enactment of , the previous notification under the stood superseded and no question survives with regard to the validity of the notification issued in 1963 and amended in 1965.
On the third point an attempt was made to argue that the Assistant Collector, while issuing the, warrant for search and seizure did not apply his mind to the relevant and necessary facts.
Our attention has been invited to the warrant itself in which the documents have not been particularised or specified but the words certain documents" have been used.
The learned single judge dealt with this matter fully and repelled the contention that there was no relevant material before the authority upon which the belief could be founded in terms of section 105(1) of the by the Assistant Collector.
We find no merit in this contention.
The appeal fails and it is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | The appellant company had a factory at Varanasi at which chemicals including ammonia were manufactured.
It was considered by the Central Excise authorities that there had been evasion of duty on ammonia by the company.
The Assistant Collector Central Excise issued a warrant for search and seizure of goods and documents, pursuant to which the premises of the aforesaid factory were raided in May, 1968 and certain documents seized.
The company filed a writ petition in the High Court which was dismissed by the Single Judge.
The Division bench upheld the order of the Single Judge.
In appeal to this Court by special leave, the questions that fell for consideration were (i) Whether section 12 of the Central Excise Act was void because the powers delegated to the Central Government thereby including the power to make alterations in the Act applied were excessive; (ii) Whether the Sea Customs Act, 1875 having been re pealed, it was open thereafter to the Central Government under section 12 of the Excise Act to apply section 105 of the ; and (iii) Whether the Assistant Collector issued the warrants in the present case after due application of mind to relevant materials and 'facts in terms of section 105(1) of the .
HELD : (i) In the notifications issued inter alia applying section 105(1) and section 1 10 of the , no such changes had been made as could possibly fall within the meaning of the word 'alterations.
The power to restrict and modify does not import the power to make essential changes.
It is confined to alterations of minor character and no change in principle is involved.
The word 'alteration ' in section 12 must be understood in the sense in which it was open to the legislature to employ it legitimately and in a constitutional manner.
No question was thus involved of delegation either of any essential legislative functions or any change of legislative policy.
[96 B D] In re ; , , referred to.
(ii)S. 8(1) of the General Clauses Act provides that where any Central Act repeals and re enacts with or without modification any provision of the former enactment then references in any such enactment or in any instrument, to the provisions so repealed shall, unless a different intention appears, be construed as references to the provisions so re 93 enacted.
By virtue of this provision it could not be disputed that in section 12 of the Central Excise and Salt Act, 1947, the can be read in place of the .
[96 E] The contention that section 12 of the Act empowers incorporation of the provision of the in the Act itself and, therefore, 8(1) of the General Clauses Act, does not apply could not be accepted.
Section 12 only contained a provision delegating limited powers to the Central Government to draw upon the provisions of the for the purpose of implementing section 3 of the Act.
A] Secretary of State for India in Council vs Hindusthan Co operative Insurance Society, 58 I.A. 259, distinguished; The Collector of Customs Madras vs Nathella Sampatha Chetty The extension of section 105 could not be said to be illegal merely because under section 172 of the it was a Magistrate who after applying judicial mind had to issue search warrant whereas under the present notification after the enactment of the , it was the Assistant Collector of Customs performing executive functions who had been empowered to issue a search warrant.
By the latter notification the previous notification applying the provisions of the was superseded and no question with regard to the validity of the notification issued in 1963 and then amended in 1965 could survive.
Collector Custom & Excise Cochine & Ors, vs A. section Bava , distinguished [98 A C] (iii)On the facts of the case it could not be said that the Assistant Collectorhad no relevant material upon which the belief could be founded in termsof section 105(1) of the
|
Appeal No. 1228 of 1966.
Appeal by special leave from the judgment and decree dated December 2, 1965 of the Punjab High Court, Circuit Bench at Delhi in Letters Patent Appeal No. 57 D of 1965.
C. B. Agarwala and P. P. Juneja, for the appellant.
Sardari Lal Bhatia, D. R. Gupta and H. K. Puri, for the respondent.
The Judgment of the Court was delivered by Bhargava, J.
The appellant Hatti was declared a Bhumidar ,of some land belonging to the respondent, Sunder Singh, under section 13 of the Delhi Land Reforms Act No. 8 of 1954 (hereinafter referred to as "the Act").
The respondent then brought a suit in the Civil Court claiming three reliefs.
The first relief claimed was for a declaration that the declaration of Bhumidari issued in the name of the appellant with respect to the land in dispute was wrong, illegal, without jurisdiction, ultra vires, void and ineffective against the respondent.
The second relief was that the respondent be declared entitled to Bhumidari rights under section 11 of the Act; and the third relief was for possession of the land.
The suit was brought on the allegation that the respondent was the owner of the land, while the appellant had no rights in it.
The land along with some other land was on Mustrajri with one Sultan Singh for a period of 20 years ending in June, 1952, and the appellant had been admitted as a tenant at will by the Mustrajar.
On the expiry of the period of 20 years in June, 1952, the Mustrajri stood terminated and the original Mustrajar 's heirs left the land.
The appellant, however, continued in possession, but, since he was a tenant at will of the Mustrajar, he had no rights in the land after the expiry of the Mustrajri.
He was asked to surrender possession, but failed to do so.
On the other hand, he was wrongly granted the declaration under section 13 of the Act that he was a Bhumidar when he had no rights as tenant in the land at all.
The main defence taken on behalf of the appellant was that he was a non occupancy tenant and he was entitled to the declaration of his Bhumidari rights.
Apart from the issues on merits, one issue was raised by the appellant that the Civil Court bad no jurisdiction to entertain the suit in view of the provisions 165 of section 185 of the Act.
The trial Court held that the jurisdiction of the Civil Court was not barred.
On merits, the finding recorded was that the respondent was the proprietor of the land, but no declaration could be granted that he became Bhumidar under section 11 of the Act, as that relief could only be granted by the revenue authorities under the Act.
It was held that he was, however, entitled to possession in exercise of his right as proprietor, so that a decree for possession was granted in his favour.
That decree was upheld, in appeal, by the District Judge and, in second appeal, by a learned single Judge of the High Court of Punjab.
The Letters Patent appeal before the Division Bench was also dismissed, so that the appellant has now come up to this Court in this appeal by special leave.
The only point that was argued before the Division Bench in the Letters Patent appeal was that the Civil Court had no jurisdiction to entertain the suit,, so that, in this appeal, we are also concerned with this issue alone.
Section 185(1) of the Act, on, which reliance has been placed for urging that the Civil Court has no jurisdiction, is as follows : "185.
(1) Except as provided by or under this Act, no court other than a court mentioned in column 7 of Schedule 1 shall, notwithstanding anything contained in the Code of Civil Procedure, 1908, take cognizance of any suit, application, or proceedings mentioned in column 3 thereof.
" The relevant entries in the First Schedule, which require consideration, are Numbers 4, 19 and 28.
Item 4 mentions applications for declaration of Bhumidari rights in column 3 and, inter alia refers to sections 1 1 and 1 3 of, the Act.
For these applications, there is no period of limitation prescribed at all, and the Court of original jurisdiction is that of the Revenue Assistant.
Item 19 refers to section 84 of the Act, and relates to suit for ejectment of a person occupying land without title and for damages.
The three sub clauses mention that the suit can be instituted (i) by a Bhumidar declared under Chapter III of the Act or by an Asami falling under section 6 of the Act where such unlawful occupant was in possession of the land before the issue of the prescribed declaration form; (ii) by a Gaon Sabha where the unlawful occupant was in possession of the land before the constitution of Gaon Panchayat; and (iii) by a Bhumidar, Asami or Gaon Sabha in any other case.
The period of limitation is three years, in the first case, from the date of issue of the prescribed declaration form; in the second case, from the date of constitution of Gaon Panchayat under section 151; and, in the third case, from the 1st of July following the date of occupation.
The 166 Court of original jurisdiction in each case is that of the Revenue Assistant.
Item 28 refers to section 104 and relates to declaratory suit under that section.
No period of limitation is prescribed for such a suit, and the Court of original jurisdiction is again the Revenue Assistant.
The plea put forward on behalf of the appellant was that this suit, which was instituted by the respondent, ,covered only those reliefs which could be granted by the Revenue Assistant under the three items Nos. 4, 19 and 28 of the First .Schedule to the Act mentioned above, so that, by virtue of section 185 of the Act, the jurisdiction of the Civil Court was barred.
The High Court has taken the view that the suit is really in the nature of a title suit and such a title suit is not covered by these items, so that the jurisdiction of the Civil Court was not barred.
It is this view of the High Court that has been challenged before us in this appeal.
Learned counsel appearing for the appellant took us through the various provisions of the Act to show that the Act is a complete Code which lays down the rights that any person can possess in agricultural land in the area to which the Act applies, and the remedies that can be sought in respect of such land for obtaining declaration of their rights or any other declaration for possession.
The Act abolished the ownership of agricultural land by the previous proprietors.
This was effected by first laying down in sections 11 and 13 that proprietors will become Bhumidars in respect of their lands which were their Khud Kasht or Sir, while tenants would become Bhumidars in respect of their holdings.
Under section 6 of the Act, persons belonging to several classes, which included non occupancy tenants of proprietor 's grove and sub tenants of tenant 's grove, and non occupancy tenants of pasture land, or of land covered by water,, and some other classes, shall become Asamis.
"Holding" was defined in section 3(11a) ,of the Act by stating that it means: (a) in respect of (i) Bhumidar or Asami; or (ii)tenant or sub tenant under the Punjab Tenancy Act, 1887, or the Agra Tenancy Act, 1901; or (iii)lessee under the Bhoodan Yagna Act, 1955, a parcel or parcels of land held under one tenure, lease, engagement or grant; and (b) in respect of proprietors, a parcel or parcels of land held as sir or khud kasht.
The effect of sections 6 and 13 was that, thereafter, tenants and :sub tenants are lessees under the Bhoodan Yagna Act, 1955, 167 ceased to continue as such, and either became Bhumidars or Asamis in respect of their holdings.
Similarly, under section 11, proprietors in respect of their sir and khud kasht land became Bhumidars.
These sections have to be read in conjunction with section 154 of the Act of which the relevant portion is quoted below: " 154.
On the commencement of this Act (i) all lands whether cultivable or otherwise, except land for the time being comprised in any holding or grove, situate in a Gaon Sabha Area, shall vest in the Gaon Sabha Sections 6, 11, 13 and 154 of the Act read together, thus, show that, after the Act came into force, proprietors of agricultural land as such ceased to exist.
If any land was part of a holding of a proprietor, he became a Bhumidar of it.
If it was part of a holding of some other person, such as a tenant or a sub tenant etc., he became either a Bhumidar or an Asami, whereupon the rights of the proprietor in that land ceased.
Lands, which were not holdings of either the proprietor or any other person, vested in the Gaon Sabha.
In the case of proprietors, their rights in the land continued to exist only in respect of holdings which, under the definition, must have been either their sir or khud kasht at the commencement of the Act.
If it was not sir or khud kasht of a proprietor, it would not be his holding and, consequently, such land would vest in the Gaon Sabha under section 154, the result of which would be that the rights of the proprietor would be extinguished.
It appears that it was in view of this scheme of the Act that, under section 84, the right to institute a suit for posses sion was granted only to a Bhumidar, or an Asami, or the Gaon Sabha.
The Act envisaged only these three classes of persons who would possess rights in agricultural I and after the commencement of the Act.
Proprietors as such having ceased to exist could not, therefore, institute a suit for possession.
This aspect of the case has been lost sight of by the High Court and the lower courts, because it appears that their attention was not drawn to the provisions of section 154 of the Act, under which all lands of proprie tors, other than those comprised in their holdings, vested in the Gaon Sabha, thus extinguishing their proprietary rights.
168 A second aspect that needs examination relates to the provi sions of the Act for declaration of Bhumidari rights.
Sections 11 and 13 grant power to the Deputy Commissioner to declare proprietors in respect of their holdings and certain classes of tenants in respect of their holdings as Bhumidars.
The procedure to be adopted for issuing the declaration forms was laid down in the Delhi Land Reforms Rules, 1954 (hereinafter referred to as "the Rules") made by the Chief Commissioner of Delhi in exercise of the powers conferred by sections 9, 105, 149, 162, 180 and 191 of the Act.
The relevant Rules are 6 to 8.
These Rules envisaged preparation of declaration forms by the revenue authorities without any application from any party.
The declaration forms are based on the entries in the revenue records and, having been prepared on their basis, the declaration forms are issued to the persons who, under the forms, are held to be entitled to.
be declared as Bhumidars.
These Rules, thus, do not envisage any application under section 11 of section 13 at this early stage.
Rule 8(4) lays down that anyone, who challenges the correctness of entries in the forms of declaration, shall, except where it refers to a clerical omission or error, be directed by the Revenue Assistant to file a regular suit within two months of the date of issue.
Obviously, this sub rule has to be interpreted in conformity with section 185 and item 4 of the First Schedule to the Act, so that the scope of this sub rule must be confined to institution of suits in respect of matters not covered by item 4 of the First Schedule.
This sub rule would not stand in the way of an application being made by any person claiming to be Bhumidar under item 4 of the First Schedule.
The Rules were examined by Khanna J., in Lal Singh vs Sardara and Another(1) and in our opinion, he rightly held that a perusal of the Rules goes to show that there is no provision for giving notice to different interested parties before a declaration of Bhumidari rights is made and the whole thing is done in more or less a mechanical way.
That being the position, it becomes obvious that an application for declaration of a Bhumidari right under item 4 of Schedule I of the Act is intended to be made even in cases where a declaration may have been previously granted under section 11 or section 13 in accordance with the Rules.
The ,scheme of the Act appears to be that, initially, a declaration of Bhumidari right can be granted under section 11 or section 13 without calling for objections and without hearing contesting parties in favour of the person who appears to the revenue authorities to be entitled to the declaration on the basis of the records maintained by them.
Thereafter, any person aggrieved and claiming Bhumidari rights is expected to move an application before the Revenue Assistant (1).
I.L.R. [1964] Vol. 169 who is to adjudicate upon the rights after following the usual judicial procedure.
The order made by the Revenue Assistant in such a proceeding will then have to be given effect to and would override the declarations earlier issued in accordance with the Rules.
This shows that any person, who is aggrieved by a declaration of Bhumidari right issued in favour of another person, can appropriately seek his remedy by moving an application before the Revenue Assistant under item 4 of the First Schedule, whereupon, if he succeeds, he will obtain a declaration that he is the Bhumi dar.
Such a declaration will automatically supersede the declaration issued by the authorities in accordance with the Rules without any adjudication of rights and without notice to interested parties.
Khanna, J., in the case of Lai Singh vs Sardara & Another(1) correctly interpreted the scope and purpose of the Rules, under which forms of declaration of Bhumidari rights are issued, but, in our opinion, incorrectly inferred that, since there is no effectual adjudication of rights by the revenue authorities while declaring Bhumidari rights, their declaration must be subject to the due adjudication of rights which, in the absence of anything to the contrary, can only be by a Civil Court.
It is true that the declarations made by the revenue authorities without going, through the judicial procedure are subject to due adjudication of rights; but such adjudication must be by an application under item 4 of Schedule I and not by approach to the Civil Court.
The jurisdiction of the Civil Court is clearly barred by section 185 of the Act read with the various items of the First Schedule mentioned above.
If a Bhumidar seeks a declaration of his right, he has to approach the Revenue Assistant by an application under item 4, while, if a Gaon Sabha wants a clarification in respect of any person claiming to be entitled to any right in any land, it can institute a suit for a declaration under item 28, and the Revenue Assistant can make a declaration of the right of such person.
So far as suits for possession are concerned, we have already held earlier that section 84 read with item 19 of the First Schedule gives the jurisdiction to the Revenue Assistant to grant decree for possession, and that the suit for possession in respect of agricultural land, after the commencement of the Act, can only be insti tuted either by a Bhumidar or an Asami or the Gaon Sabha.
There can be no suit by any person claiming to be a proprietor, because the Act does not envisage a proprietor as such continuing to have rights after the commencement of the Act.
The First Schedule and section 84 of the Act provide full remedy for suit for possession to persons who can hold rights in agricultural land under the Act.
(1) I.L.R. [1964] Vol.
2 L235Sup.
CI/71 170 The High Court, in this connection, referred to section 186 of the Act under which any question raised regarding the title of any party to the land, which is the subject matter of a suit or proceeding under the First Schedule, has to be referred by the Revenue Court to the competent Civil Court for decision after framing an issue on that question.
Inference was sought to be, drawn from this provision that questions of title could be competently agitated by a suit in the Civil Court, as the jurisdiction of the Civil Court was not barred.
It appears to us that there is no justification for drawing such an inference.
On the contrary, section 186 envisages that questions of title will arise before the Revenue Courts in suits or proceedings under the First Schedule and, only if such a question arises in a competent proceeding pending in a revenue Court, an issue will be framed and referred to the Civil Court.
Such a provision does not give jurisdiction to the Civil Court to entertain the suit itself on a question of title.
The jurisdiction of the Civil Court is limited to deciding the issue of title referred to it by the Revenue Court.
This clearly implies that, if a question of title is raised in an application for declaration of Bhumidari rights under item 4 of Schedule I of the Act, that question will then be referred by the Revenue Assistant to the Civil Court; but a party wanting to raise such a question of title in order to claim Bhumidari right cannot directly approach the Civil Court.
The ,Act is a complete Code under which it is clear that any one, wanting a declaration of his right as a Bhumidar, or aggrieved by a declaration issued without notice to him in favour of another, can approach the Revenue Assistant under item 4 of the First Schedule and this he is allowed to do without any period of limitation, because he may not be aware of the fact that a declaration has been issued in respect of his holding in favour of another.
A declaration by a Gaon Sabha of the right of any person can also be sought without any period of limitation.
If there is dispute as to possession of agricultural land, the remedy has to be sought under section 84 read with item 19 of the First Schedule.
All the reliefs claimed by the respondent in the present suit were, thus, within the competent jurisdiction of the Revenue Assistant, and the Civil Court had no jurisdiction to entertain the suit.
In the result, the appeal is allowed, the decree passed by the High Court is set aside and the suit of the respondent is dismissed.
The appellant will be entitled to his costs in this Court, while, costs in other Courts will be borne by the parties themselves.
Y.P. Appeal allowed.
| IN-Abs | Under section 13 of the Delhi Land Reforms Act, 1954 tenant was declared bhumidhar of land belonging to the respondent filed a suit in the Civil Court claiming that issued to the appellant was illegal, that he should instead bhumidhar and prayed for possession of the land.
Apart on merits, the appellant raised the issue that the Civil jurisdiction to entertain the suit in view of the bar in section The trial court held that the jurisdiction of civil court was the appellant a respondent.
The the bhumidhari be declared the from the issues Court had no 185 of the Act.
not barred, and decreed the suit.
The decree was upheld in appeal by the District Judge.
and, in second appeal, by a single Judge of the High Court.
The Letters Patent Appeal was also dismissed.
Allowing the appeal, this Court, HELD : (i) The reliefs claimed by the respondent were within the competent jurisdiction of the Revenue Assistant and the Civil Court had no jurisdiction to entertain the suit.
Under section 84 the right to institute a suit for possession was granted only to a bhumidar or an asami, or the gaon sabha.
The Act envisaged only these three classes of persons who would possess rights in agricultural land after the commencement of the Act.
Proprietors as such having ceased to exist, could not, therefore, institute a suit for possession.
This aspect of the case has been lost sight of by the High Court and the lower courts, because it appears that their attention was not drawn to the provision of section 154 of the Act, under which all lands of proprietors, other than those comprised in their holdings, vested in the gaon sabha, thus extinguishing their proprietary rights.
[ 1 67 G H] (ii)There is no provision in the rules for giving notice to different interested parties before a declaration of bhumidari rights is made, Any person, who is aggrieved by a declaration of bhumidhari right issued in favour of another person can appropriately seek his remedy by moving an application before the Revenue Assistant under item 4 of the First Schedule, whereupon, if he succeeds, he will obtain a declaration that he is the Bhumidar.
Such a declaration will automatically supersede the declaration issued by the authorities in accordance with the Rules without any adjudication of rights and without notice to interested parties [169 B] Lai Singh vs Sardara & Anr.
I.L.R. [1964] Vol.
17, 2 Pb.
428 referred to.
(iii)It is true that the declarations made by the revenue authorities without going through the judicial procedure are subject to due adjudication of rights; but such adjudication must be by an application under item 4 of Sch.
I and not by approach to the civil court.
The jurisdiction of the civil court is already barred by section 185 of the Act read with various items of the first Schedule [169 D E] The inference contra in Lal Singh vs Sardara & Anr.
I.L.R. [1964] Vol.
17, disapproved.
164 (iv)Section 186 only envisages that question of title will arise before the Revenue Courts in suits or proceedings under the first schedule and only if such a question arises in a competent proceeding pending in a Revenue Court an issue will be framed and referred to the civil court.
Such a provision does not give jurisdiction to the Civil Court to entertain the suit itself on a question of title.
[170 B C]
|
No. 2351 of 1970.
(Application for stay by notice of motion) and Civil Appeal No. 1196 of 1970.
Appeal from the judgment and order dated October 29, 1969 of the Orissa High Court in Misc.
Appeal No. 28 of 1967.
R. K. Agarwal, for the appellants.
Santosh Chatterjee and G. section Chatterjee, for the respondent.
The Order of the Court was delivered by Hidayatullah, CJ.
The appellants before us who come by way of certificate from the High Court seek stay of a suit which has been restored to file by the High Court.
At the very start we put to the counsel how certificate could have been granted in this case when the judgment and order of the High Court were not final.
The counsel brought to our notice the case of Ramesh and another vs Gendalal Motilal Ratni and others(1) and says that his, case is covered by this ruling.
This was a case in which the only question to be considered was whether article 133 of the Constitution was applicable in the two case , decided when the claim in the original suit or appeal to this Court was above Rs. 20,000/ .
This particular question was not before the court at all.
Indeed, them Constitution contemplates the filing of an appeal by certificate only (1) ; 406 against a judgment decree or final order of the High Court it does not contemplate bringing an appeal in a suit which is still a live suit and in which further proceedings are to be taken.
This has been the consistent view not only of this Court but also of the Privy Council. 'Me leading case from the Privy Council is V. M. Abdul Rahman and others vs V. D. K. Cassim and Sons and another(1).
There is a catena of cases in the High Courts and also in this Court that the judgment, decree or order from which appeal is brought to this Court must put an end to the litigation between the parties.
This was reaffirmed in M/s. Jethanand and Sons vs The State of Uttar Pradesh (2 ) approving the view of the Privy Council referred to.
Indeed, we could cite on this aspect of the case quite a large number of precedents from various courts in India.
In the present matter, the suit was decreed in the absence of the defendant who applied to have the decree set aside and gave reasons for it.
The trial court did not accede to the prayer but the High Court held that the matter was governed by O. 9 r. 9 of the Code of Civil Procedure and that there were valid reasons for setting aside the ex parte decree.
As a result of the setting aside of the decree the suit is very much alive today and this cannot be treated as a final adjudication of the suit itself.
The certificate granted by the High Court in such circumstances was premature and was not competent.
We accordingly set aside the certificate and dismiss the appeal.
There shall be no order as to costs.
Y.P. Appeal dismissed.
(1) (1933) L. R. 60 I.A. 76.
| IN-Abs | The High Court granted certificate for leave to appeal to this Court in a case where it set aside the ex parte decree in the suit and restored the suit to the Me of the trial court.
HELD: The certificate granted by the High Court was premature and was not competent.
As a result of the setting aside of the decree the suit was very much alive, and it could not be treated as a final adjudication of the suit itself.
The Constitution contemplates the filing of an appeal by certificate only against a judgment, decree of final order of the High Court.
It does not contemplate bringing an appeal in a suit which is still a live suit and in which further proceedings are to be taken.
[405 H] Ramesh & Anr.
vs Gendalal Motilal Ratni & Ors.
A.I.R. , V. M. Abdul Rahman & Ors.
vs D. K. Cassim Sons vs The State of Uttar Pradesh, ; , referred to.
|
Appeal No. 1672 of 1966.
Appeal from the judgment and order dated 16th March 1965 of the Madras High Court in Appeal Suit No. 139 of 1961.
P. Balagopal A. Y. Rangam and Lily Thomas, Advocates for the appellant.
4 28 M.Natesan, R. Ramamurthi lyer and R. Gopalakrishnan, for the Respondent.
The Judgment of the Court was delivered 'by Grover, J.
This is an appeal by certificate from a decree of the Madras High Court.
The appellant mortgaged his property bearing No. 162A West Masi Street, Madurai town for a sum of Rs. 45,000/ with the. respondent Bank on October 14, 1950.
He agreed to repay Rs. 5,0001 within a specified date and the balance was payable within two years from the date of the deed together with interest, at 101%.
It was further agreed that if the mortgagor failed to pay the interest periodically and regularly he would be liable to.
pay interest at the rate of 12% per annum from the date of such ', default and further it he failed to pay the entire amount stipulated, within two years he would have to pay the whole amount together with interest at 3 1/2 % per annum.
The sum of Rs. 5,000/ was paid within the time specified but the balance remained unpaid.
In January 1952 the appellant and his wife borrowed Rs. 25,000/and, jointly executed a promote.
The wife deposited her title deeds relating to premises No. 162 West Masi Street.
On June 25, 1952: the appellant and his wife created a mortgage of their respective properties Nos. '1 62A and, 162 West Masi Street to secure repayment of a sum of Rs. 8850/ .
All the three mortgages were in favour of the respondent Bank.
In 1953 the Bank instituted a suit on the foot of the last two, mortgages and obtained a decree against the appellant and his wife.
, This decree appears to have been satisfied.
In April 1958 the suit out of which the present appeal has arisen was filed by the Bank on the foot of the mortgage dated October 14, 1950.
The main defence of the appellant, who was the sole mortgagor, was that the suit was not maintainable in view of the provisions of section 67A of the Transfer of Property Act and that the stipulation of interest was penal and in contravention of the provisions of the .
A number of other issues were framed but it is altogether unnecessary to mention them.
The trial court granted a preliminary decree for the recovery of principal amount, of Rs.
,40,000/ which remained unpaid with interest at 12% per.
annum from August 1, 1952 till the date of the decree and thereafter at 6% per annum till realisation.
An appeal was taken to the High Court where two points were agitated.
The first was based on the provisions of section 67A of the Transfer of Property Act and the second related to the rate of interest.
The High Court did not accede to any ' of the contentions and dismissed the appeal.
Section 67A of the Transfer of Property Act provides that a I mortgagee who holds two or more mortgages executed by the same,.
mortgagor in respect of each of which he has a right to obtain the same kind of decree under section 67 and who sues to obtain such decree 429 on any one of the mortgages, shall, in the, absence of a contract to the contrary, be bound to sue on all mortgages in respect of which the mortgage money has become due.
This section was inserted by the Amending Act 20 of 1929 in view of certain conflict among the High Courts in this country, with regard to the right of the mortgagee to sue at different times on different mortgages although the mortgagor was the same.
As pointed out in Mulla 's Transfer of Property Act, 5th Edn at page 481 sections 61 and 67A of this Act lay down the simple rule that if a mortgagor has made two or, more mortgages of the same property or of different properties to the same mortgagee the mortgagor may redeem each separately but that the mortgagee must enforce all or none.
To attract the applicability of section 67A it is essential that the, mortgagor must be the same and he should have executed two or more mortgages in respect of each of which he has a right to obtain the same kind of decree under section 67A.
In the present case it is not possible to hold that the mortgagor in the suit on the foot of.
the mortgage dated October 14, 1950 is the same as the mortgagor in the previous suit which was filed on the foot of the mortgages in favour of the appellant and his wife.
In the other two mortgages there were two mortgagors, one the appellant and the other his wife.
There is no statutory provision or rule or principle by which the wife and the, husband could be treated as one entity for the purpose of the mortgages.
Each was owner of a separate and distinct property and both joined in mortgaging their respective properties.
In Moro Raghunath vs Balaji(1) the first mortgage, was by two bro thers and the second mortgage of part of the same property was by one brother.
The Bombay High Court held that the suit to enforce the first mortgage did not bar a suit to enforce the second mortgage.
This was before the insertion of section 67A but the principle embodied in that section is clearly illustrated by that case.
The bar of section 67A, therefore, could not possibly come in the way of the institution of the present suit.
On the question of interest we are of the view in the light of the provisions of the mortgage deed and all the circumstances that the rate of 12% is unfair and penal.
We are inclined, therefore, to give this relief that the interest should be calculated 'at the rate of 10 1/2% (which was the original contractual rate) from the date of the mortgage to the date of the preliminary decree.
Thereafter the interest shall be Payable as directed by the trial court 'at the rate of 6% per annum till realisation.
With this 'modification the appeal is dismissed but in view of the entire circumstances the parties are left to bear their own costs in this Court.
Appeal dismissed.
G.C. (1) I.L.R. 13Bom.
| IN-Abs | The appellant mortgaged his property bearing No. 162A West Masi Street Madurai Town for a sum of Rs. 45,000 with the respondent Bank on October 14, 1950.
In January 1952 the appellant and his wife borrowed Rs. 25,000 and jointly executed a pronote.
The wife deposited her title deeds relating to premises No. 162 West Masi Street On June 25, 1952 the appellant and his wife created a mortgage of their respective properties Nos.
162A and 162 West Masi Street to secure repayment of a sum of Rs. 8,850.
All the three mortgages were in favour of the respondent Bank.
In 1953 the Bank instituted a suit on the foot of the last two mortgages and obtained a decree against the appellant and his wife.
This decree was satisfied.
In April 1958 the Bank filed a suit on the foot of the mortgage dated October 14, 1950.
The main defence of the appellant, who was the sole mortgagor, was that the suit was not maintainable in view of the provisions of s, 67A of the Transfer of Property Act and that the stipulation of interest was penal and in contravention of the provisions of the .
The trial court decreed the suit and the High Court dismissed the appeal.
By special leave appeal was filed in this Court.
HELD : If a mortgagor has made two or more mortgages of the same property or of different properties to the same mortgagee the mortgagor may redeem each separately but the mortgagee must enforce all or none.
To attract the applicability of section 67A it is essential that the mortgagor must be the same and he should have executed two or more mortgages in respect of each of which he has a right to obtain the same kind of decree under section 67.
In the present case it was not possible to hold that the mortgagor in the suit on the foot of the mortgage dated October 14, 1950 was the same as the mortgagor in the previous suit which was filed on the foot of the mortgages in favour of the appellant and his wife.
In the other two mortgages there were two mortgagors one the appellant and the other, his wife.
There is no statutory provision or rule or principle by which the wife and the husband could be treated as one entity for the purpose of the mortgage.
Each was owner of a separate and distinct property and both joined in mortgaging their respective properties.
The bar of section 67A therefore could not possibly come in the way of the institution of the ' present suit.
[429 B F] Moro Raghunath vs Balaji, I.L.R , approved & applied.
(ii)In the light of the provisions of the mortgage deed and all the circumstances the interest rate of 12% was unfair and penal.
Rate suitably Reduced.
[429 G]
|
Appeal No. 1985 of 1969.
Appeal from the judgment and order dated January 4, 1969 of the patna High Court in Civil Writ Jurisdiction case No. 520 of 1967.
M. C. Chagla, D. P. Singh and V. J. Francis, for the appellant.
L. M. Singhvi and U. P. Singh, for respondents Nos.
1 to 4.
4 14 The Judgment of the Court was delivered by SHAH, J.
This appeal is filed with certificate granted by the High Court of Patna under article 133 (1) (a) of the Constitution.
The appellant Hansraj Bagrecha carries on business in jute.
In the course of his business the appellant buys raw jute from producers in West Bengal, transports it to Kishanganj Railway Station (which is within the State of Bihar) and then re exports it to purchasers in West Bengal.
He also buys raw jute in Bihar and exports it to the merchants or mill owners in West Bengal by rail from Kishahganj Railway Station.
The Bihar Sales Tax Act 1959, as originally enacted did not provide for levy of purchase tax.
By the Bihar Finance Act, 1966, with effect from April 1, 1967, among others the following sections were incorporated in the Bihar Sales Tax Act, 1959 S.3A "The State Government may from tune to time, by notification declare any goods to be liable to purchase tax on turnover of purchase : Provided that general sales tax and special sales tax shall not be payable on the sale of goods or class of goods declared under this section.
" section 5A "The purchase tax on goods declared under section 3A shall be levied at the point of purchase made from a person other than a registered dealer.
" By a notification dated September 14, 1966 the Governor of Bihar declared 'jute ' as a commodity liable to purchase tax at the rate specified in the notification.
Section 42 of the Bihar Sales Tax Act by the first subsection provided : "No person shall transport from any railway station, steamer station, air port, post office or any other place, whether of similar nature or otherwise, notified in this behalf by the State Govt.
, any consignment of such goods, exceeding such quantity, as may be specified in the notification, except in accordance with such conditions as may be prescribed and such conditions shall be made with a view to ensuring that there is no evasion of tax payable under this Act.
" Section 46 of the Act invested the State Government with power to make rules for all matters expressly required or allowed by the Act to be prescribed and generally for carrying out the purposes of the Act and regulating the procedure to be followed, forms to 415 be adopted and fees to be paid in connection with proceedings under the Act and all other matters ancillary or incidental thereto.
In exercise of the powers conferred under s, 46 (1) the State of Bihar promulgated under Rules 31 B and 8C, Rule 31B, which provided "(1) No person shall tender at any railway station, steamer station, air port, post office or any other place, whether of similar nature or otherwise, notified under section 42, any consignment of such goods exceeding such quantity, as may be specified 'in the notification, for transport to any place outside the State of Bihar, unless such person has obtained a despatch permit in Form XXVIII D from the appropriate authority referred to in the Explanation to rule 31 and no person, shall accept such tender unless the said permit is surrendered to him." Rule 30(1) provided "The first purchase of goods declared under section 14 of the , shall be leviable to tax in terms of sections 3, 3A and 5A of the Act and no subsequent sales or purchases in respect of the said goods shall be liable to any tax under the Act." ' After the enactment of sections 3A and 5A the State Government issued.
a notification dated December 26, 1967 purporting to exercise power under section 42 of the Bihar Sales Tax Act, 1959 read with r. 31B of the Bihar Sales Tax Rules, 1959, notifying that no person shall tender at any railway station mentioned in Sch.
II, and consignment of goods mentioned in Sch.
I, exceeding the quantity specified for transport to any place outside the State of Bihar and no person shall accept such tender in accordance with the conditions prescribed in r. 31B of the Bihar Sales Tax Rules, 1959.
Under Sch.
I `Jute ' exceeding 800 Kg.
could not be tendered for transport without "a despatch pen nit", and Kishanganj was one of the Railway Stations mentioned in Sch.
In July 1967 the Superintendent of Commercial Taxes addres sed a letter prohibiting the railway authorities from loading jute goods and despatching them from any railway station within the Purnea District of Bihar, except on production of a "registration certificate".
By his letter dated July 10, 1967 the Station Master Kishanganj called upon the Secretary, Jute Merchants Association, Kishanganj, to produce a certificate as required in the letter of the Superintendent of Commercial Taxes, before "loading jute goods for despatch was commenced" and informed them that in default wagons allotted to the jute merchants shall be cancelled and 416 registration, fees, forfeited and that "demurrage" win be charged.
The appellants request that jute booked by him be despatched from.
Kishanganj was turned down by the railway authorities, because the registration certificate issued by the Superintendent of Commercial Taxes, Purnea for the movement of jute from the place was not produced.
The appellant then moved a petition before the High Court of Patna on August 29, 1967 challenging the validity of sections 3A, 5A, 42 and 46 and r. 31B of the Bihar Sales Tax Rules, 1959.
The High Court of Patna dismissed the petition.
With certificate granted by the High Court this appeal has been preferred by the appellant.
In support of the appeal counsel for the appellant raised three contentions : (1) that sections 3A & 5A as incorporated 4th Finance Act of 1966 infringed the guarantee of freedom of trade under article 301 of the Constitution and since the amendment made by the Finance Act, 1966 did not receive the assent of the President under article 304(b) the amendment was not saved; (2) that sections 3A & 5A and r. 8C "were contrary to" section 15 of the and were void on that account; and (3) that r. 31B framed by the State Government and the notification issued on December 26, 1967 were unauthorised and liable to.
be struck down.
Article 301 of the Constitution guarantees freedom of trade, commerce and intercourse throughout the territory of India.
By article 302 the Parliament is authorised by law to impose such restrictions on the freedom of trade, commerce or intercourse between one State and another or within any part of the territory ofIndia as may be required in the public interest.
article 303(1) imposes restrictions upon the power which the Parliament or the Legislature of a State may exercise to make any law giving, or authorising the giving of, any preference to one State over another, or making or authorising the making of, any discrimination between one State and another, by virtue of any entry relating to trade and commerce in any of the Lists in the Seventh Schedule.
But that clause does not operate to restrict the power of the Parliament to make any law giving, or authorise the giving of, any preference or making or authorising the making of, any discrimination, if it is declared by such law that it is necessary to do so for the purpose of dealing with a situation arising from 417 scarcity, of in, any part of, the territory of India Art 303 (2).
article 304 provides in so far as it is relevant "Notwithstanding anything in article 301 :or article 303, the Legislature of a State may by law (a) (b) impose such reasonable restrictions on the freedom of trade, commerce or intercourse with or within that State as may be required in the public interest Provided that no Bill 'or amendment for the purpose of clause (b) shall be introduced or moved in the pose Legislature, of a State without the Previous sanction of the President.
" article 304 is in terms a restriction on the freedom guaranteed by article 301.
Notwithstanding the amplitude of, the freedom of trade, commerce and intercourse throughout the territory of India, the Legislature of a State may by law impose, among others such reasonable restrictions on the,, freedom of trade,, cow or intercourse with or within that State as may be required in the public interest.
But that authority to impose reasonable, restrictions on the freedom of trade, may only be, exercised by the Legislature of a State if the Bill or amendment for the Purpose of cl.
(b) is introduced or moved in the Legislature of a State with the previous sanction of the President.
It was contended that since section 3A providing for the of purchase tax imposes a restriction on the freedom of trade,, commerce and intercourse and on that account violates the freedom of trade guaranteed by article 301, it way be saved only if it is legislation of the nature contemplated by article 304(b) and the Bill which was enacted into the Act received the previous assent of the President.
The assumption that the levy of purchase tax must be deemed in all circumstances, to violate the .
guarantee under article 30 1, and the levy will be valid only, if the Act is enacted by the State Legislature with the previous sanction of the President, cannot be accepted 'as correct.
This Court in The State of Madras vs N. K. Nataraja Mudaliar(1) examined the validity of laws which impose taxes on sale in the: light of article 301.
It was observed at p. 839 "This Article (article 301) is couched in terms of the widest amplitude, trade, commerce and, intercourse am thereby declared free and unhampered, throughout the story of India.
The freedom of trade (1) ; so declared is against the imposition of barriers or obstructions within the state as well as inter State all restrictions which directly and immediately affect the movement of trade are, declared by Art 301 to in effective.
The extent to which article 301 operates to make trade.
and commerce free has been considered by this Court in several cases In Atiabari Tea Co. Ltd. vs, The State of Assam and others(1) Gajendragadkar, speaking for himself and Wanchoo and Das Gupta JJ., observed at p. 860 ". . we think it, would be reasonable and proper to hold that restrictions, freedom from which is guaranteed by art 301 would be such restrictions as,directly and immediately restrict or impede the free flow or movement of trade." "In Automobile Transport (Rajasthan) Ltd vs The State of Rajasthan and others(2) the view expressed by Gajendragadkar, J., in Atiabari Tea Co 's case was accepted by the majority.
Subba Rao, J., who agreed with the majority observed that the freedom declared under article 301 of the Constitution of India referred to the right of free movement of trade without any obstructions by way of barriers, inter State or intra State, or other impediments operating as such barriers.
The same view was expressed in Firm A.T.B. Mehtab Majid and Company vs State of Madras and Another(3) by a unanimous Court.
It must be taken as settled law that the restrictions or impediments which directly and immediately impede or hamper the free flow of trade commerce and intercourse fall within the prohibition imposed by article 301 and subject to the other provisions of the Constitution they may be regarded as void.
But it is said that by imposing tax on sales, no restriction hampering trade is imposed.
In the Atiabari Tea Company 's case, Gajendragadkar, J., observed: "Taxes may and do amount to restrictions; but it is only such taxes as directly and immediately restrict trade that would fall within the purview of article 30 1.
The argument that all taxes should be governed by article 301 whether or not their impact on trade is immediate or mediate, direct or remote, adopts, in our opinion, an extreme approach which cannot be upheld.
" In a recent judgment of this Court in The Andhra Sugars Ltd. and Another vs The State of Andhra Pradesh.
and others(4) (1) ; (3)[1963] 1 S.C.R. 491.
(2)[1963] Supp.
2 section C. R 435.
(4) 21 S.T.C. 212 419 Bachawat, J., speaking for the Court after referring to, the observations made by Gajendragadkar, J., in Atiabari Tea Company 's case(1) observed "This interpretation of Article 301 was not dissented from in Automobile Transport (Rajasthan) Ltd. vs State of Rajasthan (2) .
Normally, a tax on sale of goods does not directly impede the free movement or transport of goods.
Section 21 is no exception.
it does not impede the free movement or transport of goods and is not violative of Article 301.
" Section 21 of the Andhra Pradesh Sugar Cant (Regulation of Supply and Purchase) Act which was referred to in the judgment authorised the State Government to levy a tax at such rate, "not exceeding five rupees per metric tonne as may be prescribed on the purchase of cane required for use, consumption or sale in a factory.
It must, therefore, be regarded as settled law that a tax may in certain cases directly and immediately restrict or hamper the flow of trade, but every imposition of tax does.
not do so.
" Imposition of tax of the nature of purchase tax does not by itself restrict freedom of trade, commerce or intercourse.
Imposition of tax may in certain circumstances impede free flow oftrade, commerce or intercourse.
But every tax doesn 't have that effect.
Imposition of a purchase tax by the State does not by itself infringe the guarantee: of freedom under Art.301.
The argument that imposition of sales or purchase tax must be regarded in all cases as infringing the guarantee of freedom under article 301 cannot be accepted as correct.
The appellant filed the petition out of which their appeal arises soon after the Station Master informed the Jute Merchants Association about his inability to book consignments of jute.
He has made no averments in the petition which support the plea that imposition of purchase tax "directly and immediately restricts or impedes" the free flow of trade.
Since power to impose purchase tax under section 3A on notified goods is not shown to restrict or impede the free flow of trade directly and immediately, it need not seek to derive, for its validity, support from article 304(b).
The contention that sections 3A & 5A are inconsistent with section 15 of the is without substance.
By section 14 of 'the ' certain classes of goods are declared goods of special importance in inter State trade or commerce.
Jute is one of such classes of goods.
By section 15 as (1) ; , (2) [1963] 1 section C. R, 491.
420 amended by the Central Sales Tax Second Amendment Act, XXXI ,of 1958 it is provided "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 (a) the tax payable under that law in respect of any sale of 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 levied 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 refunded to such person in such manner and subject to such conditions as may be provided in any law in force in that State.
" By section 15 of the in respect of the declared goods on transactions of sale or purchase the tax leviable is restricted to 3 % and is not leviable at more than one stage.
There, is no dispute that the purchase tax on jute is leviable at the first point of purchase under section 3A of the Bihar Sales Tax Act, and the rate of tax also is not shown to exceed the maximum prescribed by section 15 of the .
The provisions of sections 3A & 5A of the Bihar Sales Tax Act are not therefore inconsistent with the provisions of section 15 of the .
But, in our judgment, r. 31B of the Bihar Sales Tax, Rules, 1959 and the notification issued on December 26, 1967 are unauthorised and must be struck down.
The Bihar Sales Tax Act is enacted by the Legislature to consolidate and amend the, law relating to the levy of tax on the sale and purchase of goods in Bihar.
The State Legislature is competent in enacting sales tax legislation to make a provision which is ancillary or incidental to any provision relating to levy,; collection and recovery of sales tax and purchase tax.
_ A provision which is made by the Act or by the Rules which seeks to prevent evasion of liability to pay tax on intra State sales or purchase would therefore be within the competence of the Legislature or the authority competent to make the rules .
But the State Legislature has no power to legislate for the levy of tax on transactions which are carried on in the course of inter State trade or commerce or in the course of export.
Section 42 of the Bihar Sales Tax Act, 1959, prevents any person from transporting from any railway station, steamer station, 421 air port, post office or any other place any consignment of such goods exceeding the.quantity specified with a view to ensuring that 'there is no evasion of tax payable under the Act.
But the power under section 42 can only be exercised in respect of levy, collection and recovery of intra State or purchase tax.
It cannot be utilised for the purpose of ensuring the effective levy of Inter State sales or purchase tax.
The appellant purchased jute both within and without the State of Bihar.
In respect of transactions of purchase within the State of Bihar and despatch of goods liability to pay purchase tax at the point of purchase may arise.
In respect of goods which are purchased in the State of West Bengal and brought within the State of Bihar and then despatched to other States in the course of inter State transactions no question of levy of purchase tax under the Bihar Sales Tax Act arises.
R. 31 B framed by the State Government seeks to prohibit transport in pursuance of transactions which are inter State, for in terms it prohibits transporting of goods to any place outside the State of Bihar.
Again transport of goods for personal consumption oil use, or of goods, gifted, pledged or dealt with otherwise than by sale, falls within the injunction contained in r. 31B. The power of the State Legislature is restricted to legislate in respect of intra state transactions of sale and purchase and to matters ancillary or incidental thereto : it has no power to legislate for levy of tax on sales and purchase in the course of inter State transactions.
The, power conferred by section 42 authorising the imposition of restriction on transport or movement of goods may only be exercised in respect of transactions which facilitate levy, collection and recovery of tax on transactions of intra State sale or purchase.
When r. 31B prohibits transport of goods to any place outside the State of Bihar unless a certificate is obtained from the appropriate authority, it seeks to prohibit transport of goods pursuant to transactions which may not even be of the nature of sale or purchase transactions; in any case it restricts transport pursuant to transactions in the course of inter Statetrade and commerce.
The operation of the rule is not restricted only to transactions in the course of intra State trade and commerce.
The rule authorises restrictions on inter State transactions and is on that account unauthorised.
For the same reasons the notification issued on December 26, 1967 must be regarded as also unauthorised.
In the view we have taken r. 31B and the notification issued bythe State Government on December 26, 1967 must be declared ultra vires, and since r. 31B and the notification are ultra vires the communication issued by the Superintendent of Commercial 4 22 Taxes to the Railway Authorities must also be declared unauthorised A writ will therefore issue declaring r. 31B and the notification issued by the Government of Bihar on December 26, 1967 ultra vires, and the letter written by the Superintendent of Commercial Taxes to the Railway Authorities is also declared unauthorised.
Having regard to the circumstances, we think there should be no order as to costs.
| IN-Abs | Under section 5A of the Bihar Sales Tax Act 1959 as amended by the Bihar Finance Act, 1966 the purchase tax on goods declared under section 3A was to be levied at the point of purchase made from a person other than a registered dealer.
By a notification dated September 14, 1966 the Governor of Bihar declared jute as a commodity liable to purchase tax at the rate specified in the notification.
The appellant carried on business in jute, In the course of his business he.
purchased raw jute from producers in West Bengal, transported it to Kishenganj Railway Station in Bihar and then re exported it to purchasers in West Bengal.
He also bought raw jute in Bihar and exported it to merchants and mill owners in West Bengal by rail from Kishenganj Railway Station.
After the enactment of sections 3A and 5A the State Government issued a notification dated December 26, 1967 purporting to exercise power under section 42 of the Bihar Sales Tax Act, 1959 read with r. 31B of the Bihar Sales Tax Rules, 1959 notifying that no person shall tender at any railway station mentioned in Sch.
11 any consignment of goods mentioned in Sch.
I exceeding the quantity specified for transport to any place inside the State of Bihar and no person shall accept such tender in accordance with the conditions laid down in the said R. 31B. Under Sch.
I jute exceeding 800 kg.
could not be tendered for transport without a despatch Permit and Kishenganj was one of the railway stations mentioned in Sch.
In July 1967 the Superintendent of Commercial Taxes prohibited the railway authorities from loading and despatching jute goods from any railway station in Purnea district without the production of a registration certificate.
For non production of such certificate the railway authorities refused to despatch from Kishenganj the jute goods booked by the appellant.
The appellant moved a 'writ petition in the High Court of Patna challenging inter alia the validity ,of sections 3A and 5A of the Bihar Sales Tax Act and of R.31B.
The High Court dismissed the petition.
With certificate the present appeal was filed.
In support of the petition it was urged (i) that sections 3A and 5A infringed the guarantee of freedom of trade under article 301 of the Constitution and since the amendment by the Finance Act, 1966 introducing these sections did not receive the assent of the President under article 304(b) the amendment was not saved; (ii) that sections 3A and 5A were contrary to ' section 15 of the and accordingly void; (iii) that P. 31B framed by the State Government and the notification issued on December 2.6, 1967 were unauthorised and liable to be struck down.
HELD: (i) The assumption that the levy of purchase tax must be deemed in all circumstances to violate the guarantee under article 301 and 413 the levy will be valid only if the Act is enacted by the State Legislature with the previous sanction of the President cannot be accepted as correct.
Imposition of tax may in certain circumstances impede free flow of trade, commerce and intercourse.
But every tax does not have that effect.[417 G; 419 E] State of Madras vs N. K. Nataraja Mudaliar [1968] 3 S.C.R. 829, Atiabari Tea Co. Ltd. vs State of Assam, and The Andhra Sugars Ltd. vs State of Andhra Pradesh, 21 S.T.C. 212, applied.
In the present case the petitioner has made no averments in his petition which supported the plea that imposition of purchase tax directly and immediately restricts or impedes the free flow of trade.
Since power to impose purchase tax under section 3A was not shown to restrict or impede the free flow of trade directly and immediately, it need not seek to derive for its validity, support from article 304(b).
[419 G] (ii) By section 15 of the , tax liable in respect of declared goods on transactions of sale or purchase is restricted to 3% and is not leviable at more than one stage.
There was no dispute that the purchase tax on jute was leviable at the first point of purchase under section 3A of the Bihar Sales Tax Act, and the rate of tax was not shown to exceed the maximum prescribed by section 15 of the .
The provisions of sections 3A and 5A of the Bihar Sales Tax Act are not therefore inconsistent with the provisions of section 15 of the .
[420 E] (iii) Rule 31B of the Bihar Sales Tax Rules must however be struck down as ultra vires.
[420 F] The power of the State Legislature is restricted to legislate in respect of intra State transactions of sale and purchase and to matters ancillary or incidental thereto : it has no power to legislate for levy of tax on sales and purchase in the course of inter State transactions.
The power conferred by section 42 authorising the imposition of restriction or transport or movement of goods may only be exercised in respect of transactions which facilitate levy, collection and recovery of tax on transactions of intra State sale or purchase.
When r. 31B prohibits transport of goods to any place outside the State of Bihar unless a certificate is obtained from the appropriate authority, it seeks to prohibit transport of goods pursuant to transactions which may not even be of the nature of sale or purchase transactions; in any case it restricts transport pursuant to transactions in the course of inter State trade and commerce.
The operation of the rule is not restricted only to transactions in the course of intra State trade and commerce.
The rule authorises restrictions on inter State transactions and is on that account unauthorised.
For the same reasons the notification issued on December 26, 1967 must be regarded as also unauthorised.
[421 E G]
|
ns Nos. 285 and 314 of 1970.
Under Article 32 of the Constitution of India for enforcement of the Fundamental Rights.
K.K. Venugopal, and R. Gopalakrishnan, for the petitioner (in W.P. No. 285 of 1970).
433 M.Natesan, R. Gopalakrishnan, for the petitioner (in W.P. No. 314 of 1970).
S.Govind Swaminathan, Advocate General for the State of Tamil Nadu, A. V. Rangam and section Mohan, for respondents Nos. 1 to 5 (in W.P. No. 285 of 1970) and the respondents (in W.P. No. 314 of 1970).
M. K. Ramamurthi and Vineet Kumar, for the interveners.
The Judgment of the Court was delivered by Hegde, J.
In these two petitions under article 32 of the Con stitution the petitioners who unsuccessfully sought admission to certain Medical Colleges in the State of Tamil Nadu have asked for a writ of mandamus to direct the State of Tamil Nadu to allot to each, one of them a seat in one of the Government Medical Colleges in that State and for consequential orders.
In the State of Tamil Nadu, there are eight Medical Colleges out of which three are situate in the city of Madras, one in Madurai, one in Chingleput, one in Coimbatore, one in Thanjavur and one in Tirunelveli.
The total seats available in Madras Colleges are 500.
The sanctioned strength of seats in Madurai, Chingleput, Coimbatore, Thanjavur and Tirunelveli are 200, 50, 100, 200 and 75 respectively.
Thus the total number of medical seats available in the Government Colleges for 1st year of M.B.B.S., course in the State of Tamil Nadu are 1125.
We understand that for these seats nearly 7,000 students applied for admission.
In the previous years except in the year 1967 68, selection of candidates for admission to the 1st year M.B.B.S. course was done on State wise basis.
In the year 1967 68, the seats were distributed on district wise basis but that scheme was held to be invalid by this Court in Minor P. Rajendran vs State of Madras and Ors.(1) Thereafter the selection was again made on State wise basis in the years 1968 69 and 1969 70 but in the current year that system was given up and selection was directed to be made on the basis of what is known as unitwise basis.
Under the present scheme the Medical Colleges in the city of Madras were constituted as one unit and each one of the other Medical Colleges in the mofussil was constituted as a unit.
Thus six units were created in the State.
In respect of each one of the units a separate selection committee was constituted.
The intending applicants were asked to apply to any one of the committees but they were advised to apply to the committee nearest to their place of residence as far as possible.
They were told that if they applied to more than one committee their applications will be forwarded by the Government to only one of the committees.
(1)[1968] 2 section C. R. 786.
434 A few seats out of the 1125 seats were reserved for certain special categories of students.
As there is no dispute about those seats we shall not refer to them hereafter.
Out of the remaining seats 41 per cent seats were reserved for students coming from socially and educationally backward classes Scheduled Castes & Scheduled Tribes.
The rest of them were placed in the general pool.
In the State of Tamil Nadu actual marks are not being given in the Pre University examination.
The papers were valued on the basis of grades.
There are all together four grades i.e. Grades A to D. For the purpose of selection to first year M.B.B.S., course only marks obtained in the optional subjects were taken into consideration.
Selection to the seats with which we are concerned in these petitions is confined to students who have taken in their Pre University examination Physics, Chemistry and Biology as their optional subjects though each of these subjects carried a maximum of 100 marks thus a total of 300 marks, for the purpose of selection to the first year M.B.B.S. course the procedure prescribed was to take the minimum marks provided for the grade secured by the applicant in Chemistry and.
Physics and add them together and thereafter divide the 'total by two and to that add the minimum marks provided for the grade secured by the applicant in Biology.
Thus the total marks in the optional subjects was reduced from 300 to 200.
All the applicants in the general pool who secured 1 10 or more marks calculated on the basis of the formulae referred to earlier were called for interview by the selection committees.
Selection committees were authorised to give a maximum of 75 marks at the interview.
The selection committees were asked to award these marks on the basis of following tests.
(1) Sports or National Cadet Corps activities; (2) Extra Curricular special services; (3) General physical condition and endurance , (4) General ability, and (5) Aptitude.
The selection committees were directed to prepare a gradation list on the basis of the total marks obtained by each applicant and submit the same to the Government.
The petitioners before us appear to have had brilliant academic career.
The facts mentioned by the petitioners in this regard were not controverted by the respondents.
The petitioner in Petition No. 285 of 1970 came out within first three ranks in the 10th and 11 th standards and in the final examination he secured 451 marks out of the total, of 700.
He Stood third in his school.
43 5 Du ring his school career he had taken keen interest in extracurricular activities.
He was a N.C.C. Cadet and passed creditably the 'A ' certificate examination.
He had also obtained certificate in boxing.
He had joined the correspondence course conducted by the Voice Prophecy Institute, New Delhi and obtained a certificate in Health and Hygiene.
After having passed his Anglo Indian High School examination creditably he joined Madurai college, in the Pre University course taking Physics, Chemistry and Biology as his science subjects.
In that course he secured first class with Grade D plus in Physics and Chemistry and A plus in Biology.
He stood fourth in his college.
The grade D plus represents 85 to 99 per cent marks and A plus 65 to 75 per cent marks.
The petitioner in Petition No. 314 of 1970 passed her Pre University examination in March, 1970 from the Scott Christian College, Nagercoil which college stands affiliated to Madurai University.
She secured first class with grade 'D ' (75 to 85 per cent marks) in Physics; grade D plus (85 to 99 per cent) in Chemistry and D (75 to 85) per cent in Biology.
The petitioner also had a brilliant career throughout in, the High School classes as well as in the college class.
She secured a merit card for the highest distinction consecutively for the years 1965 66, 1966 67 and 1967 68 in Standards 8 to 10 of St. Joseph 's Convent, Nager coil.
In the S.S.L.C. examination held in March, 1969 she secured 456 marks out of 600.
She obtained distinction in extracurricular activities both in school and college.
She had been a girl guide.
She took keen interest in games and sports particularly in net ball, throw ball and tenniquoit.
She was a member of the Representative team.
She also passed with merit the pianoforte playing Grade 1 examination conducted by the Trinity College of Music, London.
The petitioners before this Court challenged the validity of the selections made on various grounds.
They contended that the unitwise selection contravenes articles 14 and 15 of the Constitution inasmuch as the same places the applicants of some of the units in a better position than those who applied to other units.
It was alleged that the ratio between applicants and number of seats in the Coimbatore unit was 1 : 13; in Tirunelveli 1 : 10; in Chingleput 1 : 6; in the Madras 1 : 5 1/2 ; in Thanjavur 1 : 6 and in Madurai 1 : 71.
It was further alleged that several applicants who secured lesser marks than the petitioners before this Court were selected merely because their applications came to be considered in other units.
It was also alleged that this unitwise scheme was merely intended as a device to get over the decision of this Court in Rajendran 's case().
It was next contended on behalf of the petitioners that the interview held was a farce.
(1)[1968] 2 section C. R. 786.
436 Each applicant was interviewed hardly for three minutes.
During that interview irrelevant questions were put to them.
The interview marks were manipulated so as to pull up under serving applicants and downgrade those who had secured excellent marks in their Pre University examination.
It was said that a perusal of the marks list would show that the whole selection was a manipulation.
The applicants who had failed more than once and ultimately secured bare second class were selected while the first rate applicants who had secured first class with high marks were rejected.
It was urged on their behalf that even the students who get the minimum marks could be pulled up by the selection committee by plumping 70 or more out of 75 interview marks whereas the students who have secured 170 marks the highest marks that could have been secured under the admission rules in Pre University examination could be pulled down by giving less than 10 marks out of 75 marks.
The petitioners ' complaint is that after the interview the selection committee carried the marks given by them to Madras and there the Government has manipulated the marks in such a way as to 'select their favourites and reject such of them in whom the Government was not interested.
It was also urged that no guidelines.were provided for awarding marks at the interview and therefore the power conferred on the selection committee is an arbitrary power which is capable of being misused and in fact has been misused.
It was contended that the list of backward classes provided to the committee was solely made on the basis of caste and as such that list did not conform to the requirements of article 15(4) of the Constitution.
The petitioners also urged that the reservation made for backward classes is disproportionately high and further the division of backward classes into backward classes and more backward classes was impermissible under law.
We shall first take up the plea regarding the division of medical seats on unitwise basis.
It is admitted that the minimum marks required for being selected in some unit is less than in the other units.
Hence prima facie the scheme in question results in discrimination against some of the applicants.
In Rajendran 's case(1) this Court ruled that the district wise distribution of available seats is violative of article 15 of the Constitution '.
But it was Contended on behalf of the State that the unitwise distribution of seats was adopted for administrative convenience.
It was said that it was not possible for one selection committee to interview all the applicants.
Therefore several committees had to be constituted.
In the past when applicants were interviewed by several committees there were complaints that the standard adopted by one committee differed from that adopted by others and therefore the applicants ' ability was not tested by a uniform standard.
Further (1) ; 43 7 it was said that when selections were made by several committees there was delay in preparing a consolidated list.
We are unable to accept these grounds as being real grounds for classification.
The grievance when selections were made by several committees in a State wise selection the standard adopted by various committees differed, would continue even when selections are made by several committees in a unitwise selection.
Whether the selection is made by selection committees on State wise basis or unitwise basis, the standard adopted by various committees is bound to vary.
Hence in principle it makes no difference.
Now coming to the question of delay, we see no reason why there should be any delay in preparing a consolidated list.
At any rate the delay caused is not likely to be such as to justify departure from the principle of selection on the basis of merit on a Statewise basis.
Before a clasification can be justified, it must be based on an objective criteria and further it must have reasonable nexus with the object intended to be achieved.
The object intended to be achieved in the present case is to select the best candidates for being admitted to Medical Colleges.
That object cannot be satisfactorily achieved by the method adopted.
The complaint of the petitioners is that unitwise distribution of seats is but a different manifestation of the districtwise distribution sought in 1967 68 has some force though on the material on record we will not be justified in saying that the unitwise distribution was done for collateral purposes.
Suffice it to say that the unitwise distribution of seats is violative of articles 14 and 15 of the Constitution.
The fact that an applicant is free to apply to any one unit does not take the scheme outside the mischief of articles 14 and 15.
It may be remembered that the students were advised as far as possible to apply to the unit nearest to their place of residence.
Earmarking 75 marks out of 275 marks for interview as inter view marks prima facie appears to be excessive.
It is not denied that the interview lasted hardly, for three minutes for each candidate.
In the course of three minutes interview it is hardly possible to assess the capability of a candidate.
In most cases the first impression need not necessarily be the best impression.
But under the existing conditions in this country we are unable to accede to the contention of the petitioners that the system of interview, as in vogue in this country is so defective as to make it useless.
It is true that various researches conducted in other countries particularly in U.S.A. show that there is possibility of serious errors creeping in interviews made on haphazard basis.
C. W. Valentine on "Psychology and its Bearing on Education" ' refers to the marks given to the same set of persons interviewed 438 by two different competent Boards and this is what is stated in his book : "The members of each board awarded a mark to each candidate and then he was discussed and an average mark agreed on.
When the orders of merit for the two boards were compared it was found that the man placed first by Board A was put 13th by Board B when the main placed 1st by Board B was 11th with Board A." Even when the, interviews are conducted by impartial and competent persons on scientific lines very many uncertain factors like the initial nervousness on the part of some candidates, the mood in which the interviewer happens to be and the odd questions that may be put to the persons interviewed may all go to ,affect the result of the interview.
But as observed by this Court in R. Chitralekha and Anr.
vs State of Mysore and Ors(1).
"In the field of education there are divergent views as regards the mode of testing the capacity and calibre of students in the matter of admissions to colleges.
Orthodox educationists stand by the marks obtained by a student in the annual examination.
The modem trend of opinion insists upon other additional tests, such as interview, performance in extracurricular activities, personality test, psychiatric tests etc.
Obviously we are not in a position to judge which method is pre ferable or which test is the correct one.
If there can be manipulation or dishonesty in allotting marks at interviews, there can equally be manipulation in the matter of awarding marks in the written examination.
In the ultimate analysis, whatever method is adopted its success depends on th e moral standards of the members constituting the selection committee and their sense of objectivity and devotion to duty.
This criti cism is more a reflection on the examiners than on the system itself.
The scheme, of selection, however, perfect it may be, on paper, may be abused in practice. 'Mat it is capable of abused is not a ground for quashing it.
So long as the order lays down relevant objective criteria and entrusts the business of selection to qualified persons, this Court cannot obviously have any say in the matter.
" While we do feel that the marks allotted for interview ' are on the high side and it may be appropriate for the Government to (1) ; 439 re examine the question, we are unable to uphold the contention that it was not within the power of the Government to provide such high marks for interview or that there was any arbitrary exercise of power.
It was urged on behalf of the petitioners that the interview marks were, allotted on collateral considerations.
We are told that the selection committees were tools in the hands of the Government and the Government manipulated the marks in such a way as to facilitate the selection of those students in whom the members of the party in power were interested.
These allegations were denied by the respondents.
While, elaborating their arguments on their plea of mala fides the learned Counsel for the petitioners invited our attention to the marks lists which according to them clearly showed that the marks given at the interview are by and large in inverse proportion to the marks obtained by the candidates at the University examination.
We were also told that the marks lists on their face show that the interview marks were manipulated.
It was said that marks were so given as to see that certain candidates got at least the minimum required for selection.
While there is some basis for these criticisms there is not sufficient material before us from which we could conclude that there was any manipulation in preparing the gradation list.
It is true that numerous students whose performance in the University examination was none too satisfactory nor their past records creditable had secured very high marks at the interview.
It is also true that a large number of students who had secured very high marks in the University examination and whose performance in the earlier classes was very good had secured very low marks at the interview.
This circumstance is undoubtedly disturbing but the courts cannot uphold the plea of mala fides on the basis of mere probabilities.
We cannot believe that any responsible Government would stoop to manipulating marks.
The selection committees consisted of eminent persons.
Most of them are medical practitioners occupying responsible positions ' in life.
It would be a bad day for this country if such persons take to manipulation of marks.
Hence we cannot accept the contention that the interview marks were manipulated either by the Government or by the selection committees.
It was next urged that no objective criterion was fixed for interview.
We are unable to accept this contention as well.
I The selectors were asked to interview candidates on the basis of the five criteria prescribed to which we have made reference earlier.
Those tests are sufficiently objective in character.
Similar tests were held to be objective by this Court in Chitralekha 's case(1).
It cannot be denied that extra curricular activities like sports, N.C.C., special services, general physical condition and endurance and general ability are objective tests.
The aptitude (1) (1964)6 S.C.R 368.
440 referred to in the rule, in our opinion, is aptitude for medical profession.
It was next contended that separate marks had not been allotted for each one of the tests enumerated in the rule.
A total of 75 interview marks were placed at the disposal of the selection committee and from out of those the committee could award marks according to its sweet will and pleasure.
Such a power it was said is an arbitrary power.
We were told that the entire 75 marks could have been given to a candidate even if he satisfied only one out of the five criterion prescribed.
It is true that the rule did not prescribe separate marks for separate heads.
But that in our opinion did not permit the selection committee to allot marks as it pleased.
Each one of the tests prescribed had its own importance.
As observed at footnote 20 at p. 485 of American Jurisprudence Vol.
15 that the interviewers need not record precise questions and answers when oral tests are used to appraise personality traits; it is sufficient if the examiner 's findings are recorded on the appraisal sheet according to the personal qualifications itemised for measure.
A contention similar to those advanced by the petitioners came up for consideration before the Mysore High Court in D. G. Viswanath vs Chief Secretary of Mysore and Ors.
Therein the court observed thus : "It is true that Annexure IV does not specifically mention the marks allotted for each head.
But from that circumstance it cannot be held that the Government had conferred an unguided power on the Committees.
In the absence of specific allocation of marks for each head, it must be presumed that the Government considered that each of the heads mentioned in Annexure IV as being equal in importance to any other.
In other words, we have to infer that the intention of the Government was that each one of those heads should carry 1/5th of the "Interview" marks.
" We may note that the committee had not divided the interview marks under various heads nor were the marks given on itemised basis.
The marks list produced before us shows that the marks were given in a lump.
This is clearly illegal.
The interview held was also vitiated for the reason that the selection committee took into consideration irrelevant matters and at the same time failed to take into consideration matters required to 'be taken into consideration.
In the counter affidavit filed by the Chairman of the selection committee it was averred that in allotting interview marks the committee took into consideration A.I.R. 1964 Mys.132.
441 qualities such as pleasant personality, quick thinking etc.
One of the extra curricular activities that the committee was required to take into% consideration was N.C.C. training.
That was clearly an objective test but from the counter affidavit filed, it appears that the committee did not think that it was sufficient if an applicant had good record as a cadet, but according to it, he must also know why he joined the N.C.C. and what role N.C.C. plays in the National life.
These, in our opinion, are irrelevant considerations.
Again the test like the physical condition and endurance can be best judged by a competent medical practitioner after a careful medical examination.
It was in the very nature of things not possible for the selection committee though composed of eminent doctors to find out the physical condition and endurance by a mere look at the candidate.
It is clear from the affidavit filed on behalf of the selection committees that at the time of interview much attention had not been given to the general ability which test include past performance of the applicants and the varied interest taken by them.
From the facts placed before us it is clear that the candidates were not interviewed in accordance with the rules governing the interview.
It was next urged that the classification of backward classes by the Government into backward classes and more backward classes was illegal and in support of that contention our attention was invited to the decision of this Court in M. R. Balaji and Ors.
vs State of Mysore().
It is unnecessary to go into that question because for the purpose of the present selection the backward classes were not sub divided into backward classes and more backward classes.
What had happened is that the list of backward classes supplied to the selection committee showed that some of the communities are more backward than others but that list was prepared for the purpose of fee concession.
For the purpose of the present selection all the classes shown therein were treated as backward classes.
There is no basis for the contention that the reservation made for backward classes is excessive.
We were dot told why it is, excessive.
Undoubtedly we should not forget that it is against the immediate interest of the Nation to exclude from the portals of our medical colleges qualified and competent students but then the immediate advantages of the Nation have to be harmonised with, its long range interests.
It cannot be denied that unaided many sections of the people in this country cannot compete with the advanced sections of the Nation.
Advantages secured due to, historical reasons should not be considered as fundamental rights.
Nation 's interest will be best served taking a long range view if the backward classes are helped to march forward and take their (1)(1963) Supp.
1 section C. R. 438.
442 place in line with the advanced sections of the people.
That is ,why in Balaji 's case (1) this Court held that the total of reservations for backward classes, scheduled castes and scheduled tribes should not ordinarily exceed 50% of the avail able seats.
In the present case it is 41 %.
On the material before us we are unable to hold that the said reservation is excessive.
Considerable arguments were advanced assailing the enumera tion of backward classes.
It was said that the concerned list included only castes and not classes.
The petitioners ' case is that every one of the classes mentioned therein is in reality a. caste.
Hence that list cannot be sustained.
In Balaji 's case(1) this Court held that though caste is a relevant factor in ascertaining a ,class for the purpose of article 15(4), a class cannot be constituted solely on the basis of caste.
Gajendragadkar J. (as he then was) speaking for the Court observed : "That though castes in relation to Hindus may be a relevant factor to consider in determining the social ,backwardness of groups or classes of citizens it cannot be made the sole or the dominant test in that behalf. 'Social backwardness is on the ultimate analysis the result of poverty, to a very large extent.
The classes of citizens who are deplorably poor automatically become socially backward.
They do not enjoy a status in society I and have, therefore to be content to take a backward seat.
It is true that social backwardness which results from poverty is likely to be aggravated by considerations of caste to which the poor citizens may belong, but that only shows the relevance of both caste and poverty in determining the backwardness of citizens.
" In Chiterlekha 's case(2), this Court reiterated that the caste is a relevant circumstance in ascertaining the backwardness of a class.
Further it was observed therein : "While this Court has not excluded caste from ascertaining the backwardness of 'a class of citizens, it has not made it one of the compelling circumstances affording a basis for the ascertainment of backwardness of a class.
To put it differently the authority concerned may take caste into consideration in ascertaining the backwardness of a group of persons; but, if it does not, its order will not be had on that account, if it can ascer tain the backwardness of a group of persons on the basis of other relevant criteria.
" The same view was, expressed by this court in State of Andhra Pradesh and anr.
vs P. Sagar(3).
There in it was observed (1) (1963) Supp. 1 section C. R. 438.
(2) ; (3) 443 "In the context in which it occurs the expression 'class ' means a homogeneous section of the people grouped together because of certain likenesses or common traits and who are identifiable by some common attributes such as status, rank, occupation, residence in a locality, race, religion and the like.
In determining whether a particular section forms a class, caste cannot be excluded altogether.
But in the determination of a class a test solely based upon the caste or community cannot also be accepted.
" A caste has always been recognised as a class.
In construing the expression "classes of His Majesty 's subjects" found in section 153 A of the Indian Penal Code) Wassoodew J. observed in Narayan Vasudev vs Emperor(1).
"In my opinion, the expression 'classes of His Majesty 's subjects ' in Section 153 A of the Code is used in restrictive sense as denoting a collection of individuals or groups bearing a common and exclusive designation and also possessing common and exclusive characteristics which may be associated with their original race or religion, and that the term 'class ' within that section carries with it the idea of numerical strength so large as could be grouped in a single homogeneous community.,, In Paragraph 10, Chapter V of the Backward Classes Commission 's Report, it is observed : "We tried to avoid caste but we find it difficult to ignore caste in the present prevailing conditions.
We wish it were easy to dissociate caste from social backwardness at the present juncture.
In modem times any body can take to any profession.
The Brahman taking to tailoring, does not become a tailor by caste, (nor is his social status lowered as a Brahman.
A Brahman may be a seller of boots and shoes, and yet his social status is not lowered thereby.
Social backwardness, therefore, is not today due to the 'particular profession of a person, but we cannot escape caste in considering the social backwardness in India.
" In Paragraph II of that Report it is stated: "It is not wrong to assume that social backwardness has largely contributed to the educational backwardness of a large number of social groups." Finally in Paragraph 13, the committee concludes with following observations : "All this goes to Prove that social backwardness is mainly based on racial, tribal, caste and denominational differences." (1) A. I. R.1940 Bom.
444 The validity of the impugned list of backward classes came up for consideration before this Court in Rajendran 's case(1) and this is what this Court observed therein "The contention is that the list of socially and educationally backward classes for whom reservation is made under r. 5 is nothing but a list of certain castes.
There.fore, reservation in favour of certain castes based only on caste considerations violates article 1 5 ( 1 ), which prohibits discrimination on the ground of caste only.
Now if the reservation in question had been based only on caste and had not taken into account the social and educational backwardness of the caste in question, it would be violative of article 15(1).
But it must not be forgotten that a caste is also a class of citizens and if the caste as a whole is socially and educationally backward, reservation can be made in favour of such a caste on the ground that it is, a socially and educationally backward class of citizens within the meaning of article 15 (4) " Rajendran 's case(1) is an authority for the proposition that the classification of backward classes on the basis of castes is within the purview of article 15(4) if those castes are shown to be socially and educationally backward.
No further material has been placed before us to show that the reservation for backward classes with which we are herein concerned is not in accordance with article 15(4).
There is no gain saying the fact the there are numerous castes in this country which are socially and educationally backward. ' To ignore their existence is to ignore the facts of life.
Hence we are unable to uphold the contention that impugned reservation is not in accordance with article 15 (4).
But all the same the Government should not proceed on the basis that once a class is considered as a backward class it should continue to be back ward class for all times.
Such an approach would defeat the very purpose of the reservation because once a class reaches a stage of progress which some modem writers call as take off stage then ,competition is necessary for their future progress.
The Government should always keep under review the question of reservation ,of seats and only the classes which are really socially and educationally backward should be allowed to have the benefit of reservation.
Reservation of seats should not be allowed to become a vested interest.
The fact that candidate,, of backward classes have secured about 50% of the seats in the general pool does show that the time has come for a de novo comprehensive examination of the question.
It must be remembered that the Government 's decision in this regard is open to judicial review.
(1) ; 445 For the reasons mentioned above we are of opinion that the selections impugned in these petitions cannot be held to have been made validly inasmuch as the seats were distributed on unitwise basis and further that the interviews were not held in accordance with the rules.
But despite coming to that conclusion we are unable to set 'aside the selections already made.
The selected candidates have not been made parties to these petitions.
They have already joined the course and are undergoing training.
Their selection cannot be set aside without giving them an opportunity to put forward their case.
It is true that the petitioners had filed applications to premit them to have recourse to O. 1, r. 8.
C.P.C. for the representation of the persons interested in opposing these applications but no order has been passed on those applications and it is now too late to have recourse to that procedure even if that procedure is, permissible under law.
We are told by the learned Advocate General of Tamil Nadu that 24 seats still remain to be filled up.
He has assured us on behalf of the State that those seats will be filled up in accordance with the orders of this Court.
There are about 80 persons, who we are told are in the waiting list.
Some of the unsuccessful applicants had moved the High Court of Madras for relief similar to that sought by the petitioners herein.
But it appears their writ petitions have been dismissed.
Some out of them have intervened in these petitions.
Other non selected candidates have evinced no interest in chal lenging the selections made.
Under the circumstances, it is reasonable to assume that they have abandoned their claim and it is too late for them to press their claim.
Under these circumstances, after discussion with the Counsel for the parties we have come to the conclusion that these petitions should be allowed subject to the following conditions : The State of Tamil Nadu shall immediately constitute a sepa rate expert committee consisting of eminent medical practitioners (excluding all those who were members of the previous committees) for selection to the 24 unfilled seats.
The selection shall be made on Statewise basis.
The committee shall interview only the candidates who are show in the waiting list, the persons who unsuccessfully moved the High Court of Madras and the two petitioners before this Court.
They shall allot separate marks under the five heads mentioned in the rule.
The committee shall take into consideration only matters laid down in the rule, exclude from consideration all irrelevant matters and thereafter prepare a gradation list to fill up the 24 seats mentioned earlier.
It is ordered accordingly.
We think this is a fit case where the petitioners should get their costs from the State of Tamil Nadu.
| IN-Abs | In 1970 71, selection of candidates to various medical colleges in the State of Tamil Nadu was done on the 'unit wise ' basis.
Under that scheme the medical colleges in the city of Madras were constituted as ,one unit and each of the other medical colleges in the mofussil was constituted as a unit.
In respect of each one of the units, a separate selection committee was constituted.
The intending applicants were asked to apply to any one of the committees but were advised to apply to the committee nearest to their place of residence and, if they applied to more than one committee, their applications were to be forwarded by the Government to only one of the committees.
A few seats were reserved to certain special categories of students and out of the remaining seats, 41 per cent were reserved for students coming from socially and educationally backward classes, scheduled castes and scheduled tribes, and the rest were placed in the general pool.
All the applicants in the general pool who secured 110 or more marks ,out of 200, calculated according to a certain formula, were called for interview and selection committees were authorised to give in addition, a maximum of 75 marks at the interview.
The award of these marks was on the basis of the following five criteria, namely, (a) Sports or NCC activities ' (b) extra curricular special services, (c) general physical condition and endurance; (d) general ability, and (e) aptitude.
The gradation list prepared by the selection committee was to be submitted to the Government.
The petitioners, who unsuccessfully sought admission to the medical colleges in the State, challenged the validity of the selections made.
They contended that : (1) The unitwise selection contravened articles 14 and 15 of the Constitution because, (a) the applicants of 'some of the units were in a better position than those who applied to other units, since the ratio between the applicants and the number of seats in each unit varied, and several applicants who secured lesser marks than the petitioners were selected merely because their applications came to be considered in ,other units, and (b) the scheme was merely intended as a device to get over the decision of this Court in Rajendran vs State of Madras, ; ; (2) the interview was a farce because it Was held for only three minutes and no guidelines we 're provided for the award of marks at the interview and earmarking for interview marks 75 out of the total of 275 was excessive; (3) the interview marks were manipulated both by the selection committee and the Government in order to pull up undeserving :applicants; (4) the list of backward classes was solely made on the basis 431 of caste and therefore did not conform to article 15(4) of the Constitution; (5) the reservation made for backward classes was disproportionately high; and (6) the division of backward classes into backward classes and more backward classes was impermissible under law.
HELD : (1) (a) The object intended to be achieved in the present case, is to select the best candidates for being admitted to medical colleges.
This object cannot be satisfactorily achieved by the method adopted.
It is admitted that the minimum marks required for being selected in some units is less than in other units.
Hence prima facie the scheme in question results in discrimination.
The plea of delay in selection on State wise basis is neither real nor substantial.
[436 F G; 437 C D] (b)The unitwise distribution of seats appears to be a different manifestation of the district wise distribution which was struck down by this Court in Rajendran 's case,.
[437 D E] (2)In the course of three minutes interview, it is hardly possible to the capability of a candidate since,the first impression need not necessarily be the best impression.
But it cannot be held that the system of interview is so defective as to make it useless, or that the Government has no power to provide such high marks for interview or that there was an arbitrary exercise of the power.
[437 G H; 438 H; 439 A] It is true that the rule did not prescribe separate marks for the separate heads, but it must be presumed that the Government considered that each of the heads mentioned as being of equal importance and that the intention was that each of those heads 'should carry 115 of the interview marks.
[440 B G] Since the marks list, as prepared in the present case, shows that the marks were given in a lump it was clearly illegal.
[440 F G] Chitralekha vs State of Mysore ; , followed.
Viswasnath vs Chief Secretary, Mysore, A.I.R., 1964 Mys.
132, approved.
The tests relating to the various matters for allotting interview marks.
are objective tests.
The aptitude referred to in the rule is aptitude for the medical profession; but in this case certain irrelevant matters were taken into consideration and relevant matters were omitted.
[439 H; 440 A, 441 A B, C D] (3)There is no material for concluding that there was any manipulation of marks.
Numerous students whose performance in the university examination was none too satisfactory nor their past records creditable have secured very high marks at the interview, and a large number of students whose performance in the University examination was very good, secured very low marks at the interview.
This circumstance is undoubtedly disturbing but the courts cannot uphold the plea of mala fides on the basis of mere probabilities [439 C F] (4)The list of backward classes appears to include castes and not classes.
But caste is a relevant circumstance in ascertaining backwardness of a class and a classification of backward classes on the basis of caste is within the purview of article 15(4) of the Constitution, if those castes are shown to be socially and educationally backward.
But the Government could not proceed on the basis once a class is considered as a backward class it should continue to be a backward class for all time, because, once a class reaches a certain stage of progress competi 432 tion is necessary for its future progress.
The Government should, therefore, always keep under review the question of 'reservation of seats and only those classes which are really socially and educationally backward should be allowed to have the benefit of reservation.
Reservation of seats should not be allowed to become a vested interest, and the fact that, in the present case, the candidate of backward classes had secured 50 per cent of the seats in the general pool does show that the time has come for a de novo comprehensive examination of the question.
The Government 's decision in this regard is open to judicial review.
[442 B C, 444 E H] Balaji vs State of Mysore, [1963] Supp. 1 S.C.R. 438, Chitralekha vs State of Mysore ; , State of Andhra Pradesh vs Sagar, , Minor P. Rajendran vs State of Madras, ; , Narayan Vasudev vs Emperor, A.I.R. 1940 Bom.
379 and Backward Classes Commission 's Report, referred to.
(5)There is no basis for, the contention that reservation made for backward classes is excessive.
While it is against the immediate interest of the Nation to exclude from the portals of our medical colleges qualified and competent students, immediate advantages of the Nation have to be harmonised with the Nation 's long range interest.
The best way of serving the Nation 's interest would to help the backward classes to march forward and take their place in line with the advanced sections of the people.
In Balaji 's case it was held that the total, reservation for backward classes, scheduled castes and scheduled tribes should not ordinarily exceed 50 per cent of the available seats.
Since in the present case it was only 41 per cent, it could not be held that the reservation was excessive.
[441 E H; 442 A B] (6)For the purpose of selection there is no classification of backward classes as backward and more backward.
The list sent to the selection committee was that prepared for the purpose of fee concession.
[441 F] In the present case, however, the impugned selections already made could not be set aside because the selected candidates had already joined the course and are undergoing training and they had not been made parties to the petitions.
Since there are 24 seats yet to be filled up, the State shall immediately constitute a separate expert committee consisting of eminent medical practitioners (excluding all those who were members of previous committees) for selection to these unfilled seats.
The selection should be made on State wise basis.
The committee should interview only those candidates who are shown in the waiting list and persons who unsuccessfully moved the High Court and the petitioners before this Court.
in preparing the gradation list, the committee should allot separate marks under the five heads mentioned in the rule and the committee should take into consideration only matters laid down in the rule excluding from consideration all irrelevant matters.
[445 B H]
|
No. 491 of 1969.
Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights.
R.K. Garg, D. P. Singh, section C. Agrawala, R. K. Jain, V. J. Francis and section Chakravarti, for the petitioner.
Niren De, Attorney General, Jagadish Swarup, Solicitor General, J. M. Mukhi, R. N. Sachthey and B. D. Sharma, for the respondents.
The Judgment of the Court was delivered by Hidayatulla, C.J.
This petition seeks a declaration against the Union of India and the Chairman Central Board of Film Censors, that the provisions of of the together with the rules prescribed by the Central Government, February 6, 1960, in the purported exercise of its powers under section 5 B of the Act are unconstitutional and void.
As a consequence the petitioner asks for a writ of mandamus Or any other appropriate writ, direction or order quashing the direction contained in a letter (Annexure X) dated July 3, 1969 for deletion of certain shots from a documentary film entitled 'A Tale of Four Cities ' produced by him for unrestricted public exhibition.
449 The petitioner is a journalist, playwright and writer of short stories.
He is also a producer and director of cinematograph films.
He was a member of the Enquiry Committee on Film Censorship (1968) and is a member of the Children 's Film Committee.
He has produced and/or directed many films some of which have been well received here and abroad and even won awards and prizes.
The petitioner produced in 1968 a documentary film in 2 reels (running time 16 minutes) called a Tale of Four Cities.
In this film he purported to contrast the luxurious life of the rich in the four cities of calcutta Bombay, Madras and Delhi, with the squalor and poverty of the poor, particularly those whose hands and labour help to build beautiful cities, factories and other industrial complexes.
The film is in black and white and is silent except for a song which the labourers sing while doing work and some background music and sounds for stage effect.
The film, in motion sequences or still shots, shows contrasting scenes of palatial buildings, hotels and factories evidence of the prosperity of a few, and shanties, huts and slums evidence of poverty of the masses.
These scenes alternate and in between are other scenes showing sweating labourers working to build the former and those showing the squalid private life of these labourers.
Some shots mix people riding in lush motor cars with rickshaw and handcart pullers of Calcutta and Madras.
In one scene a fat and prosperous customer is shown riding a rickshaw which a decrepit man pulls, sweating and panting hard.
In a contrasting, scene the same rickshaw puller is shown sitting in the rickshaw, pulled by his former customer.
This scene is the epitomisation of the theme of the film and on view are the statutes of the leaders of Indian Freedom Movement looking impotently from their high pedestals in front of palatial buildings, on the poverty of the masses.
On the bouleverds the rich drive past in limousines while the poor pull rickshaws or handcarts or stumble along.
There is included also a scanning shot of a very short duration, much blurred by the movement of the photographer 's camera, in which the red light district of Bombay is shown with the inmates of the brothels waiting at the doors or windows.
Some of them wear abbreviated skirts showing bare legs up to the knees and sometimes a short way above them.
This scene was perhaps shot from a moving car because the picture is unsteady on the screen and under exposed.
Sometimes the inmates, becoming aware of the photographer, quickly withdraw themselves.
The whole scene barely lasts a minute.
Then we see one of the inmates shutting a window and afterwards we see the hands of a woman holding some currency notes and a male hand plucking away most of them leaving only a very few in the hands of the female.
The two actors are not shown.
450 The suggestion in the first.
scene is that a customer is being entertained behind closed shutters and in the next sequence that the amount received is being shared between the pimp and the prostitute, the former taking almost the whole of the money.
The sequence continues and for the first time the woman who shut the window is again seen.
She sits at the dressing table, combs her hair, glances at two love birds in a cage and looks around the room as if it were a cage.
Then she goes behind a screen and emerges in other clothes and prepares for bed.
She sleeps and dreams of her life before she took the present path.
The film then passes on to its previous theme, of contrasts mentioned above, often repeating the earlier shots in juxtaposition as stills.
There is nothing else in the film to be noticed either by us or by the public for which it is intended.
The petitioner applied to the Board of Film Censors for a 'U ' certificate for unrestricted exhibition of the film.
He received A. letter (December 30, 1969) by which the Regional Officer informed him that the Examining Committee and the Board had provisionally come to the conclusion that the film was not suitable for unrestricted public exhibition but was suitable for exhibition restricted to adults.
He was given a chance to make representations against the tentative decision within 14 days.
Later he was informed that the Revising Committee had reached the same conclusion.
He represented by letter (February 18, 1969) explaining the purpose of the films as exposing the exploitation of man (or woman) by man ' and the contrast between the very rich few and the very poor masses.
He claimed that there was no obscenity in the film.
He was informed by a letter (February 26, 1969) that the Board did not see any reason to alter its decision and the petitioner could ' appeal within 30 days to the Central Government.
The petitioner appealed the very next day.
On July 3, 1969, the Central Government decided to give a 'U ' certificate provided the following cuts were made in the film: "Shorten the scene of woman in the red light district, deleting specially the shot showing the closing of the window by the lady, the suggestive shots of bare knees and the passing of the currency notes.
" Dir. IC(iii)(b)(c); IV".
The mystery of the code numbers at the end was explained by a letter on July 23, 1969 to mean this : "1.
It is not desirable that a film shall be certified as suitable for public exhibition, either unrestricted or restricted to adults which 45 1 C(iii) (b) deals with the relations between the sexes in such a manner as to depict immoral traffic in women and soliciting, prostitution or procuration.
IV.It is undesirable that a certificate for unrestricted public exhibition shall be granted in respect of a film depicting a story, or containing incidents unsuitable for young persons.
" The petitioner then filed this petition claiming that his fundamental right of free speech and expression was denied by the order of the Central Government.
He claimed a 'U ' certificate for the film as of right.
Before the hearing commenced the film was specially screened for us.
The lawyers of both sides (including the Attorney General) and the petitioner were also present.
The case was then set down for hearing.
The Solicitor General (who had not viewed the film) appeared at the hearing.
We found it difficult to question him about the film and at our suggestion the Attorney General appeared but stated that Government had decided to grant a 'U ' certificate, to the film without the cuts previously ordered.
The petitioner then asked to be allowed to amend the petition so as to be able to challenge pre, censorship itself as offensive to freedom of speech and expression and alternatively the provisions of the Act and the rules, orders and directions under the Act, as vague, arbitrary and indefinite.
We allowed the application for amendment, for the petitioner was right in contending that a person who invests his capital in promoting or producing a film must have clear guidance in advance in the matter of censorship of films even if the law of pre censorship be not violative of the fundamental right.
When the matter came up for hearing the petitioner raised four points : (a) that pre censorship itself cannot be tolerated under the freedom of speech and expression, (b) that even if it were a legitimate restraint on the freedom, it must be exercised on very definite principles which leave no room for arbitrary action, (c) that there, must be a reasonable time limit fixed for the decision of the autho rities censoring the film, and (d) that the appeal should lie to a court or to an independent tribunal and not the Central Government.
The Solicitor General conceded (c) and (d) and stated that Government would set on foot legislation to effectuate them at them earliest possible opportunity.
Since the petitioner felt, satisfied with, this assurance we did not go into the matter.
But we must place on record that the respondents exhibited charts showing the time taken in the censorship of films during the last one year or so and.
45 2 we were satisfied that except in very rare cases the time taken could not be said to be unreasonable.
We express our satisfaction that the Central Government will cease to perform curial functions through one of its Secretaries in this sensitive field involving the fundamental right of speech and expression.
Experts sitting as a Tribunal and deciding matters quasi judicially inspire more confidence than a Secretary and therefore it is better that the appeal should lie to a court or tribunal.
This brings us to the remaining two questions.
We take up first for consideration : whether pre censorship by itself offends the freedom of speech and expression.
Article 19(1)(a) and (2) of the Constitution contain the guarantee of the night and the restraints that may be put upon that right by a law to be made by Parliament.
They may be read here: "19.
Protection of certain rights regarding freedom of speech, etc.
(1) All citizens shall have the right (a) to freedom of speech and expression; (2)Nothing in sub clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence.
" The argument is that the freedom is absolute and precensorship is not permissible under the Constitution.
It is submitted that precensorship is inconsistent with the right guaranteed.
Now it is clear that some restraint is contemplated by the second clause and in the matter of censorship only two ways are open to Parliament to impose restrictions.
One is to Jay down in advance the standards for the observance of film producers and then to test each film produced against those standards by a perview of the film.
The other is to let the producer observe those standards and make the infraction an offence and punish a Producer who does not keep within the standards.
The petitioner claims that the former offends 453 the guaranteed freedom but reluctantly concedes the latter and relies upon the minority view expressed in the United States Supreme Court from time to time.
The petitioner reinforces this argument by contending that there are other forms of speech and expression besides the films and none of them is subject to any prior restraint in the form of precensorship and claims equality of treatment with such other forms.
He claims that there is no justification for a differential treatment.
He contends next that even the standards laid down are unconstitutional for many reasons which we shall state in proper place.
This is the first case, in which the censorship of films in general and precensorship in particular have been challenged in this Court ' and before we say anything about the arguments, it is necessary to set down a few facts relating to censorship of films and how it works in India.
The Government of India appointed a Committee on March 28, 1968 to enquire into the working of the existing procedures for certification of cinematograph films for public exhibition in India and allied matters, under the Chairmanship of Mr. G. D. Khosla, former Chief Justice of the Punjab High Court.
The report of the Committee has since been published and contains a valuable summary of the law of censorship not only in India but also in foreign countries.
It is hardly helpful to the determination of this case to go into this history but it may be mentioned here that it is the opinion of experts on the subject that Indian :film censorship since our independence has become one of strictest in the world: See Film Censors and the Law by Neville March Hunilings p. 227 and Filmrecht: ein Handbuch of Berthold and von Hartleib(1957)p.215 quoted by Hunnings.
ln 1966
Raj Bahadur (who succeeded Mrs. Indira Gandhi as Minister for Information and Broadcasting) said that Government would 'continue a liberal censorship ' and was considering certain expert opinion on the subject.
He also suggested to the film industry that it should formulate a code which would be the best from all standards so that Government may be guided by it in formulating directives to the censors '; See Journal of Film Industry, February 25, 1966 also quoted by Hunnings at page 18 of his book.
This suggestion came to nothing for obvious reasons.
Film industry in India is not even oligopolistic in character and it is useless to expect it to classify films according to their suitability, as is done in the United States by the motion picture Association of America(MPAA) founded in October 1968.
There the film industry is controlled by eight major producers and private control of film making is possible with the assistance of the National Association of Theatre Owners and Film Importers and Distributors of America.
Having no such organisation for private censorship or even a private body like the British Board of Film Censors in England, the task must be done by Government if censorship is at all to be imposed.
Films began ' to be 436 Sup Cl/71 exhibited in India at the turn of the last century and film censorship took birth in 1918 when the (2 of 1918) was passed.
Two matters alone were then dealt with : (a) the licensing of cinema houses, and (b) the certifying of film for public exhibition.
The censors had a wide discretion and no standards for their action were indicated.
Boards of Film Censors came into existence in the three Presidency towns and Rangoon.
The Bombay Board drew up some institutions for Inspectors of Films and it copied the 43 rules formulated by T. P. O 'Connor in.
England.
These are more or less continued even today.
We do not wish to trace here the history of the development of film censorship in India.
That task has been admirably performed by the Khosla Committee.
Legislation in the shape of amendments of the Act of 1918 and a Production Code were the highlights of the progress.
In 1952 a fresh consolidating Act was passed and it is Act 37 of 1952 (amended in 1959 by Act 3 of 1959) and that is the present statutory provision on the subject.
It established a Board of Film Censors and provided for Advisory Panels at Regional Centres.
Every person desiring to exhibit any film has to apply for a certificate and the Board after examining the film or having the film examined deals with it by: (a)sanctioning the film for unrestricted public exhibition; (b)sanctioning the film for public exhibition restricted to adults; (c)directing such excisions and modifications as it thinks fit, before sanctioning the film for unrestricted public exhibition or for public exhibition restricted to adults, as the case may be; or (d) refusing to sanction the film for public exhibition.
The film producer is allowed to represent his views before action under (b) (c) and (d) is taken.
The sanction under (a) is by granting a 'U ' certificate and under (b) by an 'A ' certificate and the certificates are valid for ten years.
The Act then lays down the principles for guidance and for appeals in sections 5B and _5C respectively.
These sections may be.
read here "5B. principles for guidance in certifying films.
(1)A film shall not be certified for public exhibition if, in the opinion of the authority competent to grant the certificate, the film or any part of it is against the interests of the, security of the State, friendly relations with foreign 455 States, public order, decency or morality, or involves defamation or contempt of court or is likely to incite the commission of any offence.
(2)Subject to the provisions contained in Sub section (1), the Central Government may issue such directions as it may think fit setting out the principles which shall guide the authority competent to grant certificates under this Act in sanctioning films for public exhibition." "5C. Appeals.
Any person applying for a certificate in respect of a film who is aggrieved by any order of the Board (a) refusing to grant a certificate; or (b) granting only an "A" certificate; or (c) directing the applicant to carry out any excisions or modifications; may, within thirty days from the date of such order, appeal to the Central Government, and the Central Government may, after such inquiry into the matter as it considers necessary and after giving the appellant an opportunity for representing his views in the matter, make such order in relation thereto as it thinks fit." By section 6, the Central Government has reserved a general revising power which may be exercised during the pendency of a film before the Board and even after it is certified.
Under the, latter part of this power the Central Government may cancel a certificate already granted or change the 'U ' certificate into an 'A ' certificate or may suspend for 2 months the exhibition of any film.
The above is the general scheme of the legislation on the subject omitting allied matters in which we are not interested in this case.
It will be noticed that section 5B(1) really reproduces clause (2) of article 19 as it was before its amendment by the First Amendment.
This fact has led to an argument which we shall notice presently.
The second sub section of section 5B enables the Central Government to state the principles to guide the censoring authority, by issuing directions.
In furtherance of this power the Central Government has given directions to the Board of Film Censors.
They are divided into General Principles three in number, followed by directions for their application in what are called 'ruled '.
The part dealing with the application of the principles is divided into four sections and each section contains matters which may not be the subject of portrayal in films.
We may quote the General Principles here "1.
No picture shall be certified for public exhibition which will lower the moral standards of those who see it.
45 6 Hence, the sympathy of the audience shall not be thrownon the side of crime, wrong doing, evil or sin.
2.Standards of life, having regard to the standards of thecountry and the people to which the story relates,shall not be so portrayed as to deprave the morality of the audience.
3.The prevailing laws shall not be so ridiculed as to create sympathy for violation of such laws.
" The application of the General Principles is indicated in the four sections of the rules that follow so that a uniform standard may be applied by the different regional panels and Boards.
The first section deals with films which are considered unsuitable for public exhibition.
This section is divided into clauses A to F. 'Clause A deals with the delineation of crime, B with that of vice or immorality, C with that of relations between sexes, D with the exhibition of human form, E with the bringing into contempt of armed forces, or the public authorities entrusted with the administration of law and order and F with the protection of the susceptibilities of foreign nations and religious communities, with fomenting social unrest or discontent to such an extent as to incite people to crime and promoting disorder, violence, a breach of the law 'or disaffection or resistance to Government.
Clauses E and F are further explained by stating what is un suitable and what is objectionable in relation to the topics under those clauses.
Section 11 then enumerates subjects which may be objectionable in a context in which either they amount to indecency, immorality, illegality or incitement to commit a breach of the law.
Section III then provides "It is not proposed that certification of a film should be refused altogether, or that it should be certified as suitable for adult audiences only, where the deletion of a part or parts, will render it suitable for unrestricted public exhibition or for exhibition restricted to adults, and such deletion is made, unless the film is such as to deprave the majority of the audience and even excisions will not cure the defects." Section IV deals with the protection of young persons and enjoins refusal of a certificate for unrestricted public exhibition in respect of a film depicting a story or containing incidents unsuitable for young persons: Emphasis in this connection is laid in particular upon 457 (i)anything which may strike terror in a young person, e.g., scenes depicting ghosts, brutality, mutilations, torture, cruelty, etc.; (ii)anything tending to disrupt domestic harmony or the confidence of a child in its parents, eg.
scenes depicting parents quarrelling violently, or one of them striking the other, or one or both of them behaving immorally; (iii)anything tending to make a person of tender years insensitive to cruelty to others or to animals.
" In dealing with crime under section I clause A, the glorification or extenuation of crime, depicting the modus operandi of criminals, enlisting admiration or sympathy for smiminals, holding up to contempt the forces of law against crime etc. are indicated, as making the film unsuitable for exhibition.
In Clause B similar directions are given with regard to vice and immoral acts and vicious and immoral persons.
In Clause C the unsuitability arises from lowering the sacredness of the institution of marriage and depicting rape, seduction and criminal assaults on women, immoral traffic in women, soliciting prostitution or procuration, illicit sexual relations, excessively passionate love scenes, indelicate sexual situations and scenes suggestive of immorality.
In Clause D the exhibition of human form in nakedness or indecorously or suggestively dressed and indecorous and sensuous postures are condemned.
In Section 11 are mentioned confinements, details of surgical operations, venereal diseases and loathsome diseases like leprosy and sores, suicide or genocide, female under clothing, indecorous dancing, importunation of women, cruelty to children, torture of adults, brutal fighting, gruesome murders or scenes of strangulation, executions, mutilations and bleeding, cruelty to animals, drunkenness or drinking not essential to the theme of the story, traffic and use of drugs, class hatred, horrors of war, horror as a predominant element, scenes likely to afford information to the enemy in time of war, exploitation of tragic incidents of war, blackmail associated with immorality, intimate biological studies, crippled limbs or malformations, gross travesties of administration of justice I and defamation of any living person.
We have covered almost the entire range of instructions.
It will be noticed that the control is both thematic and episodic.
If the theme offends the rules and either with or without excision of the offending parts, the film remains still offensive, the certificate is refused.
if the excisions can remove its offensiveness, the film is granted a certificate.
Certifiable films are classified according to their suitability for adults or young people.
This is the essential working of Censorship of motion pictures in our country.
458 The first question is whether the films need censorship at all ' Pre censorship is but an aspect of censorship and bears the same relationship in quality to the material as censorship after the motion picture has had a run.
The only difference is one of the stage at which the State interposes its regulations between the individual and his freedom.
Beyond this there is no vital difference.
That censorship is prevalent all the world over in some form or other and pre censorship also plays a part where motion pictures are involved, shows the desirability of censorship in this field.
The Khosla Committee has given a description generally of the regulations for censorship (including pre censorship) obtaining in other countries and Hunning 's book deals with these topics in detail separately for each country.
The method changes, the rules 'are different and censorship is more strict in some Dlaces than in others, but censorship is universal.
Indeed the petitioner himself pronounced strongly in favour of it in a paper entitled 'Creative Expression ' written by him.
This is what he said: "But even if we believe that a novelist or a painter or a musician should be free to write, paint and compose music without the interference of the State machinery, I doubt if anyone will advocate the same freedom to be extended to the commercial exploitation of a powerful medium of expression and entertainment like the cinema.
One can imagine the results if an unbridled commerical cinema is allowed to cater to the lowest common denominator of popular taste, specially in a country which, after two centuries of political and cultural domination, is still suffering from a confusion and debasement of cultural values.
Freedom of expression cannot, and should not, be interpreted as a licence for the cinemagnates to make money by pandering to, and thereby propagating, shoddy and vulgar taste ' Further it has been almost universally recognised that the treatment of motion pictures must be different from that of other forms of art and expression.
This arises from the instant appeal of the motion picture, its versatility, realism (often surrealism), and its coordination of the visual and aural senses.
The art of the cameraman, with trick photography, vistavision and three dimensional representation thrown in, _ has made the cinema picture more true to life than even the theatre or indeed any other form of representative article The motion picture is able to stir up emotions more deeply than any other product of article Its effect particularly on children and adolescents is very great since their immaturity makes them more willingly suspend their disbelief than 45 9 mature men and women.
They also remember the action in the picture and try to emulate or imitate what they have seen.
Therefore, classification of films into two categories of 'U ' films and 'A ' films is a reasonable classification.
It is also for this reason that motion picture must be regarded differently from other forms of speech and expression.
A person reading a book or other writing or hearing a speech or viewing a painting or sculpture is not so deeply stirred as by seeing a motion picture.
Therefore the treatment of the latter on a different footing is also a valid classification.
The petitioner pressed for acceptance of the minority views expressed from time to time in the Supreme Court of the United States and it is, therefore, necessary to say a few words about censorship of motion pictures in America and the impact of the First Amendment guaranteeing freedom of speech and expression in that country.
The leading cases in the United States are really very few but they are followed in a very large number of per curiam decisions in which, while concurring with the earlier opinion of the Court, there is sometimes a restatement with a difference.
As early as 1914 in Mutual Film Corpn.
vs Industrial Commission of Ohio(1),Mr.
Justice Me Kenna, speaking for the full Court, said that legislative power is not delegated unlawfully when a board of censors is set up to examine and censor, as a condition precedent to exhibition, motion picture films, to be publicly exhibited and displayed, with a view to passing and approving only such of them as are in the judgment of the board, moral, educational or amusing and forbidding those that are not.
Speaking of the criteria stated in general words, it was said that general terms get "precision from the sense and experience of men and become certain and useful guides in reasoning and conduct".
The first notice of change came in 1925 in Gitlow vs New York(2), when it was said that censorship had to pass the scrutiny of the First Amendment through the Fourteenth Amendment before speech and expression could be abridged by State laws.
To this, was added in 1919 the test of 'clear and present danger ' pro pounded by Justice Holmes as the only basis for curtailing the freedom of speech and expression, see Shenck vs U.S.(3) and Justice Brandeis in Whitney vs California (4) laid down three components of the test (a)There must be a clear and present danger that speech would produce a substantial evil that the State has power to prevent.
This is not to say that it is enough if there is 'fear ', there must be reasonable grounds to fear that serious evil would result from the exercise of speech and expression.
(1) ; , (3) (1 919) ; (2) ; (4) ; 460 .lm15 (b)There must be a 'present ' or 'imminent ' danger and for this there must be reasonable grounds to hold this opinion and that no reasonable opportunity was available to avert the consequences; and (c)The substantive evil to be prevented must be serious ' before there can be a prohibition on freedom of speech and expression for the police power of the State could not be exercised to take away the guarantee to avert a relatively trivial harm to society.
In 1931 in Near vs Minnesota(1) immunity of press from pre censorship was denied but pre censorship (as it is termed previous restraint) was not to be unlimited.
A major purpose of the First Amendment was to prevent prior restraint.
The protection was not unlimited but put on the state the burden of showing that the limitation challenged in the case was exceptional.
In 1941 the Court handed down in Chaplinsky vs New Ham pshire(2) the opinion that free speech was not absolute at all times and in all circumstances, that there existed certain "well defined and narrowly limited classes of speech, the prevention and punishment of which had never been thought to raise any constitutional problem".
This state of affairs Continued also in respect of motion pictures and the regulation of their public exhibition.
Real attention was focussed on censorship after 1951.
The effect of World War 11 on American society was the real cause because peoples notions of right and wrong from a social point of view drastically altered.
Added to this were the inroads made by Justices Douglas and Black in Dennis vs U.S. (3) in the previously accepted propositions which according to them made the First Amendment no more than an admonition to Congress.
In Beauharnais vs Illinois(4) Justice Douglas claimed for the freedom of speech, a preferred position because the provision was in absolute terms, an opinion which has since not been shared by the majority of the Court.
In 1951 there came the leading decision Burstyn vs Wilson(,) This case firmly established that motion pictures were within the protection of the First Amendment through the Fourteenth.
While recognising that there was no absolute freedom to exhibit every motion picture of every kind at all times and places, and that constitutional protection even against a prior restraint was not absolutely unlimited, limitation was said to be only in exceptional (1) ; (3) (1951) 341 U. section 494.
(2) (4) ; (5) ; 461. cases.
It however laid down that censorship on free speech and, expression was ordinarily to be condemned but the precise rules.
governing other methods,of expression were not necessarily applicable.
The application of the 14th Amendment has now enabled the Court to interfere in all cases of state restrictions where censorship fails to follow due process.
The result has led to a serious conflict in the accepted legal opinion.
The Supreme Court has had to deal with numerous cases in which censorship was questioned.
The divergence of opinion in recent years has been very deep.
Censorship of press, art and literature is on the verge of extinction, except in the ever shrinking area of obscenity.
In the field of censorship of the motion picture there has been a tendency to apply the 'void for vagueness ' doctrine evolved under the due process clause.
Thus regulations containing such words as 'obscene, 'indecent ', 'immoral ', 'prejudicial to the best interests of people ' , 'tending to corrupt morals ', 'harmful ' were considered vague criteria.
In Kingsley International Pictures Corpn.
vs Regents(1) where the film Lady Chatterley 's Lover was in question, certain opinions were expressed.
These opinions formed the basis of the arguments on behalf of the petitioner.
Justice Black considered that the court was the worst of Board Censors because they possessed no special expertise.
Justice Frankfurter was of the opinion, that 'legislation must not be so vague, the language so loose, as to leave to those who have to apply it too wide a discretion for sweeping within its condemnation what was permissible expression as well as what society might permissibly prohibit, always remembering that the widest scope for freedom was to be given to the adventurous and imaginative exercise, of human spirit. ".
Justice Douglas considered prior restraint as unconstiutional.
According to him if a movie violated a valid law, the exhibitor could be prosecuted.
The only test that seemed to prevail was that of obscenity as propunded inRoth vs United States(2).
In that three tests were laid down: (a)that the dominant theme taken as a whole appeals to prurient interests according to the contemporary standards of the average man; (b)that the motion picture is not saved by any redeeming social value; and (c)that it is patently offensive because it is opposed to contemporary standards.
(1) ; (2) ; 3 6 2 'The Hicklin test in Regina vs Hicklin(1) was not accepted.
Side by side procedural safeguards were also considered.
The leading case is Freedmen vs Maryland(2) where the court listed the following requirements for a valid film statute 1.The burden of proving that the film is obscene rests on the censor.
2.Final restraint (denial of licence) may only occur after judicial determination of the obscenity of the material.
3.The censor will either issue the license or go into court himself for a restraining order.
4.There must be only a 'brief period ' between the censor 's first consideration of film and final judicial determination.
(As summarized by Martin Shapiro Freedom of Speech; The Supreme Court and Judicial Re view).
These were further strengthened recently in Teitel Film Corp. v Cusak(3) (a per curiam decision) by saying that a non criminal process which required the prior submission of a film to a censor avoided constitutional infirmity only if censorship took place under procedural safeguards.
The censorship system should, therefore, have a time limit '.
The censor must either pass the film or go to ,court to restrain the showing of the film and the court also must give a prompt decision.
A delay of 50 57 days was considered too much.
The statute in question there had meticulously laid down the time for each stage of examination but had not fixed any time limit for prompt judicial determination and this proved fatal The fight against censorship was finally lost in the Times Film Corporation vs Chicago(4) but only by the slender majority of one Chief Justice Warren and Justices Black, Douglas and Brennan dissented.
The views of these Judges were pressed upon us.
Chief Justice Warren thought that there ought to be first an exhibition ,of an allegedly 'obscene film ' because Government could not forbid the exhibition of a film in advance.
Thus prior restraint was said ;to be impermissible.
Justice Douglas went further and said that censorship of movies was unconstitutional.
Justice Clark, on the other hand, speaking for the majority, said : ".
It has never been held that liberty of speech is absolute.
Nor has it been suggested that all previous restraints on speech are invalid.
(1) L. R, (2) ; (3) ; (4) ; 46 3 It is not for this Court to limit the State in its selection of the remedy it deems most effective.
to cope with such a problem, absent, of course, a showing of unreasonable strictures on individual liberty resulting from its application in particular circumstances.
" The argument that exhibition of moving pictures ought in the first instance to be free and only a criminal prosecution should be the mode of restraint when found offensive was rejected.
The precensorship involved was held to be no ground for striking down a law of censorship.
The minority was of the opinion that a person producing a film must know what he was to do or not to do.
For, if he were not sure he might avoid even the permissible.
In Interstate Circuit Inc. vs Dallas(1) certain expression were considered vague including 'crime delinquency ' 'sexual promiscuity ' 'not suitable, for young persons.
According to the court the statute must state narrowly drawn, reasonably definite, standards for the Board to follow.
Justice Harlan, however, observed that the courts had not found any more precise expressions and more could not be demanded from the legislature than could be said by the Court.
However precision of regulation was to be the touchstone of censorship and while admitting that censorship was admissible, it was said that too wide a discretion should not be left to the censors.
Meanwhile in Jacobellis vs Ohio 2 it was held that was laws could legitimately aim specifically at preventing distribution of objectionable material to children and thus it approved of the system of age classification.
The Interstate Circuit Inc. vs Dallas(1) and Ginsberg vs New York(3) sat the seal on validity of ' age classification as constitutionally valid.
There are two cases which seem to lie outside the main stream.
Recently in Stanley vs Georgia(4) the Court seems to have gone back on the Roth case (supra) and held that the right to receive information and ideas, regardless of their social worth, is also fundamental to society.
Another exception can only be understood on the basis of the recognition of the needs of a permissive society.
Thus Mishkin vs New York removes the test of the average person by saying that if the material is designed for a deviant sexual group, the material can only be censored if taken as a whole, it appeals to the purient interest in sex of the members of that group.
This is known as the. selective audience obscenity test and even children are a special class.
See Ginsberg vs New (1)(1961) ; (2) ; , (3) ; (4) (1969) 394 U. section (5) ; 464 York(1).
On the whole, however, there is in this last case a return to the Hicklin test in that obscenity is considered even from isolated passages.
To summarize.
The attitude of the Supreme Court of the United States is not as uniform as one could wish.
It may be taken as settled that motion picture is considered a form of expression and entitled to protection of First Amendment.
The view that it is only commercial and business and, therefore, not entitled to the protection as was said in Mutual Film Corpn.
(2) is not now accepted.
It is also settled that freedom of speech and expression admits of extremely narrow restraints in cases of clear and present danger, but included in the restraints are prior as well as subsequent restraints.
The censorship should be based on precise statement of what may not be subject matter of film making and this should allow full liberty to the growth of art and literature.
Age classification is permissible and suitability for special audiences is not to depend on whether the average man would have considered the film suitable.
Procedural safeguards as laid down in the Freedman case(3) must also be observed.
The film can only be censored if it offends in the manner set out in Roth 's case.
The petitioner put before us ' all these dicta for our acceptance and added to them the rejection of censorship, particularly prior censorship by Chief Justice Warren and Justices Black and Douglas.
He pointed out that in England too the censorship of the theatre has been abolished by the Theatres Act 1968 (1968 C. 54) and submitted that this is the trend in advanced countries.
He also brought to our notice the provisions of the Obscene Publications Act, 1959 (7 & 8 Eliz.
2 C. 66), where the test of obscenity is stated thus : "1.
Test of obscenity.
(1)For the purposes of this Act an article shall be deemed to be obscene if its effect or (where the article comprises two or more distinct items) the effect of any one of its items is, if taken as a whole, such as to tend to deprave and corrupt persons who are likely, having regard to all relevant circumstances, to read, see or hear the matter contained of embodied in it.
and the defence of public good is stated thus "4.
Defence of public good.
(1) ; (3) ; (2) ; 465 (1 ) A person shall not be convicted of an offence against section two of this Act, and an order for forfeiture shall not be made under the foregoing section, if it is proved that publication of the article in question is justified as being for the public good on the ground that it is in the interests of science, literature, art or learning, or of other objects of general concern.
(2)It is hereby declared that the opinion of experts as to the literary, artistic, scientific or other merits of an article may be admitted in any proceedings under this Act either to establish or to negative the said ground." He contended that we must follow the above provisions.
We may now consider the English practice.
In England there was little freedom of speech to start with.
The Common Law made no provision for it.
The two constitutional documents the Petition of Right (1628) and the Bill of Rights (1689) do not mention it.
By the time of Queen Elizabeth I presses were controlled through licences and although they were granted, no book could be issued without the sanction of Government.
The Star Chamber tried several cases of censorship and it even continued in the days of Cromwell.
Milton was the first to attack censorship in his Areopagitica and that had profound effect on the freedom of speech.
We find quotations from his writings in the opinions of Chief Justice Warren and Justice Dougles.
Free dom of speech came to be recognised by slow stages and it was Blackstone who wrote in his Commentaries (Book IV p. 1517) "The liberty of the Press is indeed essential to the nature of a free State, but this consists in laying no previous restraints upon publications.
" But censorship of theatres continued and no theatre could be licensed or a play performed without the sanction of the Lord Chamberlain.
By the Theatres Act 1843 the Lord Chamberlain was given statutory control over the theatres.
He could forbid the production of a play for the preservation of good manners, decorum or the public peace.
There was ordinarily no censorship of the press in England.
When cinematograph came into being the Cinematograph Act 1909 was passed to control cinemas.
It has now been amended by the Cinematograph Act of 1952.
Restrictions were placed on the exhibition of films to children (s.4) and on the admission of children to certain types of film.
Today censorship of films is through the British Board of Film Censors which is an independent body not subject to control by the State.
An elaborate inquiry is already on foot to consider whether state control is needed or not.
Censorship of films is run on the lines 4 6 6 set by T.P. O 'Connor in 1918.
These directions, as we said earlier, have had a great influence upon our laws and our directions issued by the Central Government, follow closely the 43 points of T.P. O 'Connor.
It is wrong to imagine that there is no censorship in England.
The Khosla Committee (p. 32) has given examples of the cuts ordered and also a list of films which were found unsuitable.
The Board has never worked to a Code although the directions are followed.
By 1950 three general, principles were evolved.
They are: 1.Was the story, incident or dialogue likely to impair the moral standards of the public by extenuating vice or crime or depreciating moral standards ? 2.Was it likely to give offence to reasonably minded cinema audiences ? 3.What effect.
would it have on the minds of children ? We have digressed into the practice of the United States and the United Kingdom because analogies from these two countries were mainly relied upon by the petitioner and they serve as a very appropriate back ground from which to begin discussion on the question of censorship and the extent to which it may be carried.
To begin with our fundamental law allows freedom of speech and expression to be restricted as clause (2) itself shows.
It was observed in Ranjit D. Udeshi vs State of Maharashtra(1).
"Speaking in terms of the Constitution it can hardly be claimed that obscenity which is offensive to modesty or decency is within the constitutional protection given to free speech or expression, because the article dealing with the right itself excludes it.
That cherished right on which our democracy rests is meant for the expression of free opinions to change political or social conditions.
or for the advancement of human knowledge.
This freedom is subject to reasonable restrictions which may be thought necessary in the interest of the general public and one such is the interest of public decency and morality.
Section 292, Indian Penal Code, manifestly embodies such a restriction because the law against obscenity, of course, correctly understood and applied, seeks no more than to promote public decency and morality".
We adhere to this statement and indeed it is applicable to the other spheres where control is tolerated under our fundamental law.
The argument that section 5 B of the Cinematograph Act does (1)(1965) 1 S.C.R. 65. 4 6 7 not reproduce the full effect of the second clause of article 19 need not detain us.
It appears that the draftsman used a copy of the Constitution.
as it was before the First Amendment and fell into the error of copying the obsolete clause. 'That, however, does not make any difference.
The Constitution has to be read first and the section next.
The latter can neither take away nor add to what the Constitution has said on the subject.
The word `reasonable ' is not to be found in section 5 B but it cannot mean that the restrictions can be unreasonable.
No only the sense of the matter but the existence of the constitutional provision in part materia must have due share and reading the provisions of the Constitution we can approach the problem without having to adopt a too liberal construction of section 5 B. It, therefore, follows that the American and the British precedents cannot be decisive and certainly not the minority view expressed by some of the Judges of the Supreme Court of the former.
The American Constitution stated the guarantee in absolute terms without any qualification.
The Judges try to give full effect to the guarantee by every argument they can validly use.
But the strongest proponent of the freedom (Justice Douglas) himself recognised in the Kingsley case that there must be a vital difference in approach.
This is what he said : "If we had a provision in our Constitution for 'reasonable ' regulation of the press such as India has included in hers, there would be room for argument that censorship in the interests of morality would be permissible".
In spite of the absence of such a provision Judges in America have tried to read the words 'reasonable restrictions ' into the First Amendment and thus to make the rights it grants subject to reasonable regulation.
The American cases in their majority opinions, therefore, clearly support a case of censorship.
It would appear from ',this that censorship of films, their classification according to age groups and their suitability for unrestricted exhibition with or without excisions is regarded as a valid exercise of power in the interests of public morality, decency etc.
This is not to be construed as necessarily offending the freedom of speech and expression.
This has, however, happened in the United States and therefore decisions, as Justice Douglas said in his Tagore Law Lectures (1939), have the flavour of due process rather than what was conceived as the _purpose of the First Amendment.
This is because social interest of the people override individual freedom.
Whether we regard the state as the paren patriae or as guardian and promoter of general welfare, we have to concede, that these restraints on liberty may be justified by their absolute necessity and clear purpose.
Social interests take in not only 468 the interests of the community but also individual interests which ,cannot be ignored.
A balance has therefore to be struck between ,the rival claims by reconciling them.
The, larger interests of the community require the formulation of policies and regulations to ,combat dishonesty, corruption, gambling, vice and other things of immoral tendency and things which affect the security of the, State and the preservation of public order and tranquillity.
As Ahrens said the, question calls for a good philosophical campass and strict logical methods.
With this preliminary discussion we say that censorship in India (and precensorship is not different in quality) has full justification in the field of the exhibition of cinema films.
We need not generalize about other forms of speech and expression here for each such fundamental right has a different content and importance.
The censorship imposed on the making and exhibition of films is in the interests of society.
If the regulations venture into something which goes beyond this legitimate opening to restrictions, they can be questioned on the ground that a legitimate ,power is being abused.
We hold, therefore, that censorship of films including prior restraint is justified under our Constitution.
This brings us to the next questions : How far can these restrictions go ? and how are they to be imposed ? This leads to an examination of the provisions contained in section 5 B (2).
That provision authorises the Central government to issue such directions as it may think fit setting out the principles which shall guide the authority competent to grant certificates under the Act in sanctioning films for public exhibition.
The first question raised before us is that the legislature has not indicated any guidance to the Central Government.
We do not think that this is a fair reading of the section as a whole.
The first sub section states the principles and read with the second clause of the nineteenth article it is quite clearly indicated that the topics of films or their content should not offend certain matters 'there set down.
The Central Government in dealing with the problem of censorship will have to bear in mind those, principles and they will be the philosophical compass and the logical methods of Ahrens.
Of course, Parliament can adopt the directions and put them in schedule to the Act (and that may still be done), it cannot be said that there is any delegation of legislative function.
If Parliament made a law giving power to close certain roads for certain vehicular traffic at stated times to be determined by the Executive authorities and they made regulations in the exercise of that power, it cannot for a moment be argued that this is insufficient to take away the right of locomotion.
Of course, every thing may be done by legislation but it is not necessary to do so 4 69 if the policy underlying regulations is clearly indicated.
The Central Government 's regulations are there for consideration in the light of the guaranteed freedom and if they offend substantially against that freedom, they may be struck down.
But as they stand they cannot be challeneged on the ground that any recondite theory of law making or a critical approach to the separation of powers is infringed.
We are accordingly of the opinion that section 5 B (2) cannot be challenged on this ground.
This brings us to the manner of the exercise of control and restriction by the directions.
Here the argument is that most of the regulations are vague and further that they leave no scope for the exercise of creative genius in the field of article This poses the first question before us whether the 'void for vagueness ' doctrine is applicable.
Reliance in this connection is placed on Municipal Committee Amritsar and anr.
vs The State of Rajasthan(1).
In that case a Division Bench of this Court lays down that an Indian Act cannot be declared invalid on the ground that it violates the due process clause or that it is vague.
Shah J, speaking for the Division Bench, observes: ". the rule that an Act of a competent legislature may be 'struck down ' by the courts on the ground of vagueness is alien to our constitutional system.
The Legislature of the State of Punjab was competent to enact legislation in respect of 'fairs ', vide Entry 28 of List II of the 7th Schedule to the Constitution.
A law may be declared invalid by the superior courts in India if the legislature has no power to enact the law or that the law violates any of the fundamental rights guaranteed in Part III of the Constitution or is inconsistent with any constitutional provision, but not on the ground that it is vague.
" The learned Judge refers to the practice of the Supreme Court of the United State in Claude C. Caually vs General Construction Co.(2) where it was observed: "A statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law." The learned Judge observes in relation to this as follows "But the rule enunciated by the American Courts has no application under our constitutional set up.
This rule is regarded as an essential of the 'due process (1) A.I.R. 1960 S.C. 1100.
3 436SupCI/71 (2) 47 0 clause ' incorporated in the American Constitution by the 5th and 14th Amendments.
The courts in India have no authority to declare a statute invalid on the ground that it violates 'the due process of law '.
Under our Constitution, the test of due process of law cannot be applied to the statutes enacted by the Parliament or the State Legislature".
Relying on the observations of Kania C.J. in A. K. Gopalan vs The State of Madras(1) to the effect that a law cannot be declared void because it is opposed to the spirit supposed to pervade the Constitution but not expressed in words, the conclusion above set out is reiterated.
The learned Judge, however, adds that the words 'cattle fair ' in act there considered are sufficiently clear and there is no vagueness.
These observations which are clearly obiter are apt to be too generally applied and need to be explained.
While it is true that the principles evolved by the Supreme Court of the United States of America in the application of the Fourteenth Amendment were eschewed in our Constitution and instead the limits of restrictions,, on each fundamental right were indicated in the clauses that follow the first clause of the nineteenth article, it cannot be said as an absolute principle that no law will be considered bad for sheer vagueness.
There is ample authority for the proposition that a law affecting fundamental rights may be so considered.
A very partinent example is to be found in State of Madhya Pradesh and Anr.
vs Baldeo Prasad (2) where the Central Provinces and Berar Goondas Act 1946 was declared void for uncertainty. 'the condition for the application of sections 4 and 4A was that the person sought to be proceeded against must be a goonda but the definition of goonda in the Act indicated no tests for deciding which person fell within the definition.
The provisions were therefore held to be uncertain and vague.
The real rule is that if a law is vague or appears to be so, the court must try to construe it, as far as may be, and language permitting, the construction sought to be placed on it, must be in accordance with the intention of the legislature.
Thus if the law is open to diverse construction, that construction which accords best with the intention of the legislature and advances the purpose of legislation, is to be preferred.
Where however the law admits of no such construction and the persons applying it are in a boundless sea of uncertainty and the law prima facie takes away a guaranteed freedom, the law must be held to offend the Constitution as was done in the case of the Goonda Act.
This is not application of the doctrine of due process.
The invalidity arises from the (1) ; (2) ; at 979.
4 7 1 probability of the misuse of the law to the deteriment of the individual.
If possible, the Court instead of striking down the law may itself draw the line of demarcation where possible but this effort should be sparingly made and only in the clearest of cases.
Judging the directions from this angle, we find that there are general principles regarding the films as a whole and specific instances of what may be considered as offending the public interest as disclosed in the clause that follows the enunication of the freedoms in article 19(1)(a).
The general principles which are stated in the directions seek to do no more than restate the permissible restrictions as stated in cl.
(2) of article 19 and section 5 B(1) of the Act.
They cannot be said to be vague at all.
Similarly, the principles in section IV of the directions in relation to children and young persons, are quite specific and also salutary and no exception can be taken.
It is only the instances which are given in Section I Clauses A to D which need to be considered.
Read individually they give ample direction as to what may not be included.
It is argued on the, basis of some American cases already noticed by us that these expressions are vague.
We do not agree.
The words used are within the common understanding of the average man.
For example the word 'rape ' indicate what the word is, ordinarily, understood to mean.
It is hardly to be expected or necessary that the definition of rape in the Penal Code must be set down to further expose the meaning.
The same may be said about almost all the terms used in the directions and discussed before us.
We do not propose to deal with each topic for that is really a profitless ven ture.
Fundamental rights are to be judged in a broadway.
It is not a question of semantics but of the substance of the matter.
It is significant that Justice Douglas who is in favour of a very liberal and absolute application of the First Amendment in America is of the view that 'sexual promiscuity ' was not vague, while those in favour of prior restraints thought that it was.
We have referred earlier to the case.
We are quite clear that expressions like 'seduction ', 'immoral traffic in women '.
'soliciting, pros titution or procuration ', 'indelicate sexual situation ' and 'scenes suggestive of immorality ', 'traffic and use of drugs ', 'class hatred" 'blackmail associated with immorality ' are within the understanding of the average men and more so of persons who are likely to be the panel for purposes of censorship.
Any more definiteness is not only not expected but is not possible.
Indeed if we were required to draw up a list we would also follow the same general pattern.
But what appears to us to be the real flaw in the scheme of the directions is a total absence of any direction which would tend to preserve art and promote it.
The artistic appeal or presentation of an episode robs it of its vulgarity and harm and this appears.
472 to be completely forgotten.
Artistic as well as inartistic presentations are treated alike and also what may be socially good and useful and what may not.
In Ranjit D. Udeshi 's case(1) this court laid down certain Principles on which the obscenity of a book was to be considered with a view to deciding whether the book should be allowed to circulate or withdrawn.
Those principles apply mutatis mutandis to films and also other areas besides obscenity.
The Khosla Committee also adopted them and recommended them for the guidance of the film censors.
We may reproduce them here as summarized by the Khosla Committee: "The Supreme Court laid down the following principles which must be carefully studied and applied by our censors when they have to deal with a film said to be objectionable on the ground of indecency or immorality : (1) Treating with sex and nudity in art and literature cannot be regarded as evidence of obscenity without something more.
(2) Comparison of one book with another to find the extent of permissible action is not necessary.
(3) The delicate task of deciding what is artistic and what is obscene has to be perfo rmed by courts and in the last resort, by the Supreme Court and so, oral evidence of men of literature or others on the question of obscenity is not relevant.
(4) An overall view of the obscene matter in the setting of the whole work would of course be necessary but the obscene matter must be considered by itself and separately to find out whether it is so gross and its obscenity is so decided that it is likely to deprave or corrupt those whose minds are open to influence of this sort and into whose hands the book is likely to fall.
(5)The interest s of contemporary society and particularly the influence of the book etc.
, on it must not be overlooked.
(6) Where obscenity and art are mixed, art must be so preponderating as to throw obscenity into shadow or render the obscenity so trivial and insignificant that it can have no effect and can be overlooked.
(7) Treating with sex in a manner offensive to public decency or morality which are the words of our (1) ; 473 Fundamental Law judged by our national stan dards and considered likely to pender to lascivious, prurient or sexually precocious minds must determine the result.
(8) When there is propagation of ideas, opinions and informations or public interests or profits, the interests of society may tilt the scales in favour of free speech and expression.
Thus% books on medical science with intimate illustrations and photographs though in a sense immodest, are not to be considered obscene, but the same illustrations and photographs collected in a book from without the medical text would certainly be considered to be obscene.
(9) Obscenity without a preponderating social purpose or profit cannot have the constitutional protection of free speech or expression.
Obscenity is treating with sex in a manner appealing to the carnal side of human nature or having that tendency.
Such a treating with sex is offensive to modesty and, decency.
(1 0)Knowledge, is not a part of the guilty act.
The offender 's knowledge of the obscenity of the book is not required under the law and it is a case of strict liability.
" Applicationof these principles does not seek to whittle down the fundamentalright of free speech and expression beyond the limits permissibleunder our Constitution for however high or cherished that right it does not go to pervert or harm society and the line has to be drawn somewhere.
As was observed in the same case: ". .
The test which we evolve must obviously be of a general character but it must admit of a just application from case to case by indicating a line of demarcation not necessarily sharp but sufficiently distinct to distinguish between that which is obscene and that which is not. . ." A similar line has to be drawn in the case of every topic in films considered unsuitable for _public exhibition or specially to children.
We may now illustrate our meaning how even the items men tioned in the directions may figure in films subject either to their artistic merit or their social value over weighing their offending character.
The task of the censor is extremely delicate and his duties cannot be the subject of an exhaustive set of commands.
47 4 established by prior ratiocination.
But direction is necessary to him so that he does not sweep within the terms of the directions vast areas of thought, speech and expression of artistic quality and social purpose and interest.
our standards must be so framed that we are not reduced to a level where the protection of the least capable and the most depraved amongst us determines what the morally healthy cannot view or read.
The standards that we set for our censors must make a substantial allowance in favour of freedom thus leaving a vast area for creative art to interpret life and society with some of its foibles along with what is good.
We must not look upon such human relationships as banned in toto and for ever from human thought and must give scope for talent to put them before society.
The requirements of art and literature include within themselves a comprehensive view of social life and not only in its ideal form and the line is to be drawn where the average man moral man begins to feel embarrassed or disgusted at a naked portrayal of life without the redeeming touch of art or genius or social value.
If the depraved begins to see in these things more than what an average person would, in much the same way, as it is wrongly said, a Frenchman sees a woman 's legs in everything, it cannot be helped.
In our scheme of things ideas having redeeming social or artistic value must also have importance and protection for their growth.
Sex and obscenity are not always synonymous and it is wrong to classify sex as essen tially obscene or even indecent or immoral.
It should be our concern, however, to prevent the use of sex designed to play a commerical role by making its own appeal.
This draws in the censors scissors.
Thus audiences in India can be expected to view with equanimity the story of Oedipus son of Latius who committed patricide and incest with his mother.
When the seer Tiresias exposed him, his sister Jocasta committed suicide by hanging herself and Oedipus put out his own eyes.
No one after viewing these episodes would think that patricide or incest with one 's own mother is permissible or suicide in such circumstances or tearing out one 's own eyes is a natural consequence.
And yet if one goes by the letter of the directions the film cannot be shown.
Similarly, scenes depicting leprosy as a theme in a story or in A documentary are not necessarily outside the protection.
If that were so Verrier Elwyn 's Phulmat of the Hills or the same episode in Henryson 's Testament of Cresseid (from where Verrier Elwyn borrowed the idea) would never see the light of the day.
Again carnage and bloodshed may have historical value and the depiction of such scenes as the sack of Delhi by Nadirshah may be permissible, if handled delicately and as part of an artistic portrayal of the confrontation with Mohammad Shah Rangila.
If Nadir Shah made golgothas of skulls, must we leave them out of the story :because people must be made to view a historical theme without true history ? Rape in all its nakedness may be objectionable but Vol 47 5 taire 's Candide would ' be meaningless without Cunegonde 's episode with the soldier and the story of Lucrece could never be depicted on the screen.
Therefore it is not the elements of rape, leprosy, sexual immorality which should attract the censor 's scissors but how the theme is handled by the producer.
It must, however, be remembered that the, cinematograph is a powerful medium and its appeal is different.
The horrors of war as depicted in the famous etchings of Goya do not horrify one so much as the same scenes rendered in colour and with sound and movement, would do.
We may view a documentary on the erotic tableaux from our ancient temples with equanimity or read the Kamasutra but a documentary from them as a practical sexual guide would be abhorrent.
We have said all this to show that the items mentioned in the directions are not by themselves defective.
We have adhered to the 43 points of T.P. O 'Connor framed in 1918 and have made a comprehensive list of what may not be shown.
Parliament has left this task to the Central Government and, in our opinion, this could be done.
But Parliament has not legislated enough, nor has the Central Government filled in the gap Neither has separated the artistic and the sociably valuable from that which is deliberately indecent, obscene, horrifying or corrupting.
They have not indicated the need of society and the freedom of the, individual.
They have thought more of the depraved and less of the ordinary moral man.
In their desire to keep films from the abnormal, they have excluded the moral.
They have attempted to bring down the public motion picture to the level of home movies.
It was for this purpose that this Court was at pains to point out in Ranjit D. Udeshi 's case(1) certain considerations for the guidance of censorship of books.
We think that those guides work as well here.
Although we are, not inclined to hold that the directions are defective in so far as they go, we are, of opinion that directions to emphasize the importance of art to a value judgment by the censors need to be included.
Whether this is done by Par liment or by the Central Government it hardly matters.
The whole of the law and the regulations under it will have always to be considered and if the further tests laid down here are followed, the system of censorship with the procedural safeguards accepted by the Solicitor General will make censorship accord with our fundamental law.
We allow this petition as its purpose is more than served by the assurance of the Solicitor General and what we have said, but in the circumstances we make no order about costs.
Petition allowed.
| IN-Abs | The petitioner made a documentary film called "A Tale of Four Cities" which attempted to portray the contrast between the life of the rich and the poor in the four principal cities of the country.
The film included certain shots of the red light district in Bombay.
Although the petitioner applied to the Board of Film Censors for a `U ' Certificate for unrestricted exhibition of the film, he was granted a certificate only for exhibition restricted to adults.
On an appeal made to it by the petitioner, the Central Government issued a direction on July 3, 1969 that a `u ' Certificate may be granted provided certain specified cuts were made in the film.
The petitioner thereafter field the present petition seeking a declaration that the provisions of of the , together with the rules prescribed by the Central Government on February 6, 1960 in the exercise of its powers under section 5 B of the Act were un constitutional and void; he further prayed that the direction dated July 3, 1969 should be quashed.
The petitioner claimed that his fundamental tight of free speech and expression was denied by the order of the Central Government and that he was entitled to a 'U ' Certificate for the film as of right.
At the hearing of the petition the Central Government indicated it had ,decided to grant a 'U ' Certificate to the petitioner 's film without the cuts previously ordered.
The petitioner then applied for amendment of the petition so as toenable him to challenge pre censorship as offensive to freedom of speechand expression and alternatively the provisions of the Act and the Rules,orders and directions under the Act as vague, arbitrary and indefinite.
The Court allowed the amendment holding the petitioner was right in contending that a person who invests capital in promoting or producing a film must have clear guidance in advance in the matter of censorship of films even if the law of pre censorship be not violative of the fundamental right.
It was contended inter alia on behalf of the petitioner (a) that pre censorship itself violated the right to freedom of speech and expression; and (b) that even if it were a legitimate restraint on the freedom, it must be exercised on very definite principles which leave no room for arbitrary action.
HELD : (i) Censorship of films including prior restraint is justified under the Constitution.
It has been almost universally recognised that the treatment of motion ,pictures must be different from that of other forms of art and expression.
447 This arises from the instant appeal of the motion picture, its versatility, realism (often surrealism), and its coordination of the visual and aural senses.
The art of the cameraman, with trick photography, vistavision and three dimensional representation, has made the cinema picture more true to life than even the theatre or indeed any other form of representative article The motion picture is able to stir up emotions more deeply than any other product of article Its effect particularly on children and adolescents is very great since their immaturity makes them more willingly suspend their disbelief than mature men and women.
They also remember the action in the picture and try to emulate or/ imitate what they have seen.
Therefore, classification of films into two categories of 'U ' films and 'A ' films is a reasonable classification.
It is also for this reason that motion pictures must be regarded differently from other forms of speech and expression.
A person reading a book or other writing or bearing a speech or viewing a painting or sculpture is not so deeply stirred as by seeing a motion picture.
Therefore the treatment of the latter on a different footing is also a valid classification.
[458 G] (ii)Section 5 B authorises the Central Government to issue such directions as it may think fit setting out the principles which shall guide the authority competent to grant certificates under the Act in sanctioning films for public exhibition.
it cannot be said that this Section has not indicated any guidance to the Central Government.
The first sub section states the principles and read with the second clause of the nineteenth article it is quite clearly indicated that the topics of films or their content should not offend certain matters there set down.
A law cannot be declared void because it is opposed to the spirit supposed to pervade the Constitution but not expressed in words.
However it cannot be said as an absolute principle that no law will be considered bad for sheer vagueness.
The real rule is that if a law is vague or appears to be so, the court must try to construe it, as far as may be, and language permitting, the construction sought to be placed on it, must be in accordance with the intention of the legislature.
Thus if the law is open to diverse construction, that construction which accords best with the intention of the legislature and advances the purpose of legislation, is to be preferred.
Where however the law admits of Do such construction and the persons applying it are in a boundless sea of uncertainty and the law prima facie takes away a guaranteed freedom, the law must be held to offend the Constitution, This is not application of the doctrine of due process.
The invalidity arises from the probability of the misuse of the law to the detriment of the individual.
If possible, the Court instead of striking down the law may itself draw the line of demarcation where possible but this effort should be sparingly made and only in the clearest of cases.
[470 G] Judging the directions, 'rules and regulations from this angle, it must be held that there are general principles regarding the films as a whole and specific instances of what may be considered as offending the public interest as disclosed in the clause that follows the enunciation of the freedoms in article 19(1) (a).
The general principles which are stated in the directions given under section 5 B(2) seek to do no more than restate the permissible restrictions as stated in cl.
(2) of article 19 and section 5 B(1) of the Act.
They cannot be said to be vague at all.
Similarly, the prin ciples in section IV of the directions in relation to children and young persons are quite specific and also salutary and no exception can be taken.
It is only the instances which are given in Section I Clauses A to D which need to be considered.
Read individually they give ample direction as to what may not be included.
[471 B] 448 It is clear that expressions like 'seduction ', 'immoral traffic in women ', soliciting.
prostitution or, procuration ', 'indelicate sexual situation ' and scenes suggestive of immorality ', 'traffic and use of drugs ', 'class hatred ', 'blackmail associated with immorality ' are within the understanding of the average men and more so of persons who are likely to be the panel for purposes of censorship.
Any more definiteness is not only not expected but is not possible.
[471 G] Municipal Committee Amritsar and anr.
vs The State of Rajasthan, A.I.R. 1960 S.C. 1100; explained.
Claude C. Caually vs General Construction Co.
,,(1926) ; A. K. Gopalan vs The State of Madras, ; and State of Madhya Pradesh and Anr.
vs Baldeo Prasad, ; at 979; referred to.
(iii)A real flaw in the scheme of the directions under section 5 B(2) is a total absence of any direction which would tend to preserve art and promote it.
The artistic appeal or presentation of an episode robs it of its vulgarity and harm and this appears to be completely forgotten.
Artistic as well as inartistic presentation are treated alike and also what may be socially good and useful and what may not.
In Ranjit D. Udeshi 's case this Court laid down certain principles on which the obscenity of a book was to be considered with a view to deciding whether the book should be allowed to circulate or withdrawn.
Those principles apply miutatis mutandis to films and also other areas besides obscenity.
Although it could not be held that the directions are defective in so far as they go, directions to emphasize the importance of art to a value judgment by the censors need to be included.
[471 H] U.S., U.K. and other case law considered.
|
Appeal No. 194 of 1952.
Appeal from the Judgment and Order, dated the 7th day of September, 1951, of the High Court of Judicature at Bombay in Income tax Reference No. 46 of 1950.
S.Mitra (R. J. Kolah and 1.
N. Shroff, with him) for the appellant.
M.C. Setalvad, Attorney General for India (G. N. Joshi, with him) for the respondent.
November 1.
The Judgment of the Court was delivered by DAS J.
831 DAS J.
This appeal is directed against the judgment pronounced on the 7th September, 1951, by the High Court of Judicature at Bombay on a reference made at the instance of the appellant under section 66(1) of the Indian Income tax Act, 1922.
By an, assessment order dated the 31st March, 1948, the appellant was assessed by the Income tax Officer, Bombay, for the assessment year 1947 1948 on a total income of Rs. 19,66,782 including a sum of Rs. 9,38,011 representing capital gains assessed in the hands of the appellant under section 12 B of the Act.
The said amount of capital gains was earned by the appellant in the following circumstances.
The assessee had a half share in certain immovable properties situate in Bombay which were sold by the assessee and his coowners during the relevant accounting year which was the calendar year ending on the 31st December, 1946, to a private limited company known as Mafatlal Gagalbhai & Company Ltd. The profits on the sale of the said properties amounted to Rs. 18,76,023 and the appellants half share therein came to the sum of Rs. 9,38,011 which was included in the assessment under section 12 B.
In April, 1948, the appellant appealed from the said order to the Appellate Assistant Commissioner contending that section 12 B of the Act authorising the levy of tax on capital gains was ultra vires the Central Legislature.
The Appellate Assistant Commissioner by his order dated the 5th April, 1949, dismissed the appeal.
A further appeal to the Income tax Appellate Tribunal was dismissed by its order dated the 30th June 1950.
Being aggrieved by the order of the Appellate Tribunal the appellant applied to it under section 66(1) of the Act for raising certain questions of law.
The Appellate Tribunal agreeing that certain questions of law did arise out of its order drew up a statement of the case which was agreed to by the parties and referred to the High Court the following questions: (1) Whether the imposition of a tax under the head " capital gains " by the Central Legislature was ultra vires 832 (2) Whether the imposition was in any way invalid on the ground that it was done by amending the Indian Income tax Act ? After hearing the reference the High Court following ,its judgment in Income tax Reference No. 18 of 1950, Sir J. N. Duggan and Lady Jeena J. Duggan vs The Commissioner of Income tax, Bombay City, answered the first question in the negative and expressed the opinion that it was not necessary to answer the second question.
In that reference the two learned Judges gave the same answer to the first question but on different grounds as elaborated in their respective judgments.
The principal question that was discussed before the High Court, as before us, was whether section 12 B which authorised the imposition of a tax on capital gains was invalid being ultra vires the Central Legislature.
Section 12 B was inserted in the Act by the Indian Income tax and Excess Profits Tax (Amendment) Act, 1947 (XXII of 1947) which was a Central Act.
Under section 100 of the Government of India Act, 1935, the Central Legislature was, empowered to make laws with respect to matters enumerated in List I in the Seventh Schedule to that Act.
The only entries in List I on which reliance could be placed to uphold the impugned Act were entries 54 and 55 which were as follows: " 54.
Taxes on income other than agricultural income.
Taxes on the capital value of the assets,exclusive of agricultural land, of individuals and companies, and taxes on the capital of companies.
" Chagla C. J. held that the enactment of Act XXII of 1947 which inserted section 12 B was well within the scope of the legislative powers of the Central Legislature as it fell within entry 55 and was valid either as a whole or, in any case, to the extent that it applied to individuals and companies.
Although it was unnecessary for the learned Chief Justice to decide whether the Act could be supported as a valid piece of legislation falling within the scope of entry 54 yet in deference to the arguments advanced before the Court 833 the learned Chief Justice expressed the view that it could not be so supported.
Tendolkar J., on the other hand, held that Act XXII of 1947 was wholly intra vires the Central Legislature as it fell within entry 54 and in this view of the matter he did not consider it necessary to discuss whether the legislation was covered by entry 55 in List I of the Seventh Schedule.
In our opinion the view taken by Tendolkar J. with respect to entry 54 is correct and well founded.
In the course of a lucid argument advanced with his usual ability and skill Mr. Kolah submitted that entry 54 which deals with "taxes on income" does not embrace within its scope tax on capital gains.
"Income", according to him, does not signify capital gains either according to its natural import or common usage or according to judicial interpretation of relevant legislation both in England and in India.
He submitted that the learned Chief Justice was entirely right in the view that there was a clear line of demarcation that had always been observed by English lawyers and English jurists between income and capital, that the English legislative practice had always recognised this difference and that as the word had come to acquire a certain meaning and a certain connotation by reason of such legislative practice in England, the British Parliament which enacted the Government of India Act, 1935, must be regarded as having understood and used that word " income " in entry 54 in that sense.
Our attention has not, however, been drawn to any enactment other than fiscal statutes like the Finance Act and the Income tax Act where the word "income" has been used and, therefore, it is not possible to say that the critical word had acquired any particular meaning by reason of any legislative practice.
Reference has been made to several cases where the word "income" has been construed by the Court.
What is, therefore, described as legislative practice is nothing but judicial interpretations of the word " income " as appearing in the fiscal statutes mentioned above.
A perusal of the those cases, however, will reveal at once that those decisions were concerned with ascertaining the meaning of that word in the context of the Income tax 834 legislation.
Thus the observation of their Lordships of the Privy Council in Commissioner of Income tax vs Shaw Wallace & Co.(1), laid down the connotation of the word "income" as used "in this Act.
" The passage in the judgment of Rowlatt J. in Ryall vs Hoare and Ryall vs Honeywill(2), quoted by the learned Chief Justice in his judgment and strongly relied on by Mr. Kolah, refers to profits or gains "as used in these Acts.
" In Californian Copper Syndicate (Limited and Reduced) vs Harris(3), Lord Justice Clerk refers to the enhanced price realised on sale of certain things over the cost price thereof as not being profits "in the sense of Schedule D of the Income Tax Act of 1842." These guarded observations quite clearly indicate that they relate to the term "income" or "Profit" as used in the Income tax Act.
There is no warrant for saying that these observations out down the natural meaning of the ordinary English word "income" in any way.
The truth of the matter is that while Income tax legislation adopts an inclusive definition of the word "income" the scheme of such legislation is to bring to charge only such income as falls under certain specified heads (e.g., the 5 Schedules of the English Act of 1918 and our section 6 read with the following sections) and as arises or accrues or is received or is deemed to arise or accrue or to be received as mentioned in the statute.
The Courts have striven to ascertain the meaning of the word "income" in the context of this scheme.
There is no reason to suppose that the interpretation placed by the Courts on the word in question was intended to be exhaustive of the connotation of the word "income" outside the particular statute.
If we hold, as we are asked to do, that the meaning of the word "income" has become rigidly crystallized by reason of the judicial interpretation of that word appearing in the Income tax Act then logically no enlargement of the scope of the Income tax Act, by amendment or otherwise, will be permissible in future.
A conclusion so extravagant and astounding can scarcely be contemplated or (1) (1932) L.R. 59 I.A. 206 at page 212.
(2) at page 525.
(3) at page 165. 835 countenanced.
We are satisfied that the cases relied on by Mr. Kolah and referred to in the judgment of the learned Chief Justice do not, as we read them, establish the broad proposition that the ordinary English word "income" has acquired a particularly restricted.
meaning.
The case of Wallace Brothers & Co. Ltd. vs Commissioner of Income tax(1) was not concerned with ascertaining the meaning of the word "income" at all.
The problem there was whether the foreign income of an English company which was a partner in a firm carrying on business in Bombay and whose Indian income was greater than its foreign income could be treated as a resident within the meaning of section 4 A.
It was in that context said in that case that in determining the scope and meaning of the legislative power regard was to be had to what was ordinarily treated as embraced within that topic in the legislative practice of the United Kingdom.
The problem there was not to ascertain the meaning of the word "income" so much as to ascertain the extent of the application of the Act to the foreign income.
That case, clearly, does not establish that the word "income" had acquired any special or narrow meaning.
The same remarks apply to the case of Croft vs Dunphy(1), referred to by Lord Uthwatt in delivering the judgment of the Privy Council in Wallace Brothers case (supra).
In Kamakshya Narain Singh vs Commissioner of Income tax(,), Lord Wright observed : " Income, it is true, is a word difficult and perhaps impossible to define in any precise general formula.
It is a word of the broadest connotation. " After making the above observation his Lordship referred to the observations of Sir George Lowndes in Commissioner of Income tax, Bengal vs Shaw Wallace & Co. (supra), where an attempt was made to indicate the connotation of the word "income" as used "in this Act.
" It is, therefore, clear that none of the authorities relied on by Mr. Kolah establish what may be called a legislative practice indicating the connotation of the (1) (1948) L.R. 75 I.A. 86; ; 16 I.T.R. 240.
(2) (3) (1943) L.R. 70 I.A. 180; 836 term "income", apart from the Income tax statute.
In our view, it will be wrong to interpret the word "income" in entry 54 in the light of any supposed English legislative practice as contended for by Mr. Kolah.
It ,is interesting to note that in the English Income Tax Act of 1945 (8 and 9 Geo.
VI, C. 32, sections 37 and 38) capital gains have been included as taxable income.
In should be remembered that the question before us relates to the correct interpretation of a word appearing in a Constitution Act which, as has been said, must not be construed in any narrow and pedantic sense.
Gwyer C.J. in In re The Central Provinces and Berar Act No. XIV of 1938(1), observed at pages 36 37 that the rules which apply to the interpretation of other statutes apply equally to the interpretation of a constitutional enactment subject to this reservation that their application is of necessity conditioned by the subject matter of the enactment itself It should be remembered that the problem before us is to construe a word appearing in entry 54 which is a head of legislative power.
As pointed out by Gwyer C.J. in The United Provinces vs Atiqa Begum(2) at page 134 none of the items in the Lists is to be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it.
Itis,therefore,clear anditisacknowledged by Chief Justice Chagla that in construing an entry in a List conferring legislative powers the widest possible construction according to their ordinary meaning must be put upon the words used therein.
Reference to legislative practice may be admissible for cutting down the meaning of a word in order to reconcile two conflicting provisions in two legislative Lists as was done in The C. P. and Berar Act case (supra), or to enlarge their ordinary meaning as in The State of Bombay and Another vs F. N. Balsara(3).
The cardinal rule of interpretation, however, is that words should be read in their ordinary, natural and grammatical meaning subject to this rider that in (I) (2) (3) ; 837 construing words in a constitutional enactment conferring legislative power the most liberal construction should be put upon the words so that the same may have effect in their widest amplitude.
What, then, is the ordinary.
natural and grammati : cal meaning of the word "income" ? According to the dictionary it means "a thing that comes in".
(See Oxford Dictionary, Vol.
11, page 162; Stroud, Vol. 11, pages 14 16).
In the United States of America and in Australia both of which also are English speaking countries the word "income" is understood in a wide sense so as to include a capital gain.
Reference may be made to Eisner vs Macomber(1), Merchants ' Loan & Trust Co. vs Smietanka(2), and United States vs Stewart(3), and Resch vs Federal Commissioner of Taxation( 4).
In each of these cases very wide meaning was ascribed to the word "income" as its natural meaning.
The relevant observations of learned Judges deciding those cases which have been quoted in the judgment of Tendolkar J. quite clearly indicate that such wide meaning was put upon the word "income" not because of any particular legislative practice either in the United States or in the Commonwealth of Australia but because such was the normal concept and connotation of the ordinary English word "income." Its natural meaning embraces any profit or gain which is actually received.
This is in consonance with the observations of Lord Wright to which reference has already been made.
Mr. Kolah concedes that the word "income" is understood in the United States and Australia in the wide sense contended for by the learned Attorney General but he maintains that the law in England is different and, therefore, entry 54 which occurs in a Parliamentary statute should be construed according to the law of England.
We are again brought back to the same argument as to the word having acquired a restricted meaning by reason of what has been called the legislative practice (1) ; ; (2) ; ; 1 (3) ; ; (4) ; 107 838 in England an argument which we have already discarded.
The argument founded on an assumed legislative practice being thus out of the way, there can be no difficulty in applying its natural and grammatical meaning to the ordinary English word "income.
" As already observed, the word should be given it widest connotation in view of the fact that it occurs in a legislative head conferring legislative power.
For reasons stated above we are of opinion that Act XXII of 1947 which amended the Indian Income tax Act by enlarging the definition of the term income in section 2(6 C) and introducing a new head of income in section 6 and inserting the new section 12 B is intra vires the powers of the Central Legislature acting under entry 54 in List I of the Seventh Schedule of the Government of India Act, 1935.
In this view of the matter it is unnecessary for us to consider or express any opinion as to the meaning, scope and ambit of entry 55 in that List.
The appeal is accordingly dismissed with costs.
Appeal dismissed.
| IN-Abs | Section 12 B of the Indian Income tax Act, 1922 (inserted by Act XXII of 1947) which imposed tax on 'Capital gains ' is not ultra vires the Government of India Act, 1935.
The term 'Capital 106 830 gains ' comes well within the meaning of the word 'income ' used in item No. 54 of List I of the Seventh Schedule to the Government of India Act, 1935.
It is incorrect to say that income cannot signify 'Capital gains ' and it is equally an incorrect approach to hold that there is a legislative practice which recognises a clear line of demarcation between income and capital.
What is relied on here as a legislative practice is nothing but the judicial interpretation given to the word 'income ' as used in the income tax and fiscal statutes.
Such interpretation does not necessarily cut down the ordinary natural meaning of the word 'income ' as used in item No. 54 of List I of the Seventh Schedule to the Government of India Act, 1935.
Cardinal rule of interpretation is that the words should be read in their ordinary natural and grammatical meaning.
But the words in a constitutional enactment conferring legislative powers should however be construed most liberally and in their widest amplitude, Commissioner of Income tax vs Shaw Wallace & Co. (L.R. 59 I.A. 206); Ryall vs Hoare and Ryall vs Honeywill ; Californian Copper Syndicate (Limited and Reduced) vs Harris ; Wallace Brothers & Co. Ltd. vs Commissioner of Income tax [L.R. 75 I.A. ; : ; Croft vs Dunphy ; Kamakshya Narain Singh vs Commissioner of Income tax [L.R. 70 I.A. 180: ; In re The Central Provinces and Berar Act No. XIV of ; United Provinces vs Atiqa Begum ; State of Bombay and Another vs F. N. Balsara ; ; Eisner vs Macomber ; : ; Merchant 's Loan & Trust Co. vs Smietanka ; ; United States vs Stewart ; and Resch vs Federal Commissioner of Taxation ; , referred to.
|
Appeal No. 1626 of 1966.
Appeal from the judgment and decree dated July 7, 8, 1964 of the Calcutta High Court in Appeal from Original Decree No. 143 of 1960.
R. B. Datar, for the appellant.
B. Sen, N. R. Khaitan and B. P. Maheshwari, for respondent.
The Judgment of the Court was delivered by Shah, J.
Naresh Chandra Sanyal was the holder of a fully paid up share of the Calcutta Stock Exchange Association Ltd.hereinafter called the Exchange '.
As a member of the Exchange he was authorised to carry on business as a broker in shares, stocks and securities in the hall of the Exchange.
In December 1941 Sanyal purchased one hundred shares of the Indian Iron & Steel 'Company Ltd. from Johurmull Daga & Company, but did not arrange to take delivery of the shares on the due date.
Johurmull Daga and Company sold the shares pursuant to the authority given to them by the Sub Committee of the Exchange.
The transaction resulted in a loss of Rs. 438/10/ .
The Sub Committee directed Sanyal to pay the amount due by him, but he failed to carry out that direction.
On January 7, 1942 the complaint of Johurmull Daga & Company was referred to the Full Committee of the Exchange.
Sanyal failed to pay the amount directed to be paid by him and he was by resolution dated February 19, 1942 declared a defaulter.
On September 1, 1942, at a meeting at which Sanyal was present, the Full Committee resolved that the share standing in his name be forfeited to the Exchange with effect from September 1, 1942 and that Sanyal be expelled from the membership of the Exchange.
436Sup.
Cl/71 48 6 Sanyal then instituted an action in the High Court of Calcutta on its original side claiming a declaration that the articles of the Exchange providing for "forfeiture of a fully paid up share were ultra vires and illegal" and that "particularly articles 21, 22.
and 24 were invalid"; that the share held by him had not been "properly forfeited" by the Exchange and that forfeiture of the share was "irregular, void and inoperative and was not binding upon him" He also claimed an order that he be restored to the membership of the Exchange and that the share register be rectified accordingly.
In the alternative Sanyal claimed a decree for Rs. 55,0001 being the value of the share, or in any event to the surplus of the sale proceeds after "liquidating the debts due by him to the Exchange.
" The suit was resisted by the Exchange.
The Trial Court dismissed the suit.
In appeal under the Letters Patent the decree was confirmed.
With special leave Sanyal has appealed to this Court in forma pauperis.
The relevant Articles of Association of the Exchange are these article 21 "The Committee shall have power to expel or suspend any member or if being firm any member or authorised assistant of the firm in any of the events following (6) If the member or if being a firm any member or authorised assistant of the firm refuses to abide by the decision of the Committee in any matter which under these articles or under the Bye laws for the time being in force is made the subject of a reference to the Committee.
Provided always that in every case arising under the provisions of sub, section (5), (6), (7) and (8) of this Article no resolution for the expulsion of a member or if being a firm any member or authorised assistant of the firm shall be valid unless passed by a majority consisting of not less than two thirds of the members of the Committee at a meeting specially convened for the purpose and at which meeting not less than two thirds of the members of the committee at a meeting specially convened for the purpose and at which meeting not less than seven members of the Committee shah be present." 4 8 7 article 22 "Any member who has been declared a defaulter by reason of his failure to fulfil any engagement between himself and any other member or members and who fails to fulfil such engagements within six months from the date upon which he has been so declared a defaulter shall at the expiration of such period of six calendar months automatically cease to be a member.
" article 24 "Upon any member ceasing to be a member under the provisions of article 22 hereof and upon any resolution being passed by the Committee expelling any member under the provisions of Article 21 hereof or upon any member being adjudicated insolvent the share held by such member shall ipso facto be forfeited.
" article 27 "Any share so forfeited shall be deemed to be the property of the Association, and the Committee shall sell, re allot, and otherwise dispose of the same in such manner to the best advantage for the satisfaction of all debts which, may then, be due and owing either to the Association or any of its mem bers arising out of transactions or dealings in stocks and shares.
" article 28 "Any member whose share has been so forfeited shall notwithstanding be liable to pay and shall forthwith pay to the Association all moneys owing by the member to the Association at the time of the forfeiture together with interest thereon, from the time of forfeiture until payment at 12 percent per annum and the committee may enforce the pay ment thereof, without any deduction or allowance for the value of the share at the time of forfeiture.
" article 29 "The forfeiture of a share shall involve the extinction of all interest in and also of all claims and demands against the Association in respect of the share, and all other rights incidental to the share.
except only such of those rights as by these Articles expressly saved.
" article 31 "The Association shall have a first and paramount lien upon the share registered in the name of each member and upon the proceeds of sale thereof for his debts, liabilities and engagements.
488 article 32 "For the purpose of enforcing such hen the Association may sell the share subject thereto in such manner as, they think fit.
article 33 "The nett proceeds of any such sale shall be applied in or towards satisfaction of the debts, liabilities, or engagements, residue (if any) paid to such member, his executors, administrators, committee, curator or other representatives.
" The relevant bye laws of the exchange are: "Settlement of Disputes.
All disputes, complaints and claims between by and against members shall, on the application of either party, be decided by the Committee or by a Standing or Special Sub Committee appointed by the Committee for the purpose.
In the event of the matter being decided by the Committee the decision shall be, final and binding upon all members concerned but any member aggrieved with the decision of the Standing or Special Sub Committee may, within seven days of such decision being given, appeal to the Committee whose decision shall be final.
In the event of any member or members refusing, neglecting or failing to observe, carry out or comply with any decision of the Committee, or if no appeal is preferred, with the decision of the Standing or Special Sub Committee, such member or members so in default shall be dealt with by the Committee under the rules, regulations and/or by laws of the Association for the time being in force.
" Bye law 13 "Defaulters.
Any member who shall fail to pay any subscription or other moneys due by him to the Association on due date, or who shall fail to fulfil any engagement between himself and another member or members may be declared a 'defaulter ' by the Committee and on such declaration his name shall be posted as a 'defaulter ' on the notice board of the Association and so long as the name remains so posted he shall not be at liberty to exercise any of the privileges of member ship." Under the scheme of the Articles of Association of the Ex change, the Committee is authorised to expel or suspend a member on the ground, inter alia, that he refuses to abide by the decision of the Committee in any matter which is under the Articles or under the Bye laws referred to the Committee.
A person declared a "defaulter" because he fails to fulfil any engagement between himself and any other member or members within six months from 489 the date on which he has been declared a defaulter, ceases to be a member of the Exchange and his share also stands forfeited.
The share so forfeited is deemed to be the property of the Exchange.
But the Committee must sell, re allot or otherwise dispose of the share for satisfaction of the debts which may then be due and owing by the defaulter to the Exchange or to any of its members arising out of transactions or dealings in stocks and shares.
Forfeiture of a share involves extinction of all interest in and also of all claims and demands against the Exchange in respect of the share and all other rights incidental to the share, but not the liability of the.
erstwhile member to discharge his liabilities to the Exchange.
The Exchange has a first lien upon the share of a member and upon the proceeds of sale thereof for his debts and liabilities, and in enforcement of the lien, the Exchange may sell the share.
The net proceeds of the share subject to the lien it sold will be applied in or towards satisfaction of the debts, liabilities or engagements of the shareholder and the residue, if any, paid to such member, his executors, administrators, committee, curator or other representatives.
In this appeal counsel for Sanyal contended, that under the Indian Companies Act, 1913, a fully paid up share cannot be forfeited for failure to carry out any engagement by the shareholder other than an engagement to pay a call made by the Company to pay unpaid capital; that the procedure followed by the Sub Committee of the Exchange was irregular in that Sanyal had no notice of the meeting of the Committee to declare him a defaulter; that the Committee had no authority under the Articles of Association to direct sale of the share; and that in any event Sanyal was entitled to the balance remaining on hand with the Exchange after satisfying his debts, liabilities and engagements under the Articles of Association.
For failure to abide by the decision of the Committee in respect of his liability to pay the amount of loss due to Johurmull Daga & Company Sanyal was declared a defaulter, and when he continued to remain a defaulter for six months he was by resolution of the Full Committee expelled from the membership of the Exchange.
The Full Committee also resolved to forfeit his share.
The Exchange thereafter disposed of the share for Rs. 55,000/ .
The argument raised by counsel for Sanyal that a member of the Exchange forfeits his share only if a resolution expelling him and 490 a resolution declaring him a defaulter are passed is without substance.
The conductive "and" between the first two clauses of article 24 is used to indicate an Alternative, and does not make the two conditions cumulative.
We agree with the observations of Panckridge, J., in Surajmall Mohta vs Ballabhdas Mohta(1) that article 24 "is carelessly drawn, because, on its literal application, before his share could be forfeited, a member would both have to be expelled by the Committee under article 21 and automatically cease to be a member under article 22 Clearly this cannot be the intention of the article and it is obvious that by a slip, 'and ' has been substituted for "or".
" In any event the Full Committee passed on February 19, 1942 ,a resolution declaring the appellant a defaulter.
The appellant did not carry out his engagements for a period of six months there, after.
By resolution dated September 1, 1942 at a meeting of the Full Committee the appellant was expelled from the membership of the Exchange and it was resolved that his share shall stand forfeited.
There is no provision in the Indian Companies Act, 1913, which restricts the exercise of the tight of the Exchange to forfeit :share ,, for non payment of a call only.
The Indian Companies Act, 1913, made no provision relating to forfeiture of shares.
By section 17(2) of the Act, a company could adopt the regulations contained in Table A in the First Schedule but the Company was not bound to do so.
Regulations 24 to 30 of Table A dealt with the power and the procedure relating to forfeiture of shares.
Regulation 24, it is true, provided for exercise of the power to forfeit a share when there was default in paying calls, but no inference follows therefrom that the share of a member could be forfeited only for non payment of a call made in respect of the share which was not fully paid up.
In The Calcutta Stock Exchange Association Ltd. vs section N. Nundy & Co.(2), Harries C.J. after examining the provisions of the Companies Act 1913 reviewed the decisions of the Courts in England and of the High Court of Calcutta and observed that the Indian Companies Act as well as the English Companies Act contemplate, recognize and sanction forfeiture generally and not for non payment of calls only; that a company may by its Articles lawfully provide for grounds of forfeiture other than nonpayment of call, subject to the qualification that the Articles relating to for feiture do not offend against the general law of the land and in particular the Companies Act, and public policy; and that the forfeiture contemplated does not entail or effect a reduction in capital or involve or amount to purchase by the Company of its (1) I. L R. (2) I. L. R. [1950] 1 cal.
491 own shares nor does it amount to trafficking in its own shares.
The Court in that case was concerned to determine the true effect of the Articles of the Exchange which fall to be interpreted in this case.
This Court in Sri Gopal Jalan & Company vs Calcutta Stock Exchange Association Ltd.(1) also considered whether forfeiture of shares resulted in reduction of capital contrary to the provisions of the Companies Act where power of forfeiture was given by the Articles for failure to carry out an undertaking or satisfy an obligation of the member to forfeit the shares.
The Court in that case was interpreting the Articles which fall to be interpreted in this appeal.
The Court held that the Exchange was not liable to file any return of the forfeited shares under section 75(i) of the Indian when the same were re issued.
The Court observed that when a share is forfeited and re issued, there is no allotment, in the sense of appropriation of shares out of the authorised and unappropriated capital, and approved the observations, of Harries, C.J. in section N. Nundy 's case(2) that "on such forfeiture all that happened was that the right of the particular shareholder disappeared but the share considered as a unit of issued capital )continued to exist and was kept in suspense until another shareholder was found for it".
In the view of this Court, the shares so forfeited may not be "allotted ' in the sense in which that word is understood in the .
The Court also pointed out that re issue of forfeited shares is not allotment of the shares but only a sale, for, if it were not so the forfeiture even for non payment of call would be invalid as involving an illegal reduction of capital.
Article 27 of the Exchange it may be recalled is in terms mandatory.
The share forfeited to the Exchange must be re allotted or otherwise disposed of : it cannot be retained by the Exchange.
The share after forfeiture in the hands of the Company is subject to an obligation to dispose it of.
On that account there is no reduction of capital by mere forfeiture.
Mr. Datar appearing for the appellant however contended that in Sri Gopal Jalan & Company 's case(1) the parties argued the case on the footing that Articles of Association of the Exchange were not invalid, whereas in the present case the validity of the Articles is challenged.
But the Court in citing with approval the observations of Harries C.J. in section N. Nundy 's case(2) did in effect pronounce upon the validity of the Articles.
A forfeited share is, therefore, merely a share available to the Company for sale and remains vested in the Company for that purpose only.
By forfeiting a share pursuant to the authority of the (1) ; (2) I. L. R. 492 Articles of Association, no reduction of capital is achieved.
We are unable to agree with counsel for Sanyal that forfeiture of shares is permissible only in cases expressly contemplated by Table A Model Articles i.e. for non payment of calls in respect of a share which is not fully paid up.
Subject to the provisions of the the Company and the members are bound by the provisions contained in the Articles of Association.
The Articles regulate the internal management of the Company and define the powers of its officers.
They also establish a contract between the Company and the members and between the members inter se.
The contract governs the ordinary rights and obligations incidental to membership in the Company.
In the absence of any provisions contained in the Indian which prohibit a Company from forfeiting a share for failure on the part of the member to carry out an undertaking or an engagement the Articles of a Company which provide that in certain events membership rights of the shareholder including his right to the share will be forfeited are binding.
The Articles of Association of the Exchange expressly provide that in the event of the member failing to carry out the engagement and in the conditions specified therein his share shall stand forfeited.
Articles 22, 24, 26, 27 & 29 of the Exchange relating to forfeiture of shares in certain events are therefore valid.
There is in our judgment nothing in the procedure followed by the Sub Committee and the Full Committee which rendered the forfeiture of Sanyal 's share illegal.
It is not in dispute that Sanyal incurred liability in favour of one of the members of the Exchange to pay Rs. 438 10 0 in the transaction relating to the sale of Indian Iron & Steel Company 's shares and he failed to discharge that liability.
He continued to remain in default for six months even after the resolution of the Full Committee, and on that account he ceased to be a member and his share was forfeited.
The High Court has found that the copies of the letters dated 9th, 10th, 16th, 17th and 20th December, 1941, and of 8th January, 11th & 19th February, 1942, were sent to Sanyal and the usual notices relating to the complaints placed before the Sub Committee or the Full Committee were served upon Sanyal, that such notices were posted on the notice board of the Exchange that the appellant had opportunities at all stages of the proceedings to come before the Exchange and refute the charges made against him and that at no stage of the proceeding until September 1, 1942, did Sanyal appear before the Sub Committee or the Full Committee.
The High Court was of the view that the order had not been made against Sanyal contrary to the rules of natural justice.
It is true that Johurmull Daga complained about the default committed by Sanyal on December 9, 1941 and the meeting of the Sub Committee was held 493 on December 10, 1941.
Granting that the letter of the Sub Committee enclosing a copy of the complaint dated December 9, 1941, sent by post to Sanyal may not have reached him because he had left Calcutta, he had still ample notice of the proceeding of the SubCommittee because intimation was given to him by the notice posted on the board of the Exchange.
Sanyal raised no contention at any stage before the Sub Committee or before the Full Committee that he had not received the notices of the meetings dated December 10, 1941, December 17, 1941, January 7, 1942 of the Sub Committee and of the meeting dated February 19, 1942 of the Full Committee.
Regularity of the proceedings of the Com mittees at the various meetings is not challenged before us.
We are unable to agree with the contention raised by counsel for Sanyal that the rules of natural justice were not complied with when the Sub Committee and the Full Committee passed the impugned resolutions against Sanyal.
There is no substance in the plea that the Committee had no jurisdiction to order sale of the share forfeited.
Article 27 declares that the forfeited share is the property of the Exchange and that the Committee of the Exchange shall sell reallot or otherwise dispose of the share, for satisfaction of all debts due by the member to the Association or to its members out of transactions in shares and stocks.
Under its Articles the Exchange has, authority to sell the share and to appropriate the sale proceeds towards satisfaction of the debts, liabilities or engagements" But we are unable to agree with the view taken by the High Court that the balance of the amount remaining due after satisfying the liabilities of Sanyal remained the property of the Exchange and that Sanyal had no right thereto.
Under the stipulations contained in articles 21, 22, 24, the share of the defaulter or expelled member stands forfeited for failure to fulfil his obligation.
The share of ' Sanyal by express resolution was forfeited.
After applying the, amount realised on sale of the share towards satisfaction of the debts, liabilities and engagements of Sanyal to the Exchange and its members, the balance remaining in the hands of the Exchange had to be held for and on be half of the appellant.
That is expressly provided in article 33.
The expression used in article 29 "The forfeiture shall involve the extinction of all interest" is subject to those rights as by the Articles are saved, and article 33 saves to the defaulting shareholder whose share is forfeited the right to the balance remaining with, the Exchange.
Even assuming that Articles 24 & 31 reserve to the Exchange two distinct powers the power to forfeit and the power to exercise a lien, and that article 33 only applies to sale in enforcement of a lien, and not to a sale under article 27, we are of the view that the balance on hand after satisfying the liability of the defaulter must still be returned to the 494 defaulting shareholder.
The power to forfeit does not imply authority to appropriate the balance, remaining in hand after satisfying the liabilities and obligations of the defaulter to the Exchange and its members.
Any such implication would be contrary to the intendment of section 74 of the Contract Act.
The power of the Exchange to forfeit the shares arises out of the Articles and its source is in contract.
Forfeiture of share is in the nature of imposition of a penalty.
Section 74 of the Indian ,Contract Act provides : "When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding, the amount so named or, as the case may be, the penalty stipulated for.
In Fateh Chand vs Balkishan Das(1) this Court in dealing with a case in which a claim for damages for breach of contract to sell :a lien of immovable property arose, pronounced that the expression " 'the contract contains any other stipulation by way of penalty" comprehensively applies to every covenant involving a penalty whether it is for payment on breach of contract of money, or delivery of property in future, or for forfeiture of right to money or other property already delivered.
Duty not to enforce the penalty clause but only to award reasonable compensation is statutorily imposed upon courts by section 74 of the Indian Contract Act.
In all cases, therefore, where there is a stipulation in the nature of penalty for forfeiture of an amount deposited pursuant to the terms of a contract which expressly provides for forfeiture the Court has jurisdiction to award such sum only as it considers reasonable, but not exceeding the amount specified in the contract as liable to forfeiture.
The same principles, in our judgment, would apply in the ,case in which there is a stipulation in the contract by way of a penalty, and the damages awarded to the party complaining of the breach will not in any case exceed the loss suffered by the complainant party.
It was observed at p. 526 in Fateh Chand 's case(,) : "The section (section 74) is clearly an attempt to eliminate the somewhat elaborate refinements made under the English common law in distinguishing between stipulations providing for payment of liquidated damages and (1) [1964] IS.
C.R. 515.
495 stipulatings in the nature of penalty.
Under the common law a genuine pre estimate of damages by mutual agreement is regarded as a stipulation naming liquidated damages and binding between the parties : a stipulation in a contract in terrorem is a penalty and the Court refuses to enforce it, awarding to the aggrieved party only reasonable compensation.
The Indian Legislature has sought to cut across the web of rules and presumptions under the English common law, by enacting a uniform principle applicable to all stipulations naming amounts to be paid in case of breach, and stipulations by way of penalty.
" The Court also observed at p. 530 "Section 74 declares the law as to liability upon breach of contract where compensation is by agreement of the parties predetermined, or where there is a stipulation by way of penalty.
But the application of the enactment is not restricted to cases where the aggrieved party claims relief as a plaintiff.
The section does not confer a special benefit upon any party; it merely declares the law that notwithstanding any term in the contract pre determining damages or providing for forfeiture of any property by way of penalty, the Court will award to the party aggrieved only reasonable compensation not exceeding the amount named or penalty stipulated.
" Granting that article 33 deals with those cases in which lien alone is, enforced and not in cases where forfeiture is levied, and the obligation of the defaulting shareholder is determined by article 29, in our judgment, on the principle underlying section 74 of the Contract Act the Exchange had no right to hold out of the sale proceeds of the share any amount in excess of the amount due to it or to its members.
The Exchange may not purchase its own shares.
If it does so, it amounts to reduction of capital.
The legal theory of forfeiture is that a share forfeited is only taken over by the Company with the object of disposing it of to satisfy its claim to enforce which the share was forfeited and all other obligations arising against him out of his membership.
The Company is given this right to recover the loss suffered by it by reason of the breach of contract committed by the shareholder.
If the Company is permitted to retain the balance of the amount after satisfying the debts, liabili ties and engagements of the shareholder, the transaction would not be different from one purchasing the share of the defaulting shareholder for a value equal to the amount of his obligations.
That would be plainly illegal.
We are therefore unable to agree with the 496 High Court that the Exchange was entitled to retain the balance after satisfying the debts, liabilities and engagements of the appellant to the other members or to the Exchange.
The decree passed by the High Court is set aside and the case remanded to the High Court for determining the extent of the liabilities of the appellant to the Exchange not only in respect of the transactions with Johurmull Daga but in respect of all other outstanding liabilities of the appellant to other members of the Exchange and to the Exchange which are enforceable under the Articles.
The appellant is entitled to receive from the Exchange the balance remaining due after deducting the aggregate amount or value of the obligations.
He will be entitled to interest on the balance at the rate of 6% per annum from the date of the institution of the suit.
Parties will bear their own costs throughout.
This appeal was filed in forma pauperis.
The 'appellant will pay the court fee payable on the memorandum of appeal if he had not been permitted to appeal in forma pauperis.
V.P.S. Appeal allowed and case remanded.
| IN-Abs | Under the scheme of the articles of association of the Calcutta Stock Exchange Association Ltd., the Committee is authorised under article 21 to expel or suspend a member on the ground inter alia that he refused to abide by the decision of Committee in any matter which is under the articles or under the bye laws referred to the Committee.
Under article 22, a member declared a "defaulter" because he fails to fulfil any engagement between himself and any other member within six months from the date on which he has been declared a defaulter ceases to be a member of the Exchange automatically.
Upon his ceasing to be a member and upon a resolution being passed by the Committee expelling a member his share stands forfeited.
The share so forfeited is deemed to be the property of the Exchange.
Such forfeiture involves the extinction of all interest in and also all claims and demands against the Exchange in respect of the share and all other rights incidental to the share, but, not the liability of the erstwhile member to discharge his liabilities to the Exchange.
But the Committee must sell, reallot or otherwise dispose of the share for the satisfaction of the debts, which may then be due and owing by the defaulter to the Exchange or to any of its members arising out of transactions or dealings in stocks and shares.
The net proceeds of the sale shall be applied towards the satisfaction of the debts, liabilities or engagements of the shareholder and the residue, if any, paid to the member or his legal representatives.
The appellant failed to carry out a direction to pay a certain sum arising out of a share transaction and the Committee after notice, declared him a defaulter.
Six months later, after notice to the appellant, the Committee resolved that the share standing in his name shall be forfeited to the Exchange and that the appellant be expelled from the membership of the Exchange.
The Exchange thereafter disposed of the 'share for Rs. 55,000.
The appellant challenged the action taken by the Exchange but the suit was dismissed.
In appeal to this Court, HELD : (1) It is not necessary that a resolution expelling a member and a resolution declaring him a defaulter should both be passed before his share is forfeited by the Exchange.
The word and is used to indicate an alternative and does not make the two conditions cumulative, because, it would lead to the anomalous result that a member would have to be expelled by the Committee under article 21 and would also automatically cease to be a member under article 22.
[490 A C] Surajmall Mohta vs Ballabhdas Mohta, I.L.R , approved.
484 In any event, in the present case, a resolution declaring the appellant a defaulter was passed and six months later the appellant was expelled from the membership of the Exchange and it was resolved that his share shall stand forfeited.
[490 C D] (2)(a) Regulation 24 in Table A in the First Schedule to the Companies Act, 1913, provides for the exercise of the power to forfeit a share when there is default in paying calls, but no inference follows therefrom that the share of a member could be forfeited only for non payment of a call made in respect of a share which was not fully paid up.
Subject to the provisions of the Companies Act a company and its members are bound by the Provisions contained in its articles of association.
The Articles regulate the internal management of the company and define the powers of its officers.
In the absence of any provision contained in the Act which prohibits a company from forfeiting a share for failure on the part of a member to carry out an undertaking or engagement the articles of a company which provide that in certain events membership rights of a shareholder including his right to the share will be forfeited are binding.
There ' is no provision the Indian Companies Act 1913, which restricts the exercise of the right of the Exchange to forfeit shares for non payment of a call only, and the articles of the Exchange expressly provide that in the event of a member failing to carry out the engagement and in ,the conditions specified therein his share shall stand forfeited.
[492 A E] (b) Under article 27, the terms of which are mandatory, the shares forfeited to the Exchange must be re allotted or otherwise disposed of : it cannot be retained by the Exchange.
A forfeited share is merely a shake available to the company for sale and remains vested in it for that pur pose only.
By forfeiting a share pursuant to the authority of the articles of association no reduction of capital is achieved.
[491 F, H; 492 A] Therefore, articles 22, 24, 26, 27 and 29 relating to forfeiture of shares are valid.
[492 D E] Sri Gopal Jalan & Co. vs Calcutta Stock Exchange Association Ltd., ; , followed.
Calcutta Stock Exchange Association Ltd. vs section N. Nundy & Co. I.L.R. , approved.
(3) There is nothing in the procedure followed which rendered the forfeiture of the appellant 's share illegal.
The appellant had ample notice of the proceedings and the orders were not made against him contrary to rules of natural justice.
[493 C] (4)(a) Under its articles the Exchange has authority to sell the share and to appropriate the sale proceeds towards satisfaction of the debts, liabilities or engagements.
But the balance of the amount remaining due after satisfying the liabilities of the appellant did not remain the property of the Exchange.
The appellant was entitled to the amount.
This is expressly provided for in article 33.
The expression used in article 29 'the forfeiture shall involve extinction of all interest ' is subject to the rights as by the articles saved and article 33 saves the defaulting share holder 's right lo the balance remaining with the Exchange.[493 D G] (b) Even assuming that articles 24 and 31 reserve to the Exchange two distinct powers the power to forfeit and the power to exercise a lien, and that article 33 only applies to a sale in enforcement of a lien and not to a sale after forfeiture, the balance on hand after satisfying the liability 485 of the defaulter must still be returned to the defaulter, under section 74 of the Contract Act.
The power of the Exchange to forfeit the shares arises out of the articles and its source is in contract.
On the principle underlying section 74 of the Contract Act the Exchange had no right to hold, out of the sale proceeds of the share, any amount in excess of the amount due to it or to its members.
[493 H; 494 A B] Fateh Chand vs Balkishan Das, ; , followed.
(c) The legal theory of forfeiture is that a share forfeited is only taken over by the company with the object of disposing of it to satisfy its claims to enforce which the share was forfeited and all other obligations arising against him out of his membership.
If the company is per mitted to retain the balance of the amount after satisfying the debts, liabilities and engagements of the share holder, the transaction would not be different from one purchasing the share of the defaulting shareholder for a value equal to the amount of his obligation and that would be illegal.
[495 E H]
|
minal Appeal No. 178 of 1967.
Appeal by special leave from the judgment and order dated January 5, 1967 of the Madras High Court in Criminal Appeal Nos.
34 to 38 of 1965.
R. N. Sachthey, for the appellant.
H. R. Gokhale, M. K. Ramamurthi, Vineet Kumar and Shyamala Pappu, for respondent No. 1.
A. V. Rangam, for respondent No. 6.
The Judgment of the Court was delivered by Dua, J.
A complaint under section 6 of the Imports and Exports Control Act, 1947 dated 24th February, 1964 was presented by the Chief Controller of Imports and Exports, New Delhi in the court of the Chief Presidency Magistrate, Madras against (1) K. T. Kosalram, Director in charge of Messrs Dina Seithi Ltd., Madras, (2) K. T. Janakiram, Director, Messrs Dina Seithi Ltd., (3) K. Natarajan, Manager, Messrs Mohan Ram Press, Madras, (4) Messrs Dina Seithi Ltd., Madras, (5) Sri T. N. Ramachandran son of section Natesa lyer, Madras and (6) T. Natarajan, Manager, Messrs Dina Seithi Ltd., Madras.
Accord 5 10 ing to the broad allegations in the complaint, on November 28, 1959 accused No. 4 (hereafter called the Company) was registered under the , as a public limited company with the Registrar of Companies, Madras.
Accused nos.
1 and 2 who are brothers were both directors of the Company, accused No. 1 being the Director in charge attending to its day to day management and administration.
He was also authorised to operate its accounts with the banks.
The primary object of the Company was publication of a Tamil daily newspaper "Dina Seithi".
Accused No. 3 was the Manager of Messrs Mohan Ram Press located in the same building in which the Company was located.
Srimati Gomati Devi, wife of accused No. 1 was the sole proprietress of this Press.
She had given power of attorney to her husband for operating the bank account of her Press.
The daily newspaper (Dina Seithi) used to be printed at this press.
Accused No. 5 was a broker engaged in the business of negotiating sale and purchase of printing machinery.
Between 1949 and 1951 he was working as Chief Salesman of Printers ' House, Madras and before that for about two years he had worked as a salesman with Messrs Standard Printing Machinery Company, Madras.
In 1951 he started his independent business as a broker; in addition he also used to work as a correspondent of "Kerala Kaumudi" belonging to the Company.
Accused No. 6 was the Manager of the Company and his wife Smt.
Sarojini was one of its Directors.
On May 5, 1960 accused No. 1 applied on behalf of the Company to the Chief Controller of Imports and Exports, New Delhi, for the grant of an import licence in favour of the Company for importing two secondhand rotary printing presses valued at Rs. 3 lakhs in the category of "Actual Users".
The Chief Controller of Imports & Exports, on the recommendation of the Committee constituted for the purpose, issued in the first instance aft import licence for Rs. 1,50,000 (exhibit P 12).
The number of this licence was A 759626/60/AU/CCI/HO and it was dated September 19, 1960.
Later, on the request of accused No. 2 on behalf of the Company, the value of this licence was raised to Rs. 3 lakhs on the recommendation of the Press Registrar of India.
The licence was returned to the Company on December 16, 1960.
The original period of validity of the licence having expired on June 19, 1961 accused No. 2 requested the Licensing Authority on behalf of the Company to extend the period on the ground that the machinery could not be fixed up by the Company 's Directors.
Under the orders of the Controller in charge of the newsprint sale, the validity of the licence was extended upto March 19, 1962.
Oil July 2, 1961 accused No. 1 sought permission of the Licensing Authority on behalf of the Company to import two secondhand rotary presses instead of one already permitted within the licence value of Rs. 3 lakhs under the import 51 1 licence exhibit P/12 on the ground that one more printing press was required for the proposed office at Madurai (exhibit P/15).
After securing further necessary information about the machinery proposed to be imported the Chief Controller approved the request with the result that the amended licence for two presses was sent to the Company, on August 16, 1961.
On December 19, 1961 the Company as per letter sent by accused No. 1, informed the Chief Controller that one rotary printing press had been imported and the other was expected to arrive by January, 1962.
It was requested that in the import licence the description of the goods be changed from "Rotary Press" to "Rotary Press with Stereo equipment and Turtles".
We find from exhibit P/17 and exhibit P/17(a) that it was represented that the Company was incurring heavy demurrage as the cases were lying on the wharf uncleared for want of the required amendment of the licence.
This was described as a purely technical amendment in the licence.
This request was granted with the approval of the Chief Controller of Imports and Exports.
The amended licence was despatched to, the Company on January 3, 1962.
According to condition (c) reproduced on the reverse of the import licence the licence holder had to utilise the goods imported only for consumption in his own factory and its sale to or use by other parties was specifically prohibited.
The licence holder was further prohibited from pledging the imported goods in whole or in part except with a scheduled bank duly authorised to deal in foreign exchange and that also with prior permission of the Licensing Authority.
One Dr. K. G. Thomas owned "Kerala Dhwani", a daily newspaper of Kottayam having circulation in the State of Kerala.
It has started on August 20, 1959 and C. J. Mani was its general business manager ever since its inception.
On November 10, 1960 Dr. Thomas applied to the Chief Controller of Imports and Exports on behalf of his firm for importing a rotary printing press under a Customs Clearance Permit.
But this was rejected.
On October 25, 1961 he sent another application dated October 3, 1961 on behalf of ,the firm requesting for an import licence for importing a secondhand rotary press for the period October March, 1962.
But this was also rejected.
Still another application dated May 10, 1962 for licence for importing two mono typefacing units was also rejected on April 29, 1963.
C. J. Mani, the General Manager of this concern was also independently trying to secure a rotary printing press through various parties and firms.
Accused No. 5 was known to C. J. Mani and during the former 's visit to Kottayam in the first quarter of 1961 he learnt that Dr. Thomas was desirous of securing a secondhand rotary printing press.
Sometime in April or May, 1961 accused nos.
2 and 5 visited Kottayam and on meeting Dr. Thomas they told him that accused No. 1 was going to have an import licence for two rotary 512 printing presses but he needed only one, with the result that one R. Hoe & Co eight page rotary printing press would be available for sale.
After some correspondence and discussion between accused No. 5 and C. J. Mani and Dr. Thomas and after a personal meeting between Dr. Thomas and accused No. 1 (at the instance of accused No. 5) the terms of sale of rotary press to Dr. Thomas were finally settled on July 17, 1961.
The price was settled at Rs. 2 lakhs ex godown, Madras, The same day Dr. Thomas paid to accused No. 5 Rs. 15,000 by means of a cheque by way of advance money.
Accused No. 5 issued a stamped receipt which was also signed by accused No. 1.
On July 19, 1961 the photo prints of the press offered for sale were forwarded by accused No. 5 to Dr. Thomas.
On the reverse of these prints were the rubber stamp impressions of the Company.
On August 2, 1961 a further sum of Rs. 25,000 was paid by Dr. Thomas for which a receipt was given by accused nos.
1 and 5.
Between September 23, 1961 and March 17, 1962 the balance of Rs. 1,76,700 (total being Rs. 2,16,700) was paid by Dr. Thomas in instalments towards the price of the rotary press and its accessories.
On September 1, 1961 accused No. 1 had 'opened a letter of credit with a nil margin with the Indian Overseas Bank Ltd., Madras on Messrs Universal Printing Equipment Company, ,New York for importing a secondhand rotary press for dollars equivalent to Rs. 1,00, 1 12 against import licence No. A 759626/ 60/AU/CCI/HQ.
On October 28, 1961, the Bank received the relevant import documents and on December 13, 1961 it received from the Company the remittance of the amount in cash towards the letter of credit.
On October 20, 1961 Messrs Binny & Co., Madras, the agents of the ' Shipping Company Messrs Isthmian Lines Inc., U. section A. had requested the Company to remit Rs. 12,712 being the freight payable at Madras towards the con signment of 19 boxes containing secondhand rotary press due to arrive from New York by s.s.
"Steel Vendor" so as to enable them to cable to their principals at New York to issue the bills of leding to the shippers.
A cheque for Rs. 12,712 was accordingly sent by the Company to Messrs Binny & Co., on October 31, 1961.
The necessary cable was then sent to New York.
The import documents pertaining to the rotary press were sent by accused No. 1 on behalf of the Company to Messrs Natesa lyer & Co., Clearing Agents, Madras for clearing the goods from the Madras Port by the Indian Overseas Bank Ltd., Pursawalakam, Madras.
This invoice was issued by the Universal Printing Equipment Company, Lindhurst in the name of Messrs Dina Seithi Ltd., indicating shipment of the goods imported contained in the 19 boxes bearing marks "Dina Seithi".
The customs duty and the clearance charges were paid by the Company.
It is unnecessary to state at length further details of the complaint.
Suffice it to 513 started functioning from May 20, 1962.
In March, 1962 the Deputy Superintendent of Police, Madras, visited the premises of this newspaper and found the rotary printing Press tallying with the description given in the invoice issued to the Company by R. Hoe & Co., New York/London.
The number 458 assigned to the press was also found on its major parts.
No rotary press imported by accused No. 1 on behalf of the Company was found at its (the Company 's) premises.
The amount received by cheques and drafts from Dr. Thomas were credited to the account of Messrs Mohan Ram Press of which Smt.
Gomati Devi, wife of accused No. 1, was the sole proprietress.
On these broad avermerits it was prayed in the complaint that accused nos.
1 to 3 and 5 and 6 be proceeded against for offences under section 120 B, I.P.C. read with section 5 of Imports and Exports (Control) Act, 1947 ' Lind also for an offence under section 5 of the said Act.
The Company was alleged to be guilty under section 5 of the said Act read with cl.
(5), sub cl.
(iv) of Imports (Control) Order, 1955.
The Chief Presidency Magistrate who tried the complaint acquitted accused No. 6 holding that he had nothing to do with the impugned transaction but convicted the rest.
The Company was sentenced to fine only and so were accused nos.
2, 3 and 5; three individual accused persons were directed, in case of default to undergo rigorous imprisonment for three months on each count.
Leniency was shown to accused nos.
2, 3 and 5 because they had acted under the directions given by accused No. 1 who was sentenced to rigorous imprisonment for six months under each count and also to pay fine and in default to undergo further rigorous imprisonment for three months.
The convicted accused appealed to the High Court at Madras and the State applied for enhancement of sentences.
The, High Court acquitted all the accused persons with the result that the revision for enhancement necessarily failed.
The High Court having declined certificate of fitness under article 1 3 4 ( 1 ) (c) of the Constitution the Deputy Chief Controller of Imports & Exports secured special leave to appeal under article 136 of the Constitution against the order of acquittal by the High, Court.
In the High Court, though in the memorandum of appeal several grounds were taken, during arguments the appellant 's counsel confined his submission mainly to the point that condition.
(c) of the licence issued to accused No. 4 (exhibit P/ 1 2) related only to raw material or accessories and that as such the sale of printing press which was neither raw material nor accessories, did not contravene that clause.
The factum of sale of the printing press, 514 to Dr. Thomas (P. W. 16) was not disputed.
The High Court accepting this contention held condition (c) in exhibit P/12 to be inapplicable to printing presses and observed that the Licensing Authority had not applied its mind when this condition was inserted in the licence for importing the printing press in question.
On this ground the conviction recorded by the trial court was set aside.
The appellant 's learned counsel in this Court has questioned the correctness of this view and has submitted that it is not sustainable on the statutory provisions and has resulted in grave failure of justice.
Before dealing with this question we may dispose of a pre liminary objection to the competency of this appeal at the instance of the Deputy Chief Controller of Imports and Exports, raised by Shri H. R. Gokhale on behalf of the respondents.
It has been pointed out that the special leave petition in this Court purports to be filed by the Deputy Chief Controller of Imports & Exports and not by the State.
As the State had conducted the prosecution the complainant, it is argued, cannot seek leave nor can he prosecute this appeal.
Leave already granted ex parte is, according, to Shri Gokhale liable to be revoked.
Reliance has been placed on Management of Hindustan Commercial Bank Ltd., Kanpur vs Bhagwandass(1).
There the appellant had secured from this Court ex parte special leave to appeal under article 136 of the Constitution without first moving the High Court for the necessary certificate and this Court, on objection by the respondent, revoked the special leave as being in contravention of O. 13, r. 2 of the Supreme Court Rules.
The respondents ' contention before us is that the Public Prosecutor and not the Deputy Chief Controller of Imports & Exports had applied to the High Court for the necessary certificate and, therefore, the Deputy Chief Controller has no locus standi to apply for special leave.
Having been granted on an incompetent petition the special leave deserves to be revoked, argues Shri Gokhale.
We are unable to uphold this objection.
The complaint was filed in the court of the Chief Presidency Magistrate by the Deputy Chief Controller of Imports and Exports under section 6 of the Imports and Exports (Control Act, 1947.
It is not disputed that this officer was, as stated in para 1 of the complaint, duly authorised to make the complaint within the contemplation of section 6.
In the appeals filed by the accused against their conviction the State was impleaded, as represented by the Deputy Chief Controller of Imports and Exports (complainant), as the respondent.
It is true that in a petition for enhancement of sentence filed in the High Court the Public Prosecutor was shown as the petitioner and similarly the application for leave to appeal from the judgment of the High Court was (1) ; 515 also filed in that Court by the Public Prosecutor.
But that, in our view, does not in any way disentitle the Deputy Chief Controller of Imports and Exports (the original complainant duly authorised by the statute) to apply for special leave to appeal to this Court and to prosecute the appeal.
, Our attention has not been drawn to any provision of law which can be said to deprive the Deputy Chief Controller the lawfully authorised complainant in this case to seek special leave and prosecute this appeal.
In any event article 136 of the Constitution and the Supreme Court Rules are wide enough in their language to empower this Court to grant special leave to the Deputy Chief Controller in cases like the present and deal with the appeal on the merits.
The preliminary objection must accordingly be repelled.
Coming to the merits we may for a while again turn to con dition (c) of the licence which has already been noticed earlier.
It may be recalled that this condition expressly provides that the goods would be utilised only for consumption as raw material or accessories in the licence holder 's factory and no portion thereof would be sold to, or, be permitted to be utilised by, any other party.
The goods imported are also not to be pledged with any financier other than banks authorised to deal in foreign exchange, provided that particulars of the goods so pledged are reported in advance to the licensing authority.
Under section 3 of the Imports and Exports Act , 18 of 1947 the Central Government is empowered to provide by order published in the official Gazette for prohibiting, restricting or otherwise controlling the import, export, carriage or shipment etc., of goods of any specified description and also the bringing into any port or place in India of goods of any specified description intended to be taken out of India without being removed from the ship or conveyance in which they are being carried.
The Central Government by Order dated December 7, 1955 made the Import Control Order under sections 3 and 4A of the said Act.
Clause (3) of this Order provides for restriction on import of certain goods in these words : "Save as otherwise provided in this Order, no person shall import any goods of the description specified in Schedule 1, except under, and in accordance with, a licence or a customs clearance permit granted by the Central Government or by any officer specified in Schedule II.
" Clause 7 of this Order empowers the Licensing Authority suo motu or on application by the licensee to amend the licences granted under this Order in such manner as may be necessary to make them conform to the aforesaid Act or this Order or any other law in force or to rectify any error or omission in the licence : on the licensee 's request, however, the licence may be 5 1 6 amended in any manner consonant with the Import and Export Control Regulations.
Item No. 67(1) in Schedule 1, Part V, which appears to us to be relevant for this case reads : "Printing and Lithographic material, namely, presses, lithographic plates, composing sticks, chases, imposing tables, lithographic stones, stero blocks, wood blocks, half tone blocks, electrotype blocks, process blocks, roller moulds, roller frames and stocks, roller composition, lithographic nap rollers, standing screw and hot presses, perforating machines, gold blocking presses, galley presses, proof presses, arming presses, copper plate printing presses, rolling presses, ruling machines, ruling pen making machines, lead cutters, rule cutters, slug cutters, type casting machines, type setting and casting machines, paper in rolls with side perforations to be used after further perforation for typecasting, rule bending machines, rule mitreing machines, bronzing machines, stereotyping apparatus, paper fold ing machines, paging machines, but excluding ink and paper and sets of mats when imported as advertising material in connection with composed films." This item which contains a very large number of various components of a printing press corresponds to item No. 72(2) of the Indian Tariff Act, 1934 which consolidates the law relating to customs duties.
Item No. 67(2) in Schedule I speaks of component parts as defined in import tariff item No. 72(3), of machinery specified in cl.
(1) excluding those covered by sl.
no 6 8 of this schedule.
Serial No. 68 refers to rubber blankets for printing presses etc.
Item No. 67 (1) would suggest that printing presses are included in the expression "printing and lithographic material.
" Our attention has not been drawn to any other entry either in Schedule I of the Imports Control Order or in the first Schedule of the Indian Tariff Act which would cover the import of printing presses and payment of customs duty on such import.
These two statutes forming parts of the Import Control Scheme may appropriately be considered as throwing some light on each other.
The principal argument advanced on behalf of the respondents is that cl.
(c) of the conditions of the licence does not cover the printing presses in question because the plain language of this clause postulates that goods covered by it should be capable of being utilised for consumption as raw material or accessory in a factory.
A complete printing press, it is contended, is neither raw material nor accessories and it cannot be said that by fixing a printing press for running it, the press is utilised for consumption as raw material or accessory.
This argument, though attractive on first impression seems to us on a deeper thought to 517 be unacceptable.
A close scrutiny of the scheme and language of the relevant provisions of the import and export legislation and of the Import Control Policy formulated by the Government leaves no doubt that the argument is unfounded.
Clause (c) reads : " (c) The goods will be utilised only for con sumption as raw materials or accessories in the licence holders ' factory and that no portion thereof will be sold to or be permitted to be utilised by any other party or pledged with any financier other than Banks authorised to deal in foreign exchange provided that particulars of goods so pledged are reported in advance to the licensing authority.
" The respondents have sought assistance for their argument principally from the dictionary meaning of the words "consumption", "raw material" and "utilised" used in this clause.
"Consumption", it is argued, conveys the idea of destruction of the commodity consumed and "raw material" according to this submission, must be "utilised" in this sense.
In our opinion dictionary meanings, however helpful in understanding the general sense of the words cannot control where the scheme of the statute or the instrument considered as a whole clearly conveys a somewhat different shade of meaning.
It is not always a safe way to construe a statute or a contract by dividing it by a process of etymological dissection and after separating words from their context to give each word some particular definition given by lexicographers and then to reconstruct the instrument upon the basis of those definitions.
What particular meaning should be attached to words and phrases in a given instrument is usually to be gathered ?from the context, the nature of the subject matter, the purpose or the intention of the author and the effect of giving to them one or the other permissible meaning on the object to be achieved.
Words are after all used merely as a vehicle to convey the idea of the speaker or the writer and the words have naturally, therefore, to be so construed as to fit in with the idea which emerges on a consideration of the entire context.
Each word is but a symbol which may stand for one or a number of objects.
The context, in which a word con veying different shades of meanings is used, is of importance in determining the precise sense which fits in with the context as intended to be conveyed by the author.
The words used in the licence (exhibit P/12) have accordingly to be construed in the background of the scheme of the Import Control Order, 1955, the entry No. 67 of Schedule I to this Order and the Import Trade Control Policy.
The word "consumption" as used in cl.
(c) in the licence seems to us to convey the idea of using up the goods by L 436 Sup Cl/71 518 fixing them in the factory along with other components.
This is clear from the fact that entry No. 67(1) in Schedule 1 of the Import Control Order does not contain any single item denoting a complete printing press and from the fact that the various ;articles mentioned in this item seem as if to have been intended to constitute "raw material".
This construction fits in with the scheme and policy of the Import Trade Control as we will presently show.
The dictionary meaning of the three words in cl.
(c) on which the respondent relies also seems, in our opinion to harmo nise with this view.
The Government of India (Ministry of Commerce and Industry) has been publishing from time to time Import Trade Control Handbook on rules and procedure providing for the assistance of those interested in imports up to date information as to the manner in which applications for import licences should be made, the appropriate authority to be addressed in each case, the procedure governing the grant of licences for different classes of goods, the validity and use of import licences and other similar matters.
In the Handbook of 1956, which is the relevant Handbook for this case which relates to the licence originally granted in 1960, Schedule I commonly known as the ITC Schedule serves broadly to classify the articles that enter into the import trade.
Part V of the Schedule covers 'industrial requirements and it is in this part that the printing and lithographic material including and Other items are entered at sl.
No. 67(1), already noticed by us.
This Handbook emphasises the importance of correct classification with reference to the serial number and part of the ITC Schedule.
In Appendix III of the Handbook application forms are prescribed.
Form B is the one which was used by the respondents.
This form is meant for the import of goods by actual users not borne on the registers maintained by the Industrial Advisers, Ministry of Commerce and Industry, when licence is sought for import of goods (other than those falling under the capital goods licensing procedure) vide : Government of India, Ministry of Commerce and Industry Order No. 17/55 dated 7th December, 1955.
It is expressly stated in the respondents ' application exhibit P/ 11 (b) 1 that the raw material was required by them for printing newspaper (Dina Seithi, Tamil Daily) : full particulars of the raw materials required to be imported were given as printing machinery and proforma was attached with the application.
ITC number and part was specifically stated to be 67 (1 ) (i), Part V.
It was on the basis of this application that the licence exhibit P/12 was granted subject inter alia to condition (c).
The Government of India, Ministry of Commerce and Industry also publishes from time to time Import Trade Control Policy 519 for the various licensing periods.
in the publication for the licensing period April September, 1960 we find the policy statement, showing the list of items licensable to actual users.
At p. 360 in Appendix IV, Part V, items 67 (1) (i) and 67 (2) occur.
Item 67 (1 ) (i) reads : "Printing machinery (for Newspaper Establishments and quality printers).
" Item 67 (2) reads : "Component parts of printing machinery".
It is obvious that in the respondents ' application serial No. 67(1) (i) refers to this item in the Import Trade Control Policy, AprilSeptember, 1960, the period relevant for this case.
There is no other item in any one of the lists which covers printing presses as a separate item.
This clearly shows that the printing presses are treated by legislative intendment as Printing material or Printing machinery.
Form 'B ' used in the present case indicates that the Press intended to be imported was not considered to fall under the Capital Goods Licensing Procedure.
It seems that it is for all these reasons that in the licence it was provided that these goods would be utilised only for consumption as raw material or accessories in the licence holder 's factory.
The words "utilised", "consumption" and "raw material" have to be fitted into the clearly discernable statutory scheme and this is possible without doing violence to the dictionary meaning of these words.
The appropriate dictionary meaning of words possessing variable shades of meanings has not to be arbitrarily selected and mechanically applied without considering the setting in which they are, used and the purpose sought to be achieved.
There is another very cogent factor in this case, namely, that the respondents, when they sought licence for the import of printing press expressly represented that the imported goods were required to meet the increasing demand of circulation of their newspaper.
This indeed was the sole round for importing the press.
The amended licence was.
also secured by the respondents so as to enable them to import two printing presses on the ground that one press was required for their Madurai office as well.
Licence for both the printing presses was obtained for actual use by them for their newspapers.
Had they not complied with the procedure meant for the import of goods by actual users, they might not have secured the necessary licence.
Having secured a licence expressly for the import of goods for their use they may not be permitted to ignore the condition of actual user on the plea (which by no means seems to be virtuous) that cl.
(c) is inapplicable to actual users.
5 20 The respondents on their own showing clearly knew their dis ability under the conditions imposed by cl.
(c) of the licence.
Knowing full well the condition prohibiting the transfer of the press to other persons the respondents as the correspondence to which our attention has been drawn shows were actually negotiating for the sale of one of the presses during the period when the procedure in regard to its import was being carried out.
On July 2, 1961 amendment of the licence was sought so as to import one more printing press and on July 17, 1961 its resale was actually finalised and a part of the price also received.
These facts do not need any comment on the intention and bona fides of the respondents.
It is unnecessary to go into the evidence on this point because, as already noticed, it is not disputed that one of the printing presses was actually sold to Dr. Thomas prior to its arrival in India.
The amendment of the licence also appears to have been sought with the object of reselling the second press.
The only argument urged namely that condition (c) was inapplicable to the present case having been repelled, the appeal, in our view, must succeed and the order of the High Court reversed.
The validity of condition (c) in the licence has not been questioned and in our opinion rightly in view of the decision of this Court in M/s. Ramchand Jagdish Chand vs Union of India(1).
There is neither any legal nor equitable justification for reselling the printing press.
The suggestion faintly thrown that the Company was the holder of the licence and, therefore, the other respondents (accused persons) should not be held liable is also without merit.
On the facts found and on the authority of State of West Bengal vs Motilal Kanoria (2 ) all the respondents (the individual accused persons along with the Company) are guilty.
The argument that the High Court having acquitted the,res pondents on a view which is a possible view this Court should not convert acquittal into conviction under article 136 of the Constitution has not appealed to us.
The view of the High Court does not seem to be sustainable on the statutory language and on the Import Control Policy of which the respondents were fully aware.
Their own application is proof positive of their awareness of the true position and the breach of the conditions of the licence on their part was deliberate.
Indeed, as observed earlier, the permission for the import of the second press was apparently sought with the object of its resale.
Breach of conditions for import of goods is a serious matter because it prejudicially affects our country 's national economy.
The import licence for the second press having, in our view, been sought on false representation with (1) ; (2) [1966] 3 section C. R. 933.
521 the object and purpose of its resale the breach of the licence was, therefore, fully intended and designed.
The respondents are guilty of malpractices and of abuse of the import licence with the object of making money.
We, however, think that in view of the fact that this litigation has been pending since a long time, it would meet the ends of justice if we impose merely fine and do not sentence anyone to imprisonment.
The final result is that the order of the High Court is set aside and accused nos.
1, 2, 3 and 5 are convicted under section 120 B, I.P.C. and section 5 of the Imports & Exports Act, 1947 read with cl. 5 of the Import Control Order, 1955 and each of the accused nos.
2, 3 and 5 are sentenced to pay a fine of Rs. 2,000/ under each count.
Accused No. 1 who is the principal culprit and who was sen tenced by the trial court to imprisonment and fine is sentenced to pay a fine of Rs. 5,000/ under each count.
In default of payment of fine the defaulting accused persons will undergo rigorous imprisonment for three months.
The Company is convicted only under section 5 of the Imports & Exports Act read with cl. 5 of the Import Control Order and sentenced to pay a fine of Rs. 2,000/ .
V.P.S. Appeal allowed.
| IN-Abs | Under section 3 of the Imports and Exports Act, 1947, the Central Government is empowered to provide by Order published in the Official Gazette for prohibiting, restricting or otherwise controlling the import,, export, carriage or shipment etc., of goods of any specified description.
The Central Government made the Import Control Order, 1955.
Under cl. 3 of this Order the import of any goods of the description specified in Sch.
I of the Order is restricted except under and in accordance with a licence or a customs clearance permit granted by the Central Government.
Item 67(1) in Sch.
I Part V, contains printing and lithographic material, and a large number of various components of a printing press.
In Part V of the Schedule, known as ITC Schedule of the Import Trade Control Handbook, relevant for the year 1960, published by the Government of India (Ministry of Commerce and Industry) printing and lithographic material are entered at serial No. 67(1).
The I.T.C Handbook, which is published to give information of rules and procedure for the assistance of those interested in imports, emphasises the importance of correct classification with reference to the serial number and part, of the ITC Schedule.
The Government of India, Ministry of Commerce and Industry also publishes from time to time its Import Trade Control Policy.
In the publication, relevant for the period April September 1960, the policy statement shows the list of items licensable to actual users, and item 67(1)(i) dealing with printing machinery (for Newspaper Establishments and quality printers), is shown in App.
iv, Part V.
The respondents who were the Director in Charge and other officers of a company publishing a Tamil daily newspaper and others applied in Form B prescribed in Appendix III of the ITC Handbook, for a licence for importing a printing press.
This form is meant for the import of goods by actual users, when the licence is sought for import of goods other than those falling under the capital goods licensing procedure.
The respondents stated that the raw material was required by them for printing their newspaper.
The ITC number and part were specifically stated to be No. 67(1)(i), Part V. An amendment of the licence was sought by the respondents for importing one more printing press, and while the matter was pending with the Government, negotiations were entered into by the respondents with a third party for the sale of one of the printing presses.
One of the presses was ultimately sold and delivered to the third party.
According to condition (c) of the licence issued 508 to the respondents the licence bolder had to utilise the goods imported only for consumption as raw material or accessories in his own factory and their sale to or use by other parties was specifically prohibited.
Alleging that the respondents had violated cl.
(c) of the licence, the appellant, (Deputy Chief Controller of Imports and Exports) who was authorised by Statute to do so, field a complaint against them for offences under section 120B I.P.C., section 5 of the Imports and Exports Control Act and cl.
5(iv) of the Imports Control Order, 1955.
The respondents justified the sale on the contention that cl.
(c) did not cover the printing presses, that this clause postulated that the goods covered by it should be capable of being utilized for consumption as raw material or accessory in a factory, and that a complete printing press is neither raw material nor accessories and that it cannot be said that by fixing a printing press for running it the press is utilised for consumption as raw material or accessory.
The trial court convicted some of the accused.
The High Court acquitted them on appeal, and dismissed the petition for enhancement of sentence filed by the Public Prosecutor.
The Public Prosecutor applied under article 134(1) (c) of the Constitution for leave to appeal to this Court but that application was dismissed by the High Court.
Special leave to appeal under article 136 was applied for by the appellant and was granted.
On the questions: (1) Whether special leave to appeal could be granted to the appellant when he did not move the High Court; and (2) whether the respondents were guilty of the offences charged, HELD : (1) There is no provision of law which disentitles the appellant, who was the original complaint, from applying for special leave in this Court merely because the Public Prosecutor had applied in the High Court for enhanced punishment and for leave to appeal to this Court, under article 134(1) (c).
Article 136 and the Supreme Court Rules are also wide enough to empower this Court to grant special leave to the appellant in cases like the present [515 A C] Management of Hindustan Commercial Bank Ltd. Kanpur vs Bhagwandass; , , referred to.
(2) (a) The words used in the licence have to be construed in the background of the scheme of the Import Control Order, 1955, entry No. 67 of Schedule I to that Order and the Import Trade Control Policy.
What particular meaning should be attached to words and phrases in a given instrument is usually to be gathered from the context.
the nature of the subject matter, the purpose or the intention of the author, and the effect of giving to them one or the other of the permissible meanings, on the object to be achieved.
[515 F H] There is no item in any of the lists referred to in the Import Control Order, 1955, or the relevant ITC Handbook or the relevant publication regarding Import Trade Control Policy which covers printing presses as a separate item.
Printing presses are thus treated by legislative intendment as printing material or printing machinery, and the respondents also proceeded on that footing.
This is shown by their use of Form B, and by the reference in their application to serial No. 67(1)(i).
They also knew the disability imposed on them by cl.
(c) of the conditions in the licence issued to them.
The words 'utilised ', 'consumption ' and 509 raw material ', in the conditions have to be fitted into the clearly discernible statutory scheme and this is, possible without doing violence to the dictionary meaning of the words.
The word "consumption" conveys the idea of using up the goods by fixing them in the factory along with the other components, and the various articles mentioned in Item 67(1) (i) have been intended constitute 'raw material. ' [518 A B; 519 E F] (b) Further, the respondents sought as actual users the original licence and the amended licence on the ground that the imported goods were required to meet the increasing demand of circulation of their newspaper.
Had they not complied with the procedure meant for the import of goods by actual users they might not have secured the licence.
Having secured a licence expressly for the import of goods for their use they cannot be permitted to ignore the condition of actual user on the plea that cl.
(c) of the conditions is inapplicable to them.
[519 F H] Therefore, all the respondents the individual accused and the company were guilty of the offences charged.
[520 F] State of West Bengal vs Motilal Kanoria, [1966] 3 S.C.R. 933, followed.
(3) Breach of conditions for import of goods is a serious matter because it prejudicially affects the country 's national economy.
The view of the High Court is not sustainable on the statutory language and on the Import Control Policy of which the respondents were fully aware, and hence, this Court is justified in converting the acquittal into conviction, under article 136 of the Constitution.
[520 G H]
|
Appeal No. 1908 of 1968.
Appeal from the judgment and decree dated August 9, 1966 of the Patna High Court in Misc.
Judicial Case No. 1665 of 1964.
M. C. Chagla, Kailash Mehta and, A. K. Nag, for the appel lants.
Jagadish Swarup, Solicitor General and R. C. Prasad, for respondents Nos. 1, 3 and 4.
V. A. Seyid Muhammad and section P. Nayar, for respondent No. 2.
The Judgment of the Court was delivered by Hegde, J.
On June 24, 1959, the Deputy Commissioner Santal Parganas caused a notice dated June 20, 1959 published in the Bihar Gazette in accordance with the provisions of Rule 67 of the Mineral Concession Rules, 1949, of the availability for regrant of mining rights in respect of fireclay over the whole of village Palasthali No. 39, situate in Thana Nala, Block Kasta, Sub Division Jamtara in the District of Santal Parganas.
He announced in that notice that the said area will be available for regrant with effect from August 1, 1959 and invited applications for grant of mining lease in respect of that area in accordance with the provisions of Mineral Concession Rules, 1949.
The appellant, a partnership firm applied for that lease on June 24, 1959 itself.
Thereafter other persons including the 5th respondent Nankhu Singh also applied for obtaining the lease in question.
The State Government of Bihar granted the lease to the appellant on March 31, 1962.
In pursuance of that grant a written agreement was entered into between the State Government and the appellant and the same was duly registered.
The State Government rejected the applications of the other applicants.
Even during the pendency of the applications before the State Government, the 5th respondent moved the Central Government under rule 54 of the Mineral Concession Rules, 1960 which had replaced the 1949 Rules.
Therein he prayed that the grant of the lease in favour of the appellant, if it had been made, should be cancelled and that he should be granted the mineral lease in question.
The Central Government served a copy of that petition on the appellant and called for its comments.
At the same time it called for the comments of the State Government as well.
After 5 24 receiving the comments of the State Government, the same were passed on to the appellant as well as to the 5th respondent and their further comments were called for.
After examining the representation made by the parties and the comments offered by the State Government, the Central Government dismissed the petition made by the 5th respondent on September 30, 1964.
The Order of the Central Government reads thus "GOVERNMENT OF INDIA MINISTRY OF STEEL & MINES, (Department of Mines and Metals), No. MV 1(569)/61 New Delhi, the 30th September, 1964 From Shri A. Nabar, Under Secretary to the Government of India.
To Shri Nankhu Singh, P.O. Churulia, Distt.
Burdwan (West Bengal) Subject : Application under rule 54 of the Mineral Concession Rules, 1960 in respect of Mining lease for fire clay over 248 acres in Mouza Palasthali, P.S. Nala, Distt.
Santal, Parganas.
Sir, I am directed to refer to your application dated 17 10 1961 on the above subject and to say that after careful consideration the Central Government hereby reject your revision application as being time barred.
Yours faithfully, Sd./ A. Nabar, Under Secretary to the Government of India.
" Thereafter the Central Government passed a further order on November 5, 1964 and that order reads thus : Registered A/D D. N. ROY V. BIHAR (.Hegde, J.) 5 2 5 "GOVERNMENT OF INDIA MINISTRY OF STEEL AND MINES (Department of Mines and Metals) No. MV 1(569)/61 New Delhi, the 5th November, 1964.
From Shri H. section Sahni, Under Secretary to the Government of India.
TO The Secretary to the Government of Bihar, Department of Mines and Geology, Patna.
Subject : Revision application under rule 54 of the Mineral Concession Rules, 1960 from Shri Nankoo Singh relating to Mining lease for Fire clay over 248 acres in Santal Pargana District.
Sir, In continuation of this Ministry 's letter of even number dated 30 9 1964 on the above subject, I am directed to say that since no entry in the standard register was made as required under former rule 67 of the Mineral Concession Rules, 1949, the area could not have been held to be available and the four applications (referred to in para 2 of the State Government 's letter No. 3181/ M, dated 9 6 1962) would be deemed to be premature and should have been rejected on that ground alone.
Even assuming that the notification was valid, the first two applications were premature under rule 68 and on that ground should have been rejected.
Apart from this the application of M/s. D. N. Roy and section K. Bannerjee was deemed to be rejected on the expiry of 9 months from the date of receipt of application i.e., 24 3 1960.
The party did not come up in revision.
The application, therefore, ceased to exist and the order of the State Government granting the lease to this party on 31 3 1962 was without jurisdiction.
The grant and consequent execution of the Mining lease are therefore, void.
In view of the position explained above the Central Govern ment in exercise of their revisionary power conferred by Rule 55 of Mineral Concession Rules, 1960 and all other powers enabling in this behalf hereby set aside the order of the State Government contained in their letter No. A/MM/4031/62 1789M, dated 5 2 6 31 3 1962 (mentioned in State Government 's letter No. A/MM 4031./62 3181/M, dated 9 6 1962) granting Mining lease to M/s. D. N. Roy and section K. Banerjee and further direct them to through open the area again under Rule 58(1) of Mineral Concession Rule 1960 for regrant.
The notification should clearly indicate the date from which the area could be available for regrant and the date by.
which the petitioners should submit their applications for mineral concession.
M/s. D. N. Roy and section K. Banerjee are being informed.
Yours, faithfully, Sd./ H. section Sahni Under Secretary to the Government of India.
Copy forwarded to M/s. D. N. Roy and section K. Banerjee village and P. O. Churulia, Distt.
Burdwan (West Bengal) with reference to their letter dated 12 6 1963.
Sd./ H. section Sahni Under Secretary to the Government of India.
" Aggrieved by this order the appellant moved the Patna High Court under article 226 of the Constitution to quash the order of the Central Government dated November 5, 1964 (which will hereinafter be referred to as the 'impugned order ').
The High Court dismissed its petition.
As against the order of the High Court the appellant has brought this appeal after obtaining Certificate of fitness from the High Court.
It was urged before the High Court that the Government having passed the final order on September 30, 1964, it had no power to review its own order and make any further order.
Admittedly there is no provision under the or under the Mineral Concession Rules, 1960 empowering the Central Government to review its order.
The High Court did not hold that the Central Government had any power to review its own order either under the Mines and Mineral (Regulation and Development) Act, 1957 or under the Mineral Concession Rules.
It upheld the Central Government 's order on two grounds namely that the order dated September 30, 1964 is not a complete order as it did not dispose of the application made by the 5th respondent completely and secondly the Central Government had suo moto power to review the order of the State Government under section 30 of the .
These conclusions of the High Court were assailed before us.
527 In his application under rule 54 of the Mineral Concession Rules, 1960, the 5th respondent prayed for (i) setting aside the grant made in favour of the appellant and (ii) grant the area in question, on lease to him.
The High Court thought that these are two independent prayers.
In its view the Central Government by its order dated September 30, 1964 had disposed of only the prayer of the 5th respondent to grant the area on lease to him but it had not disposed of his first prayer namely to cancel the grant in favour of the appellant.
In our opinion this is an incorrect approach.
The two reliefs asked for by the 5th respondent were inter connected reliefs.
In the context in which they were made, they cannot be considered as independent prayers.
No grant in his favour could have been made without first setting aside the grant made in favour of the appellant.
Therefore the first relief asked for by the 5th respondent is a necessary condition precedent for a grant in his favour.
Further by its order dated September 30, 1964, the Central Government dismissed the entire application of the 5th respondent on the ground that the same was time barred.
If his application in respect of one part of Ms prayer was time barred, it was equally time barred in respect of the other part.
The impugned order of the Central Government does not show that it was made in the exercise of its suo moto power.
It is purpoted to have been made on the basis of the application made by the 5th respondent under rule 54 of the Mineral Concession Rules, 1960.
In paragraph 3 of that order it says "in view of the position explained above the Central Government in exercise of their revisionary power conferred by Rule 55 of Mineral Concession Rules, 1960 and all other powers enabling in this behalf hereby set aside the order of the State Government contained in their letter No. A/MM/4031/62 1789M, dated March 31, 1962".
It is true that the order in question also refers to "all other powers enabling in this behalf".
But in its return to the writ petition the Central Government did not plead that the impugned order was passed in exercise of its suo moto powers.
We agree that if the exercise of a power can be traced to an existing power even though that power was not purported to have been exercised, under certain circumstances, the exercise of the power can be upheld on the strength of an undisclosed but undoubted power.
But in this case the difficulty is that at no stage the Central Government intimated to the appellant that it was exercising its suo moto power.
At all stages it purported to act under rules 54 and 55 of the Mineral Concession Rules, 1960.
If the Central Government wanted to exercise its suo moto power it should have intimated that fact as well as the grounds on which it proposed to 5 28 exercise that power to the appellant and given him an opportunity 'to show cause against the exercise of suo moto power as well as against the grounds on which it wanted to exercise its power.
Quite clearly the Central Government had not given him that opportunity.
The High Court thought that as the Central Government had not only intimated to the appellant the grounds mentioned in the application made by the 5th respondent but also the comments of the State Government, the appellant had adequate opportunity to put forward his case.
This conclusion in our judgment is untenable.
At no stage, the appellant was informed that the Central Government proposed to exercise its suo moto power and asked him to show cause against the exercise of such a power.
Failure of the Central Government to do so, in our opinion, vitiates the impugned order.
For the reasons mentioned above we allow this appeal as well as the writ petition and set aside the impugned order.
Central 'Government shall pay the costs of the appellant in this Court as well as in the High Court.
Y.P. Appeal and petition allowed.
| IN-Abs | The respondent State granted a mining lease to the appellant.
The 5th respondent, whose application was rejected moved the Central Government under rule 54 of the, Mineral Concession Rules, 1960, praying (i) for setting aside the grant in favour of the appellant, and (ii) for grant of the area on lease to him.
The Central Government asked for the comments of the appellant and the State Government and after receipt of these comments, they were passed to the parties for further comments.
The Central Government by an order passed on Sept. 30, 1964 rejected the application of 5th respondent as time barred.
Thereafter, the Central Government on Nov. 5, 1964, under the revisionary powers conferred by r, 55, of the Rules and "all the powers enabling in this behalf," set aside the order granting the lease to the appellant, and further directed regrant after issuing fresh notification.
The appellant, moved the High Court under article 226 of the Constitution for quashing the order of November, 1964, The High Court dismissed the petition.
HELD : The appeal as well as the Writ Petition must be allowed and the order of the Central Government Nov. 5, 1964 must be set aside.
The High Court erred in its approach that the two prayers in the application of the 5th respondent were independent, and that the Central Government by its order of Sept. 30, 1964 had disposed of only the prayer of 5th respondent to grant the area on lease to him, but it had not disposed of his other prayer to cancel the grant in favour of the appellant.
The two reliefs asked for by the 5th respondent were inter connected reliefs.
In the context in which they were mad, they could not be considered as independent prayers.
Further by its order dated September 30, 1964, the Central Government dismissed the entire application of the 5th res pondent on the ground that the same was time barred.
If his application in respect of one part of his prayer was time barred, it was equally, time barred in respect of the other part.
[527 B D] The order of Nov. 5, 1964 of the Central Government does not show that it was made in the exercise of its suo motu powers.
It is purported to have been made on the basis of the application made by the 5th respondent.
[527 E] If the Central Government wanted to exercise its suo motu power it should have intimated that fact as well as the grounds on which it proposed to exercise that power to the appellant and given him an opportunity to show cause against the exercise of suo motu power as well as 5 2 3 against the grounds on which it wanted to exercise its power.
The Central Government had not given him that opportunity.
Failure of the Central Government to do so, vitiates the impugned order.
[527 H]
|
minal Appeal No. 131 of 1967.
Appeal from the judgment and order dated January 9, 1967 of the Judicial Commissioner 's Court Tripura, Agartala in Criminal Appeal Case No. 8 of 1963.
M. K. Ramamurthi, J. Ramamurthi and Vineet Kumar, for the appellant.
H. R. Khanna and R. N. Sachthey, for the respondent.
The Judgment of the Court was delivered by Dua, J.
Pursuant to a complaint by Shri Joy Shanker Bhattacharyya, the appellant Sushil Kumar Gupta was tried in the court of Assistant Sessions Judge, Tripura on the following charges "(1) That you in between the month of September, 1958 and July, 1959 at Agarwala P. section Kotwali being a servant viz. Secretary in the employment of the Tripura Central Marketing Co operative Society Ltd., and in such capacity entrusted with certain property to wit a total sum of Rs. 18,200 being the fund of the Society committed criminal breach of trust in respect of the said property and thereby committed an offence punishable under section 408 of the Indian Penal Code and within the cognizance of this Court.
Secondly : that you in between the period of September, 1958 and July, 1959 at the same place being a Secretary in the employment of the Tripura Central Marketing Co operative Society Ltd., wilfully and with intent to defaud, falsified certain books and other relevant papers to wit cash book etc., which belonged to the said society, your employer and thereby committed an offence punishable under section 477 A of the Indian Penal Code and within the cognizance of this Court.
" As the appellant was tried jointly along with five others who have been acquitted and as if was argued on behalf of the appellant that in view of the acquittal of his co accused the appellant 772 also should have been acquitted, the charges against them may also be reproduced : "That Sushil Kumar Gupta, Secretary of the Tripura Central Marketing Co operative Society Ltd., in between the period of September, 1958 and July, 1959 at Agartala p.s.
Kotwali committed the offence of criminal breach of trust in respect of Rs. 18, 200 and that you the aforesaid persons at the same place and time abetted the said Shri.
Sushil Kumar Gupta in the commission of the same offence of criminal breach of trust in respect of the said amount which was committed in consequence of your abetment and that you have thereby committed an offence punishable under section 109, I.P.C. read with section 408, I.P.C. and within my cognizance.
Secondly : that Shri Sushil Kumar Gupta, Secretary of the Tripura Central Marketing Co operative Society Ltd. in between the period of September, 1958 and July, 1959 at Agartala p.s.
Kotwali committed the offence of falsification of accounts and that you the aforesaid persons at the same place and time abetted the said Shri Sushil Kumar Gupta in the commission of the same offence of falsification of account which was committed in consequence of your abetment and that you have thereby committed an offence punishable u/s 109, I.P.C. read with section 477 A of the I.P.C. and within my cognizance.
" The trial court acquitted all the six accused persons.
An appeal against the acquittal of all of them was preferred under section 417 (3), Cr.
P.C. in the court of the Judicial Commissioner, Tripura.
That court allowed the appeal against section K. Gupta only and dismissed it as against the others.
section K. Gupta was held guilty of the offence of criminal breach of trust under section 408, I.P.C. and also of the offence of falsification of accounts under section 477 A, I.P.C. regarding the sum of Rs. 18,200.
He was sentenced under each count to undergo rigorous imprisonment for one year, the sentences to be concurrent.
The convict section K. Gupta has appealed to this Court on certificate granted under article 134(1)(c) of the Constitution. 'Me order granting the certificate does not disclose on its face what exactly the difficulty of the court of the Judicial Commissioner is and precisely what question of outstanding difficulty this Court is desired to settle.
On behalf of the appellant his learned advocate Shri Ramamurthy, however, addressed elaborate arguments questioning the order of the learned Judicial Commissioner allowing 773 the appeal against the appellant section K. Gupta 's acquittal.
His, challenge was based on three main contentions.
The fourth point that the learned Judicial Commissioner erred in law in considering exhibit P 59 to be admissible in evidence, in disagreement with the trial court, according to which it was hit by section 24, Indian Evidence Act, was not allowed to be argued in this Court because this ground was not taken in the grounds of appeal.
The first contention seriously pressed on behalf of the appellant is that in view of the acquittal of his co accused who were tried along with him the court of the Judicial Commissioner was wrong in law in holding that there was falsification of accounts and embezzlement of the funds of the Tripura Central Marketing Co operative Society.
This submission is unacceptable.
The acquittal of the other co accused as affirmed by the learned Judicial Commissioner is not based on the finding that there was no falsification of accounts and no embezzlement of the funds of the Society.
section K. Gupta, appellant, it may be pointed out was the Secretary of the Society since April 13, 1957 when the first general meeting of the Society was held and was in that capacity entrusted with its funds.
He worked as such till August 10, 1960.
He was accordingly responsible for the cash and maintenance of current accounts of the Society during the period in question.
Turning to the Bye laws of the Society, bye law No. 41 prescribes the duties of the Secretary.
According to this bye law the Secretary has inter alia : "(3) To make disbursement and to obtain vouchers and to receive payments and pass receipts, under the general or special orders of the Board of Directors on this behalf from time to time.
(4) To keep all accounts and registers required by the rules.
(13) To countersign cash book in token of the balance being correct and to produce the cash balance.
whenever called upon to do so by the Chairman or any person authorised to do so.
In the absence of the Secretary the Board of Directors may authorise the Manager to perform the duties of the Secretary.
The Board of Directors may also authorise the Manager to perform any of the duties of the Secretary to facilitate, the working of the Society.
Receipts passed on behalf of the Society shall be, signed by the Secretary.
Share certificates and other 774 documents shall be signed by the Secretary and one member of Board of Directors jointly.
" Byelaw 42 contains directions I regarding advances against proof goods and clause (1) of this byelaw provides : "(1) The Board of Directors shall, at the beginning of the session, fix the amount of advance, indicating the percentage of the market price of produce or goods pledged with the society, that may be granted to a member.
Such limits may be fixed for different com modities and varied from time to time according to fluctuation in markets or otherwise.
It shall also be competent for the Board of Directors to call on a borrower at any time before the due date to repay a portion of the loan or advance issued or to produce additional security for the outstanding loan or advance within a time fixed by them, if in their opinion, there is fall or likely to be a fall in the market value of the produce or goods pledged.
" Under byelaw 44 loans may be granted to members in suitable cases on such terms and conditions as regards individual and maximum limits, repayment of loan,, rate of interest thereon etc., as may be fixed by the Board of Directors from time to time.
According to the learned judicial Commissioner "the overall picture" emerging .from the evidence on the record, to quote his own words, it "(1) A sum of Rs. 18,200/ was said to have been disbursed in 1958 and 1959.
(2) It was said to have been repaid in the last week of June, 1959 towards the end of the co operative year of 1959 and long after the maximum period of 6 months allowed by rule 42 (4) of the byelaws.
(3) The same amount was again said to have been ,disbursed in a few days in the first week of July commencing with the next cooperative year (1959 60).
(4) Except the 2nd and 4th respondents, the others were not members of the Co operative Society and in this regard the 1st respondent disregarded sub rule (1) ,of r. 42 of the byelaws.
(5) The 1st respondent did not obtain any general or special orders of the Board of Directors to make the disbursements and violated sub rule (1) of r. 42 of Ext.
P 41. 775 (6) Ext.
P 56 and P 59 show that the alleged collections of the monies in June 1959 was false and that the accounts were got up.
(7) The fact that a discount of Rs. 10/ was paid to cash a cheque on 29 6 1959 shows that the society had no funds on that day.
(8) None of the alleged loanees was a Jute grower and no jute was deposited in the godowns of the society before the advances were made and in this regard the mandatory provisions of sub r.
(2) of r. 42 were also disregarded by the 1st respondent.
(9) A number of adjustments were made in the Accounts to show that the sum of Rs. 18,200/ was disbursed.
(10) The three persons to whom ultimately the amounts were said to have been disbursed are interested in the 1st respondent.
The 4th respondent C. C. Das Gupta is a relation of the 1st respondent and proved by P. Ws 1, 6 and 8 and as admitted by the 4th respondent himself in Ext.
The 3rd respondent Sudhir Ranjan Roy is a servant of D.W. I who is a co Director of the Match Factory and friend of the 1st respondent.
The 3rd respondent Haradhan Deb was appointed by the 1st respondent in the C.M.S.
The 3rd respondent was also an employee of the C.T.S. of which the 1st respondent was a Director.
" On the basis of these observations the appellant was held to ,have committed criminal breach of trust and to have either misappropriated or misapplied the funds of the Society dishonestly to benefit himself of his relations and friends.
Counsel failed to point out any legal infirmity in the final conclusion drawn in the impugned order from the overall picture.
Indeed, counsel, after a faint attempt to find fault with this conclusion felt constrained to admit that the money had been advanced against the rules of the Society and also to the persons not entitled to it, his only contention in support of the appeal being that it did not constitute a criminal offence and that in any event the Board of Directors of the Society having ratified the advances, the foundation for the criminal charge must be deemed to have disappeared.
We are unable to agree.
The offence of criminal breach of trust is committed when a person who is entrusted in any manner with property or With dominion over it, dishonestly misappropriates it, or converts it to his own use, or dishonestly uses it or disposes it of in violation 776 of any direction of law prescribing the mode in which the trust is to be discharged, or of any lawful contract, express or implied, made by him touching such discharge, or wilfully suffers any other person so to do.
The appellant 's manner of dealing with the money entrusted to his custody clearly constitutes criminal breach of trust.
Counsel was not able to point out any provision which empowers the Directors to prescribe the mode of making advances, which violates or is in breach of, or contrary to the Byelaws.
If the Directors, possess no authority to give any directions contrary to the byelaws they can scarcely claim or assume power to ratify violation of the Byelaws in the matter of dealing with the trust money.
Our attention was not drawn to any over riding provision conferring power on the Board of Directors to ratify use of the trust money contrary to the directions contained in the Byelaws.
Exhibit P 27, the resolution of the Board of Directors dated January 10, 1960, on which reliance in support of ' the argument was placed, merely states "investments made by the Secretary uptodate are hereby approved" without pointing out the provisions under which such approval could validate breaches of the Byelaws.
Incidentally it may be mentioned that the learned Judicial Commissioner also entertained some suspicion about the manner in which the meeting, in which this resolution was passed, was held.
This contention of the counsel must, therefore, be repelled.
In the last submission the counsel made a grievance against the joint trial of several accused persons on several items of embezzlement.
According to him there was a misjoinder of charges which vitiated the trial.
In our opinion, charges under section 408 and section 477 A, Indian Penal Code, could, in the circumstances of this case, be tried together and the joint trial of all the accused was proper and lawful.
Our attention was not drawn to any provision of law against the legality of the joint trial.
In any event no failure of justice in consequence of the joinder of charges was pointed out, with the result that the question of misjoinder of charges must be held to be of little consequence at the stage of appeal.
Before closing we may point out, as has repeatedly been said by this Court, that there is normally no right of appeal to this Court in criminal matters except in cases provided :by article 134 ( 1 ) (a) and (b) of the Constitution.
Clause (c) of this Article empowers the High Court to certify cases to be fit for appeal to this Court.
The word "certify" is a strong word; it postulates exercise of judicial discretion by the High Court and the certificate should ordinarily show on the face of it that the discretion was invoked and properly exercised.
This Court should be in a position to know that the High Court has not acted mechanically 777 but has applied its mind.
A certificate under this clause is impermissible on questions of fact and when a case does not disclose a substantial question of law or principle then the certificate granted by the High Court is liable to be revoked by this Court, though such prima facie non disclosure would not by itself automatically invalidate the certificate.
In the case in hand no substantial question of law or principle was made out at the bar and the certificate was clearly misconceived though it vaguely states that several questions of law are involved.
The appeal fails and is dismissed.
V.P.S. Appeal dismissed.
| IN-Abs | The appellant, who was the Secretary of a Cooperative Society and was responsible for the cash and maintenance, of the accounts of the Society, was charged with the offenses of criminal breach of trust and falsification of accounts under sections 408 and 477 A, I.P.C. He was tried along with 5 others who were charged with the offence of abetment of the offenses.
The, trial court acquitted all of them, but the appellate court (the Court of Judicial Commissioner) convicted the appellant and acquitted the.
others.
The appellate Court held that the appellant had advanced money against the rules of the Society and also to various persons not entitled to it, that the appellant had thereby committed criminal breach of trust and either misappropriated or misapplied the funds of the Society dishonestly to benefit himself or his relations and friends.
The 'appellate Court certified that the case was a fit one for appeal to this Court under article 134(1) (c), but, the order granting the certificate did not disclose on its face what exactly was the difficulty of the appellate Court and what question of outstanding difficulty this Court was to settle.
In appeal to this Court, HELD : (1) The acquittal of the co accused was not based on the finding that there was no falsification of accounts or embezzlement.
Therefore, the appellant could not contend that no offence was committed because of the acquittal of the co accused.
[773 G D] (2) On the finding of the appellate court, it was not a mere civil liability of the appellant.
The appellant 's manner of dealing with the money entrusted to his custody constituted criminal breach of trust.
The Directors had no authority under the bye laws to give any directions contrary to the bye laws and so, could not ratify the violation of the bye laws.
Any resolution ratifying the use of trust money contrary to the directions contained in the bye laws would not validate the breach of the bye laws.
[775G; 776 A C] (3) There was no misjoinder of charges and no prejudice was caused to the appellant.
[776 F] (4) The appellate Court should not have granted the certificate, under article 134(1)(c) in the present case.
The word 'certify ' in the Article 771 postulates the exercise.
of judicial discretion by the appellate Court and the certificate should ordinarily show on the face of it that the discretion was invoked and properly exercised.
This Court should be in a position to know that the appellate Court has not acted mechanically but has applied its mind.
A certificate under this clause is impermissible on questions of fact.
When the case does not disclose a substantial question of law or principle the certificate.
granted by the appellate Court is liable to be revoked by this Court, though such_ prima facie non disclosure would not by itself automatically invalidate the certificate [777 A C]
|
Appeal No. 1946 of 1966.
Appeal by special leave from the judgment and order dated December 6, 1965 of the Punjab High Court in Civil Writ No. 1523 of 1962.
V. C. Mahajan, for the appellant.
Abad Behari, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by Shah, J.
On May 9, 1958 Khillu and two others sold a plot of land in village Majesar, Tehsil.
Ballabhgarh, District Gurgaon to Surinder Kumar and Virender Kumar (who will hereinafter be referred to as "the defendants").
On January 9, 1959 Ramjilal and Khazan hereinafter called the "plaintiffs" filed a suit in the Civil Court to pre empt the sale.
On November 16, 1961 the Government of Punjab issued in exercise of the power conferred by sub section (2) of Section 8 of the Punjab Pre emption Act, 1913 a notification declaring "that no rights of pre emption shall exist with respect to urban or village immovable property or agri cultural land when purchased by any person for setting up or extension of any industry in the State with the permission of the Director of Industries, Punjab.
" The plaintiffs contended that the notification issued by the Government did (not prejudicially affect their claim to pre empt the sale.
By order dated February 16, 1962 the Civil Court passed a decree for pre emption conditionally on payment of the amount for which the property was sold.
The Civil Court found that the defendants had failed to establish that they intended to establish a factory on the land in question.
5 52 The defendants appealed to the Court of the Senior Subordinate Judge against the decree of the Trial Court.
Thereafter the Government of Punjab issued another notification on September 3, 1962, that the Governor of Punjab was Pleased to order that "no right of pre emption shall exist with respect to the sale of land, described in the Schedule to this Notification made on the 9th May, 1958, in favour of Messrs. Surinder Kumar and Virender Kumar, opposite Railway Station, Faridabad, for the establishment of a factory for manufacture of cork products".
In the Schedule was described the property sold to the defendants by Khillu and two others.
The plaintiffs then moved a petition in the High Court of Punjab challenging the validity of the notification dated September 3, 1962, among others on the ground that in issuing the order the Government acted mala fide.
A Division Bench of the High Court referred the case for hearing before a full bench of the Court.
The full bench held that in a suit for pre emption the claimant must prove that his right to pre empt subsisted till the date of the decree of the first Court and that loss of the right after the date of the decree "by his own act or by an act beyond his control" did not affect his claim in the suit.
Accordingly the notification under s: 8 (2) of the Punjab Pre emption Act, 1913 extinguishing the right of pre emption in the property issued during the pendency of the appeal against the decree of the Trial Court did not disentitle the plaintiffs to maintain their claim of pre emotion already exercised, and in respect of which a decree was granted to them.
The High Court also held that section 8(2) of Punjab Act 1 of 1913 did not offend article 14 of the Constitution, but the notification dated September 3, 1962, was issued mala fide, and was on that account liable to be struck down as invalid.
" With special leave, the State of Punjab has appealed to this Court.
It was urged, that section 8 (2) infringes the guarantee of equality under article 14 of the Constitution.
In terms, section 8(2) provides "The State Government may declare by notification that in any local area or with respect to any land or property or class of land or property or with respect to any sale or class of sales, no right of pre emption or only such limited right as the State Government may specify shall exist.
,, The High Court was of the view that section 8 must be read in the light of the scheme of the Act and especially section 9 which excludes fro the operation of the Act sales made by Or to Government, or to any local authority, or to any company under the provision of Part VII of the Land Acquisition Act, 1894, or in respect any sale sanctioned by the Deputy Commissioner under section 3 (2) of 553 the Punjab Alienation of Land Act, 1900.
The power conferred by section 8(2) to declare by notification that to certain sales the Act will not apply is independent of the exemption which is statutorily prescribed by section 9.
Exercise of the power under section 8 (2) is apparently not restricted to transactions of the nature specified in section 9, but for the purpose of the present case we do not feel called upon to decide whether sub section
(2) of section 8 invests the State Government with "arbitrary, unguided and uncanalised power " so as to infringe the guarantee of article 14 of the Constitution, for, in our view the plea that the order was issued mala fide raised by the plaintiffs and upheld by the High Court must be decided in their favour.
The High Court on a review of the evidence found it proved, that, although at some stages reference to the pre emption suit filed by the plaintiffs appeared in the history of the case, the defendants did not disclose the fact that a decree had been passed in favour of the plaintiffs in the suit, nor did any authority (except the Tehsildar) try to find out whether a decree had been passed in that suit; that it was never brought to the notice of any authority by the defendants that the finding of the Trial Court was against them and it was because they had failed to prove that they intended to set up a factory, no authority ever tried to learn anything about that finding; that only a few days after the filing of the appeal by the defendants against the decree of the Trial Court an affidavit was filed by one of the defendants that they intended to put up a factory on the land in question; that the District Inspector of Industries at Gurgaon made a report in favour of the defendants, only on the basis that they had started building the boundary wall; that the Tehsildar made a report adverse to the defendants, and pointed out that they had only constructed a small room in the middle of the land and not a factory building; that the move of the defendants was to stultify and defeat that decree; that the Deputy Commissioner first ordered that a copy of the report of the Tahsildar be forwarded to the Government,but two days later the Deputy Commissioner changed his mind when the defendants approached him and on the mere statement of the defendants that they intended to set up a factory in the land in question, heproceeded to recommend that "exemption notification under section 8(2) of the Act" be issued in favour of the defendants and that this was followed up by the higher authorities; that the report of the Tahsildar which had material bearing on the decision to be taken in the matter of issue of the impugned notification was suppressed and for this suppression there was no explanation "on the side of the State"; that although in the note dated March 14, 1962 of the Joint Director of Industries, it was directed that the defendants were to sign an agreement that the exemption to be granted to them would not be "misutilised" and the land would "not be sold for money making", and although in the Revenue Department 's note of August 14, 1962, it was 5 5 4 stated that the Director of Industries be asked to obtain such an undertaking before the issue of the notification, no such agreement or undertaking was obtained from the defendants and all that was done was that on November 8, 1962 (a day before the date of the notification and some days before its publication) another affidavit was obtained from the defendants that the land had been purchased for establishing a factory and "they solemnly undertook not to misuse or abuse the land", and declared and undertook that the land shall be used only for industrial purposes, but there was "no manner of contract by them whereby they would have to surrender back the land in the event of their not using it for the purpose of establishing a factory".
The High Court also observed that there was no allegation that any superior officer "in the Revenue Department such as the Secretary or the Deputy Secretary had acted in a mala fide manner in the issue of the impugned notification".
But it was pressed before the Court that the notification was not really the act of one single person finally approving that the notification be issued : it was the result of a process of formal or informal inquiries and reports and consideration of various authorities at various stages leading up to the recommendations based on material collected which went to form the basis of the judgment whether or not such a notification should issue in any particular case.
Approving of the process, the High Court observed that on a consideration of all the circumstances the impugned notification must be held to have been issued mala fide.
The High Court concluded "The reason in the circumstances of this case is simple.
In the first place, the report of the Tahsildar was a crucial and vital document in this case, which would substantially and materially.
affect the approach of the higher authorities in the conclusion to issue or not to issue the Notification.
In this respect what happened before the Deputy Commissioner (Collector) had also the same bearing.
It should have been disclosed what orders the Deputy Commissioner (Collector) passed first and what was the order which he passed two days later.
An endeavour should have been made by somebody to find out what was the finding given by the Trial Court in the decision of that suit.
This was not done even after the matter was pointed out by the Tahsildar.
In other words, either deliberately or by sheer avoidance no effort was made to find out what finding the Trial ,Court had given in the matter .
In spite of it having been pointed out that before the issue of the notification an agreement be obtained from respondents 5 5 5 2 and 3 (the defendants) against misuse and misutilisation of the land for the purpose other than that for which it was being exempted from the right of pre emption of the, petitioners and for not making it an otherwise profiteering transaction, no such agreement, binding in law, was obtained from these respondents '(the defendants), but instead the matter was slurred over by obtaining a second affidavit from the two respondents (the defendants).
It is thus apparent that at the final stages, when the question for consideration was whether or not the impugned notification should be issued, whether all the circumstances were present which justified the issue of such a notification and whether all the obligations that were required to be taken by respondents 2 and 3 (the defendants) had been taken before its issue, were matters which either could not 'be considered because substantial material collected was withheld or clear directions were completely ignored. .
In the circumstances of the case, to my mind, the impugned notification cannot be held to have been issued in good faith and has to be held to have been issued mala fide.
" This is a finding based on appreciation of evidence, and no case is made on which may justify us in interfering with that finding.
It appears that the subordinate authorities withheld very important facts which had bearing on the issue of the notification by the State Government excluding the land, sold under the sale deed dated May 9, 1958 executed by Khillu from the operation of the Punjab Pre emption Act 1 of 1913 even after a decree was passed by the Civil Court granting pre emption.
Counsel for the State of Punjab contended that the, plea that the action of the State was not bona fide established, cannot be said to be unless the party alleging that case names the officer or officers guilty of conduct which justifies an inference that the official act was done for a collateral purpose, and since no such attempt was made and the High Court did not find that any named officer or officers was or were responsible for that official act, the plea that it was bona fide must fail.
We do not think that the law casts any such burden upon the party challenging the validity of the action taken by the State Government.
The State Government has undoubtedly to act through its officers.
What matters were considered, what matters were placed before the final authority, and who acted on behalf of the State Government in issuing the order in the name of the Governor, are all within the knowledge of the State Government, and it would be placing an intolerable burden in proof of a just claims to require a party alleging mala fides of, State action to aver in his petition and to prove by positive 556 evidence that a particular officer was responsible for misusing the authority of the State by taking action for a collateral purpose.
The facts in the present case are eloquent.
A sale deed was executed in favour of the defendants.
The plaintiffs who claimed that they had a right to pre empt the sale filed a suit against the defendants and obtained a decree.
On the finding of the, High Court it is clear that except disclosing that the defendants intended to construct a factory, nothing more was said.
The State Government still proceeded to issue, in exercise of the power under section 8 (2) of the Punjab Pre emption Act, a notification to exclude from the operation of the Act the land so as to defeat the right of preemption exercised by the plaintiffs in respect of which a decree was passed by the Civil Court.
The State Government has filed no affidavit explaining the circumstances in which the order came to be passed : they have merely offered "comments" on the petition filed by the plaintiffs.
In our _judgment, the conclusion of the High Court was home out by evidence and no ground is made out calling for our interference with that conclusion in this appeal with special leave.
The appeal therefore fails and is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | Surinder Kumar and Virender Kumar (defendants in the suit) purchased on May 9, 1958 a plot of land in District Gurgaon.
On January 9, 1959 the plaintiffs filed a suit in the Civil Court to pre empt the sale.
On November 16, 1961 the Government of Punjab issued in exercise of the power conferred by section 8(2) of the Punjab Pre emption Act, 1913, a notification declaring "that no right of pre emption shall exist with respect to urban of village immovable property or agricultural land when purchased by any person for setting up or expansion of any industry in the State with the permission of the Director of Industries, Punjab.
" By order dated February 16.
1962 the Civil Court passed a decree for preemption conditionally on payment of the amount for which the property was sold.
The Civil Court found that the defendants had failed to establish that they intended to establish a factory on the land in question.
The defendants appealed to the Court of the Senior Subordinate Judge against the decree of the Trial Court.
Thereafter the Government of Punjab issued another notification on September 3,1962, that the Governor of Punjab was pleased to order that "no right of pre emption shall exist with respect to the sale of land, described in the Schedule to this Notification made on the 9th May, 1958, in favour of Messrs. Surinder Kumar and Virender Kumar, opposite Railway Station, Faridabad for the establishment of a factory for manufacture of cork products".
In the Schedule was described the property aforesaid purchased by the defendants.
The plaintiffs then moved a petition in the High Court chal lenging the validity of the Notification dated September 3, 1962 among others On the ground that in issuing the order the Government acted mala fide.
The High Court held that the notification extinguishing the right of pre emption in the property,issued during the pendency of the appeal did not disentitle the plaintiffs to maintain their claim of preemption already exercised and in respect of which a decree was granted to them.
The notification dated September 3, 1962 was held to have been issued mala fide and on that account invalid though section 8(2) of the Punjab Act 1 of 1913 was held not offend article 14 of the Constitution.
With special leave the State of Punjab appealed to this Court, HELD : The High Court rightly held on the facts that the impugned notification was issued mala fide.
The plaintiffs who claimed that they bad a right to pre empt the sale filed a suit against the defendants and obtained a decree.
On the finding of the High Court it was clear that except disclosing that the defendants intended to construct a factory, nothing more was said.
The State Government still proceeded to exclude from the operation of the Act the land so as to defeat the right of preemption exercised by the plaintiffs in respect of which a decree was passed 551 by the Civil Court.
The State Government had not in their affidavit satisfactorily explained the circumstances in which the order was passed.
The conclusion of the High Court was borne out by the evidence and no ground was made out calling for interference in this appeal by special leave.
[554 E; 556 B C] The contention on behalf of the State that the party alleging that the action of the State was not bona fide must name the officer or officers guilty of conduct which justifies an inference that the official act was done for a collateral purpose, could not be accepted.
It would be placing an intolerable burden of proof of a just claim to require a party alleging mala fides of State action to aver in his petition and to prove by positive evidence that a particular officer was responsible for misusing the authority of the State by taking action for a collateral purpose.
[5.55 F H] [The impugned notification having been held invalid the question whether section 8(2) of the Punjab Pre emption Act was ultra vires article 14 of the Constitution did not survive for consideration.] [553 B]
|
Appeal No. 1943 of 1966.
Appeal from the judgment and decree dated March 7, 1962 of the Calcutta High Court in Appeal from Original Decree No. 173 of 1956.
section V. Gupte and D. N. Mukherjee, for the appellants.
Purushottam Chatterjee, P. K. Chatterjee and Rathin Das, for respondent No. 2.
The Judgment of the Court was delivered by Shah, J.
One Sashi Bhusan was possessed of a piece of land at Mouza Behala District 24 Parganas admeasuring 98 acres.
The land devolved on the death of Sashi Bhusan in 1920 upon his daughter Sarala.
Under the Dayabhaga system of law; Sarala inherited the property of her father as a limited owner.
Sarala married Kunja Behari.
The latter died in 1937 leaving him surviving Sarala, two sons Tulsi and Gobinda, and four daughters were married during the life time of Kunja Behari.
Kunja Behari left no estate except a residential house constructed on the land at Mauza Behala.
Kunja Behari was ailing for about one year before his death in 1937.
He was in an humble walk of life, and was apparently not profitably employed during his life time.
At the time of his death the two sons Tulsi and Gobinda were minors.
On October 22, 1941, Sarala executed a deed, Ext.
E, agree ing to sell a part of the land (.90 acres) for Rs. 1,100/ to Chapalabala wife of Sakha Nath Ghosh.
It was recited in the agreement of sale that Sarala had agreed to sell 90 acres of land possessed by her 'on account of financial need and to pay off certain debts".
Sarala acknowledged receipt of Rs. 101/ as earnest money.
It appears that Sarala was for some time thereafter disinclined to carry out the bargain.
However on March 13, 1942 she executed a deed, Ext.
C, conveying the land agreed to be sold for a consideration of Rs. 1,500/ to Chapalabala and Banikana.
It was recited in the deed : "Now on account of financial needs and to meet certain debts and out of other legal necessity, I announced to sell 90 acre land at rent of Rs. 23/ per annum free from defects and encumbrances leaving a 605 portion of homestead land measuring.
08 acre.
" It was also recited in the deed that Rs. 101/ were paid on the date of the agreement of sale, that Sarala had received Rs. 899/ before the date of sale, and Rs. 500/ were paid to her in the presence of the Sub Registrar.
An endorsement of payment of Rs. 500/ before the Sub Registrar was made by that Officer.
The thumb mark of Sarala was attested by Abinash Chandra Chakravarty and the deed was attested by four persons including her son Gobinda.
On the date of the sale the rent in respect of the land was in arrears.
It also appears that before the date of sale Mangala had been given in marriage and the youngest daughter Radha remained to be married.
Sarala had also to provide for food and clothing for at least five persons.
Sarala had only a residential house and the land in dispute and she had no source of income.
Sarala died on April 12, 1950.
On January 24, 1953 Tulsi and Gobinda sons of Sarala filed a suit in the Court of the Subordinate Judge, 24 Parganas, for a decree declaring that the sale deed dated March 13, 1942, executed by Sarala was not binding upon the plaintiffs, because it was executed without legal necessity.
The suit was resisted by Chapalabala and Banikana (defendants 1 & 2) and by alianees of the land from them.
The Trial Court held that the sale deed was supported by legal necessity.
The learned Judge observed that Sarala was in " strained financial circumstances", and she executed the sale deed to meet expenses for maintaining herself and her family, and for payment of debts.
She had, to meet municipal taxes, rent for the land, and expenses for the marriage of her daughter Radha.
The learned Judge observed that the plea that execution of the sale deed was obtained by fraud, misrepresentation and undue influence was not seriously pressed "inasmuch as there was no evidence worth the name adduced" to support that case.
Against the decree dismissing the suit the plaintiffs appealed to the High Court.
the view of the High Court there was "no such serious and sufficient pressure on the estate" of Sarala as to compel her to sell her property, and the case of the plaintiffs that she was induced to do so "by persuasion and undue influence" of Sakha Nath Ghosh husband of defendant I must be accepted.
The High Court also observed that it was doubtful whether even full consideration for the sale was paid.
The High Court held that the defendants ' case of legal necessity was not proved and on that account the sale deed executed by Sarala was not binding upon the plaintiffs.
But because one Dhiren Chandra an intermediate transferee was not made party to the suit and Dhiren Chandra had obtained a fresh settlement the High Court was of the opinion that the decree of the Trial Court in respect of 10 cotta has out of the land sold by Sarala could not be reversed.
The High Court accordingly modified the decree passed by the Trial Court and allowed the appeal in part, and dismissed the plaintiffs ' suit against defendants 4, 5, 6 and 16 in respect of 10 cottahas of land in the northern part of the land.
The plaintiffs were given by the decree opportunity to amend the plaint by making a claim for actual possession which was, not till then claimed in the plaint.
Accordingly the suit was decreed in respect of the remaining defendants in respect of the portion of the land not covered by 10 cottahs in posses sion of defendants 4, 5, 6 and 16.
With certificate granted by the High Court, the heirs of original defendants 2 and 3 have appealed to this Court.
In the plaint it was averred in paragraphs that Sarala was "illiterate and unpractical in worldly matters", that "she was a simple and pardanashin lady", that Sakha Nath Ghosh husband of Chapalabala was an "officer" of one of the partner of the famous Roy family and was "shrewd and cunning", that Sarala called him "Dharamapita", and ustd to "depend upon him in many affairs" and used to be guided by his instructions, and on that account the said Sakha Nath and the husband of Banikana in collusion with the scribe made fraudulent representation and exercised undue influence over Sarala and got the sale deed executed in their favour.
This plea was denied by the contesting defendants.
At the trial no issue was raised and no evidence was led in support of that plea.
It was conceded that the plea of fraud and undue influence could not be supported.
The Trial Court observed : "Though it was also tried to be said that there was fraud, misrepresentation and undue influence exercised for the execution and registration of the Kobala (sale deed) yet that branch of argument was not seriously pressed inasmuch as there was no evidence worth the name adduced to show that there was really any fraud practised for the execution and registration of the kobala in favour of defendants 1 and 2 (Chapalabala and Banikana) by Sarala Bala Dasi." The High Court without adverting to this state of the record observed that the case of the plaintiffs that Sarala was induced to sell the land because of persuasion and undue influence of Sakha Nath Ghosh must be accepted.
The High Court also observed that it was doubtful whether full consideration for the sale was paid, and that since Sakha Nath Ghosh was "a rent collector under one of Roy Babus of Behala, in order to grab the 607 valuable property belonging to Sarala he had induced Sarala to enter into a transaction of sale".
These observations of the High Court are not supported by any evidence, and they seriously vitiate the appreciation of the evidence on record.
In the sale deed it was expressly recited that Rs. 101/ were paid at the time of the agreement of sale.
That recital was supported by the recital in Ext.
E in the agreement of sale.
It was also recited in the sale deed, Ext.
C, that Rs. 899/ were received before the date of the sale, and Rs. 500/ were received before the Sub Registrar.
Payment of Rs. 500/ is supported by the endorsement on the sale deed itself.
It is true that apart from the recital about the payment of Rs. 899/ there is no other documentary evidence to prove that payment.
The burden of proving that the consideration was not received by the vendor, however, lay upon the plaintiffs and no serious attempt was made to discharge that burden.
The plaintiffs set up the case that Rs. 500/were taken back from Sarala after she left the Sub Registrar 's office.
The High Court disbelieved this part of the case about repayment of the amount of Rs. 500/ by Sarala received by her before the Sub Registrar.
The High Court observed that about the payment of the balance of the consideration, namely Rs. 899/ , "there was no evidence at all on the side of the defendants that the same was paid".
In our judgment, the High Court misconceived the nature of the onus which lay upon the plaintiffs to prove that the consideration which it was recited in the deed was received by Sarala was not in fact received by her and a false recital was made.
The recitals in the deed are supported by the testimony of Sailendra Nath Nandi who said that the entire consideration was received by Sarala.
We are unable to accept the view of the High Court that the sale deed was not supported by full consideration.
The agreement of sale and the sale deed were attested by Gobinda son of Sarala.
Before us it was contended that Gobinda was at the date of the agreement of sale, and at the date of the sale deed, a minor and his attestation was of no value.
But on this part of the case there is no reliable evidence.
Jogindra Nath Mondal who wrote the two deeds was examined on behalf of the defendants.
He deposed that Ext.
E the agreement of sale was read over and the contents were explained to Sarala after it was written, and she understood the implications of the deed and also received Rs. 101/ .
In his cross examination he stated that he had written down the deed according to what was said to him by Sarala, Gobinda and by Sakha Nath Ghosh and thereafter Sarala executed the deed.
There is no reason to disbelieve the testimony of this witness.
Abinash Chandra 608 Chakravarty who attested the sale deed Ext.
C and the agreement of sale Ext.
E could not be examined for he had died before the date of the trial.
Attestation by him of the two deeds has significance.
Gobinda Chandra Debnath a witness examined on behalf of the plaintiffs stated that the family of the plaintiffs had confidence in Abinash Chandra Chakravarty as he was "the friend and well wisher of the family".
There is no ground for believing that Abinash Chandra Chakravarty who was present at the time of the execution and had attested the two deeds misused the confidence reposed in him and was guilty of being a party to the bringing into existence a deed containing false recitals to defraud Sarala and her sons.
Legal necessity to support the sale must however be established by the alienees.
Sarala owned the land in dispute as a limited ,owner.
She was competent to dispose of the whole estate in the property for legal necessity or benefit to the estate.
In adjusting whether the sale conveys the whole estate, the actual pressure on the estate, the danger to be averted, and the benefit to be conferred upon the estate in the particular insistance must be consi dered.
Legal necessity does not mean actual compulsion : it means pressure upon the estate which in law may be regarded as serious and sufficient.
The onus of providing legal necessity may be discharged by the alienee by proof of actual necessity or by proof that he made proper and bona fide enquires about the existence of the necessity and that he did all that was reasonable to satisfy himself as to the existence of the necessity.
Recitals in a deed of legal necessity do not by themselves prove legal necessity.
The recitals are, however, admissible in ;evidence, their value varying according to the circumstances in which the transaction was entered into.
The recitals may be used to corroborate other evidence of the existence of legal necessity.
The, weight to be attached to the recitals varies according to the circumstances.
Where the evidence which could be brought before the Court and is within the special knowledge of the person who seeks to set aside the sale is withheld, such evidence being normally not available to the alienee, the recitals go to his aid with greater force, and the Court may be justified in appropriate cases in raising an inference against the party seeking to set aside the sale on the ground of absence of legal necessity wholly or partially when he withholds evidence in his possession.
Kunja Behari husband of Sarala had died in 1937 after a protracted illness : there is no reliable evidence that he left any property except the residential house, built on a part of the land which Sarala had inherited from her father.
Sarala had two sons 609 who were then minors and two daughters who were yet to be married.
There were five members in the ' family to be fed and clothed, and the marriage expenses of two daughters had to be met.
The case that Tulsi the eldest son obtained gainful employment shortly after his father 's death and before the sale deed was executed was rightly disbelieved by the Trial Court.
The story that Gobinda had taken to hawking vegetables has also been rightly disbelieved by the Trial Court.
Sarala had to meet several obligations : she had to pay the annual rent accruing due.
in respect of the land in dispute and also to pay municipal taxes :she had to feed and clothe herself and her children and to perform the marriage of her daughter Radha.
She had no other property and she had no income.
The recitals in the deed about the existence of pressure upon the estate are therefore amply corroborated by the circumstances.
Mr. Purshottam Chatterjee appearing on behalf of the plain tiff 's contended that there was evidence only of the debts amounting to 75/ , Rs. 25/ as rent for the land payable to the head lessor and Rs. 50/ expenditure incurred for the marriage of the daughter Mangala.
Counsel relied upon the recitals made in a. plaint filed in a suit for recovery of rent by the landlord against Sarala after the sale deed in which the rent for the years 1941, 1942 and 1943 was claimed.
Counsel also relied upon the evidence that in the community to which Sarala belonged, the marriage of a daughter only costs Rs. 50/ .
That evidence, in our judgment, is wholly unreliable.
In any event apart from the obligation to pay rent and to meet the expenses of marriage of her daughter Mangala various other obligations had to be met.
The argument that Sarala belonged to a community in which the male members used to be employed as "household servants" and that Tulsi and Gobinda were so employed is also not supported by any reliable evidence.
In our judgment, the High Court ignored the strong inference which arose out of these Circumstances and especially out of the participation by Gobinda in the execution of the agreement of sale and the sale deed.
In our view the case of the defendants 1 and 2 that the sale, deed was supported by legal necessity of Sarala was amply made out and the Trial Court was right in holding that the sale deed was executed for legal necessity.
From the attestation by Gobinda one of the sons of the agreement of sale and the sale deed and the recitals in those deeds, viewed in the light of the other evidence, we are of the opinion that the level necessity set up by the defendants 1 and 2 is amply proved.
It was urged before us that because the 10th defendant died before the certificate was given by the High Court for appeal to, 610 this Court, and the heirs of the 10th defendant were not brought on the record, the appeal abates in its entirety.
There is, however, no clear evidence whether the 10th defendant died before or after the judgment of the High Court.
Again, the plaintiffs had in the suit only claimed a relief for declaration that the alienation in favour of defendants 1 and 2, i.e. Chapalabala and Banikana made on March 13, 1942, was without legal necessity and was not binding upon them, and for a declaration of their title to the disputed land.
The alienees from defendants 1 and 2 were, it is true, impleaded as parties, but no relief was claimed against them.
Nor was any averment made in the plaint about the reasons for and the circumstances in which they were so impleaded.
Since the plaintiffs only claimed relief against defendants 1 and 2, and that relief cannot be granted to the plaintiffs, we think, the circumstance that the heirs of the 10th defendant are not impleaded in this appeal does not affect the right of the defendants to claim that the appeal must be dismissed.
The appeal is therefore allowed and the suit filed by the plaintiffs is dismissed with costs throughout.
Y.P. Appeal allowed.
| IN-Abs | section a Hindu female governed by Dayabhaga system of law, executed a sale deed.
It was recited in the agreement that she agreed to sell "on account of financial need and to pay off certain debts".
After her death her sons filed a suit for a declaration that the sale deed was not binding on them as it was executed without legal necessity.
The Trial Court held that the sale deed was supported by legal necessity.
The Court also observed that the contention that there was fraud, misrepresentation and undue influence was not seriously pressed as there was no evidence adduced to prove the same.
The High Court, in appeal, reversed the decree holding that the defendants ' case of legal necessity was not proved and on that account the sale deed was not binding upon the plaintiffs.
, The High Court, without adverting to the record, observed that the case of the plaintiffs that s was induced to execute the sale deed because of persuation and undue influence had to be accepted.
In appeal by cer tificate, this Court.
HELD : (i) The Appellants defendants had amply made out that the sale deed was supported by legal necessity.
The observations of the High 'Court were not supported by any evidence and they seriously vitiated the appreciation of the evidence on record.
(ii) Legal necessity does not mean actual compulsion : it means pressure upon the estate which in law may be regarded as serious and sufficient.
The onus of proving legal necessity may be discharged by the alienee by proof of actual necessity or by proof that he made proper and confide enquiries about the existence of the necessities and that he did all that was reasonable to satisfy himself as to the existence of the necessity.
[608 D] Recitals in a deed, of legal necessity, do not by themselves prove legal necessity.
The recitals are, however, admissible in evidence, their value.
varying according to the circumstances in which the transaction was entered into.
Where the evidence which could be brought before the Court and is within the special knowledge of the per son who seeks to set aside the sale is withheld, such evidence being normally not available to the alience, the, recitals go to his aid with greater force, and the Court may be justified in appropriate cases in raising an inference against the party seeking to set aside the sale on the ground of absence of legal necessity wholly or partially when he withholds evidence, in his possession.
In the present case the recitals in the deed about the existence of pressure upon the estate are amply corroborated by the circumstances.
[608 F] (iii) Since the plaintiffs only claimed relief against defendants 1 & 2 for declaration that the alienation in their favour was not binding on the plaintiffs and that relief cannot be granted to the plaintiffs, the circum 604 stance that the heirs of the 10th defendant are not impleaded in their appeal does not affect the right of the defendants to claim the appeal must be dismissed.
[610 C]
|
minal Appeals 233 to 235 of 1966, and 9 to 11 of 1967.
Appeals from the judgment and order dated April 13, 1966 of the Madras High Court in Writ Petitions Nos.
390 of 1965 etc.
933 M.C. Chagla, Amjad Nainar and R. Gopalakrishnan, for the appellant (in Cr.
Nos. 233 to 235 of 1966) and respondent No. 1 (in Cr.
Nos. 9 to 11 of 1967).
section Govind Swaminathan, Advocate General for the State of Tamil Nadu, A. V. Rangam, K. section Ramaswami Thevar, N. section Sivan, for the respondents (in Cr.
Nos. 233 to 235 of 1966) and the appellants (in Cr.
Nos. 9 to 11 of 1967).
The Judgment of the Court was delivered by Mitter, J.
These six appeals arise out of certificates granted by the High Court of Madras arising out of two Writ Petitions and a petition under sections 435 and 439 of the Code of Criminal Procedure filed in that court by P. Sirajuddin, the appellant in the first set of appeals.
It is not necessary to give an outline of these Petitions as the salient features thereof appear sufficiently from the judgment of the High Court and the substance thereof is dealt with hereafter.
The facts are as follows.
The appellant was the Chief Engineer, Highways and Rural Works, Madras having risen from the status of a District Board Engineer in which capacity he joined service in the year 1935.
He attained the age of 55 years on March 14, 1964 on which date he was asked to hand over charge of his office to one Shiv Shankar Mudaliar, Superintending Engineer, Madras.
He expected to be retained in service up to the age of 58, a privilege said to be normally accorded to persons physically and otherwise fit for public service.
It appears that on March 1, 1964 a copy of a petition concerning him and dated February 28, 1964 addressed to the Minister, Public Works by one Rangaswami Nadar was received by the Chief Minister of the State.
It is said that apart therefrom allegations about want of rectitude of the appellant had already reached the Government.
The Chief Minister asked the Director of Vigilance and Anti Corruption to make confidential enquiries.
On March 10, 1964 Government received a note from the said officer which cast serious aspersions on the appellant 's reputation and mentioned quite a few instances of his lack of probity.
The endorsement of the Chief Minister on the note read: Secretary, P.W.D.
I had this (petition already mentioned) from the Director of Vigilance.
This may be immediately looked into.
I have asked the Director to pursue the investigation further.
" Thereupon the Chief Secretary orally ordered a full fledged enquiry in the matter and the Deputy Superintendent of Police, Vigilance and Anti Corruption one G. _K. Ranganathan, was asked to make a personal enquiry and report under the supervision of 93 4 R. N. Krishnaswamy.
The Director of Vigilance registered an enquiry numbering 8/HD/64 on 15th April, 1964.
That the enquiry was taken up with great keenness appears from a note of Ranganathan to the effect he would require the assistance of two Inspectors to assist him.
There can be no doubt that the enquiry launched by the Vigilance and Anti Corruption Department was a very thorough and searching one.
A very large number of persons were examined by the Vigilance and Anti Corruption officers including 18 public servants who spoke to matters touching the allegations against the appellant.
Statements in writing signed by the makers were taken from no less than nine public servants regarding the above and two of them, namely, section Sivasubrahmanyam and section Chidambaram were given certificates assuring them immunity from prosecution for the part played by them.
in rendering aid to the appellant in the commission of his malpractices.
These two persons occupied the position of an Assistant Engineer and a Junior Engineer and were subordinates of the appellant.
On June 27, 1964 a first information report was lodged in the Directorate of Vigilance and Anti Corruption, Madras and the case recorded as 3/AC/64.
The offences to be investigated into were under sections 161 and 165 of the Indian Penal Code and section 5 (1) (a) and (d) of the Prevention of Corruption Act.
The complaint was made by Ranganathan, Deputy Superintendent of Police, Vigilance and Anti Corruption Department to the Additional Superintendent of Police in the same department.
It is pertinent to note that the Directorate of Vigilance and Anti Corruption which had been set up under a Government order dated 8th April 1964 was declared to be a 'police station ' under clause (s) of sub section (1) of section 4 of the Code of Criminal Procedure by a notification dated May 25.
1964 and by another notification of the same date the Governor of Madras conferred upon the Director and the Superintendents of Police of the said Directorate all the ordinary powers of a Magistrate of the First Class under section 5 A of the Prevention of Corruption Act within the limits of the whole of .he
State of Madras except the Presidency Town.
The complaint by Ranganathan to the Additional Superintendent of Police, Vigilance and Anti Corruption, gave details of various malpractices with which the appellant was charged.
He was inter alia said to have obtained various articles of furniture with the help of Sivasubrahmanyam and Chidambaram mentioned above by paying only a small fraction of the cost and asking them to adjust the balance by manipulations of the muster rolls claims.
He was also said to have got his residence whitewashed in a similar manner.
It was also alleged against him that he had constructed a bungalow by diverting building materials allotted for the construction of 'the Cauveri bridge at Tiruchinapalli.
The complaint wound up with a paragraph to the effect that a criminal case would be registered against him as a regular investigation alone would facilitate the collection 9 3 5 of additional evidence by way of recovery of valuable things which he had obtained from his subordinates by various illegal means and in addition more incriminating evidence was likely to be ,forthcoming during the investigation.
Sanction to prosecute the appellant was obtained on September 27, 1964 and a charge sheet was filed against the appellant in the court of the Special Judge, Madras on October 5, 1964 numbered as C.C. No. 10 of 1964.
No less than 47 witnesses had been examined during the investigation following the first information report and at least nine of them had been previously examined at what was termed as a "preliminary or detailed enquiry".
No less than 19 malpractices were alleged against him in different paragraphs of the charge sheet and the appellant was charged with having obtained for himself or for members of his family various valuable things from his subordinates by corrupt and illegal means and by abusing his position as a public servant.
charges were for offences already mentioned.
In the enquiry the appellant was supplied with copies of re cords on which the prosecution proposed to rely including the statements recorded by the investigating officer which according 'IO the appellant showed prima facie that a number of public servants who had given the statements were themselves responsible for commission of various offences including falsification of accounts and forgery of public records.
Before the Special Judge the appellant moved an application for discharge under section 251 A of the Code of Criminal Procedure on the ground that the charges against him were groundless.
In that application he also complained : (a) that the instances alleged against him related mostly to his personal matters unconnected with his official functions; (b) that none of the items referred to in the charge had been handed over to or delivered to him for the purpose of securing an advantage in order to attract section 5(1)(d) read with section 5(2) of the Prevention of Corruption Act, and (c) that on the admitted statements of the public servants they were liable to be charged with various offences and he had been greatly prejudiced by discriminatory treatment.
While holding that there was no basis of charging thee appellant under section 165 I.P.C. or under section 5(2) read with section 5(1)(b) of the Prevention of Corruption Act, the Judge held that a charge could be framed against him under section 5(2) read with section 5(1)(d) of the Act.
He observed that the "investigating officers evidently felt that ,if they arraigned the subordinate officers along with the appellant the case may fail for lack of evidence.
" 9 3 6 Against that order dated January 16, 1965 the Public Pro secutor Preferred Cr.
R.C. 294 of 1965 and the appellant preferred Cr.
M.P. 934 of 1965 under section 561 A of the Code, for quashing the proceedings and discharging him as the charge was groundless.
The appellant filed.
two writ petitions before the High Court, namely, one for a writ of mandamus directing the forbearing from prosecution of C.C. No. 10 of 1964 and a second for a writ of certicrari to quash the order of the Special Judge mentioned above.
There was a petition under sections 435/439 of the Criminal Procedure Code for revision of the order of the Special Judge and one under section 561 A of the Code for quashing his said order.
The High Court dealt with all the Writ Petitions and the different allied matters together.
Broadly speaking, it was urged before the High Court: 1.There had been such a violent departure from the provisions of the Code in the matter of investigation and cognizance of offences as to amount to denial of justice and to call for interference by the issue of prerogative writs.
The investigation and prosecution were wholly mala fide and had been set afoot by his immediate junior officer , one Sivasankar Mudaliar, Superintending Engineer, Madras who was related to the Chief Minister of the State.
The appellant 's case was being discriminated from those of others who though equally guilty according to the prosecution case were not only not being proceeded against but were promised absolution from all evil consequences of their misdeeds because of their aid to the prosecution.
In his petition for the issue of a writ of mandamus 'by the High , Court the appellant stated that it was only by perusing copies of the statements furnished to him under section 173(4) Cr.
P.C. that he found that 18 public servants had stated having given him valuables without any or adequate consideration and that it was at his instance that they had committed offences of criminal conspiracy under section 120 B I.P.C. and criminal breach of trust of Government moneys under section 409 I.P.C. besides falsification of accounts etc.
His positive case was that the Director of Vigilance and Anti Corruption had obtained signed statements which were confessional and self incriminatory from persons who were going to be called .as witnesses by giving them assurances of immunity.
These assurances were not only directed towards immunising them from prosecutions but ;Also any departmental action likely to affect adversely the makers of the statements.
The case of discrimination was based mainly on the above averments that the Directorate had single him out leaving others who were equally guilty.
According 93 7 to the appellant this also showed mala fides and malice directed towards him.
Another main argument which ' was canvassed before the High Court related to the applicability of sections 162 and 163 of the Criminal Procedure Code and the effect of the violation thereof, if any.
For the appellant, it was argued that the taking of signed statements from persons who were eventually going to be examined in the criminal proceedings by giving them assurances of immunity and thereafter relying on their subsequent unsigned statements those under section 161(3) of the Code for the purpose of section 173 amounted to a fraud on the procedure established by law.
It was contended that as the statements recorded under section 161 were the material on which the Special Judge had to consider whether the charge was groundless under section 251 A of the Code, the illegality "corroding the foundation vitiated the enquiry and necessitated the discharge of the appellant.
" The High Court examined the case made out in the affidavits of the appellant and the counter affidavits on behalf of the State.
It expressed great dissatisfaction at the variance in the attitude of the State in the different affidavits in that whereas in the first counter affidavit there was no contradiction of the appellant 's averment that assurances of immunity had been given to all the 18 persons examined before the lodging of the first information report, the plea put forward in a subsequent affidavit was that such assurance had been given only to two persons, namely, the two subordinates of the appellant and only after signed statements had been given by them.
The Court was however not satisfied that a direction was called for for the prosecution of the subordinate officers also.
Further the High Court was not impressed with the plea of hostile discrimination against the appellant observing that although the "policy of not securing judicial pardon to accomplices by bringing them as approvers but retaining them at the sole discretion of the prosecution might be open to question" "that cannot by itself invalidate the arraignment of the persons actually put up for trial" specially where the person charged was in a position to wield influence and power over those asked by him to aid him in commission of misconduct.
Although not of the view that the record before it established a case of mala fide or hostile discrimination against the appellant which called for the quashing of the proceedings, the High Court took the view that the investigation of the case under Chapter XIV of the Code should be held to have commenced when Ranganathan, the Deputy Superintendent of Police, started the enquiry on 15th April 1964 on the reasoning that though "an enquiry may start with shadowy beginnings and vague rumours, once a police officer forms a definite opinion that there are grounds for investigating a L1OSup.
CI(NP)70 15 938 crime, an investigation under the Code has started".
According to the High Court (a) "substantial information and evidence had been gathered before the so called first information report was registered".
(b) the police officer who had conducted the enquiry prior to 27th June 1964 was a person competent to enter upon investigation; (c) admittedly there had been an earlier probe by the, Vigilance Department prior to 10th March 1964 on the basis whereof he was not re employed; (d) there was definite information to the Government contained in the report dated 13th March 1964 relating to corrupt activities of the appellant; and (e) the "delay on the part of the investigating officer in registering the first information report may be an irregularity, but certainly the statements recorded subsequent to the receipt of definite information of the commission of an offence in gathering evidence of the offence would nonetheless be statements recorded during investigation and hit by section 162 of the Criminal Procedure Code.
" With regard to the disregard of the provisions of sections 162 and 163 of the Code, the High Court observed that the result of taking his signature to a statement would be to tie a witness down to the statement or at least to give him the impression that he would not be free to make a different statement at the trial but the statement of a witness at the trial would not become inadmissible by reason of his having signed a statement before going into the witness box.
Reference was made to several decisions bearing on section 162 of the Code and in particular to Zahiruddin vs King Emperor(1) that the evidence of a witness who had previously signed a statement in writing did not become inadmissible or vitiate the whole proceeding although the value of the evidence would be seriously impaired thereby.
The court seems to have been of the view that it was the duty of the Magistrate or the presiding Judge on discovering that a witness had while giving evidence, made material use of a statement given by him to the police to disregard the evidence of that witness as inadmissible.
The High Court 's definite conclusion was that there had been a deliberate violation of the provisions of the Code (1) 74 I.A. 65, 74.
939 and a departure from a recognised and lawful procedure, for investigation.
With regard to the propriety of taking self incriminatory statements even when there had been no assurance of immunity from prosecution, the High Court observed that as the learned Advocate General for the State had stated that the record of manipulations in the muster rolls by the subordinate officers of the appellant had to be disregarded as not proper material for consideration as the "Special Judge had not considered these vitiating features in regard to the documents placed before him while ordering the framing of charges against the appellant" it was unnecessary to examine the question at length.
The High Court found partly in favour of the appellant and held that the order of the Special Judge directing the framing of a charge on consideration of the statements before him under section 173(4) of the Code without reference to the illegalities in the investigation should be quashed.
The High Court further directed the Special Judge to take up the matter once again and consider the case excluding from consideration all statements recorded under sections 161(3) and 164 which were found vitiated in the light of the observations made by it.
A direction was also given to exclude portions of the statements which were self incriminatory and confessional in character of the maker even if the same did not otherwise violate the provisions of sections 162 and 163 of the Code.
In our view the procedure adopted against the appellant be fore the laying of the first information report though not in terms forbidden by law, was so unprecedented and outrageous as to shock one 's sense of justice and fairplay.
No doubt when allegations about dishonesty of a person of the appellant 's rank were brought to the notice of the Chief Minister it was his duty to direct an enquiry into the matter.
The Chief Minister in our view pursued the right course.
The High Court was not impressed by the allegation of the appellant that the Chief Minister was moved to take an initiative at the instance of a person who was going to benefit by the retirement of the appellant and who was said to be a relation of the Chief Minister.
The High Court rightly held that the relationship between the said person and the Chief Minister, if any, was so distant that it could not possibly have influenced him and we are of the same view.
Before a public servant, whatever be his status, is publicly charged with acts, of dishonesty which amount to serious misdemeanour or misconduct of the type alleged in this case and a first information is lodged against him, there must be some suitable preliminary enquiry into the allegations by a responsible officer.
The lodging of such a report against a person, specially one who like the appellant occupied the top position in a department, even if baseless, would do incalculable 940 harm not only to the officer in particular but to the department he belonged to, in general.
If the, Government had set up a Vigilance and Anti Corruption Department as was done in the State of Madras and the said department was entrusted with enquiries of this kind, no exception can be taken to an enquiry by officers of this department but any such enquiry must proceed in a fair and reasonable manner.
the enquiring officer must not act under any preconceived idea of guilt of the person whose conduct was being enquired into or pursue the enquiry in such a manner as to lead to an inference that he was bent upon securing the conviction of the said person by adopting measures which are of doubtful validity or sanction.
The means adopted no less than the end to be achieved must be impeccable.
In ordinary depart mental proceedings against a Government servant charged with delinquency, the normal practice before the issue of a charge sheet is for some one in authority to take down statements of persons involved in the matter and to examine documents which have a bearing on the issue involved.
It is only thereafter that a charged sheet is submitted and a full scale enquiry is launched.
When the enquiry is to be held for the purpose of finding out whether criminal proceedings are to be resorted to the scope thereof must be limited to the examination of persons who have knowledge of the affairs of the delinquent officer and documents bearing on the same to find out whether there is prima facie evi dence of guilt of the officer.
Thereafter the ordinary law of the land must take its course and further inquiry be proceeded with in terms of the Code of Criminal Procedure by lodging a first information report.
The Code of Criminal Procedure is an enactment designed inter alia to ensure a fair investigation 'of the allegations against a person charged with criminal misconduct.
Chapter XIV of the Code gives special powers to the police to investigate into cases whether cognizable or non cognizable in the manner provided therein.
Section 160 empowers a police officer making an investigation to require the attendance before himself of any person who appears to be acquainted with the circumstances of the case.
Section 161 (1 ) gives him the right to examine orally any person supposed to be acquainted with the facts and circumstances of the case.
Although bound to answer question put to him sub section
(2) of the section exempts a person from answering any question which would have a tendency to expose him to a penal charge or to a penalty for forfeiture.
Under sub s.(3) the police officer is empowered to reduce into writing any statement made to him in the course of such examination.
Section 162(1) expressly lays down that such a statement made in the course of an investigation if reduced into writing is not to be signed by the maker thereof and no part of such statement except as expressly provided is to be used 941 for any purpose at any enquiry or trial in respect of any, such offence under investigation at the time when the statement was made.
The only exceptions to these are cases when the statement falls under section 32 cl.(1) of the Evidence Act and to statements which are covered by section 27 of that Act.
The obvious idea behind this provision is that an over zealous police officer may not misuse his position by getting a statement in writing signed by the maker which would tend to pin him down to the statement but leave him free to speak out freely when called to give evidence in court.
In order that statements made in the course of such investigations be recorded without any pressure or inducement by an investigating officer section, 163(1) lays down an embargo on the investigating authorities using any inducement, threat or promise to the maker which might influence his mind and lead him to suppose that thereby he would gain any advantage or avoid any evil in reference to his conduct as disclosed in the proceedings.
It is to be noted that whereas the other sections hereinbefore referred to contain guidelines for the police officers in making investigation, this section expressly provides that any person in authority even if he is not a police officer must guide himself accordingly, in case where a crime is.
being investigated under this Chapter of the Code.
All this is however subject to the provisions of sub s.(2) which allows a person to make any statement against his own interest by way of confession if he does so of his own free will.
Even then the law enjoins by section 164 that such a statement or con fession can only be recorded by a Magistrate of the Class mentioned therein and even such a Magistrate must explain to the person making the confession before recording the same, that he is not bound to make it and if he does so it may be used as evidence against him.
Further the Magistrate must make sure that the person was making the confession voluntarily and not acting under any pressure from an outside source.
All the above provisions of the Code are aimed at securing a fair investigation into the facts and circumstances of the criminal case : however serious the crime and howsoever incriminating the circumstances may be against a person supposed to be guilty of a crime the Code of Criminal Procedure aims at securing a conviction if it can be had by the use of utmost fairness on the part of the officers investigating into the 'crime before the lodging of a charge sheet.
Clearly the idea is that no one should be put to the harassment of a criminal trial unless there are good and substantial reasons for holding it.
Section 169 of the Code empowers a notice officer making investigation to release an accused person from custody if there is no sufficient evidence or reasonable ground of suspicion to justify the forwarding of him to a Magistrate by taking a bond from him with or without sureties, Section 173 enjoins upon a police officer 942 to complete the investigation without unnecessary delay a IInd forward to a Magistrate empowered to take cognizance of the offence a report in the form prescribed by Government setting forth inter alia the names of the parties, the nature of the information and the names of the persons who appear to be acquainted with the circumstances of the case and to communicate to the State Government the action taken by him to the person, if any, by whom information relating to the commission of the offence was first given.
When a report has been made under this section it is the duty of the officer in charge of the police station to furnish to the accused before the commencement of the enquiry or trial a copy of the report above mentioned and of the first information report under section 154 and of all other documents or relevant extracts on which the prosecution proposes to rely including the statements and confessions, if any, recorded under section 164 and the statements recorded under sub s.(3) of section 161 of all persons whom the prosecution proposes to examine as its witnesses.
In our view the enquiring officer pursued the investigation with such zeal and vigour that he even enquired into and took down statements of persons who were supposed to have provided the appellant with articles of food worth trifling sums of money long before the launching of the enquiry.
The whole course of investigation as disclosed in the affidavits is suggestive of some predetermination of the guilt of the appellant.
The enquiring Officer was a high ranking police officer ' and it is surprising that simply because he was technically not exercising powers under Chapter XIV of the Criminal Procedure Code in that a formal first information report had not been lodged he overlooked or deliberately overstepped the limits of investigation contained in the said Chapter.
He recorded self incriminating ' statements of a number of persons and not only secured their signatures thereto obviously with the idea of pinning them down to those but went to the length of providing certificates of immunity to at least two of them from the evil effects of their own misdeeds as recorded.
It was said that the certificates were given after the statements had been signed.
It is difficult to believe that the statements could have been made before the grant of oral assurances regarding the issue of written certificates.
There can be very little doubt that the persons who were given such immunity had made the statements incriminating themselves and the appellant under inducement, threat or promise as mentioned in section 24 of the Indian Evidence Act.
It is no doubt the duty of the State to track down and punish all delinquent officers but it is certainly not in accordance with justice and fairplay that their conviction should be sought for by such questionable means.
943 The office of the Directorate of Vigilance and Anti Corrup tion Department, Madras became a police station for the purpose of the Criminal Procedure Code under sub cl.
(s) of sub section
(1) of section 4 of the Code by a notification dated 25th May, 1.964.
Prior to that it was only functioning under a Memorandum No. 1356/ 64 2 dated 8th April 1964 when it was set up to ensure the maintenance of the highest standard of integrity and probity in public servants.
If the investigation had been taken up after May 25, 1964 it would have been one under Chapter XIV of the Code without any doubt.
Although we are not disposed to concur with the view that the investigation under Chapter XIV of the Code started as early as 15th April 1964 we are of opinion that there was no warrant for the Vigilance and Anti Corruption Department which was in the charge of one of the highest police officers of the State to disregard the provisions of sections 162 and 163 of the Code of Criminal Procedure.
The investigation was of a type more I thorough and elaborate than is usually 'to be found : as noticed already it was in charge of a senior police officer who had the I assistance of two police inspectors in the matter.
No blame attaches to them for making enquiries of a large number of persons but the whole course of investigation is suggestive of guidance by someone who was intimately familiar with the affairs of the appellant and his department 'and throwing out scents which the investigating officers were only too keen to pick up and follow.
The appellant may have been guilty of all the charges levelled against him but we cannot approve of the manner in which the investigation against him was conducted and an attempt made to lay a guideline for the persons who were to be cited as prosecution witnesses in their evidence at the trial.
To say the least it would be surprising to find so many persons giving confessional and self incriminatory statements unless they had been assured of immunity from the evil effects thereof whether oral or in writing.
There can be no excuse for the Directorate of Vigilance and Anti Corruption for proceeding in the manner adopted in the Preliminary enquiry before the lodging of the first information report.
As soon as it became clear to them and according to the High Court it was before March 13, 1964 in which we concur that the appellant appeared to be guilty of serious misconduct.
it was their duty to lodge such a report and proceed further in the investigation according to Chapter XIV of the Code.
Their omission to do so cannot but Prejudice the appellant and the State ought not to be allowed to take shelter behind the, plea that although the steps taken in the preliminary enquiry were grossly irregular and unfair, the accused cannot complain because there was no infraction of the rules of the 'Evidence Act or the provisions of the Code, 944 In our view the granting of amnesty to two persons who are sure to be examined as witnesses for the prosecution was highly irregular and unfortunate.
It was rightly pointed out by the High Court "Neither the Criminal Procedure Code nor the Prevention of Corruption Act recognises the immunity from prosecution given under these assurances and that the grant of pardon was not in the discretion of police authorities.
" We are not impressed by the argument that the appellant was singled out from a number of persons who had aided the appellant in the commission of various acts of misconduct and that they were really in the position of accomplices.
It was pointed out by the High Court that the prosecution may have felt that "if the subordinate officers were joined along with the appellant as accused the whole case may fall for lack of evidence".
In our view, if it be a fact that it was the appellant who was the head of the department actively responsible for directing the commission of offences by his subordinates in a particular manner, he cannot be allowed to take the plea that unless the subordinates were also joined as co accused with him the case should not be allowed to proceed.
It was contended before us by the learned Advocate General for the State of Madras that both the High Court and the Special Judge had gone wrong in the interpretation of s.5(1)(b) of the Prevention of Corruption Act.
Having heard counsel on both sides, we find ourselves unable to sustain the view of the High Court on this point.
Omitting the portions of the section which are not relevant it reads : "5(1) A public servant is said to commit the offence of criminal misconduct (a) . . (b) if he habitually accepts or obtains. for himself . 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 The portion of the sub section within brackets in our view qualifies,, 94 5 the expression "any person" in the same way as the portion reading "having any connection with the official function of himself".
So read ,,any person having any connection with the official functions of himself" would include any subordinate of the person who accepts the valuable thing.
The words "of himself" do not refer to the person in the expression "any person" but refers to the pronoun "he" at the beginning of the sub section.
A subordinate of the public servant would have connection with his official fun ctions.
In our view the sub section aims at folding within its ambit not only outsiders "who are likely to be concerned in any proceeding or business transacted or about to be transacted" by the public officer but also any subordinate or any other person who is connected with the official functions of the public servant.
In the result all the appeals are dismissed.
Although we do not endorse the view of the High Court with regard to the date of the commencement of the investigation so far as Chapter XIV of the Code of Criminal Procedure is concerned, we do hold that serious irregularities were committed in the so called "full fledged enquiry" to the prejudice of the appellant.
We do not however feel that there is any need to modify the directions given by the High Court to the Special Judge who will follow the directions of the High Court in addition to the modification indicated by us.
V.P.S. Appeal 's dismissed.
| IN-Abs | On March 1, 1964, the Chief Minister of the State received a petition containing allegations of corruption against the appellant (a Superintending Engineer) and the Chief Minister asked the Director of Vigilance and Anti Corruption to make enquiries.
On March 10, 1964, the Director submitted a note containing serious aspersions on the appellant and the Chief Minister ordered further investigation.
The Director of Vigilance registered an inquiry on 15th April, 1964, and a Deputy Superintendent of Police of the Vigilance Department was asked to make the inquiry.
The Deputy Superintendent of Police made a thorough and searching inquiry.
He examined a large number of persons including 18 public servants and even enquired into and took down statements of persons who were supposed to have provided the appellant with articles of food worth trifling sums of money, a long time before.
He recorded self incriminating statements of a number of persons and secured their signatures thereto.
With respect to two officers, who were the subordinates of the appellant, he even gave certificates of immunity from any action that might be taken against them for the part played by them in aiding the appellant.
On June 27, 1964, he lodged a first information report, with respect to offences under sections 161 and 165 I.P.C., and section 5(1)(a) and (d) of the Prevention of Corruption Act, 1947.
He investigated into the offences there after, and filed the charge sheet before the Special Judge.
The appellant made an application for discharge under section 251 A, Cr.
P.C., on the grounds of discrimination between him and other officers who were given pardon and, gross irregularities in the investigation.
The Special Judge held, that though there was no basis for charging the appellant under section 165, I.P.C., or under section 5(2), read with section 5(1)(b).
of the Prevention of Corruption Act, a charge could be framed against him under section 5(2) read with section 5(1)(d).
The appellant thereafter moved the High Court, The High Court held : (1) that the investigation started on 15th April 1964 when the Director of Vigilance registered an inquiry (2) that the taking of signed and self incriminating statements from various witnesses was in violation of sections 161 to 164 Cr.
P.C.; (3) that the Special Judge erred in directing the framing of the charge without excluding those statements from consideration; and (4) that the Special Judge should take up the matter once again after excluding from consideration those statements.
In appeal to this Court, HELD : (1) Though technically investigation did not commence on 15th April 1964 but started only after the formal first information report was lodged on,.
June 27, 1964, there were serious irregularities during the 93 2 inquiry and investigation which caused prejudice to the appellant.
The directions given by the High Court were, however, sufficient in the circumstances of the case.
[945 D] The Directorate of Vigilance and Anti Corruption became a police station for the purposes of the Criminal Procedure Code only by a notification dated 25th May 1964.
Therefore, the inquiry before that date was not an investigation under Ch.
XIV of the Code, but there was no warrant for the Vigilance Department, which was in the charge of a senior police officer, to disregard the provisions of sections 162 and 163 of the Code.
Under s.161(3) of the Code a police officer is empowered to reduce into writing any statement made to him in the course of investigation and section 162(1) lays down that such a statement is not to be signed by the maker thereof.
Section 163(1) lays an embargo on the investigating authority using any inducement, threat or promise to the maker.
The reason for these provisions is to secure a fair investigation into the facts and circumstances of the case and to see that an of calous police officer may not misuse his position by getting a statement signed by the maker in order to pin him down to it.
Also, immunity from prosecution and the grant of a pardon were not in the discretion of police authorities.
1940 A H; 941 A B, D, F] In the present case.
the officers who were given immunity must have made the self incriminating statements because an oral assurance of immunity was given before they made the statements, that is, the statements were given as a result of an inducement.
There can be no excuse for the Vigilance Department for proceeding in the manner adopted merely because the first information ',report had not been lodged.
As soon as it became clear to them on March 10, 1964, that the appellant appeared to be guilty of serious misconduct, it was their duty to lodge such a report and,proceed further in the investigation according to Ch.
XIV of the Code.
Their omission to do so cannot but prejudice the appellant and the State ought not to be allowed to take shelter behind the plea that although the, steps taken in the enquiry before the first information was lodged were.
grossly irregular and unfair, the appellant could not complain, because.
there was no infraction of the rules after lodging the first information report.
[942 D G; 943 C H] (2) If it be a fact that it was the appellant, who as the head of the department, was actively responsible for directing the commission of offences by his subordinates in a particular manner, he cannot be allowed to take the plea that the subordinates should also be joined as co accused with him.
[944D] (3) Under section 5 (1) (b), a public servant would be guilty of the offence of criminal misconduct if he habitually accepts any valuable thing for inadequate consideration not only from outsiders who are likely to be concerned in any proceeding or business, transacted or about to be transacted by the public officer but also from any subordinate or any other person who is connected with the official functions of the public servant.
Therefore, in this case, a charge could also be framed under section 5(1)(b), if there was material.
[945 A C]
|
Civil Appeal No. 774 of 1967.
Appeal by special leave from the judgment and order dated February 6, 1970 of the Madhya Pradesh High Court in Second Appeal No. 327 of 1963.
D. N. Mukherjee, for the appellant.
Janardan Sharma, for the respondents.
The Judgment of the Court was delivered by Mitter, J.
This is an appeal by special leave from a judgment of the Madhya Pradesh High Court dated 6th February 1967 dismissing a Second Appeal by the appellant before this Court against 726 a decree passed by the Additional District Judge of Ratlam for ejectment of the appellant from a house mortgaged by the predecessor in interest of the appellant to one Kesharimal for Rs. 3, 1 00 and further decreeing a claim for arrears of rent amounting to Rs. 731 35 and mesne profits at the rate of Rs. 20 per month until eviction.
The relevant facts are as follows.
On July 29, 1945 Mathuralal, predecessor in interest of the appellant, mortgaged his house in Ratlam to Kesharimal for a sum of Rs. 3,100 with possession.
The deed of mortgage contained the following terms : 1.
That interest would run on Rs. 3, 100 at Rs. 0 1 0 0 per cent per mensem till realization.
The period of redemption would be two years.
During the period of mortgage "the tenant as may be shall execute the rent notes in favour of the mortgagee and whatever rent shall be realised will be credited in lieu of interest and it the amount of rent shall exceed the amount of interest, the difference shall be deducted from the original sum due,, but if the amount of interest shall exceed the amount of interest the difference shall be deducted from the original sum due.
" But if the amount of interest shall exceed the amount of rent, then the mortgagor shall pay it.
Notwithstanding any vacancy during the period of the mortgage the rent would continue.
During the period.
of the mortgage an account of the rent and interest shall be settled after every six months.
The mortgagor undertook to keep the house in repairs during the period of the mortgage and in default of repairs by him the mortgagee was to be entitled to execute the necessary repairs and add the cost to his dues.
"The burden of the mortgage money shall be on the mortgaged house.
In case the amount is not realised from the house, the moragagee shall have a right to take steps to realise his money" from the mortgagor and his property of every kind.
On the same day the mortgagor executed another document in favour of the mortgagee reciting that his house in Ratlam was mortgaged with possession to the creditor who was "having its possession" and the mortgagor had taken the same on rent at Rs. 20 per month on the following terms : 1.
The executant would pay the rent every month regularly and in default of payment of two months ' rent, the mortgagee would be entitled to get him evicted.
727 2.
The executant would white wash and repair the house and keep it in good condition.
Kesharimal would be entitled to increase or decrease the rent.
The executant would vacate the house whenever asked to do so. 5.
The executant would hand over possession of the house in,the same condition in which he had received it.
Kesharimal filed a suit on his mortgage in 1954 and a preliminary decree for sale for the amount of Rs. 5,637 6 0 besides interest at, the rate of Rs. 0 10 0 per cent per mensem for six months.
on the sum of Rs. 3,600 was duly passed.
The defendant was, directed to pay the full amount of the decree before the 24th May 1955 and in case of his doing so the property was to be released from the mortgage and the plaintiffs were to hand over all the documents which they had in their possession, but in case of failure to pay the plaintiffs would be entitled to file an application for the execution of the decree and get the property auctioned; and in case of non satisfaction of the decree 'by the sale, the plaintiffs were to be at liberty to recover the balance of the decretal claim by a personal decree against the defendant.
It appears that Kesharimal had died during the pendency of the suit and his legal representatives were brought on record and the preliminary decree passed in their favour.
Whatever be the reason no application for a final decree for sale of the property was made within the period fixed under the Limitation Act.
The application for this purpose made by the executors to the estate of Kesharimal was dismissed on July 29, 1960 as barred by limitation.
On December 27, 1960 the said executors filed a suit for ejectment against the appellant alleging that the rent for the premises had remained unpaid from September 29, 1957 till November 28, 1960.
An amount of Rs. 731 75 was arrived at by totalling the rent for the period mentioned and mesne profits from 29th November 1960 to 26th December 1960 at the same rate and incidental charges and expenses and deducting therefrom the rent for two months which was barred by the lapse of time the plaintiffs asked for a decree for ejectment and further mesne profits.
The trial Judge dismissed the suit.
But on appeal this was set aside and the plaintiffs claim allowed in full.
The High Court in Second Appeal maintained the decree of the appellate court.
The points urged by counsel for the appellant before us were 1.
The rent note executed simultaneously with the mortgage was a mere device to secure payment of interest and did not record 728 an independent transaction.
Further it did not create any relationship of landlord and tenant.
The plaintiffs ' right as mortgagee merged in the decree and ,execution thereof being 'barred by the laws of limitation the plaintiffs had lost all their rights.
The mortgage being extinguished the mortgagor could not bring a suit for redemption.
Before examining the contentions urged we propose to note the substance of the two documents and what the parties sought to achieve thereby.
It is, clear that the mortgage was with possession of the house and that the mortgagee wanted to make sure of Rs. 20 per month irrespective of the fact as to whether the mortgagor or some other person occupied the house and notwithstanding any vacancy during the period of the mortgage.
The sum of Rs. 20 per month which the mortgagee wanted to ensure payment of every month exceeded the interest stipulated for by Rs. 0 10 0 per month.
There was to be no decrease in this amount even if the mortgagor were to repay a portion of the principal.
The mortgagee had further the right to increase or decrease the rent and the mortgagor covenanted to vacate the property whenever the mortgagee asked for possession.
In other words if the mortgagee chose to go into possession himself, the mortgagor would be entitled to have Rs. 20 p.m. credited towards the dues on the mortgage so long as he continued in possession.
Even during the period of redemption when the mortgagee could not have sued for the mortgage money he still had a right to evict the mortgagor in case the latter defaulted in payment of Rs. 20 a month for two months.
It would appear that the relationship between the parties was not simply that of a mortgagee and mortgagor : the creditor also had the rights of a landlord qua his tenant besides other rights conferred on him which were greater than those possessed by an ordinary landlord.
There can be no doubt that by leasing the property back to the mortgagor in the way mentioned above the mortgagee tried to ensure the regular payment of interest but his rights were not limited to that alone.
In case he decided to go into possession himself the only remedy left to the mortgagor was to sue for redemption.
This right under the Limitation Act of 1908 was to enure for 60 years from the date of the mortgage and the mortgagor had not lost his right to redeem notwithstanding the passing of the preliminary decree in the mortgage suit.
The mortgage security continued even after the passing of the said decree : if the mortgagee had continued in possession of the property after the passing of the preliminary decree and did not apply for a final decree, he would only lose his right to recover the mortgage money 729 by sale of the property unless he applied for that purpose within the period of limitation fixed by the Limitation Act.
After the mortgagee had lost his right to apply for a final decree for sale, he did not lose his status as a mortgagee : he only lost his remedy to recover the mortgage money by sale.
The mortgagor did not lose his right to redeem.
We may now examine the authorities which were cited at the Bar in aid of the respective contentions.
In aid of his first proposition Mr. Mukherjee relied principally on the decisions of the Bombay High Court in Harilal Bhagwanji vs Hemshanker(1) and Ramnarain vs Sukhi(2).
The facts of the Bombay case were as follows.
The defendant appellant mortgaged with possession the house in suit for Rs. 7,500/ on August 23, 1952.
Under the deed of mortgage the principal amount was to carry interest at 9% and both principal and interest were charged on the mortgaged property.
A portion of the house was already in the occupation of the plaintiff as the defendant 's tenant on a monthly rental of Rs. 15 and another portion was let out to one Mansukhlal at the rate of Rs. 17 p.m., the defendant himself occupying the remaining part of the house.
Simultaneously with the mortgage a rent note was executed on the same day in respect of the portion of the house in the defendant 's occupation which was leased back to him by the plaintiff for a term of six months at the rate of Rs. 24 4 0 per month.
The plaintiff sued the defendant for possession of the said portion and for arrears of rent on the strength of the rent note.
The defence was that the rent note was a nominal document executed for securing payment of interest and that no relationship of landlord and tenant was created.
It was contended that the principal money and interest were to be realised from the mortgaged property and a suit for rent alone which was in reality interest would not he.
It was held by the High Court that the fact that the two documents had varying periods of operation would not make any difference in the determination of the question as to whether they formed part of the same transaction or not.
Further the rent to be realised from the tenant Mansukhlal was to be credited towards interest and the significant circumstance was that the rent payable by the defendant under the rent note was fixed with a view to making up the interest on the mortgage sum at 9%.
Although the mortgage deed recited that the plaintiff could let out the property to anyone he liked but as the property was already wholly occupied, the High Court took the view that the question of leasing it out to another tenant was not in contemplation of the parties.
As a result of the above findings the court held that the rent note was a mere device for securing payment of interest.
Reliance was placed on Ramnarain vs Sukhi(2) and it was held that although the decree for eviction of (1) A.I. R. 1958 Bombay 8.
(2) A.T.R.1957 Patna 24.
SupCI(NP)/70 2 730 the defendant from the suit property could not stand, that awarding arrears of rent was to be maintained.
In Ramnarain vs Sukhi(1) an application was made by the defend ant for setting aside the decree of the Small Causes court evicting him.
The defendant had executed a usufructuary mortgage in favour of the plaintiff and by a kerayanama executed on the same day had taken back the house on a rent of Rs. 6 per month from the plaintiff.
He had not paid any rent for over three years and the suit was brought for recovery of arrears of rent for the said period.
It was his contention that the agreement between the parties was not for execution of a usufructuary mortgage but one of a simple mortgage.
It was further contended on his behalf that the mortgage and the kerayanama were one and the same transaction and no relationship of landlord and tenant was created and the ijara term having expired the plaintiff 's remedy to recover the house rent which represented the interest the mortgage money could only lie under section 68 of the Transfer of Property Act.
The High Court referred to several decisions and came to the conclusion that the intention of the parties was that the mortgagee would not get possession of the mortgaged property but would only get interest on the amount advanced in the shape of rent so long as the lease continued and the amount payable under the kerayanama was interest on the mortgage money and not rent for use and occupation of the mortgaged property.
The mortgage bond and the kerayanama being part of the same transaction the mortgagee in execution of his decree for money obtained in respect of the so called rent of the house against the mortgagor would not be entitled to execute the decree for arrears of rent by sale of the property, as such a case would be governed by 0.
34 R. 14 Civil Procedure Code.
In the result the claim of the creditor in excess of 9 % p.a. was rejected but as the defendant had been in occupation of the house, although under an invalid lease, he was directed to pay, compensation to the plaintiff for use and occupation of the house for the period of his occupation.
Reference may also be made to the case of Umeshwar Prasad vs Dwarika Prasad(2).
In this case the mortgagor executed a usufructuary mortgage of certain properties for Rs. 14,400 for a period of seven years.
Soon thereafter the mortgagee leased back the entire property to the mortgagor for a period of about seven years at the annual rent of Rs. 432 which was equal to the interest on the sum advanced.
It was held by the Patna High Court that the mortgage bond and the lease deed were parts of the same transaction and the fact that the periods of the two deeds were not identical was immaterial and the case was governed by 0.
34 r. 14 (1) A.I.R. 1957 Patna 24.
(2) A.I.R. 1944 Patna 5.
731 and as such the mortgagee could not execute the decree for arrear of rent by sale of equity of redemption.
In Ganpat Ruri vs Md. Asraf Ali( ') the plaintiff had filed a suit claiming arrears of rent at the rate of Rs. 20 per month in respect of a house which had been given to him by the defendant in usufructuary mortgage by a registered document, the property being let out to the defendant on lease on the same day at the monthly rent of Rs. 20.
Applying the test as to whether on a reasonable construction of the two documents the property given in security was not only for the principal amount secured under the bond but also for the interest accruing thereupon, the court held that the transactions were two different transactions and for this reliance was placed on the fact that no rate of interest was prescribed in the bond and Rs. 20 p.m. could not possibly be treated as interest due on the principal amount of Rs. 500.
In contrast with the above cases reference may be made to the case of Jankidas vs Laxminarain(2).
In this case the plaintiffs who were usufructuary mortgagees of a house gave a lease of it to the defendant mortgagor on rent and put the lessee in possession thereof on the same day.
The rent remaining unpaid the plaintiff filed a suit for arrears of rent and ejectment.
Ultimately however the High Court of the former State of Marwar granted a decree for arrears of rent but refused the prayer for ejectment.
The plaintiff thereupon filed the suit in 1953 claiming arrears of rent amounting to Rs. 126/ for three years preceding the date of the suit.
The suit was resisted by the defendant who, among other pleas, contended that the suit was barred by 0.
II r. 2 C.P.C.
There was said that although the mortgage and the deed of lease represented one transaction that would not mean that no tenancy came into existence by the execution of the deed of lease.
It was held that the right which arose to the mortgagees to sue for rent was an independent obligation though it might be part of the same transaction in the sense that it was brought into existence by an arrangement made at the same time for a common purpose.
In Lalchand vs Nenuram(3) the defendants had executed a mortgage in favour of the plaintiffs agreeing to pay interest at 8 % p.a. which came to Rs. 27 8 0 per month.
The mortgagors had delivered possession to the mortgagees and a registered qabuliat reciting that they were taking on lease the property described at a monthly rental of Rs. 27 8 0.
The lower courts took the view that the mortgage deed was a rent note and part and parcel of the same transaction and the plaintiffs were not entitled to get a decree for (1) A.I.R. 1961 Patna 133.
(2) I.L.R. (3) I.L.R. 732 ejectment on the basis of the rent note.
Rejecting this the Rajasthan High Court observed at p. 952 : "Whether the two documents represent one transaction or two different transactions, a court of law should be anxious to give effect to the terms in both the documents instead of being unduly critical about them.
Having secured the possession of the mortg age, the mortgagee is further entitled to lease it out even to the mortgagor.
It is in the interest of the mortgagor that the property is; leased out to him as he can better look after it.
There is nothing objectionable in this, nor is there any statutory prohibition for 'such transactions.
Now if the parties do this by executing proper documents, it is the duty of the court of law to give effect to them." The reasoning of the Rajasthan judgment seems to be logical and commends itself to us.
In all such cases the leasing back of the property arises because of the mortgage with possession but we find ourselves unable to hold that the mortgagee does not secure to himself any rights under the deed of lease but must proceed on his mortgage in case the amount secured to him under the deed of lease is not paid.
If the security is good and considered to be sufficient by the mortgagee there is no reason why he should be driven to file a suit on his mortgage when he can file a suit for realisation of the moneys due under the rent note.
The position of the creditor is strengthened where as in this case the interest on the amount of the mortgage is not the same as the rental fixed.
If during the continuance of the security the mortgagee wants to sue the mortgagor on the basis of the rent note and take possession himself or to induct some other tenant thereby securing to himself the amount which the mortgagor had covenanted to pay, there can be no legal objection to it.
Under the provisions of 0.
34 r. 4 he cannot deprive the mortgagor of his right to redeem excepting by proceeding on his mortgage.
Although we express no final opinion on this point it may be that a mortgagee who secures a decree for payment of arrears of rent cannot put the property to sale for realisation of the amount decreed but there can be no objection to his suing for possession if the rent note entitles him to do so.
So long as the mortgagor had a right to redeem the mortgage he can always pay off the mortgagee and get back possession.
This position would continue so long as the property is not sold under a final decree for Sale under the provisions of 0. 34 C.P.C.
In our opinion the second contention put forward on behalf of the appellant has no force.
The rights of a mortgagee do not merge in his rights under the preliminary decree for sale.
As already mentioned, the mortgagee lost his right to recover the money 733 by sale of the mortgaged property; otherwise his security remained intact and the mortgagor continued to have his right to redeem the property.
As regards the third point the only statutory provision to which ,a reference was made was section 28 of the Limitation Act of 1908 which provided that : "At the determination of the period hereby limited to any person for instituting a suit for possession of any property, his right to such property shall be extinguished.
" If the right of the mortgagee arose on the strength of the rent note which continued to be in force notwithstanding that the period for applying for a final decree for sale had expired there could be no extinction of his right to sue for possession because of section 28 of the Limitation Act.
In the result the appeal fails and is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | On July 29, 1945 the predecessor in interest of the appellant mortgaged his house in Ratlam to K for a sum of Rs. 3,100 with possession.
According to the deed of mortgage interest would run on the said sum at Rs. 0 10 0 per cent per annum till realisation.
The period of redemption was two years.
Simultaneously with the mortgage a rent note was executed by and between the parties under which the mortgagor was to continue to Occupy the premises, at a rental of Rs. 20/ per month.
The rent note provided inter alia that if the executant (i.e. mortgagor) made default in payment of two months ' rent the mortgagee would be entitled to get him evicted.
The mortgagee was also entitled to increase or decrease the rent and the executant was to vacate the.
house whenever asked to do so.
K filed a suit on his mortgage in 1954 and a preliminary decree was passed in his favour.
On his death his legal representatives were substituted in his place on record.
For some reason no application for a final decree for sale of the property was made within the period fixed under the Limitation Act.
The application for this purpose made by the executors to the estate of K was dismissed on July 29, 1960 as barred by limitation.
On December 27, 1960 the said executors filed a suit for ejectment of the appellant alleging that the 'rent for the premises had remained unpaid from September 19, 1957 till November 28, 1960.
The trial judge dismissed the suit.
In first appeal the plaintiffs claim was allowed in full.
The High Court in second appeal maintained the decree of the appellate court.
Appeal by special leave was filed in this Court against the High Court 's judgment.
It was contended by the appellants that : (i) The rent note executed simultaneously with the mortgage was a mere device to secure payment of interest and did not represent an independent transaction.
Further it did not create any relationship of landlord and tenant; (ii) The plaintiffs ' right as mortgagee merged in the decree and execution thereof being barred by the laws of limitation the plaintiffs had lost all their rights; (iii) The mortgage being extinguished the mortgagor could not bring a suit for redemption on account of section 28 of the Limitation Act, 1908.
HELD : The appeal must be dismissed.
(1) The contents of the documents executed by the parties showed that the relationship between the parties was not simply that of a mortgagee and mortgagor the creditor also had the rights of a landlord qua his tenant besides other rights conferred on him which were greater than those possessed by an ordinary landlord.
[728 F] In all such cases the leasing back of the property arises because of the mortgage with possession.
It cannot however be held that the mortgagee 724 does not secure to himself any rights under the deed of lease but must proceed on his mortgage in case the amount secured to him under the deed of lease is not paid.
If the security is good and considered to be sufficient by the mortgagee there is no reason why be should be driven to file a suit an his mortgage when be can file a suit for realisation of the moneys due under the rent note.
The position of the creditor is strengthened where as in the present case, the interest on the amount of the mortgagee is not the same as the rent fixed.
If during the continuance of, the security the mortgagee wanted to sue the mortgagor on the basis of the rent note and take possession himself or to induct some other tenant thereby securing to himself the amount which the mortgagor had covenanted to pay, there could be no legal objection to it.
Under the provisions of 0.34 r. 4 of the Code of Civil Procedure he could deprive the mortgagor of his right to redeem excepting by proceeding on his mortgage.
It may be (without a final opinion being expressed on the point) that a mortgagee who secured decree for payment of rent cannot put the property to sale for realisation of the amount decreed, but there cas be no objection to his suing for possession if the rent note entitles him to do so.
So long as the mortgagor has a right to redeem the mortgage fie can always pay off the mortgagee and get back possession.
This position would continue so long as the property is not sold under a final decree for sale under the provisions of 0.
34 C.P.C. [732 D G] Lalchand vs Nenuram, I.L.R. , approved.
Harilal Bhagwanji vs Hemshanker, A.I.R. 1958 Bombay 8, Ramnarain vs Sukhi, A.I.R. 1957 Patna 24, Umeshwar Prasad vs Dwarika Prasad, A.I.R. 1944 Patna 5, Ganpat Ruri vs Mad.
Asraf Ali, A.I.R. 1961 Patna 133 and Jankidas vs Laxminarain, I.L.R. , 'referred to.
(ii) Since the mortgagee had only lost his 'right to recover the money by sale of the mortgaged property, his security otherwise remaining intact, and the mortgagor also continued to have his right to redeem the property, the contention on behalf of the appellant that the rights of the mortgagee merged in the preliminary decree could not be accepted.
[732 H] (iii) If the mortgagee had an independent right on the strength of the rent note which continued to be in force notwithstanding that the period for a final decree for sale had expired, there could be no extinction of his right to sue for possession because of section 28 of the Limitation Act.
[733 C]
|
Appeal No. 1924 of 1970.
Appeal by special leave from the judgment and order dated April 28, 1970 of the Allahabad High Court in Special Appeal 'No. 368 of 1970.
section V. Gupte and Sobhagmal Jain, for the appellant. 0.
P. Rana and R. Bana, for the respondents.
591 The Judgment of the Court was delivered by Hegde J.
In this appeal by special leave the true ambit of item 1 in the Schedule to the (to be hereinafter referred to as the Act) read with section 3(1) of that Act comes up for consideration.
The appellant is a manufacturer of certain medicines with the aid of substances like tincture, spirit etc.
The tincture and spirit in their turn contain alcohol.
The Superintendent of Excise called upon the appellant to pay duty under the Act on the medicinal preparation on the ground that they contain alcohol.
The appellant resisted the demand on the ground that the medicines in question were not prepared by adding pure alcohol; the fact that the tincture which is a component of that preparation contains alcohol does not make it a preparation containing alcohol.
That contention was rejected by the Superintendent of Excise as well as by the High Court in the Writ petition brought by the appellant.
It is admitted that alcohol though it was not directly added is a component of the medicinal preparations in question.
The alcohol has not undergone any chemical change into some other substance.
It is present in a liquid form in those preparations.
The question for decision is whether the preparation in question do not attract duty because alcohol was not directly added to the solution.
The contention of the appellant is that unless alcohol is added into the preparation in its free condition, a medicinal preparation does not become dutiable.
For deciding this question we may now read the relevant provisions of the Act.
Section 3(1) of the Act says "There shall be levied duties of excise, at the rates specified in the Schedule, on all dutiable goods manufactured in India." "Dutiable goods" is defined in section 2(c) as meaning the medicinal and toilet preparations specified in the Schedule as being subject to the duties of excise levied under this Act: "Medicinal Preparation" is defined in section 2(g) in these words : " "medicinal preparation" includes all drugs which are a remedy or prescription prepared for internal or external use of human beings, or animals and all substances intended to be used for or in the treatment, mitigation or prevention of disease in human beings or animals.
" 5 9 2 Item 1 of the Schedule, the only item with which we are concerned in this case reads as follows : Item No. Description of Dutiable goods Rate of Duty Medicinal preparation.
Medicinal preparations, being patent or Ten proprietary medicines, containing alcohol Percent and which are not capable of being ab valouem consumed as ordinary alcoholic beverages.
The only other provision which we need consider is section 4 of the Act.
That section reads thus : Where alcohol, opium, Indian hemp or other narcotic drug or narcotic had been supplied to a manufacturer of any suitable goods for use as an ingredient of such goods by, or under the authority of, the collecting Government and a duty of excise on the goods so supplied had already been recovered by such Government under any law for the time being in force, the collecting Government shall, on an application being made to it in this behalf, grant in respect of the duty 'of excise leviable under this Act, a rebate to such manufacturer of the excess, if any, of the duty so recovered over the duty leviable under this Act.
" It was conceded that the preparations with which we are con cerned in this case are medicinal preparations.
They are proprietary medicines and that they are not capable of being consumed as ordinary alcohol beverages.
The only question that has to be decided is whether those preparations contain alcohol.
It is admitted that tincture is a component of that preparation and alcohol is a component of tincture.
Therefore we fail to see how it can be urged that those preparations do not contain alcohol.
In order to attract duty all that is required is that a medicinal preparation should contain alcohol.
Alcohol may be a part of the preparation either because it is directly added to the solution or it came to be included in that medicinal preparation because of one of the components of that preparation contained alcohol.
According to the plain language of the provision all that is required is that the preparation should contain alcohol.
In interpreting a tax ing provision, the courts should not ordinarily concern themselves with the policy behind the provision or even with its impact.
As observed by Rowlatt J. in Cape Brandy Syndicate vs Commissioners of Inland Revenue(1) in a taxing Act one has to look at (1) 593 what is clearly said.
There is no room for any intendment.
There is no equity about a tax.
There is no presumption as to a tax.
Nothing is to be read in, nothing is to be implied.
One can only look fairly at the language used.
It was urged on behalf of the appellant that if we hold that even indirect introduction of alcohol into a medicinal preparation brings that preparation within the scope of section 3(1) of the Act, it would mean multipoint taxation.
Coming to the medicinal preparations with which we are concerned in this case, it was urged that if the view taken by the High Court is correct then, first the tincture used became dutiable and thereafter the medicinal preparations in which tincture was used became dutiable.
It was said that that could not be the intention of the parliament.
We are unable to appreciate this contention.
Multipoint taxation is not unknown to us.
Our attention was invited to section 4 of the Act in support of the Contention that the legislature did not intend to levy multi point tax.
Section 4 provides for rebate of duty on alcohol supplied to the manufacturer of dutiable goods for use as an ingredient of such goods by or under the authority of the collecting government and a duty of excise on goods so supplied bad already been recovered by such Government under any law for the time being in force.
In our opinion this provision instead of supporting the appellant goes to show that multi point tax on medicinal preparations containing alcohol was within the contemplation of the leigslature; otherwise there was no purpose in incorporating section 4 into the Act.
if section 3 did not impose any levy on medicinal preparations of which pure alcohol is not a component, there was no need for section I.
There can be no question of any rebate if there was no levy at all.
Every rebate presupposes an imposition of tax or duty.
But the rebate under section 4 is confined only to those goods which directly come within the scope of section 4 and not to others.
That was the will of Parliament.
If Parliament desired to give rebate only in certain cases and not to others, it cannot be said that as regards the other medicinal preparations there can be no levy.
In our judgment the language of the provision imposing the levy is plain and unambiguous.
It imposes duty on all medicinal preparations containing alcohol.
At the hearing our attention was invited to the decision of the Madras High Court in M/s. Pharm Products Ltd. Thanjavur & ors.
vs Dist.
Rev. Officer(1).
The conclusion reached by that High Court accords with our conclusion.
In the result this appeal fails and the same is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | The appellant is a manufacturer of certain medicines with the aid of substances like tincture, spirit, etc., which contain alcohol.
On the question whether he was liable to pay duty under the Medicinal and Toilet Preparation (Excise Duties) Act, 1955, HELD : (1) The preparations are proprietary medicinal preparations and are not capable of being consumed as ordinary alcohol beverages, According to Item 1 of the Schedule to the Act, in order to attract duty, all that is required is that the medicinal preparation should contain alcohol.
Alcohol may be a part of the preparation either because it is directly added to the solution or it came to be included in the medicinal preparation because one of its components contains alcohol.
[592 E G] (2)It may be that a tincture is dutiable under the item, and, when the medicinal preparation in which it was used is also made dutiable it will involve multi point taxation.
But section 4 of the Act shows that the multi point tax on medicinal preparations containing alcohol was within the contemplation of the Legislature.
That section provides for rebate of duty on alcohol supplied to the manufacturer of dutiable goods, and, every rebate pressupposes imposition of tax or duty.
[593 B F] (3) The rebate under section 4 is confined only to those goods which directly come within the scope of section 4 and not to others.
From such a provision it cannot be said that as regard the other medicinal preparations, there can be no levy when the language of the provision imposing the levy is plain and unambiguous.
[593 F G] M/,s .
Pharm Products Ltd. Thanjavur vs District Revenue Officer , approved.
Cape Brandy Syndicate vs Commissioners of Inland Revenue. , referred to.
|
Appeal No. 2394 of 1968.
Appeal under section 116A of the Representation of the People Act, 1951 from the judgment 'and order dated July 24, 1968 of the Mysore High Court in Election Petition No. 9 of 1967.
B. section, Patil, Vineet Kumar and Shyamala Pappu, for the appellant.
A. V. Albal and M. Veerappa, for respondent No. 1.
The Judgment of the Court was delivered by GROVER, J.
This is an appeal from a judgment of the Mysore High Court dismissing an election petition which had been filed by two electors challenging the election of respondent No. 1 B. D. Jatti from the Jamkhandi Constituency at the General Elections held in 1967.
The last date for filing of nomination papers was January 19, 1967.
The polling took place on February 2, 1967 and the result was declared on February 22, 1967.
The only contesting candidates were respondent No. 1 and respondent No. 2 M. M. Shivappa.
Respondent No. 1 secured 24,578 votes whereas respondent No. 2 got 21,261 votes.
The election petition was filed 613 on April 6, 1967 by I. section Ghattarki and P. R. Belagali who were electors in the Jamkhandi Constituency, Each of them had acted as an election agent of respondent No. 2.
Petitioner No. 1 Ghattarki was his election agent from February 10, 1967 till the last date of the election and petitioner No. 2 Belagali acted as an election agent from January 19, 1967 to February 4, 1967.
The trial of the petition commenced on December 11, 1967 and after certain witnesses had been examined on February 1, 1967 petitioner No. 1, Ghattarki, made an application praying for permission to withdraw from the petition "for all purposes".
Petitioner No. 2 objected to his withdrawal.
The learned judge dismissed the application of petitioner No. 1 on the ground that section 110(1) of the Representation of the People Act, 1951, hereinafter called the "Act", dil not permit withdrawal by one petitioner without the consent of his co petitioner.
It has, however, been noted by the learned judge that both the petitioners continued to be represented by one counsel Shri B. section Patil.
It may be mentioned at this stage that the election petition is a very long document and that the evidence which has been produced by the parties is also voluminuous.
The judgment of the learned judge consists of 227 printed pages.
A number of issues were framed but the controversy before us has been confined only to certain points.
The first question which falls for consideration arises out of issue No. 1 which consists of three clauses and was framed in the following terms "1 (a) Do the petitioners prove that the 1st respondent was not an elector at all and therefore not qualified to stand for election ? (b) Are the petitioners precluded from questioning the validity of the entry of the name of the 1 st respondent as elector in the Electoral Roll relating to Jamkhandi Constituency ? (c) Has this Court no jurisdiction to go into the said question of validity ?" It was held by the leaned trial judge that the petitioners (in the election petition) were not precluded from questioning the validity of the entry of the name of respondent No. 1 as an elector in the Electoral Roll relating to Jamkhandi Constituency and that the c court had the jurisdiction to go into that question.
It was, however, found on a consideration of the evidence that the petitioner& had failed to prove that respondent No. I was not an elector and was not qualified to stand for election to a seat in the Mysore Legislative assembly, from Jamkhandi constituency.
12 LA36SupCI/71 614 If the view of the trial judge that the court had the jurisdiction in an election petition to go into the question of the validity of an entry in an Electoral Roll is erroneous and if the court was precluded from deciding this matter it will be altogether unnecessary to consider the evidence led for the purpose of clause (a) of issue No. 1.
The principal allegations of the petitioners on issue No. 1(a) were that respondent No. I had ceased to be a person ordinarily resident within the constituency of Jamkhandi during the period relevant to the 1967 General Elections.
It was further asserted that by long stay in the city of Bangalore the name of respondent No. I had been entered in the Electoral Roll relating to the municipal area of that city and that respondent No. 1 with the object ,of getting his name entered in the Roll of Jamkhandi Constituency had either got his name deleted from the Bangalore Roll or had tried to get it changed from that Roll to the Roll of Jamkhandi ,Constituency.
In order to decided the jurisdiction and powers of, the court trying an election petition under the provisions of the Act to determine the validity or legality of an entry in an Electoral Roll we shall have to look at the relevant provisions of the Act.
The Representation of the People Act 1950, to be called the "Act of 1950" and the Constitution.
Part 11 of the Act deals with the qualifications and disqualifications for Membership of Parliament ,and State Legislature.
Section 5(c) is as follows : "A person shall not be qualified to be chosen to fill a seat in the legislative assembly of a State unless.
(a). . . . . (b). . . . . (c) in the case of any other seat he is an elector for any Assembly constituency in that State.
" The word "elector" is defined by section 2 (1 ) (e) to mean in relation to a constituency a person whose name is entered in the Electoral Roll of that Constituency for the time being in force and who is not subject to any of the disqualifications mentioned in section 16 of the Act of 1950.
Chapter III of the Act contains disqualifications for Membership of Parliament and State Legislatures.
According to section 7(b) "disqualified" means disqualified for being chosen as and for being a Member of either House of Parliament or of the Legislative Assembly etc.
Sections 8 to 11 give the disqualifications on conviction for certain offences, for commission of corrupt practices and other matters which need not be noticed.
The position under 615 the Act,.
therefore, is that in order to stand for election to a legislative assembly of a State a person must be an elector for any assembly constituency in that State and he must not be subject to any of the disqualifications mentioned in section 16 of the Act of 1950 or the disqualifications given in Chapter III of the Act.
The Act of 1950 was meant to provide for the allocation of seats and the delimitation of constituencies for the purpose of elections, to the House of the People and the legislatures of States, the qualifications of voters at such elections, the preparation of Electoral Rolls. . and matters connected therewith.
Part III thereof contains provisions for Electoral Rolls for assembly constituencies.
According to section 15 for every constituency there shall be an Electoral Roll which shall be prepared in accordance with the provisions of the Act of 1950 under the superintendence, direction and control of the Election Commission.
Section 1 6 is in these terms : section 16.
"Disqualifications for registration in an electoral roll. (1) A person shall be disqualified for registration in an electoral roll if he (a) is not a citizen of India; or (b) is of unsound mind and stands so declared by a competent court; or (c) is for the time being disqualified from voting under the provisions of any law relating to corrupt practices and other offences in connection with elections.
(2) The name of any person who becomes so disqualified after registration shall forthwith be struck off the electoral roll in which it is included : Provided that. . . . .
Section 19 gives the conditions of registration in the Electoral Roll.
It provides that every person who is not less than 21 years of age on the qualifying date and is ordinarily resident in a constituency shall be entitled to be registered in the Electoral Roll for that constituency.
Section 20 deals with the meaning of "ordinarily resident".
The preparation and revision of Electoral Roll has to be made in accordance with section 21 and the correction of entries 'is provided by section 22.
Section 24 contains a provision for an appeal which can be filed to the Chief Electoral Officer from any order of the Electoral Registration Officer under section 22 or section 23.
Under section 30 no civil court shall have jurisdiction to entertain or 616 adjudicate upon any question whether any person is or is not entitled for registration in an Electoral Roll for a constituency.
There are elaborate rules which have been promulgated for preparation and revision of the Electoral Rolls, namely, Electors ' Rules 1960.
It may be noted that the conditions about being ordinarily resident in a constituency for the purpose of registration are meant for that purpose alone and have nothing to do with the disqualifications for registration which are prescribed by section 16 of the Act of 1950 which alone are relevant to the definition of an "elector" as given in section 2 (1) (e) of the Act.
The entire scheme of the Act of 1950 and the amplitude of its provisions show that the entries made in an Electoral Roll of a constituency can only be challenged in accordance with the machinery provided by it and not in any other manner or before any other forum unless some question of violation of the provisions of the Constitution is involved.
Article 173 of the Constitution relates to qualifications for membership of the State legislature.
It reads : article 173 "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 before 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) is, in the case of a seat in the Legislative Assembly, not less than twenty five years of age and, in the case of a seat in the Legislative Council, not less than thirty years of age; and (c) possesses such other qualifications as may be prescribed in that behalf by or under any law made by Parliament." The qualifications, as mentioned previously, have been prescribed by section 5 of the Act.
Condition (b) in section 19 of the Act of 1950 of being ordinarily resident in a constituency finds no place in any of the provisions of the Act or in article 173 of the Constitution.
The decision of this Court in Durga Shankar Mehta vs Thakur Raghurai Singh & Others(1) involved non compliance with the provisions of clause (b) of article 173 and in case of a candid ate who was constitutionally incapable of being returned as a member it was held that the Election Tribunal could declare his election to be void by applying sub section
(2) (c) of section 1 00 of the Act.
The present case is clearly not of that kind and.
no violation or in (1) [1955] 1 S.C.R. 267.
6 17 fringement of any provision of article 173 has been or could be established.
The other provisions relating to election are contained in Part XV of the Constitution.
Article 324 deals with the superintendence, direction and control of elections which are vested in the Election Commission.
Article 325 declares that no person shall be ineligible for inclusion in an, Electoral Roll on account only of religion, race, caste, sex or any of them.
Article 326 says that the elections to the House of the People and the Legislative Assemblies of States shall be on the basis of adult franchise.
Article 327 gives power to the Parliament to make provisions with respect to elections to Legislatures.
Article 329 bars the interference of courts in electoral matters.
By virtue of that Article no election shall be called in question except by an election petition.
It is abundantly clear that in the present case the question whether respondent No. 1 was ordinarily resident in Jamkhandi constituency during the material period and was entitled to be registered in the Electoral Roll could not be the subject matter of enquiry except in accordance with the provisions of the Act of 1950.
The grounds on which the election can be declared to be void under the Act are set out in section 100 of the Act.
Clause (d) is "that the result of the election, in so far as it concerns a returned candidate, has been materially affected (i). . . (ii). . (iii). . . (iv) by any non compliance with the pro visions of the Constitution or of this Act or of any rules or orders made under this Act.
" Nothing could be clearer than the ambit of this provision.
It does not entitle the court in an election petition to set aside any election on the ground of non compliance with the provisions of the Act of 1950 or of any rules made thereunder, with the exception of section 16.
The learned trial judge does not appear to have fully and properly appreciated the correct ratio and true determination of the points involved in Durga Shanker Mehta 's(1) case.
The distinction is too obvious to bear repetition.
It seems that a Bench decision of the Mysore High Court in K. Sriramulu vs K. Deviah(2) was distinguished without any justification by the learned judge.
It was clearly laid therein that in an election petition the correctness of the Electoral Roll cannot be gone into.
The decision of a Full bench of the Punjab and Haryana High Court in Roop Lal Mehta vs Dhan Singh & Others(1) about the finality of the Electoral Roll was, also not noticed.
In this view of the matter the evidence relating to issue No. 1(a) becomes wholly irrelevant and redundant.
The decision on that issue in favour of respondent No. 1, is, however, affirmed.
(3) 618 [His Lordship next considered the evidence in respect of the allegations of corrupt practice and then proceeded :] In conclusion it may be observed that the impression left by the facts and circumstances of this case on our mind is that the authorities concerned in the Mysore State were not careful or discreet enough in posting Hasbi for the second time to Jamkhandi in July 1966 when it was known that the relations between him and respondent No. 2 had been very unhappy in the past and by which time it could also be foreseen and appears to be known that there would be another contest between respondent No. 1 and respondent No. 2 who had been fighting elections since 1952.
Similarly with regard to Kallur it would have been a wise step to transfer him before the elections from the area in which Jamkhandi is situate because he had also figured similarly in the pre vious contest between the two respondents.
Free and fair elections are the very foundation of democratic institutions and just as it is said that justice must not only be done but must also seen to be done; similarly elections should not only be fairly and properly held but should also seem to be so conducted as to inspire confidance in the minds of the electors that everything has been above board and has been done to ensure free elections.
It will be a sad day in the history of our country when the police and the Government officers create even an impression that they are interfering for the benefit of one or the other candidate.
This is particularly so if a candidate is holding an important position or assignment like respondent No. 1, who, at the material time was a Minister in the State.
The appeal fails and is dismissed.
In view of all the facts and circumstances of the case we make no order as to costs in this Court.
R.K.P.S. Appeal dismissed.
| IN-Abs | By an election petition two electors of the constituency, the appellants, challenged the election of the first respondent to, the Mysore Legislative Assembly in 1967 from the Jamkhandi constituency.
It was alleged inter alia that the first 'respondent had ceased to be a person ordinarily resident within the constituency during the period relevant to the 1967 General Elections, and the validity of the entry of his name on the Electoral Roll was questioned; it was claimed that he was not therefore qualified to stand for election from the constituency.
The petition also contained allegations of corrupt practices including misuse by certain Police Officers of their position to prevent voters from voting freely, and malpractices by the Presiding Officer at the time of polling, etc.
After framing an issue on the question and taking the view that the Court had jurisdiction to determine the validity of the inclusion of the first respondent 's name as an elector on the Electoral Roll, the trial judge held on a consideration of the evidence, that the petitioners had failed to prove he first respondent was not an elector and was not qualified to stand for election from the constituency.
The High Court also rejected the allegations of corrupt practices and dismissed the petition On appeal to this Court, HELD : (i) Under section 30 of the Representation of the People Act, 1950, no civil court shall have jurisdiction to entertain or adjudicate upon any question whether any person is or is not entitled for registration in an Electoral Roll for a constituency.
There are elaborate rides which have be en promulgated for preparation and revision of the Electoral Rolls, namely, Electors ' Rules 1960.
The conditions about being ordinarily resident in a constituency for the purpose of registration are meant for that purpose alone and have nothing to do with the disqualifications for registration which are prescribed by section 16 of the Act of 1950, which alone are relevant to the definition of an "elector" as given in section 2(1)(e) of the Act of 1951.
The entire scheme of the Act of 1950 and the amplitude of its provisions show that the entries made in an Electoral Roll of a constituency can only be challenged in accordance with the machinery provided by it and not in any other manner or before any other forum unless some question of violation of the provisions of the Constitution is involved.
The present case did not also involve any violation or infringement of Article 173 or any other provision of the Constitution.
[,615 H] The question whether respondent No. 1 was ordinarily resident in Jamkhandi constituency during the material period and was entitled to 612 be registered in the Electoral Roll could not therefore be the subject matter of enquiry except in accordance with the provisions of the Act of 1950.
Under section 100(1) (d) an election can be declared void only if the result of the election, in so far as it concerns a returned candidate, has been materially affected by any non compliance with the provisions of the Constitution or of the Act of 1951 or of any rules or orders made thereunder.
Nothing could be clearer than the ambit of this provision.
It does not entitle the court in an election petition to set aside any election on the ground of non compliance with the provisions of the Act of 1950 or of any rules made hereunder with the exception of section 16.
[617 E] Durga Shankar Mehta vs Thakur Raghurai Singh & Others, [1955] 1 S.C.R. 267; K. Sriramulu vs K. Deviah ; Roop Lal Mehta vs Dhan Singh and Others ; referred to.
On the evidence, no reasons were shown for this court to differ from the findings of the Trial Judge on the allegations of corrupt practices.
Meghraj Patodis vs R. K. Birla & Others, Civil Appeal No. 1094/69 dated 10 9 1970; referred to.
|
Appeal No. 162 of 1952.
Appeal from the Judgment and Order dated the 7th day of June, 1951, of the High Court of Judicature at Calcutta in Income tax Reference No. 60 of 1950 arising out of the Order dated the 22nd day of November, 1949, of the Income tax Appellate Tribunal in I.T.A. Nos. 1026 and 1027 of 1948 49 N. C. Chatterjee for the appellant.
Porus A. Mehta for the respondent.
November, 11.
The Judgment of the Court was delivered by, BHAGWATI J.
This appeal from the judgment And order of the High Court of Judicature at Calcutta with leave under section 66 A (2) of the Indian Income tax Act raises an interesting question as to the line of demarcation between capital expenditure and revenue expenditure.
On the 14th November, 1938, the appellant company acquired from the Government of Assam a lease of certain limestone quarries, known as the Komorrah quarries situated in the Khasi and Jaintia Hills District for the purpose of carrying on the manufacture of cement.
The lease was for 20 years commencing on the 1st November, 1938, and ending on the 31st October, 1958, with a clause for renewal for a further term of 20 years.
The rent reserved was a half yearly rent certain of Rs. 3,000 for the first two years and thereafter a half yearly rent certain of Rs. 6,000 with the provision for payment of further royalties in certain events.
In addition to these rents and royalties two further sums were payable under the special covenants contained in clause& 4 and 5 of the lease as " protection fees ".
Under clause 4 the protection was in respect of another group of quarries called the Durgasil area, the lessor undertaking not to grant any lease, permit or prospecting licence regarding the limestone to any other party 976 therein without a condition that no limestone should be used for the manufacture of cement in consideration of a sum of Rs. 5,000 payable annually during the whole period of the lease.
Under clause 5 a further protection was given in respect of the whole of the Khasi and Jaintia Hills District, a similar undertaking being given by the lessor in consideration of a sum of Rs. 35,000 payable annually but only for 5 years from the 15th November, 1940.
In the accounting years 1944 45 and 1945 46 the company paid its lessor sums of Rs. 40,000 in accordance with these two covenants and claimed to deduct the sums in the computation of its business profits under the provisions of section 10(2) (xv) of the Income tax Act in the assessments for the assessment years 1945 46 and 1946 47.
The Income tax Officer, the Appellate Assistant Commissioner and the Appellate Tribunal rejected the contention of the company and the following question, as ultimately reframed, was at the instance of the company referred by the Tribunal to the High Court for its decision : " Whether, in the circumstances of the case, the two sums of Rs. 5,000 and Rs. 35,000 paid under clauses 4 and 5 of the deed of the 14th November, 1938, were rightly disallowed as being expenditure of a capital nature and so not allowable under section 10(2) (xv) of the Indian Income tax Act ".
The High Court answered the question in the affirmative and hence this appeal.
Clauses 4 and 5 of the deed of lease may be here set out : 4.
The lessee shall pay to the lessor Rs. 5,000 (Rupees five thousand) only annually during the period of the lease on November 15th starting from November 15th, 1938, as a protection fee.
In consideration of that protection fee the lessor undertakes not to allow any person or company any lease permit or prospecting licence for limestone in the group of quarries as described in Schedule 2 and delineated in the plan thereto annexed and therein coloured blue called the Durgasil area without a condition in such 977 lease permit or prospecting licence that no limestone ,shall be used for the manufacture of cement.
5.Besides the above protection fee the lessee shall pay to the lessor annually the sum of Rs. 35,000 (Rupees thirty five thousand) only for five years starting from the 15th day of November, 1940, as a further protection fee so long as the total amount of limestone quarried by the lessee in a year does not exceed 22,00,000 maunds per year whether quarried in the area of this lease or elsewhere or obtained by purchase from other quarries in the Khasi and Jaintia Hills by the lessees.
If, however, in any year the total amount of limestone converted into cement at the lessee 's Sylhet,Factory exceed 22,00,000 maunds the lessee will be entitled to an abatement at the rate of Rs. 20 for every 1,000 maunds quarried in excess of 22,00,000 maunds and the lessee shall pay the sum of Rs. 35,000 less the abatement calculated on the basis hereinbefore mentioned.
Limestone which is not converted into cement at the lessee 's factory in Sylhet district will not entitle the lessee to any abatement in the protection fee.
The lessor in consideration of the said payment undertakes not to allow any person or company any lease permit or prospecting licence for limestone in the whole of Khasi and Jaintia Hills district without a condition in such lease permit or prospecting licence that no limestone extracted shall be used directly or indirectly for the manufacture of cement.
The lessor will be empowered to terminate this agreement for the payment of a protection fee at any time after it has run for 5 years by giving six month,% ' notice in writing by registered letter addressed to 11, Clive Street, Calcutta but the lessee will not be entitled to terminate this agreement during the currency of the lease except with the consent of the lessor.
It is not clear as to what was meant by the last provision contained in clause 5, the lessee in the event of his having paid the sum of Rs. 35,000 for the 5 years having nothing else to do but enjoy the benefit of the covenant on the part of the lessor during the subsequent period of the lease.
This provision is however immaterial for our purposes.
978 The line of demarcation between capital expenditure and revenue expenditure is very thin and learned Judges in England have from time to time pointed out the difficulties besetting that task.
Lord Macnaghten a Dovey vs Cory(1), administered the following warning: I do not think it desirable for any tribunal to do that which Parliament has abstained from doing that is, to formulate precise rules for the guidance or embarrassment of business men in the conduct of business affairs.
There never has been, and I think there never will be, much difficulty in dealing with any particular case on its own facts and circumstances; and, speaking for myself, I rather doubt the wisdom of attempting to do more." Rowlatt J. also expressed himself much to the same effect in Countess Warwick Steamship Co. Ltd. vs Ogg(1): " It is very difficult, as I have observed in previous cases of this kind, following the highest possible authority, to lay down any general rule which is both sufficiently accurate and sufficiently exhaustive to cover all or even a great number of possible cases, and I shall not attempt to lay down any such rule.
" Certain broad tests have however been attempted to be laid down and the earliest was the one indicated in the following observations of Bowen L.J. in the course of the argument in City of London Contract Corporation vs Styles (3) : " You do not use it 'for the purpose of ' your concern, which means, for the purpose of carrying on your concern, but you use it to acquire the concern.
" The expenditure in the acquisition of the concern would be capital expenditure; the expenditure in carrying on the concern would be revenue expenditure.
Lord Dunedin in Vallambrosa Rubber Co., Ltd. vs Farmer ( 4), suggested another criterion at page 536 : Now, I don 't say that this consideration is absolutely final or determinative, but in a rough way I think it is not a bad criterion of what is capital (1) , 488.
(2) [1924] 2 K.B. 292, 298.
(3)(1887) , 243.
(4)(1910) , 536.
979 expenditure as against what is income expenditure to say that capital expenditure is a thing that is a going to be spent once and for all, and income expenditure is a thing that is going to recur every year.
" This test was adopted by Rowlatt J. in Ounsworth (Surveyor of Taxes) vs Vickers Ltd. (1), and after quoting the above passage from the speech of Lord Dunedin he observed that the real test was between expenditure which was made to meet a continuous demand for ex.
penditure as opposed to an expenditure which was made once for all.
He however suggested in the course of his judgment another view point and that was whether the particular expenditure could be put against any particular work or whether it was to be regarded as an enduring expenditure to serve the business as a whole, thus laying the foundation for the test prescribed by Viscount Cave L.C. in Atherton 's case (2).
Atherton vs British Insulated and Helsby Cables Ltd. (2), laid down what has almost universally been accepted as the test for determining what is capital expenditure as distinguished from revenue expenditure.
Viscount Cave L.C. there observed at page 192: "But there remains the question, which I have found more difficult, whether apart from the express prohibitions, the sum in question is (in the words used by Lord Sumner in Usher 's case(3) ), a proper debit item to be charged against incomings of the trade when computing the profits of it; or, in other words, whether it is in substance a revenue or a capital expenditure.
This appears to me to be a question of fact which is proper to be decided by the Commissioners upon the evidence brought before them in each case ; but where, as in the present case, there is no express finding by the Commissioners upon the point, it must be determined by the Courts upon the materials which are available and with due regard to the principles which have been laid down in the authorities.
Now, in Vallambrosa Rubber Company vs Farmer (4).
Lord Dunedin, as Lord President of the Court of Session, expressed the opinion that "in a rough way" it was (1)(1915) (2)(1925) (3)(19I4) (4)(19IO) 536, 980 "not a bad criterion of what is capital expenditure as against what is income expenditure to say that capital expenditure is a thing that is going to be spent once and for all and income expenditure is a thing which is going to recur every year" ; and no doubt this is often a material consideration.
But the criterion suggested is not, and was obviously not, intended by Lord Dunedin to be a decisive one in every case; for it is easy to imagine many cases in which a payment, though made "once and for all", would be properly chargeable against the receipts for the year. .
But when an expenditure is made, not only once and for all.
but with a view to bringing into existence an asset or an advan tage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circumstances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue but to capital." Viscount Haldane however in John Smith & Son vs Moore (H. M. Inspector of Taxes) (1), suggested another test and that was the test of fixed or circulating capital, though even there he observed that it was not necessary to draw an exact line of demarcation between the fixed and circulating capital.
The line of demarcation between fixed and circulating capital could not be defined more precisely than in the description of Adam Smith of fixed capital as what the owner turns to profit by keeping it in his own possession, and circulating capital as what he makes profit of by parting with it and letting it change masters.
This test was adopted by Lord Hanworth M.R. in Anglo Persian Oil Co. vs Dale (2), where he observed: " I am inclined to think that the question whether the money paid is provided from the fixed or the circulating capital comes as near to accuracy as can be suggested.
Lord Cave 's test, that where money is spent for an enduring benefit it is capital, seems to leave open doubts as to what is meant by "enduring" . . . . (1) , 282.
(2) ,138.
981 It seems rather that the cases of Hancock (1) and of Mitchell vs B. W. Noble, Ltd. (2) and of Mallet vs Staveley Coal & Iron Co. (3), give illustrations that the test of fixed or circulating capital is the true one; and where, as in this case, the expenditure is to bring back into the hands of the company a necessary ingredient of their existing business important, but still ancillary and necessary to the business which they carry onthe expenditure ought to be debited to the circulating capital rather than to the fixed capital, which is em.
ployed in and sunk in the permanent even if wasting assets of the business.
" This preference of his was reiterated by Lord Hanworth M.R. in Golden Horse Shoe (New) Ltd. vs Thurgood (H. M. Inspector of Taxes) "The above cases serve to establish the difficulty of the question rather than to affirm any principle to be applied in all cases.
Indeed, in the last case cited, Atherton vs British Insulated and Helsby Cables Ltd. (5) Lord Cave says that a payment 'once and for all ' a test which had been suggested by Lord Dunedin in Vallambrosa Rubber Company ' vs Farmer(1), was not true in all cases, and he found authority for that statement in Smith vs Incorporated Council of Law Reporting for England and Wales (7) and the Anglo Persian case(8 ) already referred to is another.
The test of circulating, as contrasted with fixed capital, is as good a test in most cases, to my mind, as can be found ; but that involves the question of fact, was the outlay in the particular case from fixed or circulating capital ?" Romer L.J. at page 300 pointed out the difficulties in applying this test also.
"Unfortunately, however, it is not always easy to determine whether a particular asset belongs to the one category or the other.
It depends in no way upon what may be the nature of the asset in fact or in law.
Land may in certain circumstances be circulating (2) (2) (1927] 1 K.B. 719.
(3) (1928] 2 K.B. 405.
(4) , 298. 125 (5) , 192.
(6) (7) (8) 982 capital.
A chattel or a chose in action may be fixed capital.
The determining factor must be the nature of the trade in which the asset is employed.
The land upon which a manufacturer carries on his business is part of his fixed capital.
The land with which a dealer in real estate carries on his business is part of his circulating capital.
The machinery with which a manufacturer makes the articles that he sells is part of his fixed capital.
The machinery that a dealer in machinery buys and sells is part of his circulating capital, as is the coal that a coal merchant buys and sells in the course of his trade.
So, too, is the coal that a manufacturer of gas buys and from which he extracts his gas. " In Van Den Berghs, Limited vs Clark (H. M. Inspector of Taxes)(1), Lord Macmillan however veered round to Viscount Cave 's test and expressed his disapproval of the test of fixed and circulating capital.
He reviewed the various authorities and stated : " My Lords, if the numerous decisions are examined and classified, they will be found to exhibit a satisfactory measure of consistency with Lord Cave 's principle of discrimination.
" As regards the test of fixed and circulating capital he observed, at page 432 : " I have not overlooked the criterion afforded by the economists ' differentiation between fixed and circulating capital which Lord Haldane invoked in John Smith & Son vs Moore(1), and on which the Court of Appeal relied in the present case, but I confess that I have not found it very helpful. " The Privy Council in Tata Hydro Electric Agencies, Limited, Bombay vs Commissioner of Income tax, Bombay Presidency and Aden(1), pronounced at page 226: "What is money wholly and exclusively laid out for the purposes of the trade ' is a question which must be determined upon the principles of ordinary commercial trading.
It is necessary, accordingly, to attend (1) ; (2) , (3) (1937) L.R, 64 I.A. 215.
983 to the true nature of the expenditure, and to ask oneself the question, is it a part of the company 's working expenses; is it expenditure laid out as part of the process of profit earning ?" In the case before them they came to the conclusion that the obligation to make the payments was undertaken By the appellants in consideration of their acquisition of the right and opportunity to earn profits, i.e., of the right to conduct the business and not for the purpose of producing profits in the conduct of the business.
The distinction was thus made between the acquisition of an income earning asset and the process of the earning of the income.
Expenditure in the acquisition of that asset was capital expenditure and expenditure in the process of the earning of the profits was revenue expenditure.
This test really is akin to the one laid down by Bowen L.J. in The City of London Contract Corporation Ltd. vs Style8(1).
Dixon J. expressed a similar opinion in Sun Newspapers Limited and the Associated Newspapers Limited vs The Federal Commissioner of Taxation(1), at page 360: " But in spite of the entirely different forms, material and immaterial, in which it may be expressed, such sources of income contain or consist in what has been called a 'profit yielding subject," the phrase of Lord Blackburn in United Collieries Ltd. vs Inland Revenue Commissioners(3).
As general conceptions it may not be difficult to distinguish between the profit yielding subject and the process of operating it.
In the same way expenditure and outlay upon establishing, replacing and enlarging the profit yielding subject may in a general way appear to be of a nature entirely different from the continual flow of working expenses which are or ought to be supplied continually out of the returns of revenue.
The latter can be considered, estimated and determined only in relation to a period ,or interval of time, the former as at a point of time.
For the one concerns the instrument for earning profits (1) (2) (1038) ; (3) , 220.
984 and the other the continuous process of its use or employment for that purpose.
These are the three criteria adopted for distinguishing capital expenditure from revenue expenditure though it must be said that preponderance of opinion is to be found in support of Viscount Cave 's test as laid down in Atherton 's case(1).
Viscount Cave 's test has also been adopted almost universally in India: vide Munshi Gulab Singh & Sons V. Commissioner of Income tax(2), Commissioner of Income tax, Bombay vs Century Spinning, Weaving & Manufacturing Co. Ltd.(1), Jagat Bus Service, Saharanpur vs Commissioner of Income tax, U. P. & Ajmer Merwara(4), and Commissioner of Income tax, Bombay vs Finlay Mills Ltd.(5).
In Commissioner of Income tax, Bombay vs Century Spinning, Weaving & Manufacturing Co., Ltd.(3), Chagla J. observed, at page 116: " The legal touchstone which is almost invariably applied is the familiar dictum of Viscount Cave in Atherton 's case(1). .
Romer L.J. felt that this definition had placed the matter beyond all controversy see remarks in Anglo Persian Oil Co. 's case(6).
But Lord Macmillan in Van Den Bergh 's case(1), felt that Romer L.J. had been unduly optimistic and the learned Law Lord was of the opinion that the question whether a particular expenditure fell on one side of the line or other was a task of much refinement.
But on the whole I think that the definition of Viscount Cave is a good working definition ; and if one were to supplement it with the definition suggested by Mr. Justice Lawrence in Southern vs Borax Consolidated Ltd.(1), whether an expenditure had in any way altered the original character of the capital asset, we have a legal principle which can be applied to any set of given facts.
(1) (1925) to T.C. 155.(5) (1952] S.C.R. 11.
(2) [1945]14 I.T.R. 66.(6) (3) ; (4) [1942] 10 I.T.R. Suppl.
1, 6. 985 In Benarsidas Jagannath, In re(1), a Full Bench of the Lahore High Court attempted to reconcile all these decisions and deduced the following broad test for distinguishing capital expenditure from revenue expenditure.
The opinion of the Full Bench was delivered by Mr. Justice Mahajan as he then was, in the terms following: " It is not easy to define the term 'capital expenditure ' in the abstract or to lay down any general and satisfactory test to discriminate between a capital and a revenue expenditure.
Nor is it easy to reconcile all the decisions that were cited before us for each case has been decided on its peculiar facts.
Some broad principles can, however, be deduced from what the learned Judges have laid down from time to time.
They are as follows : 1.
Outlay is deemed to be capital when it is made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment: vide Lord Sands in Commissioners of Inland Revenue vs Granite City Steamship Company(1).
In City of London Contract Corporation vs Styles(1), at page 243, Bowen L.J. observed as to the capital expenditure as follows : " You do not use it 'for the purpose of ' your concern, which means, for the purpose of carrying on your concern, but you use it to acquire the concern.
Expenditure may be treated as properly attributable to capital when it is made not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade: vide Viscount Cave L.C. in Atherton vs British Insulated and Helsby Cables Ltd.(1).
If what is got rid of by a lump sum payment is an annual business expense chargeable against revenue, the lump sum payment should equally be regarded as a business expense, but if the lump sum payment brings in a capital asset, then that puts the business on another footing altogether.
Thus, if labour saving machinery was acquired, the cost of such acquisition cannot be (1) (3) (2) , 14.
(4) 986 deducted out of the profits by claiming that it relieves the annual labour bill, the business has acquired anew asset, that is, machinery.
The expressions 'enduring benefit ' or 'of a permanent character ' were introduced to make it clear that the asset or the right acquired must have enough durability to justify its being treated as a capital asset.
3.Whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business.
Again, it is to be seen whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital.
Fixed capital is what the owner turns to profit by keeping it in his own possession.
Circulating or floating capital is what he makes profit of by parting with it or letting it change masters.
Circulating capital is capital which is turned over and in the process of being turned over yields profit or loss.
Fixed capital, on the other hand, is not involved directly in that process and remains unaffected by it".
This synthesis attempted by the Full Bench of the Lahore High Court truly enunciates the principles which emerge from the authorities.
In cases where the expenditure is made for the initial outlay or for extension of a business or a substantial replacement of the equipment, there is no doubt that it is capital expenditure.
A capital asset of the business is either acquired or extended or substantially replaced and that outlay whatever be its source whether it is drawn from the capital or the income of the concern is certainly in the nature of capital expenditure.
The question however arises for consideration where expenditure is incurred while the business is going on and is not incurred either for extension of the business or for the substantial replacement of its equipment.
Such expenditure can be looked at either from the point of view of what is acquired or from the point of view of what is the source from which the expenditure is incurred.
If the expenditure is made for acquiring or bringing into existence an. asset or advantage for the enduring benefit of the 987 business it is properly attributable to capital and is of the nature of capital expenditure.
If on the other hand it is made not for the purpose of bringing into existence any such asset or advantage but for running the business or working it with a view to produce the profits it is a revenue expenditure.
If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically.
The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure.
The source or the manner of the payment would then be of no consequence.
It is only in those cases where this test is of no avail that one may go to the test of fixed or circulating capital and consider whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital.
If it was part of the fixed capital of the business it would be of the nature of capital expenditure and if it was part of its circulating capital it would be of the nature of revenue expenditure.
These tests are thus mutually exclusive and have to be applied to the facts of each particular case in the manner above indicated.
It has been rightly observed that in the great diversity of human affairs and the complicated nature of business operations it is difficult to lay down a test which would apply to all situations.
One has therefore got to apply these criteria, one after the other from the business point of view and come to the conclusion whether on a fair appreciation of the whole situation the expenditure incurred in a particular case is of the nature of capital expenditure or revenue expenditure in which latter event only it would be a deductible allowance under section 10(2) (xv) of the Income tax Act.
The question has all along been considered to be a question of fact to be determined by the Income tax authorities on an application of the broad principles laid down above and the courts of law would not ordinarily interfere with such findings of fact if they have 988 been arrived at on a proper application of those principles.
The expression "once and for all" used by Lord Dunedin has created some difficulty and it has been contended that where the payment is not in a lump sum but in instalments it cannot satisfy the test.
Whether a payment be in a lump sum or by instalments, what has got to be looked to is the character of the payment.
A lump sum payment can as well be made for liquidating certain recurring claims which are clearly of a revenue nature, and on the other hand payment for purchasing a concern which is prima facie an expenditure of a capital nature may as well be spread over a number of years and yet retain its character as a capital expenditure.
(Per Mukherjea J. in Commissioner of Income tax vs Piggot Chapman & Co.(1).
The character of the payment can be deter mined by looking at what is the true nature of the asset which has been acquired and not by the fact whether it is a payment in a lump sum or by instalments.
As was otherwise put by Lord Greene M.R. in Henriksen (Inspector of Taxes) vs Grafton Hotel Ltd.(2): "The thing that is paid for is of a permanent quality although its permanence, being conditioned by the length of the term, is shortlived.
A payment of this character appears to me to fall into the same class as the payment of a premium on the grant of a lease, which is admittedly not deductible".
The case of Tata Hydro Electric Agencies Ltd., Bombay vs Commissioner of Income tax, Bombay Presidency and Aden(3) affords another illustration of this principle.
It was observed there: "If the purchaser of a business undertakes to the vendor as one of the terms of the purchase that he will pay a sum annually to a third party, irrespective of whether the business yields any profits or not, it would be difficult to say that the annual payments were made solely for the purpose of earning the profits of the business".
(1) [1949] 171.T.R. 3I7.
(3) (193 7) L. R. 64 1, A 215.
(2) 989 The expression "once and for all" is used to denote an expenditure which is made once and for all for procuring an enduring benefit to the business as distinguished from a recurring expenditure in the nature of operational expenses.
The expression "enduring benefit" also has been judicially interpreted.
Romer L.J. in Anglo Persian Oil Company, Limited vs Dale(1) agreed with Rowlatt J. that by enduring benefit is meant enduring in the way that fixed capital endures: "An expenditure on acquiring floating capital is not made with a view to acquiring an enduring asset.
It is made with a view to acquiring an asset that may be turned over in the course of trade at a comparatively early date".
Latham C. J. observed in Sun Newspapers Ltd. & Associated Newspapers Ltd. vs Federal Commissioner of Taxation(2): "When the words 'permanent ' or 'enduring ' are used in this connection it is not meant that the advantage which will be obtained will last for ever.
The distinction which is drawn is that between more or less recurrent expenses involved in running a business and an expenditure for the benefit of the business as a whole e.g "enlargement of the goodwill of a company permanent improvement in the material or immaterial assets of the concern".
To the same effect are the observations of Lord Greene M. R. in Henriksen (H.M. Inspector of Taxes) vs Grafton Hotel Ltd. (3 ) above referred to.
These are the principles which have to be applied in order to determine whether in the present case the expenditure incurred by the company was capital expenditure or revenue expenditure.
Under clause 4 of the deed the lessors undertook not to grant any lease, permit or prospecting license regarding limestone to any other party in respect of the group of quarries called the Durgasil area without a condition therein that no limestone shall be used for the manufacture of (1) (1932] 1 K.B. 124, 146.
(2) ; , 355.
126 (3) 990 cement.
The consideration of Rs. 5,000 per annum was to be paid by the company to the lessor during the whole period of the lease and this advantage or benefit was to enure for the whole period of the lease.
It was an enduring benefit for the benefit of the whole of the business of the company and came well within the test laid down by Viscount Cave.
It was not a lump sum payment but was spread over the whole period of the lease and it could be urged that it was a recurring payment.
The fact however that it was a recurring payment was immaterial, because one bad got to look to the nature of the payment which in its turn was determined by the nature of the asset which the company had acquired.
The asset which the company had acquired in consideration of this recurring payment was in the nature of a capital asset, the right to carry on its business unfettered by any competition from outsiders within the area.
It was a protection acquired by the company for its business as a whole.
It was not a part of the working expenses of the business but went to appreciate the whole of the capital asset and make it more profit yielding.
The expenditure made by the company in acquiring this advantage which was certainly an enduring advantage was thus of the nature of capital expenditure and was not an allowable deduction under section 10(2)(xv) of the Income tax Act.
The further protection fee which was paid by the company to the lessor under clause 5 of the deed was also of a similar nature.
It was no doubt spread over a period of 5 years, but the advantage which the company got as a result of the payment was to enure for its benefit for the whole of the period of the lease unless determined in the manner provided in the last part of the clause.
It provided protection to the company against all competitors in the whole of the Khasi and Jaintia Hills District and the capital asset which the company acquired under the lease was thereby appreciated to a considerable extent.
The sum of Rs. 35,000 agreed to be paid by the company to the lessor for the period of 5 years was not a revenue expenditure which was made by the company for working the capital asset which it had acquired.
It was no 991 part of the working or operational expenses of the company.
It was an expenditure made for the purpose of acquiring an appreciated capital asset which would no doubt by reason of the undertaking given by the lessor make the capital asset more profit yielding.
The period of 5 years over which the payments were spread did not make any difference to the nature of the acquisition.
It was none the less an acquisition of an advantage of an enduring nature which enured for the benefit of the whole of the business for the full period of the lease unless terminated by the lessor by notice as prescribed in the last part of the clause.
This again was the acquisition of an asset or advantage of an enduring nature for the whole of the business and was of the nature of capital expenditure and thus was not an allowable deduction under section 10(2)(xv) of the Act.
We are therefore of the opinion that the conclusion reached by the Income tax authorities as well as the High Court in regard to the nature of the payments was correct and the sums of Rs. 40,000 paid by the company to the lessors during the accounting years 1944 45 and 1945 46 were not allowable deductions under section 10(2)(xv) of the Act.
The appeal therefore fails and must be dismissed with costs.
Appeal dismissed.
| IN-Abs | Section 10(2)(xv) of the Indian Income tax Act, 1922, uses the term 'capital expenditure ' for which no allowance is given to the assessee.
The term 'capital expenditure ' is used as contrasted with the term 'revenue expenditure in respect of which the assessee is entitled to allowance under section 10(2) (xv) of the Act.
As pointed out by the Full Bench of the Lahore High Court in Benarsidas Jagannath, In re [(1946) it is not easy to define the term 'capital expenditure ' in the abstract or to lay down any general and satisfactory test to discriminate between a capital and a revenue expenditure.
Though it is not easy to reconcile all the decided cases on the subject, as each case had been decided on its peculiar facts, some broad principles could be 973 deduced from what the learned judges have laid down from time to time: (1)Outlay is deemed to be capital when it is made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment: vide Lord Sands in Commissioners of Inland Revenue vs Granite City Steamship Company ( and City of London Contract Corporation vs Styles ( (2)Expenditure may be treated as properly attributable to capital when it is made not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade: vide Viscount Cave, L.C., in Atherton vs British Insulated and Helsby Cables Ltd. ([1926] If what is got rid of by a lump sum payment is an annual business expense chargeable against revenue, the lump sum payment should equally be regarded as a business expense, but if the lump sum payment brings in a capital asset, then that puts the business on another footing altogether.
Thus, if labour saving machinery was acquired, the cost of such acquisition cannot be deducted out of the profits by claiming that it relieves the annual labour bill, the business has acquired a now asset, that is, machinery.
The expressions 'enduring benefit ' or 'of a permanent character ' were introduced to make it clear that the asset or the right acquired must have enough durability to justify its being treated as a capital asset.
(3)Whether for the purpose of the expenditure, any capital was withdrawn, or, in other words, whether the object of incurring the expenditure was to employ what was taken in as capital of the business.
Again, it is to be seen whether the expenditure incurred was part of the fixed capital of the business or part of its circulating capital.
Fixed capital is what the owner turns to profit by keeping it in his own possession.
Circulating or floating capital is what he makes profit of by parting with it or letting it change masters.
Circulating capital is capital which is turned over and in the process of being turned over yields profit or loss.
Fixed capital, on the other hand, is not involved directly in that process and remains unaffected by it.
One has got to apply these criteria, one after the other from the business point of view and come to the conclusion whether on a fair appreciation of the whole situation the expenditure incurred in a particular case is of the nature of capital expenditure or revenue expenditure in which latter event only it would be a deductible allowance under section 10(2)(xv) of the Indian Income tax Act, 1922.
The question has all along been considered to be a question of fact to be determined by the Income_ tax Authorities on an application of the broad principles laid down above and the Courts of law would not ordinarily interfere with such findings of 124 974 fact if they have been arrived at on a proper application of those principles.
The assessee acquired from the Government of Assam a lease for 20 years (with a clause for renewal) in respect of certain limestone quarries situated in Khasi and Jaintia Hills.
In addition to the rents and royalties for lease the assessee as the lessee had to pay two further sums as protection fees ' under the covenants contained in clauses 4 and 5 of the lease.
Under clause 4 the portection was in respect of another group of quarries called the Durgasil area, and the lessor undertook not to grant for this area any lease, permit or prospecting licence regarding limestone to any other party except with a condition that no limestone should be used for the manufacture of cement.
This protection was given in consideration of a sum of Rs. 5,000 annually payable by the assessee during the whole period of the lease.
Under clause 5 a further protection was given by the lessor to the lessee in respect of the whole of the Khasi and Jaintia Hills District for which lessee was to pay annually Rs. 35,000 to the lessor for 5 years.
According to these covenants the assessee in his capacity as the lessee paid the lessor a sum of Rs. 40,000 for the accounting years 1944 45 and 1945 46.
Held, that the sum of Rs. 40,000 was a capital expenditure inasmuch as it was incurred for the acquisition of an asset or advantage of an enduring nature for the whole of the business and Was no part of the working or operational expenses for carrying on the business of the assesses.
Accordingly the payment of Rs. 40,000 was not an allowable deduction under section 10(2)(xv) of the Indian Income tax Act, 1922.
Countess Warwick Steamship Co. Ltd. vs Ogg [1924] 2 K.B. 292), City of London Contract Corporation vs Styles [18871 , Vallambrosa Rubber Co., Ltd. vs Farmer ( , Ounsworth (Surveyor of Taxes) vs Vickers Limited ( [19151 , Atherton vs British Insulated and Helsby Cables, Ltd. ([1925] , Usher 's case ( , John Smith & Son vs Moore (H. M. Inspector of Taxes), ( [19211 , Anglo Persian Oil Co. vs Dale ( , Golden Horse Shoe (New) Ltd. vs Thurgood (H. M. Inspector of Taxes), ( [1933]18 T.C. 280).
Van Den Berghs, Limited vs Clark (H. M. Inspector of Taxes) (I 19341 ; , Tata Hydro Electric Agencies, Limited, Bombay vs Commissioner of Income tax, Bombay Presidency and Aden ([19371 L.R. 64 I.A. 215), Sun Newspapers Ltd. and the Associated Newspapers Ltd. vs The Federal Commissioner of Taxation ([1938] 61 C.L.R. 337), Munshi Gulab Singh and Sons.
vs Commissioner of Income tax ([1945] , Commissioner of Income tax, Bombay vs Century Spinning Weaving and Manufacturing Co. Ltd. ([1946] , Jagat Bus Service Saharanpur vs Commissioner Of Income tax, U.P. & Ajmer Merwara ([1949] , Commissioner of Income tax, Bombay vs Finlay Mills Ltd., ([1952] S.C.R. 11), Commissioner of Income tax vs Piggot Chapman. & Co. 975 ( and Henriksen (Inspector of Taxes) vs Grafton Hotel Ltd. ( , referred to.
Benarsidas Jagannath, In re, ( , approved.
|
Appeal No. 192 of 1970.
Appeal by special leave from the,, judgment and order dated December 15, 1969 of the Punjab and Haryana High Court in R.S.A. No. 1949 of 1968.
section C. Manchanda, section K. Mehta, K. L. Mehta,and K. R. Nagraj, for the appellant.
Rameshwar Dial, section K. Bagga, section D. Sood and section Bagga, for the respondent.
641 The Judgment of the Court was delivered by Grover, J.
This is an appeal by special leave from a judg ment of the Punjab & Haryana High Court.
In December 1966 Labhu Ram who was the owner of the land in dispute sold the same in two lots to Bhagwan Das (do,ceased) now represented by his legal representatives and others.
The lands mentioned in clauses (a) and (b) of the title of the. plaint in the suit out of which the present appeal has arisen were sold for Rs. 20,000/ and Rs. 1,000/ respectively.
The respondent Chet Ram was a tenant at will of the lands covered by the sales.
Bhagwan Das and others filed a suit against Chet Ram in the revenue court for ejectment under section 14A (i) read with section 9 ( 1 of the Punjab Security of Land Tenures Act 1953 which was decreed on July 31, 1967.
On August 31, 1968 Bhagwan Das and others entered into possession of the aforesaid lands after evicting Chet Ram by virtue of the decree for eviction obtained against him.
After his eviction Chet Ram the present respondent filed a suit for possession of the lands which were the subject matter of sale by pre emption under section 15(1)(a) FOURTHLY of the Punjab Preemption Act, 1913, (Punjab Act 1 of 1913), hereinafter called the 'Act ',.
By that provision the right of pre emption has been declared to vest in the tenant who holds under tenancy of the vendor the land or property sold or a part thereof.
It was admitted before the trial court that the respondent was a tenant before July 31,.
1967 and that before the institution of the pre emption suit his tenancy had been determined.
The trial court dismissed the suit.
On appeal the learned Additional District Judge, in view of certain decisions of the Punjab High Court, allowed the appeal and decreed the suit.
The judgment was upheld in second appeal by the High Court.
The sole question for determination is whether a person who has ceased to hold the land sold as a tenant can succeed in a suit for possession by pre emption under section 15(1)(a) FOURTHLY.
The Punjab & Haryana High Court in Kashmiri Lal & Others vs Chuhar Ram(1) had expressed the view that in a suit based on a right under the aforesaid clause the plaintiff was required to prove only that he was a tenant under the vendors on the date of the sale and not at any time thereafter as he could not remain a tenant under the vendors after they had sold the property.
In certain other judgments delivered by learned single judges of the Punjab High Court it had been recognised that the rule was firmly established in the law relating to pre emption that a pre emptor in order to succeed must have a right to pre empt not only at the (1) Letters Patent Appeal No. 71 of 1965 decided on November 19,1969; 642 time of sale but also at the institution of the suit and the passing of the decree by the trial court.
In other words, the pre emptor 's right should subsist up to the date of the passing of the decree and if he lost that right at any time before the decree was granted his suit must fail.
These learned judges of the High Court, however, considered that the language of section 15 (1) (a).
FOURTHLY ,showed that the legislature intended to depart from the well settled principle mentioned before and all that has to be seen is whether the plaintiff was a tenant of the vendor on the date of sale (see Sahan Singh vs Udho Ram & Others(1).
In Hans Nath & Others vs Ragho Prasad Singh (2) it was laid down by the Privy Council that the decisive date as regards the right of a pre emptor to pre empt the sale was the date of the decree.
A. full bench of the Lahore High Court in Thakur Madho Singh & Another vs Lt. James R. R. Skinner & Another(1) while considering the relevant provisions of the Act applied this rule to a case where a vendee had improved his status during the pendency of the pre emption suit and held that a vendee could de feat the right of a pre emptor by improving his status at any time before the passing of the decree.
The right of pre emption is a weak one and is liable to be defeated by, all legitimate means at the instance of a vendee against whose contract an inroad is being attempted by the pre emptor.
The vendee is on the defensive and is entitled to arm himself with a shield in order to protect his right.
The pre emptor is an aggressor and as he wishes to dislocate the vendee he must show that the superior right of pre emption which he had at the date of the sale continued to remain superior at all relevant times: vide Faiz Mohammad vs Fajar Ali Khan & Another(1) (Full Bench).
In the latest full bench decision of the Punjab High Court in Ramji Lal & Another vs The State of Punjab & Others( ) the rule that a pre emptor must maintain his qualification to pre empt upto the date of the decree was recognised as well settled. 'In the presence of the above principle which is firmly entrenched in the law of pre emption it is difficult to conceive that the legislature intended to depart from it in section 15 (1) (a) FOURTHLY nor has any reason been suggested for doing so.
The language employed is not very happy but the clear requirement is that the tennant must hold the land as such.
If his tenancy, has come to an end and he has been dispossessed it can never be said that he is holding the land under tenancy of any one.
The legislature can hardly be attributed the intention of giving the right to a tenant, who has been dispossessed and whose tenancy has been (1) (2) 59 I.A. 138.
(4) 1.
(3) 1. L. R. [1942] 23 ILah.
(5) 643 determined either before or during the pendency of the suit, to obtain a decree for possession by pre emption.
This is particularly so as the statutory right of pre emption is one which attaches to the land and is not a mere personal right.
There could be no basis for the legislature giving an indefeasible right to a person who happens to be in possession of the land sold as a tenant of the vendor.
His right is neither better nor worse than any other person who has been conferred that right by the provisions of section 15 of the Act.
For instance, a co sharer has been given a right to pre empt the sale of a share out of joint land by clause (b) FOURTHLY of section 15(1).
If a co sharer must retain his right upto the date of the decree, which he must, (See Surjit Singh vs Gurnam Singh etc.(1) there is no intelligible ground for treating a tenant differently.
The tenant must show his right at all material times before he can succeed in a suit for pre emption.
In other words his tenancy must remain intact and he must hold the land in his capacity as a tenant till the date of the decree.
It must be remembered that sale alone does not and cannot divest the tenant of his ' right to hold the land of which he is in possession by virtue of his tenancy under the vendor.
But if his tenancy is determined by a decree for eviction he loses his status of a tenant.
He then does not satisfy the first requirement of s.15(1) FOURTHLY that he is a tenant who holds the land.
In that situation he cannot succeed in a pre emption suit if the decree for eviction has been passed after the sale but before the institution of the suit or during its pendency and before the date of the decree.
This would be so by applying the well established rule which, as stated earlier, has become a part of the law relating to pre emption.
In the present case not only a decree for eviction was passed against the respondent but he was also actually dispossessed from the land in his tenancy pursuant to the decree before he filed the pre emption suit.
We are altogether unable to see how he could be granted a decree in such a suit.
An attempt was made by means of C.M.P. No. 4634 of 1970on behalf of the respondents to reopen the question of the area in respect of which the decree for eviction had been passed on July 31, 1967.
It was maintained that it related only to certain Khasra Numbers which were covered by the first sale shown as clause (a)in the heading of the plaint and that there was no order relating to eviction from the land covered by the second sale mentioned in clause (b) therein.
This question was never raised in the courts below and as it involves an investigation into matters of (1) (1964) P. L. R. 10623.
644 fact it was not possible to allow the same to be reopened at this stage.
The appeal is allowed and the suit of the respondent is dis missed.
In view of the nature of the points involved the parties are left to bear their own costs in this Court.
| IN-Abs | The appellants purchased certain lands and filed a suit against the respondent, who was the tenant at will under the vendor, for ejectment The suit was decreed.
The appellants entered into possession and the tenancy of the respondent was determined.
Thereafter, the respondent filed a suit for possession by pre emption under section 15(1) (a) Fourthly of the Punjab Pre emption Act, 1913 which provides that a right of preemption vests in a tenant who holds, under tenancy of the vendor the land or property sold or a part thereof.
It was contended that it was sufficient if the plaintiff proved that he was a tenant under the vendor ,on the date of the sale.
HELD: The well established principle being that a pre emptor must maintain his qualification to preempt upto the date of the decree for possession by pre emption, the Legislature cannot be attributed the intention of giving the tight to a tenant who has been dispossessed and whose tenancy has been determined either before or during the pendency of his suit, claiming the right of pre emption.
This is particularly so as the statutory right of presumption is one which attaches to the land and is not a mere personal right.
[641 H; 642 A B, F G; 643 A B] Hans Nath vs Ragho Prasad Singh, 59 I.A. 138, Thakur Madho Singh vs Lt.
James R. R. Skinner, I.L.R. [1942] 23 Lah. 155, Faiz Mohammad vs Fajar Ali Khan, I.L.R. [1944] 25 Ladfl 473 and Surjit Singh vs Gurnam Singh, , referred to.
Ramji Lal vs State of Punjab, , approved.
Kashmiri Lal vs Chuhar Ram, and Sohan Singh vs Udho Ram, , over ruled.
|
minal Appeal No. 212 of 1967.
Appeal by special leave from the uderstand order dated August 3, 1967 of the Patna High Courtin Criminal Appeal No. 389 of 1965 with Special Leave Petition (Criminal) No. 1048 of 1969 from the judgment and order dated July 14, 1969, of the Patna High Court in Criminal Misc.
No. 411 of 1969.
from the judgment and, order dated July 14, 1969, of the Patna Hi& Court in Criminal Misc.
No. 411 of 1969.
section N. Prasad, for the appellant.
B. P. Jha, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave raises the question of the applicability of the rule of issue estoppel.
The appellant, 620 Gopal Prasad Sinha, was tried on a charge under section 409, I.P.C., for having committed criminal breach of trust of Rs. 27,800/during the period between January 31, 1960 and November 30, 1960, while acting as a cashier of the Public Works Department, East Division, Gaya.
The Assistant Sessions Judge framed three points for determination : "1.
If the accused Gopal Prasad Sinha was a Public servant and was working as cashier in the office of the Executive Engineer, P.W.D., Gaya East Division, during the period between 31 1 60 to 30 11 60 ?" 2.
Whether charge amount namely Rs. 27,800/ was entrusted to the accused or he had dominion over it in his capacity as a public servant ? 3.
Whether the accused committed criminal breach of trust in respect of this charge amount ?" The learned Assistant Sessions Judge, after going through the oral and documentary evidence, answered the first point in the affirmative and held that the accused was handling the cash in the office during the aforesaid period as a cashier.
On point No. 2 the learned Assistant Sessions Judge, after considering the oral and documentary evidence, held : "It is proved that the accused was in charge of one key of one of the locks of the door of the iron chest of the office of the Executive Engineer P.W.D., Gaya East Division.
It is also proved that the accused was dealing with the cash of the Division and he was receiving and disbursing money of the Division.
I accordingly hold that the charge money was entrusted to the accused and the accused had dominion over the charge amount of Rs. 27,800/ while acting as cashier of P.W.D., Gaya East Division.
" On point No. 3 he held that "the accused made entries in the cash book showing remittance of the charge amount to sub divisions Nos. 2 and 3 but the same were not actually remitted by the accused nor they were received in sub division Nos. 2 and 3." The point of issue estoppel was raised before him, the point being that the accused was put up on trial in a previous case under section 409, I.P.C., for having committed criminal breach of trust with respect to certain amounts during the period December 8, 1960 to August 17, 1961, and in that case the High Court had acquitted the accused holding that he was not in 621 charge of the cash.
The learned Assistant Sessions Judge held that the aforesaid finding of the High Court could not operate as a res judicata.
The High Court, on appeal in the present case, upheld the findings of fact of the learned Assistant Sessions Judge.
The High Court also repelled the argument regarding rule of issue estoppel thus : "In the earlier case out of which criminal appeal 40 of 1963 arose, the defalcations in question were alleged to have been committed by the present appellant in his capacity as a cashier during the period 8 12 60 to 17 8 61.
As such, the point in issue in that case was whether the accused, that is, the present appellant, was the cashier and was incharge of the cash during the aforesaid period.
In the present case, however, the defalcations in question are alleged to have been committed during an altogether different period, namely, 31 1 60 to 30 11 60 and the point in issue in the present case is whether the appellant was the cashier of the division and was in charge of the cash during this particular period.
The finding of fact as given in the aforesaid appeal that the appellant was not a cashier and was not in charge of the cash must be held as being operative for the period 8 12 60 to 17 8 61 during which the defalcations forming the subject matter of the aforesaid appeal were alleged to have been committed and, as such, those findings cannot in any way operate under the principle of issue estoppel to preclude the prosecution from adducing evidence in the subsequent case, that is, in the present case, to show that the appellant was the cashier of the division and was in charge of the cash during the period 31 1 60 to 30 11 60.
" The learned counsel for the appellant contends that subs tantially it was the same issue that was tried during the earlier trial, and if the accused was not the cashier from December 8, 1960 to August 17, 1961, he could not be held to be a cashier from January 31, 1960 to November 30, 1960.
He said that the defence in both the cases was identical and the evidence also almost the same.
In our opinion, the High Court came to the correct con clusion.
The basic principle underlying the rule of issue estoppel is that the same issue of fact and law must have been determined in the previous litigation.
The question then arises : Was it the same issue of fact which was determined in the earlier 62 2 case ? A person may be acting as a cashier at one period and may not be acting as a cashier at another period, especially as in this case it was found that the appellant had never been appointed as a cashier.
He was a temporary senior accounts clerk who was alleged to be doing the work of a cashier.
If there is any likelihood of facts or conditions changing during the two periods which are under consideration then it is difficult to say that the prosecution would be bound by the finding in a previous trial on a similar issue of fact.
It seems to us that the later finding must necessarily be in contradiction of the previous determination.
There can be no such contradiction if the periods are different and the facts relating to the carrying on of the duties of a cashier are different.
The learned counsel has referred to a number of cases of this Court where the rule of issue estoppel has been approved; e.g. Pritam Singh vs State of Punjab(1); Manipur Administration vs Thokchom Bira Singh (2) ; State of Andhra Pradesh vs Kokkiligada Meeraiah(3); and Assistant Collector of Customs vs L. R. Malwani(4), but these cases do not support the contention of the learned counsel for the appellant.
It appears that the appellant surrendered on December 1, 1961, and in Sessions Trial No. 90 of 1962 he was sentenced to five years ' rigorous imprisonment.
He started serving his sentence on November 15, 1962.
His appeal to the High Court was allowed on October 5, 1964, and thereafter he remained in prison as an undertrial prisoner.
In the present case he was sentenced to six years ' rigorous imprisonment and a fine of Rs. 25,000/ or in default to undergo further imprisonment for 18 months.
In the circumstances given above we consider the sentence of six years in the present case as excessive and reduce it to rigorous imprisonment for three years, and a fine of Rs. 25,000/or in default further imprisonment for 18 months.
In the result the appeal is partly allowed in the matter of sentence, as stated above.
Special Leave Petition (Criminal) No. 1048 of 1969 is accordingly dismissed.
V.P.S. Appeal partly allowed.
(1) A.I.R. 1956 S.C. 415.
| IN-Abs | The appellant was tried under section 409, I.P.C., for having committed criminal breach of trust during the period between January 31, 1960 and November 30, 1960 while acting as a cashier.
He was put up for trial in a previous case under section 409, I.P.C., for having committed criminal breach of trust during the period December 8, 1960 to August 17, 1961 and in that case he was acquitted because it was held that he was not in charge of the cash.
On the question, whether on the principle of issue estoppel he should be acquitted, because, if he was not a cashier from December 8, 1960 to August 17, 1961 he could not be held to be a cashier from January 31, 1960 to November 30, 1960.
HELD : The basic principle underlying the rule of issue estoppel is that the same issue of fact and law must have been determined in the previous proceeding, that is, the latter finding must necessarily be in contradiction of the previous determination.
In the present case, however, the accused was never appointed as a cashier, but was a temporary senior accounts clerk who was alleged to be doing the work of a cashier.
A person may be acting as a cashier at one period and may not be acting as a cashier at another.
In such circumstances, when the periods are different, there can be no such contradiction.
Therefore, the rule of issue estoppel does not apply to the facts of the case.
[621 H; 622 A C]
|
Appeals Nos. 1772 and 1773 of 1970.
Appeals from the judgment and order dated July 24, 1970, of the Delhi High Court in Letters Patent Appeals Nos. 72 and 73 of 1969.
C. K. Daphtary, section P. Nayar, for the appellant (in both the appeals).
N. A. Palkhivala, Santosh Chatterjee, G. section Chatterjee and A. M. Parikh, for respondent No. 1 (in both the appeals).
B. N. Kirpal and Bishamber Lal, for respondent No. 2 (in C.A. No. 1772 of 1970).
B. Sen and O. P. Khaitan, for respondent No. 2 (in C.A. No. 1773 of 1970).
N. A. Palkhivala, Bhuvanesh Kumari, Santosh Chatterjee, J. B. Dadachanji, for intervener No. 1.
M. C. Setalvad., Santosh Chatterjee, C. M. Oberoi and J. B. Dadachanji, for intervener No. 2.
C. K. Daphtary and 1.
N. Shroff, for intervener No. 3.
A. N. Sinha and Rathin Das, for intervener No. 4.
C. K. Daphtary and section K. Dholakia, for intervener No. 5.
The Judgment of the Court was delivered by Shah, J.
On May 29, 1965, the Allied International Products Ltd hereinafter called 'the Company issued 'a prospectus offering to the public for subscription 5,00,000 equity shares 664 of Rs. 10 each and 10,000 cumulative preference shares of Rs. 100 each, and intimating that "applications are being made to "Bombay, Calcutta and Delhi Stock Exchanges for permission to deal in for official quotations of the shares of the Company".
On June 3, 1965, the Company submitted applications to the Stock Exchanges at Bombay, Calcutta and Delhi which are recognised Stock Exchanges within the meaning of section 2(39) of the ), for "enlisting" its shares.
The subscription list of the Company was closed on June 21, 1965.
On June 22, 1965, the Bombay Stock Exchange extended the. time for consideration of the application till the expiry of seven weeks from the date of closing of the subscription list and requested the Company to furnish certain particulars to facilitate compliance with section 73 of the Indian .
On August 6, 1965, the Exchange informed the Company that the application was receiving further consideration and requested that certain formalities be complied with.
On September 13, 1965.
the Exchange informed the Company that it had considered and approved the application for "enlisting" its shares.
On June 9, 1965, the Calcutta Stock Exchange called upon the Company to modify certain Articles of Association, and by letter dated July 12, 1965, asked for particulars in respect of specified matters.
On July 27, 1965, the Calcutta Stock Exchange granted time for compliance till the end of the seventh week from the date of the closing of the subscription list.
On November 5, 1965, the Calcutta Stock Exchange rejected the application of the Company for "enlisting" the shares.
The Delhi Stock Exchange informed the Company on July 10, 1965, that in order to facilitate compliance with the provi sions of section 73 of the , "the allotment of shares should be finalised as soon as possible in consultation with the Stock Exchange".
By another letter dated August 9, 1965, the Exchange informed the Company that the matter of "enlistment" of shares was under consideration, and the Company will be intimated of the decision of the Exchange as soon as it is taken.
The Delhi Stock Exchange by letter, dated December 4, 1965, rejected the application of the Company for "enlistment" of its shares.
The Company challenged the orders passed by the Calcutta and Delhi Stock Exchanges rejecting the applications for "enlistment", in separate appeals under section 22 of the Securities Contracts (Regulations) Act 42 of 1956.
The Central Government dismissed the appeals.
In the orders recording dismissal it was recited that the Exchange did not grant the permission for the shares 665 to be "enlisted" before the expiry of four weeks from the date of closing of the subscription list as required by section 7 3 (1) of the , and that the Exchange did not notify any extension of time for the grant of the permission within four weeks.
The Company then moved petitions id the High Court of Delhi for the issue of writs quashing the orders passed by the Central Government in appeals under section 22 of the , and the orders of the Stock Exchanges rejecting the application of the Company as "void, illegal and of no effect", and for orders directing the Stock Exchanges to "grant enlistment" of the shares of the Company, and further declaring section 22 of the Securities Contracts.
(Regulation) Act 42 of 1956, and section 73 of the , ultra vires the Constitution of India.
Rangarajan, I was of the opinion that grant of permission by the Bombay Stock Exchange was valid, and that allotment of shares did not become void, merely because one out of the three Exchanges alone gave the permission to "enlist" the Company 's shares.
The learned Judge quashed the order of the Central Government and directed that writs of mandamus do issue against the Calcutta and Delhi Stock Exchanges requiring them to "enlist" the shares of the, Company.
Against the decision of Rangarajan, J., the Union of India appealed to a Division Bench of the High Court of Delhi.
The two Exchanges acquiesced in the orders passed against them.
The High Court confirmed the orders of Rangarajan, J. With certificate granted by the High Court, the Union of India has appealed to this Court.
In support of these appeals, two principal contentions were urged on behalf of the Union : (1) The permission granted by the Bombay Stock Exchange after the expiry of seven weeks violated the provisions of section 73(1) of the and was on that account invalid; and (2) that grant of permission by one out of the three Exchanges did not protect the allotment of shares from being invalid under section 73(1) of the .
The two Stock Exchanges which had acquiesced in the judgment of the Rangarajan, J., urged that the order granting writs of mandamus requiring the two Exchanges to "enlist" the shares of the Company was without jurisdiction.
Rangarajan, J., it was L436 Sup.
CI/70 6 66 said, could only direct that the applications be considered by the two Exchanges.
The relevant provisions of section 73 of the , in force at the date of the applications for permission for the shares to be dealt in the Exchanges provided: "(1) Where a prospectus, whether issued generally or not, states that application has been made or will be made for permission for the shares or debentures offered thereby to be dealt in on a recognised stock exchange, any allotment made on an application in pursuance of ,he, pros tu shall, whenever made, be void, if the permission has not been applied for before the tenth day after the first issue of the prospectus, or, if the permission has not been granted before the expiry of four weeks from the date of the closing of the subscription lists or such longer period not exceeding seven weeks as may, within the said four weeks be notified to the applicant for permission by or on behalf of the Stock Exchange.
(2) Where the permission has not been applied for as aforesaid, or has not been granted as aforesaid, the company shall forthwith repay without interest all, moneys received from applicants in pursuance of the prospectus, and, if any such money is not repaid within eight days after the company becomes liable to repay it, the directors of the company shall be jointly and severally liable to repay that money with interest at the, rate of five per cent per annum from the expiry of the eighth day Provided (5) For the purpose of this section permission shall not be deemed to be refused, if it is intimated that the application for permission though not at present granted, will be given further consideration.
(7) No prospectus shall state that application has been made for permission for the shares or debentures offered thereby to be dealt in on any stock exchange, unless it is a recognised stock exchange.
" 667 By the , 'machinery is set up for extending recognition to and for withdrawal of recognition to Stock Exchanges and for other incidental matters such as the making of rules and bye laws of the Exchanges and appeals against the orders of recognised Exchanges.
By section 22 of the Act it is provided : "Where a recognised stock exchange acting in pursuance of any power given to it by its bye laws, refuses to list the securities of any public company, the company shall be entitled to be furnished with the reason for such refusal, and may appeal against the decision of the recognised stock exchange to the Central Government, and the Central Government, may after giving the stock exchange an opportunity of being heard, vary or set aside the decision of the recognised stock exchange and when it does so the stock exchange shall be bound to act in conformity with the orders of the Central Government." Sub section (5) of section 73 of the , is intended to be explanatory of sub sections
(1) & (2) of section 73.
Before that sub section was amended by Act 31 of 1965 different phraseology was used in sub sections
(1) & (2) and in sub section
(5) : the former used the expression "permission has not been granted", whereas sub section
(5) used the expression "permission shall not be deemed to be refused".
The expression "permission has not been granted" is ambiguous : it may mean "permission has been refused" : it may also mean that the application for permission is under consideration and has not been disposed of.
Sub sections (1) & (2) of section 73 were borrowed from section 51 of the English Companies Act, 1948 with slight modifications.
But the draftsman of the Indian Act, for reasons which it is difficult to appreciate, substituted the expression "permission has not been granted" for the expression "permission has been refused".
In enacting sub section
(5) of section 73 the words used in sub section
(5) of section 51 of the English Act, viz. "Permission shall not be deemed to be, refused" were adopted.
In our judgment, the expression "permission has not been granted" in sub sections
(1) & (2) was intended in the context in which it occurs and in the light of the object of the enactment, to mean "permission has been refused".
A Stock Exchange fulfils a vital function in the economic development of a nation: its main function is to "liquify capital by enabling a person who has invested money in say a factory or a railway to convert it into cash by disposing of his share in the enterprise to some one else".
Investment in joint stock companies is attractive to the public, because the value, of the shares is announced day after day in the Stock Exchanges, and the shares 66 8 quoted on the Exchanges are capable of almost immediate conversion into money.
In modern days a company stands little chance of inducing the public to subscribe to its capital, unless its shares are quoted in an approved Stock Exchange.
All public companies are anxious to obtain permission from reputed exchanges for securing quotations of their shares and the management of a company is anxious to inform the investing public that the shares of the company will be quoted on the Stock exchange. 'To prevent malpractices, the Parliament enacted legislation which aimed at securing control over the proper functioning of the Stock Exchanges, and also placed stringent restrictions upon the representations made by the companies in issuing prospectus inviting subscriptions.
The Parliament enacted the 42 of 1956, and simultaneously made provision in section 73 of the , for ensuring that representations made in the prospectus are carried out and fluidity of the investment by the holder of stock is ensured by procuring permission for quotation of shares in a recognized stock exchange.
Under sub section
(1) of section 73 an application for permission to secure quotation, if not previously made, shall be made before the tenth day after the first issue of the prospectus, and if the.
application is not so made, the allotment is void.
Again if the Exchange rejects the application within four weeks, or within seven weeks after extending the time, the allotment will be void, unless within that period the Exchange has informed the Company that further consideration will be given to the application.
It is however not enacted in section 73(1) that if the application is not granted within the time prescribed, it cannot be granted after the expiry of the prescribed period, even if the Exchange has intimated that it will give further consideration to the application.
Sub section (5) contains a clear implication to the contrary.
If the Exchange has intimated within the period prescribed by sub section
(1) that the application will be given further consideration, it is not to be, deemed that the application is refused.
The Exchange is not obliged to give any intimation relating to the consideration of the application before the last day of the prescribed period.
If no intimation is given till the last date of the prescribed period, no inference of refusal follows.
It would then be difficult to hold that if the Exchange intimates that it is considering the application or intends to give further consideration to the application that such an inference may follow.
The amendment made by Act 31 of 1965 in sub section
(5) by the substitution of the expression "Permission shall not be deemed to be refused" by the expression "it shall not be deemed that permission has not been granted" also gives, a clue to the legislative intention that the inference of refusal will not be made if the 669 Exchange has intimated to the applicant that further consideration will be given to the application.
We are unable to hold that permission for "enlistment" of shares can be given within the initial four weeks or if time be extended within seven weeks from the date of the closing of the subscription list, and if permission be not granted by the Exchange within those seven weeks, the allotment becomes void, even if the Stock Exchange intimates that it is giving further consideration to the application.
The intendment of sub sections
(1), (2) & (5) is plain.
If within four weeks from the date of the closing of the subscription list, the Stock Exchange sends no intimation either extending the time or notifying that the application "though not at present granted will be given further consideration," the application is deemed to be refused.
If the Stock Exchange so desires it may intimate that the period is being extended to seven weeks.
The Exchange may say nothing more within the extended period, in which case, on the expiry of the extended period the allotment becomes void.
If, however, within the four weeks, or within the extended period of seven weeks, the Exchange intimates that even though the application for permission is not at present granted, the application will be given further considera tion, the application is not deemed to be re fused until it is finally decided.
The application for allotment of shares and acceptance thereof constitute a contract between the Company and the applicant.
Section 73(1) of the imposes a penalty whereby the allotment of shares becomes void on the happening of the contingency specified therein.
The imposition of penalty depends upon the violation of the Exchange and when imposed operates to invalidate all contracts resulting from allotment of shares between the applicants for shares and the Company.
Such a provision must be strictly construed.
Unless the statute in clear terms so provides, when the Exchange intimates its desire to consider the application further an inference that the Exchange has still rejected the application, cannot be made.
It is true that in the prospectus issued by the Company it was intimated that applications are being made to the Bombay, Calcutta and Delhi Stock Exchanges for permission for official quotations of the shares of the Company.
It is not contended, and it cannot reasonably be contended, that only one application for permission to secure quotation of the shares in an 'approved Exchange may be made.
The expression "a recognised stock exchange" means "any recognised exchange".
More applications than one for quotation of shares may therefore be made In the present case, three applications were submitted on June 3, 1965.
Two of these applications were rejected and one was granted.
We 670 are unable to hold that unless all the applications were granted, the allotment of shares must, by virtue of sub section
(1) of section 73, be invalid.
The object of section 73(1) is that the subscribers to the shares must have facility to approach an Exchange for having their holdings converted whenever they desire.
Even if out of several Exchanges approached, one or more, but not all, have granted the application for "enlistment",.
the facility of ensuring quick conversion is still avail able.
If after representing in the prospectus that an application has been made to a recognised exchange for "enlistment" or will be made within the prescribed period, the Company is unable to obtain permission for "enlistment" from any exchange, the allotment will be invalid.
But sub section
(1) is not intended to mean that it will be invalid, even if permission is obtained, but not from all the Exchanges to which applications have beer, made.
Section 73(1) is enacted with the object that the subscribers will be ensured the facility of easy convertibility of their holdings when they have subscribed to the shares on the re presentation in the prospectus that an application for quotation of shares has been 'II be made.
The allotment of shares will, be invalid only or WI when permission for quotation is not obtained.
When permission from one or more of the Exchanges is obtained, it carries out the object of the Act.
It will be a mechanical interpretation wholly divorced from the true object and intendment of the Act to hold that even if permission is secured for quotation of shares in an Exchange, the allotment will be invalid because another exchange has not granted the permission.
That this is the true meaning of section 73(1) is clear from the fact that the penalty of avoidance of allotment of shares is attracted not only where the permission ' applied for has not been granted, but where no application has been made within the prescribed period. 'If applications are made to several exchanges, some within the period of ten days after the first issue of the prospectus, and some beyond, or that one or more applications, but not all, is or are defective, and the error is not rectified, it would be unreasonable to hold that because some of the applications made beyond the tenth day after the first issue of the prospectus, or are defective, are liable to be rejected, the applications properly made before some of the Exchanges are 'also ineffective and the allotment made may be invalid.
Counsel for the Calcutta Stock Exchange urged that where a person is induced to subscribe for shares relying upon a representation that an application is made or intended to be made for quotation of the shares in an Exchange near his home town, and it is found that the application is not made, or if made it is rejected by the Exchange, it would be a great hardship to the 67 1 shareholder if he is bound by the allotment, even if the condition of securing quotation in the Exchange convenient to him is not carried out.
But section 73(1) declares the entire allotment void : it does not take into consideration the right or convenience of individual shareholders.
An enquiry whether a shareholder or a class of share holders was or were induced to subscribe for shares on the representation is irrelevant in determining whether the allotment is for failure to secure compliance with a statutory condition rendered invalid.
We need not consider whether the individual shareholder who finds that an Exchange convenient to him has not listed the shares furnishes a cause of action to him for avoiding the contract.
We are in the view we have taken not called upon to decide whether the provisions of section 73 of the , are ultra vires, nor do we consider it necessary to decide whether section 22 of the , is ultra vires.
It was urged on behalf of the Delhi and Calcutta Stock Ex changes that the High Court ought, in exercise of the power under O. 41 r. 33 of the Code of Civil Procedure, to have vacated the writ of mandamus issued requiring them to grant permission for quotation of the Company 's shares.
An Appellate Court may in appropriate case pass any decree and make 'any order appropriate to the ends of justice, even if a party has not appealed against an adverse decision.
That power may be exercised by the Court notwithstanding that the appeal is as to a part only of the decree and may be exercised in favour of all or any of the parties, even though they may not have filed any appeal or objection.
But the jurisdiction is discretionary and the High Court has not exercised it apparently for good reasons.
The order passed against the Union and the two Exchanges were in substance distinct.
Against the Union the order was made quashing its order in appeal against the orders of the Exchanges; and against the Exchanges the order was made directing inclusion of the shares in the list of quoted shares. 'Me Exchanges acquiesced in the direction.
We need, however, not express any final opinion in this question.
We are informed at the Bar that the Calcutta Stock Exchange has applied for certificate to the High Court of Delhi and that application is pending.
We need not pre judge the result of that application or the appeal, if any, which may be filed in this Court.
The appeals fail and are dismissed with costs.
There will be one hearing fee in favour of the Company.
The other parties will bear their own costs.
Appeals dismissed.
| IN-Abs | The first respondents limited company issued a prospectus offering its shares to the public for subscription.
it was mentioned in the prospectus that the company was applying to the Bombay, Calcutta and Delhi Stock Exchanges (which were recognised exchanges within the meaning of section 2(39) of the ), for enlistment of its shares.
On June 3, 1956 the Company submitted the applications.
The subscription list was closed on June 21, 1965.
On June 22, 1965 the Bombay Exchange extended the time for consideration of the application till the expiry of seven weeks from the date of closing of the subscription list.
On August 6, 1965 the Exchange informed the company that the application was receiving further consideration.
On September 13, 1965 the Exchange informed the company that its application for enlisting its shares had been approved.
The Calcutta and Delhi Exchanges rejected the applications made to them.
The company Challenged the orders passed by the Calcutta and Delhi Exchanges in appeals to the Central Government under section 22 of the .
The Central Government dismissed the appeals.
The company filed writ petitions in the High Court.
The Single Judge held that the grant of permission by the Bombay Exchange was valid and that allotment of shares did not become void merely because one out of the three exchanges alone, gave the permission to enlist the company 's shakes.
He quashed the order of the Central Government and.
directed the issue of mandamus to the Calcutta and Delhi Exchanges requiring them to enlist the shares of the company.
The Union of India appealed to the Division Bench.
The Calcutta and Delhi Exchanges acquiesced in the orders passed against them.
The High Court confirmed the order of the Single Judge.
With certificate, the Union of India appealed to this Court.
The questions that fell for consideration were : (i) whether the permission granted by the Bombay Exchange after the expiry of seven weeks from the date of closing of the subscription list violated the provisions of section 73(1) of the and was on that account invalid; (ii) whether the grant of permission by one out of three Exchanges was sufficient to protect the allotment of shares from being invalid under section 73(1) of the ; (iii) whether a shareholder who buys shares on the 15 L436Sup.(P)/71 662 representation that the shares would be enlisted in an Exchange convenient to him is bound by the allotment even when the condition of securing quotation in an Exchange convenient to him has not been carried out; (iv) 'Whether in the circumstances of the case the High Court ought in exercise of its power under O.41 r. 33 of the Code of Civil Procedure, to have vacated the writ of Mandamus requiring the Calcutta & Delhi Exchanges to grant permission for quotation of the Company 's shares.
HELD : (i) It was not possible to accept the argument that permission for enlistment of shares can be given within the initial period of four weeks, or if time be extended,, within seven weeks from the date of closing of the subscription list, and if permission be not granted by the Exchange within those seven weeks, the allotment becomes void, even if the Stook Exchanges intimates that it is giving further consideration to the application.
[669 B] The intendment of sub sections
(1), (2) and (5) of section, 75 of the is plain.
If within four weeks from the date of the closing of the subscription list, the stock exchange sends no intimation either extending time or notifying that the application " 'though not at present granted will be given further consideration", the application is deemed to be refused.
If the Stock Exchange so desires it may intimate that the period is being extended to seven weeks.
The Exchange may say nothing more during the extended period, in which case, on the expiry of the extended period the allotment becomes void.
If however, within the four weeks, or within the extended period of seven weeks, the Exchange intimates that even though the application for permission is not at present granted, the application will be given further consideration the application is not deemed to be refused until it is finally granted.
[669 C D] Being a penal provision section 73(1) must be strictly construed.
Unless the statute in clear terms so provides, when the Exchange intimates its desire to consider the application further, an inference that the Exchange has still rejected the application cannot be made.
[669 F] The amendment made by Act 31 of 1965 in sub section
(5) by the substitution of the expression "permission shall not be deemed to be refused" by the expression "it shall not be deemed that permission has been granted" also gives a clue to the legislative intention that the inference of refusal shall not be made if the Exchange has intimated to the applicant that further consideration will be given to the application.
[668 H] (ii) It cannot be held that unless all the applications to different Exchanges were granted, the allotment of shares must, by virtue of sub section
(1) of section 73 be invalid.
The object of section 73(1) is that the subscribers to the shares must have facility to approach on Exchange for having their holding converted whenever they desire.
Even if out of several exchange I approached, one or more, but not all, have granted the application for enlistment, the facility of ensuring quick conversion is still available.
, It after representing in the prospectus that an application bag been made to a, recognised exchange for '*enlistment" or will be made within the prescribed period, the company is unable to obtain permission for "enlistment" from any Exchange, the allotment will be invalid.
But sub section
(1) is not intended to mean that it will be invalid even if permission is obtained but not from all the Exchanges to which applications have been made.
[670 A C] (iii) Section 73 (1) declares the entire allotment void : it does not take into consideration the right or convenience of individual shareholders.
663 An enquiry whether a shareholder or a class of shareholders was or were induced to subscribe for shares on the representation that the company was applying for enlistment to several exchanges one of which was convenient to him, is irrelevant in determining whether the allotment is tendered invalid for failure to secure compliance with a statutory condition.
[671 B] (iv) An appellate court may in appropriate case pass any decree and make any order appropriate to the ends of justice, even if a party has not appealed against an adverse decision.
The power may be exercised by the Court notwithstanding that the appeal is as to a part only of the decree and may be exercised in favour of all or any of the parties, even though they may not have filed an appeal or objection.
[671 E] [The Court did not give a final opinion on the question whether in the present case the discretion was correctly exercised by the High Court because the Calcutta and Delhi Exchanges had applied for certificates in the High Court of Delhi and the application was pending.] [671 G]
|
Appeals Nos. 1409 and 1721 of 1966.
Appeals by special leave from the judgment and order dated November 15, 1965 of the Bombay High Court, Nagpur Bench in Special Civil Application Nos. 746 and 747 of.
section K. Mehta and K. L. Mehta.
for the appellants (in both the appeals).
M. section Gupta, for respondents Nos. 1 and 2 (in C.A. No. 1409 of 1966.
section section KhanduJa, for respondent No. 3 (in both the appeals).
658 The Judgment of the Court was delivered by Shah, J.
Badridas son of Ramgopal was the owner of fields Survey Nos. 2 and 9/2 of village Bhamberi, taluq Akot, District Akola.
On February 26, 1958, Badridas granted a lease for cultivation of the lands to two brothers Kishan and Manik.
At the end of the agricultural year 1958 59 Badridas ' took possession of the lands from Kishan and Manik representating that he desired to cultivate the lands personally.
Badridas cultivated the lands during the agricultural years 1959 60 and 1960 61, and thereafter on January 18, 1961 he granted a lease of the lands for four years to Bhagwant son of Pundalik Kishan and Manik then applied on June 30, 1961 under section 36(1) of the Bombay Tenancy and Agricultural Lands (Vidarbha Region) Act, 1958, for an order restored them to possession alleging that their eviction from the lands was illegal.
The Additional Tahsildar dismissed the application, but in appeal the order was reversed.
In the view of the appellate authority Kishan and Manik were in 1958 59 tenants of the lands and they were evicted otherwise than in accordance with the law, and that they were entitled to be restored to possession under section 36(1) of the Bombay Tenancy and Agricultural Lands (Vidarbha Region) Act, 1958.
In a petition by Bhagwant the Revenue Tribunal reversed the order of the appellate authority.
The Tribunal held that since Kishan and Manik had given up pos session of the lands volutarily and had allowed Badridas to cultivate the lands for the following two years, they had no right to be reinstated into possession of the lands, especially after the lands were let out by Badridas to Bhagwant.
Kishan and Manik then moved in the High Court of Bombay at Nagpur, two Special Civil Applications Nos.
746 and 747 of 1964 in respect of the two fields Survey Nos. 2 and 9/2 separately.
The High Court set aside the order of the Revenue Tribunal and directed that an order for pos session be made in favour of Kishan and Manik in respect of the two lands.
With special leave, these appeals have been preferred by Bhagwant.
The Bombay Tenancy and Agricultural Lands (Vidarbha Region) Act, 1958, was brought into force on December 30, 1958.
Section 20 provides : "A tenant may terminate the tenancy at any time by surrendering his interest of a tenant in favour of the landlord.
Provided that such surrender shall be in writing and shall be verified before the Tahsildar in the prescribed manner." 659 Section 36 of the Act provides : ( 1 ) A tenant .
entitled to possession of any land .
under any of the provisions of this Act or as a result ofeviction in contraven tion of sub section (2) may apply in writing for each.
possession to the Tahsildar.
(2) No landlord shall obtain possession of any land, held by a tenant except under an order of the Tahsildar.
For obtaining such order he shall make an application in the prescribed form and within.
a period of two years from the date on which the right to obtain possession of the land, is deemed to have accrued to him: For the agricultural year 1958 59 Kishan and Manik were tenants in respect of two lands in question.
Badridas took possession of the lands at the end of that year.
Granting that Kishan and Manik delivered the lands voluntarily, there could not under S 20 of the Act be a valid surrender, unless the surrender was in writing and verified before the Tahsildar and in the prescribed manner.
Possession obtained by Badridas was not lawful, for Badridas obtained possession of the land from the tenants without complying with the requirements of section 20 and of sub section
(2) of section 36.
Sub section (2) of section 36 prohibits the landlord from obtaining possession of any land held by a tenant except under an order of the Tahsildar.
Delivery of possession voluntarily by Kishan and Manik did not render the possession of Badridas valid.
Under section 36(1) a tenant who has been evicted in contravention of sub section
(2) may apply in writing to the Tahsildar for such possession.
Counsel for the appellant contended that section 36(2) does not commence with the expression "Notwithstanding any agreement,.
usage, decree or order of a court of law" as section 19 of the Act does,.
and on that account it may reasonably be inferred that the Legislature intended that only those tenants shall be deemed entitled to possession within the meaning of section 36(1) who were dispossessed by fraud, coercion or misrepresentation, and not tenant who had voluntarily parted with possession of the lands.
We are unable to agree with that contention.
Section 19 provides that not with standing any agreement, usage, decree or order of a court of law tenancy of any land held by a tenant shall not be terminated exception the cases specified therein.
Thereby it was intended to make the provisions of section 19 paramount.
In section 20 'of the Act which deals with surrender it is expressly enacted that surrender shall be in writing and shall be Verified in the prescribed manner.
Surrender of tenancy which does not comply with the requirements of section 20, 660 is ineffective.
Again, sub section
(2) of section 36 imposes a disability upon the landlord from obtaining possession of any land occupied by a tenant except under an order of the Tahsildar.
The terms of subs.
(2) of section 36 are explicit : they are not subject to any implication ' that possession obtained with the consent of the tenant, but without an order of the Tahsildar is valid In a recent judgment Madhao s/o Tatya Sonar vs The Maharashtra Revenue Tribunal and ors.
(1) the High Court of Bombay held that section 36(2) is plenary and controls section 20 of the Act.
In the present case there is no surrender of tenancy in writing and no verification of surrender by the Tahsildar.
We need express no opinion on the question Whether mere verification by the Tahsildar without an order of the Tahsildar authorising the landlord to obtain possession disentitles the tenant to claim possession under section 36(1).
The appeals fail and tire dismissed.
Having regard to all the circumstances, however, we think, there should be no order as to costs in this Court.
Counsel for the appellant Bhagwant submitted that there are crops standing on the lands, and prayed that the appellant may be allowed to reap them.
0one months time from the date of this judgment is given to the appellant to deliver possession of the lands.
Y.P. Appeals dismissed.
(1) Special Civil Application No. 206 of 1967 decided on September 11/12 1969.
| IN-Abs | The respondents obtained a lease for cultivation of land.
On the landlord 's desire to cultivate the land personally, the respondents surrendered the lands to the landlord.
The surrender was not in writing nor was there verification of the surrender by the Tehsildar.
The landlord cultivated the land for a few years, and thereafter granted a lease to the appellant.
The respondents applied under section 36 of the Bombay Tenancy and Agricultural Lands (Vidarbha Region) Act, 1958, for restoration of possession to them.
On the question whether the eviction of respondent was legal, this Court, HELD : Possession obtained by the landlord was not lawful for, he obtained possession of the lands from the tenants without complying with the requirements of section 20 and sub section
(2) of section 36.
Sub section (2) of section 36 prohibits the landlord from obtaining possession of any land held by a tenant except under an order of Tahsildar.
Delivery of possession voluntarily by the respondents did not render possession of the landlord valid.
Under s.36(1) a tenant who has been evicted in contravention of sub section
(2) may apply in writing to the Tahsildar for such possession.
[1659 E] By section 20 of the Act which deals with surrender it is expressly provided that surrender shall be in writing and shall be verified in the prescribed manner.
Surrender of tenancy which does not comply with the requirements of section 20 is ineffective.
Again the terms of sub section
(2) of section 36 are explicit; they are not subject to any implication that possession obtained with the consent of the tenant, but without an order of the Tahsildar is valid.
[659 H] In the present case there is no surrender of tenancy in writing and no verification of surrender by the Tahsildar.
Madho S/o Tatya Sonar vs Maharashtra Revenue Tribunal & Ors.
Special Civil Application No. 206/1967 dt.
11 12 1969, followed.
|
Appeal No. 1732 1966.
Appeal from the Judgment and decree dated June 20, 1966 the Mysore High Court in Regular Appeal No. 97 at 1959.
M. C. Chagla, P. N. Tiwari, J. B. Dadachanji, O.C .
and Ravinder Narain for the appellant.
A. K. Sen, section section Javali and M. Veerappa, for respondents 1 and 2.
The Judgment of the Court was delivered by Mitter, J.
One Rudrappa Murigoppa Gugwad died leaving a will dated February 2, 1919.
It is claimed by the appeal that he also left a codicil dated August 10, 1919.
After citing in clause 1 of the will that he had brought UP Lochanappa Gugwad, son of Irappa Sidlingappa Gugwad, and though he had wished to take the said Lochanappa in but had not been able to do so up till then 'and even if the adoption ceremony did not take place in the future, Lochanappa alone would be the owner of his properties he proceeded state in clause 2 of his will that : "Even though I have hereby transferred the ownership of my immovable and movable properties to Lochanappa Irappa Gugwad, Lochanappa should act under the supervision of 'the trustees, namely.
Lingappa Sanganabassappa Tyapi and Gurulingappa Gan gappa Gugwad.
it both the trustees find that my property will fall out of use on account of Lochanappa 's taking to bad ways, both the trustees should take possession of the property 'and safeguard it by appointing my extremely faithful clerks Veerabhadrappa Mallappa Suligavi and Basappa Murangappa 693 Tuppadd.
If Lochanappa gets a male issue the, property should be in the possession of both the trustees till that son attains majority.
" In clause 3 he laid down that "In case Lochanappa Irappa dies without leaving male issue, fully authorise, the said trustees to transfer the ownership of the movable and immovable property of my family to the son of Gurupadappa Gangappa Gugwad, resident of Bijapur, and to deliver the entire property into his possession." The original will was deposited with the Collector.
After having executed the will the testator appeared to have proceeded to Benares and from there a dressed a letter to Lochanappa Irappa Gugwad on 10th August, 1919.
By that he directed some money to be advanced to Gurubasappa Bassappa Gugwad to start him on a business and commended the welfare of the said Gurubasappa to the care of Lochanappa adding : "The main thing is that you should pay full attention to him.
I have mentioned in the will that in case male children are not born to you, you should take in adoption in your own name any of the sons of Gurupadappa Gangappa Gugwad of Bijapur and that if you die without taking in adoption, they alone will be the owner of the movable and immovable properties.
But two sons are born to him.
As early as possible that is to say, when one boy becomes five years old or after my death you should execute this work of adoption and you should mention that the property should go to him after your death.
" The last statement appears to be incorrect inasmuch as the testator had not by his will directed Lochanappa to make such an adoption.
Probate of the will was duly taken into possession of all the properties left by the testator.
According to the judgment of the High Court appealed from, the letter was not a formal document as a codicil should be, nor was it referred to in the probate proceedings.
In the year 1935 Gangappa Gurupadappa Gugwad, the appellant herein, filed a suit in the court of the First Class Subordinate Judge at Bijapur against Lochanappa and the said two trustees for a declaration that Lochanappa had only a life interest in respect of the properties described in the schedule to the plaint as per the 694 will and codicil executed by the testator, that certain improvident transactions put through by Lochanappa in contravention of the directions given in the will were not binding on the plaintiff or the properties left by the der eased and that the s Lochanappa having acted contrary to the directions given in will and codicil and having mismanaged the said properties a injunction should be issued against the trustees directing to give Lochanappa only maintenance in terms of the will.
The Subordinate Judge who heard the suit framed several issues of which the important ones were as follows (1) Whether the plaintiff is entitled to sue ? (2) Whether Lochanappa, defendant No. 1 got only a limited interest in the estate of the testator, Rudrappa Gugwad, under the will? (3) Whether acts of mismanagement by Lochanappa contrary to the directions of the will had been proved ? (4) Whether an injunction could be validly given to the trustees to take over the management from Lochanappa and give him only maintenance ?.
Before the Subordinate Judge evidence both oral and documentary were let in.
He construed the will to arrive at the finding that Lochanappa had been made the malik or owner of the pro parties covered by the will and that it was the will of the tesator which recited that the estate given to Lochanappa was be heritable.
With regard to the further directions given in will, he came to the conclusion that "Lochanappa having bee made an owner under the will further expression of such intention cannot be properly allowed to control or qualify that ownership.
" As regards the direction in the letter styled a codicil advising Lochanappa to take one of the sons of Gurupadappa Gangappa Gugwad in adoption, he held that: "In fact, there is no such direction in the original will.
Even assuming that it is so, only means that Gurupaddappa 's sons are to be the owners in case Lochanappa dies without male issue and without adopting one of the sons of Gurupadappa; Lochanappa is still alive and it is yet to be seen whether he adopts plaintiff or not or whether a son will be born to him or not.
Plaintiff has at the most a contingent right and vested interest, and therefore ' it is a question whether he is entitled, to a simple declaration.
" The suit out of which this appeal arises was 'filed by Gang Gugwad after the death of Lochanappa in 1957 against 695 widow of Lochanappa, one Chanabasappa Gurubasappa Gugwad who was undisputedly taken in adoption by Lochanappa as his son in the year 1951 and Gurlingappa Gungappa Gugwad, the surviving trustee under the will of Rudrappa pleading inter alia that "Rudrappa did not confer an absolute estate on Lochanappa in respect of his property, that the bequest made in his favour conferred upon him only a restricted life estate and that even assuming Lochanappa was an absolute owner he was entitled to it only during his lifetime and after his demise it was to revert to the plaintiff by virtue of the will and codicil.
" The plain,tiff appellant went on to add that it was incumbent on Lochanappa to adopt him alone and none else and any adoption in contravention of the direction in the will of, Rudrappa Murigappa Gugwad was invalid and even assuming that the said direction was not mandatory, defendant No. 2 could not acquire the status of a son begotten by Lochanappa so as to claim any interest in the property of the deceased testato.
The suit was contested by the widow and the adopted son, defendant No. 2 who plead ed the bar of res judicata on the strength of the judgment in the suit of 1935.
The Subordinate Judge held against the dependent on that issue.
He also found that the appellant.
was the rightful heir to the properties of the deceased testator under the will and codicil of Rudrappa after the death of Lochanappa.
The High Court examined the will and the letter described as codicil over again and came to the conclusion that the letter described as codicil was only an informal communication from one relation to another, that the testator had only a vague recollection of the contents of the will at the time of writing the letter from Benaras and that the order in the probate proceedings did not refer to the letter.
On the basis of the will the High Court held that Lochanappa was an absolute owner of the property.
The High Court further held that the decree in the suit of 1935 operated as res judicata in the subsequent suit.
Referring to the first two issues framed in suit of 1935 the High Court held that there was a clear finding in the judgment in that suit that the appellant had obtained no interest under the will of Rudrappa and therefore he was not entitled to sue.
Before us learned counsel for the appellant contended that in spite of the observations made by the learned Subordinate Judge in the judgment in the suit of 1935 about Lochanappa 's rights under the will and the document styled as codicil, the. decision on the first issue went to show that the appellant 's suit was premature and as such it was not necessary for the Subordinate Judge to go into the other question and his findings on issues other than the first should be treated as obiter.
696 In support of the above contention counsel for the appellant relied on the decision of the Privy Council in Shankarlal vs Hiralal(1).
The head note in that case to which our attention was drawn reading, "Court holding that suit is not maintainable by reason of failure to comply with section 80 Findings given on merits are obiter and do sot support plea of res judicata either in favour of or against party".
seems to be misleading inasmuch as the judgment of the Board does not bear out the above proposition of law.
At best the head note only records a finding by an appellate Bench of the ,Calcutta High Court which the Board by its own judgment did not expressly reject or uphold.
The appeal to the Privy Council arose out of a suit filed by ,one Mangtulal Bagaria for royalties due under a lease of collieries by one Popat Velji Rajdeo of which the said Mangtulal was appointed manager by the court.
The defendants were the lessees under the lease or their representatives and were respondents in the appeal to the Board.
There the defence of the lessees was that the lease had been surrendered in July 1933.
The plaintiffs challenged the surrender and also pleaded that the point was covered by res judicata.
Ameer Ali, J., before whom the suit came on for hearing on the original side of the Calcutta High Court framed several issues, in two groups.
The first issue in Group A related to a plea of res judicate.
The second issue in that group raised a question whether there was any defence apart from surrender.
Group B raised questions as to the fact and validity of the alleged surrender.
The plea of res judicata was based on a judgment of the Subordinate Judge of Dhanbad wherein the lessees had sued Mangtulal and some others for a declaration that the lease had been validly surrendered in 1933.
The Subordinate Judge held that the suit did not lie inasmuch as notice had not been served on Mangtulal under section 80 Civil Procedure Code.
He however supported to decide other issues in the suit including one as to the sufficiency of the surrender.
An appeal from the decree of the Subordinate Judge was taken to the High Court at Patna but was withdrawn against Mangtulal and the brother of the lessor and a consent decree, was obtained against the two widows upholding the surrender.
Ameer Ali, J. went into the question of res judicata as ' a preliminary issue and "pressed the view: (1) A.I.R. 1950 P. 30.
697 .lm15 "that the decision of the Dhanbad Court had decided the same issue which had to be decided in his own court and between the same persons and parties.
" In appeal from his judgment the learned " 'Judges held that Inasmuch as the Subordinate Judge in the Dhanbad suit had held that the suit did not lie by reason of the failure to comply with section 30, Civil P.C., he was bound to dismiss the suit under Or.
7 R. 1 1 of the Code and the findings of the Court on the merits were obiter and could not support a plea of res judicata.
" They held further that Ameer Ali, J. had decided nothing but the issue of res judicata.
Accordingly.
they allowed the appeal and remanded the case to the court of first instance for trial of issues other than issue 1.
The judgment of the Judicial Committee shows that before the Board it was conceded on behalf of the appellant that the appellate court was right in the view which it took as to the effect of the Dhanbad decree.
The Board proceeded to observe "Their Lordships have no doubt that the decision in the Dhanbad suit could not support a plea of res judicata on the merits, either in favour of or against Mangtulal.
" The Board rejected the contention of the appellant that Ameer Ali, J. had decided not only the issue of res judicata but also that the alleged surrender of the lease was invalid.
According to the Board the judgment of Ameer Ali, J. was to some extent obscure and there were passages in it which suggested that he thought the surrender invalid but "it was clear that he did not purport to decide anything beyond the issue of res judicata" and he expressly stated that h. , was not deciding the issues in the second group.
Accordingly the Board saw no reason to differ from the view of the appellate Judges that the issues as to surrender were not decided by the trial Judge and did not feel inclined to interfere with the direction given by the 'appellate court regarding the remand of the trial of the issues in the court of first instance.
On the strength of the dictum of the appellate Bench of the Calcutta High Court forming a part of the headnote to the above decision it was contended before us, that once the Subordinate Judge of Bijapur recorded a finding on the first issue against the appellant in the suit of 1935 his construction (if the will and the effect thereof were obiter and they would not be binding on the appellant in the second suit.
This was sought to be fortified by the observations in the concluding portion of 698 the judgment in the suit of 1935 which we have quoted above that the plaintiff had at the most a contingent right and no vested interest.
It was.argued that the learned Subordinate Judge 's view that the suit was premature was sufficient to dispose of the case before him without his going into the other questions and the issues raised.
No doubt it would be open to a court not to decide all the issues which may arise on the pleadings before it if it finds that the plaint on the face of it is barred by any law.
If for instance the plaintiff 's cause of action is against a Government and the plaint does not show that notice under section 80 of the Code of Civil Procedure claiming relief was served in terms of the said section,, it would be the duty of the court to reject the plaint recording an order to that effect with reason for the order.
In such a case the court should not embark upon a trial of all the issues involved and such rejection.
would not preclude the plaintiff from presenting a fresh plaint in respect of the same cause of action.
But, where the plaint on the face of it does not show that any relief envisaged by section 80 of the Code is being claimed, it would be the duty of the court to go into all the issues which may arise on the pleadings including the question as to whether notice under section 80 was necessary.
If the court decides the various issues raised on the pleadings, it is difficult to see why the adjudication of the rights of the parties, apart from the question as to the applicability of section 80 of the Code and absence of notice thereunder should not operate.
as, res judicate in a subsequent suit where the identical questions arise for determination between same parties.
In our view the High Court was right in deciding the issue as to res indicate against the appellant.
The High Court rightly pointed out that the Subordinate Judge had in clear terms decided that the appellant had obtained no interest under the will of Rudrappa and therefore he was not entitled to sue.
The Subordinate Judge had further held that the estate obtained by Lochanappa under the will was an absolute estate.
With respect, we concur with the view expressed by the High Court.
There was no question of the trial of any preliminary issue in the suit of 1935 the decision of which would obviate the necessity of examining the other pleas raised and coming to a finding thereon.
The nature of the right acquired by Lochanappa under the will of the testator was directly in question and the Subordinate Judge went elaborately into it to take the view that Lochanappa had become absolutely entitled to the,properties left by the testator.
The observation referred to in the concluding portion of the judgment of the Subordinate Judge is not to be taken 699 as the decision on a preliminary issue so as to render the findingon the other issues mere obiter or surplusage.
In our view the High Court rightly relied on the observations of this Court in Vithal Yeshwant father vs Shikandarkhan Makhtum khan Sardesai(1) that if the final decision in any matter at issue between the parties is based by a court on its decisions on.
more than one point each of which by itself would be sufficient for the ultimate decision the decision on each of these points operates as res judicata between the parties.
The question as to the nature of the estate taken by Lochanappa under the will and the document called codicil to the will of the testator, Rudrappa having been in issue in the suit of 1935 and it having been decided that Lochanappa had obtained an absolute estate to the property,, the decision would bind the appellant in any subsequent litigation to which the claim is, based on the will and codicil.
We accordingly dismiss the appeal on the ground that the decision in the t of 1935 was a bar to the trial of the second suit of 1957.
The respondent will be entitled to costs throughout.
G.C. Appeal dismissed.
(1) ; at 290.
| IN-Abs | R wanted to adopt L as his son but did not actually do so.
In accordance with R 's will executed in 1919 L inherited R 's property after his death.
In 1935 the appellant herein instituted a suit against L and the trustees appointed under R 's will.
It was the appellant 's claim that the will was supplemented by a codicil (this referred to a letter written by R to L some time after the execution of the will).
Under these documents, according to him, L inherited only a life estate.
He alleged that L was mismanaging the property and prayed for an injunction directing the trustees to take over management of the properties.
The Subordinate Judge framed four issues to the affect (1) whether the appellant was entitled to sue, (2) whether L inherited only a life interest, (3) whether L had mismanaged the property and (4) whether an injunction as prayed should be issued to the trustees.
The Subordinate Judge held that L had inherited not a life Mate but full ownership, and that the appellant had only a contingent right in the property depending on L dying without male issue, so that it was not possible to grant to the appellant the declaration he prayed for.
L adopted a son C in 1951, and died in 1957.
After his death the appellant filed another suit against L 's widow, C the adopted son and the surviving trustee.
This suit was also based on the claim that L had inherited only a life estate under R 's will and codicil.
The contesting defendants raised the plea of res judicata based on the decision in the suit of 1935.
The plea of res judicata was rejected by the trial court but accepted by the High Court.
In appeal before this Court it was urged on behalf of the appellant that the trial court in the suit of 1935 having held the suit to be premature and thus decided the preliminary issuability the appellant, its decision on the other issues was only obiter and could not operate as res judicata.
HELD: The appeal must fail.
There was no question of the trial of any preliminary issue in the suit of 1935 the decision of which would obviate the necessity of examining the other pleas raised and coming to a finding thereon.
The nature of the right acquired by L under the will of the testator was directly in question and the subordinate judge went elaborately into it to take the view that L had become absolutely entitled to the properties left by the ,testator.
The observation referred to in the concluding portion of the Judgment of the Subordinate Judge is not to be taken as the decision on a preliminary issue so as to render the finding on the other issues mere obiter and surplusage.
L698 G 699 Al If the final decision in any matter at issue between the parties is based by a court on its decisions on more than one point eacb of which by itself 6 92 would be sufficient for the ultimate decision the decision one these points would operate as resjudica between the parties.
question as to the nature of the estate taken by L under the will and document called codicil to the will of the testator having been in is in the suit of 1935 and the Court having been decided that L had obta an absolute estate to the property, this decision would bind the up in any subsequent litigation such as the present, in which the claim based on the will and cod cil.
[699 B C] Shankarlal vs Hiralal, A.I.R. 1950 P.C. 80, explained and distinguished Vithal Yeshwant Jathar vs Shikandarkharn Mukhtum khan (19631 2 S.C.R. 285, 290, applied.
|
s Nos. 468, 469 489, and 490 of 1969.
Petitions Under article 32 of the Constitution of India for enforcement of fundamental rights.
section V. Gupte, D. Sudhakara Rao and B. Parthasarathy, for the petitioners (in W. P. No. 468 of 1969).
B.ParthasarathY, for the petitioners (in W. P. Nos.
469, 489 and 490 of 1969).
Niren De Attorney General, B. D. Sharma and section P. Nayar, for respondent NO. 1 (in all the appeals).
168 P. Ram Reddy and G. section Rama Rao, for respondent No. 2 (in all the petitions).
The Judgment of the Court was delivered by Shah, J.
The petitioners who are traders in foodgrains edible oils, and other articles of food, challenge the validity of section 7 read with section 2 (v) and 2 (ix), and section 19, section 2 (i) and section 1 0 read with section 13 of the Prevention of Food Adult Iteration Act 37 of 1954 and the rules framed thereunder.
They claim that by the Act and the rules the fundamental rights guaranteed under articles 14, 19 (1) (g) and 20(3) of the Constitution are infringed.
The Parliament, with a view to control adulteration and mis branding of articles of food, enacted the .
The petitioners concede that they do not claim a fundamental right to carry on business in adulterated or misbranded foodstuffs : they claim that ,they are honest traders, and do not resort to any malpractice, still in carrying on their business in foodstuffs they are, by the Act, subjected to restrictions which are not reasonable.
They contend that the Act presumes every trader charged with an offence under section 1 6 (1) (a) to be guilty and imposes upon him the burden of proving that he is not guilty of the offence charged, by establishing facts which are not within his knowledge, or which without great expense wholly incommensurate with his means and the facility available to him, he cannot establish.
They also claim that by the Act they are denied the equal protection of the laws and the guarantee of article 20(3) of the Constitution is infringed.
The relevant provisions of the Act may first be noticed.
Section 7 of the Act provides No person shall himself or by any person on his behalf manufacture for sale,or store, sell or distribute (i) any adulterated food; (ii) any misbranded food; (iii) any article of food for the sale of which a licence is prescribed, except in accordance with the conditions of the licence; (iv) any article of food for the sale of which is for the time being prohibited by the Food (Health) Authority in the interest of public health; or (V) any article of food in contravention of any other ' provision of this Act or of any rule made thereunder." 169 By s.10 a food inspector appointed under section 9 ( 1 ) of the Act is authorised to take samples of any articles of food from any person selling such article, or from any person who is in the course of conveying, delivering or preparing to deliver such article to a purchaser or consignee, or from a consignee after delivery of any such article to him, and to send such sample for analysis to, the public analyst, and with the previous approval of the health officer having jurisdiction in the local area concerned, or with the pre vious approval of the Food (Health) Authority to prohibit the sale of any article of food in the interest of public health.
Sub section (5) of section 13 provides "Any document purporting to be a report signed by a public analyst, unless it has been superseded under sub section (3), or any document purporting to be a certificate signed by the Director of the Central Food Labo ratory, may be used as evidence of the facts stated therein in any proceeding under this Act or under sections 272 to 276 of the Indian Penal Code Provided that any document purporting to be a certificate signed by the Director of the Central Food Laboratory shall be final and conclusive evidence of the facts stated therein." Section 16(1) prescribes the penalties : cls.
(a) & (f) which are relevant provide "(1) If any person (a) whether by himself or by any other person on his behalf imports into India or manufactures for sale, or stores, sells or distributes any article of food (i) which is adulterated or misbranded or the sale of which is prohibited by the Food (Health) authority in the interest of public health; (ii)other than an article of food referred to in subclause (i), in contravention of any of the provisions of this Act or of any rule made thereunder; or (f) whether by himself or by any other person on his behalf gives to the vendor a false warranty in writing in respect of any article of food sold by him, he shall in addition to the penalty to which he may be liable under the provisions of section 6, be punish able with imprisonment for a term which shall not be less than L11Sup.
Cl/70 12 170 six months but which may extend to six years, and with fine which shall not be less than one thousand rupees: Provided that . . . . . .
Section 19 deals with the defences which may, and which may not, be allowed in prosecutions under the Act.
It provides "(1) It shall be no defence in a prosecution for an offence pertaining to the sale of any adulterated or misbranded article of food to allege merely that the vendor was ignorant of the nature, substance or quality of the food sold by him or that the purchaser having purchased any article for analysis was not prejudiced by the sale.
(2) A vendor shall not be deemed to have committed an offence pertaining to the sale of any adulterated or misbranded article of food if he proves ' (a) that he purchased the article of food (i) in a case where a licence is prescribed for the sale thereof, from a duly licensed manufacturer, distributor or dealer; (ii) in any other case, from any manufacturer, distributor or dealer with a written warranty in the prescribed form; and (b) that the article of food while in his possession was properly stored and that he sold it in the same state as he purchased it.
(3)Any person by whom a warranty as is referred to in section 14 is alleged to have been given shall be entitled to appear at the hearing and give evidence.
" "Food" is defined in section 2(v) as meaning "any article used as food or drink for human consumption other than drugs and water and includes (a) any article which ordinarily enters into, or is used in the composition or preparation of human food, and (b) any flavouring matter or condiments".
Clauses (i) and (ix) of section 2 define the expressions "adulterated" and "misbranded".
According to counsel for the petitioners the Act imposes un reasonable restrictions, because it creates absolute liability by section 16(1) (a) and imposes severe penalties for storage and sale or distribution of articles of food found to be adulterated or misbranded, or prohibited by law; it prescribes standards which are technical, and absolute, and for the slightest departure therefrom the trader is liable to be prosecuted and punished.
Counsel submitted that it is impossible for an ordinary trader without the 171 assistance of an expert technician to ascertain whether the articles of food purchased by him comply with the prescribed standards, and that in prescribing the standards of quality the imperceptible changes which take place in foodstuffs by passage of time, are not taken into account.
In our judgment, the restrictions imposed upon the conduct of business by traders in foodstuffs cannot be deemed unreasonable.
By section 16(1) provision is made for imposing penalties, among other acts, for storage, sale or distribution of articles of food which are adulterated or misbranded, or sale of which is prohibited by the Food (Health)authority in the interest of the public health, or is in contravention of the Act or the rules.
The Act, it is true, does not make some blame worthy mental condition constituted by knowledge or intention relating to the nature of the article stored, sold or distributed, an ingredient of the offence.
Unless the case falls within sub section
(2) of section 19, if sale, storage or distribution is established, intention to sell articles or knowledge that the articles are adulterated, misbranded, or prohibited need no, be proved by the prosecutor to bring home the charge.
Sub section (1) of section 19 provides that it is no defence in a charge, for an offence pertaining to the sale of any adulterated or misbranded article of food to allege merely that the vendor was ignorant of the nature, substance or quality of the food sold by him, or that the purchaser having purchased any article for analysis was not prejudiced by the sale.
By that clause a bare plea of ignorance by a trader about the nature, substance or quality of the food sold by him is not a defence in a prosecution for the offence pertaining to the sale of any adulterated food nor that the article was, purchased for analysis.
But in considering whether creation of absolute liability amounts to imposing unreasonable restrictions, the Court has to strike a balance between the individual right and public weal.
The Courts will not strike down an Act as imposing unreasonable restrictions merely because it creates an absolute liability for infringement of the law which involves grave danger to public health.
The Courts will undoubtedly consider whether without imposing absolute liability the object of the statute could be reasonably secured.
For that purpose the Court will consider the object of ,the Act, apprehended danger to.
the public interest, arising out of the activity if not controlled and the, possibility of achieving the intended results by less stringent provisions.
The nature of the trade in foodstuffs, the channels of supply and the movement of goods from trader to trader and fertile sources of adulteration and misbranding make it extremely difficult in a large majority of cases to establish affirmatively that storage or sale of adulterated or misbranded foodstuff was with a guilty mind.
Provisions in the statute book creating absolute liability for sale of adulterated food are 172 fairly common.
Section 3(1) of the English "Foods & Drugs Act", 1938, imposes absolute duty on a dealer in foodstuff regardless of negligence : Lindley vs George W. Horner & Co. Ltd.;(1) and Lamb vs Sunderland and District Creamery Ltd. 2 ) The same provision is repeated in section 2 of the "Food and Drugs Act", 1955.
In Halsbury 's Laws of England, Vol. 10 (3rd Edn.) at p.273, article 508, it is stated : "A statutory crime may or may not contain an express definition of the necessary state of mind.
A statute may require a specific intention, malice, knowledge, wilfulness, or recklessness.
On the other hand, it may be silent as to any requirement of mens rea, and in such a case in order to determine whether or not mens rea is an essential element of the offence, it is necessary to look at the objects and terms of the statute.
In some cases, the courts have concluded that despite the absence of express language the intention of the legislature was that mens rea was a necessary ingredient of the offence.
In others, the statute has been interpreted as creating a strict liability irrespective of mens rea.
Instances of this strict liability have arisen on the legislation concern ing food and drugs, liquor licensing, and many other matters".
In Mousell Brothers vs London and North Western Rail Co.(3) Atkin, J., observed : ". yet the legislature may prohibit an act or enforce a duty in such words to make the prohibitions or the duty absolute :. .
To ascertain whether a particular Act of Parliament has that effect or not, regard must be had to the object of the statute, the words used, the nature of the duty laid down, the person whom it is imposed, the person by whom it would in ordinary circumstances be performed, and the person upon whom the penalty is imposed." In Quality Dairies (York) Ltd. vs Pedley 4 ) the Court of Appeal held that Regulation 26(1) of the Mill and Dairies Regulation, 1949, requiring a distributor to ensure that every vessel used as a container for milk shall be in a state of thorough cleanliness, imposed an absolute liability.
It is true that for the protection of the liberty of the citizen, in the definition of offences, blameworthy mental condition is ordinarily an ingredient either by express enactment or clear implica (1) (3) (2) (4) 173 tion : but in Acts enacted to deal with a grave social evil, or for.
ensuring public welfare, especially in offences against public health, e.g., statutes regulating storage or sale of articles of food and drink, sale of drugs, sale of controlled or scare commodities, it is often found necessary in the larger public interest to provide for imposition of liability without proof of a guilty mind.
If from the scheme of the Act it appears that compliance with the regulatory provisions will be promoted by imposing an absolute liability, and that it cannot otherwise be reasonably ensured, the Court will be justified in holding that the restriction on the right of the trader is in the interest of the general public.
Adulteration and misbranding of foodstuffs is a rampant evil and a statute calculated to control that evil is indisputably in the interest of the general public : The statute imposing restrictions upon traders will not be deemed unreasonable merely because it makes a departure from the normal structure of statutes enunciating offences and prescribing punishments.
By sub section
(2) of section 19, even in respect of the absolute offence, the Parliament has enacted that on proof of certain facts, criminal liability will be excluded.
Thereby a vendor is not deemed to have committed an offence pertaining to the sale of any adulterated or misbranded article of food if he proves that the purchased the article of food from a duly licensed manufacturer, distributor or dealer in a case where a licence is prescribed for the sale thereof, and in any other case from any manufacturer, distributor of dealer with a written warranty in the prescribed form, provided the article of food while in his possession was properly stored and that he sold it in the same state as the purchased it.
The argument of counsel for the petitioners that the provision that a retail seller who opens a container of a branded article of food loses even the limited protection under section 19(2) is without substance.
Clause (b) of sub section
(2) of section 19 does not provide, nor does it imply, that if the container of a branded article is opened, the article of food ceases to be in them same state in which the vendor purchased it.
If the article of food ' is sold in the same condition in which it was purchased from a licensed manufacturer or dealer, or was purchased with a warranty, the vendor will not lose the protection of sub section
(2) of section 19 merely because he opened the container.
If the vendor has obtained the article from a licensed manufacturer, distributor or dealer or from a manufacturer, distributor or dealer with a warranty, he is protected, provided he has property stored the article and sells it in the same state as he purchased the article, even if it turns out that the article was adulterated or misbranded.
The Act does not dispense with proof that the article of food is adulterated, misbranded or that its sale is prohibited: it enacts that a vendor selling articles of food adulterated or misbranded cannot plead merely that he was ignorant of the nature, substance or quality 174 of the goods.
A statute enacted by the Parliament in the interest of public health (which is generally made in similar statutes elsewhere) imposing liability for an offence without proof of a guilty mind does not per se impose restrictions on the, freedom to carry on trade which are unreasonable.
It is true that stringent penalties are provided under section 16 (1)(a).
A vendor of adulterated, misbranded or prohibited articles of food is punishable with imprisonment for a term which shall not, in the absence of adequate and special reasons, be less than six months, and which may extend to six years, and with fine which shall not be less than one thousand rupees.
But for the protection of the public by ensuring the purity of articles of.
food supplied to the people and preventing malpractices by the traders in articles of food, severity of the penalties is not so disproportionate to the gravity of the offence that it may be deemed unreasonable.
We are again unable to accept the argument that under the Act even when an article is purchased not as an article of food, but for use otherwise, the vendor will be deemed guilty if the article does not conform to the 'prescribed standards, or is as an article of food adulterate or misbranded.
Counsel said that coconut oil is used in the State of Kerala as a cooking medium, and sale of adulterated coconut oil may in Kerala be an offence under section 16, but in other parts of the country where coconut oil is not used as a cooking medium and is used as a component of hair oil or for other purposes, it amounts to imposing an unreasonable restriction to penalise the vendor who sells coconut oil knowing that the, purchaser is not buying it as a cooking medium.
But there are no articles which are used as food only in one part, and are not at all used as food in another part of the country.
Even coconut oil is used as a cooking medium by certain sections of the people in parts of India other than Kerala.
In any event it is always open to a person selling an article capable of being used as an article of food as well as for other purpose, to inform the purchaser by clear notice that the, article sold or supplied is not intended to be used as an article of food.
What is penalised by section 16(1) is importation manufacture for sale, or storage, sale, or distribution Of any article of food.
If what is imported manufactured or stored, sold or distributed is not an article of food, evidently S.16 can have no application.
The various items in the Schedule seting out standards of quality use technical expressions with which an ordinary retail dealer may not be familiar, and also set out percentages of components which the dealer with the means at his command 175 cannot verify.
But by section 3, the Central Government has to set up the Central Committee for Food 'Standards to advise the Central and the State Governments on matters arising out of the administration of the Act.
The Committee consists of experts and representatives of the Central Government and of the State Governments and the Director General of Health Services is its Chairman.
Under section 23 (1) (b) the Central Government makes rules prescribing the standards of quality and the limits of variability permissible in any article of food.
The rules are made after consultation with the Committee for Food Standards.
The standards set out in the Appendix to the Rules are prescribed after consultation with the Committee for Food Standards.
It has not been even urged that the standards have been fixed arbitrarily. ' Apart from a general argument that small retail dealers may not, be in a position to ascertain whether goods purchased by them or in their possession are according to the standards, no specific argument was advanced that the standards, are not normal, or that the variations in quality during the course of storage are unreasonably restricted.
This Court in State of Uttar Pradesh vs Kartar Singh(1) in which in dealing with an argument of invalidity of the rule setting out standards under the observed : "The standards themselves, it would be noticed, have been prescribed by the Central Government on the advice of a Committee which included in its composition persons considered experts in the field of food technology and food analysis.
In the circumstances, if the rule has to be struck down as imposing unreasonable or discriminatory standards, it could not be done merely on any a priori reasoning but only as a result of materials placed before the Court by way of scientific analysis.
That where a party seeks to impeach the validity of a rule made by a competent authority .
the burden is on him to plead and prove the infirmity is too well established to need elaboration.
If, therefore, the respondent desired to challenge the validity of the rule on the ground either of its unreasonableness or its discriminatory nature, he had to lay a foundation for it by setting out the facts necessary to sustain such a plea and adduce cogent and convincing evidence to make out his case, for there is a presumption that every factor which is relevant or material has been taken into account in formulating the classification of the zones and the, prescription of the minimum (1) ; 176 standards to each zone, and where we have a rule framed with the assistance of a Committee containing ex.
perts such as the one constituted under section 3 of the Act, that presumption is strong, if not overwhelming.
" In the petitions a plea was raised that by the Act and the Rules, the guarantee of article 14 was infringed, but no argument was presented before us independently of the argument relating to infringement of the guarantee under article 19(1)(g), in support of the contention that the Act infringed the guarantee of equality before the law or equal protection of the laws.
The Act deals with the regulation of a class of traders, and in view of the widespread malpractices, and the practical difficulties of controlling those malpractices, stringent provisions have been made by the Act.
The classification is founded on an intelligible differentia and the differentia has a rational relation to the object sought to be achieved.
The provisions of the Act again do not invest arbitrary authority upon those who are to administer the Act.
nor can it be said that the standards prescribed are arbitrary.
The Act does not infringe the guarantee of Art.20(3) of the, Constitution.
By that clause no person accused of any offence shall be compelled to be a witness against himself.
But by enacting that a plea by the vendor in a prosecution for an offence pertaining to sale of adulterated or misbranded article of food, that he was ignorant of the nature, substance or quality will not be a defence, the guarantee under article 20(3) is not infringed.
The vendor when charged with an offence is not thereby compelled to be a witness against himself.
Nor can it be said that by making the report of the Director of Central Food Laboratory conclusive evidence of the facts stated therein, any such infringement is intended.
The provision has been made with a view to secure formal evidence of facts without requiring the Director to remain present, and in ' the interest of effective administration of the Act, the certificate signed by the Director of the Central Food Laboratory is made final and conclusive evidence of the facts stated therein.
The Director is a highly placed official, an expert in determining the nature, substance and quality of food, and is wholly disinterested in the result of any case coming before the Courts.
It is difficult to appreciate how con clusiveness attributed to the certificate of the Director compels the vendor charged with an offence under the Act to be a witness The petitions fail and are dismissed with costs.
One hearing fee Y.P. Petition dismissed.
| IN-Abs | The petitioners are traders in foodgrains, edible oils and other articles of food.
In a petition under Art.32 they challenged the validity of sections 7, 10 and 19 of the .
They contended that: (1) sections 7 and 10 of the Act are violative of articles 14 and 19(1)(g) because, (a) section 16(1)(a) of the Act read with section 19(1) imposes an absolute liability on dealers; (b) the standards of quality and limits of variability Of quality prescribed by the Act are unreasonable and that small dealers would not be in a position to ascertain whether the goods purchased by them or in their possession are according to those standards as required by section 7 of the Act; (c) even when an article is purchased not as an article of food, but for other use, the vendor would be deemed guilty if the article did not conform to the prescribed standards; (d) if a retail seller opens a container of branded article of food he loses even the limited protection provided by section 19(2); and (e) that the penalties which may be imposed under section 16(1) (a) are unduly severe; and (2) the non availability to the vendor of the plea of his ignorance and the conclusiveness of the certificate of the Director of Central Food Laboratory under section 13(5) of the Act, violate the guarantee under article 20(3).
HELD : (a) The Act does not make mens rea an ingredient of the offence.
Ordinarily, for the protection of the liberty of a citizen, in the definition of offences, blame worthy mental condition is made an ingredient: but in Acts enacted to deal with a grave social evil or for ensuring public welfare especially in offences against health, it is often found necessary in the larger public interest to provide for imposition of liability without proof of a guilty mind.
If from the scheme of an Act, it appears that compliance with the regulatory provisions will be promoted by imposing such absolute liability and that it cannot otherwise be reasonably ensured, the court will be justified in holding that the restriction on the right of the trader is in the interest of the general public.
[172 H 173 C] Adulteration and misbranding of food is a rampant evil in our country.
The channels of supply and the movement of goods from trader to trader, and fertile sources of adulteration and misbranding, make it extremely difficult in a large majority of cases to establish affirmatively that storage or sale of adulterated or misbranded food stuffs was with a guilty mind.
Therefore, a statute calculated to control that evil is in the interest of the general public and merely because it makes a departure from the normal structure of statutes enunciating offences and prescribing punishments, the restrictions on traders will not be deemed unreasonable.
The defences set out in section 19(2) are open to the vendor and the act does not dispense with proof that the article of food is adulterated, misbranded or that its sale is prohibited : it only enacts that a vendor selling adulterated and misbranded articles of food cannot merely plead that he was ignorant of the nature and quality of the goods.
[171 G H; 173 C D] 167 (b) The schedule to the Act uses technical expressions in relation to standards of quality and an ordinary retail dealer may not be familiar, with them.
But the rules, made under section 23(1)(b) prescribe clearly the standards of quality.
The standards are arrived at after consultation.
with the Committee for Food Standards which.
consists of experts in the field of food technology and food analysis and representatives of the Central and State Governments.
Hence the standards cannot be, challenged as arbitrary or unreasonable.
[175, C] (c) What is penalised by section 16(1) is the importation, manufacture for sale or storage, sale or distribution of any article of food.
It is always open to a person selling an article capable of being used as an article of food as well as for other purpose, to inform the purchaser by clear notice that the article sold or supplied was not intended to be used as an article of food and in such cases section 16 would, not apply.
[174 G] (d) Under section 19(2) if the vendor has obtained the article of food from a licensed manufacturer, distributor or dealer or from a manufacturer, distributor or dealer With a warranty, he is protected, provided he.
has properly stored the article and sold it in the same state as he purchased it, even if it turns out to be adulterated or misbranded.
By merely opening the container the article of food does not cease to be in the same state in which the vendor purchased it.
Therefore, the vendor will not lose the protection of the sub section merely because he opens the container. [173 G H] (e) The severity of the penalty is not so disproportionate to the gravity of the offence that it may be deemed unreasonable, because, the penalties are imposed as a deterrent to prevent malpractices by traders in articles of food and to ensure the purity of articles of food.
[174 C] The Act deals with the regulation of a class of traders and in view of the widespread malpractices and the practical difficulties of controlling the malpractices, stringent provisions have been made in the Act.
The classification is founded on an intelligible differentia and has a rational relation to the object sought to be achieved.
[176 C] (2) Article 20(3) provides that no person accused of any offence shall be compelled to be a witness against himself.
By providing that a plea of ignorance of the vendor wilt not be a defence and that the certificate of the Director of Central Food Laboratory, who is a disinterested and high placed official as conclusive, article 20(3) is not violated.
[176 D C]
|
iminal Appeal No.24 of 1968.
Appeal by special leave from the judgment and order dated December 13, 14, 1967 of the Bombay High Court in Criminal Appeal No. 380 of 1966.
A. section R. Chari and A. G. Ratnaparkhi, for the appellant.
G. L. Sanghi and section P. Nayar, for the respondent.
The Judgment of the Court was delivered by Dua, J.
In this appeal by special leave we are only concerned with the conviction of one out of four accused persons jointly tried for the murder of one Mohd. Yahya.
The appellant Noor Mohammed Mahamed Yusef Momin, accused No. 4, in the trial court was jointly tried with three others in the court of the second Additional Sessions Judge, Thana on the following three charges "That you accused nos.
1 to 4 on or about the 16th day of April, 1965 at Bhiwandi entered into an agreement to commit the murder of Mohamed Yahya and that the same illegal act was done in pursuance of the said agreement and thereby you committed an offence punishable under section 120B of the Indian Penal Code and within my cognizance.
That You accused nos.
1, 2 and 3 on or about the 17th day of April, 1965 at about 11 p.m. at Bhiwandi 121 in furtherance of common intention of you all and accused No. 4 to commit the murder of the deceased Mahamed Yahya did commit his murder by intentionally causing his death by assaulting him by knife and thereby committed an offence punishable under section 302 read with section 34 of the Indian Penal Code and within my cognizance.
In the alternative you accused No. 4 on 17th of April, 1965 at Bhiwandi abetted the commission of the offence of murder of Mahamed Yahya by accused nos.
1 to 3 which offence was committed in consequence of your abetment and that you thereby committed an offence punishable under sections 109 and 302 of the Indian Penal Code and within my cognizance.
" The trial court convicted Mohd. Taki Haji Hussein Momin, accused No. 1 under section 302, I.P.C. and sentenced him to imprisonment for life.
He was acquitted of the other charges.
His three co accused were acquitted of all the charges. 'Accused No. 1 appealed to the Bombay High Court against his conviction whereas the State appealed against the acquittal of the other three.
The High Court, after considering the evidence on the record, upheld the conviction of accused No. 1 and reversed the order of acquittal of the other three.
Accused nos.
2, 3 and 4 (Chinwa Ca, Ahmed Hessan Momin, Abdul Rahamen Bacchu Momin, and Nur Mahamed Mahamed Yusef Momin respectively) were held guilty of the offence under section 120 B, I.P.C. as also of the offence under section 302, read with section 34, I.P.C. Accused No. 4 was in addition held guilty of the offence under section 302 read with section 109, I.P.C. Accused nos.
2, 3 and 4 were sentenced to imprisonment for life both under section 120 B, I.P.C. and section 302 read with section 34, I.P.C. Accused No. 4, appellant in this Court, was also separately sentenced to imprisonment for life for the offence under section 302 read with section 109, I.P.C. Incidentally it may be mentioned that Jaitunbi, widow of the deceased Mohd. Yahya, had also appealed to the Bombay High Court challenging the acquittal of accused nos.
2, 3 and 4 on all charges and of accused No. 1 on the charges other than that of murder under section 302, I.P.C.
This appeal which was treated as an application under section 417(3), Cr.
P.C. was held not to be maintainable.
As already indicated, this Court granted special leave only to the appellant who was accused No. 4 in the trial court.
Before narrating the prosecution story the inter se relationship of the accused persons may be stated.
Abdul Rehman Bacchu Momin.
accused No. 3, is the husband of the sister of the appellant Noor Mohammed 's wife.
Chinwa alias Ahmed Hessan L11 Sup.
CI/70 9 122 Momin, accused No. 2, is the brother of Kallu, who is the son in law of the appellant, accused No. 4.
Mohd. Taki, accused No. 1, is the servant of Kallu.
All these persons are the residents of the same place and the deceased Mohd. Yahya was a close neighbour of the appellant.
According to the prosecution there were constant disputes between the, appellant and the deceased over the right of passage and the right to tap water, and it is not disputed that both sides had made reports and counter reports with the police against each other.
The climax reached on April 16, 1965 in the morning at 7 O ' clock.
On that day Mohd. Yahya, when going out of his house, found that there was a heap of earth and a cot belonging to the appellant obstructing his way.
A cow belonging to the appellant was also standing in the passage.
In order to clear his way the deceased picked up a stone and hurled it at the cow.
This offended the appellant and he in retaliation threw a glass which he was holding towards the deceased and also abused him.
The deceased reported this incident to the police station.
The appellant also went to the police station and made a counter complaint against the deceased.
When the deceased :and the appellant had gone to the police station the two wives of the appellant abused Jaitunbi, wife of the deceased, with the result that Jaitunbi also went to the police.station to lodge a report.
But this report was not recorded.
A little later, the wives, sisters and children of the appellant again abused Jaitunbi and pelted stones at her.
Jaitunbi went to the police station again to lodge a complaint, the same day at about 10 a.m. When the deceased was lying on a cot in his house the appellant came up to the door of the former 's house asking him to get down.
On enquiry by the deceased as to why he should get down the appellant replied that he would serve the deceased with his last tea.
At that time the appellant was accompanied by four or five persons including Chinwa, accused No. 2.
It is said that all of them abused the decreased.
Chinwa, accused No., 2, held a knife in his hand which he is stated to have opened by pressing the button and as he tried to enter the house of the deceased, the latter 's daughter, Noorjahan, went by the back door to the police station to lodge a complaint.
This part of the story is not admitted by the accused.
On Noorjahan 's complaint the police came to the spot in a van and after interrogating the persons present the police party took with them accused nos.
2 and 3.
The appellant is stated to have offered to reach the police station himself a little later.
In view of these incidents Jaitunbi apparently felt somewhat frightened and advised her husband, deceased Mohd. Yahya, to go to Bombay to avoid further clashes with the appellant.
Mohd. Yahya, acting on his wife 's advice, went away to Bombay but 123 returned on the evening of April 17, 1965 bringing with him some female guests.
In those days an Urus was being held near Par Naka and it appears that it was to attend this Urus that the female guests came with him.
Seeing Mohd. Yahya back from Bombay, the appellant asked his nephew Latif, who was sleeping on a cot outside the house, to go in, loudly uttering that a dead body was to be kept on that cot.
The deceased who had reached home at about 9.30 P.M. a little later went out to a pan shop near the Navyug Hotel.
The deceased accompained by two unidentified persons followed him.
Soon after, Mohd. Yahya was stabbed with a knife and this news reached his house.
At the Par Naka two constables, Bhika Bahiram and Suvamasing, who were on duty in connection with the Urus, on learning of some disturbance near the Navyug Hotel and noticing some commotion, proceeded to the lane where a crowd had collected.
On the way, accused No. 3 told them that nothing untoward had happened; but the two constables nevertheless proceeded further and reached the spot where Mohd. Yahya was lying in injured condition.
Someone from the upper storey of a house nearby shouted that the assailants were running away.
Constable Bhika Behiram asked Suvarnasing to attend to the injured person and he himself chased the two persons trying to escape.
He caught Mohd. Taki, accused No. 1, in a lane near the municipal office.
The other person who could not be caught was identified by Bhika Bahiram as Chinwa, accused No. 2, who was known to him.
Suvamasing in the mean time, feeling that Bhika Bahiram would need his help also followed him and found him grappling ' with Mohd. Taki.
Both the constables over powered Mohd. Taki, who had a knife in his pocket and whose clothes were bloodstained.
Mohd. Taki was brought back to the place where Mohd. Yahya was lying injured.
Mohd. Yahya was taken to the hospital in a bullock cart but he expired soon thereafter.
In the report ' lodged by constable Bhika Bahiram, the names of accused nos.
1 and 2 were mentioned and accused No. 3 was described as an old man with moustaches, wearing a lungi.
The appellant was not arrested, though his statement was recorded during the investigation on April, 19, 1965.
He appears to have absconded soon thereafter and was arrested on June 18, 1965.
The case against the appellant is to be considered in the background of the order of conviction against the other three co accused which has become final, this Court having declined special leave against their conviction.
The High Court, on a consideration of the entire evidence, came to the conclusion that all the accused (nos. 1 to 4) had hatched a plan to commit the murder of Mohd. Yahya after his return from Bombay and it was in pursuance of that conspiracy 124 that he was murdered on the night of April 17, 1965.
The appellant, along with accused nos.
2 and 3, was also held guilty of an offence under section 302 read with section 34, I.P.C. He was further held guilty of an offence under section 302 read with section 109, I.P.C. The appellants ' conviction on all these counts is challenged in this Court.
So far as section 34, I.P.C. is concerned, it embodies the principle of joint liability in the doing of a criminal act, the essence of that liability 'being the existence of a common intention.
Participation in the commission of the offence in furtherance of the common intention invites its application.
Section 109, I.P.C. on the other hand may be attracted even if the abettor is not present when the offence abetted is committed provided that he has instigated the commission of the offence or has engaged with one or more other persons in a conspiracy to commit an offence and pursuant to that conspiracy some act or illegal omission takes place or has intentionally aided the commission of an offence by an act or illegal omission.
Turning to the charge under section 120 B, I.P.C. criminal conspiracy was made a substantive offence in 1913 by the introduction of Chapter V A in the Indian Penal Code.
Criminal conspiracy postulates an agreement between two or more persons to do, or cause to be done an illegal act or an act which is not illegal, by illegal means.
It differs from other offences in that mere agreement is made an offence even if no step is taken to carry out that agreement.
Though there is close association of conspiracy with incitement and abetment the substantive offence of criminal conspiracy is somewhat wider in amplitude than abetment by conspiracy as contemplated by section 107, I.P.C. A conspiracy from its very nature is generally hatched in secret.
It is, therefore, extremely rare that direct evidence in proof of conspiracy can be forthcoming from wholly disinterested, quarters or from utter strangers.
But, like other offences, criminal conspiracy can be proved by circumstantial evidence.
Indeed, in most cases proof of conspiracy is largely inferential though the inference, must be founded on solid facts.
Surrounding circumstances and antecedent and subsequent conduct, among other factors, constitute relevant material.
In fact because of the difficulties in having direct evidence of criminal conspiracy, once reasonable ground is shown for believing that two or more persons have conspired to commit an offence then anything done by anyone of them in reference to their common intention after the same is entertained becomes, according to the law of evidence, relevant for proving both conspiracy and the offences committed pursuant thereto.
In the present case the High Court, after referring to the evidence of Laxmibai, (P.W. 7) and Hari Chavan (P.W. 13) (whom 125 that court expressly described as independent witnesses) and also of Murlidhar (P.W. 12), expressed its opinion in these words "All this evidence would show that at least since the 16th of April, 1965 the accused nos.
2, 3, and 4 were acting in concert and had something common in their mind.
It would also show the presence of the accused No. 2 with a knife, at the incident of the 16th April, 1965 and his threatening the deceased with the knife and the acts and words used by the accused No. 4 Mohammad Noora inspiring the accused No. 2 and some other persons who were with him to beat and kill Mohammad Yahya, the subsequent utterances of the accused No. 4 when the deceased returned from Bombay on the night of the 17th of April, 1965, the following of the deceased Mohammad Yahya by the accused No. 4 alongwith two persons when Mohammad Yahya went out to have a pan, the death of Mohammad Yahya soon thereafter, then running of the four persons from the scene of the offence the accused No. 3 misleading the police constable with respect to the incident, the accused nos.
1 and 2 running away from the scene of the offence eluding the police constables, the accused No. 1 being caught after some struggle near the Municipal Office and found with his clothes stained with blood and having a knife in his shirt pocket, all these circumstances, taken together, would show that the accused nos.
1 to 4 must have met previously before causing of the injuries to deceased and must have hatched out a plan of causing the death of the deceased or causing at least grievous injuries to the deceased.
Otherwise the presence of all the four accused near the scene of the offence at the time the incident occurred cannot be satisfactorily explained.
The accused No. 4 had known that the deceased had returned from Bombay and the ominous words he used while asking his nephew Lateef to get down from the cot would suggest that he had still in mind that idea of doing away with the deceased and must have collected the other colleagues of his to carry out the plan which must have been hatched out prior to the incident.
That inference can reasonably be drawn from the circumstances established in the case and it is in pursuance of that pre planning to do away with the deceased, all the four accused must have followed the deceased when he went out that night and the deceased was stabbed by at least some of these accused persons.
" The High Court also believed the evidence of Noorjehan (P.W. 11) and Jaitunbi, (P. W. 5).
In its opinion though these two 126 witnesses were, to a certain extent, interested their evidence appeared to it to be natural and its tenor did not show that they were deposing falsely.
On a consideration of the entire material on the record the High Court felt that all the four accused persons must have hatched a plan to commit the murder of Mohd. Yahya after his return from Bombay and it was in pursuance of this conspiracy that Mohd. Yahya was murdered on the night of April 17, 1965.
The court took into account the facts that accused No. 1 was caught after some chase near the scene of occurrence, accused No. 2 was identified though he made good his escape, accused No. 3, who was also identified by description, tried to mislead the police constables, and that accused No. 4 was seen following the deceased just before the murder with two or three persons.
On this material the High Court upheld the appellant 's conviction.
Under article 136 of the Constitution this Court does not normally proceed to review and appraise the evidence for itself and the conclusions of the High Court on questions of fact on appreciation of evidence are considered to be final.
This is so even if this Court were to feel that a different view of the evidence is possible.
But in this case, as it was represented that the evidence on the record does not support the conclusion of the High Court and that grave and substantial injustice had been caused, we undertook to go into the evidence, with the help of the counsel for the parties, to satisfy ourselves if there is any sufficient ground for interference on appeal by special leave.
Hari Chavan, (P.W. 13), has deposed that on April 16, 1965 at about 10.30 a.m. the appellant, while standing near the steps of Mohd. Yahya 's house, exported three of his companions, one of whom was accused No. 2 who had a knife in his hand, to beat the deceased, the actual words used being, "Beat him : Kill him : I shall look to the consequences".
This evidence is corroborated by Laxmibai, (P.W. 7) and both of these witnesses have been believed by the High Court.
Laxmibai (P.W. 7) actually saw the appellant with the two others following the deceased about 15 or 20 minutes before the murder.
We are unable to find any cogent ground for disagreeing with the High Court.
On this evidence not only animus on the part of the appellant but also instigation by him must be held to be fully established.
This evidence would also support the charge of criminal conspiracy against the appellant.
Indeed, the evidence of Jaitunbi (P.W. 5) and Noorjehan (P.W. 1) also shows that the appellant on April 16, 1965 and on the evening Of April 17, on Mohd. Yahya 's return from Bombay and a short time before his murder, openly gave expression to his strong feelings of animosity against the deceased which leaves little doubt that he was thinking of doing away with Mohd. Yahya 's life.
The admitted strained relations between the parties which reached the climax on April 16, 1965 and the evidence just discussed, in our opinion, clearly 127 establishes the complicity of the appellant in the murder of the deceased.
The charges under section 302 read with section 109, I.P.C. and of conspiracy are thus fully supportable on the evidence.
In regard to the 'charge under section 302 read with section 34, I.P.C. also Jaitunbi (P.W. 5) has deposed that on the date of the occurrence at about 9.30 p.m. the appellant asked his nephew Latif who was sleeping on the cot outside to go inside the house because a dead body was to be kept on that cot.
Thereafter it is in the evidence of Laxmibai (P.W. 7), that the appellant accompanied by two persons followed the deceased when the latter went to the Pan shop.
About 20 minutes later the news of Mohd. Yahya 's murder reached his house.
From this evidence it seems highly probable that at the time of the actual murder of Mohd. Yahya the appellant was either present with the other three co accused or was somewhere nearby.
But this evidence does not seem to be enough to prove beyond reasonable doubt his presence at the spot in the company of the other accused when the murder was actually committed.
For, it may be that after leaving the house he stayed away and the persons actually taking part in the murder were only the other three co accused.
We are, therefore, inclined to give to the appellant the benefit of doubt in regard to the charge under section 302 read with section 34, I.P.C. This would, however, be of little practical benefit to the appellant because he has already been given the lesser sentence.
This appeal is, therefore, accepted only to the extent that the appellant 's conviction under section 302 read with section 34 is set aside.
In all other respects this appeal fails and is dismissed.
R.K.P.S. Appeal allowed in part.
| IN-Abs | Four accused were charged with the offences under section 120 B (conspiracy to commit murder) and section 302 read with section 34.
The fourth accused was also charged under section 302 read with section 109 for the offence of abetting the murder committed by the other three accused.
The accused 2 to 4 were related to one another while the first accused was a servant of the brother of the second accused.
There were constant disputes between the fourth accused and the deceased over a right of passage and the right to tap water.
The day before the murder the fourth accused, went to the house of the deceased and exhorted his companions, one of whom was the second accused, to kill the deceased.
On the next day (the day of the murder) the fourth accused threatened to kill the deceased and later, accompanied by the 1st and 2nd accused, followed the deceased when he went out at about 10 p.m. Fifteen minutes after the deceased was thus seen being followed by the accused, the deceased was stabbed.
The third accused tried to persuade the two constables who were proceeding towards the scene when they heard the disturbance that nothing untoward had happened, but the constables proceeded to the scene, and, on noticing the wounded body of the deceased, chased and caught the first accused and recognised the second accused who had escaped.
One of the constables lodged the first information against the accused 1 to 3.
The fourth accused was absconding and after he was arrested, all the accused were put up for trial.
The High Court convicted the first accused under section 302 I.P.C., and accused two to four for offences under section 120 B and section 302 read with section 34, I.P.C. The fourth accused was also convicted for the offence under section 302 read with section 109.
In appeal by special leave to this Court by the 'fourth accused, this Court examined the evidence, contrary to its usual practice, as it was represented that the evidence did not support the conclusion of the High Court, and HELD : The evidence clearly established the complicity of the appellant in the murder of the deceased, and the charges under section 302 read with section 109 I.P.C. and of conspiracy were fully supported by the evidence.
As regards the charge under section 302 read with section 34, though, it was highly probable that at the time of the actual murder the appellant was either present with the other three co accused or was somewhere nearby, the evidence did not establish beyond reasonable doubt his presence at or near the spot when the murder was actually committed, and therefore, he must be given the benefit of doubt in regard to that charge.
Section 34 embodies the principle of joint liability in the doing of a criminal act, the essence of that liability being the existence of a common intention.
Participation in the commission of the offence in furtherance of the common intention invites its application.
120 Section 109, on the other hand, may be attracted even if the abettor is not present when the offence abetted is committed provided that he has instigated the commission of the offence or has engaged with one or more other persons in a conspiracy to commit an offence and pursuant to that conspiracy some act or illegal emission takes place or has intentionally aided the commission of an offence by an act or illegal omission.
Criminal conspiracy is a substantive offence under section 120 B I.P.C. It differs from the other offences in that mere agreement is made an offence even if no step is taken to carry out that agreement.
Though there is close association of conspiracy with incitement and abetment, the substantive offence of criminal conspiracy is wider in amplitude than abetment by conspiracy as contemplated by section 107 I.P.C. Conspiracy from its very nature is hatched in secrecy and it is, therefore, extremely rare that direct evidence in proof of conspiracy can be forthcoming, but like other offences it can be proved by circumstantial evidence.
Surrounding circumstance and antecedent and subsequent conduct, among other factors constitute relevant material.
In fact, because of the difficulties of having direct evidence of criminal conspiracy, once 'reasonable ground is shown for believing that two or more persons have conspired to commit an offence then anything done by any one of them in reference to their common intention after the same is entertained becomes, according to the law of evidence relevant for proving both conspiracy and the offences committed pursuant thereto.
(124B H]
|
Appeal No. 265, of 1966.
Appeal by special leave from the judgment and order dated January 10, 1966 of the Assam and Nagaland High Court in Civil Rule No. 266 of 1965.
Naunit Lal, for the appellants.
R. Gopalakrishnan, for respondent No. 1.
The Judgment of the Court was delivered by Shah, J.
Daksha Prasad Deka hereinafter called 'the res pondent ' was appointed Assistant Sub Inspector of Police with 688 effect from January 17, 1929.
On a representation made by the respondent the date of his birth was entered in the service record as July 1, 1910.
Under F.R. 56(a) the respondent was liable to be compulsorily retired on July 1, 1965.
In 1956 the respondent applied that the date of birth entered in his service record 'be showing as August 1 191 1.
That application was rejected.
The respondent again applied in 1963 for correction of his date of birth.
The application was, rejected and by order dated June 26, 1965, the respondent was informed that he win stand superannuated on June 30, 1965.
His representation made to the Government of Assam against that order was unsuccessful.
The respondent then applied to the High Court of Assam praying for a writ in the nature of mandamus requiring the State ,of Assam to forbear from giving effect to the order dated June 26, 1965.
The High Court quashed the order dated June 26, 1965 and directed the State of Assam to give an opportunity to the respondent to show cause against the order directing compulsory retirement and an opportunity to prove his true date of birth.
Against that order, this appeal is preferred with special leave.
In the opinion of the High Court if the true date of birth of the respondent was August 1, 1 9 1 1, the order compulsorily retiring the respondent on June 30, 1965, without giving him an opportunity to prove his true age, infringed the guarantee of article 311(2) of the Constitution.
In our judgment, the High Court was wrong in holding that there was any infringement of article, 311(2) of the Constitution.
In the service record of the respondent his date of birth was recorded as July 1, 1910 and under F.R. 56(a) the respondent was liable to be compulsorily retired on the date on which he attained the age of 55 years.
The date of compulsory retirement under F.R. 56(a) must in our judgment, be determined on the basis of the service record, and not on what the respondent claimed to be his date of birth, unless the service record is first corrected consistently with the appropriate procedure.
A public servant may dispute,.the date of birth as entered, in the service record, and may apply for correction of the record.
But until the record is corrected, he cannot, claim that he has been deprived of the guarantee under article 311(2) of the Constitution by being compulsorily retired on attaining the age of ' superannuation on the footing of the date of birth entered in the service record.
is true that the State authorities did not give to the respondent an opportunity to support his case that he was born on 689 August 1, 1911, and that the service record was erroneous.
But in view of S.R. 8 Note, which governed the employment of the respondent an application for correction of the service record could not be entertained if it was made within three years before the date of "actual supernuation".
S,R. 8 Note provides "No alteration in the date of birth of a Government servant should be allowed except in very rare cases where a manifest mistake has been made.
Such mistakes should be rectified at the earliest opportunity in the course of (1) periodical re attestation of the entries in the first page of service book, and (2) preparation of the annual detailed statement of a permanent establishment (Financial Rule Form No. 11) in which is noted the date of, incumbent 's birth.
In no case the request for change in the date of birth of a Government servant made on a date with three years of the date of ' his actual.
superannuation ' should be entertain ed.
" Validity of the Rule is not challenged by the respondent.
are unable to agree with the view of the High Court that the date of "actual superannuation" within, the meaning.
of S.R. 8 Note is the date of superannuation computed with reference to the claim made by the public servant, and not with reference to the date as entered in the service record.
If such an interpretation be accepted, S.R. 8 Note would prove in a majority of cases of no practical utility.
It is intended by S.R. 8 Note that any error 'in the service record shall be rectified at the, earliest opportunity and in no case should an application for rectification be entertained within three years of the "date of actual super annuation".
i.e. the date of superannuation according to the service record.
Again, if the contention of the respondent were correct, on the date on which he entered service he was a minor.
If on a representation that he had attained the age of majority on the date on which he entered service, it would not be open for him, after being admitted to the service, to contend that under the appropriate service rules he could not have been admitted to the service, but for the misrepresentation made by him.
Counsel for the respondent relied upon the judgment of this Court in State of Orissa vs Dr. (Miss) Binapani Dei & Ors.
(1) in support of the contention that a public servant must be given an opportunity to prove his true date of birth before he is superannuated, and any order passed without such opportunity is illegal.
In our judgment Dr. (Miss) Binapani 's case(1) enunciates no such proposition.
In that case in the service record of a pub (1) 1967 2 section C. R. 625 2 L 694 Sup.
C.I/171 690 lic servant, April 10, 1910 was entered as the date of 'her An enquiry was, held and the public servant was required to show cause why her date of birth should not be accepted as April 1907.
Thereafter the Government of Orissa determined her of birth as April 16, 1907, and declared that she should deemed to have been superannuated on April 16, 1962.
order was challenged by the public servant in a petition to High Court of Orissa.
The High Court held that the order the State Government amounted to compulsory retirement before she attained the age of superannuation and was contrary to the rules governing her service conditions and amounted to removal within the meaning of article 311 of the Constitution, and since :she was not given a reasonable opportunity of showing cause against the action proposed to ';be taken in regard to her, the order was invalid.
This Court confirmed the order passed by the High Court of Orissa.
It was observed by this Court that ,even an administrative order which involved civil consequences must be made consistently with the rules of natural justice 'The person concerned must be informed of the case of the State and the evidence in support thereof and must be given a fair opportunity to meet the case before an adverse decision is taken The public servant, according to the service record, could not be superannuated before April 10, 1965.
But by an enquiry which was not held in a manner consistent with the rules of natural justice an order was made altering the date of birth as entered in the service record, and declaring that she was born in 1907 That was plainly an order passed to the prejudice of the public servant without giving an opportunity to meet the case of the State.
In the present case, however, the State did not seek to modify the service record: it was the respondent who sought modification of the service record and claimed that he declared only on the basis of the rectification prayed for by him.
It is true that ordinarily when an application is made for rectification of age by a public servant, the State should give the applicant proper opportunity to prove his case and should give due consideration to the evidence brought before it.
But in the present case, since the application for rectification was made within three years of the date of actual superannuation, according to S.R. 8 Note the application could not be, entertained.
The principle of Dr. (Miss) Binapani 's case(1) has no application to this case.
The appeal is allowed and the order passed by the High Court is set aside.
The petition filed by the respondent shall stand dismissed.
There will be no order as to costs throughout.
| IN-Abs | The respondent was appointed Assistant Sub Inspector of Police with effect from January 17, 1929, and on his own representation his date of birth was entered in the service record as July 1, 1910.
Under F.R. 56(a) he was liable to be compulsorily retired on July 1, 1965. 'In 1963 he applied that the date of birth in the service record may be corrected as.
August 1, 1911.
The application was rejected without giving him an opportunity to support his case and he was informed on June 26, 1965.
that he would stand superannuated on June 30, 1965.
He filed a writ petition in the High Court and the High Court quashed the order dated June 26, 1965.
In appeal to this Court HELD : Until the service record of a public servant is corrected he cannot claim that he has been deprived of the guarantee under article 311(2) of the Constitution by being compulsorily retired on attaining the age of superannuation on the basis of the service record.
A public servant may dispute the correctness of the date of birth as entered in the service record and may apply for its correction, but in view of S.R. 8 Note, which governed the employment of the respondent, an application for such a correction could not be entertained if it was made within three years before the date of 'actual superannuation '.
The words 'actual superannuation ' mean the date of superannuation according to the service record, and not according to the date of birth claimed by the public servant.
The respondent represented that he had attained the age of majority on the date on which he entered service.
It was not open to him to contend that under the appropriate service rule he could not have been admitted to the service.
[688 G H, 689 A B, F G] State of Orissa vs Dr. (Miss) Bimapani Dei, [1967] 2 S.C.R. 625 explained.
|
Appeal No. 2003 of 1966.
Appeal from the judgment and order dated December 18, 1964 of the Calcutta High Court in Appeal No. 254 of 1963.
Ram Janiavani and section P. Nayar for the appellants.
The respondent did not a pear.
The Judgment of the Court was delivered by Shah, J.
On March 31, 1959 the Ministry of Commerce and Industry, Government of India, granted to the respondents a licence permitting them to import from West Germany certain machinery described therein of the maximum C.I.F. value of Rs. 45,000/ .
Condition No. 1 of the licence provided that: "The .
application is accepted and import licence is hereby granted having quantity and value as the limiting factors and is not valid for clearance if the actual value of any item exceeds the C.I.F. value indicated in the licence by more than 5%.
" The respondents submitted a bill of entry dated July 1, 1960, disclosing the C.I.F. value of the consignment as Rs. 45,179 92 inclusive of landing charges, and cleared the consignment after paying duty assessed by the Customs authorities on the real value of the goods as disclosed in the bill of entry.
On June 20, 1961 the Customs authorities issued a notice requiring the respondents to show cause why penal action should not be taken against them under section 167(8) of 'the , as being persons concerned in the unauthorised importation of the goods.
This notice was amended by notice ,dated September 21, 1961, whereby the respondents were charged with having committed offences under section 167(8) read with section 3(2) of the Imports and Exports (Control) Act, 1947, for 683 illegally importing the machinery.
The respondents claimed that no breach of the conditions of the licence was committed.
The Additional Collector of Customs, Calcutta, by order dated March 17, 1962, directed confiscation of the machinery under section 167(8) of the read with section 3 (2) of the Imports and Exports (Control) Act, 1947, and permitted the respondents to pay a fine of Rs. 20,000/ in lieu of confiscation.
A personal penalty of Rs. 25,000/ was also imposed on the respondents.
The respondents then moved a petition before the High Court of Calcutta under article 226 of the Constitution praying for a writ quashing the adjudication order dated March 17, 1962.
A Single Judge of the Calcutta High Court dismissed the petition, but in appeal under the Letters Patent the High Court reversed the decision and issued a Writ of certiorari quashing the order dated March 17, 1962.
The Additional Collector of Customs, Calcutta, has appealed to this Court with certificate granted by the High Court.
The only question which falls to be determined is whether for breach of a condition of the licence penalty may be imposed under section 5 of the Imports and Exports (Control) Act, 1947, read with the .
The relevant statutory provisions may first be noticed.
Under section 167 of the , the offences mentioned in the first column of the Schedule are punishable to the extent mentioned in the third column of the same with reference to such offences respectively: Section of this Act to which offence Offences.
has reference.
Penalties 8.
If any goods, the importation or 18 & 19 such goods shall be liable to be exportation of which is for the confiscated ; and any person con time being prohibited or resting herded in any such offence, shall acted by or under Chapter IV of be liable to a penalty not exceed this Act, be imported into or axing three times the value of the ported from India contrary to goods, or not exceeding one such prohibition or restriction; or thousand rupees, Chapter IV of the , contains three sec tions : sections 1 8, 19 & 19A.
By section 18 an absolute prohibition is unposed in respect of importation of goods by land or by sea specified therein.
Section 19 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 684 land goods of any specified description into or our of India across any customs frontier as defined by the Central Government.
The Central Legislature enacted the Imports and Exports (Control) Act, 1947, with the object of authorising prohibition and control on imports and exports.
By section 3 of that Act it was provided.
"(1) The Central Government may, by order pub lished in the Official Gazette, make provisions for prohibiting, restricting or otherwise controlling in all cases or in specified classes of cases, and subject to such exceptions if any, as may be made by or under the order (a) the import, export, carriage coastwise or shipment as ships stores of goods of any specified description; (b) the bringing into any port or place in India or goods of any specified description intended to be taken out of India without being removed from the ship or conveyance in which they are being carried.
(2) All goods to which any order under sub section (1) applies shall be deemed to be goods of which the import or export has been prohibited under section 19 of the , 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.
(3) Section 5 of the Imports and Exports (Control) Act, 1947, as originally enacted, provided : "If any person contravenes any order made or deemed to have been made under this Act, he shall, without prejudice to any confiscation or penalty to which he may be liable under the provisions of the , as applied by sub section (2) of section 3, be punishable with imprisonment for a term which may extend to one year, or with fine, or with both" 6 85 In exercise of the power conferred by sections 3 and 4 A of the Imports and Exports (Control) Act, 1947, the Central Govern ment issued the Imports (Control) Order, 1955.
Clause 3 of the Imports (Control) Order prevented importation of any goods of the description specified in Sch.
I, except under, and in accordance with, a licence or a customs clearance permit granted by the Central Government or by any officer specified in Sch.
By sub cl.
(2) of cl. 3 it was provided that if in any case, it was found that the goods imported under a licence did 'not conform to the description given in the licence or were shipped prior to the date of issue of the licence under which they were claimed to have been imported, then, without prejudice to any action that may be taken against the licensee under the , in respect of the said importation, the licence may be treated as having been utilised for importing the said goods.
By cl. 5 certain conditions could be imposed by the Licensing Authority issuing a licence.
It may be recalled that one of the conditions of the licence issued by the respondent was that the value of any item shall not exceed the C.I.F. value indicated in the licence by more than 5 %.
It was the, case of the Customs I authorities that the real value of the machinery imported exceeded the declared value, and on that account the respondents had infringed the conditions of the licence.
In East India Commercial Company Ltd., Calcutta & Anr.
vs The Collector of Customs, Calcutta(") this Court held that section 167 cl. 8 of the , read with section 3(2) of the Imports and Exports (Control) Act, 1947, authorised the imposition of penalty, if goods were imported in con travention of any order under the Imports and Exports (Control) Act, 1947 : but the section did not, expressly or by implication authorise confiscation of goods imported under a valid licence on the ground that a condition of the licence not imposed by the order was ' infringed.
This view was reiterated by this Court in Boothalinga Agencies vs T. C. Poriaswami Nadar (2).
These cases were decided on the interpretation of section 5, of the Imports and Exports (Control) Act, 1947, as it stood before it was amended by Act 4 of 1960.
By the Imports and Exports (Control) Amendment Act 4 of 1960, in section 5, after the words ',any order made or deemed to have been made under this Act," the words "or any condition of a licence granted under any such order" were inserted.
Contravention of any condition of a licence granted under any order was therefore liable to be punished under section 5 as amended.
(1) L196313S.C.R.338.
(2) 19591 1 S.C.R. 65. 686 In the present case the Customs authorities did not direct section for contravention of any condition of a licence directed confiscation of the machinery and imposed penalty lieu thereof.
But on the terms of section 5 as amended, the right impose penalty for contravention of any condition of a may be exercised under the , and under the Imports and Exports (Control) Act, 1947.
For are of any condition of a licence, it is open to the authorities direct prosecution, but no order confiscating goods and ring penalty in lieu thereof could be made.
The order of fiscal could only be made under section 167 cl. 8 of the Sea atoms Act, 1878 : in terms cl. 8 of section 167 provides for action of the goods importation or exportation of which is the time being prohibited or restricted by or under Ch.
IV the .
The notification of which contravention is said to have began made, is not issued under 19 of the , but under the Imports and (Control) Act, 1947.
It has not been urged before us, a rightly, that penalty of confiscation is incurred under the pro sons of the , for breach of the con lions of the licence.
In our judgment, the High Court was right in holding the scope of power under the was not enlarged by the amendment to section 5 of the Imports and Exports (Control) Act, and there is nothing in the amended section 5 of the Imports and Exports (Control) Act which warrants the view that provisions of the , may be invoked punish the breach of a condition of a licence granted under Imports and Exports (Control) Act, 1947.
The appeal fails and is dismissed.
There will be no order as to costs.
| IN-Abs | Under section 3 of Imports & Exports Control Act 18 of 1947 all goods to which any order under sub section
(1) applied shall be deemed to be goods of which the Import & Export has been prohibited under section 19 of the Sea.
Customs Act 8 of 1878, and all the provisions of.that Act shall have effect accordingly.
In exercise of power conferred by sections 3 and 4A of the Act 18 of 1947 the Central Government issued the Imports control) Order 1955.
Clause 3 of the Order prevented the importation of any goods of the description specified in Schedule except under and in accordance with a licence or a customs clearance permit granted by the Central Government or by any officer specified in Sch.
Section 5 of Act 18 of 1947 as originally enacted provided : "If any person contravenes any order made or deemed to have been made under the Act, he shall without any prejudice to any confiscation or penalty to which he may be liable under the provisions of the , as applied by sub section
2@ of section 3 be punishable with imprisonment for a term which may extend to one year, or with fine, or with both.
" By the Imports & Exports (Control) Amendment Act 4 of 1960 contravention of any conditions of a licence ranted in accordance with The terms of any order passed under the Act was also made punishable under section 5.
The respondents imported certain goods from West Germany under licence granted by the Ministry of Commerce.
According to the Government the goods imported were in excess of the terms of the licence and accordingly the respondents were charged with having committed ' offences under section 167(8) 'read with section 3(2) of Act 18 of 1947 and the a good s imported by them were confiscated.
In lieu of the confiscation, however, a fine of Rs. 20,000/ was imposed an the respondents.
A personal penalty of Rs. 25000/ was also imposed.
The respondents filed ' a writ petition in the High Court which was dismissed by the Single Judge but 'allowed by the Division Bench.
With certificate the Collector of Customs appealed.
The only question for consideration was whether for breach of a condition of the licence penalty may be imposed under section 5 of Act 18 of 1947 read with section 167(8) of Act 8 of 1878.
HELD: The appeal must be dismissed.
For breach of any condition of a licence it is open to the authorities.
under section 5 of Act 18 of 1947 as amended, to direct prosecution but no, 682 order confiscating goods and imposing penalty in lieu thereof could be made.
The order of confiscation could only be made under section 167 cl. 8 ,of Act 8 of 1878 : in terms cl. 8 of section 167 provides for confiscation of the goods importation or exportation of which is for the time being prohibited or restricted by or under Ch.
IV of the .
The notification of which the contravention was alleged was not issued under section 19 of the but under the Imports & Exports (Control) Act 1947.
The High Court was therefore right in holding that the scope of power under the was not enlarged by the amendment to section 5 of the Imports & Exports (Control) Act.
There is nothing in the amended section 5 of the imports & Exports (Control) Act which warrants the view that the provisions of the , may be invoked to punish the breach of a condition of a licence granted under the Imports & Export , (Control) Act, 1947.
[686 B C]
|
Appeals Nos. 116, 117 and 119 of 1967.
Appeals from the judgment and decrees dated May 19, 1966 of the Allahabad High Court in First Appeals Nos.
441 of 1950, 198 of 1952 and 442 of 1950 respectively.
section V. Gupte, section T. Desai, J. P. Goyal and G. N. Wantoo, (or the appellants (in all the appeals).
Sidhartha Ray, A. K. Sen, Rameshwar Nath, Krishna Sen and Swaranjit Sodhi, for the respondent (in all the appeals).
The Judgment of the Court was delivered by Shelat, J.
Prior to January 18, 1944 M/s. Lakshmiratan Cotton Mills Co. Ltd. (hereinafter referred to as the appellant company), Aluminium Corporation of India Ltd. (hereinafter referred to as the corporation, J.K. Limited, Beharilal Kailashpat India Supplies, Northern India Trading Co., and Northern India Brush Manufacturing Co. Ltd. were all jointly managed by two, groups, who may conveniently be called the Singhania and the Gupta groups.
Disputes having arisen between them, they were referred to arbitration by a deed of reference, dated December 9, 1943.
It is not necessary to go into the details of the award, dated January 18, 1944, by which these disputes were adjudi 626 cated upon except that from and after the date of the award the aforesaid concerns were brought under the management and ,control of one or the other of the said two groups.
The corporation came under the control and management of the Singhania group.
Cl. 9 of the award provided as follows "The above award or directions in respect of Laxmi Ratan Cotton Mills Co. Ltd., Aluminium Corporation of India Ltd., J. K. Ltd., Beharilal Kailashpat India Supplies, Northern India Trading Co. and Northern Brush Manufacturing Co. do not cover the advances which either party or their separate firms may have made to all or any of them or their moneys which may be in deposit with them and they shall be payable and paid in their usual course." According to the appellants, there existed in their trading books :accounts in respect of amounts advanced or spent by them for, ' the corporation in respect of which cl.
(9) of the award specifically made provision for and also for interest due thereon.
After the award was made the appellant company sent a statement of account to the corporation, but this was objected to on the ground that the appellant company, during the course, of the previous joint management of the corporation, had not properly maintained the accounts and that several items were either not properly accounted for or entered into.
Correspondence thereafter ensued between the parties.
The parties also appointed their respective officers to meet and reconcile their respective accounts the corporation being represented by its Secretary cum,Chief Accountant, one Subramanayam, and the appellant company sometimes by one Arora and at other times by one Newatia.
Since no settlement could be arrived at, the appellants filed two suits claiming Rs. 3,56,207 9 6 and Rs. 72,595 4 6 from the corporation, being Suit Nos. 63 and 65 of 1949.
In para 14 of the plaint in Suit No. 63 of 1949, it was claimed that the suit was within time as after adjustment of several items in 1946 and 1947 a sum of Rs. 2,96,110 11 6 was found due to the appellant company and that in any event the suit was saved from being barred by limitation by a letter ,dated April 16, 1946 addressed by the said Subramanayam, thereby acknowledging the liability of the corporation to pay the amount which would be found due and payable under the said accounts.
Similar averments were also made in the plaint in Suit No. 65 of 1949.
The written statements filed by the corporation inter alia pleaded that the said claims were, barred by limitation, 627 LAKSHMIRATAN COTTON MILLS V. ALUMINIUM CORP. 627 (Shelat, J.) that the said letter did not amount to an acknowledgement within the meaning of section 19 of the Limitation Act, 1908 which was then applicable to the suits, and lastly, that even if the said letter did amount to an acknowledgment, it was not binding on the corporation as the said Subramanayam had no authority to make any such acknowledgement for and on behalf of and binding on the corporation.
On the question of limitation, the Trial Court raised three questions for its determination; (1) whether the letter (exhibit 1) was binding on the corporation, (2) whether it amounted to an acknowledgement, and (3) if so, whether it would extend the period of limitation so as to save the claims made by the appellants, from being barred.
On consideration of the, evidence, both oral and documentary, the Trial Court held in favour of the appellants on all the three questions and passed decrees in both the suits.
Three appeals were filed in the High Court against those decrees, two by the corporation and the third by the appellant company as the claim allowed in its favour was for a reduced amount.
As framed by the High Court, the question common to all the three appeals was whether the said letter (exhibit 1) amounted to an acknowledgement extending the period of limitation.
The High Court, on consideration of the correspondence between the parties and the other evidence, reached the conclusion that the letter (exhibit 1) was "merely explanatory" and was not, meant to bind the corporation, that even if it did amount to " some kind of acknowledgement", its author, the said Subramanayam, bad no authority to acknowledge any debt or liability on behalf of the corporation.
In this view the High Court held the two suits barred by limitation and allowed the corporations, appeals.
It rejected the appellant company 's appeal and dismissed the two suits.
Hence these three appeals under certificates granted by the High Court.
It was never disputed that, except for the letter (exhibit 1) relied on by the appellant company, provided it amounted to an acknowledgement binding on the corporation, the claims of the, appellants would be barred by limitation.
Consequently, the questions for determination in these appeals are the same as the ones before the High Court.
These questions were canvassed before us in their three aspects; firstly, whether the letter (exhibit 1) amounted to an acknowledgement, secondly, if it did, whether it was an acknowledgement by the corporation, and thirdly, if not, whether the said Subramanyam, who addressed it, had the authority express or implied, to acknowledge liability on behalf of the I corporation so 'as to bind that corporation.
Counsel for the appellant company sought to argue that in as much as the letter, (exhibit 1) was written by the corporation 's 628 Secretary, who also combined the position of the Chief Accountant, and furthermore, addressed that letter for and on behalf of the corporation, the letter was of and by the corporation.
Therefore, if the letter amounts to an acknowledgement, such acknowledgement would be by the corporation itself and no enquiry would then be necessary to ascertain whether the said Subramanayam had the authority to acknowledge the liability so as to bind the corporation.
No such plea, however, is to be found in the plant which merely stated that "there are several letters constituting acknowledgement of the unsettled account.
The plaintiff files one of such letters which is dated 16th April, 1946.
" The written statement denied that the corporation, ever made any acknowledgement or that the letter of April 16, 1946 was any such acknowledgement.
It further denied that Subra manayam, who wrote it, had any authority to acknowledge any debt.
Such a comprehensive denial notwithstanding, no issue was raised covering the argument now urged that the said letter was and must be treated as one of or by the corporation, and that therefore, there was no question of Subramanayam having or not having the authority to make an acknowledgement on behalf of the corporation.
No such argument also appears to have been made either in the Trial Court or the High Court where the controversy was centered around the question whether the said letter contained an acknowledgement and whether its writer, addressing it on behalf of the corporation, had the authority to make such an acknowledgement binding on the corporation.
In our view Mr. Gupte could not, at such a belated stage, raise for the first time the plea that it was the corporation which through the said letter made the acknowledgement and that we should understand that letter to mean such an acknowledgement by the corporation itself.
The question, therefore, that really arises for our determination is whether the said letter contains an acknowledgement, which its writer, Subramanyam, had the authority, express or implied, to make.
Even that question gets reduced in extent and scope as it was never the case of the appellant company at any stage that the corporation had clothed its Secretary with such authority expressly.
Such a case Mr" Gupte did not make out even before us and proceeded in fact to argue that the evidence on record showed that he had such authority given to him impliedly.
19(1) of the Limitation Act, 1908 provides that where, before the expiration of the period prescribed for a suit in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, a fresh period of limitation shall be computed from the time 629 when the acknowledgement was so signed.
The expression 'signed ' here means not only signed personally by such a party, but also by an agent duly authorised in that behalf.
Explanation 1 to the section then provides that an acknowledgement would be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment has not yet ,come, or is accompanied by a refusal to pay or is coupled with a claim to a set off, or is addressed to a person other than the person entitled to the property or right.
The new Act of 1963 contains in section 18 substantially similar provisions.
It is clear that the statement on which the plea of acknow ledgement is founded must relate to a subsisting liability as the section requires that it must be made before the expiration of the period prescribed under the Act.
It need not, however, amount to a promise to pay, for, an acknowledgement does not create a new right to action but merely extends the period of limitation.
The statement need not indicate the exact nature, or the specific character of the liability.
The words used in the statement in question, however, must relate to a present subsisting liability and indicate the existence of jural relationship, between the parties, such as, for instance, that of a debtor and a creditor, and the intention to admit such jural relationship.
Such an intention need not be in express terms and can be inferred by implication from the nature of the admission and the surrounding circumstances.
Generally speaking, a liberal construction of the statement in question should be given.
That of course does not mean that where a statement is made without intending to admit the existence of jural relationship, such intention should be fastened on the person making the statement by an involved and far fetched reasoning.
(see Khan Bahadur Shapoor Freedom Mazda vs Durga Prosad Chamaria(1) And Tilak Ram vs Nathu(2).
As Fry, L.J., in Green vs Humphreys(3) said "an acknowledgement is an admission by the writer that there is a debt owing by him either to the receiver of the letter or to some other person on whose behalf the letter is received but it is not enough that he refers to a debt as being due from somebody.
In order to take the case out of the statute there must upon the fair construction of the letter, read in the light of the surrounding circumstances, be an admission that the writer owes the debt.
" As already stated, the person making the acknowledgement can be both the debtor himself as also a person duly authorised by him to make the admission.
In Khan Bahadur (1) (2) A. I. R. , at 938, 939.
(3) at 481.
13 L436 Sup C 1/71 630 Shapoor Fredoom Mazda 's case(1) the Court accepted a statement in a letter by a bortgagor to a second mortgagee to save the mortgaged property from being sold away at a cheap price at the instance of the prior mortgagee by himself purchasing it as one amounting to an admission of the jural relationship of a mortgagor and mortgage&, and therefore, to an acknowledgement within section 19.
Also, an agreement of reference to arbitration containing an unqualified admission that whoever on account should be proved to 'be the debtor would pay to the other has been held to amount to an acknowledgement.
Such an admission is not subject to the condition that before the agreement should operate as an acknowledgement, the liability must be ascertained by the arbitrator.
The acknowledgement operates whether the arbitrator acts or not.
(see Tejpal Saraogi vs Lallanjee Jain(2), ,approving Abdul Rahim Oosman & Co. vs Ojamshee Prushottamdas & Co. (3).
The letter (exhibit 1) relied on as an acknowledgement was written to the appellant company by Subramanayam signing it "for Aluminium Corporation of India Ltd." it consists of Several paragraphs dealing with diverse items relating to different amounts ,claimed by the appellant company in a statement of claim previously sent by it to the corporation, some of which are refuted by the writer, while the others are accepted.
The penultimate paragraph, which is said to contain the admission, reads as follows "After all the above adjustments, the position will be as per statement attached.
Interest has been provided on some balances and on others it has not been provided.
We request you, to confirm the balance of Rs. 1,07,477 13 11, so that we may proceed with the calculation of interest and settle your claim once and for all immediately.
Kindly acknowledge this letter and favour us with an immediate reply.
" The letter speaks in the last sentence of a copy of it to be sent to Lala Purshottam Dasji Singhania "for information".
The co of the letter, as is clear from the other evidence as also the words "for information" was not sent for approval and was obviously not intended to be subject to such approval by Purushottam Singhania.
The statement enclosed with the letter headed "Account of M/s. Lakshmiratan Cotton Mills Co. Ltd. ' and first sets out the balance of Rs. 1,00,760 0 7 in favour of (1) (2) C.A. No. 766 of 1962, decided.
on Feb. 8, 1965.
(3) (1928) 1.
L. R. 631 the appellant com any "as per our ledger", meaning the ledger of the corporation, and the first foot note thereto states that that amount included interest of Rs. 26,490 11 10 calculated upto March 31, 1943.
Several amounts due to other concerns payable to or by the appellant company are, then adjusted and finally the balance is struck at Rs. 1,07,447 13 11 (which is the one mentioned in the letter (exhibit 1) which if confirmed by the appellant company, the corporation would "settle your claim once and for all immediately." The High, Court, as aforesaid, held, contrary to the view of the Trial Court, that these letter was only "explanatory" and was not intended to be an admission of liability or of the jural relationship between the parties as debtor and creditor.
Counsel for the corporation also argued in support of the High Court 's view that the letter was written in the process of adjustment and reconciliation of the statement of claim addressed by the appellant company and a counter. statement to it by the corporation and therefore, could not be held to be one intended as an admission of liability on the part of the corporation, and that, in any event, Subramanayam, who wrote it, had no authority to acknowledge any such liability on behalf of the corporation.
Before we proceed to inquire into the correctness or other wise of the High Court 's view in regard to the letter (exhibit 1), it would be necessary to examine the correspondence which previously ensued between the parties and the surrounding circumstances which led to that letter.
As already stated, under cl.
(9) of the award by which the concerns, once, jointly controlled, were separated, moneys advanced by either of the parties or their firms or standing in deposit with them were to be payable by one to the other.
The award also directed the Gupta group to hand over to the Singhanias account books and other papers and files relating to the corporation.
Accordingly, the Guptas handed them over to the corporation on February 1. 1944.
The complaint of the corporation was that these books had not been properly posted up and contained discrepancies and that the corporation consequently required the help of the Guptas to finalise them.
Early in March 1945, the appellant company had also sent a statement of account in respect of the amounts due and payable to it by the corporation.
On April 20, 1945, one Col. Naidu, a director of the corporation, wrote to the appellant company pointing out from the said statement of account certain items which the corporation disputed.
On 11th/12th September,, 1945, the appellant company sent a statement of account claiming Rs. 2,94,000 and odd as payable to it.
On December 17, 1945, 63 2 a reply thereto was given by a letter sent by Lakshmipat Singhania, the director incharge, of the corporation, mentioning various items disputed by the corporation and the efforts made by it to reconcile those items and enclosed with that reply a reconciliation statement showing the true position according to the corporation.
Among other things, the reply stated as follows "You will find from the above that we have tried our level best to see that these accounts are settled as early as possible as we have been very anxious for finalising but unfortunately, there has been absolutely no response from your side.
From the reconciliation statement you will find that according to our books amount due to the Laxmi Ratan Cotton Mills Co. Ltd., is Rs. 98,101 3 1 which includes interest calculated and credited to your account up to 31st March, 1943.
The interest from that date till the date of settlement is further to be calculated when this account is properly reconciled and confirmed by you.
" The reply pointed out that as against the said amount of Rs. 98,101 3 1 the corporation claimed Rs. 38,490 2 2 and Rs. 8,256 13 6 which, according to it, had to be adjusted.
Lastly,, the reply threatened that unless the accounts were finalised within a month "we will not be paying you any interest on any of your dues beyond 30th September, 1945 ".
The position, as stated in the statement enclosed with the reply, was as follows "Reconciliation of Accounts of M/s. Lakshmiratan Cotton Mills Co. Ltd. Balance as per A.C.I. Ltd. Books Rs. 98,101 3 1 Balance as per statement Rs. 2,94,658 0 9 Difference Rs. 1,96,556 13 8" Then followed detailed items claimed by the corporation totalling Rs. 1,96,556 13 8.
The statement referred to above was the one under which the appellant company claimed Rs. 2,94,658 0 9 and which was sent earlier in March 1945 by Ram Ratan Gupta to Purushottam Singhania.
The corporation took objection to it by claiming various amounts and against which, according to the corporation, only a sum of Rs. 98,.101 3 1 was payable by it "as per A.C.I. Ltd. Books that is to say, as shown by the books of account maintained by the corporation.
The reply of the appellant company, dated December 6, 1945, to the 633 of the appellant company, dated December 6, 1945, to the afore aforesaid letter of September 17, 1945 and the statement enclosed thereto shows that the said Arora on behalf of the appellant company and the said Subramanayam on behalf of the corporation met and tried to reconcile the accounts.
The appellant company by this reply also sent particulars of certain items apparently called for by Subramanayam at that meeting and in its turn asked for particulars of certain items debited to it in the said reconciliation statement.
On December 21, 1945, Subra manayam replied to the appellant company 's letter of December 6, 1945.
By that letter he conveyed two things, (1) that in respect of certain items claimed by the appellant company and which were disputed, those items were either passed or disallowed, and (2) that since the appellant. company had combined in its statement of claim accounts of other allied concerns also, he too had combined those accounts while preparing the statement of accounts he was sending along with his letter.
The letter concluded by stating : "we herewith enclose a consolidated statement after merging all these accounts.
" The consolidated state ment, (exhibit 44) enclosed by Subramanayam with his reply, reads as follows : "Accounts of Messrs Lakshmiratan Cotton Mills Co. Ltd. 1945 December 1.
By balance as per our ledger Rs. 1,00,304 7 7 Then follow accounts of other concerns whose accounts were brought in in what Subramainayam called the consolidated statement of account.
This statement reflected the position of the appellant company in the corporation 's books of accounts as on December 1, 1945.
It will be noticed that the amount admitted in the statement by the corporation as due to the appellant company rose from Rs. 98,000 and odd (as per the earlier statement, dated September 17, 1945) to Rs. 1,00,304 7 7.
This increase was due to the fact that, while adjusting the disputed items.
Subramanayam had allowed and "passed" some of them between September and December 1945 when the disputed items were discussed and adjusted, and entries relating to those which were passed were posted to the credit of the appellant company in the books of the corporation.
The letter of December 21, 1945 was replied to by the appel lant company on February 25, 1946 by asking particulars in 63 4 respect of item claimed by Subramanayam in his said letter.
It was in answer to this letter that Subramanayam wrote the letter (exhibit 1) in controversy and with which he sent the statement showing Rs. 1,07,447 13 11 as "Balance carried down".
Correspondence continued thereafter between the parties, the appellant company maintaining that a much larger amount was due to it than the sum of Rs. 1,07,447 13 11.
Except that, the later correspondence would not throw any light on the question as to acknowledgement, and therefore, we need now detain ourselves on it.
Leaving aside for the time being the question as to Subra manayam 's authority, the following facts emerge from the correspondence and the statements of accounts accompanying some of the letters sent on behalf of the corporation : (a) In pursuance of cl.
(9) of the said award, the appellant company sent to the corporation in the beginning of March 1945 a statement of account claiming Rs. 2,94,000 and odd as due to it.
(b) At no time during the lengthy correspondence which ensued between the parties, the corporation denied its liability to pay; what it did was.
to dispute the correctness of the amount claimed by the appellant company by challenging certain items for which the appellant company claimed credit and by making certain counter claims of its own.
As against the statement of account sent by the appellant company, the corporation sent its own statement which it called the 'reconciliation account '.
(c) During the process of adjustment and reconciliation of the several items claimed by the appellant company some were allowed and some were rejected, and the corporation sought to debit certain items claimed by it against the appellant company.
(d) According to the reconciliation statement sent by the corporation on September 17, 1945 only Rs. 98,000 and odd was due to the appellant company as against its claim for Rs. 2,94,000 and odd.
Later, this figure was raised from time to time as some of the items claimed by the appellant company were allowed 6 3 5 with the result that in the statement sent along with the letter (exhibit 1 ) the balance due to the appellant company was shown at Rs. 1,07,447.
(e) The statements of accounts, (Exs. 43 and 44) and the one enclosed with the letter, (exhibit 1 ) in clear terms stated that the balances shown therein were as shown in the ledger maintained by the corporation.
The letters equally clearly stated that interest on such balances was being credited up to certain dates and for the further period would be credited when the accounts were finalised.
It must follow from these facts that there was a subsisting.
account in the name of the appellant company in the books of the corporation in which interest on the balance shown therein from time to time was being credited and in which amounts in respect of items passed during the course of reconciliation were also being credited.
The statement in the letter (exhibit 1) that "after all the above adjustments the position will be as per statement attached", that is to say, that there was a balance of Rs. 1,07,447 13 11 due and payable to the,appellant company, must clearly amount to an acknowledgement within the meaning of section 19(1).
In our view if the letter (exhibit 1) were to be looked at in the background of the controversy between the parties, which controversy was, as aforesaid, limited to the question as to the correctness of the amount claimed by the appellant company as also the correspondence which ensued in regard to it, it would be impossible to say that the letter (exhibit 1) and the statement of account enclosed therewith were merely explanatory and did not amount to an admission of the jural relationship of debtor and creditor and of the liability to pay the amount found due at the foot of the account on finalisation.
But the argument was that since the letter (exhibit 1) called for confirmation of the amount of Rs. 1,07,447 as being the balance due to the appellant company and. as the appellant company failed to confirm it, the admission of liability was conditional, and therefore, cannot operate as an acknowledgement.
In this connection the decision in Maniram vs Rupchand(1) was relied on and in particular the famous dictum of Mellish, L.J., in In re River Steamer Co. vs Mitehell(2) approvingly cited therein.
The dictum was that an acknowledgement to take the case out of the statute of limitation must be either one from which an absolute promise to pay can be inferred, or secondly, an (1) L. R. 33 1.
A. 165.
(2) L. R. , at 828.
636 unconditional promise to pay the specific debt, or thirdly, that there must be a conditional promise to pay the debt and evidence that the condition has been performed.
The statement relied on in Maniram 's case(1) as an acknowledgement was by the respondent in a written statement filed by him in an earlier bate proceeding in which it was averred that the applicant chand Nanabhai (the respondent) "had for the last five ye open and current accounts with the deceased (the testator) that the alleged indebtedness did not affect his right to apply for probate", as one of the executors.
It was held that the statement was sufficient to constitute an acknowledgement.
"An unconditional acknowledgement", said their Lordships, "has always been held to imply a promise to pay, because that is the natural inference if nothing is said to the contrary.
It is what every honest man would mean to do.
There can be no reason for giving a different meaning to an acknowledgement that there is a right to have the accounts settled, and no quali fication of the natural inference that whoever is the creditor shall be paid when the condition is performed by the ascertainment of a balance in favour of the claimant.
It is a case of the third proportion of Mellish, L.J., a conditional promise to pay and the condition performed.
" We do not see how this decision can support the corporation since in the present case also there was an admission of a subsisting account on the finalisation of which the corporation was prepared to pay the balance found due at the foot thereof.
The only dispute was what would such as balance, Rs. 1,07,447, according to the corporation, a larger sum according to the appellant. company.
The con firmation sought for in the letter (exhibit 1) was not a condition to the admission as to the existence of a subsisting account an the liability to pay when accounts were finalised, but to the specific amount which, according to the corporation, would the amount payable by it.
according to its calculation.
The decision in, Raja Kavali Arunachella Row Bahadur vs Sri R Rangiah App Row Bahadur(2) does not apply as the condition subject to which the settlement there was made was not performed, and therefore, the document was held to be one which could not be spelt out as an acknowledgement.
In Rallapragada Ramamurthy vs Thammana Gopayva(3) also, the letter relied on as an acknowledgement stated that if certain arbitrators should decide that the defendant should pay any amount he would immediately pay, but if the arbitrators failed to decide the plaintiff might sue and the defendant in that case would not plead limitation.
The arbitrators failed to decide.
It was held that the letter being conditional and the condition not having been (1) L. R. 33 1A. 165.
(2) [1906] 1.
L. R. 29 mad.
519: (3) Mad.
637 performed did not operate as an acknowledgement.
This deci sion too has no bearing on the facts of the present case.
Unlike the cases relied on by Mr. Sen, the present case is one of an admission of a subsisting, account and the jural relationship and the liability to pay whatever amount would be found due on finalisation of accounts.
There is no condition subject to which the admission was made which remained unperformed.
Ordinarily, the functions of Subramanym as the secretary of the corporation would be ministerial and administrative.
As a secretary only, he would have no authority to bind the corporation by entering into contracts or other commitments on its behalf.
As the chief accountant and holder of a power of attorney, his functions in regard to the former would be to supervise over maintenance of proper accounts, and in regard to the latter to look after and represent the corporation in litigation.
None of these three positions held by him would by itself or cumulatively make him a person duly authorised to make an acknowledgement binding on the corporation.
Also, the fact that he carried on correspondence for the corporation would not make him a, person authorised to make an acknowledgement binding on the corporation.
[see Uma Shankar vs Gobind Narain(1)].
But such a description of the functions and duties perfomed by him would not be complete.
If the correspondence together with the statements of accounts encolsed therewith is closely examined it becomes clear that he was authorised to scrutinise the claim made by the appellant company, the various items for which the appellant company claimed credit and to reject some, and what is important, to allow the others.
That he had such an authority is clear from the fact that in respect of such of the items which he allowed credit was given to the appellant company and necessary entries to the credit of the appellant company were posted in the account maintained by the corporation in its books of account.
Thus, in the reconciliation statement (exhibit 43) sent along with the corporation 's letter of September 17, 1945.
Rs. 98,101 were shown to be the balance due to the appellant company.
The words used in that statement were "balance as per A.C.I. Ltd. Books".
These words clearly indicate that there was a subsisting account in the name of the appellant company in the books of the corporation and that at the foot of that account the sum of Rs. 98,101 was due to it.
exhibit 44, another statement of account sent to the appellant company, stated Rs. 1,00,304 7 7 as being the "Balance as per ledger" as on December 1, 1945.
As explained earlier, the increase in the balance from Rs. 98,101 to Rs. 100,304 was due to certain items aggregating Rs. 2,203 4 6 having been passed by Subramanayam, and entries (1) 1.
L. R. 46 All.
6 38 having thereupon been posted in the ledger.
Thereafter, further items were passed by him totalling Rs. 465 10 0 which when added raised the balance to Rs. 1,60,760 1 7, as at the end of December 1945.
This was the balance "as per our ledger" stated in the statement sent along with the letter (exhibit 1).
It is impossible to think that in the course of finalising the accounts Subramanayam accorded his assent to various items claimed by the appellant company without having been authorised so to do.
Nor is it possible to say that on his passing those items necessary entries were made in the books of accounts of the corporation without his having so authorised.
Further, he could not have sent to the appellant company statements of accounts showing the balance due to it "as per the ledger" unless he was authorised to finalise the accounts and arrive at the amount due and payable to the appellant company.
In his evidence Subramanayam testified that Lakshmipat Singhania, the director in charge of, the corporation, knew that he was dealing with Arora, the representative of the appellant company, in the matter of accounts between the parties.
He also said that he was to find out the difference between the two and that as a result many points were resolved an he confirmed by letters to the appellant company those points which were so resolved.
He then stated that the directors of the corporation were aware of the settlement of the said points by him but they neither ratified nor repudiated them.
This was because, as conceded by him, be never placed those settled points before the directors for their ratification.
He did not say that he had no authority to settle the differences or that he settled them subject to the approval of the directors.
It is clear that he could not have settled the various points of difference between the parties and suitable entries in the books consequent upon such settlement could not have been posted unless he was authorised by the directors to finalise the accounts and make final adjustment with the appellant company.
He tried, of course, to make out that he had no authority except as a secretary to carry on cor respondence for clarifying the position of the corporation.
He even denied that entries were made in the books of the corporation after he had settled the said items.
The denial is futile because the statements of account sent by him to the appellancompany from time to time clearly show that such entries were made.
The effect of all this evidence is that besides his functions as the secretary cum chief accountant, he was authorised to finalise the accounts between the parties, to settle differences between them and to arrive at the final figure payable by the corporation.
It was in pursuance of such authority that he dealt with Arora, passed some of the items for which the 639 appellant company claimed credit, had those entries posted in the books of the corporation, sent statements of accounts from time to time and finally addressed the letter, (exhibit 1), stating therein that according to the books of the corporation the sum of Rs. 1,07,447 was the balance payable to the appellant company.
He could not possibly have asked the appellant ,company to confirm that balance unless he had the authority on behalf of the corporation to acknowledge on its behalf that that was the balance payable by it.
Therefore, the conclusion is inescapable that he had the implied authority to make the acknowledgement and wrote the letter (exhibit 1) with the intention of doing so.
Accordingly, the suits were not liable to be dismissed on the ground of their being barred by limitation, and the High Court was in error in allowing the appeals by the corporation and dismissing the suits.
The result is that the appeals are allowed, and the judgment and order passed by the High Court are set aside.
The case will have to be remanded to the High Court for deciding the rest of the questions arising in the suits and ascertaining the amounts due to the appellants (the original plaintiffs) as the High Court has not gone into those questions as it dismissed the suits on the point of limitation.
In view of the very long period having elapsed due to prolonged adjournments of the appeals while they were pending before the High Court, we earnestly hope that the High Court will dispose of the cases as expeditiously as possible.
The corporation will pay to the appellants costs of these appeals, such costs to be in one set of costs.
G.C. Appeals allowed.
| IN-Abs | Prior to January 18, 1944 six companies including M/s. Lakshmiratan.
Cotton Mills Co. Ltd. (the appellant company) and the Aluminium Corporation of India Ltd. (respondent corporation) were jointly managed by two groups known as the Singhania and Gupta groups.
As a result of disputes between the two groups there was a reference to arbitration.
After January 18, 1944, the date of the award, the aforesaid six concerns were brought under the management and control of one or the other of the two groups The Corporation came under the control and management of the Singhania group.
In cl. 9 of the award it was said that the award did not cover the advances which either party or their separate firms may have made to all or any of them or their moneys which may be in deposit with them and that they would be payable and paid in their usual course.
After the award the appellant Company sent a statement of account in respect of advances made to the respondent corporation, and expenditure incurred on its behalf.
The statement was objected to.
on the ground that the appellant company had not properly maintained its accounts during the period of joint management.
Efforts at reconciliation of accounts having faded the appellants filed two suits claiming Rs. 3,56,207.9.6 and Rs. 72,595.4.6 from the Corporation, being suits Nos. 63 and 65 of 1949.
In suit No. 63 of 1949 it was claimed that the suit was within time as after adjustment of several items in 1946 and 1947 a sum of Rs. 2,96,110. 11.6 was found due to the appellant company and that in any event the suit was saved from being barred by limitation by a letter (exhibit 1) dated April 16, 1946 addressed by s the Secretarycum Chief Accountant of the Corporation, thereby acknowledging the liability of the Corporation to pay the amount which would be found due and payable under the said accounts.
Similar averments were made in, Suit No. 65 of 1949.
The written statements filed on behalf of the Corporation inter alia pleaded that the said claim was barred by limitation, that the said letter didnot amount to an acknowledgement within the meaning of section 19 of theLimitation Act, 1908 which was then applicable to the suits, and lastly,that even if the said letter did amount to an acknowledgement, it wasnot binding on the Corporation.
The trial court decreed the suits but theHigh Court dismissed them as being time barred.
In appeals to this Courtthe questions that fell for consideration were (i) whether the letter in question amounted to an acknowledgment;(ii) whether it was an acknowledgement by the corporation, and if not (iii) whethe 'r the Secretary cum Chief Accountant had authority express or implied.
to acknowledge liability on behalf of the Corporation so as, to bind that corporation.
Allowing the appeals, HELD: (1) (a) From the provisions of section 19(1) of the Limitation Act, 1908 it is clear that the statement on which the plea of acknowledgement is founded must relate to a subsisting liability as the section requires 624 that it must be made before the expiration of the period prescribed by the Act.
It need not, however, amount to a promise to pay, for an acknowledgement does not create a new right of action but merely extends the period of limitation.
The statement need not indicate the exact nature or the specific character of the liability.
The words used in the statement in question, however, must relate to a present subsisting liability and indicate the existence of jural relationship between the partes such as, for instance, that of a debtor and a creditor and the intention to admit such a jural relationship Such an intention need not be in express terms and can be inferred by implication or the nature of the admission and the surrounding circumstances.
Generally speaking a liberal construction of the statement in question should be given.
That of course does not mean that where a statement is made without intending to admit the existence of a particular jural relationship, such an intention should be fastened on the person making the statement by an involved or a far fetched reasoning.
[629 C E] Khan Bchadur Shapoor Freedoom Mazda vs Durga Prosad Chamaria, , Tilak Ram vs Nathu, A.I.R. , 938, 939, Green vs Humphreva, [1884] 26 Ch. D. 474, 481, Tajpal Saraogi vs Lallanjee Jain, C.A. No. 766/62 dt.
8 2 1965 and Abdul Rahim Oosman & Co. vs Ojamshee Prushottamdas & Co., Cal.
6,39, referred to.
(b) From the correspondence between the parties and the surrounding circumstances it must follow that there was a subsisting account in the name of the appellannt company in the books of the Corporation in which interest on the balance shown therein from time to time was being credited and in which amounts in respect of items passed during the course of reconciliation were also duly credited.
The statement in the letter exhibit 1 that "after all the above adjustments the position will be as per statement attached", that is to say, that there 'was a balance of Rs. 107447/13/11 due and payable to the appellant company must clearly amount to acknowledgement within the meaning of section 19(1).
If the letter be looked at in the background of the controversy between the parties which controversy was limited to the question as to the correct ness of the amount claimed by the appellant company as also the correspondence which ensued in regard to it, it would be impossible to say that the letter and the statement of account enclosed therewith were merely explanatory and did not amount to an admission of the jural reship of debtor and creditor and of the liability to pay the amount found due at the foot of the account on finalisation.
[635 D F] The mere fact that letter called for confirmation of the amount of the balance mentioned therein and the fact that the appellant company failed to confirm it, could not lead to a conclusion that the admission of liability was conditional and therefore could not operate as an acknow ledgement.
The confirmation sought in the letter was not a condition to the admission as to the existence of a subsisting account and the liability to pay when accounts were finalised but to the specific amount which according to the corporation would be the amount payable by it according to its calculation. 'There was no condition subject to which the admission was to be made which remained unperformed.
[635 G; 636 F G; 637 B] Maniram vs Rupchand, L.R. 33 I.A. 165, Raja Kayali Arunachella Row Bahadur vs Sri Rajah Rangiah Appa Row Bahadur, Mad.
519 and Ballapragada Ramamurthy vs Thammana Gopayya, Mad. 701, distinguished.
625 LAXMIRATAN COTTON MILLS V. ALUMINIUM CORP. (Shelat, J.) In re River Steamer Co. vs Mitchell, , 828, referred to.
, (ii) The plea that the letter exhibit I should be regarded as an acknowledgement by the corporation itself was not included among the issues formulated before the courts below.
It could not be allowed to be raised for the first time in this Court.
[628 B] (iii) If the correspondence between the parties together with the statements of accounts enclosed therewith was closely examined it became clear that S was authorised to scrutinise the claim made by the appellant company, the various items for which the appellant _company claimed credit and to reject the same and, what is important, to allow others.
That he had such an authority was clear from the fact that in respect of such of the items which he allowed, credit was given to the appellant and necessary entries to the credit of the appellant company were posted in the account maintained by the Corporation in its books of account.
It was impossible to say that in the course of finalising the accounts, S accorded his assent to various items claimed by the appellant company without having been authorised so to do.
Nor was it possible to say that on his passing those items necessary entries were made in the books of accounts of the corporation without his having so authorised.
Further, he could not have sent to the appellant company statements of account showing the balance due to it "as per the ledger" unless he was authorised to finalise the accounts and arrive at the amount due and payable to, the company.
[637 E F; 638 B C] Uma Shankar vs Govind Narain, I.L.R. 46 All. 982, referred to.
|
of 1951.
Appeal under article 132 (1) of the Constitution of India from the Judgment and Order dated November 15, 1950, of the High Court of Judicature at Madras (Menon and Sayeed JJ.) in Criminal Miscellaneous Petition No. 1278 of 1950.
V. K. T. Chari (Advocate General of Madras) (Ganapathy Iyer, with him) for the appellant.
K. section Krishnaswamy Iyengar (K. Venkataramani, with him) for respondent No. 1. 1952.
December 5.
The Judgment of Patanjali Sastri C.J., Mukherjea, Chandrasekhara Aiyar and Ghulam Hagan JJ. was delivered by Patanjali Sastri C.J. Vivian Bose J. delivered a separate judgment.
PATANJALI SASTRI C. J.
This is an appeal from an order of the High Court of Judicature at Madras quashing certain criminal proceedings instituted in 337 the Court of the Third Presidency Magistrate, Madras, against the first respondent who is the managing director of a cinema company carrying on business in Madras under the name of "Prabhat Talkies.
" The proceeding arose out of a charge sheet filed by the police against the first respondent for an offence under section 29 of the (hereinafter referred to as the Act).
The charge was that the first respondent failed to implement certain terms of an award dated 15th December, 1947, made by the Industrial Tribunal, Madras, appointed under the Act and thereby committed a breach of those terms which were binding on him.
The first respondent raised a preliminary objection before the Magistrate that the latter had no jurisdiction to proceed with the enquiry because the award on which the prosecution was based was ultra vires and void on the ground that the reference to the Industral Tribunal which resulted in the award was not made by the Government in accordance with the requirements of section 10 'of the Act.
As the Magistrate refused to deal with the abjection as a preliminary point, the first respondent applied to the High Court under article 226 of the Constitution for a writ of certiorari to quash the proceeding pending before the Magistrate.
The application was heard in the first instance by a single Judge who referred the matter to a Division Bench in view of the important questions involved, and it was accordingly heard and decided by Govinda Menon and Basheer Ahmed Sayeed JJ.
who upheld the objection and quashed the proceeding by their order dated 15th November, 1950.
From that order the State of Madras has preferred this appeal.
The second respondent, the South Indian Cinema Employees ' Association (hereinafter referred to as the Association) is a registered trade union whose members are employees of various cinema companies carrying on business in the State of Madras.
Among these are the 24 cinema houses operating in the City of Madras, including the " Prabhat Talkies".
On 8th 338 November, 1946, the Association submitted to the Labour Commissioner of Madras, who had also been appointed as the Conciliation 'Officer under the Act a memorandum setting forth certain demands against the employers for increased wages and dearness allowance, annual bonus of three months ' wages, increased leave facilities, provident fund, and adoption of proper procedure in imposing punishment and requesting the Officer to settle the disputes as the employers were unwilling to concede the demands.
After meeting the representatives of the employees and the employers, the Labour Commissioner suggested on 28th April, 1947, certain " minimum terms " which he invited the employers and the union officials to accept.
The managers of six cinema companies in the City including " Prabhat Talkies " agreed to accept the terms but the managements of other companies did not intimate acceptance or non acceptance.
It would appear that, in the meantime, a meeting was convened on 22nd February, 1947, of the employees of four cinema companies including "Prabhat Talkies." Ninety four out of 139 workers attended the meeting and resolutions were passed to the effect that no action need be taken about the demands of the Association as the managements of those companies agreed to some improvement in the matter of wages and leave facilities and promised to look into the workers ' grievances if they were real.
But as the terms suggested by the Labour Commissioner were not accepted by all the employers, the representatives of the Association met that Officer on 13th May, 1947, and reported that the Association had decided to go on strike on any day after 20th May, 1947, if their demands were not conceded.
As the conciliation proceedings of the Labour Commissioner thus failed to bring about a settlement of the dispute, he made a report on 13th May, 1947, to the State Government as requited by section 12 (4) of the Act stating the steps taken by him to effect a settlement and why they proved unsuccessful.
In that report, after mentioning the minimum terms suggested by him and 339 enumerating the ten demands put forward by the employee,;, the Labour Commissioner stated as follows: "As the employers have not accepted even the minimum terms suggested by me and as the employees are restive, I apprehend that they may strike work at ' anytime.
I therefore suggest that the above demands made by the workers may be referred to an Industrial Tribunal for adjudication.
I have advised the workers to defer further action on their notice pending the orders of Government," and he concluded by suggesting the appointment of a retired District and Sessions Judge as the sole member of the Special Industrial Tribunal " to adjudicate on this dispute.
" Thereupon the Government issued the G. O. M. section No. 2227 dated 20th May, 1947, in the following terms: " Whereas an industrial dispute has arisen between the workers and managements of the cinema talkies in, the Madras City in respect of certain matters ; And whereas in the opinion of His Excellency the Governor of Madras, it is necessary to refer the said industrial dispute for adjudication; Now, therefore, in exercise of the powers conferred by section 7 (1) and (2) read with section 10 (1) (c) of the " His Excellency the Governor of Madras hereby constitutes an Industrial Tribunal consisting of one person, namely, Sri Diwan Bahadur K. section Ramaswami Sastri, Retired District and, Sessions Judge, and directs that the said industrial dispute be referred to that tribunal for adjudication.
The Industrial Tribunal may, in its discretion, settle the issues in the light of a preliminary enquiry which it may hold for the purpose and thereafter adjudicate on the said industrial dispute.
The Commissioner of Labour is requested to send copies of the order to the managements of cinema talkies concerned," 44 340 The Tribunal sent notices to all the cinema companies in the City and to the Association calling upon them to file statements of their respective cases and to appear before it on 7th July, 1947.
Pleadings were accordingly filed on both sides and the Tribunal framed as many as 22 issues of which issue (3) is ,material here and runs thus: " Is there a dispute between the managements of the City theatres and their respective employees justifying the reference by the Government to the Industrial Tribunal for adjudication ? Whether such an objection is tenable in law ?" It appears to have been claimed on behalf of some of these companies including " Prabhat Talkies " that so far as they ware concerned there was no dispute between the, management and their employees and therefore they should not be included in the reference or the award.
The Tribunal repelled this argument observing: "That even if some of the theatres have got a staff contented with their lot there is a substantial dispute in the industry taken as a whole.
After I arrive at my decision about the basic wages, increments, dearness allowance, etc.
the same will bind the industry as a whole in the City of Madras if the Government accepts and implements my award.
" The Tribunal accordingly held that none of the cinema companies should be "removed from the ambit of this industrial dispute and adjudication ".
It also found as a matter of fact that " the idyllic picture of industrial peace and contentment " put forward by the first respondent company was not justified by the evidence. 'Issue No. 3 was thus found for the Association.
The Tribunal finally passed its award on 15th December, 1947, which was confirmed by the Government on 13th February, 1948, and was declared binding on the workers and the managements with effect from 25th February, 1948, the date of its publication in the Fort St. George Gazette, for a period of one year from that date.
It is alleged that 341 the first respondent failed to implement certain provisions of the award when their implementation was due and thereby committed an offence punishable under section 29 of the Act.
No prosecution, however, was instituted till 24th April, 1950, as, in the meanwhile, certain decisions of the Madras High Court tended to throw doubt on the validity of references made in general terms without specifying the particular disputes or the groups of workers and managements between whom such disputes existed, and legislation was considered necessary to validate awards passed on such references.
Accordingly the Industrial Disputes (Madras Amendment) Act, 1949, was passed on 10th April, 1949, purporting to provide, inter alia, that all awards made by any Industrial Tribunal constituted before the commencement of that Act shall be deemed to be valid and shall not be called in question in, any court of law on the ground that the dispute to which the award relates was not referred to the Tribunal in accordance with the provisions of the (section 5).
It also purported to validate certain specified awards including " the award in the disputes between the managements of cinema theatres and workers " (section 6), which obviously refers to the award under consideration in these proceedings.
In support of his application to the High Court the first respondent herein raised three contentions.
First, the Government had no jurisdiction to make the reference in question as there was no dispute between the management and workers of " Prabhat Talkies " and, therefore, the reference and the award in so far as they related to the first respondent were ultra vires and void; secondly, in any case the notification by the Government purporting to refer an industrial dispute to the Tribunal was not competent under the Act, inasmuch as it did not refer to any specific disputes as &rising for adjudication and did not mention the companies or firms in which the disputes are said to have existed or were apprehended; and thirdly, the Madras Amendment Act was 342 unconstitutional and void under section, 107 of the Government of India Act, 1935, being repugnant 10the provisions of, the Central , and also void under article 13 (1) read with article 14 of the Constitution as being discriminatory in character.
The learned Judges, by separate but concurring judgments, upheld these contentions and issued a certificate under article 132 (1) of the Constitution as the case raised substantial questions of law regarding the interpretation of the Constitution.
As we considered that the contentions of, the appellant on the first two points must prevail, we did not hear arguments on the constitutional issue.
Before dealing with the main contentions of the parties, we may dispose of a minor point raised by Mr. Krishnaswami Aiyangar, for the first time before us, namely, that the prosecution of the first respondent for the alleged breach of some of the terms of the Tribunal 's award is unsustainable inasmuch as it was instituted after the expiry of the award.
In support of this argument learned counsel invoked the analogy of the cases where it has been held that a prosecution for an offence under a temporary statute could not be commenced, or having been commenced when the statute was in force, could not be continued after its expiry.
Those decisions have no application here.
The first respondent is prosecuted for an offence made punishable under section 29 of the Act which is a permanent statute and when he committed the alleged breach of some, of the terms of the award, which was in force at the time, he incurred the liability to be prosecuted under the Act.
The fact that the award subsequently expired cannot affect that liability.
On behalf of the appellant, the Advocate General of Madras urged that the question whether there existed an industrial dispute when the Government made the reference now under consideration was an issue of fact which the High Court ought not to have found in the negative at this preliminary stage 343 before evidence was recorded by the trial court.
He submitted, however, that, on the facts already appearing on the record, there could be no reasonable doubt that an industrial dispute did exist at the relevant time.
We are.
inclined to agree.
The ten demands set forth in the Labour Commissioner 's letter of the 13th May, 1947, which were not agreed to by the managements of the 24 cinema theatres in Madras clearly constituted industrial disputes within the meaning of the Act.
Basheer Ahmed Sayeed J., with whom the, other ' learned Judge concurred, says: "There is nothing in the letter of the Commissioner which would indicate that these demands made by the South Indian Cinema Employees ' Association were referred to the respective owners of the cinema houses in the City of Madras as a body or to any of them individually.
" This, we think is based on a misapprehension of the true facts.
Thedemandswereidenticalwiththose mentioned in the Association 's memorandum originally submitted on the 8th November, 1946, and they formed the subject of discussion with the representatives of the cinema companies in the City in the course of the conciliation proceedings.
That memorandum, which was not made part of the I record in the court below, was produced here, and Mr. Krishnaswami Aiyangar was satisfied that the demands referred to in that memorandum were the same as those mentioned in the Labour Commissioner 's letter of 13th May, 1947, of which all the employers were thus fully aware.
Nor is it correct to say " that the disputes, if any, ' which might have existed between the workmen of the petitioner 's cinema and the petitioner him self had been settled by the petitioner 's ready and willing acceptance of the terms suggested.
by the Commissioner ".
The terms accepted by the first respondent were what the Commissioner called "the minimum terms " and were by no means the same as the demands put for ward by the Association, which were never accepted 344 by the Association.
The Commissioner 's letter of the 13th May, 1947, made this clear.
But, in truth, it was not material to consider whether there was any dispute outstanding between the first respondent and his employees when the Government made the reference on 20th May, 1947.
The learned Judges appear to have assumed that the disputes reference to a Tribunal under section 10 (1) (c) of the Act must, in order that the resulting award may be binding on any particular industrial establishment and its.
employees, have actually arisen between them.
" Analysing the order of reference of the Madras Government now under consideration," the learned Judges observe, " it is obvious that there is no mention of the existence of any dispute between the petitioner (the first respondent herein) and his workmen . . .
In fact there was no dispute to be referred to a Tribunal so far as this petitioner is concerned.
If, therefore, there was no jurisdiction to make any reference, it follows that the whole reference and the award are both invalid and not binding on the petitioner.
" This view gives no effect to the words "or is apprehended " in section 10 (1).
In the present case, the Government referred " and industrial dispute between the workers and managements of cinema talkies in Madras City in respect of certain matters." As pointed out in the Labour Commissioner 's letter to the Government, there were 24 cinema companies in Madras, and the Association, which, as a duly registered trade union, represented their employees, put forward the demands on behalf of the employees of all the cinema houses in the City.
Fifteen out of 43 workers of the " Prabhat Talkies " were admittedly members of the Association which thus figured as one of the parties to the dispute.
In that situation, the Government may have thought, without a close examination of the conditions in each individual establishment, that disputes which affected the workmen collectively existed in the cinema industry in the City and that, even if such disputes had not actually arisen in any particular establishment, they could, 345 having regard to their collective nature, well be appre hended as imminent in respect of that establishment also.
It is not denied that notices were sent by the Tribunal to all the 24 companies and they all filed written statements of their case in answer to the demands made by the Association on behalf of the employees.
In these circumstances, it is idle to claim that the Government had no jurisdiction to make the reference and that the award was not binding on the respondent 's Organisation.
The latter was clearly bound by the award under section 18 of the Act.
It was next contended that the reference was not competent as it was too vague and general in its terms containing no specification of the disputes or of the parties between whom the disputes arose.
Stress was laid on the definite article in clause (c) and it was said that the Government should crystallise the disputes ,before referring them to a Tribunal under section 1 0 (1) of the Act.
Failure to do so vitiated the proceedings and the resulting award.
In upholding this objection, Govinda Menon J., who dealt with it in greater detail in his judgment, said, " Secondly, it is contended that the reference does not specify the dispute at all.
What is stated in the reference is that an industrial dispute has arisen between the workers and the management of the cinema talkies in the City of Madras in respect of certain matters.
Awards based on similar references have been the subject of consideration in this Court recently.
In Bamayya Pantulu vs Kutty and Rao (Engineers) Ltd.(1) Horwill and Rajagopalan JJ.
had to consider an award based on similar references without specifying what the dispute was.
" After referring to the decision of the Federal Court in India Paper Pulp Co. Ltd. vs India 'Paper Pulp Workers ' Union(2), and pointing out that though the judgment of the Federal Court was delivered on 30th March, 1949, it was not referred to by the High Court in Kandan Textile Ltd. vs Industrial Tribunal, Mad ras(3), which was decided on 26th August, 1949, the learned Judge expressed the view that the trend of (1) (3) (2) 346 decisions of this Court exemplified in the cases referred to by me above has not been overruled by their Lordships of the Federal Court.
" Basheer Ahmed Sayeed J. I however, sought to distinguish the decision of the Federal Court on the facts of that case, remarking "that a reading of the order of reference that was the subject matter of the Federal Court decision conveys a clear idea as to a definite dispute, its nature and existence and the parties between whom the dispute existed.
" It is, however,, clear from the order of reference which is fully extracted in the judgment that it did not mention what the particular dispute was, and it was in repelling the objection based on that omission that Kania C.J. said: "The section does not require that the particular dispute should be mentioned in the order; it is sufficient if the existence of a dispute and the fact that the dispute is referred to the Tribunal are clear from the order.
To that extent the order does not appear to be defective.
Section 10 of the Act, however, requires a reference of the dispute to the Tribunal.
The Court has to read the order as a whole and determine whether in effect the order makes such a reference.
" This is, however, not to say that the Government 'will be justified in making a reference under section 10 (1) without satisfying itself on the facts and circumstances brought to its notice that an industrial dispute exists or is apprehended in relation to an establishment or a definite group of establishments engaged in a particular industry, and it is also desirable that the Government should, wherever possible, indicate the nature of the dispute in the order of reference.
But, it must be remembered that in making a reference under section 10(1) the Government is doing an administrative act and the fact that it has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character. ' The Court cannot, therefore, canvass the order of reference closely to see if there was any 347 material before the Government to support its conclusion, as if it was a judicial or quasi judicial determination.
No doubt, it will be open to a party seeking to impugn the resulting award to show that what was referred by the Government was not an industrial dispute within the meaning of the Act,, and that, therefore, the Tribunal had no jurisdiction to make the award.
But if the dispute was an industrial dispute as defined in the Act, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for the Government to decide upon, and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no material before the Government on which it could have come to an affirmative conclusion on those matters.
The observations in some of the decisions in Madras do not appear to have kept this distinction in view.
Moreover, it may not always be possible for the Government, on the material placed before it, to particularise the dispute in its order of reference, for situations might conceivably arise where public interest requires that a strike or a look out either existing or imminent should be ended or averted without delay, which, under the scheme of the Act, could be done only after the dispute giving rise to it has been referred to a Board or a Tribunal (vide sections 10(3) and 23).
In such cases the Government must have the power, in order to maintain industrial peace and production, to set in motion the machinery of settlement with its sanctions and prohibitions without stopping to enquire what specific points the contending parties are quarrelling about, and it would seriously, detract from the usefulness of the statutory machinery to construe section 10 (1) as denying such power to the Government.
We find nothing in the language of that provision to compel such construction.
The Government must, of course, have sufficient knowledge of the nature of the dispute to be 45 348 satisfied that it is an industrial dispute within the meaning of the Act, as, for instance, that it relates to retrenchment or reinstatement.
But, beyond this no obligation can be held to lie on the Government to ascertain particulars of the disputes before making a reference under section 10 (1) or to specify them in the order.
This conclusion derives further support from clause (a) of section 10 (1) which provides in the same language for a reference of the dispute to a Board for promoting a settlement.
A Board is part of the conciliation machinery provided by the Act, and it cannot be said that it is necessary to specify the dispute in referring it to such a body which only mediates between the parties who must, of course, know what they are disputing about.
If a reference without particularising the disputes is beyond cavil under clause (a), why should it be incompetent under clause (c) ? No doubt, the Tribunal adjudicates; whereas the Board only mediates.
But the adjudication by the Tribunal is only an alternative form of settlement of the disputes on a fair and just basis having regard to the prevailing conditions in the industry and is by no means analogous to what an arbitrator has; to do in determining ordinary civil disputes according to the legal rights of the parties.
Indeed, this notion that a reference to a Tribunal under the Act must specify the particular disputes appears appears to have been derived from the analogy of an ordinary arbitration.
For instance in Ramayya Pantulu vs Kutty & Rao (Engineers) Ltd.(1) it is observed "that if a dispute is to be referred to: a Tribunal the nature of the dispute must be set out just as it Would if a reference were made to an arbitrator in a civil dispute.
The Tribunal like any other arbitrator can give an award on a reference only if the points of reference are clearly placed before it.
" The analogy is somewhat misleading.
The scope of adjudication by a Tribunal under the Act is much wider as pointed out in the Western India (1) 349 Automobile Association 's case (1), and it would involve no hardship if the reference also is made in wider terms provided, of course the dispute is one of the kind described in section 2(k) and the parties between whom such dispute has actually arisen or is apprehended in the view of the Government are indicated either individually or collectively with reasonable clearness.
The rules framed under the Act provide for the Tribunal calling for statements of their respective cases from the parties and, the disputes would thus get crystallised before the Tribunal proceeds to make its award.
On the other hand, it is significant that there is no procedure provided in the Act or in the rules for the Government ascertaining the particulars of the disputes from the parties before referring them to a Tribunal under section 10(1).
In view of the increasing complexity of modern life and the interdependence of the various sectors of a planned national economy, it is obviously in the interest of the public that labour disputes should be peacefully and quickly settled within the frame work of the Act rather than by resort to methods of direct action which are only too well calculated to disturb the public peace and order and diminish production in the country, and courts should not be astute to discover formal defects and technical flaws to overthrow such settlements.
In the result we set aside the order of the High Court and dismiss the first respondent 's petition.
BOSE J. I agree but would have preferred to rest my decision on the ground that in this case there was sufficient compliance with the terms of section 10(1) (C) of the Act even on the first respondent 's interpretation of it, namely that the words, " the dispute " require Government to indicate the nature of the dispute which the Tribunal is required to settle.
I say this because, in my judgment, we must read the order of the 20th May, 1947, along with the documentS which accompanied it.
I also agree that one (1) 350 must not be over technical, but had it not been for the /of act that the point is now settled by the decision in the India Paper ' Pulp Company 's case(1) I would have been inclined to consider that an indication of the nature of the dispute, either in the order itself or in the papers accompanying it, was necessary.
However, that is now settled and I have no desire to go behind the decision but I would like to say that even if it is not legally necessary to indicate the nature of the dispute, it is, in my opinion, desirable that that should be done.
Appeal allowed.
Agent for respondent No. 1: section Subramanian.
| IN-Abs | The South Indian Cinema Employees ' Association, a regis tered trade union whose members were the employees of the 24 cinema houses operating in the Madras City including some of the employees of the Prabhat Talkies, submitted to the Labour Commissioner a memorandum setting forth certain demands against their employers for increased wages etc.
and requesting him to settle the disputes.
The Labour Commissioner suggested certain, " minimum terms " which were accepted by some of the companies including the Prabhat Talkies and at a meeting of the employees of the Prabhat Talkies a resolution was passed to the effect that no action be taken about the demands of the Association.
The Association decided to go on strike.
The Labour Com missioner reported to the Government, and the Government made a reference to an Industrial Tribunal, the material portion of which " 'Whereas an industrial dispute has arisen between the workers was: and management of the Cinema Talkies in the Madras City in respect of certain matters and whereas in the opinion of His Excellency the Governor of Madras it is necessary, to refer the said industrial dispute for adjudication: now therefore etc.
" The Prabhat 335 Talkies contended before the tribunal that as there was no dispute between them and their employees they should not be included in the reference or award, but the Tribunal did not exclude them and an award was passed, and the managing director of the Prabhat Talkies was prosecuted for non compliance with the award: Held by the Full Court, (i) that the Labour Commissioner 's report clearly showed that an industrial dispute existed between the management and the employees of the cinema houses; (ii) that as some of the workers of the Prabhat Talkies were members of the Union, and a reference could be made even when a dispute was apprehended, the Government had jurisdiction to make a reference even in respect of the Prabhat Talkies and the reference and the award were binding on the Prabhat Talkies.
Held Per PATANJALI SASTRI C.J., MUKHERJEA, CHANDRA SEKHARA AIYAR and GHULAM HASAN JJ.
(BosE J. dubitante) that the reference to the Tribunal under section 10 (1) of the , cannot be held to be invalid merely because it did not specify the disputes or the parties between whom the disputes arose.
Per BOSE J.
The order of reference must be read with the documents which accompanied it and there was sufficient compliance with section 10 (1) (c) of the even if the words " the dispute " in the said clause require the Government to indicate the nature of the dispute which the Tribunal is required to settle.
Even if it is not legally necessary to indicate the nature of the dispute in a reference, it is desirable that that should be done.
Per PATANJALI SASTRI C. T., MUKHERJEA, CHANDRASEKHARA AIYAR and GHULAM HASAN JJ.
Though the Government will not be justified in making a reference under section 10 (1) without satisfying itself on the facts and circumstances brought to its notice that an industrial dispute exists or is apprehended in relation to an establishment or a definite group of establishments engaged in a particular industry and it is also desirable that the Government should, wherever possible, indicate the nature of the dispute in the order of reference, it must be remembered that in making a reference under section 10 (1) the Government is doing an administrative act and the fact that it has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character.
The Court cannot, therefore, canvass the order of reference closely to see if there was any material before the Government to support its conclusion, as if it was a judicial or quasi judicial determination.
No doubt, it will be open to a party seeking to impugn the resulting award to show that what, was referred by the Government, was not an industrial dispute within the meaning of the Act, and that, therefore, the Tri bunal had no jurisdiction to make the award But, if the dispute 336 was an industrial dispute as defined in the Act, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for the Government to decide upon, and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no material before the Government on which it could have come to an affirmative conclusion on those matters.
The Government must have sufficient knowledge of the nature of the dispute to be satisfied that it is an industrial dispute within the meaning of the Act, as, for instance, that it relates to retrenchment or reinstatement.
But, beyond this no obligation can be held to lie on the Government to ascertain particulars of the disputes before making a reference under section 10 (1) or to specify them in the order.
The adjudication by the Tribunal is only an alternative form of settlement of the disputes on a fair and just basis having regard to the prevailing conditions in the industry and is by no means analogous to what an arbitrator has to do in determining ordinary civil disputes according to the legal rights of the parties.
Ramayya Pantulu vs Kuttti and Rao (Engineers) Ltd. [(1949) , India Paper Pulp Co. Ltd. vs India Paper Pulp Workers ' Union ([1949 50] F.C.R. 348), Kandan Textiles Ltd. vs Industrial Tribunal, Madras [(1949) and Western India Automobile Association 's case ([1949 50] 1 F.C.R. 321) referred to.
Judgment of the High Court of Madras reversed.
|
minal Appeal No. 134 of 1968.
Appeal from the judgment and order dated April 16, 1968 of the Allahabad High Court in Criminal Misc.
Case No. 3403 of 1967.
Yogeshwar Prasad, for the appellant 0.
P. Rana, for respondent No. 2.
701 The Judgment of the Court was delivered by Dua, J.
The short point requiring determination in this appeal on certificate of fitness granted by the Allahabad High Court under article 134(1)(c) of the Constitution is whether tolltax on laden motor vehicles levied under section 128(1)(vii) of the, U.P., Municipalities Act 11 of 1916 (hereinafter described as the Act) on their entry within the limtis of Nainital Municipality can be realised from the passengers carried by them.
The relevant facts which lie within a narrow compass may now be briefly stated.
Brij Mohan Chandra, Vice President of the Notified Area Committee, Bhowali, District Nainital (respondent No. 1 in this Court) traveled in U.P. Government Roadways Bus from Bhowali to Nainital on 17th, 26th and 29th May, 1967.
At Kaila Khan Municipal toll barrier one and a half mile from Nainital on the Bhowali Nainital Road, toll tax was demanded from him but he declined to pay.
The Executive Officer, Municipal Boad, Nainital, thereupon filed a complaint against him under section 190(1)(c) of the Code of Criminal Procedure on the allegation that he had by entering the municipal limits of Nainital without paying the toll dues committed breach or r. (1) of the Rules made under section 153(a) of the Act for the 'assessment and collection of tolls within the municipality of Nainital.
Brij Mohan Chandra 's contention in reply was that the levy of toll tax by the Municipal Board on passengers was ultra vires the taxing power of the Board.
During the pendency of the proceedings in the court of Sub Divisional Magistrate, Nainital, Brij Mohan Chandra applied to the High Court of Judicature at Allahabad under section 561A, Cr.
P.C. for quashing those proceedings.
The High Court (section D. Singh J) on April 16, 1968 quashed the proceedings by the impugned order holding that cl, (vii) of section 128(1) of the Act did not authorise levy of toll tax on passengers and that the relevant notification also levied tax only on vehicles and not on passengers.
The rule imposing an obligation on the passengers to pay the toll was, therefore, struck down as ultra vires.
In this Court Shri Yogeshwar Prasad, learned counsel for the appellants (the Municipal Board, Nainital and the Executive Officer of the Board) at the outset attempted obliquely to seek support for the validity of the levy on passengers from cl.
(xiv) of section 128(1) as pleaded in the memorandum of appeal lodged in this Court under O.21, r. 12 of the Supreme Court Rules.
But this attempt was soon abandoned and Shri Yogeshwar Prasad felt constrained to concede that in view of the clear and precise position taken on behalf of the Board in the High Court that it had never been intended to impose toll tax on passengers, it was not 702 open to him in this Court to rely on cl.
(xiv).
Shri O. P. Rana, the learned counsel for the respondent State of U.P. supporting the appeal, also did not rely on cl.
(xiv).
We, therefore, do not purpose to express any opinion on the question whether or not a toll tax on passengers would be permissible under cl.
(xiv).
The only point seriously pressed on behalf of the appellants as also by Shri O. P. Rana on behalf of the State of U.P. was that the toll imposed on the vehicle entering the municipality could legally be realised from the passengers carried by it because of their nexus with the entry of the vehicle.
Before examining this contention we may in passing turn to cl.
(vii) of section 128 ( 1 of the Act which reads: "128(1) Subject to any general rules or special orders of the State Government, in this behalf, the taxes which a board may impose in the whole or part of a municipality are (vii) a toll on vehicles and other conveyances, animals, and laden coolies entering the municipality; This clause in clear and unambiguous terms speaks of a toll on vehicles and other conveyances, animals and laden coolies ,entering the municipality.
It does not take within its Cold the, passengers carried by vehicles to be taxed, with the result that imposition of tax on passengers by the Municipal Board would be incompetent under this clause.
And this in fact was not ,disputed at the Bar.
The argument of nexus was also raised in the High Court: but it was repelled by that Court which observed as follows "It was urged that when a tax on conveyance is levied, some provision has to be made for the assessment and collection of that tax and some provision made about the persons from whom that tax may be recovered and that if there is any reasonable or rational nexus between the levy of the tax and the persons from whom that tax may be recovered, the Municipal Board would be within its rights to realise the tax from the persons so named.
It is difficult, however, to apply the nexus theory in a manner so as to enable the Municipal Board to recover the toll tax from the passengers travelling in a bus otherwise there will be no distinction left between a vehicles tax and a passenger tax.
When a toll tax is 703 levied on a vehicle, it is levied at the point of its entry within the municipal limits.
It is obviously, therefore, the person, who is in charge of the vehicle or who makes an attempt to take the vehicle inside the municipal limits, who takes upon himself the responsibility for the payment of the toll tax.
There is no question of there being any nexus between the levy of the tax on the vehicle and the persons sitting inside the same.
In the case of ,vehicles plying on hire the driver or conductor of the vehicle can, of course, charge the amount of tax which has to be paid, from the passengers in addition to the fare which is normally charged from them.
" The same argument was repeated before us.
The submisssion seems to be based largely on the policy of the law to ensure the collection of taxes by preventing fraudulent evasion.
in order to, appreciate its cogency we may appropriately advert 'to the Rules made by the State Government, in 1922 under section 296 read with section 153(a) of the Act, with respect to the assessment and collection of tolls in the Nainital Municipality.
So far as relevant for the purposes of this appeal, according to r. (1), no person can bring within the limits of the Nainital Municipality any vehicle in respect of which the toll tax imposed under section 128 ( 1 ) (vii) of the Act is leviable until the toll due in respect thereof has been paid to such muharrir and at such barrier as the Board may from time to time appoint.
Under r. 2(a), in the case of laden motor vehicles the load recorded in the chalan or invoice accompanying the vehicle has to be accepted by the muharrir for purposes of assessing the toll.
If no chalan or invoice accompanies the vehicle the load is to be assumed for the purposes of assessment to exceed three mounds unless it is ascertained to be less by weighment undertaken 'at the request of the person in charge of the vehicle.
The toll on a laden motor vehicle has to be paid by the person in charge of the vehicle and toll on a passenger is to be paid by the passenger.
Rule 2 (b) provides that when any person in charge of a laden vehicle enters the municipal limits such person shall pay the toll to the muharrir at the barrier add the muharrir shall tender a face value ticket with coupon attached for the amount to the person paying the toll.
This face value ticket can be examined by the official appointed for the purpose and the person bringing the vehicle with the municipal limits is bound under r. 3 to permit such examination.
Under r. 2(c), every driver of a motor lorry or other vehicle plying for ,hire and every driver of a private motor can or vehicle carrying passengers or goods has to so his lorry or vehicle at the toll barrier for a reasonable time to enable the, toll staff to recover prover tolltax from passengers and on the goods loaded therein.
The pro 704 vision contained in r. 2(a) that the toll on a passenger shall be paid by the passenger on which reliance has principally been placed, is of no assistance to the appellants beacuse it postulates imposition of toll on_ passengers and, therefore, unless a ton has been imposed on passengers none can be demanded from them under this clause.
Similarly the notification (No. 1450/XI 476 E) dated 19th August, 1921, according to which toll tax under section 128 (1) (vii) of the Act sanctioned by the U.P. State Government under section 135(2) of the Act is levied on motor vehicles other than cars at the rate of Re. 1/ per passenger carried by them and at the rate of Rs. 2/ per vehicle is unhelpful to the appellants.
As already observed by us, no toll tax has been imposed on passengers and indeed it was conceded on behalf of the appellants, both here and in the High Court, that the Board had never intended to impose a tax on passengers.
It is also noteworthy that the toll imposed on the laden vehicles is expressly made payable by the person incharge of such vehicles and according to the scheme of the rules which provide the procedure for collecting such tolls, the person bringing the vehicle within the municipal limits (who is supposed to be the person in charge) is enjoined to permit examination of the face value ticket when demanded after the vehicle 's enquiry into, those limits.
No liability has been fixed on the passengers for payment of the tax imposed on the vehicles carrying them 'and entering the Nainital Municipality.
The liability for the payment of such tax having been fixed only on the person in charge of the vehicle and not on the passengers it is difficult to appreciate how the authorities entrusted with the duty of realising the same can demand it from the passengers.
Our attention was not invited to any provision of law under which the passengers can be held liable to pay the toll tax imposed on the vehicles.
Neither any precedent nor any principle was cited at the Bar in support of the submission that merely because the passengers were carried by the vehicles the toll tax imposed on the entry of the vehicles into the municipal limits could be demanded from them.
On the facts and circumstances of this case and on the arguments addressed we are, therefore, unable to hold that the passengers carried by the vehicles entering the municipality of Nainital can be legally called upon to pay the tax imposed on the vehicles.
As a last resort a faint attempt was made by the appellants ' counsel to rely on section 164 of the Act in bar of the jurisdiction of the High Court in entertaining the petition under section 561A, Cr.
P.C. and in holding the impugned assessment and liability of the passengers to be unauthorised and illegal.
This argument ignores the vital point that if the impugned levy is outside the Act then this section cannot operate and the jurisdiction of the High Court 705 to quash the proceedings relating to the levy which is ultra vires the taxing power of the Board under the Act cannot be taken away to the prejudice of the aggrieved, citizen.
This submission is accordingly repelled.
In the final result this appeal fails and is dismissed.
R.K.P.S. Appeal dismissed.
| IN-Abs | While the first respondent was travelling by a U.P. Government Road.
ways bus from Bhowali to Nainital in May 1967, toll tax was demanded from him at the appellant 's municipal toll barrier but he declined to pay.
The Executive Officer, Municipal Board, Nainital, thereupon filed a complaint against him under section 190(1) (c) la.
P.C., for breach of rule 1 of the Rules made under section 153(a) of the U.P. Municipalities Act, 1916.
The first respondent 's contention was that the levy of toll tax by the Municipal Board on passengers was ultra viruses the taxing pow& of the Board.
During the pendency of these proceedings, on an application made,,, by the first respondent under section 561A, Cr.
P.C., the High Court quashed those proceedings holding that clause (vii) of section 128(1) of the Municipalities Act did not authorise the levy of toll tax on passengers and that a connected notification also levied tax only on vehicles and not on passengers.
The Rule imposing an obligation on the passengers to pay the toll was therefore struck down as ultra vires.
In appeal to this Court it was contended inter alia that toll imposed on the vehicle entering the Municipality could legally be realised from the passengers carried by it because of their nexus with the entry of the vehicle.
HELD:Dismissing the appeal, The toll imposed on the laden vehicles is expressly made payable by the person in charge of such vehicles.
No liability has been fixed on the passengers for payment of the tax imposed on the vehicles carrying them and entering the Nainital Municipality.
There was no precedent or any principle in support of the submission that merely because the passengers were carried by the vehicles the toll tax imposed on the entry of the vehicles into the municipal limits could be demanded from them [704 D G] When the impugned levy was outside the Act, section 164 of the Act could not operate to bar the jurisdiction of the High Court to quash the proceedings relating to the levy which was ultra virus the taxing power of the Board.
[704 H]
|
l Appeals Nos.
2480 to 2509 2543 to 2546, 2547 to 2553, 2559, 2575, 2576 and 2602 of 1966, 214 to 217, 672 to 674, 1053, 1054, 1055, 1062, 1063,.
1457 and 1458 of 1967, and 162, 672 ' 673 and 1000 of 1968.
Appeals from the judgments and orders dated June 24, 1966 and July 20, 1966 of the Madras High Court in Writ Petitions Nos.
1542 of 1965 etc.
V. Vedantachari, K. C. Rajappa, section Bala krishnanand N. M. Ghatate, for the appellants (in C.As.
2480 2482, 2484 2509, 2575 and 2576, of 1966).
V. Vendantachari and section Balakrishnan, for the appellants (in C.As.
Nos. 2543, 2544 and 2546 of 1966).
section Balakrishnan and N. M. Ghatate, for the appellant (in C.A. No. 2545 of 1966).
section V. Gupte and K. Jaram, for the appellants (in C.A. Nos. 2547 to 2553 and 2559 of 1966).
792 K. Parasaran, K. R. Chaudhuri and K. Rajendra Chaudhuri, for the appellants (in C.As.
2602 of 1966, 214 to 217 and 1055 of 1967).
M. section K. Sastri section Gopalan and M. section Narasimhan, for the appellants (in C.As.
672 to 674 of 1967).
M. section Narasimhan, for the appellants (in C.As.
1053 and 1054 of 1967).
A. V. V. Nair, for the appellants (in C.As.
Nos. 1062 and 1063 of 1967).
V. Vedantachart, A. T. M. Sampath and E. C. Agarwala, for the appellants (in C.As.
14517 and 1458 of 1967).
P. C. Bhartari, for the appellant (in C.A. No. 162 of 1968).
K. Jayaram, for R. Thiagarajan for the appellants (in C.As.
Nos. 672, 673 and 1000 of 1968 and 2483 of 1966).
section Mahan Kumaramangalam and A., V. Rangarm, for the respondent State of Madras in, all the appeals).
R. Kunchitapadam, Vineet Kumar and K. Jayaram, for respondent No. 2 (in C.A. No. 2484 of 1966).
M. K. Ramamurthy, J. Ramamurthy and Vineet Kumar, for respondent No. 2 (in C.As.
2488 to 2490 of 1966).
The Judgment of the Court was delivered by Hegde, J.
In this batch of appeals, the validity of the Mad ras Inam Estates (Abolition and Conversion Into Ryotwari) Act, 1963 (Madras Act 26 of 1963); the Madras Lease Holds (Abolition and.
Conversion into Ryotwari) Act, 1963 (Madras Act 27 of 19 63) and the Madras Minor Inams (Abolition and Conversion Into Ryotwari) Act, 1963 (Madras Act 30 of 1963) is challenged on the ground that the material provisions in those Acts are violative of articles 14, 19(1)(f) and 31 of the Constitution.
The provisions in these Acts reducing the tenants" liability to pay the arrears of rent are also challenged on the ground that the legislature had no competence to enact 'those provisions.
A few other minor contentions are also raised in these appeals to which reference will be made in the course of the judgment.
All these contentions had been unsuccessfully urged before the High Court.
Dealing with the allegation of infringement of articles 14, 19 and 31, the High Court in addition to holding that there has been no infringement of those Articles has further held that the challenge to the validity of these Acts on the basis of those 793 articles is precluded in view of article 31 (A).
Dealing with the contention relating to the reduction of rent the High Court came to the conclusion that the legislature had power to enact the impugned provisions.
The High Court also has given reasons for rejecting the other contentions advanced before it.
Aggrieved by the decision of the High Court these appeals have been brought by special leave.
The impugned statues deal with agrarian reforms.
They purport to deal with Inam lands.
It is profitless to go to the origin of Inams or about their early history.
Suffice it to say that the Urdu word "Inam" means a gift.
The Inams, rants were made by the Rulers for various purposes.
Some of them were granted to institutions and some to individuals.
Broadly speaking there were three types of Inams The first type consisted of the grant of the melwaram right alone.
The second category consisted of the grant of both the melwaram as well as the kudivaram right.
In addition to these two Inams, there were what are known "as Minor Inams.
Sometime prior to 1862, the Government took up the question of enfranchising the Inams.
The Inams Commissioner went into the rights of various persons claiming to be Inamdars.
Thereafter the Madras Enfranchised Inams Act '.
1862 (Madras Act 47 of 1862) was passed for declaring and confirming the title of the Inamdars.
Section 2 of that Act provided that the title deeds issued by the Inams Commissioner or an authenticated extracted from the register of the Commissioner or Collector shall be deemed sufficient proof of the enfranchisement of land previously hold on Inam tenure.
By Madras Inams (Assessment) Act, 1956 (Madras Act 40 of 1 95 6), full assessment was levied on 'all Inam lands except Warm inams granted on service tenure, without affecting in any way the rights as between the Inamdar and other, persons, if any, in possession or enjoyment of the Inam land.
Where the Inam comprised the entire villa e, the same was treated as an "estate" in the Madras Proprietary Estates ' Village Service Act, 1894 (Madras Act 2 of 1894) and the Madras Hereditary Village Offices Act, 1895 (Madras Act 3 of 1895) as well as in Madras Estate Land Act, 1908 (Madras Act 1 of 1908).
Mdras Estates Land Act, 1908 recognised the ryots ' permanent tenure.
That Act secured a permanent right of occupancy to every ryot who at the commencement, was in possession of "ryoti" I and or who was subsequently admitted to the possession of such land.
Then came the Madras Estate Land (Third Amendment Act, 1936 (Madras Act 18 of 1936).
That Act amplified the definition of the "estate" in the Madras Estate Land Act, 1908, so as to bring within its scope A, Inam villages, of 794 which the grant was made, confirmed or recognised by the Government.
It also provided that when a question arises whether any land was the land holder 's private land or not, the land should be presumed not to be Inamdar 's private land until the contrary was proved.
In 1937, the Madras Government appointed the, Prakasam Committee to enquire into and report the conditions which prevailed in the Zamindari and other proprietary areas in the State.
That committee submitted its report together with a draft bill on the lines of its recommendations, but no action was taken on that report as the Congress Ministry which appointed it resigned.
Then we come to the Madras Estates (Abolition and Conversion Into Ryotwari) Act, 1948 (Madras Act 26 of 1948).
This Act applies to all estates i.e. Zamindari and under tenure estates and all Inam villages in which the grant consisted of melwaram alone.
That Act as its preamble says is an Act to provide for the repeal of the permanent settlement, the acquisition of the rights of landholders in permanently settled and certain other estates in the Province of Madras and the introduction of the ryotwari settlement in such estates.
To complete the agrarian reform initiated by this Act, the impugned Acts appears to have been enacted.
The Preamble to Madras Act 26 of 1963 says that it is an Act to provide for the acquisition of all rights of landholders in Inam estates in the State of Madras and the introduction of the ryotwari settlement in such estates.
That Act follows by and large the provisions in Act 26 of 1948.
In Act 26 of 1963 Inams estates are divided into two categories namely (1) existing Inam estate and (2) a new Inam estate.
The existing Inam estate refers to the estate consisting of the whole village and the new Inam estate means a part village Inam estate of Pudukkottai Inam estate.
The "New Inam estate" was not an estate known to law earlier.
It is merely a name given to part village Inam estate a Pudukkottai Inam estate for drafting convenience.
Act 27 of 1963 is an Act to provide for the termination of the leases of certain lease holds granted by the Government, the acquisition of the rights of the lessees in such lease holds, and the introduction of the ryotwari settlement in such leaseholds.
Act 30 of 1963 is an Act to provide for the acquisition of the rights of the Inamdars in minor Inams and the introduction of the ryotwari settlement in such Inams.
We do not think it necessary to go into the contention that one or more provisions of the impugned Acts are violative of articles 14, 19 and 31 as in our.
opinion these Acts are completely protected by article 31 '(A) of the Constitution which says that "Notwithstanding anything contained in article 13, no law providing for 7 95 (a) the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights. . shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 1 9 or article 3 1.
" The expression "estate" is defined in sub article
(2) of Art31 (A).
That definition includes not merely Inams but also land held under ryotwari settlement as well as land held or let for the purpose of agriculture or for purposes ancillary thereto, including(, waste land, forest land, land for pastures or site or buildings, and other structures occupied by the cultivators of land, agricultures and village artisans.
The impugned Acts are laws providing for the acquisition by the State of an "estate" as contemplated ' by article 31 (A).
They seek to abolish all intermediate holders and 'to establish direct relationship between the Government and the occupants of the concerned lands.
These legislations were undertaken as a part of agrarian reforms.
Hence the provisions relating to acquisition or the extinguishment of the rights of the intermediate holders fall within the protective wings of article 31 (A) see B. Sankara Roo, Badami and ors.
vs State of Mysore and anr.
It is next contended on behalf of the appellants that the lands, on which full assessment was levied under Act 40 of 1956 ceased to be inams and therefore provisions of the Madras Act 26 of 1963 cannot be applied to the same.
We have not thought it necessary to go into the question whether as a result of Madras Act 40 of 1956, certain Inams have ceased to be Inams, as in our opinion, whether they continued to be Inams or not they are still "estate" within the meaning of article 31 (A) because they fall either under sub clauses (1) or (II) or (111) of Clause (a) of article 31 (A) (2) and that being so the provisions of the impugned Acts cannot be challenged on the ground that they infringe articles 14, 19 and 31.
The contention that as the State purported to abolish Inams and not other intermediaries the law cannot be held to be valid if the intermediaries sought to be removed are not Inamdars is an untenable one.
If the impugned legislation can be traced to a valid legislative power, the fact that the legislature wrongly described some of the intermediaries sought to be removed does not make the law invalid.
From the above observations, it should not be understood that we have come to the conclusion that the intermediaries concerned were not Inamdars.
We have not gone into that question.
From the provisions of (1) ; 796 The impugned Acts, it is quite clear that the intention of the legislature was to abolish all intermediaries including the owners of those "estates" that were subjected to full assessment by Act 40 ,of 1956.
It was next urged that article 31(A) does not protect a legis lation where no compensation whatsoever has been provided for taking the "estates".
We do not think we need go into that question.
This contention bears only on the provisions of the Madras Act 26 of 1963.
Section 18 of that Act provides that compensation shall be determined for each Inam as a whole and not separately for each of the interests in the Inams.
The validity of this section was not challenged before us.
All that was urged was that for some of the pro reties included in the Inam, no compensation was provided.
Even if we assume this contention to be correct, it cannot be as that no compensation was provided for the acquisition of the lnam as a whole.
Hence article 31(A) bars the plea that there was contravention of article 31(2) in making the acquisition in question.
One of the contentions taken on behalf of the appellants that the impugned Acts to the extent they purport to acquire mining lands are outside the purview of article 31 (A).
It is not known whether the lands in which mining operations are going on were let or held as "estates".
There is also no evidence to show that the owners of those lands were entitled to the mines.
Hence, it is not possible to uphold the contention that lands concerned in some of the appeals have been acquired without paying compensation.
In order to avoid the bar of article 3 1 (A), a curious plea was put forward.
It was urged that when the concerned bills were submitted to the President for his assent as required by the first proviso to article 31 (A), the President was not made aware of the implications of the bills.
This contention is a wholly untenable one.
There is no material before us from which we could conclude that the President or his advisers were unaware of the implications of those 'bills.
We must proceed on the basis that the President had given his assent to those bills after duly considering the implication of the provisions contained therein.
it was next urged that the provisions in the impugned Acts reducing the liability of the tenants in the matter of payment of the arrears of rent, whether decreed or not was beyond the legislative competence of the State legislature.
This contention is agairt untenable.
Those attears are either affairs of rent or debts due from agriculturists.
It they are treated as affears of rent then the State legislature had legislative power to legislate in respect of the same under Entry 18 of List II of the VIIth Schedule.
If they are considered as debts due from agriculturists then the 797 State legislature had competence to legislate in respect of the same under Entry 30 of the same list.
In regard to the Inams belonging to the religious and chari table institutions, the impugned Acts do not provide for payment of compensation in a lumpsum but on the other hand provision is made to pay them a portion of the compensation every year as Tasdik.
This is only a mode of payment of the compensation.
That mode was evidently adopted in the interest of the concerned institutions.
We are unable to agree that the method is violative of article 31(2).
At any rate that provision is protected by article 31 A. It was next urged that by acquiring the properties belonging to religious denominations the legislature violated article 26 (c) and (d) which provide that religious denominations shall have the right to own and acquire movable and immovable property and administer such property in accordance with law.
These provisions do not take away the right of the State to acquire property belonging to religious deuomintions.
Those denominations can own acquire properties and administer them in accordance with law.
That does not mean that the property owned by them cannot be acquired.
As a result of acquisition they cease to own that property.
Thereafter their right to administer that property ceases because it is no longer their property.
article 26 does not interfere with the ' right of the State to acquire property.
Mr. section V. Gupte appearing for some of the appellants urged that the Impugned Act contravenes the second proviso to article 31(A).
From the material before us it is not possible to hold that any property under the personal cultivation of any of the appellants had been acquired.
Further there is no material to show what the ceiling is.
Hence it is not possible for us to examine the correctness of that contention.
If in any particular case, the second proviso to article 31 (A) has been breached, then to that extent, the acquisition will become invalid.
It was urged by Mr. Sastri appearing for some of the appel lants that the impugned Acts do not acquire the lands concerned in some of the appeals.
This contention was not 'gone into by the High Court.
Dealing with that contention, the High Court in its judgment observed : "But the applicability of the impugned Acts to the Inams in question cannot be conveniently investigated in the present writ proceedings.
The question will have to be determined with reference to the terms of the 798 grant, the extent of the grant has to be ascertained by reference to the relevant materials.
Section 5 of Madras Act, XXXI of 1963 (XXX of 1963 ?) makes special provision for determination of the question whether any non ryotwari area is or is (not an 'existing Inam Estate 'or ' part village Inam Estate ' or a minor Inam or whole Inam village in Pudukkottai.
It is stated at the bar that in most of the cases now 'before us the parties have applied under the provisions of the said Act for determination of the character of the Inams respectively held 'by them.
It, is needless to point out that the Tribunal constituted under the Act will be entitled to decide that a particular property is neither an existing Inam estate ' nor a part village Inam estate nor a whole inam village in Puddukkottai and completely out of the coverage of Acts XXVI and XXX of 1963.
We a1so make it clear that the disposal of these writ petitions now does not preclude the Inamdars from agitating The question that a particular property is not an Inam at all and does not under any of the aforesaid four categories or falls under one or other of the categories as may be urged for the inamdars.
" We agree with the High Court that the contention in question can be more appropriately gone into in the manner suggested by the High Court.
In the result these appeals fail and they are dismissed.
But ,under the circumstances; we make no order as to costs in these appeals.
| IN-Abs | In the State of Madras there were :three types of inams namely: (1)those which constituted of the grant of melwaram alone; (2) thosewhichconsisted of the grant of both melwaram and kudivaram; and (3) minor inams.
By Madras Inams (Assessment) Act, 1956, full assessment was levied on all inam lands except melwaram inams granted on service tenure, without affecting in any way the rights between the inamdars and the persons in possession or enjoyment of the land.
To complete the agrarian reform initiated by the Madras Estates (Abolition and Conversion into Ryotwari) Act, 1948, the he Madras Inam Estates (Abolition and Conversion into Ryotwari) Act, 1963 the Madras Leaseholds (Abolition and Conversion, into Ryotwari) Act, 1963, and the Madras Minor Inams (Abolition and Conversion into Ryotwari) Act, 1963, were enacted.
Under the first, acquisition of all rights of landholders in inam estates and the introduction of ryotwari settlement in such estates was provided for.
Section 18 of the Act provides that compensation shall be determind for each inam as a whole.
The second Act provides for the termination of the leases of certain leaseholds granted by the Government, the acquisition of the rights of the lessees in such leaseholds and the introduction of ryotwari settlement; and the third Act provides for the acquisition of the rights of inamdars in minor inams and the introduction of the ryotwari settlement.
The Acts contain provisions reducing the liability of the tenants in the matter of payment of arrears of rent.
On the question of the validity of the Acts, HELD : (1) The impugned Acts could not be challenged as violative of Arts 14, 19 and 3 1.
They deal with 'estates ' as defined in article 31A of the Constitution, and provide for their acquisition by the State ' They seek to abolish all intermediate holders and to establish direct relationship between the Government and the occupants of the concerned lands.
They were undertaken as a part of agrarian reform and hence, the provisions relating to acquisition or extinguishment of the rights of the intermediate holders fall within the protective wings of article 3 IA.
[795 D E] B. Shankara Rao Badami & Ors.
vs State of Mysore & Anr.
, ; , followed.
(2) Assuming that as a result of the levy of full assessment under the 1956 Act, the lands cease to be inams and the intermediaries ceased to be inamdars, the lands are still 'estate ' within the meaning of article 31A, because, they fall under one of the sub cls.
1, II or III of article 79 1 3 IA(2) (a).
If the impugned legislation can be traced to a valid legislative power the fact that the Legislature wrongly described some of the intermediaries sought to be removed does not make the law invalid.
[795 E H] (3) In the Absence of any material to the contrary, the court must proceed on the basis that the President had given his assent to the bills after duly considering the implication of the provisions contained therein.
[796 E G], (4) If the arrears of rent are treated as rent then the State Legislature has power to legislate with respect to the liability of tenants to pay the arrears, under Entry 18 of List 11, VII Schedule.
If they are considered as debts due from agriculturists then the State Legislature has competence to legislate under Entry 30 of the same list.
[796 G H; 797 A] (5) In the case of the first of the impugned Acts, assuming that for some of the properties included in the inam no compensation was provided, article, 31A bars the plet that there was contravention of article 31(2).[796 C D] (6)In regard to the inams belonging to the religious and charitable institutions, the impugned Acts do not provide for payment of compensation in a lumpsum but provision is made to pay a portion of the compensation every year as tasdik.
The method adopted is not violative of Art 31(2) and is at any rate protected by Art, 31A. [7917] A C] (7) Article 26(c) and (d) of the Constitution provide that religious denominations shall have the right to own and acquire properties and administer them according to law.
But that does not mean that the properties owned by them cannot be acquired by the State.
[797 C E] (8)It is open to the inamdars to agitate before the.
Tribunal constituted under the last Act that a particular property is not an inam at all and that the Acts do not apply to them.
[798 D E]
|
Appeals Nos. 2012 and 201 of 1969.
Appeals from the judgment and order dated September 23, 1968 of the Madras High Court in Writ Appeals Nos. 106 and 107 of 1968.
A.K. Sen and A. V. Rangam, for the appellants (in both the appeals).
T. A. Ramachandran, for the respondent (in both the appeals), 10 L694SupCI/71 818 The Judgment of the Court was delivered by Shah J.
Motor Lorry No. K.L.R. 3919 driven along a highway from Coimbatore in the State of Madras towards the border of the State of Kerala was when searched by the Check Post Officer found to carry 85 bags of foodstuffs 45 bags of maids, 20 bags of flour and 20 bags of Khandsari sugar.
The driver of the motor lorry was found to carry with him a bill of sale and a delivery note which covered 85 bags of flour.
On the ground that without a bill of sale or delivery note maid a and Khandsari sugar were attempted to be transported, and, suspecting that there was an attempt at evasion of sales tax, the Check Post Officer by order dated March 2, 1965, confiscated the goods and gave an option to M/s. K. P. Abdulla & Bros. the owners of the goods to pay Rs. 1,000 'as penalty in lieu of confiscation.
The owners of the goods then moved a petition in the High Court of Madras challenging the validity of section 42 (3) (a) of the Madras General Sales Tax Act, 1959, and for an order quashing the penalty, and another petition for a direction to the State of Madras and the Check Post Officer to return the goods seized and "confiscated while in transit".
Ramakrishnan, J., rejected the petitions.
In appeals filed by the owners, the petitions were allowed and the orders imposing penalty and confiscation of goods were set aside.
The State of Madras has appealed to this Court with certificate granted by the High Court.
Section 42 of the Madras General Sales Tax Act, 1959, provides "(1) If the Government consider that with a view to prevent or check evasion of tax under this Act in any place or places in the State, it is necessary so to do, they may, by notification, direct the setting up of a check post or the erection of a barrier or both, at such place or places as may be notified. "(2) At every check post or barrier mentioned in sub section (1), or at any other place when so required by any officer empowered by the Government in this behalf, the driver or any other person in charge of any vehicle or boat shall stop the vehicle or boat, as the case may be, and keep it stationary as long as may reasonably be necessary, and allow the officer in charge of the check post or barrier, or the officer empowered as aforesaid, to examine the contents in the vehicle or boat and inspect all records relating to the goods carried, which are in the possession of such driver, or other person in charge, who shall, if so required, 819 give his name and address and the name and address of the owner of the vehicle or boat as well as those of the consignor and the consignee of the goods.
(3)The officer in charge of the check post or barrier, or the officer empowered as aforesaid, shall have power to seize and confiscate any goods which are under transport by any vehicle or boat and are not covered by, (i) a bill of sale or delivery note, (ii)a Goods Vehicle Record, a Trip Sheet or a Log, Book, as the case may be; and (iii)such other documents as may be prescribed under section 43 and 44; Provided that before ordering confiscation the officer shall give the person affected an opportunity of being heard and make an inquiry in the prescribed manner; Provided further that the officer ordering the confiscation shall give the person affected option to pay in lieu of confiscation (a)in cases where the goods are taxable under this Act, in addition to the, tax recoverable, a sum of money not exceeding one thousand rupees, or double the amount of tax recoverable, whichever is greater; and (b)in other cases, a sum of money not exceeding one thousand rupees.
" By sub section
(2) the driver or any person in charge of the vehicle is required to stop the, vehicle and to allow the officer in charge of the check post or barrier to examine the contents in the vehicle, and to inspect all records relating to the goods carried in the vehicle.
The officer in charge of the check post or barrier is invested with power by sub section
(3) to seize and confiscate any goods which are carried and are not covered by the documents specified therein.
The officer is required when ordering confiscation to give the person affected option to pay penalty in lieu of confiscation.
Entry 54 of List II of the Seventh Schedule to the Constitution authorises the State Legislature to legislate in respect of taxes on the sale or purchase of goods.
A legislative entry does not merely enunciate powers : it specifies a field of legislation and the widest import and significance should be attached to it.
Power to legislate on a specified topic includes power to legislate in respect of 820 matters which may fairly and reasonably be said to be comprehended therein: see The United Provinces vs Mst.
Atiqa Begum and Others(1); Navinchandra Mafatlal vs The Commissioner of Income tax, Bombay City(2); and Balaji vs Income tax Officer, Special Investigation Circle(3).
, A taxing entry therefore confers power upon the Legislature to legislate for matters ancillary or incidental including provisions for preventing evasion of tax.
Subsections (1) & (2) of section 42 are intended to set up machinery for preventing evasion of.
sales tax.
But, in our judgment, the power to confiscate goods carried in a vehicle cannot be said to be fairly and reasonably comprehended in the power to legislate in respect of taxes on sale or purchase of goods.
By sub section
(3) the officer in charge of the check post or barrier has the power to seize and confiscate any goods which are being carried in any vehicle if they are not covered by the documents specified in the three subclauses.
Sub section (3) assumes that all goods carried in a vehicle near a check post are goods which have been sold within the State of Madras and in respect of which liability to pay sales tax has arisen, and authorises the check post officer, unless the specified documents are produced at the check post or the barrier, to seize and confiscate the goods and to give an option to the person affected to pay penalty in lieu of confiscation.
provision so enacted on the assumption that goods carried in a vehicle from one State to another must be presumed to be transported after sale within the State is unwarranted.
In any event power conferred by sub section
(3) to seize and confiscate add to levy penalty in respect of all goods which are carried in a vehicle whether the goods are sold or not is not incidental or ancillary to the power to levy sales tax.
A person carrying his own goods even as personal luggage from one State to another or for consumption, because he is unable to produce the documents specified in clauses (i), (ii) & (iii) of sub section
(3) of section 42, stands in danger of having his goods forfeited.
Power under sub section (3) of section 42 cannot be said to be ancil lary or incidental to the power to legislate for levy of sales tax.
The High Court was of the view that the question which fell to be determined was concluded by the judgment of this Court in The Commissioner of Commercial Taxes and Others vs R. section Jhaver and Others,(4).
That case arose under section 41(2) of the Madras General Sales Tax Act 1 of 1959, and this Court struck down the power conferred under the Madras General Sales Tax Act, 1959, upon the officer of the Government to seize such accounts, registers, records or other documents of the dealer as he may consider necessary, if he had reason to suspect that any dealer is attempted to evade payment of any tax, fee or other (1) (2) [1955] 1 S.C.R. 829 (3) ; (4) ; 821 amount.
This Court held that tax and penalty cannot be levied before the first sale in the State, and on that account authority conferred to levy tax and penalty before the sale and to confiscate the goods for non payment was outside the legislative competence of the State That case may have no direct bearing in this case.
In the present case, however, the power to confiscate the goods and to levy penalty in lieu of confiscation, when in respect of the goods found in a vehicle the driver of the vehicle is not carrying with him the documents specified therein, is not a provision which is ancillary or incidental to the power to tax sale of goods.
The appeals therefore fail and are dismissed with costs.
One hearing fee.
Y.P. Appeals dismissed.
| IN-Abs | By sub section 3 of section 42 of the Madras General Sales Tax Act, 1959, the Officer in charge of a check post or barrier has the power to seize and confiscate any goods which are being carried in any vehicle if they are not covered by the documents specified in the three sub clauses.
On the question whether the power to confiscate goods and to levy penalty in lieu of confiscation, when in respect of the goods found in a vehicle the driver of the, vehicle is not carrying with him the documents specified therein, is a provision which is ancillary or incidental to them power to legislate in respect of taxes on the sale or purchase of goods in entry 54 of List II of the Seventh Schedule to the Constitution, HELD : A taxing entry confers power upon the legislature to legislate for matters ancillary or incidental, including provisions for preventing evasion of tax.
But the power conferred by sub section (3) to seize and confiscate and to levy penalty in respect of all goods which. are carried in a vehicle whether the goods are sold or not is not incidental or ancillary to the power to levy sales tax.
[819 H 820 B; 820 E] Commissioner of Commercial Taxes & Ors., vs R. section Jhevar & Ors., ; , held inapplicable.
United Provinces vs Mst.
Atiqa Begum & Ors., [1940] F.C.R. 110; Navinchandra Mafatlal vs Commissioner of Income tax, Bombay City, [1955] 1 S.C.R. 829 and Balaji vs Income tax Officer, Special Investigation Circle, ; , referred to.
|
l Appeals Nos.
1868 to 1882 of 1969.
Appeals from the judgment and order dated July 9, 10, 1968 of the Mysore High Court in Writ Petitions Nos. 1776, 2108, 2109, 2111, 2112, 2272, 2273, 2275, 2385, 2386, 2390, 2395 and 2396 of 1966 and 728 and 990 of 1967.
Jagadish Swarup, Solicitor General, section section Javali and section P. Nayar, for the appellant (in all the appeals).
M.Mama Jois and R. B. Datar, for respondent No. 1 (in C.As.
1868 to 1871 and 1874 to 1881 of 1969).
832 The Judgment of the Court was delivered by Mitter, J.
The State of Mysore has come up in appeal from a common judgment of the High Court at Bangalore disposing of a number of writ petitions and holding void the compulsory transfer of the respondents herein to the Agricultural University under the provisions of the University of Agricultural Sciences Act, 1963.
As the same question arise Civil all these appeals it will be sufficient to state the facts in Appeal No. 1$68 of 1969 in which one H. Papanna Gowda is the respondent.
The said respondent was appointed on January 7, 1959 as an agricul tural demonstrator in the Mysore Civil Service.
His appointment was as a local candidate ' which under the Mysore Civil Service Rules means a person appointed not in accordance with the rules of recruitment.
His services were however regularised when he was selected by the Public Service Commission for appointment to that post on August 27, 1959.
By an order dated April 4, 1964 he was transferred and posted as a Chemical Assistant of the Sugarcane Research Station Mandya, in the department of agriculture.
When he was thus employed, a law made by the State Legislature called the University of Agricultural Sciences Act.
, 1963 (hereinafter referred to as the Act ') came into force on April 24, 1964.
Before the High Court the respondents to these appeals challenged the vires of section 7(5) of the Act and a notification issued thereunder.
The preamble to the Act shows that it was an Act to estab lish and incorporate a University for the development of agriculture, animal husbandry and allied sciences in the State of Mysore.
Under section 3(2) the University was to be a body corporate having perpetual succession and a common seal.
The powers given under section 6 of the Act enabled it inter alia to create administrative, ministerial and other posts and to appoint persons to such posts.
Under section 7(1) subject to the conditions therein mentioned several agricultural and veterinary colleges were disaffiliated from the Karnatak University or the University of Mysore and were to be maintained by the new University as constituent colleges.
The control and management of these colleges were to stand transferred to the Agricultural University and all its properties and assets and liabilities and obligations of the State Government in relation thereto were to stand transferred to, vest in, or devolve upon the said University.
Under sub section
(4) of section 7 the control and management of such research and educational institutions of the Department of Agriculture, the Department of Animal Husbandry and the Department of Fisheries of the State Government were, as and from such date as the State Government 833 might by order specify, to be transferred to the University and thereupon all the properties and assets and liabilities and obligations of the State Government in relation to such institutions were to stand transferred to, vest in, or devolve upon the University.
omitting the proviso which is not relevant for our purpose, sub section
(5) provided "Every person employed in any of the colleges specified in sub section (1) or in any of the institutions referred to in sub section (4) immediate before the appointed day or the date specified in the order under subsection (4), as the case may be, shall, as from the appointed day or the specified date, become an employee of the University on such terms and conditions as may be determined by the State Government in consultation with the Board :" The Board has been defined in section 2 clause (3) as the Board of Regents of the University.
By notification dated September 29, 1965 the control and management of a large number of research and educational institutions were transferred to the University with effect from October 1, 1965.
The Agricultural Research Institute Mandya where the respondent was working was one such institution.
Not liking the change which his future prospects were likely to undergo as a result of the notification, the respondent presented a writ petition, seeking a declaration that sub sections
(4) and (5) of section 7 of the Act Were invalid And for a further declaration that he continued to be a civil servant under the State Government.
To put in brief the argument on this head was that he had been removed from a civil post under the State in contravention of the provisions of article 311.
A further argument was put up that the respondent had been subjected to hostile discrimination inasmuch as persons who had been appointed in the same manner as himself and later in point of time than himself had been retained in the service of the State thereby infringing articles 14 and 16 of the Constitution.
It is not necessary to deal with the second point as the appellant, in our opinion, must fail on the first.
There can be no dispute as indeed the learned Solicitor General was constrained to admit that the respondent and others who had filed writ petitions in the High Court challenging the notification ceased to hold the civil posts which they held under the State of Mysore at the time when the notification was issued if it was to have full force and effect.
Whether the prospects of the respondent were 11 L694Sup.
CI/71 834 or were not to be prejudicially affected if he was to become an employee of the University is not in point.
However the learned Solicitor General drew our attention to paragraph 17 of the counter affidavit to the writ petition filed in the High Court where it was stated that the terms and conditions of transfer as agreed to by the Government and the University provided inter alia for the following (1)Every employee of the, Government on his transfer to the University shall enjoy the same pay scale.
(2) He was to be eligible for pensionary benefits in the same manner as he had while he was serving the Government.
(3) His claims for higher pay scales or higher positions under the University shall be deemed to be on a preferential basis in comparison with others, provided the qualifications and experience were equal; and (4)Every employees of the Government on his transfer to the University was to be protected to the extent that the terms and conditions of his service under the University would not be altered to his detriment.
We are not here concerned with the question as to whether for all practical purposes the respondent was not to be a loser as a result of the transfer.
Evidently the respondent held the view that as a civil servant of the State of Mysore the prospects of promotion to higher posts with better scales of pay were greater in the service of the State with its manifold activities in various departments.
For better or for worse, the notification resulted in extinction of his status as a civil servant.
The learned Solicitor General sought to rely on a judgment of the Punjab High Court in Amulya Kumar Talukdar vs Union of India and others(1) a case which was considered by the High Court of Mysore, in aid of his contention that the transfer of the kind effected in this case had been held to be valid by the Punjab High Court.
The High Court at Bangalore went into the question rather elaborately and noted that there were many differences between the provisions of the , the Act impugned in the Punjab High Court and the Agricultural University Act of 1963.
Tin the Punjab case the petitioner had initially been appointed by the Director, Indian Institute of Technology Kharagpur as a peon.
As a result of the Act of 1956 the Institution declared to be one of national importance, was constituted under the Act providing inter alia that the employees who were working in the Institute be fore were to hold office or service thereafter upon the (1) I.L.R. 13 Punj.
781. 835 same terms and conditions and with the same rights and Privileges as to pension, leave, gratuity, provident fund and other matters as they would have held the same on the date of commencement of.
the Act as if the Act had not been passed.
In the case before us the Act provides by sub section
(5) of section 7 that the terms and conditions of the Government employees immediately before the appointed day or the date specified in the notification were to be such as might be determined by the State Government in consultation with the Board.
The learned Judge of the Punjab High Court on the facts of that case found it unnecessary to examine the argument whether, the assent given by the President to the Indian Institute of Technology Bill had the effect of terminating the status of the petitioners as Government servants by the President as also the argument raised on their behalf that their lien had been terminated under the Fundamental Rules without their consent.
The Punjab decision can not therefore apply to the case as presented before us.
In the result the appeals fail and are dismissed with costs.
There will be one set of hearing fee.
V.P.S. Appeals dismissed.
| IN-Abs | The University of Agricultural Sciences Act, 1963, was passed by the Mysore State Legislature, to establish a University for the development of agricultural and allied sciences in the State.
Under section 7(4) of the Act, the control and management of such research institutions of the department of agriculture as the State Government might by order specify, were to be transferred to the University as and from the date specified; and, under sub section
(5), every person employed in such an institution, were, as from the specified date, to become an employee of the University on such terms and conditions as might be determined by the State Government in consultation with the Board of Regents of the University.
The respondent was holding a civil post under the State Government, having been appointed as a chemical assistant in the Agricultural Research Institute, Mandya, in the department of agriculture of the State.
In 1965, the control and management of the Institute was transferred to the University, by a notification under the Act.
On the question whether there was a removal of the respondent from a civil post in contravention of article 311, HELD : Whether the prospects of the respondent were or were not prejudicially affected is irrelevant.
For better or for worse, the notification resulted in the extinction of his status as a civil servant, and hence, his compulsory transfer to the University was void.
[834 A, F] Amulya Kumar Talukdar vs Union of India, I.L.R. 13 Punj. 781, distinguished.
|
No. 513 of 1970.
Petition under article 32 of the Constitution of India for writ in the nature of habeas corpus.
The petitioner appeared in person.
P. Ram Reddy and P. P. Rao, for the respondent.
The Judgment of the Court was delivered by Dua, J.
The petitioner, A. Lakshmanrao, an Advocate practicing at Narasipatnam in the district of Visakhapatnam in the State of Andhra Pradesh has applied under article 32 of the Constitution for a writ of habeas corpus on the following averments The petitioner, while going home from the court, was arrested on 17th July, 1970 at about 12.30 in the afternoon.
He was not shown any warrant at the time of his arrest.
He was produced before a Judicial Magistrate, First Class, on 18th July and 824 remanded to judicial custody under section 167 (2), Cr.
P.C. for 15 days.
At the time of remand he was informed by the Magistrate that he was accused of offenses under sections 120 B, 121 A 122 read with 302 and 395, I.P.C. in Crime No. 3 of 1970 (known as Parvatipuram Naxalite Conspiracy Case).
This crime had been registered in January, 1970 in which more than 148 persons were sought to be proceeded against.
The names of only 148 accused persons were specifically mentioned.
The petitioner and one Dr. C. Ramadass were not specifically named.
They were apparently included in the expression "others".
On 30th March, 1970 a report was filed by the Investigating Officer describing it as a preliminary charge sheet in which it was stated that the investigation in the case had not been completed and several accused persons had yet to be traced.
This report, according to the averments, does not fall under section 173(1), Cr.
P.C. Even in this preliminary charge sheet the names of the petitioner and Dr. Ramadass were not included.
On 1st August when the period of the petitioner 's first remand expired, again no charge sheet was separately filed against him and Dr. C. Ramadass.
The prosecution, however, sought extension of the period of remand.
When the petitioner objected to further remand a second preliminary charge sheet was presented to the court on that very day specifically including the petitioner 's name.
His remand was thereupon extended upto 6th August and thereafter upto 20th August.
On 20th August he was not produced in the court because of want of escort and the order of remand was made in his absence.
He has expressed ignorance about the period of this remand.
The present petition dated 22nd August, 1970 was forwarded to this Court through the Superintendent.
Central Jail, Rajahmundry (Andhra Pradesh).
The petitioner challenges the remand orders from the 1st August onwards and claims that his detention is illegal and that he is entitled to be set at liberty.
The remand order dated 20th August, 1970 which was made in his absence because he could not be produced before the court on the ground of lack of escort is challenged on the further ground that the law does not permit remand orders without the actual production of the accused before the court: According to the petitioner who himself argued his case, section 344(1A), Cr.
P.C. does not contain any guidelines for the court in the matter of remand orders and he added that this section is otherwise too inapplicable to the investigation stage of criminal cases.
When his attention was drawn to the explanation to section 344, according to which the likelihood of further evidence being obtained by the remand in cases of suspicion against an accused person raised by the evidence already obtained, he contended that the 825 explanation could not, as a matter of law, serve to extend the scope of the substantive provision contained in sub section
On this premise the petitioner questioned the vires of section 344(1A) and (2) and the explanation.
In the counter affidavit sworn by the Judicial Magistrate in whose court the case against the petitioner is pending, while referring to the proceedings held on 1st August, 1970, it is affirmed that the petitioner and Dr. C. Ramadass were produced in court and it was submitted by them that since their names had not shown in the preliminary charge sheet the court had no power to extend the period of reman.
On that very day the prosecution filed a second preliminary charge sheet in which the petitioner and Dr. C. Ramadass were shown as accused nos.
149 and 150 suspected of having committed offences under sections 120 B, 121A, 122 read with 302 and 395, I.P.C.
The Court thereupon passed an order of remand in respect of both of them.
A bail application filed on behalf of the petitioner and Dr. C. Ramadass was thereafter argued by the petitioner and the matter was adjourned to 6th August, 1970 for orders when that application was disposed of.
On behalf of the other respondents a lengthy affidavit has been sworn by section Veeranarayanareddi, Deputy Superintendent of Police, Crime Branch, C.I.D., Government of Andhra Pradesh, Hyderabad.
It is affirmed in this affidavit that the petitioner is an active Naxalite and along with others is accused of charges under sections 120 B read with sections 302, 395, 397, 399, 364, 365, 368 and 386, I.P.C. in P.R.C. No. 3/70, pending in the Court of the Judicial First Class Magistrate, Parvatipuram Taluk.
A separate complaint under sections 121 A and 120 B read with 121, 122, 123 and 124A, I.P.C. is also stated to have been filed against the aforesaid persons including the petitioner in the same court in P.R.C. 8 of 1970.
These two cases are known as Parvatipuram Naxalite Conspiracy Cases and relate to 46 murders, 82, dacoities, 99 attacks on police and 15 abductions committed by the accused persons in Andhra Pradesh.
The accused persons are also alleged to have committed several offences of the types just mentioned in the Agency Tracts of Orissa bordering Andhra Pradesh.
The Government of Andhra Pradesh had on account of the gravity of the situation declared certain areas affected by the Naxalite menace in Srikakulam and Warangal Districts as disturbed areas Under section 3 of the Andhra Pradesh Suppression of Disturbances Act, 1948.
In the affidavit certain incidents have been traced from 1964 and it is affirmed that as a result of various political developments certain volunteers were recruited from various parts of Andhra Pradesh and the petitioner helped them in creating revolutionary bases in the agency tracts of Visakhapatnam District.
There is also reference to one of the accused persons having become an approver and another having made a confes 826 sional statement.
After stating various facts discovered during investigation it is affirmed that the investigation of this case is limited not only to the State of Andhra Pradesh but it extends to several States where naxalite, movement has spread, including West Bengal and Orissa, and as many as 900 witnesses have already been examined during the course of investigation which has taken nearly nine months.
Sanction of the State Government has also been ob tained for the prosecution of the petitioner and the other accused persons under section 196, Cr.
On 12th October, 1970 the investigation was completed and a final charge sheet filed in the court of the Judicial Magistrate in P.R.C. No. 3 of 1970.
The separate complaint against the petitioner and other accused persons mentioned earlier was also filed in the court of the Judicial Magistrate under sections 121A, 120B read with 121, 123 and 124A, I.P.C. on the same day.
It is admitted that the preliminary charge sheet is not covered by section 173(1), Cr.
But it is averred that it is only a report pending further investigation seeking extension of remand under section 344, Cr.
The long period of investigation has been ascribed to the fact that there was an organised attempt on the part of the accused and their followers to thwart the, efforts of the authorities in bringing the accused to book.
It is admitted that the peti tioner is lodged in Central Jail, Rajahmundry and that on 20th August, 1970 he could not be produced before the court for lack of escort.
The; remand is also admitted to have been extended by the Magistrate, respondent No. 1, from time to time on 3rd and 17th September and 1st October, 1970.
The court, it is pleaded, is empowered to pass an order of remand even in the absence of the accused under section 344, Cr.
P.C. unlike the remand order under section 167, Cr.
Incidentally, in this counter affidavit there is a reference to the prejudicial activities in which the petitioner has been indulging in connection with Naxalite movement.
The initial non inclusion of his name in the array of accused persons ' has been explained on the ground that sufficient corroboration of the approver 's testimony incriminating the petitioner was not forthcoming at that stage.
In so far as, the question of legality of the remand order dated 20th August, 1970 without producing the petitioner before a Magistrate is concerned, the point is concluded by a recent judgment of this Court in the case of Rai Narain vs Supdt.
Central Jail, New Delhi(1).
In that case this Court by majority expressed the view that as a matter of law personal presence of an accused person before a Magistrate is not a necessary requirement for the purpose of his remand under section 344, Cr.
P.C., at the instance of the police, though as a rule of caution it is highly desirable that the accused should be personally produced before the Magistrate so that he may, (1) 827 if he so chooses, make a representation against his remand and for, his release on bail.
The Court on a review of the decided cases, observed "There is nothing in the law which required his personal presence before the Magistrate because that is a rule of caution for Magistrates before granting remands at the instance of the police.
However, even if it be desirable for the Magistrates to have the prisoner produced before them, when they recommit him to further custody, a Magistrate can act only as the circumstances permit.
" The order of remand dated 20th August, 1970 was in the circumstances not contrary to law so as to render the petitioner 's, custody illegal justifying his release by this Court on habeas corpus.
It is unnecessary to point out that it was and still is open to the, petitioner to apply for his release on bail to the appropriate court in accordance with law there being no illegal obstacle in his way in this respect.
The challenge to the constitutional validity of section 344(1A), Cr.
P.C. is also in our opinion misconceived.
Section 344 reads " (1) In every inquiry or trial, the proceedings.
shall be held as expeditiously as possible and in particular, when the examination of witnesses, has once begun, the same shall be continued from day to day until all the witnesses in attendance have been examined, unless the Court finds the adjournment of the same beyond the following day to be necessary for reasons to be recorded.
(1 A) If, from the absence of a witness, or any other reasonable cause, it becomes necessary or advisable to postpone the commencement of, or adjourn, any inquiry or trial, the Court may, if it thinks fit, by order in writing, stating the reasons therefore, from time to time, postpone or adjourn the same on such terms as it thinks fit, for such time as it considers reasonable, and may by a warrant remand the accused if in custody: Provided that no Magistrate shall remand an accused person to custody under this section for a term exceeding fifteen days at a time Provided further that when witnesses are in attendance.
no adjournment or postponement shall be granted, without examining them, except for special reasons to be recorded in writing.
828 (2)Every order made under this section by a Court other than a High Court shall be in writing signed by the presiding Judge or Magistrate. ' Explanation.
If sufficient evidence has been obtained to raise a suspicion that the accused may have committed an offence, and it appears likely that further evidence may be obtained by a remand, this is a reasonable cause for a remand.
" Sub section (1 A) was originally numb. red as sub section 1 The present sub section (1) of section 344 was added by the Amending Act 26 of 1955 when the original sub section (1) was renumbered as sub section (1 A).
The impugned sub section vests in the court seized of a criminal case power to postpone the commencement of or adjourn any inquiry or trial before him by order in writing stating the reasons therefore from time to time on such terms as the court thinks fit and for such time as it considers reasonable.
When the case is so postponed or adjourned the court may also by a warrant remand the accused, if in custody.
This judicial power to postpone or, adjourn the proceedings is to be exercised only if from the absence of witnesses or any other reasonable cause the court considers it necessary or advisable to do so.
Reasonable cause for remand according to, the explanation to this section covers a case where sufficient evidence is obtained to raise a suspicion about the complicity of an accused person in the offence and it appears likely that more evidence may be obtained by remand.
The court has in the exercise of its judicial discretion in granting or declining postponement or adjournment of the case and in ordering remand of the accused, to keep in view all the relevant facts and circumstances of the case.
The petitioner strongly contended that this section clothes the court with an unfettered, arbitrary and unguided power.
A plain reading of the section shows the untenability of the submission.
Apart from the fact that it is only when either from the absence of a witness or some other reasonable cause the court, considers it either to be necessary or advisable to postpone the commencement of, the inquiry or trial or adjourn the hearing of the case that the order can be made, the court is also required to record the order in writing giving the reasons why it thinks fit that the case should be postponed or adjourned.
It is further open to the court to impose terms and to fix the period which cannot exceed 15 days at one time.
This discretion being vested in a court of law has to be exercised _judicially on well recognised principles, and is in our view immune from challenge on the ground of arbitrariness or want of guidelines.
In our opinion, therefore, not only are the guidelines clearly contained in the statute but the discretion being judicial is required to be exercised on general principles guided by rules of reason and justice on the facts of each case, 829 and not in any arbitrary or fanciful manner.
It may also be remembered that if the discretion is exercised in an arbitrary or un judicial manner remedy by way of resort to the higher courts is always open to the aggrieved party.
The second limb of the challenge is based on the contention that section 344 falls in Chapter 24, Cr.
P.C. which contains general provisions as to inquiries and trials.
According to this submission this section cannot apply to a case which is at the stage of investigation and collection of evidence only.
This argument appears to us to be negatived by the express language both of sub section
(1A) and the explanation.
Under sub section
(1A) the commencement of the inquiry or trial can also be postponed.
This clearly seems to refer to the stage prior to the commencement of the inquiry.
The explanation makes it clear beyond doubt that reasonable cause as mentioned in sub section
(1A) includes the likelihood of obtaining further evidence during investigation by securing a remand.
The language of section 344 is unambiguous and clear and the fact that this section occurs in Chapter 24 which contains general provisions as to inquiries and trials does not justify a strained construction.
Indeed, postponement of an inquiry also seems to be within the contemplation of the general provisions as to inquiries and trials.
So this challenge also fails.
The suggestion that the explanation could not extend the substantive provisions of sub section
(1A) has merely to be stated to be rejected because the explanation merely serves to explain the scope of the expression reasonable cause.
The last submission that there is in any event no guideline for making a remand order and, therefore, the power to remand an accused person under section 344 is ultra vires being arbitrary and ' unguided is wholly unacceptable.
When a case is postponed or adjourned and the accused is in custody the court has to exercise its judicial discretion whether or not to continue him in custody by making a remand order.
The court is neither bound to make an order of remand nor is it bound to release the accused person.
The period of remand is in no case to exceed 15 days at a time.
The discretion to make a suitable order is to be exercised judicially keeping in view all the facts and circumstances of the case including the nature of the charge, the gravity of the alleged offence, the, area of investigation, the antecedents of the accused and all other relevant factors which may appropriately help the court in determining whether to keep the accused in custody or to release him on bail.
The court has to ensure the presence of the accused and ' a just, fair and smooth inquiry and trial of the offence charged.
The order of remand is thus subject to judicial discretion and the, order is also subject to review by the superior courts in accordance, 830 with law.
The power conferred being judicial the absence of an express, precise standard for determination of the question would not render the section unconstitutional.
Detention pursuant to an order of remand which appropriately falls within the terms of section 344 is accordingly not open to challenge in habeas corpus.
After we had reserved orders the petitioner forwarded to this ;Court through jail supplementary affidavit containing written arguments.
We have gone through the affidavit but we do not find any new point requiring discussion.
It only discloses a further attempt to reopen the majority decision of this Court in Rai Narain 's case (supra) by relying on the minority judgment and by submitting that section 344(1A), Cr.
P.C. offends article 19(1)(d) of the Constitution.
All that we need Say at this stage is that the majority view :is binding on us.
This petition accordingly fails and is dismissed.
G.C. Petition dismissed.
| IN-Abs | The petitioner was arrested on July 17, 1970 and was produced before a first class Magistrate next day when he was remanded to judicial custody under section 167(2) Cr.
P.C. for 15 days.
He was informed at the time of remand that his arrest was in connection with a case relating to dacoity and murder and conspiracy to commit the same.
Although a charge sheet had been submitted against about 148 persons accused in the case the petitioners ' name was not among them, because as the police later explained, investigations against him had not been completed.
The petitioner objected to a second remand on August 1, 1970 but that very day the prosecution filed a supplementary charge sheet including his name.
Remand was then extended upto August 6 and thereafter upto August 20, 1970.
On the last mentioned date he was not produced before the magistrate because of alleged want of escort and the remand was extended in his absence.
In a petition under article 32 of the Constitution the petitioner challenged his detention from August 1 onwards.
The remand order of August 20 was challenged on the ground that it was made in his absence and it was urged that the law does not permit remand without actual production of the accused before the Court.
The constitutional validity of section 344(1A) and of the Explanation to the section was also challenged.
HELD : (1) In view of this Court 's decision in Rai Narain 's case it could no longer be urged that the production of an accused before the magistrate for the purpose of remand was a necessary requirement.
though as a rule of caution it is highly desirable that the accused should be personally produced before the magistrate so that he may if he so chooses make a representation against his remand.
The order of remand dated August 20, 1970 was in the circumstances not contrary to law so as to render the petitioner 's custody illegal justifying his release by this Court on habeas corpus.
It was still open to the petitioner to apply for bail to the appropriate court in accordance with law.
Rai Narain vs Supdt.
Central Jail, New Delhi, ; applied.
[826 G 827 C] (ii)Sub section (1A) of section 344 of the code vests in the court seized of a criminal case, power to postpone the commencement of or adjourn any inquiry or trial before him by order in writing stating the reasons therefore from time to time on such terms as the court thinks fit and for such time as it considers reasonable.
When the case is so postponed or adjourned the court may also by a warrant remand the accused, if in custody.
The discretion to adjourn being vested in a court of law has to be exercised judicially on well recognised principles and is therefore immune from challenge on the ground of arbitrariness or want of guidelines.
The judicial power to postpone or adjourn the proceedings is to be exer 823 cises only it from the absence of witnesses or any other reasonable cause the court considers it necessary or desirable to do so.
It has to record its reasons for so doing.
Similarly the discretion to order remand of the accused is to be exercised judicially keeping in view all the facts and circumstances of the case including the nature of the charge the gravity of the alleged offence, the area of investigation, the antecedents of the accused and all other relevant factors which may appropriately help the court in determining whether to keep the accused in custody or to release him on bail.
Reasonable cause for remand according to the explanation covers a case where sufficient evidence is obtained to raise suspicion about the complicity of an accused person in the offence and it appears likely that more evidence may be obtained by remand.
[828 C E] Further, both the order of adjournment as well as the order of remand are subject to review by the superior courts in accordance with law.
The challenge to the validity of section 344(1A) on the ground of want of guidelines must therefore fail.
[829 H 830 A] (iii)The suggestion that the explanation could not extend the substantive provisions of sub section
(1A) has merely to be stated to be rejected because the explanation merely serves to explain the scope of the expression reasonable cause.
[829 E] (iv)The argument that since section 344 falls in Ch.
24 Cr.
P.C. which contains general provisions as to inquiries and trials and therefore it cannot apply to a Case at the stage of investigation and collection of evidence is negatived by the express language of sub section
(1A) and the explanation.
Under sub section
(1A) commencement of the inquiry or trial can also be postponed.
This clearly seems to refer to the stage prior to the commencement of the inquiry.
The explanation makes it clear beyond doubt that reasonable cause as mentioned in sub section
(1A) includes the likelihood of obtaining further evidence during investigation by securing a remand.
Indeed a postponement of an inquiry on trial also seems to be within the contemplation of the general provisions as to inquiries and trials.
[829 C D] [Plea to reopen Rai Narain 's case rejected.]
|
Appeal No. 158 of 1967.
Appeal by special leave from the judgment and order dated August 5, 1966 of the Rajasthan High Court.
in section P. Civil Regular Second Appeal No. 222 of 1964.
section T. Desai, P. C. Bhartari, J. B. Dadachanji and Pukhraj Singh, for the appellant.
S.V. Gupte, K. K. Jain and H. K. Puri, for respondents Nos. 1 to 9.
That Judgment of the Court was delivered by P.Jaganmohan, Reddy, J. This Appeal by Special Leave of this Court is against the Judgment of a Single Judge of the Rajas 838 than High Court affirming the Judgment and decree of the, District Court with certain variations.
Respondents 1 to 9 filed a suit against the Appellants and Respondents 10 and 11 and two others for a declaration that they have been carrying on and are entitled to carry on Darshan, Prakshal and Poojan etc.
of the idol of Adeshwarji, the first Tirthankar in the Temple named after him at Paroli without interference according to the tenets observed by the Digambri Sect of the Jain religion. ' The said Temple of Shri Adeshwarji is said to have been in existence for 200 years while, the Respondents aver that the inscriptions on it bear Vikram Samvat 1510 (1454 AD).
The Plaintiffs further alleged that the Temple was constructed and the idol, was consecrated according to and by the followers of the tenets of the Digamber sect; that the Plaintiffs and the other followers of the Digamber Sect have been performing Darshan, Prakshal and Poojan of the said idol according to their tenets every since the Temple was founded; that on the 23rd of December 1949 the Defendants attempted to convert the said idol into the idol of Swetambri Sect by putting Chakshus (artificial eyes ) thereon, but were prevented from doing so by a strong opposition of the followers of the Digamber Sect; that thereafter some temporary arrangements were made between the followers of the two Sects who agreed to maintain the status quo until a decision of the Civil Court on the rival claims of the parties was given; that in disregard of the temporary settlement and without getting the rights in the Temple adjudicated upon by the Civil Court, the Defendants made arrangements to put Dhwajadand and Kalash on the said Temple according to their tenets,, and that they also further learnt that the Defendants were intending to enclose the said idol by putting up doors and locks with the.
object of interfering with and obstructing the free exercise by the Digamberies of their unfettered rights to perform Poojan, Prakshal and worship of the said ideal according to their tenets.
On these allegations it was prayed that the Defendants be restrained by a permanent injunction from (i) erecting the Dhwajadand, and putting up Kalash; (ii) enclosing the idols by putting up doors and locks; or in any manner altering the nature and shape and appearance of the idols installed in the said Temple; or directly or indirectly doing any act or thing which may have the effect of wounding the religious susceptibilities and sentiments of the followers of the Digamberi Jain Sect; and (iii) from interfering with the free and unfettered rights of the Plaintiffs of performing Darshan.
Prakshal and Poojan and other rites according to the tenets of Digamber Jain Sect.
839 The Defendants did not deny that they,intended to put the Netras ' but said that they did so because the Netras which the idol had even before the said date having been damaged and fallen out, new Netras were put up.
They further claimed that since its existence the Temple of Adeshwarji has been in the possession of the Defendants who have been in exclusive management of the Temple and its property; that the Plaintiffs never used to do Poojan or Prakshal in the Temple nor had they any Tight thereto, and that when in 1949 there was a dispute between the parties a temporary arrangement was made but the Defendants did not admit any right of Plaintiffs to Poojan.
It, was further averred that the said idol and the Temple is in all respects Jain Swetambri Sect, that it has been so used and described in all the historic records from time to time and that the Civil Court had no jurisdiction to decide the religious rights of the parties nor is it a dispute of a civil nature.
On these pleadings issues were framed on 3 12 55 but subse quently after the evidence in the case was recorded and having regard thereto fresh issues were framed in substitution of the former ones on 4 6 57 but thereafter no evidence was led by either party.
The controversy between the parties as is evident from these issues was, as to which Sect of the Jains the main idol of Adeshwarji belongs, which Sect has constructed the upper portion of the idol referred to and the nearby portion of the temple; under what tenets have the followers of the Sects, Digamber and Swetamber, performed Darshan, Prakshal and Poojan of the idol of the temple referred to and can any Sect change those previous tenets , whether the Notras (artificial eyes) of the idol, Bhujband and Dhwajadand over the temple existed before and if not, can they be placed and inserted now; and whether the Temple is in possession and under the management of the Defendants alone from the time it came into existence.
The Civil Judge of Bhilwara decreed the suit of the Plain tiffs, against which the Defendants appealed.
The District Judge, however, allowed the appeal and dismissed the suit on the ground that in his opinion no question of any right to property or office was involved in the suit ' and consequently the plaintiffs suit was dismissed with costs.
On an appeal from this Judgment the High Court allowed the Appeal holding that inasmuch as the allegations in the plaint relate to an assertion of a right of worship and an interference with that right, a dispute of civil nature arises which is, clearly cognizable by a Civil Court.
In this view the case was, remanded to the District Judge for determining the appeal on merits.
Leave to Appeal was also refused.
840 After remand the District Judge confirmed the Judgment and decree of the Trial Court with certain variations.
Against this Judgment the Appellants filed an appeal to the High Court and the Respondents filed cross objections.
The High Court affirmed the Judgment of the District Judge except for that part of the decree directing the Appellants to keep open the doors of the Temple between 8.30 and 9.30 each morning to enable the Respondents to worship without interference, which, however, was modified to enable Respondents to worship at the Temple between 6 a.m. to 9 a.m. every morning, during which time the Temple was not to be locked.
It further directed that if the Swetambaries wanted also to worship during this period without disturbing the Digamberies they had the liberty to do so.
The learned Advocate for the Appellants Shri section T. Desai urged several contention before us namely; (i) the High Court was in error in not deciding the ownership of the Temple or of the idol; (ii) that it should have held that a presumption of ownership would arise having regard to the concurrent findings that the Swetamberies were in management and possession of the Temple; (iii) that the reliefs claimed make it clear that the dispute is not of a civil nature for in any view of the matter the Courts were in error that placing of the Dhwajadand and Kalash on the Temple changes the nature of the temple; (iv) that the High Court should not have accepted the cross appeal fixing 3 hours time for the worship of the Digamberies Sect; (v) that the Judgment of the Trial Court is wholly vitiated because the Trial Judge not having accepted the evidence based his findings on his own inspection.
Before as deal with these contentions, it is necessary to detail the findings of the Courts below The Trial Court while decreeing the Plaintiff 's suit held that though it was not proved as to who built the Temple of Adeshwarji initially, both Digamberies and Swetamberies worshipped in the said Temple; that the management and the possession of the Temple was with the Defendants Swetamberies for a long time, that the Swetamberies were not entitled to put artificial eyes or to put Dhwajadand or Kalash on the Temple; and that the Defendants were trying to interfere with the rights of the Plaintiffs ' and were making alterations to transform the character of the Temple.
In this view the Trial Judge gave a declaration in favour of the Plaintiffs against Defendants in their personal capacity as well as representatives of the Jain Swetamberies Sect that the Plaintiffs or the followers of the Digamberi Sect have been performing Prakshal, Poojan and Darshan and are also entitled to do so in future.
He also issued a permanent injunction against the Defendants in their personal capacity as well as representatives 841 of the Jain Swetamberi Sect restraining them from changing the shape and appearance of the idol by putting Netras (artificial eyes), Armlets, and Mukat, from erecting Dhwajadand and putting Kalash on the Temple and putting locks on the shutters of the Temple.
The Appellants were further directed not to restrain the followers of the Jain Digamber Sect from performing Darshan, Poojan and Prakshal according to their tenets.
After the remand Appellants urged before the District Judge the following contentions : (1)That the Temple belongs to Swetamber Sect and the Plaintiffs are entitled to have Darshan only of the idol, otherwise they have got no right to worship it according to their tenets; (2) That the idol being Swetamberi, the Defendants are entitledto put artificial eyes in the idol, Dhwajadand and Kalash on them Temple; (3) That the Defendants having been managing the Temple for the last so many years, their management cannot be interfered with it for the betterment of the idol, it is kept under lock, it cannot be said to wound the sentiments and religious feelings of the Plaintiffs.
The District Judge held on the first contention that though the Temple is admittedly an old one there is not an iota of evidence as to who constructed the Temple originally; that the Appellants have been in management and possession of the Temple, which fact was not really challenged by the Respondents, though this by itself does not imply that the Temple is a Swetamberi Temple.
It was also contended that the Respondents had no right to worship the idol but can only have Darshan.
This contention was also rejected on a review of the evidence led by both parties, and also, by relying on Exh. 1 which embodied a compromise between the two Sects under which the right of the Respondents to worship the idol was specifically admitted.
On the second point urged before him the District Judge held that the Appellants case that there were eyes already in the idol, but as they got damaged they wanted to replace them is not substantiated by the evidence led on behalf of the Appellants themselves.
It also held that an attempt was made by, the Swetamberies in 1949 to install the eyes in the idol and that as most of the Appellant 's witnesses admitted that though Dhwajadand was offered on certain occasions which were retained by the Oswals (Swetamberies) there was no Dhwajadand and Kalash on the temple itself.
On the third point it was held that the Appellants, who were in management and possession of the Temple for the last so many 842 years, have a right to lock the main Temple, to prevent it from being defiled, which does.
not in any way interfere with the right of worship of the Respondents or any other person on their behalf.
This being so ' the Trial Courts decree excepting for restraining the Appellants to lock the Temple was affirmed subject to the further,direction as already noticed keeping the Temple open for worship of the Respondents and the Digambaries Sect between 8.30 and 9.30 a.m.
When the appeal and cross objections were pending before the High Court the Appellants filed an application under Order 41, Rule 27 of the Civil Procedure Code for recording the evidence of Shri Satya Prakash Srivastava, Director of Archaeology and Museum, Rajasthan to establish the denominational identity of.
the idol in the Temple.
It was stated in that, application that since he District Judge had remarked that the parties had not produced sufficient evidence and it was not possible to come to any conclusions regarding the nature of the idol as to whether it is Swetamberi or Digamberi, the petitioner had moved the Direc tor of Archeology who after a thorough examination came to the conclusion that the idol was Swetamberi.
In view of this Report it was prayed that the said Director be called in evidence and be examined.
In the alternative it was prayed that the case be remanded to the Trial Court for allowing the parties to lead additional evidence so that effective adjudication can be made.
The High Court however, did not feel the need for any additional evidence as the case could be disposed of on the material on record.
In this view it dismissed the application.
Even before us the learned Advocate for the Appellant tried to persuade us to look into that Report and urged that the evidence of the Director was necessary and ought to have been allowed to be adduced.
In view of the concurrent findings of all the Courts on certain material aspects of the case to which we shall presently refer, it is possible to determine the controversy between the parties, as such we agree with the High Court that no additional evidence is required at this stage, though the parties could have led better evidence in the initial stages itself.
It was further contended on behalf of the Appellants that the Respondents suit was not maintainable because it did not involve a dispute of a Civil nature.
Respondents ' learned Advocate though he first indicated that he would raise a preliminary objection to this contention being urged because when the High Court set aside the Judgment of the District Judge and remanded the case to be decided on merits holding that the suit was maintainable as it raised a dispute of a civil nature, the Appellants ought to have appealed to the Supreme Court.
The learned Advocate for the Appellants however contends that the remand order of the 843 High Court did not finally dispose of the rights of the parties as such it is open to him to urge in this appeal that the suit was not maintainable on the ground that it does not raise any dispute of a civil nature.
Though the preliminary objection was not subsequently pressed even on the merits, the learned Advocate for the Appellant is unable to satisfy us that the suit is not of a civil nature.
From the pleadings and the controversy between the parties it is clear that the issue is not one which is confined merely to rites and rituals but one which effects the rights of worship namely whether the Swetamberies by placing Chakshus, Dhwajadand and Kalash according to their tenets or by locking the temple could preclude the Digamberies from worshipping in accordance with their tenets.
It is admitted that the Digamberies will not worship the idol which is not Nirakar ' or which has Chakshus.
If the Digamberies have a right to worship at the temple the attempt of the Swetamberies to put Chakshus or to place Dhwajadand or Kalash in accordance with their tenets and to claim that the idol is a Swetamberi idol was to preclude the Digamberies from exercising their right to worship at the temple.
These findings clearly establish that the Appellants interfered with the rights of Digamberies to worship with respect to which a civil suit is maintainable under Section 9 of the Civil Procedure Code.
This position is well established.
If authority was needed we may refer only to two cases.
The Privy Council in Sir Seth Hukam Chand & Ors.
vs Maharaj Bahadur Singh & Ors.(1), had to deal with the practices observed by Digamberies and Swetamberies on the Parasnath Hill which is considered to be sacred by.
both the Sects but in respect of which the Digamberies objected to the continuous employment of human beings on the Hill and against building thereon of Dwellings necessarily involving according to their tenets of a sacrilegious pollution and desecration of the sacred hill, while the Swetamberies had no such belief.
Sir John Wallace delivering the opinion of the Board observed :"These are matters for the Jain themselves and the Civil Courts are only concerned with them in so far as they are relevant to questions of civil right such as an alleged interference with the Plaintiffs rights to worship on the hill, and in that case the issue must be not whether the acts complained of are in accordance with orthodoxy or with previous practice, but whether they do in fact interfere with the plaintiff 's rights of worship".
Again this Court in Nar Hari Sastri and Others vs Shri Badrinath Temple Committee (2 ) was concerned with the rights of the Deoprayagi Pandas to enter the Badrinath Temple alongwith their Yajmans or clients, which it was claimed the Pawal or the Trustee denied and threaten to obstruct the said Deoprayagi (1) (2) ; 844 Pandas from entering the precincts of the Temple along with their Yajmans or from assisting the pilgrims in the matter of Darshans etc.
inside the Temple.
The Defendant however, asserted that it was neither necessary nor desirable that the plaintiffs should be allowed to accompany their Yajmans or clients into the Temple, as he had himself made adequate arrangements for the Darshan and worship of the pilgrims and that as the sole Trustee and manager of the Temple he had the right to regulate entry into the Temple so the over crowding might be avoided and order maintained inside it.
Mukerjea J, (as he then was) speaking for the Court dealt with this contention in the following passage "The true position therefore is that the Plaintiffs ' right of entering the temple along with their Yajmans is not a precarious or permissive right depending for its existence upon the arbitrary discretion of the Temple authorities; it is a legal right in the true sense of the expression but it can be exercised subject to the restrictions which the Temple Committee may impose in good faith for maintenance of order and decorum within the Temple and for ensuring proper performance of customary worship.
In our opinion, the Plaintiffs are entitled to a declaration in this form.
" It is clear therefore that a right to worship is a civil right, interference with which raises a dispute of a civil nature though as noticed earlier dispute which are in respect of rituals or ceremonies alone cannot be adjudicated by Civil Courts if they are not essentially connected with Civil rights of an individual or a sect on behalf of whom a suit is filed.
In our view the contention of the learned Advocate for the Appellant to the maintainability of the suit is not well founded.
One other objection which the learned Advocate for the Appellants urged at the outset is that the findings of the Trial Judge are vitiated because he did not rely on the evidence on record but decided to which Sect the idol in dispute belongs, only on what he found on his inspection of the idol and the Temple which cannot be evidence in the case, without his being subjected to cross examination.
It is further contended that even if what has been stated in the Judgment is what the Trial Judge had observed in his inspection there is nothing to show that he had drawn up inspection notes and made them part of the record as required under the law.
The contention that the Trial Judge had given his findings mainly on the observations made during his inspection in the first place is based on insufficient appreciation of what was really observed when dealing with the question as to 845 which Sect the idol in dispute belongs.
It was observed in the Judgment that most of the witnesses produced were non Jains and therefore, their evidence does not carry much weight to establish to which Sect the idol belongs.
After stating that the remaining witnesses of the parties have given statements in favour of their party the Trial Judge said that these statements also cannot be much relied upon.
The decision of his case is based mostly on the site inspection and the evidence on record.
Even while giving the findings the Trial Judge remarked that the evidence led by the Plaintiff appears to be correct.
These observations themselves show that the evidence on record was an element in the formulation of the Trial Courts Judgment buttered by the observations of the learned Judge during the site inspection.
There is therefore, no validity in the contention that the finding of the Trial Judge was based entirely on the result of his inspection.
It is also evident from a narrative given in the Judgment of what was noticed during the inspection that the Judge had inspected the site on two occasions once on 24 3 1956 and again a year and two months thereafter on 23 5 1957.
The details given by him could not have been given if he had not made some inspection notes.
It would also appear that at the time of the inspection Council for the Plaintiffs and Defendants were present because when giving a description of the idol of Neminathji in the Swetemberi Jain Temple when it was noticed that some portion of the idol under the waist and naval is raised and is like a line, the Council for the Plaintiffs pointed out to him that mark denoted the wearing of a loin cloth while the Counsel for the Defendants said it was the mark of an Artist.
Again in respect of the observation that on the back side and at the lower portion of the navel some portion is raised, the Counsel for the Plaintiffs had pointed out to the loin cloth, while the Counsel for the Defendants said that it has been engraved by an Artist without any sense.
We are satisfied that the description given by the learned Judge of the idols in the Adeshvarji Temple and the Temple of the Swetambaries were observations made during an inspection at which both the Plaintiffs ' and Defendants ' Advocates were present and that there must have been notes also in respect of the inspection made on both the occasions.
The Appellants had at no time made a grievance either to the District Judge or to the High Court or even before this Court except during the stage of arguments that there were no inspection notes nor that the inspection was made by the Judge behind the back of the parties.
if these objections had been raised earlier the Respondents would have had an opportunity of showing that there were inspection notes.
The Judgment in our view is not based solely on the result of personal inspection made by the Trial Judge, which inspection was for the purposes of understanding the evidence in the case and has been so used by the Trial Judge.
We must, 846 therefore, reject the contention of the learned Advocate for the Appellants that the finding in respect of the idol is vitiated.
In this view it is not necessary to deal with any of the decisions referred to before us.
It was contended by Shri Desai that unless the ownership of the Temple is established or that the idol belongs to the Digamberies no injunction can be given nor the Plaintiffs permitted to worship.
It is argued that in the plaint the Respondents wavered that the idol is a Digamberi idol and if they have failed to prove it then their right to worship fails.
At any rate the argument proceeds that the High Court was in error in not deciding the ownership of the Temple or of the idol.
We have earlier indicated the plaint averments in which there is no mention of the ownership of the Temple or of the idol but that paragraphs 2 and 3 of the plaint merely gave a description of the Temple and the idol when it is averred that the idol was constructed and consecrated according to and by the followers of the Digamberi Sect and that the Plaintiffs and the other followers of the Digamberi sect have been performing Darshan, Prakshal and Poojan of the said deity in the said Temple for a considerable number of years past and really ever since the Temple was founded.
There is therefore, force in the contention of Shri Gupte, learned Advocate for the Respondents that having regard to the concurrent findings of the Courts below that the idol was Nirakar ' (naked) that there were no Chakshus, no Mukat, no Armlet, no Dhwajadand or no Kalash, would show that the idol was consecrated by the Digamberies.
It was also held as had already been noticed that though it is not possible to say when the Temple was constructed and the idol consecrated it was an ancient Temple and that both the Digamberies and the Swetamberies worship the idol.
It is not denied that while the Digamberies will not worship an idol which has Chakshus or which has clothes or Mukat( the Swetamberies would worship a Digamberi idol without these and hence the right to worship a Digamberi idol by both the sects is possible and indeed has been so held by all the Courts.
Even the Defendants ' witnesses substantiate these findings.
We would refer to only two of these witnesses.
Shri Suwa Lal D.W. 4 even though he says that the Temple belonged to the Oswals in which he and his father has been performing Sewa for the last 30 or 35 years on behalf of the Oswals (Swetamberies) admitted that since he attained the age of discretion and upto the time of giving evidence he had never seen Adinathji wearing clothes, never saw the idol with eyes and had never seen Dhwajadand or Kalash on the Temple and does not know whether the idol belongs to Oswals or Saravagis (Digamberies).
D.W. 3 Shri Pokhar a barber of Oswals also supports this witness.
That the Digamberies had a right to worship is also borne out by exhibit 1 dated 847 23 12 49 which was a compromise entered into between Swetam beries and Digamberies at the time when the Swetamberies attempted to put Chakshus in the idol.
No doubt this was an interim arrangement till the decision of a Civil Court adjudicating the respective rights, but there was never any question of either Sect not having the right to worship the idol.
The dispute had arisen only as to whether Swetamberies can fix Chakshus in the idol.
1 states as follows: "We Panchas give this award that a dispute had arisen between the Swetamberies and Digamberies as Swetamberies recently fixed eyes on the idol.
This new thing should not continue.
These eyes should be removed.
Digamberies have a right to perform Poojan so they can mark saffron Tiki ' and have Darshan and come back.
Digambries will not performs Prakshal, Poojan.
Swetamberies will continue incurring expenses as usual.
The idol shall remain backed (Nirakar)".
The representatives of both Sects have signed this award, as a temporary measure agreeable to both the Sects, who indicated that they would press their rights in a Civil Court.
Once the right of worship of the Digamberies is established there is little doubt that they are entitled to the injunction sought for by them against the Defendants Appellants from preventing them from worshiping or from interfering with that right by placing Chakshus in the idol, Dhwajadand, Kalash on the Temple.
In view of these findings the further question that when once it has been found that the Swetamberies have the right of management and possession of the Temple there is a presumption of ownership under Sec.
110 of the Evidence Act does not arise nor is it relevant.
It is no doubt contended by the Respondents Advocate that when consecration of an idol takes place the ownerships of the Temple is in the idol and therefore, the question, of presumption under Sec. 110 does not arise.
It is again contended by Shri Desai that the moment it is held that it is not possible to, come to a conclusion as to which Sect the idol belongs, as has been held by the Court below, the Respondents cannot be allowed to object to the Appellants worshipping the idol according to their tenets.
This contention, however, in our view ignores the rights of the Digamberies to worship in accordance with their tenets.
If the contention of the learned Advocate for the Appellants is accepted it will be tantamount to holding that Digamberies have no right to worship as there would denomination change in the idol if the Swetamberies are held to have the right to worship it according to their tenets by placing Chakshus in the idol or by erecting their Dhwajadand or Kalash over the Temple.
848 Lastly it is urged that the High Court ought not to have entertained the cross objection by extending the time for worship from 1 hour to 3 hours.
In our view the directions of the High Court are not unreasonable nor do they in any way affect the right of the Respondents to worship because the directions clearly enable the Swetamberies who wish to worship the deity within that period without disturbing the Digamberies to be at liberty to do so and likewise it will be open to Digamberies to go and worship in the temple during the period it is kept open.
In view of the acute controversy between these 2 sects and their reluctance to arrive at an amicable settlement the directions given by the High Court are manifestly reasonable just and proper.
In this view the appeal fails and is dismissed with costs.
R.K.P.S. Appeal dismissed.
| IN-Abs | Respondents 1 to 9 filed a suit against the Appellants and some of the other respondents for a declaration that they hid been carrying on, and were entitled to the worship without interference of the idol of Adeshwarji in the temple named after him at Paroli according to the tenets observed by the Digambri Sect of the Jain religion.
They further alleged : that the temple was constructed and the idol consecrated according to and by the followers of their sect; that in December, 1949, the defendants had attempted to convert the said idol into the idol of the Swetambri Sect by putting Chakshus (artificial eyes) thereon, but were prevented due to strong opposition of the followers of Digambri Sect.
It was claimed that although a temporary settlement was reached between the two sects while the rights in the temple were to be adjudicated upon by a Civil Court, the defendants had made arrangements to alter the temple according to their tenets and that they were intending to enclose the idol by doors and locks with the object of interfering with the free exercise of a Digambris ' right to worship the idol.
It was therefore prayed that the defendants be restrained by a permanent injunction from altering the nature and shape and appearance of the idol in any manner or from doing any act which would interfere with the right of worship of the followers of the Digambri Sect.
The defendants denied that the Digambri Sect had any right of worship of the idol or had ever exercised such a right and contended that the idol and the temple is in all respects a temple of the Jain Swetambri Sect.
The Trial Court decreed the suit and the District Judge in appeal as well as the High Court confirmed the decree.
The High Court also fixed three hours a day when the Digambris may use the temple for worship In appeal to this Court, it was contended inter alia on behalf of the appellant that the reliefs claimed made it clear that the dispute was not of a civil nature; and that the judgment of the Trial Court was wholly vitiated because the Trial Judge not having accepted the evidence produced before him, based his findings on his own inspection.
It was also contended that unless the ownership of the temple, was established or that the idol belonged to the Digambri Sect, no injunction could be given nor could the respondents be permitted to worship there; in the plaint the respondents had averred that the idol is a Digambri idol and as they had failed to prove this, their right to worship also failed.
HELD:Dismissing the appeal, (i)From the pleadings and the controversy between the parties it was clear that the issue was not one which was confined merely to rites and rituals but one which effected the rights of worship.
If the Digambries have a right to worship at the temple, the attempt of the Swetam 837 belies to put Chakshus or to place Dhwajadand or Kalash in accordance with their tenets and to claim that the idol is a Swetamberi idol was to preclude the Digamberies from exercising their right to worship at the temple, with respect to which a civil suit is maintainable under Section 9 of the Civil Procedure Code.
This position is well established.
[843 B] Sir Seth Hakam Chand & Ors.
vs Maharaj Bahadur Singh & Ors., 60 I.A. 313 and Nar Hari Sastri and Ors.
vs Shri Badrinath Temple Committee; , , referred to.
(ii)While, giving his findings the Trial Judge remarked that the evidence led by the Plaintiffs appeared to be correct.
These observations themselves show that the evidence on record was an element in the formulation of the Trial Court 's judgment buttressed by the observations of the learned Judge during the site inspection.
it was clear that the description given by the learned Judge of the idols in the Adeshwarji Temple and the Temple of the Swetemberies were observations made during an inspection at which both the Plaintiffs and Defendants Advocates were present and that there must have been notes also in respect of the inspection made on both the occasions.
There was therefore no validity in the contention that the finding of the Trial Judge was based entirely on the result of his inspection.
[844 G 845 C] (iii)The concurrent findings of the Courts below that the idol was Nirker ' (naked), that there were no Chakshus, no Mukat, no Armlet, no Dhwajadand or no Kalash, would show that the idol was consecrated by the Digamberies.
It was also clear that it was an ancient temple and that both the Digamberies and the Swetamberies worship the idol.
It was not denied that while the Digamberies will not worship an idol which has Chakshus or which has clothes or Mukat, the Swetamberies would worship a Digamberi idol without these and hence the right to worship a Digamberi idol by both the sects is possible and it has been rightly so held by all the courts.
[846 E] Once the right of worship of Digamberies was established they would be entitled to the injunction sought for by them against the Appellants from preventing them from worshiping or from interfering with that right by placing Chakshus in the idol, Dhwajadand, Kalash on the Temple.
The directions of the High Court extending the time for worship by Digamberi Sect from one hour to three hours was not unreasonable.
[848 A B]
|
iminal Appeal No. 76 of 1968.
Appeal by special leave from the judgment and order dated February 8, 1968 of the Mysore High Court in Criminal Appeal No. 215 of 1966.
V.M. Tarkunde, R. Jethamalani, N. H. Hingorani and K. Hingorani, for the appellant.
section P. Nayar, for the respondent.
The Judgment of the Court was delivered by Dua, J.
This appeal by special leave is directed against the judgment and order of the Mysore High Court on appeal setting aside in part the order of the appellant 's acquittal by a Second Class Magistrate and convicting him under r. 126P(2) of the Defence of India Rules as amended in 1963 hereafter called the Rules and sentencing him to rigorous imprisonment for six months.
The order of the trial court acquitting him of the offence under section 135 of the Customs Act was upheld.
The appellant alighted from a service plane at H.A.L. Aero drome, Bangalore on November 16, 1963 at about 12.45 in the afternoon.
E. R. Fariman, Inspector, C.I.D. had prior incriminating information about the arrival of a person whose description seemed to tally with that of the appellant.
The Inspector and has staff who were on the look out waited for the appellant to take his baggage from the baggage counter.
As soon as the appellant took delivery of a plastic bag and a hold all the Inspector asked the appellant to accompany him to the Security Room.
On being questioned the appellant gave his name as Tara Chand though he admitted that he had travelled under the name of J. D. Shaw.
In the Security Room in the presence of Panchwatdars the plastic bag and the hold all were opened and examined.
From a pillow taken out of the hold all were found two tape bags containing 16 pieces of gold with foreign markings.
These tape bags had been put into the pillow which was then stitched.
The appellant was then produced by the Inspector before his D. section P. along with the articles seized from him.
After obtaining sanction from the Collector under section 137(1) of the 910 Customs Act and under r. 126Q of the Rules Shri Rasool, Superintendent of Central Excise (P.W. 3) filed the complaint.
The learned Magistrate trying the appellant found the.
gold pieces to be of foreign origin.
He, however, did not find any evidence establishing them to be smuggled with the result that the appellant was acquitted of the offence under section 135 of the Customs Act.
The learned Magistrate did not draw any presumption against the appellant because the seizure of the gold pieces was not by the Customs authorities but by the police who thereafter handed over the gold pieces to the office of the Collector of Central Excise and Customs.
While considering the case against the appellant under r. 126P(2) of the Rules, the learned Magistrate observed that according to the relevant notification issued by the Government of India on November 5, 1963 in modification of the earlier one issued under r. 126J read with r. 126X of the Rules, it is either the Assistant Collector of Central Excise or the Collector of Central Excise who can institute prosecution.
These officers are not authorised to delegate the power to institute prosecution.
According to the learned Magistrate the Collector of Excise had, therefore, no power to delegate the right to institute prosecutions with which healone had been clothed.
Exhibit P/5 was in the circumstancesconsidered to be ineffective.
On this reasoning the complainthaving not been filed by the officer competently authorised the appellant was acquitted.
On appeal by the Superintendent of Central Excise and Customs (the complainant in the case) the High Court disagreed with the view taken by the learned Magistrate.
It may be pointed out that the appeal by the complainant was confined only to the acquittal under r. 126P(2) of the Rules and the appellant 's acquittal under section 135 of the Customs Act was not questioned, it being conceded that there was no evidence on the record to bring the appellant 's case under section 135 of the Customs Act.
The High Court relying on exhibit P/5 and the two notifications issued by the Government of India came to the conclusion that the Collector was lawfully empowered to authorise the Superintendent of Central Excise to prosecute the appellant.
That Court also arrived at the conclusion that the,appellant, who was not a dealer or refiner, having a licence, was found in possession of gold, of which no declaration had been made under the law and, therefore, he was guilty of an offence punishable under r. 126P(2) of the Rules.
The appeal was accordingly allowed and the appellant convicted and sentenced to rigorous imprisonment for six months.
911 In this Court Shri Tarkunde assailed the legality of the view taken by the High Court.
According to him the trial court had rightly held the prosecution not to have been instituted by a duly authorised person.
Let us see if the scheme of the relevant statutory provisions supports the learned counsel.
Part XII A of the Rules deals with Gold Control and it con tains rules 126A to 126Z.
This part was inserted in the Defence of India Rules in January 1963.
Rule 126Q provides : "(1) No prosecution for any offence punishable under this Part shall be instituted against any person except by, or with the consent of, the Administrator or any person authorised by the Administrator in this behalf.
(2) Nothing in rule 154 shall apply to any contravention of any provision of this Part or any order made thereunder.
" The word "Administrator" was substituted for the word "Board" in September 1963.
We are informed that no Administrator as defined in r. 126A(a) was appointed by the Central Government under power conferred on it by r. 126J(1).
Under r. 126X the Central Government is empowered to perform all or any of the functions of the Administrator and also by notification to exercise all or any of the powers conferred on the Administrator by Part XII A if considered necessary or expedient in the public interest to do so.
The Administrator who is to take suitable measures : (a) to discourage the use and consumption of gold, (b) to bring about conditions tending to reduce the demand for gold and, (c) to advise the Central Government on all matters relating to gold, is enjoined by r. 126J(3) to discharge his functions subject to the general control and directions of the Central Government.
Sub rules 4 and 5 of r. 126J provide : "(4) The Administrator may by general or special order authorise such person as he thinks fit to exercise all or any of the powers exercisable by him under this Part and different persons may be authorised to exercise different powers Provided that no officer below the rank of Collector of Customs or Central Excise or Collector of a district shall be authorised to hear appeals under sub rule (3) of rule 126 M. (5) Subject to any general or special direction given or condition attached by the Administrator any 912 person authorised by the Administrator to exercise any powers may exercise these powers in the same manner and with the same effect as if they had been coffered on that person directly by this Part and not by way of authorization.
" We may bear in mind the effect of sub rule (5) on the scheme.
Rule 126H(2) (d) dealing with restrictions on possession and sale of gold by persons other than licensed holders lays down "(2) Save as otherwise provided in this Part, (d) no person other than a dealer licensed under this Part shall buy or otherwise acquire or agree to buy or otherwise acquire, gold, not being ornament, except, (i) by succession, intestate or testamentary, or (ii)in accordance with a permit granted by the Administrator or in accordance with such authorisation as the Administrator may, by general or special order make in this behalf : Provided that a refiner may buy or accept gold from a dealer licensed under this Part;" Turning now to the two notifications on the construction of which the fate of this case depends, we find that on January 10, 1963 the Central Government issued a notification in exercise of the powers coffered on it by r. 126X read with r. 126J(4) authorising certain officers of the Central Excise Department to exercise any or all of the powers of the Gold Board in relation to certain matters specified therein.
At sl.
No. 10 of the Table contained in the notification officers not inferior in rank to the Assistant Collector were authorised to exercise powers and functions in relation to the matter of "according of sanctions for the prosecution of offences" with reference to r. 126Q.
We have reproduced the exact words of the entry in col.
(4) of the Table.
This notification was amended in certain respects on November 5, 1963.
At sl.
No. 10 of the amended Table officers not inferior in rank to the Assistant Collector of Central Excise Department were authorised to exercise the powers and functions in relation to the matter of "institution.
of prosecution for any offence punishable under Part XII A of the Defence of India 913 Rules" with reference to r. 1260.
Here again we have reprocessed the exact words used.
According to Shri Tarkunde these notifications did not em power the Assistant Collector to authorise the Superintendent of Central Excise and Customs to institute the present proceedings.
The Assistant Collector, said the counsel, was authorised only himself to institute them and he could not lawfully accord consent for the institution of prosecution as he purported to do under ET.
We are unable to accept this submission.
The actual wording of the relevant entries in all the columns of serial No. 10 in the Table of the later notification may here be reproduced.
Assistant Collector of the Central Excise Department.
126Q Institution of prosecution for any offence punishable under Part XIIA of the Defence of India Rules, 1962".
This has to be read along with the opening part of the earlier notification dated January 10, 1963 Which remains the principal notification and was amended only in certain particulars on November 5, 1963.
According to the opening part of the principal notification the officers not inferior in rank to the officer specified in col. 2 of its Table were authorised to exercise any or all of the powers of the Gold Board in relation to the matters specified in the corresponding entries in cols.
3 and 4.
In place of "Gold Board" we have to read the word "Administrator" and since no Administrator was ever appointed, the powers and functions entrusted to him were at the relevant time being exercised by the Central Government.
We may point out that it was apparently by oversight that the word "Administrator" was not substituted for the expression "Gold Board" in the noti fication though in September 1963 such substitution had been effected by appropriate amendment in the relevant rules.
This was not controverted at the Bar and indeed no point was sought to be made on this ground.
It would thus be seen that in determining the scope and extent of the powers of the officers authorised in the Table of the Notification to exercise the powers and functions of the Administrator, actually exercised by the Central Government (there being no Administrator appointed under the rules), we have to see the nature of the power and function mentioned in col. 4 and examine it by ' reference to the rule mentioned in col. 3 in the light of the expression "in relation to the matters specified" in the notification which, in our opinion, to some extent widens the scope of the powers and functions de legated by the notification.
16 L694 SupCI/71 914 Under r. 126Q as read in the light of the entries at serial No. 10 of the notification prosecution for an offence punishable under Part XII A can, in our opinion, be instituted by or with the consent of an officer not inferior in rank to the Assistant Collector of the Central Excise Department.
In exhibit P/5 dated September 4, 1964 Shri V. Parthasarathy, Collector of Central Excise accorded his sanction to the prosecution of the appellant as required under r. 1260 of the Defence of India Rules.
He did so in exercise of the powers conferred on him by the two notifications mentioned above.
The offence for which the consent was given was described in this document as under "WHEREAS Shri Tarachand s/o Deviraj (Devi chand) Room No. 4, Mistry Bungalow, Duncan Road, Bombay 4was found to have acquired gold not being ornamentexcept by succession, intestate, or testamentary or in accordancewith the permit granted, either by the Administrator or by the Deputy Secretary in the office of the Gold Control Administrator, Bombay, duly authorised in this behalf by the Government of India vide their notification No. F. 1/8/63 GC dated 20 10 1963, 16 pieces of gold of 10 tolas each bearing markings as to its origin and purity contrary to the pro visions of rule 126H(d) of the Defence of India Amendment Rules.
WHEREAS any person having in his possession or in his control any quantity of gold or buy or otherwise acquires or accepts gold in contravention of any provisions of Part XII A of the Defence of India Rules renders himself liable for punishment under Rule 126P(2).
And on careful study of the material placed before me and satisfying myself that the said Shri Tarachand is liable to action under rule 126P(2) of the Defence of India Amendment Rules, 1963 for reasons mentioned above, I. V. Parthasarathy, Collector of Central Excise, Mysore Collectorate, Bangalore, in exercise of the powers conferred on me by the Government of India in their Notification F. No. 25/1/63 GCR dated 5 11 63 issued under Rule 126J read with Rule 126 X of the Defence of India Amendment Rules do hereby accord consent for the institution of prosecution of the said Shri Tarachand as required under Rule 126 Q of the Defence of India Amendment Rules, 1963.
" 915 This authority, in our opinion, quite clearly falls within the notification read as a whole and the High Court was right in so construing it.
The submission that these notifications must be construed strictly because by these instruments the authority to prosecute is delegated and so construed they should be held to confer power only to prosecute but not to accord consent to the apperant 's prosecution by some other person or authority has not impressed us.
The attempt by the appellant 's learned counsel in this connection to equate these notification with powers of attorney does not carry the matter any further.
The plain reading of the relevant entries in the notifications leaves no doubt in our mind as to its meaning, scope and effect.
It quite clearly authorises the Collector to exercise power and function in relation to the matter of institution of prosecution for any offence punishable under Part XII A of the Rules referred to in r. 126Q.
Keeping in view the multifarious activities of the higher officers of the Central Excise Department it seems to us that after the responsible officers of this Department not inferior in rank to the Assistant Collector had applied their mind and come to a decision as to the desirability of starting the prosecution in a given case further steps in the matter of actual prosecution including the drafting and presentation of the complaint can be lawfully carried out by others: That this is the real object and purpose of the notifications Is clearly brought out on plain reading of their language.
To hold otherwise, as desired by 5hri Tarkunde, would not only mean unduly straining the unambiguous statutory language but would also tend to thwart, instead of effectuating, their real purpose.
We are thus in agreement with the view taken by the High Court.
The counsel next submitted that the charge levelled against the appellant was different from the one for which he has been convicted.
In any event the charge framed, according to the counsel, was vague and it has caused him prejudice in his defence.
Here again, we are unable to agree.
In the complaint all the relevant facts were stated quite clearly and it was emphasised that the appellant had been found in possession of 16 pieces of gold with foreign markings ingeniously concealed inside long tabular pouches, in turn hidden inside a pillow case.
He was stated to be guilty inter alia of offences punishable under r. 126P(2).
The second charge framed by the court was as follows : "That you on or about the 16th November, 1963 at about 12.45 hours at H.A.L. Aerodrome, Bangalore, alighted from the plane No. 105 which arrived from Bomay and when you and your articles were searched, 17 L694 Sup CI/71 916 you were found in possession of 16 pieces of gold each bearing markings, as to its foreign origin and purity weighing 10 tolas each, having illegally imported into India in contravention of prohibition imposed by the Ministry of Finance Notification No. 1211 F1/48 dated 25th August, 1948, and without permit issued by the Gold Control Authorities as required under Rule 126H(d) under the Defence of India Amendment Rules, 1963 and thereby committed an offence under Rule 126P(2) r/w 1261(10) of the Defence of India Amendment Rules, 1963 relating to Gold Control and within my cognizance.
" The appellant never complained that this charge was vague or outside the complaint.
Indeed in his statement in court the appellant has admitted all the relevant facts alleged by the prosecution.
The facts alleged and proved clearly bring the appellant 's case within the mischief of rr.
126H(2) (d) and 126P(2).
Rule 126H(2) (d) has already been reproduced earlier.
Under r. 126P(2) (ii) whoever has in his possession or under his control any quantity of gold in contravention of any provision of Part XII A is punishable with imprisonment for a term of not less than six months and not more than two years and also with fine.
All the relevant salient facts alleged by the prosecution having been admitted by the appellant there can hardly be any ques tion of prejudice having been caused to him by the wide language of the complaint and the charge, assuming the language to be wde.
This argument is accordingly repelled.
Lastly the counsel contended that the sentence imposed was two severe.
The entire gold seized from him having been confiscated the sentence undergone should, according to the submission, be held to serve the cause of justice.
We have already noticed that under r. 126P(2) (ii) the minimum period of imprisonment prescribed is six months.
According to the appellant the law has since been amended and under the Gold (Control Act 18 of 1965 which has repealed Part XII of the Rules there is no minimum sentence of imprisonments prescribed.
In our opinion this case must be governed by the law as in force Prior to the enforcement of the .
Our attention has not been drawn to any provision of law nor to any principle or precedent which would attract the provisions of the of 1965 to this case in regard to the question of sentence.
This appeal accordingly fails and is dismissed.
R.K.P.S. Appeal dismissed.
| IN-Abs | The Appellant was searched on alighting from a plane at the H.A.L. Aerodrome, Bangalore, on November 16, 1963 and a quantity of Gold was found on and seized from him.
After obtaining sanction from the Collector under section 137(1) of the Customs Act and under Rule 126 Q of Defence of India Rules, 1962, the Superintendent of Central Excise filed a complaint against the Appellant.
The Trial Court did not find any evidence establishing that the Gold had been smuggled and the Appellant was therefore acquitted of the offence under section 135 of the Customs Act.
As regards the case against the Appellant under Rule 126 P(2) the Trial Court held that according to the Notification issued by the Government of India on November 5, 1963 in modification of the Notification dated January 10, 1963 issued under Rule 126 J read with Rule 126 X, either the Assistant Collector of Central Excise or the Collector of Central Excise could institute the prosecution; these officers were not authorised to delegate powers to institute prosecution.
The Court, therefore, acquitted the Appellant on the view that the complaint was not filed by an Officer competently authorised.
The High Court in appeal disagreed with this view holding that the Collector was lawfully empowered to authorise the Superintendent of Central Excise to prosecute the appellant.
The Court convicted the appellant and sentenced him to rigorous imprisonment for six months.
Dismissing an appeal to this Court, HELD : The plain reading of the relevant entries in the Notification of January 10, 1963 as amended by the Notification of November 5, 1963 clearly shows that it authorises the Collector to exercise the power and function in relation to the institution of prosecution for any offence punishable under Part XII A of the Rules referred to in r. 126Q.
Keeping in view the multifarious activities of the higher officers of the Central Excise Department it seems clear that after the responsible officers of this Department not inferior in rank to the Assistant Collector had applied their mind and come to a decision as to the desirability of starting the prosecution in a given case, further steps in the mitt& of actual prosecution including the drafting and presentation of the complaint could be lawfully carried out by others.
To hold otherwise would not only mean unduly straining the unambiguous statutory language but would also tend to thwart, instead of effectuating, their real purpose.
[915 C F] There was no force in the contention that the charge levelled against the appellant was vague or in any way different from the one for which 909 he was convicted.
In fact the appellant had admitted all the relevant facts alleged by the prosecution.
The facts alleged and proved clearly brought the appellant 's case within the mischief of rule 126H(2)(d) and 126 P(2).
Although under the new Gold (Control) Act 18 of 1965, which had repealed Part XII A of the Rules, there is no minimum sentence of imprisonment prescribed, the present case must be governed by the law in force at the time and therefore the minimum sentence of 6, months under rule 126 P(2) (ii) must apply.
[916 D, G]
|
Appeal No.2402 of 1966.
1 2 L694SupCI/71 850 Appeal by special leave from the judgment and order dated May 4, 1966 of the Patna High Court in Misc.
Judicial Case No. 284 of 1962.
A. K. Sen and U. P. Singh, for the appellants.
N. A. Palkhivala, section B. Mehta, B. Datta, for the respondent.
Hegde, J. This is an appeal by special leave.
It arises from the judgment of the High Court of Patna in a Reference under section 25(3) of the Bihar Sales Tax Act, 1947.
That reference was called for by the High Court at the instance of the assessee company (the respondent herein.
The questions referred for the opinion of the High Court by the Board of Revenue were : "(1) With regard to the sales which took place in the period from 1st of April, 1955 to the 6th September 1955, whether the assessee is entitled, upon the facts found by the Board of Revenue with regard to these categories of sales, to exemption from liability under the Bihar Sales Tax Act because of the provision of Article 286(1) (a) of the Constitution as it stood at the relevant date read with the explanation to that article.
(2) With regard to the sales which took place in the period from 7th September, 1955, to 31st March, 1956 whether the assessee is entitled, upon the facts found by the Board of Revenue with regard to these categories of sales, to exemption from liability under the Bihar Sales tax Act on the ground that the sales took place in the course of inter State trade or commerce under article 286(2) of the Constitution as it stood at the relevant period.
" The High Court answered the first question in the negative and against the assessee.
It answered the second question in the affirmative and in favour of the assessee.
The assessee has not come up in appeal.
This appeal has been brought by the State of Bihar contesting the correctness of the opinion given by the High Court on the second of the two questions referred to earlier.
The assessee is, a Public Limited Co., incorporated under the Indian Companies Act, 1913.
It carries on business of manufacturing and selling inter alia trucks and bus chassis and spare parts thereof to their appointed dealers, State Transport Organizations and individual buyers throughout India.
The registered office of 851 the assessee is at Bombay but its factory where manufacturing proCess. is being carried on is at Jamshedpur in Bihar.
The assessee has appointed several dealers all over India for the sale of its trucks, bus chassis and spare parts.
Those dealers are appointed under agreements entered into between the in and the assessee.
The turnover in dispute relates to the sales made by the assessee to its dealers of trucks, bus chassis and spare parts for being sold in the territories assigned to them under the dealership agreements.
The agreements between the assessee and its dealers appear to be similar.
Under the agreements, each dealer is assigned a territory .in, which alone he can sell the trucks, bus chassis and other spare parts purchased by him from the assessee company.
He is forbidden from selling anyone of those articles to any purchaser outside his territory.
As per the agreements, dealers will have to place their indents, pay the price of the goods to be purchased and obtain delivery orders from the Bombay office of the assessee.
In pursuance of those delivery orders, trucks, bus chassis and other spare parts were delivered in Bihar to be taken over to the territories assigned to them.
Under the contracts of sale, the dealers, were required to remove the trucks, bus chassis and the spare parts, delivered to them.
in the State of Bihar to place outside Bihar.
These are facts found by the Board of Revenue and affirmed by the High Court.
On the basis of these facts, we have whether the sales with which we are concerned in this appeal are sales that took place in the course of inter State trade and commerce as contemplated by article 286(2) of the Constitution as it stood at, the relevant time.
In other words the question for decision is, whether the sales in question were sales for the purpose of inter State trade or commerce or whether they were sales in the course of inter State trade or commerce.
As seen earlier, the High Court has held that, those sales took place in the course of interState trade or commerce.
The expression "in the course of" appearing in article 286(1)(b) came up for consideration in State of Travancore Cochin and Ors.
vs The Bombay Co. Ltd. (1) Therein in this Court held that whether else may or may not fall within article 1286(1)(b) of the Constitution,.
sales and purchases which themselves occasion the export or import of the goods as the case may be out of or into, the territory of India come within the exemption.
In that case this Court further observed that a sale by export involves, a series of integrated activities 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 resultant export form parts of a single transaction.
Of these two integrated activities which to (1) ; 852 gather 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 same exposition of the law is true of cl.
(2) of article 286 as it stood prior to its amendment on September 11, 1956.
The next decision in which article 286(1)(a), 1(b) and (2) came to be considered by this Court is State of Travancore Cochin and Ors.
vs Shanmugha Vilas Cashew Nut Factory and Ors.
(1) Therein this Court observed that the word "course ' etymologically denoties movement from one point to another and the expression "in the course of" in article 286(1)(b) not only implies a period of time during which the movement is in progress but postulates also a connected relation.
Consequently, a sale in the course of export out of the country should be understood in the context of article 286(1) (b) as meaning a sale taking place not only during the activities directed to the end of exportation of the goods out of the country, but also as part of or connected with such activities.
But a purchase of goods for the purpose of export is only an act preparatory :to their export and.
not an act done in the course of the export of ,the goods.
In The Bangal Immunity Company Ltd. vs The State of Bihar and Ors.
(2) Venkatarama Ayyar, J. observed that a sale could be a sale in the course of inter State trade only if two conditions concur : (1) a sale of goods and (2) a transport of those goods from one State to another under the contract of sale.
In Endupuri Narasimham and son vs The State of Orissa and Ors.
(3), this Court held that in order that a sale or purchase might be inter State, it is essential that there must be a transport of goods from one State to another under the contract of sale or purchase.
IA purchase made inside a State for sale outside the State cannot itself be, held to be in the course of inter State and the imposition of tax thereon is not repugnant to article 286(2) of the Constitution.
In Tata Iron and Steel Co. Ltd. vs section R. Sarkar and ors.
(4) this Court held that within cl.
(b) of section 3 of the , are included sales in which property in the goods passes during the movement of the goods from one State to another by transfer of documents of title thereto and also covers sales in which movement of goods from one State to another is the result of a covenant or incident of the contract of sale and property in (1) ; (2) [1955] 2 S.C.R.603.
(3) ; (4) ; 853 the goods passes in either State.
Clause (b) of section 3 of the says : "That no law of a State shall impose or authorise the imposition of,.
a tax on the sale or purchase of goods where such sale or purchase takes place in the course of the import of goods into, or export of the goods out of,.
the territory of India.
" In The Cement Marketing Co. of India (private Ltd. and anr.
vs The State of Mysore and anr.(1), this Court held that where the goods were transported outside the State as required by the contract of sale, they are inter State sales and hence exempt from sales tax.
On the facts of that case it was held that the sales transactions themselves involved movement of goods across the border.
In Ben Gorm Nilgiri Plantations Co. Coonoor and ors.
vs Sales Tax Officer, Special Circle, Ernakulam and ors.(2) this Court had to consider what sales are sales in the course of export and what sales are for the purpose of export.
In the course of the judgment Shah, J. (one of us) observed : "A sale in the course of export predicates a connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted, without a breach of the contract or the compulsion arising from the nature of the transaction.
In this sense to constitute a sale in the course of export it may be said that there must be an intention on the part of both the buyer and the seller to export, there must be obligation to export,.
and there must be an actual export.
The obligation may arise by reason of statute, contract between the parties, or from mutual understanding or agreement between them.
, or even from the nature of the transaction which links the sale to export.
A transaction of sale which is a preliminary to export of the commodity sold may be regarded as a sale for export, but is not necessarily to be regarded as one in the course of export, unless the sale occasions export." In K. G. Khosla and Co. (P) Ltd. vs Deputy Commissioner of Commercial Taxes, Madras(3 ) this Court held that before a sale could be said to have occasioned the import, the movement of goods must have incidental to the contract or in pursuance of the conditions of the contract and there should be no possibility (1) 14, S.T.C. 175 (S.C.) (2) 117 S.T.C. 473.
(S.C.) (3) 854 the goods being diverted by the assessee for any other purpose.
meaning thereby that there should be no possibility of diversion according to law or contract and not in breach of them. ' In Tata Engineering and Locomotive Co. Ltd. vs The Asstt.
Commissioner of Commercial Taxes and anr.(1), this Court after referring to the earlier decisions observed : "It has been laid down that the sale in the course of export, predicated connection between the sale and export, the two activities being so integrated that the connection between the two cannot be voluntarily interrupted without a breach of the contract or the compulsion arising from the nature of the transaction.
To occasion export there must exist such a bond between the contract of sale and the actual exportation that each link is inextricably connected with the one immediately preceding it.
The principle thus admits of no doubt.
according to the decisions of this Court, that the sales to be exigible to tax under the Act (Central Sales Tax Act, 1956) must be shown to have occasioned the movement of the goods or articles from one State to another.
The movement must be the result of a covenant or incident of the contract of sale.
" If we apply the principles enunciated by this Court in the decisions referred to above to the facts of this case, it is obvious that the sales with which we are concerned in this case are sales in the course of inter State trade.
The dealers were required to move the trucks, buses, chassis and other spare parts purchased by them from the State of Bihar to places outside Bihar.
They are so required by the terms of the contracts entered into by them with the assessee.
They would have committed breach of their contracts and incurred the penalty prescribed in their dealership agreements, if they had failed to abide by the term requiring them to move the goods outside the State of Bihar.
The decided cases establish that sales will be considered as sales in the course of export or import or sales in the course of inter State trade and commerce under the following circumstances: (1) When goods which are in export or import stream are sold; (2) When the contract of sale or law under which goods are sold require those goods to be exported or imported to a foreign country or from a foreign country as the case may be or are required to be transported to a State other (1) [1970] 1 S.C.C.622.
855 than the State in which the delivery of goods takes place and (3) Where as a necessary incident of the contract of sale goods sold are required to be exported or imported.
or transported out of the State in which the delivery of goods takes place.
But Mr. A. K. Sen, learned Counsel for the State of Bihar contended that this Court has taken a different view of the law in Coffee Board, Bangalore vs Joint Commercial Tax Officer, Madras and anr.(1).
According to him the ratio of that decision is that whenever goods are delivered in a State in pursuance of a contract of sale, the sale in question becomes exigible to tax in the State in which the goods are delivered unless they are taken out of the State for purposes of consumption and not resale, or the same is taken out of the State in pursuance of an already existing agreement to resell in the State to which it is taken.
The decision in Coffee Board case (supra) does not, in our opinion, afford any basis for these contentions.
We have earlier noticed that this Court in a series of decisions has pronounced in unambiguous terms that where under the terms of a contract of sale, the buyer is required to remove the goods from the State in which he purchased those goods to another State and when the goods are so moved, the sale in question must be considered as a sale in the course of inter State trade or commerce.
This is a well established position in law.
In the Coffee Board case this Court did not deviate from this position nor could it deviate as the earlier decisions were binding on it.
Fur ther in the course of his judgment, the learned Chief Justice who spoke for the Court referred with approval to the earlier decisions of this Court where distinction between the sales in the course of inter State trade or commerce and sales for the purpose of interState trade and commerce were explained.
On the basis of the facts in that case, his Lordship came to the conclusion that the export of the coffee in question was, not integrated with the sales with which the Court was concerned and that there was no direct bond between the export and the sales.
In the course of his judgment his Lordship observed : "Here there are two independent sales involved in the export programme.
The first is a sale between the Coffee Board as seller to the export promoter.
Men there is the sale by the export promoter to a foreign buyer.
Of the latter sale, the Coffee Board does not have any inkling when the first sale takes place.
The Coffee Board 's sale is not in any way related to the second sale.
Therefore, the first sale has no connec (1) 25 S.T.C. 528 (S.C.) 856 tion with the second sale which is in the course of export, that is to say, movement of goods between an exporter and an importer.
" This finding clearly brings out the distinction between the facts of the Coffee Board 's case (supra) and the facts of the cases wherein this Court held that the sales in question were sales in the course of export or import.
In the Coffee Board 's case this Court found that what was insisted on by the Coffee Board was that the coffee set apart for the purpose of the export must be exported; it was not incumbent for the purchasers at the auction to export that coffee themselves; they may do it themselves or they may sell it to somebody who may export it outside India.
On that basis, this Court came to the conclusion that the sales effected by the Coffee Board are not sales in the course of export; they are only sales for, the purpose of export.
The ratio of that decision does not bear on the facts before us.
Herein, under the terms of the contracts of sale, the purchasers were required to remove the goods from the State of Bihar to other States.
Hence the sales with which we are concerned in this case must be held to be sales in the course of inter State trade or commerce.
For the reasons mentioned above, we agree with the findings of the High Court.
In the result this appeal fails and the same is dismissed with costs.
| IN-Abs | The assessee, having its registered office in Bombay and its factory in Bihar, was carrying on the business of manufacturing and selling trucks, bus chassis and spare parts to their appointed dealers and others.
Agreements were entered into between the assessee and the appointed dealers, under which, each dealer was assigned a territory in which alone the dealer could shell.
The dealers had to place the indents, pay the price of goods to be purchased and obtain delivery orders from the Bombay office.
In pursuance of the delivery orders the trucks etc.
were delivered in Bihar to be taken to the territories assigned to them for sale there.
If the dealers failed to abide by the term requiring them to move the goods outside the State of Bihar they would have committed breach of their contracts, On the question whether the turnover relating to the sales made by the assessee to its dealers for sale by them in their respective territories outside the State of Bihar, during the period 7th September 1955 to 31st March 1956, was exempt from liability to pay sales tax under the Bihar Sales Tax Act, on the ground that the sales took place in the course of inter State trade or commerce, under article 286(2) as it, then stood, HELD : Where under the terms of a contract of sale, the buyer is required, as a necessary incident of the contracts to remove the goods from the State in which he purchased the goods to another State and when the goods are so removed, the sale must be considered as a sale in the course of inter State trade or commerce.
[854 G H; 858 A 13] State of Travancore Cochin vs The Bombay Co. Ltd. ; , State of Travancore Cochin vs Shanmugha Visal Cashew Nut Factory, ; , Bengal Immunity Co. Ltd. vs State of Bihar, , Endupuri Narasimham & Son vs State of Orissa, ; , Tata Iron & Steel Co. Ltd. vs section R. Sarkar, [1961] ] S.C.R. 379, The Cement Marketing Co. of India (P) Ltd. vs State of Mysore, 14 S.T.C. 175, Ben Gorm Nilgiri Plantations Co. vs Sales Tax, Officer, Special Circle, Ernakulam; , , K. G. Khosla & Co. (P) Ltd. vs Dy.
Commissioner of Commercial Taxes, Madras, 17 S.T.C. 473 and Tata Engineering & Locomotive Co. Ltd. vs Asstt.
Commissioner of Commercial Taxes & Anr. ; , applied.
Coffee Board, Bangalore vs Joint Commercial Tax Officer, Madras, 25 S.T.C. 528, explained.
|
iminal Appeal No. 55 of 1970.
Appeal by special leave from the judgment and order dated September 26, 1969 of the Allahabad High Court in Criminal Appeal No. 1037 of 1969 and Referred No. 82 of 1969.
Yogeshwar Prasad, section K. Bagga and Sureshta Bagga, for the appellants.
O. P. Rana, for the respondent.
Sikri, J.
This appeal by special leave is directed against the judgment of the High Court of Judicature at AllAhabad confirming conviction of the two appellants by the Sessions Judge, Mainpuri, under section 302/34 of the Indian Panel Code.
Appellant Jadunath Singh was sentenced to death by the Sessions Judge and appellant Girand Singh was sentenced to undergo imprisonment for life.
In order to appreciate the points raised before us by the learned counsel for the appellants it is necessary to state a few facts.
It is alleged against the appellants that on February 26, 1968, at about 7.30 a.m., in furtherance of their common intention, they murdered one Ram Swarup Pandey by repeatedly stabbing him to death, when he was passing on the Grand Trunk road in the town of Bewar to catch a truck.
As many as 34 injuries were found on the deceased at the postmortem conducted on his body on the same day at about 3 p.m.
The prosecution case in brief is as follows : It is common ground that there was great enmity between the deceased and Laturi Ahir and his sons, the two appellants.
The deceased apprehended danger to his life from them, and on November 23, 1967, be sent an application to the Superintendent of Police, Mainpuri, ;alleging that Laturi and his son, Jadunath, Brahma, Panna Lal and Anokhey, et&. were terrorising the weaker and poorer sections of the village community and declaring openly that they would kill the deceased to silence his opposition for ever.
He prayed that an enquiry may be made and suitable action taken against them.
(On February 25, 1968 ( the deceased came to Bewar in the evening to meet the A.D.O. in connection with an enquiry on a complaint made against Munshi Lal Pradhan of the village.
He could not meet the A.D.O. as he was out of station.
He stayed during the 919 night with Prem Narain, P.W. 1, who happened to be a brother inlaw of his cousin Gulati Ram.
According to Prem Narain, both of them got up in the morning at 6.45 a.m. and since it was Shivratri that day the deceased did not take any food and they left for the bus stand at Bewar.
When they reached the bus stand at about 7.10 a.m. they found that the bus for Etah via Sultanganj had already left.
The next bus was due to go at 9.30 a.m. but, as the deceased thought that he could get a seat in some truck near the Prem Hotel and the Octroi barrier, they left the bus stand for the Octroi barrier.
When they reached the house of Kotwal Singh on the way, both the accused attacked the deceased with chhuri and knife, respectively; Jadunath had the chhuri and Girand Singh had the knife.
Both the deceased and Prem Narain were unarmed.
On hearing the, cries of the deceased Prem Narain asked the appellants why they were attacking the deceased.
Then Girand Singh, appellant, advanced towards him and gave a knife cut at his right wrist.
On the deceased falling down both accused persons attacked him with their respective weapons.
On his raising the alarm Mahesh Chandra and Dwarka Prasad who were coming along the same road came and they shouted at the appellants.
On hearing their shouts the accused ran away.
The deceased died on the spot.
The First Information Report was lodged at 8 a.m., the Police Station being only two furlongs from the scene of occurrence.
In the First Information Report, in the second column, under the heading "Name and residence of accused", it was stated as follows "1.
Jadu Nath Singh, father 's name not known and 2.
Girand Singh father 's name not known.
Ahirs by caste, residents of Garhia Kishunpur P.S. Bewar, Distt.
Mainpuri.
" The accused surrendered on March 12, 1968, and it appears that an application was filed by the advocate on their behalf that they be kept ba pardah as they might claim identification.
Another application was put in on March 25, 1968, in which it was stated that the witnesses other than Prem Narain were strangers and they applied that there should be an identification parade.
On April 19, 1968, the then Public Prosecutor submitted a report to the Additional District Magistrate as under "Accused Jadu Nath Singh and Girand Singh in case Cr. No. 24 under Section 302 I.P.C., P.S. Bewar, have applied for identification, vide application herewith attached.
It may be submitted that they are named in the F.I.R. and charge sheet against them has also been received.
The applications are moved to delay this case.
Submitted for n.a.
" 920 The Additional District Magistrate (Judicial) passed the following order on the application, on April 20, 1968 : "As charge sheet has already been received and the accused have been named by P.Ws., there appears to be no justification for ordering test identification.
Accused be informed accordingly.
The jail authorities be informed not to keep them ba parda.
" We have set out these facts in detail because, as will presently appear, one of the points raised by the learned counsel is that failure to put up the accused for identification either vitiated the trial or, in any case, rendered the evidence of, P.W. 2, Mahesh Chandra, and P.W. 3, Dwarka Prasad, useless.
We may here notice that portion of the evidence of Dr. N. K. Mital, who conducted the postmortem examination and on which one other point is sought to be founded.
He found that the stomach was empty and the small intestines were half full and the large intestines were also half full.
In cross examination he stated that since the stomach was empty, the deceased should have taken his last meal about 4 to 6 hours before the infliction of the injuries.
" He was asked: " 'The evidence is that the deceased took puris and vegetable at 8 p.m. on 25 2 68; and according to the case for the prosecution his murder took place at 7.30 a.m. on 26 2 68.
At the time of post mortem the stomach was found empty and both the small and large intestines were found half full.
Does it not indicate that in all likelihood the man was murdered between 3 and 4 a.m. ?" To this question Dr. Mital answered "No. It is not an indication of this fact.
After finishing his meal at about 8 or 8.30 p.m. on 25 2 68 the stomach could have got empty by 2 or 2.30 a.m.
The digested food material should have come in the small intestine by about 2 or 2.30 a.m. Complete digestion takes place in the small intestine.
And if he had answered the call of nature the preceding evening fully and completely, even then the small and large in testines might be half full and stomach empty if he had taken puries with vegetable at 8 p.m. on 25 2 68." ' The learned Sessions Judge believed the evidence of Prem Narain, corroborated as it was by the injuries sustained by him in the course of the occurrence at the hands of one of the assailants, namely, Girand Singh.
He also believed the evidence of Mahesh Chandra, P.W. 2, and Dwaraka Prasad, P.W. 3.
He relied on the fact that the appellants had absconded immediately after the crime and had only appeared before the Court as late as March 12, 921 1968, after proceedings under sections 87 and 88 of the Code of Criminal Procedure had been taken against them.
Regarding the claim of the appellants for identification the learned Sessions Judge observed that during the course of investigation both Mahesh Chandra and Dwarka Prasad had named the accused persons, and it would indeed have been surprising if the Additional District Magistrate (Judicial) had directed the accused to be paraded at a test identification parade in the jail.
He observed that the evidence indicated that the accused persons were not strangers even to Mahesh Chandra and Dwarka Prasad at the time of the occurrence.
Mahesh Chandra had stated in his evidence that he had known the accused persons for about 4 years and that they were living at village Garhiya lying at a distance of three furlongs from Bewar, and that Girand Singh was reading at the Amar Shaheed Inter College, Bewar.
Dwarka Prasad had stated that he had seen Girand visiting Bewar before that day.
He had also seen Jadu Nath Singh at Bewar but only once or twice before that.
For all these reasons the learned Sessions Judge held that the applications claiming identification were not bona fide and were intended to protract the proceedings, and accordingly he was unable to draw any adverse inference against the prosecution for the omission to parade the accused persons at a test identification parade in the jail.
The High Court believed the three eyewitnesses, Prem Narain, Mahesh Chandra and Dwarka Prasad.
The High Court held that "Mahesh and Dwarka Prasad are wholly independent witnesses having no affinity with the deceased and entertaining no animosity towards the appellants.
" The High Court observed that these ' witnesses had claimed to have known the appellants for the last six or seven years as they had been frequently visiting the town of Bewar, and the appellant, Girand Singh, was a student in a college at Bewar.
The learned counsel for the appellants raised two principal points before us (1) Since the accused were denied identification the trial was vitiated; (2) The medical evidence is in conflict with the prosecution case about the time of the assault.
The learned counsel further urged that the number and nature of injuries belie the prosecution story, and that the application by the deceased to the Superintendent of Police was nothing but a peshbandi.
He urged that the eye witnesses were not reliable and the courts below had missed the point that the appellants could not have anticipated that the deceased would be at this particular spot at that time.
922 The learned counsel relied on the following observations of the Lahore High Court in Sajjan Singh vs Emperor(1) "If an accused person is already well known to the witnesses, an identification parade would, of course, be only a waste of time.
If, however, the witnesses claim to have known the accused previously, while the accused himself denies this, it is difficult to see how the claim made by the witnesses can be used as a reason for re using to allow their claim to be put to the only practical test.
Even if the denial of the accused is false, no harm is done, and the value of the evidence given by the witnesses may be increased.
It is true that it is by no means uncommon for persons who have been absconding for a long time to.
claim an identification parade in the hope that their appearance may have changed suffi ciently for them to escape recognition.
Even so, this is not in itself a good ground for refusing to allow any sort of test to be carried out.
It may be that the witnesses may not be able to identify a person whom they knew by sight owing to some change of appearance or even to weakness of memory, but this is only one of the facts along with many others, such as the length of time that has elapsed, which will have to be taken into consideration in determining whether the witnesses are telling the truth or not.
" State of U.P. vs Jagnoo (2 ) refers to Sajjan Singh vs Emperor(1) with approval.
In re Sangiah(3) the decision of the Lahore High Court in Sajjan Singh vs Emperor (Supra) was dissented from Rajamannar, J., observed : "I am unable to find any provision in the Code which entitles an accused to demand that an identification parade should be held at or before the enquiry or the trial.
An identification parade belongs to the stage of investigation by the police.
The, question whether a witness has or has not identified the accused during the investigation is not one which is in itself relevant at the trial.
The actual evidence regarding identification is that which is given by the witness in Court.
The fact that a particular witness has been able to identify the accused at an identification trade is only a circumstance corroborative of the identification in Court.
If a witness has (1) A.I.R. 1945 Lab. 48, 50.
(2) A.I.R. 1968 All. 333, (3) A.T.R. , 923 not identified the accused at a parade or otherwise during the investigation the fact may be relied on by the accused, but I find nothing in the provisions of the Code which confers a right on the accused to demand that the investigation should be conducted in a particular way.
" In Perkash Chand Sogani vs The State of Rajasthan (1) (an unreported decision of this Court) in connection with the point regarding identification, it was observed : "Much is sought to be made out of the fact that no identification parade was held at the earliest opportunity in order to find out whether P.W. 7 Shiv Lal could have identified the appellant as the person who was at the wheel of the car and drove it and reliance is placed upon Awadh Singh & Others vs The Patna State(2) Provash Kumar Bose and Another vs The King(3) and also Phipson on the Law of Evidence, 9th Ed., p. 415 to justify the contention that in criminal cases it is not sufficient to identify the prisoner in the dock but the police should have held an identification parade at the earliest possible opportunity to show that the accused person had been connected with the crime.
It is also the defence case that Shiv Lal did not know the appellant.
But on a reading of the evidence of P.W. 7 it seems to us clear that Shiv Lal knew the appellant by sight.
Though he made a mistake about his name by referring to him as Kailash Chandra, it was within the knowledge of Shiv Lal that the appellant was a brother of Manak Chand and he identified him as such.
These circumstances are quite enough to show that the absence of the identification parade would riot vitiate the evidence.
A person, who is well known by sight as the brother of Manak Chand, even before, the commission of the occurrence, need not be put before an identification parade in order to be marked out.
We do not think that there is any justification for the contention that the absence of the identification parade or a mistake made as to his name, would be necessarily fatal to the prosecution case in the circumstances." In Awadh Singh vs The State(2) it was held that "the accused person may or may not have legal right to claim for test identification and the holding of test identification may or may not be a rule of law, but it is a rule of prudence.
Test identification parade should be held especially when the accused persons definitely as (1) Criminal Appeal No. 92 of 1956, decided on January 15, 1957.
(2) A.I.R. 1954 Patna 483, (3) A.I.R. 1951 Cal.
475, 924 sert that they were unknown to the prosecution witnesses either by name or by face and they requested the authorities concerned to have the test identification parade held." In Provesh Kumar Bose vs The King(1), a Division Bench of the Calcutta High (Harries C.J., & Das Gupta, J.) held: "The fact that the witnesses have identified in Court the accused is of very little consequence in a prosecution under section 384, Penal Code, when none of the witnesses knew the accused from before. . the cor roborative evidence which one is entitled to expect in cases of this nature is the evidence of the witnesses having pointed the accused whom they identified in Court from the midst of other persons with whom they were mixed up at a test identification parade.
The evidence of their having identified such persons at a test identification parade has no substantive value, but is very important corroboration of their evidence in Court.
" In Kanta Prasad vs Delhi Administration ( 3 ) a point was made regarding non holding of test identification parade by the police and this Court observed : "As for the test identification parade, it is true that no test identification parade was held.
The appellants were known to the police officials who had deposed against the appellants and the only persons who did not know them before were the persons who gave evidence of association, to which the High Court did not attach much importance.
It would no doubt have been prudent to hold a test identification parade with respect to witnesses who did not know the accused before the occurrence, but failure to hold such a parade would not make inadmissible the evidence of identification in court.
The weight to be attached to such identification would be a matter for the courts of fact and it is not for this Court to reassess the evidence unless exceptional grounds were established necessitating such a course.
" It seems to us that, it has been clearly laid down by this Court in Perkash Chand Sogani vs The State of Rajasthan(3) that the absence of test identification in all cases is not fatal and if the accused person is well known by sight it would be waste of time to put him up for identification.
Of course if the prosecution fails to hold an identification on the plea that the witnesses already knew the accused well and it transpires in the course of the trial (1) A.I.R. 1951 Cal.
(2) ; ,1221.
(3) G.A. No. 92 of 1956 decided on 15 1 1957.
925 hat the witnesses did not know the accused previously, the prosecution would run the risk of losing its case.
It seems to us that if there is any doubt in the matter the prosecution should hold an identification parade specially if an accused says that the alleged eyewitnesses did not know him previously.
It may be that there is no express provision in the Code of Criminal Procedure enabling an accused to insist.
on an identification parade but if the accused does make an application and that application is turned down and it transpires during the course of the trial that the witnesses did not know the accused previously, as pointed out above the prosecution will, unless there is some other evidence, run the risk of losing the, case on this point.
In the present case, however, it is clear that P.W. Mahesh Chandra knew the accused persons for about four years and said : "I know the accused persons, Jadunath Singh and Girand Singh for about 4 years.
They live at village Garhiya lying at a distance of three furlongs from Bewar.
Girand Singh is reading at the Amar Shaheed Inter College, Bewar.
" No cross examination was directed on this point.
P.W. 3, Dwarika Prasad, stated "I had seen Girand visiting Bewar before that but I had seen Jadunath at Bewar only once or twice before that day.
Identifies both the accused persons in the dock.
Lays hand correctly on Jadunath; and also lays hands correctly on Girand in the, dock.
" In cross examination he stated "I had seen Jadunath accused at Bewar at the shop of one Chhakku once or twice before the occurrence.
I had seen him two or 2 1/2 years back.
" It seems to us that the reason given by the Public Prosecutor in the report and the reason given by the Additional District Magistrate (Judicial) in the order directing that identification requested for be not held were not valid.
The fact that a charge sheet had been received and the accused had been named by P.W.s was no justification for not having ordered the test identification.
But on the facts of this case it is clear that P.W. 2 at least knew the accused from before.
As regards P.W. 3, although he claims to have known the accused, it is clear that his knowledge of the accused was very scant and if it had not been for the evidence of P.W. 2 we would not have placed reliance on the 926 evidence of P.W. 3 in view of the fact that the police did not ask him to identify the appellant.
It is stated in Phipson on the Law of Evidence, 9th Ed., p. 415, as follows : "In criminal cases it is improper to identify the accused only when in the dock; the police should place him, before hand, with others, and ask the witness to pick him out.
Nor should the witness be guided in any way nor asked "Is that the man We consider that the same is the law in India, if the identity is in doubt.
Accordingly on the facts of this case we are of the opinion that the trial was not vitiated because the accused persons were denied identification.
Regarding the second point, we have already extracted the evidence of the doctor, and it is quite clear to us that the evidence is not in conflict with the prosecution case.
If the occurrence took place at about 7.30 a.m. and the deceased had not taken any food in the morning, his stomach would still be empty at 7.30 a.m.
If anything the medical evidence destroys the case of the defence that the murder took place at about 3 in the morning.
We are unable to think that the deceased would leave with Prem Narain at 3 a.m. to catch a bus which was supposed to leave at about 7 a.m.
This appeal is by special leave and this Court does not reappropriation the evidence.
The, other points raised by the learned counsel are of that nature, and at any rate there is no substance in those points.
The appeal accordingly fails and is dismissed.
G.C. Appeal dismissed.
L694SupCI/70 2500 29 4 72 GIPF.
| IN-Abs | The appellants were accused of an offence under, section 302 read with section 34 of the Indian Penal Code.
Apart from P who was injured in the incident there were, according to the prosecution, two other eye witnesses M and D who.
knew the appellants from before.
The names of the appellants were mentioned in the First Information Report but not their parentage.
The appellants, at the stage of inquiry, made an application to the Additional District Magistrate (Judicial) requesting that a test identification parade be held.
According to the appellants P knew them from before but not the other two alleged eye witnesses.
The Magistrate rejected the application on the ground that the charge sheet had, already been filed.
The same request made at the trial stage to the Sessions Judge was again rejected on the ground it was not bona fide.
The trial court, believing the eye witnesses, convicted the appellants.
The High Court upheld their conviction and did not accept their plea that the trial had been vitiated because they had been denied a test identification parade.
In appeal to this Court by special leave, HELD: As laid down by this Court in Perkash Chand Sogani 's case the absenceof test identification in all cases is not fatal, andif the accused person is well known by sight it would be waste of time to put him up for identification.
But if there is any doubt in the matter the prosecution should hold an identification parade specially if an accused says that the alleged eyewitnesses did not know him previously.
It may be that there is no express provision in the Code of Criminal Procedure enabling an accused to insist on an identification parade but if the accused ' does make an application and that application is turned down and it transpires during the course of the trial that the witnesses did not know the accused previously, the prosecution will, unless there is some evidence,, run the risk of losing the case on this point.
[924 G 925 C] Perkash Chand Sogani vs State of Rajasthan, Cr.
92/1956 dt.
15 1 1957, applied.
Sajjan Singh vs Emperor, A.I.R. 1945 Laj. 48, State of U.P. vs Jagnoo, A.I.R. 1962 All.
333, In re Sangish, A.I.R. 1948 Mad. 113, Awadh Singh & Ors.
vs Patna State, A.I.R. 1954 Pat 483, Provash Kumar Bose vs The King, A.I.R. 1951 Cal.
475, Kanta Prasad vs Delhi Administration ; 1221, referred to.
In the present case it could be said about D that his knowledge of the accused was very scant.
The claim of the other witness M that he had known the accused for about four years was not challenged in crossexamination.
Therefore on the facts of the case the trial of the appellants.
918 Could not be held to be vitiated because of the denial of test identification although the reason given by the Magistrate for refusing it, namely, that the cbarge sheet had already been filed, was wrong.
[925 G 926 C]
|
Appeal No. 1104 of 1970.
Appeal by special leave from the judgment and order dated April 9, 1970, of the Rajasthan High Court in D. B. Civil Special Appeal No. 126 of 1970.
M. C. Chagla, F. section Nariman, P. N. Tiwari and O. C. Malther, for the appellant.
M. C. Setalvad and B. P. Maheshwari, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal from a judgment of the Rajasthan High Court holding that the appellant was not entitled to file an appeal against the order of the Company Judge directing sale of lease hold rights of the Golcha Properties (P) Ltd. (in liquidation) in the land belonging to the appellant.
The facts briefly are that on November 5, 1960 an agreement was entered into between the appellant and the respondent company allowing Golcha Properties (P) Ltd. to construct a cinema threatre within three years from the issue of the 'No Objection Certificate ' on land measuring 42,900 sq.
feet at Bhagwandas Road, Jaipur belonging to the appellant.
The Company deposited a sum of Rs. 5 lakhs by way of security.
In October 1963 No Objection Certificate is stated to have been issued for construction of a cinema theatre.
In 1966 a petition for winding up of the company was filed in the Rajasthan High Court.
On May 10, 1968 an order for winding up of the company was made and a liquidator was appointed ' On July 11, 1969 the Official Liquidator made a report to the Company Judge for sale of the lease hold rights of the company in the land belonging to the appellant and the structures standing on it.
It appears that the Official, Liquidator made a report under section 457 of the Indian to obtain the necessary orders for sale.
On July 21, 1969 the Company Judge without hearing any one or issuing notice to the appellant ordered that the lease hold rights and the structures be auctioned as proposed by the Official Liquidator On October 3,1969 the appellant 's attorney sent a letter to the Official Liquidator stating that the licence granted to the company under, an.
agreement dated November 5, 1960 stood revoked and called upon him to deliver possession of the land and also pay compensation amounting to Rs. 10, lakhs.
On February 9, 1970 the Official Liquidator sent a reply claiming that the company was entitled to a lease for 20 years under the agreement.
On March 14, 1970 a notice was issued in a newspaper (Times of India) in respect of the proposed auction sale ,of lease hold rights which was to take place on April 14, 1970.
249 According to the appellant she enquired from the Official Liquidator under whose authority the, property was being sold to which no reply was sent by the Official Liquidator.
On April 3, 1970 the appellant applied for a certified copy of the order dated July 21,1969 after taking inspection of the record in the High Court.
The certified copy was sent on April 24, 1970.
On the same date the appellant filed an appeal before the High Court.
The High Court rejected that application summarily but recorded short order.
In the order of the High Court reference has been made to Rule 139 of the Companies (Court) Rules 1959 and it has been pointed out that since the appellant had not appeared before the Company Judge she was not entitled to maintain the appeal.
It was conceded that no notice had ever been sent to her either by the Official Liquidator or the Company Judge before the order appealed against relating to appellant 's property was made.
The High Court was of the view that the only remedy of the appellant was by way of a suit after obtaining leave of the Company Judge under section 446 of the Act.
Now an appeal lies under section 483 of the Act from any order made or decision given in the matter of finding up of a company by the court and it lies to the same court to which, in the same manner in which, and subject to the same conditions under which, appeals lie from any order or deci sion of the Court in cases within its ordinary jurisdiction.
There can be no manner of doubt that an appeal was competent against the order made by the Company Judge on July 21, 1969 in view of the terms of section 483.
The only question is whether because the Official Liquidator failed to discharge his duties properly by having a notice issued to the appellant, whose rights were directly affected by the order proposed to be made, the appellant was debarred from filing the appeal.
In our opinion apart from Rule 139 to which reference has been made by the High Court the Official Liquidator as well as the learned Company Judge were bound by the rules of natural justice to issue a notice to the appellant and hear her before making the order appealed against.
If there was default on their part in not following the correct procedure it is wholly incomprehensible how the appellant could be deprived of her right to get her grievance redressed by filing an appeal against the order which had been made in her absence and without her knowledge.
It would be a travesty of justice if a party is driven to file a suit which would involve long and cumbersome procedure when an order has been made directly affecting that party and redress can be had by filing an appeal which is permitted by law.
It is well settled that a person who is not a party to the suit may prefer an appeal with the leave of the appellate court and such leave should be granted if he would be prejudicially affected by the judgment.
250 Rule 103 of the Companies (Court) Rules provide for taking out summons for directions not only with reference to the settlement of the list of contributories and the list of creditors but also the axercise by the Official Liquidator of all or any of the powers under section 457(1) and any other matter requiting directions of the court.
The exercise of the power under section 457 (1) (c) of the Act to sell the immovable and movable property of the Company by public auction or private contract would certainly fall Within the ambit of the Rule.
That Rule expressly provides for issuing of a notice of the summons to the petitioner on whose petition the order for winding up was made.
It is implicit that if the directions which have to be given by the court would affect any person prejudicially he: must be served with a notice of the summons under the general rule of natural justice and that no order should be made affecting the rights of a party without affording a proper opportunity to it to represent its case.
The High Court was thus clearly in error in not entertaining and deciding the appeal preferred by the appellant who was the owner of the land in which lease hold rights said to have been created by her in favour of the Company in liquidation were sought to be sold.
The appeal is allowed and the order of the High Court is set aside.
The case is remanded to the High Court for disposing of the appeal in accordance with law.
Costs shall abide the event.
Y.P. Appeal allowed.
| IN-Abs | The respondent company holding leasehold rights in the appellant land went into liquidation.
Accepting the.
official liquidator 's report the company Judge (Rajasthan High Court) without hearing anyone or issuing notice to the appellant ordered auction of the lease hold right of the respondent company.
The appellant sent a letter to the Official Liquidator revoking the licence granted to the company and calling upon him to, deliver possession of the land.
The Official Liquidator claimed that the company was entitled to a further period of lease under the agreement.
Notice was issued in respect of the proposed auction sale.
The appellant filed an appeal before the High Court.
The High Court held that since the appellant had not appeared before the company Judge, she was not entitled to maintain the appeal, and further that the only remedy of the appellant was by way of a suit after obtaining leave of the Company Judge under section 446 of the Indian Companies Act.
In appeal to this Court, HELD : The High Court was in error in not entertaining and deciding the appeal preferred by the appellant who was the owner of the land in which lease hold rights said to have been created by her in favour of the company in liquidation were sought to be sold.
An appeal lies under section 483 of the Act from any order made or decision given in the matter of winding up of a company by the Court and it lies to the same, court to which, in the same manner in which, and subject to the same conditions under which appeals lie from any order or decision of the Court in cases within its ordinary jurisdiction.
Therefore an appeal was corn tent against the order of the company Judge.
[249 D] It is implicit in Rule 103 of the Company Court Rules that if the directions which have to be given by the Court would affect any person prejudicially he must be served with a notice of the summons under the general rule of natural justice and that no order should be made affecting the rights of a party without affording a proper opportunity to it to represent its case.
A] Further, the Official Liquidator as well as the, learned company Judge were bound by the rules of natural justice to issue a notice to the appellant and hear her before making the order appealed against.
If there was default on their part in not following the correct procedure the appellant could not be deprived of her right to get her grievance redressed by filing an appeal.
[250 C] 248
|
149 and 167 of 1950.
758 Application under article 32 of the Constitution for a writ in the nature of habeas corpus I Bawa Shiv Charan Singh for the petitioner in petition No. 149.
Bindra for the petitioner in Petition No. 167.
B.K. Khanna, Advocate General of the Punjab, for the respondent in both the petitions.
M.C. Setalvad, Attorney General for India, for the Union of India (Intervener in Petition No. 149).
February 23.
The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J.
The earlier of the two petitions has been filed by one Ujagar Singh, under article 32 of the Constitution of India, for a writ of habeas corpus and for an order of release from detention.
The latter petition is a similar one by one Jagiit Singh.
In both the petitions, the respondent is the State of Punjab.
The orders of deten tion were made under the preventive Detention Act IV of 1950.
The petitions are not connected with each other, except that they raise the same grounds.
In petition No. 149 of 1950, Ujagar Singh was originally arrested and detained under the East punjab Public Safety Act on 29th September, 1948.He was released on 28th March, 1949, but on the same date, there was an internment order against him.
On 29th September, 1949, he was rearrested.
On 2nd March, 1950, an order of detention under the , was served on him, and on 3rd April, 1950, he was served with the grounds of detention dated 11th March, 1950.
Both in September, 1949, and in March, 1950, the ground alleged was ' 'You tried to create public disor der amongst tenants in Una Tehsil by circulating and dis tributing objectionable literature issued by underground communists.
" Additional grounds were furnished in July 1950.
In petition No. 167 of 1950, Jagjit Singh was arrested on 24th July, 1948.
under the provisions of the 759 Punjab Safety Act, 1947.
After the East Punjab Public Safety Act, 1949, came into force, a fresh detention order dated 14th May, 1949, was served on him and he continued to be kept in jail.
Grounds of detention were given to him on 7th September, 1949.
A fresh order of detention under the Pre ventive Detention Act (IV of 1950) dated 2nd March, 1950, was served on 7th March, 1950.
Grounds of detention dated 11th March, 1950, were served on him on 3rd April, 1950.
Both in September 1949 and April 1950, the same ground was given, i.e., "In pursuance of the policy of the Communist Party, you were engaged in preparing the masses for violent revolutionary campaign and attended secret party meetings to give effect to this programme.
" Additional or supplementary grounds were served on 5th August, 1950.
Several contentions were advanced on behalf of the petitioners challenging the legality of their detention and urging that as the detention was unlawful and the petition ers ' fundamental right of personal liberty had been in fringed, they should be set at liberty.
The points taken on their behalf can be briefly summarised as follows_ As the ground of detention now mentioned was the same as the ground specified in 1948 or 1949, i.e., months earlier under the Provincial Acts, the order of detention was made mechanical ly and was really mala fide in the sense that there is nothing to show that were was any fresh satisfaction on the part of the detaining authority that detention was necessary in the interests of public order.
Secondly, the grounds were not given "as soon as may be", which is required under section 7 of the Act; and as an unusually long period of time elapsed between the order of detention and the giving of the grounds, the detention must be held to be unlawful after the lapse of a reasonable time.
Thirdly, the grounds given originally were so vague that they could not be said to be grounds at all such as would enable the detenu to make any representation against the order.
Fourthly, supplemen tary grounds could not be furnished and should not be taken into account in considering whether the 760 original order was lawful, or whether the detention became unlawful after a particular period of time.
Two other points of a subsidiary nature were also raised, namely that the order was bad as the period of detention was not specified therein as appears to be required by section 12 and that the grounds given did not purport to state that the authority making the order was the Governor of the State.
There is no substance in the last two points.
Section 12 of the Act does not require that the period of detention should be specified in the order itself where the detention is with a view to preventing any person from acting in any manner prejudicial to the maintenance of public order.
The section itself provides that he can be detained without obtaining the opinion of an Advisory Board for a period longer than three months but not exceeding one year from the date of detention.
Normally, the detention period shall not exceed three months, unless an Advisory Board reports before the expiration of the said period that there is in its opinion sufficient cause for such detention.
See arti cle 22, clause (4), sub clause (a) of the Constitution.
Under sub clause (7) (a) of the same article, Parliament may by law prescrib, the circumstances under which, and the class or classes of cases in which, a person may be detained for a period longer than three months under any law provid ing for preventive detention without obtaining the opinion of an Advisory Board in accordance with the provisions of sub clause (a) of clause (4).
" Therefore, detention for more than three months can be justified either on the ground of an opinion of the Advisory Board sanctioning or warrant ing longer detention or on the ground that the detention is to secure the due maintenance of public order, in which case it cannot exceed one year in any event, as stated.
in sec tion 12 of the .
It is thus clear that the period is not to exceed three months generally, but may go up to one year in certain special cases.
In view of these provisions, the non specification of any definite period 761 in the detention order is not a material omission rendering the order itself invalid.
Under section 3 of the , the authority to make the order is the State Government.
Sec tion 166 (1) of the Constitution provides that all executive action of the Government of a State, shall be expressed to be taken in the name of the Governor.
The orders of deten tion expressly state that the Governor of Punjab was satis fied of their necessity and that they were made by his order.
The orders are signed no doubt by the Home Secre tary, but this is no defect.
The communication of the grounds need not be made directly by the authority making the order.
Section 7 does not require this.
The communica tion may be through recognized channels prescribed by the administrative rules of business.
Let us now turn our attention to the main contentions.
There is nothing strange or surprising in the fact that the same grounds have been repeated after the lapse of several months in both the cases, when it is remembered that the petitioners were under detention and in jail during the whole of the intervening period.
No fresh activities could be attributed to them.
There could only be a repetition of the original ground or grounds, whether good or bad.
It does not follow from this that the satisfaction of the detaining authority was purely mechanical and that the mind did not go with the pen.
The past conduct or antecedent history of a person can be taken into account when making a detention order, and, as a matter of fact, it is largely from prior events showing the tendencies or inclinations of the man that an inference could be drawn whether he is likely even in the future to act in a manner prejudicial to the maintenance of public order.
If the authority satisfied himself that the original ground was still available and that there was need for detention on its basis, no mala fides can be attributed to the authority from this fact alone.
The Act does not fix the time within which the grounds should be furnished to the person detained.
762 It merely states that the communication must be "as soon as may be".
This means reasonable despatch and what is reasona ble must depend on the facts of each case.
No arbitrary time limit can be set down.
The delays in the communication of the grounds in the two petitions have been adequately explained by the Home Secretary who says in this affidavits that grounds had to be supplied to nearly 250 detenus and that the printing of the necessary forms occupied some time.
According to him, he made an order even on 11 3 1950 for the supply of the grounds.
The extreme vagueness of the grounds is alone left as the chief line of attack.
As stated already, the original ground communicated in Petition No. 149 of 1950 is "to create public disorder amongst tenants in the Tehsil by circulating and distributing objectionable literature issued by underground communists.
" In the other petition, the ground is "In pursuance of the policy of the Communist Party you were engaged in preparing the masses for violent revolu tionary campaign and attended secret party meetings to give effect to this programme.
" We shall leave aside for the moment the supplementary grounds furnished later.
There can be little doubt that in both the cases the grounds furnished in the first instance were highly vague.
If we had only Iswar Das 's case to go by, Petition No. 30 of 1950, such vagueness by itself would constitute a justifica tion for release of the petitioners.
Since the date of that decision, however.
this Court had to consider the question at great length in two cases from Bombay and Calcutta re spectively Cases Nos. 22 and 24 of 1950 where the subject of the meaning and scope of section 7 of the and article 22, sub clauses (5) and (6)of the Constitution of India.
came up for elaborate consideration.
The said cases were decided on 25th January, 1951, and we are now governed by the principles laid down in these judg ments.
It was held by a majority of the Judges in Case No. 22 of 1950 (1) State of Bombay vs Atmaram Sridhar Vaidya [1951] S.C.R. 167.
763 (a) that mere vagueness of grounds standing by itself and without leading to an inference of mala fides or lack of good faith is not a justiciable issue in a court of law for the necessity of making ' the order, inasmuch as the ground or grounds on which the order of detention was made is a matter for the subjective satisfaction of the Government or of the detaining authority; (b) that there is nothing in the Act to prevent particulars of the grounds being furnished to the detenu within a reasonable time, so that he may have the earliest opportunity of making a representation against the detention order what is reasonable time being dependent on the facts of each case; (c) that failure to furnish grounds with the speedy addition of such particulars as would enable the detenu to make a representation at the earliest opportunity against the detention order can be considered by a court of law as an.
invasion of a fundamen tal right or safeguard guaranteed by the Constitution, viz., being given the earliest opportunity to make a representa tion;and (d) that no new grounds could be supplied to strengthen or fortify the original order of detention.
We are not concerned so much with the earlier history of the detenus as with what happened to them under the Preven tive Detention Act, 1950.
OverloOking the fact that the ground mentioned In March 1950 was the same as that given in September 1949, and condoning the vagueness in the original ground furnished in both the cases to support the making Of the order, it is impossible to justify the delay of nearly four months in furnishing what have been called additional or supplementary grounds, Let us take up Petition No. 149 first.
In the grounds furnished in July 1950, there are several which do not apparently relate to the original ground.
"You were respon sible for hartal by labourers working on Bhalera Dam in October 1947". "You instigated labourers working in Nangal in 1948 to go on strike to secure the acceptance of their demands" "After release you absconded yourself from your village and 99 764 remained untraced for a considerable period" . "When you were re arrested on 29 9 1949, lot of objectionable communist literature was recovered from your personal search" are instances of new grounds, and they have to be eliminated therefore from consideration.
In Jagjit Singh 's petition No. 167 of 1950, the supplemental grounds, which are as many as ten in number, are dated 31 7 1950, but they were served on him on 5 8 1950, that is two days after he had prepared his petition to this court under article 32 of the Constitution.
The grounds may be taken as particulars of the general allegation made against him on 3 4 1950 when the original grounds of detention were served.
But the time factor to enable him to make a representation at the earliest opportunity was not borne in mind or adhered to.
In the affidavit of Shri Vishan Bhagwan, Home Secretary to the Punjab Government, dated 6th September, 1950, no explanation has been offered for this abnormal delay in the specification of the particulars.
This delay is very unfor tunate indeed.
But for its occurrence the petitioner would not have been able to urge that one of the valuable rights guaranteed to him by the Constitution has been violated.
It is not alleged b.y the Home Secretary that the detenu was furnished with these particulars when he was arrested and detained under the Provincial Act and that consequently it was considered unnecessary to give him the same particu lars once over.
On the other hand, the detenu 's complaint has throughout been that he was given no particulars at all till the 5th August, 1950.
As the petitioners were given only vague grounds which were not particularised or made specific so as to afford them the earliest opportunity of making representations against their detention orders, and their having been inex cusable delay in acquainting them with particulars of what was alleged.
the petitioners have to be released, the rules being made absolute.
Ordered accordingly.
765 PATANJALI SASTRI J.
I concur in the order proposed by my learned brother Chandrasekhara Aiyar J. DAS J.
In view of the majority decision in Case No. 22 of 1950 (The State of Bombay vs Atma Ram Sridhar Acharya), I concur in the order proposed by my learned brother.
Order accordingly.
Petition No. 194 of 1950 Agent for the petitioner: R.R. Biswas.
Agent for the intervener: P.A. Mehta.
Petition No. 167 of 1950 Agent for the petition: R.S. Narula.
| IN-Abs | Non specification of any definite period in a detention order made under section 3 of the Preventive Detention Act, IV of 1950, is not a material omission rendering the order invalid in view of the provisions contained in clauses (4) (a) and (7) (a) of article 22 the Constitution and section 12 of the Act.
An order of detention which expressly states that the Government of the State concerned was satisfied of the necessity of 757 making such an order and that it was made by the order of the Governor is not defective merely because it is signed by Home Secretary.
Communication of the grounds of the order need not be made directly by the authority making the order but may be made through recognized channels prescribed by the adminis trative rules of business.
The past conduct or antecedent history of a person can be taken into account in making a detention order, and as a matter of fact, it is largely from prior events showing tendencies or inclinations of a man that an inference could be drawn whether he is likely even in the future to act in a manner prejudicial to the maintenance of public order.
If the authority making an order is satisfied that the ground on which the detenue was detained on a former occasion is still available and that there was need for detention on its basis no mala fides can be attributed to the authority from the fact that the ground alleged for the second detention is the same as that of the first detention.
Whether grounds have been communicated "as soon as may be" must depend on the facts of each case.
No arbitrary time limit can be laid down.
The recent rulings of the Supreme Court establish (a) that mere vagueness of grounds standing by itself and with out leading to an inference of mala fides or lack of good faith is not a justiciable issue in a court of law for the necessity of making the order, inasmuch as the ground or grounds on which the order of detention was made is a matter for the subjective satisfaction of the Government or of the detaining authority; (b) that there is nothing in the Act to prevent particulars of the grounds being furnished to the detenu within a reasonable time so that he may have the earliest opportunity of making a representation against the detention order what is reasonable time being dependent on the facts of each case; (c) that failure to furnish grounds with the speedy addition of such particulars as would enable the detenu to make a representation at the earliest opportu nity against the detention order can be considered by a court of law as an invasion of a fundamental right or safe guard guaranteed by the Constitution, viz. being given the earliest opportunity to make a representation; and (d) that no new grounds could be supplied to strengthen or fortify the original order of detention.
Where the petitioners against whom detention orders were made were given only vague grounds and there was inex cusable delay of nearly 4 months in acquainting them of the particulars, held that their detention was illegal and they should be released.
|
Appeal No. 135 of 1951.
Appeal by Special Leave granted by the Supreme Court of India by its Order dated the 21st of May, 1951, from the Judgment and Order dated the 19th February, 1951, of the Labour Appellate Tribunal of India, Allahabad in Appeal No. 136 of 1950.
C.K. Daphtary, Solicitor General of India (J. B. Dadachanji, Rajinder Narain and Devinder Swarup, with him) for the appellant.
S.C. Isaacs (0. P. Lal, with him) for the res.
pondent.
M.C. Setalvad, Attorney General for India, (Rajin der Narain and Devinder Swarup, with him) for the Intervener (All India Organisation of Industrial Employers).
S.C. Isaacs (Mohan Lal Saxena and C. P. Lal, with him) for the Intervener (State of U.P.).
November 19.
The Judgment of the Court as delivered by BHAGWATI J.
This appeal with special leave is directed against the judgment and order of the Labour Appellate Tribunal of India in a dispute regarding the workers ' claim for bonus.
During the year 1948 the appellant made a profit of Rs. 11,97,648 11 9.
It paid 24 3 per cent.
dividend on ordinary shares, being the maximum that could be paid under the Public Companies (Limitation of Dividend) Ordinance of 1948 and also paid to the workers their full share of bonus at annas 4 in a rupee of their basic earnings.
During the year 1949 the selling rates for cloth and yarn were controlled by the Government and were approximately 4 per cent.
below those obtained in 1948.
The basic wages were increased from the 1st December, 1948, by order of the Government of Uttar Pradesh and the total wages paid were therefore higher than those in the previous year.
There 994 was moreover indiscipline amongst the workers and production suffered.
There was a strike in the month of October and the mills were closed for nearly a month.
Further the management were unable to secure cotton which resulted in the curtailment of the working hours.
As a result of all these circumstances the appellant suffered a trading loss of Rs. 5,02,563 1 10.
A sum of Rs. 2,50,000 being the excess reserve for taxation was written back and a sum of Rs. 10,01,871 13 5 being the amount of reserve transferred from the investment account was also brought in.
An aggregate sum of Rs. 12,51,871 13 5 was thus brought into the balance sheet by these two transfers.
The trading loss was deducted from this amount leaving a credit balance of Rs. 7,49,308 11 7 and that amount was shown as the profit for the year 1949 in the balance sheet for that year.
The balance which had been brought forward from the previous year was added thereto and a dividend of 243/4 per cent.
was paid to the ordinary shareholders.
The appellant also paid ex gratia to the workmen bonus at the rate of annas 2 per rupee of their basic earnings making it clear by their notification dated the 7th April, 1950, that the directors had sanctioned the payment at that rate in spite of the appellant having suffered a trading loss for the year, that it was being paid entirely at the discretion of the appellant and was not related to or connected with any contract of employment of any worker.
On the 4th May, 1950, the Secretary of the respondent Union petitioned to the Provincial Conciliation Officer (Textile) that there was more production in 1949 than in 1948, that there was no reason to hold that the profit in 1949 was less than in the previous year and that the rate of bonus was wrongly reduced and asked that bonus for 1949 should also be paid at the rate of annas 4 per rupee.
The industrial dispute which thus arose was referred for enquiry and recording of an award to the Regional Conciliation Board (Textile), Kanpur.
The Conciliation Board by a majority decision repelled the contention of the appellant and awarded the payment of bonus at annas 4 per rupee.
On an appeal taken by the appellant to the 995 Industrial Court (Textiles and Hosiery), Kanpur, the Industrial Court accepted the contention of the appellant, allowed the appeal and set aside the award.
The respondent thereupon appealed to the Labour Appellate Tribunal which substantially agreed with the Industrial Court on questions of fact as well as the general position in law but imported considerations of social justice and treating this as a special case " where social justice would demand that labour should have bonus for the year where for that very year capital had not only a reasonable return but much in excess of that ", allowed the appeal and directed the appellant to pay to the workmen bonus at the rate of annas 4 per rupee within six weeks of their decision.
The appellant filed this appeal against that decision after obtaining special leave from this Court.
Both the Industrial Court as well as the Labour Appellate Tribunal found as a fact that there was a trading loss of Rs. 5,02,563 1 10 during the year 1949 and also that the dividend of 243/4 per cent.
to the ordinary shareholders was distributed after transferring the aggregate sum of Rs. 12,51,871 13 5 from the reserves.
The question which therefore arises for our consideration is mainly whether the workers are entitled to the payment of a bonus in spite of the employer having worked at a loss during the year and incidentally whether the workers have any right, title or interest in the reserves and the undistributed profits of the previous years.
The primary meaning of the word " bonus " according to the definition given in the New English Dictionary is: " A boon or gift over and above what is nominally due as remuneration to the receiver and which is therefore something wholly to the good ".
This definition was adopted by Stirling J. in In re Eddystone Marine Insurance Co. (1).
Webster 's International Dictionary defines bonus as "something given in addition to what is ordinarily received by or strictly due to the recipient ".
The Oxford Concise Dictionary defines it as " something to the good, into the bargain (and as an example) gratuity to workmen beyond their wages".
(1) L. R. (I894) W. N. 30.
996 Corpus Juris Secundum, Volume XI, at page 515 ascribes the following meanings to the word bonus: " An allowance in addition to what is usual current or stipulated ; a sum given or paid beyond what is legally required to be paid to the recipient; something given in addition to what is ordinarily received by or strictly due to the recipient" and adds: It has been said to carry the idea of something uncertain and indefinite, something which may or may not be paid depending on varying circumstances and under particular conditions has been said to imply a benefit accruing to him who offers it and an inducement to the offeree.
" This imports the conception of a boon, a gift or a gratuity otherwise described as an ex gratia payment.
The word 'bonus ' has however acquired a secondary meaning in the sphere of industrial relations.
It is classified amongst the methods of wage payment.
It has been used especially in the United States of America to designate an award in addition to the contractual wage.
It is usually intended as a stimulus to extra effort but sometimes represents the desire of the employer to share with his workers the fruits of their common enterprise.
(Vide Encyclopaedia Britannica, Volume III, page 856).
The Pocket Part of the Corpus Juris Secundum, Volume XI, under the heading "As Compensation for Services" quotes the following passage from Attorney General vs City of Woburn(1) : "The word 'bonus ' is commonly used to denote an increase in salary or wages in contracts of employment.
The offer of a bonus is the means frequently adopted to secure continuous service from an employee to enhance his efficiency and to augment his loyalty to his employer and the employee 's acceptance of the offer by performing the things called for by the offer binds employer to pay the bonus so called.
" It also gives another meaning of the word bonus ', viz., "increased compensation for services already (1) 997 rendered gratuitously or for a prescribed compensation where there is neither express or implied understanding that additional compensation may be granted.
" This imports the conception that even though the payment be not strictly due to the recipient nor legally enforceable by him, a claim to the same may be laid by the employee under certain conditions and if such claim is entertained either by an agreement with the employer or by adjudication before a properly constituted Tribunal as on an industrial dispute arising, the same would ripen into a legally enforceable claim.
This position was recognised in Sutton vs Attorney General (1), where the Earl of Birkenhead observed "The term 'bonus ' may of course be properly used to describe payments made of grace and not as of right.
But it nevertheless may also include, as here, payments made because legally due but which the parties contemplate will not continue indefinitely", and in National Association of Local Government Officers vs Bolton Corporation(2) "This payment, if made, cannot properly in my opinion be regarded as a mere gratuity.
Though there is an element of bounty in it the bounty, if granted, is given for good reasons of national policy. .
I do not see why this does not fall within the definition of trade dispute just as much as a dispute as to the rate of wages or salary.
" To a similar effect are the observations in Kenicott vs Supervisors of Wayne County (1): "But second, the meaning of the word 'bonus ' is not given to it by the objection.
It is thus defined by Webster. 'A premium given for a loan or a charter or other privilege granted to a company; as, the bank paid a bonus for its charter; a sum paid in addition to a stated compensation '.
It is not a gift or gratuity, but a sum paid for services, or upon a consideration in addition to or in excess of that which would ordinarily be given", (1) , 297, (3) ; (2) , I87.
127 998 and also in Great Western Garment Co. Ltd. vs Minister of National Revenue (1): "A bonus may be a mere gift or gratuity as a gesture of goodwill and not enforceable, or it may be something which an employee is entitled to on the happening of a condition precedent and is enforceable when the condition is fulfilled.
But in both cases it is something in addition to or in excess of that which is ordinarily received.
" The Textile Labour Inquiry Committee defined 'bonus ' as follows : "The term bonus is applied to a cash payment made in addition to wages.
It generally represents the cash incentive given conditionally on certain standards of attendance and efficiency being attained.
" There are however two conditions which have to be satisfied before a demand for bonus can be justified and they are, (1) when wages fall short of the living standard and (2) the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production.
The demand for bonus becomes an industrial claim when either or both these conditions are satisfied.
The principles for the grant of bonus were discussed and a formula was evolved by the Full Bench of the Labour Appellate Tribunal in Millowners ' Association, Bombay vs Rashtreeya Mill Mazdoor Sangh, Bombay (2) "As both labour and capital contribute to the earnings of the industrial concern, it is fair that labour should derive some benefit, if there is a surplus after meeting prior or necessary charges" and the following were prescribed as the first charges on gross profits, viz., (1) Provision for depreciation, (2) Reserves for rehabilitation, (3) A return at 6 per cent.
on the paid up capital.
(4) A return on the working capital at a lesser rate than the return on paid up capital.
The surplus that remained after meeting the aforesaid deductions would be available for distribution as bonus.
(1) , 233.
(2) 999 It is therefore clear that the claim for bonus can be made by the employees only if as a result of the joint contribution of capital and labour the industrial concern has earned profits.
If in any particular year the working of the industrial concern has resulted in loss there is no basis nor justification for a demand for bonus.
Bonus is not a deferred wage.
Because if it were so it would necessarily rank for precedence before dividends ' The dividends can only be paid out of profits and unless and until profits are made no occasion or question can also arise for distribution of any sum as bonus amongst the employees.
If the industrial concern has resulted in a trading loss, there would be no profits of the particular year available for distribution of dividends, much less could the employees claim the distribution of bonus during that year.
This has been clearly recognised even in the various decisions of the Labour Appellate Tribunal, e.g., Nizam Sugar Factory Ltd., Hyderabad vs Their Workmen(1), Textile Mills, Madhya Pradesh vs Their Workmen (2) and Famous Cine Laboratory vs Their Workmen (3).
This was also the basis of the demand of the respondent in the case before us, its case being that the appellant had reaped substantial profits during the year 1949.
This case was negatived by the Industrial Court as well as the Labour Appellate Tribunal, both of whom held that the working of the appellant during the year 1949 had resulted in a loss.
Whereas the Industrial Court declined to grant the respondent any relief because the working of the appellant during the year had resulted in a loss, the Labour Appellate Tribunal made a special case for the respondent in spite of its concurrence with that finding of the Industrial Court.
It is significant to observe that this principle was accepted by the Labour Appellate Tribunal itself.
"As at present advised a claim for bonus which had been rested on profits earned should ordinarily be determined on the basis of the profits earned in the year under claim and that the scale of bonus should be determined on the quantum of profits earned in the (1) (1952) I L.L.J. 386.
(2) (3) (1953) I L.L.J. 466.
1000 year.
So, it would follow that if there is trading loss in the year under claim, bonus should not ordinarily be awarded.
It however observed: " But, in our opinion, that should not be the universal rule.
Considerations of social justice cannot be disregarded altogether, in relations between capital and labour.
There may be special cases, and we consider the case before us to be one, where social justice would demand that labour should have bonus for the year where for that very year capital had not only a. reasonable return but much in excess of that.
" The Labour Appellate Tribunal did not accept the contention of the respondent that bonus should be linked to dividends nor did it rest its decision on the respondent having a right, title and interest in the reserves and the undistributed profits of the appellant.
Linking of bonus to dividend would obviously create difficulties.
Because if that theory was accepted a company would not declare any dividends but accumulate the profits, build up reserves and distribute those profits in the shape of bonus shares or reduce the capital in which event the workers would not be entitled to claim anything as and by way of bonus.
The workers not being members of the company would also not have any right, title and interest in the reserves or the undistributed profits which would form part of the assets of the company.
Even on a winding up of a company the property of the company would be applied in satisfaction of its liabilities pari passu and, unless the articles of association of the company otherwise provided, in distribution amongst the members according to their rights and interest in the company.
The employees would in no event be entitled to any share or interest in the assets and the capital of the company.
A transfer of moneys from these reserves or the undistributed profits would therefore not enure for the benefit of the workers.
The shareholders only would be entitled to such benefit and the mere fact that dividends were declared and paid to the shareholders out of such reserves and undistributed profits would 1001 not entitle the workers to demand bonus when in fact the working of the industrial concern during the particular year had showed a loss.
It has also got to be remembered that the labour force employed in an industrial concern is a fluctuating body and it cannot be predicated of the labour force in a particular year that it represents the past and the present workers, so that it can claim to demand bonus out of the reserves or undistributed profits of the Previous years.
On the accounts of each year being made up and the profits of the industrial concern being ascertained the workers during the particular year have their demand for bonus fully satisfied out of the surplus profits and the balance of profits is allocated and carried over in the accounts.
No further claimed payment of bonus out of those reserves or undistributed profits can therefore survive.
To admit the claim for bonus out of the reserves transferred to the profit and loss account would tantamount to allowing a second bonus on the same profits in respect of which the workers had already received their full bonus in the previous year.
The labour force which earns the profits of a particular year by collaborating with the employers is distinct from the one which contributed to the profits of the previous years and there is no continuity between the labour forces which are employed in the industrial concern during the several years.
The ratio which applies in the case of the shareholders who acquire the right, title and interest of their predecessorsin interest does not apply to the labour force and the fact that the shareholders get a dividend by transfer of funds from the reserves and undistributed profits of the previous years would not entitle the workers to demand bonus out of those funds if the working of the industrial concern during the particular year has resulted in a trading loss.
The considerations of social justice imported by the Labour Appellate Tribunal in arriving at the decision in favour of the respondent were not only irrelevant but untenable.
Social justice is a very vague and indeterminate expression and no clear cut definition can be laid down which will cover all the situations.
1002 Mr. Isaacs, the learned counsel for the respondent,.
attempted to give a definition in the following terms : "social justice connotes the balance of adjustments of the various interests concerned in the social and economic structure of the State, in order to promote harmony upon an ethical and economic basis" and he stated that there were three parties concerned here, viz., the employers, the labour and the State itself, and the conception of social justice had to be worked out in this context.
Without embarking upon a discussion as to the exact connotation of the expression "social justice" we may only observe that the concept of social justice does not emanate from the fanciful notions of any particular adjudicator but must be founded on a more solid foundation.
Indeed the Full Bench of the Labour Appellate Tribunal evolved the abovequoted formula with a view to dispensing social justice between the various parties concerned.
It adopted the following method of approach at page 1258 of that judgment : " Our approach to this problem is motivated by the requirement that we should ensure and achieve industrial peace which is essential for the development and expansion of industry.
This can be achieved by having a contented labour force on the one hand, and on the other hand an investing public who would be attracted to the industry by a steady and progressive return on capital which the, industry may be able to offer.
" This formula was reiterated in Textile Mills, M. P. Their Workmen(1), and Famous Cine Laboratory vs ,Their Workmen( 2 ), and in the latter case it deprecated the idea of adjudicators importing considerations of social justice which were not comprised in that formula : " And what is social justice ? Social 'justice is not the fancy of any individual adjudicator; if it were so then ideas of social justice might vary from adjudicator to adjudicator over all parts of India.
In our Full Bench decision (See 1950,2 L.L.J., p. 1247), we care.
fully considered the question of social justice in relation (1) (2) 1003 to bonus, and there we equated the rights and liabilities of employers and workmen with a view to achieving a just formula for the computation of bonus.
That Full Bench decision stands, and this tribunal and all other tribunals are bound by it.
" Without committing ourselves to the acceptance of the above formula in its entirety we may point out that the Labour Appellate Tribunal did not apply its own formula to the facts of the present case.
It is also significant to note that even while importing considerations of social justice the Labour Appellate Tribunal was oblivious of the fact that it was by their own acts of indiscipline and strike that the workers of the appellant company themselves contributed, to the trading losses incurred by the appellant and it hardly lay in their mouth then to contend that they were none the less entitled to a payment of bonus commensurate with the dividend paid to the shareholders out of the undistributed profits of the previous years.
The Labour Appellate Tribunal also overlooked the fact that but for the Public Companies (Limitation of Dividend) Ordinance of 1948 the whole of the profits of 1948 could have been distributed after paying the workers bonus in that year of four annas in the rupee.
We may before concluding refer to an argument which was addressed to us by Mr. Isaacs, the learned counsel for the respondent, that this Court under article 136 should not interfere with the decisions of the tribunals set up by the .
This contention can be shortly answered by referring to our decision in Bharat Bank Ltd., Delhi vs Employees of the Bharat Bank Ltd., Delhi(1), where we held that the Industrial Tribunals were tribunals within the meaning of article 136 and further that article 136 has vested in this, Court exceptional and overriding power to interfere where it reaches the conclusion that a person has been dealt with arbitrarily or that a Court or tribunal within the territory of India has not given a fair deal to a litigant.
(Vide (1) (1950] S.C.R. 459.
1004 Dhakeswari Cotton Mills Ltd. vs Commissioner of Income tax, West Bengal(1).
The result therefore is that the decision of the Labour Appellate Tribunal appealed against must be reversed and that of the Industrial Court (Textiles and Hosiery), Kanpur, restored.
The appeal will accordingly be allowed with costs.
Appeal allowed.
| IN-Abs | The term bonus is applied to a cash payment made in addition to wages.
it generally represents the cash incentive given conditionally on certain standards of attendance and efficiency being attained.
992 There are two conditions, which have to be satisfied before a demand for bonus can be justified and they are, (1) when wages fall short of the living standard and (2) the industry makes huge profits part of which are due to the contribution which the workmen make in increasing production.
The demand for bonus becomes an industrial claim when either or both these conditions are satisfied.
The formula for the grant of bonus is as follows: As both labour and capital contribute to the earnings of the industrial concern, it is fair that labour should derive some benefit, if there is a surplus after meeting prior or necessary charges, The first charges on gross profits are (1) provision for depreciation.
(2) reserves for rehabilitation, (3) a return at 6 per cent.
on the paid up capital and (4) a return on the working capital at a lesser rate than the return on paid up capital.
The surplus that remained after meeting the aforesaid deductions would be available for distribution as bonus.
The claim for bonus can be made by the employees only if as a result of the joint contribution of capital and labour the industrial concern has earned profits.
If in any particular year the working of the industrial concern has resulted in loss there is no basis nor justification for a demand for bonus.
Bonus is not a deferred wage.
If it were so, it would necessarily rank for precedence before dividends.
The dividends can only be paid out of profits and unless and until profits are made no occasion or question can arise for distribution of any sum as bonus amongst the employees.
Social justice is a very vague and indeterminate expression and no clear cut definition can be laid down which will cover all the situations.
The concept of social justice does not emanate from the fanciful notions of any particular adjudicator but must be founded on a more solid foundation.
Industrial Tribunals are Tribunals within the meaning of article 136 and article 136 has vested in the Supreme Court exceptional and overriding power to interfere where it reaches the conclusion that a person has been dealt with arbitrarily or that a Court or Tribunal within the territory of India has not given a fair deal to a litigant.
In re Eddystone Marine Insurance Co. , Sutton vs Attorney General ([19231 , National Association of Local Government Officers vs Bolton Corporation , Kenicott vs Supervisor of Wayne County ([1873] ; , Great 'Western Garment Co. Ltd. vs Minister of National Revenue ([1948] 1 D.L.R. 225), Millowners ' Association, Bombay vs Bashtreya Mills Mazdoor Sangh, Bombay '[1950] 2 L.L.J. 1247), Nizam Sugar Factory Ltd., Hyderabad vs Their Workmen ([1952], , Textile Mills, Madhya Pradesh vs Their Workmen ([1952] , Famous Cine Laboratory vs Their Workmen ([1953] and Bharat Bank Ltd., Delhi 993 vs Employees of the Bharat Bank Ltd., Delhi, ([1960] S.C.R. 469), referred to.
|
Criminal Appeal No. 135 of 1968.
Appeal by special leave from the judgment and order dated May 1, 1968 of the Madhya Praesh High Court, Gwalior Bench .in
Criminal Appeal No. 143 of 1966.
R. L. Kohli and J. C. Talwar, for the appellant.
I. N. Shroff, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave is directed a aginst the judgment of the High Court of Madhya Pradesh, Gwalior Bench, allowing the appeal of the State and convicting the appellant for having committed an offence punishable under section 435, Indian Penal Code, and sentencing him to undergo imprisonment for one year.
The only point involved in the present appeal is whether the appellant was a person of unsound mind within section 84 of the Indian Penal Code at the time of the incident.
The Magistrate held that he was not liable to punishment as he was insane at that time and did not know that he was doing anything wrong or anything contrary to law.
The High Court, on the other hand, came to the conclusion that the case of the appellant did not 'fall within the exception created by section 84, I.P.C.
It is now well settled that the crucial point of time at which unsoundness of mind should be established is the time when the .crime is actually committed and the burden of proving this lies of on the accused.
(See State of Madhya Pradesh vs Ahmadullah) (1).
In D. C. Thakker vs State of Gujarat(2) it was laid down that "there is a rebuttable presu mption that the accused was not insane, when he committed the crime, in the sense laid down by section 84 of the Indian Penal Code : the accused may rebut it by, placing before the court all the relevant evidence al, documentary or circumstantial, but the burden of proof upon him is no higher than that which rests upon a party to civil pro cedings.
" It was further observed : "The crucial point of time for ascertaining the state of mind of the accused is the time when the offence was circumstances which preceded, attended and followed the mind as to be entitled to the benefit of section 84 of the Indian Penal Code can only be established from the circumstances which preceded, attended and followed the crime.
The learned counsel contends that if regard is had to the circumstances which preceded, attended and followed the crime it would be clear that the accused is entitled to the benefit of section 84 of the Indian Penal Code.
(1) [1961] 3S.C.R.583.
(2) [1964] 7S.C.R.361.
253 The prosecution case is that on January 22, 1965, the appel lant set fire to the grass lying in the khalyan of Nemichand at the time of the setting of the sun.
He was caught at the spot while setting fire.
On being asked why he did it the accused said; "I burnt it and do whatever you want." The accused was arrested on January 23, 1965, and he remained in police, custody till February 2, 1965, when it was found that the accused needed medical examination, and accordingly the District Magistrate ordered that he be medically examined.
No explanation has been given why he was kept in police custody all that time.
There is no evidence either to indicate as to his condition from the time of his arrest to the time when his case was referred for medical examination.
These facts were within the knowledge of the police and we should have expected that the prosecution would lead evidence regarding his condition during this time.
Further, the police made it impossible for the appellant to prove his mental condition at the time of the incident by keeping him in their custody from January 23 to February 2, 1965, not having him examined and not sending him to judicial custody earlier where he would have been examined by the jail doctor.
On February 20, 1965, V. section Vaidya, Assistant Surgeon,.
Civil Hospital, Vidisha, reported to the Jailor, Sub Jail, Vidisha, as follows : "Subject, In Ref.
to your letter No. 295 dated 8 2 1965.
Sir, Ratanlal Prisoner was kept under observation as indoor patient during this time.
He was keeping silent, he never used to reply any question so in my opinion he should be refd.
to some specialist for further investigation and needful.
" On February 22, 1965, Y. D. Kamran, Civil Surgeon, Vidisha,.
reported as follows: "Shri Ratanlal, undertrial, was examined by me.
He does not appear to be deaf or dumb, but is mentally retarded.
He should be referred to Stiperintendent, Mental Hospital, Gwalior, for expert opinion." On March 29, 1965, Dr. B. Shah.
Psychiatrist and Superintendent,Mental Hospital, Gwalior, reported as follows: "This is to certify that Shri Ratanlal s/o Kishanlal who has been kept under observation in this hospital from 18 3 1965 to 29 3 1965 is a person of unsound mind, in terms of Indian Lunancy Act; 1912.
He is not dangerous, 254 and/or violents by reason of Lunancy and thus unfit to be at large.
The report is based on the following facts observed here : (1) Remains depressed.
(2) Does not talk.
(3) He is a case of Maniac depressive.
(4) Psychosis and needs treatment.
" On April 28, 1965, another report was given that he was still a person of unsound mind in terms of Indian Lunancy Act, 1912, but was better though still confused, and further that treatment was being continued and it may take 4 to 6 weeks more for recovery.
The defence also led evidence as to his condition before the incident in question.
Shyamlal, D. W. 1, son in law of the appellant stated that "the accused was not feeling well for 2 3 years.
He was in such a condition that if he is sitting will remain sitting.
If he is to go then he will go and if he wishes to fall in the river then he will fall.
Such was the conditions of his mind that he used to set fire in his own clothes and house.
" He further stated that on the day of the incident the appellant did not allow anybody ,to enter his house and had put a lock on the house and his children took their food outside, and the accused did not talk to anybody.
He further stated that "prior to this incident the accused was being taken to Bhopal after tying him for the treatment of mind.
He was also taken to Bhavera but the accused did not improve.
" In ,cross examination it was brought out that "prior to the setting of fire the accused was neither got admitted in the government hospital nor any, report was lodged in the police station." No cross examination was directed to ascertain the nature of his illness or to bring out that he was otherwise sane.
Another witness, Than Singh, D.W. 2, (the appellant is his maternal uncle) stated that the appellant "used to do whatever he thought.
He used to run away wherever he liked.
He used to jump in the river also.
He used to enter the house of anybody.
He used to lock his house.
His ' children used to lie hungry outside.
He used to set fire in his clothes also.
On the day of occurrence the condition of the accused was worst.
He did not speak to anybody on that day.
" The witness, however, admitted that the accused had not been taken to Government hospital.
The Trial Court also mentioned that Moolchand, P.W. 3, Madora, P.W. 4, and Dhanna, P.W. 6. admitted that the appellant remained in the khalyan throughout the period that the grass was burning till the chowkidar took him to thana and did not utter a word and did not try to run away.
255 The Trial Court, relying on the evidence of Shyamlal, D.W. 1, Than Singh, D.W. 2, and the behaviour of the accused on that day came to the conclusion that the accused was insane.
He also relied on the certificates issued by the doctors, mentioned above .He further found support in the, absence of motive for the crime.
He also relied on the fact that the appellant 's khalayan adjoined the khalayan which was set on fire by him and if the appellant had been sane he would not have taken the risk of having his own khalayan burnt, which was most likely.
The High Court, with respect, erred in differing from the Trial Court.
The High Court observed that the appellant had not examined in defence any expert in mental diseases to substantiate his plea of legal insanity.
It is expecting rather a great deal from a poor villager that he should produce experts in mental diseases, specially in view of the certificates issued by the Medical authorities after he was arrested.
The High Court further erred in holding that the medical reports were of no evidential value.
it is true that the reports speak of the mental state of the accused at the time when the reports were issued but the High Court failed to note that the appellant was in police custody from January 23, 1965, and the police could have produced evidence to show that he was absolutely sane till the day when they sent him for medical examination.
, The High Court thought that the evidence of the two defence witnesses only suggested an irrational behaviour on the part of the accused.
The High Court failed to note that, according to D.W. 2, the appellant used to set fire to his own clothes and house, and this could hardly be called irrational it is more like verging on insanity.
The High Court also felt it rather unsafe to rely on the testimony of the two defence witnesses because such evidence could always be procured.
It was also impressed by the fact that there was no independent witness forthcoming nor was there any evidence showing that the accused was taken to Bhopal or Gwalior for treatment.
The High Court observed: "Apart from this, these witnesses merely suggest that there was irrational behaviour on the part of the accused.
But it has not been proved that he entertained any homicidal tendencies.
The evidence adduced is merely of conduct not confirming to the accepted pattern of human behaviour.
Such evidence is inadequate to establish that there was such an impairment of cognitive faculties of the accused as to render him legally insane.
" 256 With respect, it is not necessary that every insane person should have homicidal tendencies.
In this case he is not charged for an offence involving homicide but arson.
Although the High Court discarded the medical evidence, it took account of its own observations, when it stated "We had an opportunity to observe the accused, who was produced before us by the learned counsel, and he appeared to be a man of normal understanding.
We also find that in answering questions which were put to him by the court under section 342, Cr. P.C., the accused showed intelligence and care." With great respect, these are irrelevant considerations.
The appeal was heard on April 25, 1968, and the incident occurred on January 22, 1965.
A person can surely improve within three years.
We are inclined to agree with the conclusion arrived at by the learned Magistrate.
We hold that the appellant has dis charged the burden.
There is no reason why the evidence of Shyam Lal, D.W. 1, and Than Singh, D.W. 2, should not be believed.
It is true that they are relations of the appellant, but it is the relations who are likely to remain in intimate contact.
The behaviour of the appellant on the day of occurrence, failure of the police to lead evidence as to his condition when the appellant was in custody, and the medical evidence indicate that the appellant was insane within the meaning ' of section 84, I.P.C. We accordingly allow the appeal and acquit the appellant of the offence under section 435, I.P.C., because at the time of the incident he was a person of unsound mind within the meaning of section 84 of the Indian Penal Code.
His bail bond shall stand cancelled.
G.C. Appeal allowed.
| IN-Abs | The appellant set fire to grass lying near a khalyan.
He was arrested next day From February 23, 1965 when he was arrested to February 2, 1965, he was in police custody and thereafter sent to jail.
The Assistant Surgeon, the Civil Surgeon, and the Psychiatrist of the mental hospital to which he was referred reported that he was depressed and silent.
According to the Psychiatrist he was a lunatic in terms of the Indian Lunacy Act, 1912.
At is trial under section 435 of the Indian Penal Code two of his relatives appeared as defence witnesses and testified that he was mentally unsound.
The trial Magistrate acquitted the accused on the finding that the appellant fell within the general exception in section 84 of the Indian Penal Code.
The High Court, in appeal filed by the State, reversed the judgment.
In appeal by special leave, HELD : It is now well settled that the crucial point of time at which unsoundness of mind should be established is the time when the crime was committed.
The burden of proving this lies on the accused though the burden is no higher than that which rests upon a party to civil preceedings.
[252 E] State of Madya Pradesh vs Ahmadulla, ; and D. C. Thakker vs State of Gujarat, ; , referred to.
In the present case the appellant had discharged the burden.
There was no reason why the defence witnesses should not be believed.
They were no doubt relations of the appellant but it is the relations who are likely to remain in intimate contact.
The behaviour of the appellant on the day of occurrence, failure of the police to lead evidence as to his condition when the appellant was in custody, and the medical evidence indicated that the appellant was insane within the meaning of section 84 I.P.C.[256 D] The High Court was wrong in drawing an adverse inference against the accused on the ground that he had not produced any expert medical evidence in defence.
This could not be expected from a poor villager specially in view of the certificates issued by the medical authorities after he was arrested.
[2 55 C] The High Court 's observation that the appellant appeared to be of normal understanding and the fact that he had given intelligent answers.
to questions under section 342 Cr.
P.C., were irrelevant considerations in view of the time that had elapsed since the alleged commission of the offence.
[256 B C] 252
|
minal Appeal No. 834 of 1965.
Appeal by special leave from the judgment and order dated October 19, 24, 1964 of the Bombay High Court in Criminal Appeal No. 1330 of 1964.
A. section R. Chari, R. Nagaratnam, Vineet Kumar and Shyamala Pappu, for the appellant.
Debabrata Mukherjee, H. R. Khanna and section P. Nayar, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This is an appeal by special leave against the judgment and order of the High Court of Judicature at Bombay dismissing the appeal of the appellant against the conviction recorded by the Special Judge for Greater Bombay.
The appellant was convicted by the Special Judge under section 5(2), read with section 5 1 (1 ) (a) X (d) and section 5 (3 ), of the Prevention of Corruption Act, 1947 (11 of 1947) hereinafter referred to as the Act and sentenced to suffer rigorous imprisonment for three years and to pay a fine of Rs. 1,25,000/ , in default of payment of fine to suffer further rigorous imprisonment for one year.
The Special Judge further directed that the amount of fine be recovered from the properties seized.
The following charge was framed against the appellant: " That you, while functioning as (a) Income tax Officer, from about 1st April 1947 to November 1954 at Jalgaon Dhulia, Godhra and Mahansa (b) as Inspector of Income tax from November 1954 to January 1958 at Surat and Broach, (c) as Incometax Officer from January 1958 to the end of November 1961 at Bhavnagar, Dhulia, Amraoti and Ratnagiri, habitually accepted or obtained and habitually agreed to accept or attempted to obtain gratification other than legal remuneration and obtained for yourself pecuniary advantage by corrupt and illegal means or by otherwise abusing your position as a public servant, with the result that, during the said period you came in possession of assets of the value of about Rs. 2,01,080/ which were disproportionate to your known sources of income for which you could not satisfactorily account and you thereby committed the offence of criminal misconduct punishable under subs.
(2) read with section (1) (a), (d) & (3) of section 5 of Act IT of 1947, the Prevention of Corruption Act, 1947, and within the cognizance of this Court.
" 238 The case of the prosecution before the Special Judge was that the appellant was habitually corrupt, and wherever he was posted he used to develop personal contacts with the assessees, whose cases were pending before him and in his talk with them he tried to impress upon them that they were likely to be heavily taxed; he used to create a favourable psychological background and taking advantage of the same tried to screw out money from them; if the assessee did not accept his proposal or proved to be smarter, he used to harass him by various methods.
The prosecution sought to establish the charge against him under section 5(1)(a) of the Act by leading evidence of five instances: (i) He obtained from the witness Gopaldas an amount of Rs. 3,000/ as a loan and subsequently converted it as his personal gratification for finalising income tax cases of his firm.
(ii) He demanded an illegal gratification ( Rs. 10,000/ from the witness Gopaldas to show him were pending before him.
(iii) He attempted to obtain bribe from P.W. 7 Motilal Bansgopal, whose income tax proceedings were pending before him.
(iv) He atempted to obtain bribe from the assessee P.W. 9, Somchand Khimji, whose income tax proceedings were pending before him.
(v) He also made a demand of bribe of Rs. 400/ to Rs. 500/ from P.W. 93 Gulabdas Kisondas Bhatia of Dharanyaon.
Before the Special Judge the prosecution also relied on the presumption arising under section 5(3) of the Act as the accused was found to be in possession of assets worth about Rs. 2,01,080 which were disproportionate to his known sources of income.
The learned Special Judge, in a very detailed and lengthy judgment, held that it was not proved that the appellant had obtained Rs. 3000/ from Gopaldas representing that he wanted the amount as a hand loan for taking delivery of the car.
He further held that it was not proved that the appellant demanded bribe of Rs. 10,000/ from him as a motive for doing him favour in the disposal of his wealth tax cases.
Regarding P.W. 7.
Motilat Bansgopal.
the Special Judge held that the accused had entertained a corrupt motive in asking the assessee P.W. 7to see him at his residence, and this circumstance could be considered against him in considering the charge for the offence of 239 habitually being corrupt.
Regarding Somchand, P.W. 9, the Special Judge held that the appellant had made an implied demand of bribe and had a guilty conscience.
Regarding Gulabdas, he held that the allegation regarding demand of bribe from P.W. 93, Gulabdas, had not been proved.
He summarised.
the findings thus "Thus out of specific instances the prosecution has established only two and it has been proved that the accused had made an implied demand of bribe from P.W. 9, Somchand and he had also asked P.W. 7, Motilal to come to his residence in connection with the delay in filing the return.
The second instance though does not establish any demand of bribe as such, it does prove the proclivity of the mind of the accused and a corrupt tendency and would support the prosecution version." He further held that "the two instances proved will not themselves be sufficient to prove habit of bribe taking and the question is whether considering all the matters before the court it can be held that the accused is guilty of criminal misconduct and if yes, of what category." He further held that the appellant could be convicted on the strength of presumption arising under section 5 (3).
The High Court repelled the contention of the appellant that no presumption arose under section 5 (3) of the Act because no specific instances had been held to be proved and, at any rate, they did not amount to an offence.
The High Court distinguished the cases of R. section Pandit vs State of Bihar,(1) and Surajpal Singh vs The State of Uttar Pradesh(2).
The High Court further observed that the trial Judge had accepted the evidence regarding two instances while it was prepared to accept the instance involving Gopaldas also.
The High Court generally agreed with the finding regarding disproportionate assets and disbelieved the explanation offered by the appellant.
Before we deal with the merits of the case, we shall taker up two preliminary points raised by the learned counsel for the appellant, Mr. Chari.
He urged that as sanction had not been given for prosecuting the appellant the whole trial was bad.
He said that the search of the appellant 's house took place on November 4, 1961, and on June 27, 1962, he was dismissed ' from service by the Commissioner of Income tax.
On July 30, 1962, charge sheet was filed in the court of Special Judge.
On (1) [1963] Suppl.
2 S.C.R. 652.
(2) ; 240 "September 21, 1962, the appellant submitted an appeal to the President of India and the President was pleased to, convert the order of dismissal into one of the removal.
The learned counsel contends that I pending the appeal the appellant should have been deemed to be in service and, therefore deemed to be in service on July 30, 1962.
A similar point was raised before the Special Judge and he repelled the contention in the following terms . "For requiring a sanction to be taken before taking cognizance of an offence against a person, he must be in actual employment of the State.
A mere right of appeal will not invest him with that status.
Moreover, a person may have right of appeal, but he may not exercise the same and may not file the appeal.
It is purely within his discretion and the act of taking cognizance which is the course of law would not be made dependent upon such arbitrary and discretionary alternatives held by a person.
" The Special Judge also referred to rule 23 of the Central Civil Services (Classification, Control and Appeal) Rules, 1957, and the explanation thereto in which it is stated : "In this rule the expression 'member of a Central Civil Service ' includes a person who has ceased to be a member of the service.
" This explanation was also relied on before us.
Regarding the explanation the learned Special Judge came to the conclusion that the explanation was restricted to that particular rule for giving the dismissed servant a right to prefer an appeal.
We agree with the conclusion of the learned Special Judge.
Section 6 of the Act reads as follows : "Previous sanction necessary for prosecution.
(1) No Court shall take cognizance of an offence punishable under section 161 or section 164 or section 165 of the Indian Penal Code (Act 45 of 1860), or under sub section (2) of section 5 this Act, alleged to have been committed by a public servant, except with the previous sanction, (a) in the case of a person who is employed in connection with the affairs of the Union and is not removable from his office save, by or with the sanction of the Central Government, of the Central Government.
241 (b) in the case of a person who is employed in connection with the affairs of a State and is not removable from the office save by or with the sanction of the State Government, of the State Government; (c) in the case of any other person, of the authority competent to remove him from his office.
(2) Where for any reason whatsoever any doubt arises whether the previous sanction as required under sub section (1) should be given by the Central or State Government or any other authority, such sanction shall be given by that Government or authority which would have been competent to remove the public ser vant from his office at the time when the offence was alleged to have been committed.
" It seems to us that the person must be employed in connection with the affairs of the Union in sub cl.
(a) and with the affairs of the State in sub cl.
(b) The case of the appellant would be covered in sub cl.
(a) because he had been employed in connection with the affairs of the Union.
But the sub section contemplates that the person must be employed in connection with the affairs of the Union and not that he was employed with the affairs of the Union.
The policy underlying section 6, and similar sections, is that there should not be unnecessary harassment of public servants.
But if a person ceases to be a public servant the question of harassment does not arise.
The fact that an appeal is pending does not make him A public servant.
The appellant ceased to be a public servant when the order of dismissal was passed.
There is no force in the contention of the learned counsel and the trial cannot be held to be bad for lack of sanction under section 6 of the Act.
The other preliminary point which the learned counsel raised was that the charge was defective.
We have already set out the charge.
It is true that there are no instances given in the charge.
But as the charge is of habitually accepting the.
bribe it is no,, necessary that the various instances should have been mentioned.
It was expressly so held by this Court in Biswabhusan Naik vs The State of Orissa(1).
This Court overruled a similar point in the following words: "But no particulars need be set out in the charge in such a case because the offence under section 5(1) (a) does not consist of individual acts of bribe as in section 161 of the Indian Penal Code but is of a general character.
Individual instances may be useful to prove (1) [1955]1 S.C.R.92.
2 807 Sup CI/71 242 the general averment in particular cases but it is by no means necessary because of the presumption which section 5(3) requires the Court to draw.
" This Court accordingly held in that case that there was no illegality in the charge.
We accordingly hold that the charge in this case was not illegal.
We may now deal with the merits of the case.
This is an appeal by special leave, and as there are concurrent findings of fact we do not ordinarily go into questions of fact.
But we allowed Mr. Chari to take us through the relevant evidence, both oral and documentary, in order to show whether the concurrent findings were vitiated in any respect.
He has not been able to point out any circumstances which may lead us to differ from the concur rent findings.
It is true that as far as the case of Gopaldas is concerned the High Court differed from the Special Judge and held that the allegations were proved.
The learned counsel has taken us in detail through the material relevant to this witness and we are inclined to agree with the conclusion arrived at by the High Court.
But apart from that the concurrent findings regarding P.W. 7, Motilal, and P.W. 9, Somchand, and the presumption arising under section 5(3) are sufficient to sustain the conviction recorded against the appellant.
The learned counsel urged before us that if the prosecution fails to establish any of the offences mentioned in section 5 (1) (a) to 5 (1) (d), the question of assets being found disproportionate to the known sources of the accused becomes irrelevant.
A number of cases were referred to us but we are unable to agree with this proposition because we are bound by the ruling to the ,contrary given by this Court.
In Biswabhusan Naik vs State of Orissa(1), after referring to section 5(1)(a) and section 5(3), Bose, J., speaking for the Court, observed : "Therefore, all that the prosecution has to do is to show that the accused, or some person on his behalf, is in possession of pecuniary resources or property disproportionate to his known sources of income and for which the accused cannot satisfactorily account.
Once that is established then the Court has to presume, unless the contrary is proved, that the accused is guilty of the new offence created by section 5, namely criminal misconduct in the discharge of his official duty." (1) [19551] 1 S.C.R. 92.
243 Then the Court proceeded to deal with the facts thus "Now the accused was found in possession of Rs. 3,148/ .
He accounted for Rs. 430/ of that sum by showing that it was paid to him at the, time as a trap.
He has been acquitted of that offence, so all he had to account for was the balance Rs. 2,698/ .
This is a large sum for a touring officer to carry with him in cash while on tour.
His explanation was not considered satisfactory and that is a question of fact with which we are not concerned in this Court.
Therefore, all that remains to be seen is whether this was disproportionate to his known sources of income.
" Then the Court referred to the findings regarding his total emoluments drawn and the small piece of land owned by him, and observed "Once the facts set out above were found to exist and the explanation of the accused rejected as unsatisfactory, section 5(3) was at once attracted and the Court was bound to presume (the word used in the section is 'shall ' and not 'may ') that the accused was guilty under section 5(2), especially as this part of the section goes on to say 'and his conviction 'therefor shall not be invalid by reason only that it is based solely on such presumption." These facts alone are enough to sustain the conviction and we need not consider the other matters.
" The conviction, therefore, of Biswabhushan Naik, in that case, solely proceeded on the presumption as in the earlier part of the judgment it was observed that he was separately charged and separately prosecuted under section 161 of the Indian Penal Code for three specific offences of bribe taking but was acquitted on all the counts and his conviction was only under section 5 (2) alone.
Similarly in C.S.D. Swamy vs The State, Swamy 's conviction was sustained only on the presumption.
The appellant, Swamy, in that case was put up on trial on charges under sections 5(1) (a) and 5 (1) (d) of the Act.
Payments of particular sums by way of bribe were not proved against him.
But the High Court, holding that the appellant 's bare statements from the dock un supported by any other acceptable evidence could not satisfactorily account for the large deposits standing to his credit in (1) ; 244 his bank accounts raised the presumption under section 5 (3) of the ,Act and held him guilty of criminal misconduct in the discharge of his official duty under section 5 (1) (d) of the Act.
It was contended before this Court that the charge relating to specific instances of bribery having failed the contrary presumption under section 5(3) of the Act should have been established.
This Court repelled the argument in the following words : "The finding of the High Court and the court below is that the prosecution had failed to adduce sufficient evidence to prove those particular facts and circumstances of criminal misconduct within the meaning of section 5 (1 ) (a) of the Act, but the failure to bring the charge home to the accused under section 5 (1 ) (a) does not necessarily lead to the legal effect contended for.
As soon as the requirements of sub section (3) of section 5 have been fulfilled, the Court will not only be justified in making, but is called upon to make the presumption that the accused person is guilty of criminal misconduct within the meaning of section 5 (1) (d).
If there is evidence forthcoming to satisfy the requirements of the earlier part of sub section
(3) of section 5, conviction for criminal misconduct can be had on the basis of the presumption which is a legal pre sumption to be drawn from the proof of ' facts in the earlier part of the sub section
(3) aforesaid.
That is what has been found by the courts below against the accused person.
Hence, the failure of the charge under cl.
(a) of sub section
(1) of section 5 does not necesarily mean the failure of the charge tinder section 5(1)(d).
" It will be noticed that while Bose, J., in Biswabhushan Naik vs State of Orissa(1), held that once the presumption applies the accused was guilty of the new offence created by section 5, namely.
criminal misconduct in the discharge of his official duties, without specifying any of the sub clauses,Sinha, J,, as he then was.
held that the offence under ' section 5 (1) (d) 'was made out.
It is not necessary to decide in this case which is the correct way of putting the matter because, whichever reasoning is adopted the case of the appellant fails.
The case of Surajpal Singh vs State of Uttar Pradesh(2) does not assist the appellant.
It is true that, as laid down by this Court, section 5(3) does not create a new offence.
But this does not mean that if the prosecution fails to prove the specific (1) ; (2) [1961] 2 S.C.R.971.
245 charges the presumption under section 5(3) cannot be applied.
in Surajpal 's case what, happened was that the only charge against Surajpal was of 'criminal misconduct under section 5(1)(c) of the Act.
But since he was acquitted of the charge it was held that he could not be convicted.
of criminal misconduct referred to in cls.
(a), (b) or (d) of section 5(1) of the Act for which he had not been charged.
R. section Pandit vs State of Bihar(1) also does not assist 'the appellant.
It is true that it was held in that case section 5(3) does not create a separate offence but lays down only a rule of evidence and marks a departure from the well established principle of criminal jurisprudence that onus is always on the prosecution to bring home the guilt to the accused.
But it does not follow from this that if the prosecution has failed to prove specific instances it cannot rely on the presumption.
The learned counsel contended that if this is the law, the prosecution need not allege any specific instance at all and could come to Court only alleging that the accused had assets disproportionate to his known sources of income.
This point does not arise in this case and is not likely to arise again because the Act has since been amended and the act of possessing pecuniary resources or property disproportionate to known sources of income, for which the public servant cannot satisfactorily account, has been made into a separate offence.
Therefore we need not consider this example given by the learned counsel.
Accordingly we hold that the, appellant in this case had pecuniary resources and property disproportionate to his known sources of income, and that both the High Court and the learned Special Judge rightly held that the presumption arose under section 5 (3).
We may mention that the learned counsel tried to show that the assets were not too disproportionate but nothing has been shown which would entitle us to set 'aside the concurrent findings on this aspect of the case.
The learned counsel then said that a fine of Rs. 1,25,000/ has been levied and the appellant has already undergone sen tence of about four months.
He said that the appellant is now on bail and it would be hard on him if we send him back to jail.
He further said that the investigation began somewhere in 1961, the trial began in 1963, and the expenses of the,trail and the printing of the records has cost the appellant a great deal, (1) [1963] Supp. 2 S.C.R. 652. 246 and further that the State has kept Rs. 1,25,000/ out of the seized amount for recovery of the fine.
The learned council for the respondent drew our attention to section 5(2) which provides that any public, servant who commits criminal miscounduct in the discharge of his duty shall be punishable with imprisonment 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.
It seems to us that in view of the facts mentioned by the learned counsel for the appellant it will meet the ends of justice if the sentence is reduced to one already undergone, maintaining the sentence of fine.
In the result the appeal is allowed to the extent that sentence of three year 's rigorous imprisonment is altered to imprisonment already undergone.
His bail bonds shall stand cancelled.
V.P.S. Sentence modified.
| IN-Abs | The appellant, who was an income tax Officer, was, dismissed from service and against the order of dismissal he filed an appeal to the President of India.
Meanwhile, he was charged under the Prevention of Corruption Act, 1947, with the offence of habitually accepting bribes.
Five instances were offered by the prosecution in evidence against him to prove the charge.
The trial court accepted the evidence regarding two instances, and convicted the appellant under section 5(2) read with sections 5(1)(d) and 5(3) of the Act drawing the presumption under section 5.(3) (before its amendment in 1964) against him on the ground that he was in possession of assets disproportionate to his known sources of income.
He was sentenced to rigorous imprisonment for three years and to pay a fine of Rs. 1,25,000/ , to be recovered from the properties siezed from him.
The High Court accepted the evidence regarding one more instance and confirmed the conviction and sentence.
In appeal to this Court, HELD : (1) The trial is not bad for lack of santcion under section 6 of the Act.
The appellant ceased to be a public servant when the order of dismissal was passed.
The fact that an appeal was pending would not make him a public servant.
Sanction is necessary only when the person is employed in connection with the affairs of the Union and not when he was employed.
[241 D F] (2)Since the charge was one of habitually accepting bribes it was not necessary that specific instances of taking bribe should be given in the charge.
[241 G] Biswabhusan Naik vs State of Orissa, ; , followed.
(3) The appellant had property disproportionate to his known sources of income and the presumption under section 5(3) of the Act was rightly drawn against him.
Failure to establish any of the offences in section 5(1) (a) to (d) is irrelevant for sustaining a conviction based on the presumption.
Biswabhusan Naik vs State of Orissa, ; and C. S.D. Swamy vs State, ; , followed.
Surajmal Singh vs State of Uttar Pradesh, [1961] 2 S.C.R. 971 and R. section Pandit vs State of Bihar, [1963] Supp.
2 S.C.R., 652, referred to and explained.
[245 C] (4) In view of the fact that the appellant had undergone the sentence for about four months and a large fine was imposed on him, the ends of justice would be met if the sentence is reduced to one already undergone while maintaining the sentence of fine.
[246 B C] 237
|
Appeal No. 1258 of 1966.
Appeal from the judgment and order dated September 16, 1965 of the Calcutta High Court in First Appeal No. 146 of 1960.
C. B. Agarwala, P. K. Chakravarty, Prodyot Kumar Chakra varty and Uma Mehta, for the appellant.
B. Sen, section P. Mitra, section N. Mukherjee, G. section Chatterjee for, Sukumar Basu, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by certificate from a judgment of a Division Bench of the Calcutta High Court reversing the judgment and decree of a learned Single Judge made in exer cise of original jurisdiction in a suit filed by the appellant.
2 The record of the case is voluminous and apparently that led to very lengthy judgments both by the Single Judge and the Division Bench.
A host of facts have been introduced out of which it is necessary to state only those which are relevant for the purpose of the disposal of the points before us.
The appellant was appointed Station Officer in the Bengal Fire Service in 1943.
In March 1949 he was appointed to act as Assistant Director of Fire Services and Regional Officer, Calcutta Industrial Area until further orders.
section Bose, who was appointed Director ,of Fire Service on or about the same date, received some complaints against the appellant.
He made certain preliminary enquiries.
In the beginning of May 1949 Bose informed the appellant that the post of Assistant Director Fire Service would be treated as abolished with effect from the date of the appointment ,of the appellant as Assistant Director.
This led to protests by the appellant against the abolition of that post.
A lot of acrimonious dialogue started between Bose and the appellant; the former made his final report to section K. Gupta, Secretary Local Self Government, as to the charges which were to be preferred against the appellant.
On July 12, 1949 the appellant was suspended.
On July 19, 1949 a communication containing the charges against the appellant was sent to him by section K. Gupta, Secretary Local Self Government.
It is necessary to reproduce it in extenso "Charges.
Whereas it has been made to appear to the Government of West Bengal (1) that you, Sri section C. Chakravarty, Regional Officer, Calcutta Industrial Area, West Bengal Fire Service incited the subordinate staff of the said service by circulating false rumours regarding the retrenchment policy of the Government, thereby spreading insubordination and discontent within the Force; (2) that you, Sri section C. Chakravarty, Regional Officer, Calcutta Industrial Area, West Bengal Fire Service, took an active part in a conspiracy to implicate the present Director of Fire Service West Bengal in a false case by planting firearms in his office and to injure him by planting a time bomb in his car when he might be going on inspection; 3 (3) that you, Sri section C. Chakravarty, Regional Officer, Calcutta Industrial Area, West Bengal Fire Service, have been guilty of (a) wilful disobedience of Government Order directing you to stay at your headquarters at Barrackpore and of the order of the Director Fire Service to produce the petrol log book of your inspection car; (b) grave negligence of duty, failure to attend office on many days and irregular attendance even on the days when you came to office, resulting in accumulation of work; (c) fabricating false entries in the cash book by putting signatures on dates when you did not attend office; (d) taking illegal issue of petrol from the accounts of different fire stations in addi tion to the quota allotted to you for your use.
and (e) cooking up false complaint against some members of the staff of the West Bengal Fire Service whom you tried to rope in into the conspiracy but failed and refusing permission to them to see the Director, Fire Service, apprehending a disclosure.
AND whereas these acts of indiscipline, conspiracy negligence in the performance of your duties and other irregularities were committed by you while you were holding the responsible, position of the Regional Officer, Calcutta Industrial Area, in a disciplined Organisation like the West Bengal Fire Service and which, therefore, amounted to an abuse or misuse of the position so enjoyed by you.
Now, therefore, you are directed to show cause why you should not be dismissed from the service of the Government or otherwise suitably punished departmentally.
The enquiry will be conducted by the undersigned Sri 'section C. Chakravarty is directed to put in a written statement of his defence by the 8th August, 1949, and to state within the time aforesaid whether he desires to be heard in person.
illegible.
Local Self Government Department Secy.
to the Govt.
of Calcutta.
The 19th July, 1949 West Bengal 4 It is common ground that a statement of the allegations on which each charge was based was never sent to the appellant.
He sent a letter dated August 5, 1949 with reference to the communication containing the charges.
He emphatically denied what had been alleged against him and described the charges as false and actuated by mala fides.
What is worth noticing is that the appellant in categorical terms stated that the charges and allegations were vague, indefinite and lacking in material particulars and pointed out that "unless the charges are made specific to the point and contain full details with date, time, place, and person etc. it is impossible for me to meet them properly." No further particulars or details were supplied at that stage or subsequently.
section K. Gupta submitted his report on May 1, 1950.
He found charges 1, 2 and 3 (b) as having been proved against the appellant.
Charge 3 (a) was dropped.
As regards charges 3 (c) and 3 (d) it was found that there had been gross negligence on the part of the appellant in attendance as well as in carrying out all his ordinary duties, vis., checking and signing of the cash book and disposal of current work including grant or refusal of leave applications.
The appellant was not found guilty of charge 3 (e) On June 10, 1950, the Deputy Secretary to the Government, West Bengal, sent a notice to the appellant in which it was stated that in view of the findings of the Enquiry Officer he was considered to be unsuitable for retention in service and it was proposed to remove him.
A summary of the findings of the Inquiry Officer was sent and the appellant was directed to show cause why he should not be removed from the service of the Government.
The appellant wrote a long letter on July 1, 1950 in which he once again pointed out that according to law he was entitled to have a statement of allegations on which each charge was based before the enquiry started.
But he was not given any such statement with the result that he could not defend his case properly.
On June 16, 1950 the Director of Fire Services communicated an order of dismissal to the appellant who filed an appeal to the Government without any success.
In August 1951 the appellant moved the High Court under article 226 of the Constitution for quashing the order of dismissal.
In April 1952 the High Court acceded to the appellants prayer and quashed the order of dismissal on the sole ground that the punishment which had been tentatively proposed in the show cause notice was removal and therefore an order of dismissal could not have been made. ' On May 15, 1952 the appellant called upon the Government to reinstate him in his post.
On May 31, 1952 an order was made by the Governor, West Bengal, removing the appellant from service.
A memorandum was sent by the Joint Secretary, Local Self Government, along with a copy of the order of the Governor.
It was stated therein that after a careful considera 5 tion of the report of the Enquiry Officer and the representation submitted by the appellant the Government, in consultation with the Public Service Commission, West Bengal, had decided that he should be removed from service.
In September 1952 the appellant filed a suit in the Calcutta High Court challenging the order of his removal from service and asking for various reliefs including a declaration that lie was still in government service and a decree for arrears of pay and allowances from the date of suspension till institution of the suit and interim pay and allowances till the disposal of the suit together with interest etc.
We need refer only to para 19(a) of the plaint in which it was pleaded that the enquiry was vitiated because under the rules and procedure for holding such enquiry the appellant was entitled to be furnished with definite charges.
But the charges and allegations were vague, indefinite and lacking in material particulars and in spite of repeated requests these, were neither made specific nor material particulars like, day time, place and persons were supplied.
In the written statement filed by the respondent it was denied that the charges or allegations were vague, indefinite or lacking in material particulars as alleged.
It is unnecessary to set out the other pleadings but the issues which were settled would indicate the points which the trial court was called upon to decide.
These issues were: 1.
Is there a valid contract of employment between the plaintiff and the defendant under the Government of India Act ? 2.
Was the suspension order dated 12th July 1949 mala fide, wrongful and ultra vires ? 3.
Was Mr. section K. Gupta in a position to exercise unbiased mind in the matter of enquiry ? 4.
Was the order dated 16th September 1950, illegal, void and ultra vires in the Constitution and it cannot operate to terminate the service of the plaintiff ? 5.
Was the order of removal dated 31st May 1952 illegal, void in law and ultra vires in the Constitution of India and the Civil Service Rules for grounds stated in paragraph 29 and 30 of the plaint ? 6.
Was the plaintiff no longer in suspension and was unable to be reinstated in service to his usual pay and allowances from the date of his suspension in view of the order dated 24th April 1952 ? 6 7.
To what relief, if any, is the plaintiff entitled ? Some additional issues were framed out of which we may only refer to those which were settled on June 8, 1959 and which were in these terms : 1.
Was the enquiry made by Mr. Gupta vitiated on the grounds as alleged in paragraph 19 of the plaint ? 3.
Is the Court debarred from trying issue Nos. 4, 5 and 6 and the additional issues settled today by reason of res judicata ? The learned Judge, found that the Enquiry Officer section K. Gupta was biased against the appellant before he held the enquiry.
It was further found that no particulars and other necessary details were given in the charges and they were vague resulting in noncompliance with Rule 55 of the Civil Services (Classification, Control and Appeal) Rules and the necessary particulars were not supplied in spite of the repeated objections of the appellant to the charges being vague and indefinite.
In the opinion of the learned Judge the trial was vitiated for want of definite charges.
It was held that the appellant had been duly appointed as member of the Fire Service of the State and that a contract in terms of Ar t. 299 of the Constitution was not necessary.
Issues 2 and 4 were not pressed.
Reading the prayer in the light of the averments in the plaint the learned Judge granted a declaration that the purported removal of the appellant was void and inoperative And he remained or was still in government service.
He was held entitled to salary and other benefits from the date of his suspension till the date of the judgment.
It was particularly mentioned that the parties had worked out the figures of the salary and allowances etc.
at Rs. 69,636/ for which a decree was granted together with interest at 6% per annum till the date of realisation.
The respondent filed an appeal to the Division Bench of the High Court.
We do not consider that we need refer to all the points dealt with by the Division Bench.
In our judgment the Division Bench was wholly in error in reversing the decision of the learned Single Judge on one of the crucial points, namely, non compliance with Fundamental Rule 55 and complete vagueness and indefiniteness of the charges on which no proper enquiry could be held.
It is incomprehensible how the details as to date, time, place and person etc.
would not have made the charges more definite as appears to have been the opinion of the Division Bench.
We are unable to agree that the details without which a delinquent servant cannot properly defend himself are a matter of evidence.
In this connection reference may be made to Fundamental Rule 55 which provides, inter 7 alia, that without prejudice to the provisions of the Public Servants Enquiry Act 1850 no order of dismissal removal or reduction shall be passed on a member of service unless he is informed in writing of the grounds on which it is proposed, to take action and has been afforded an adequate opportunity of defending himself.
The grounds on which it is proposed to take action have to be reduced to the form of a definite charge or charges which have to be communicated to the person charged together with a statement of the allegations on which each charge is based and any other circumstance which it is proposed to be taken into consideration in passing orders has also to be stated.
This rule embodies a principle which is one of the basic contents of a reasonable or adequate opportunity for defending oneself.
If a person is not told clearly and definitely what the allegations are on which the charges preferred against him are founded he cannot possibly, by projecting his own imagination, discover all the facts and circumstances that may be in the contemplation of the authorities to be established against him.
By way of illus tration one of the grievances of the appellant contained in his letter dated March 24, 1950, to the Enquiry Officer may be mentioned.
This is what he said though the language employed is partly obscure and unhappy : "Regarding the first charge I beg to submit that the allegation is vague.
In the charge it has not been specifically stated as to where, when and before whom I circulated false rumours, regarding retrenchment policy of the Government and thereby spread insubordination.
In fact if one goes through the statements of P.Ws.
made to D.F.S. as submitted before my suspicion, it will appear that no specific case could have made with all material particular as to date, time and person.
Having been able to take deposition and to conduct enquiry keeping me in dark and finally put me out of office, Sri section Bose was able to win over the witnesses and was able to shape his case to suit his pur pose.
" Now in the present case each charge was so bare that it was not capable of being intelligently understood and was not sufficiently definite to furnish materials to the appellant to defend himself.
It is precisely for this reason that Fundamental Rule 55 provides, as stated before, that the charge should be accompanied by a statement of allegations.
The whole object of furnishing the statement of allegations is to give all the necessary particulars and details which would satisfy the requirement of giving a reasonable opportunity to put up defence.
The appellant repeatedly and at every stage brought it to the notice of the 8 authorities concerned that he had not been supplied the statement of allegations and that the charges were extremely vague and indefinite.
In spite of all this no one cared to inform him of the facts, circumstances and particulars relevant to the charges.
Even if the Enquiry Officer had made a report against him the appellant could have been given a further opportunity at the stage of the second show cause notice to adduce any further evidence if he so desired after he had been given the necessary particulars and material in the form of a statement of allegations which had never been supplied to him before.
This could undoubtedly be done in view of the provisions of article 311 (2) of the Constitution as they existed at the material time.
The entire proceedings show a complete disregard of Fundamental Rule 55 in so far as it lays down in almost mandatory terms that the charges, must be accom panied by a statement of allegations.
We have no manner of doubt that the appellant was denied a proper and reasonable opportunity of defending himself by reason of the charges being altogether vague and indefinite and the statement of allegations current findings against the respondent on that point.
The resupplied to him.
In this situation, for the above reason alone, the trial judge was fully justified in decreeing the suit A faint attempt was made by the learned counsel for the respondent to assail the decision of the trial court on issue No. 1 Both the single Judge and the Division Bench had given con current finding against the respondent on that point.
The respondent cannot be permitted to reagitate the matter before us.
We accordingly allow this appeal, set aside the judgment and decree of the Division Bench and restore that of the trial ,court.
The appellant will further be granted a declaration that he is entitled to the salary and allowances for the period subsequent to the date of the decree of the learned Single Judge of the High Court to the date of his superannuation.
The appellant will be entitled to his costs in this, Court.
| IN-Abs | The appellant filed a suit in the Calcutta High Court challenging his; removal, after a departmental enquiry, from the post of Assistant Director of Fire Services and Regional Officer Calcutta Industrial Area.
The suit was decreed in his favour,by the Civil Judge but the Division Bench reversed the decree.
In appeal to this Court, by certificate the question was whether the appellant had been denied a reasonable opportunity to defend himself inasmuch as the charges were vague and no statement of allegations as required by Fundamental Rule 55 of the Central Service (Classification Control & Appeal) Rules was furnished to him.
HELD: The appeal must be allowed: The appellant repeatedly and at every stage brought to the notice of the authorities concerned that he had not been supplied the statement of allegations and that the charges were extremely vague and indefinite.
In spite of this he was not informed of the facts and Circumstances and particulars relevant to the charges.
The entire proceedings showed a complete disregard of Fundamental Rule 55 in so far as it lays down in an almost mandatory manner that the charges must be accompanied by a statement of allegations.
There could be no doubt that the appellant was denied a proper and reasonable chance to defend himself by reason of the charges being altogether vague and indefinite and the statement of allegations containing the material facts and particulars not having been supplied to him.
[6 H; 7 D]
|
l Appeals Nos. 1001 to 1003 of 1965.
Appeals from the judgment and decree dated December 22, 1961 of the Orissa High Court in First Appeals Nos. 82, 83 and 84 of 1958.
Bishan Narain and P. C. Bhartari, for the 'appellants (in all the appeals).
B. P. Maheshwari, for respondent No. 1 (in C.A. No. 1002 of 1965).
Sadhu Singh and Jagmohan Khanna, for respondents Nos.
1 to 5 (in C.A. No. 1003 of 1965).
The Judgment of the Court was delivered by Grover, J.
These appeals have been brought by certificate from a common judgment of the Orissa High Court.
Five different suits were filed against certain defendants on the foot of five different pronotes.
All the five suits were ' heard together and were decreed by the trial judge.
In respect of two suits the valuation being low the appeals were preferred before the District Judge and in three suits the appeals were filed in the High Court.
The High Court dismissed the appeals.
It is altogether unnecessary to refer to the points in controversy between the parties because.
the sole question which has been agitated before us relates to the admissibility of certain assessment orders 311 on which reliance has been placed for deciding whether the contesting defendants were the partners of firm Surajmal Manilal on whose behalf the pronotes had been executed.
The learned subordinate judge had found that the suit transactions were genuine and execution on behalf of the firm as well as the passing of consideration had been proved.
He had further found that the contesting defendants were joint with their uncle Manilal in 1949 and that they were the partners of the firm Surajmal Manilal being members of a trading family, and therefore they were liable to the extent of the assets of the joint family in their hands.
It appears that the assessment orders were produced not by the contesting defendants but by the son of Manilal who was the assessee.
After examining section 54 of the Income tax Act 1922 and the various decisions of the High Courts the learned judges of the High Court ,game to the conclusion that the general consensus was that if a copy of the assessment order or a certified copy thereof was produced by the assessee waiving his privilege it would be admissible in evidence.
Section 54(1) of the Act was in the following terms section 54(1) "All particulars contained in any statement made, return furnished or accounts or documents produced under the provisions of this Act, or in any evidence given, or affidavit or deposition made, in the course of any proceedings under this Act other than proceedings under this Chapter, or in any record of any assessment proceeding, or any proceeding relating to the recovery of a demand, prepared for the purposes of this Act, shall be treated as confidential, and notwithstanding anything contained in the (1 of 1872), no Court shall, save as provided in this Act, be entitled to require any public servant to produce before it any such return, accounts, documents of record or any part of any such record, or to give evidence before it in respect thereof.
" Under sub section (2) if a public servant disclosed any particulars contained in a statement, return etc.
mentioned in sub section
(1) he was liable to punishment with imprisonment as well as fine.
The prohibition against disclosure was not applicable to the facts and particulars in such cases and circumstances as were set out in sub section
Now it is quite clear that section 54 created a complete bar to the production by officials and other servants of the Income tax Department of any such documents which were mentioned in sub sections
(1) and (2).
It also made it obligatory on them to treat as confidential the records and documents mentioned in the 312 sub sections.
They were further prohibited from giving any evidence.
relating to them.
The question which came up for consideration before the courts was if the documents could be given without requiring a public servant to produce them could the court allow them to be tendered and admitted into evidence ? The Madras High Court held in Mythili Ammal vs Janaki Ammal & Another(") that statements made in income tax returns could not be brought up in court against the person making them or against any one else nor could the income returns be proved by secondary evidence under section 64 of the .
The Calcutta High Court in Promatha Nath Pramanick vs Nirode Chandra Ghose (2) considered it startling that when an assessment order was to be treated as confidential under section 54 of the Act a joint assessee could be permitted the use of the copy of such an order to the detriment of his co assessee in contentious proceedings between them.
A Full Bench of the Madras High Court, however, held in Rama Rao vs Venkataramayya(3) that a return was confidential and could not be disclosed to a third party but there could be no objection to the maker of a return having a COPY for his own purposes if he so desired and he was not bound to treat the document as confidential.
In other words he could produce that document as evidence in court.
It is unnecessary for the purposes of this case to go into the larger question of production of the documents covered by section 54(1) by third parties as it was the son of Manilal the assessee who had produced the assessment orders which are in dispute.
There is an overwhelming weight of authority in favour of the view that assessment orders could be produced by the assessee or his representative in interest; see Emperor vs Osman Chotani(4), Suraj Narain vs Seth Jhabhu Lal & Others(5) and Buchibai vs Nagpur University(6).
In our opinion the law laid down by these cases on the admissibility of evidence of assessment orders produced by an assessee or his representative in interest is unexceptionable.
We may refer to a decision of this Court in Charu Chandra Kundu vs Gurupada Ghosh (7) on which reliance was placed on behalf of the appellants.
There the appellant had applied to the trial court praying that the Commissioner of Income tax be directed to arrange for the production before the court of the record of the statement made by the respondent therein.
In that situation it was held that the prohibition imposed under section 54 of the Act was absolute and the operation of the section was not obliterated by any waiver by the assessee in whose assessment the evidence was tendered, documents produced or (1) (2) (3) (4) (1942)101.T.R.429.
(5) (1945)131.T.R.13.
(6) (1947)151.T.R.150.
(7) ; 313 record prepared.
It is apparent that in that case the question of production of an assessment order by the assessee himself did not come up for consideration.
These appeals fail and are dismissed with costs.
One hearing fee.
V.P.S. Appeals dismissed.
| IN-Abs | Section 54 of the Income tax Act, 1922, created a complete bar to the production by officials and other servants of the Income tax Department of the documents mentioned in the section.
But, where the assessee or his representative in interest himself produces a copy of the incometax assessment order in any legal proceeding the order would be admissible in evidence.
[311H; 312 G H; 31 B A] Emperor vs Osman Chotani , Suraj Narain vs Seth Jhabhu Lcl & Ors., and Buchibai vs Nagpur University, , approved.
Charu Chandra Kundu v, Gurupada Ghosh; , , referred to.
|
Appeal No. 1218 of 1968.
Appeal from the judgment and order dated November 29, 1966 of the Punjab High Court in Civil Writ No. 271 of 1966.
M. C. Setalvad and R. N. Sachthey, for the appellant.
The respondent did not appear.
268 The Judgment of the Court was delivered by Hegde, J.
On September 12, 1963, the Government of Punjab passed the following order : "Subject : Reservation for the members of Scheduled Castes, Scheduled Tribes and Backward Classes in promotion cases.
Sir, I am directed to refer you to the subject noted above and to say that at present reservation for Scheduled Castes, Scheduled Tribes and other Backward Classes is applicable to new appointments and not to promotions which are governed by consideration of merit and seniority alone.
Since those castes/classes are poorly represented in various services in the upper grades under the State Govt. it has been under the active consideration of Government that some reservation in higher grade posts as well should be made for them.
It has now been decided that except in the case of All India Services 10 per cent of the higher posts to be filled by promotion should be reserved for the members of Scheduled Castes, Scheduled Tribes and Backward Classes (9 per cent for the ' members of Scheduled Castes and Scheduled Tribes and 1 per cent for the Backward Classes) subject to the following conditions : (a) the persons to be considered must possess the minimum necessary qualification; and (b) they should have at least a satisfactory record I of service." Up till that date reservation for Scheduled Castes.
Scheduled Tribes and Backward Classes was confined to initial recruitment.
The first out of every five initial recruitments was reserved for, Scheduled Castes, Scheduled Tribes or other Backward Classes.
On January 14, 1964, the Government clarified its order dated September 12, 1963.
In this case we are not concerned with the first paragraph of that clarification.
The second paragraph of that clarification reads thus : "Government have since been receiving references from several quarters seeking clarification in regard to the implementation of the said decision.
After careful consideration of the matter, it has now been decided that : (a) The said decision should be applied to all promotion posts already vacant on 12th September, 1963, or falling vacant thereafter.
269 (b) The reservation should not imply that 10 per cent of the total posts reserved for promotion in any cadre have to be filled by Scheduled Castes personnel in the sense that all existing/ future vacancies will be filled up by Scheduled Castes/Tribes and other Backward Classes candidates until their share in higher services comes up to 1 0 per cent.
(c) This provision of reservation applies to all State.
services including Class 1, II, III, and IV posts, the only exception being All India Services.
(d) This reservation should apply even in the case of short term leave vacancies unless it is likely to involve unnecessary dislocation of work in different offices and avoidable expenditure and inconvenience due to mid year transfers etc.
(e) So far as Scheduled Castes/Tribes are concerned, the very first vacancy existing on/arising after the 12th September, 1963, should retreated as reserved for them and only if no such official is available for promotion against the vacancy reserved for them in the first block of 10 vacancies, a candidate belonging to other Backward Classes may be selected in preference to the remaining officials against one such post only out of one hundred, since the reservation for other Backward Classes may not exceed I per cent.
However, if Sheduled Castes/ Tribes candidates are available to fill one out of every ten vacancies, the specific reservation in favour of other Backward Classes should be the, 51st vacancy.
(f) One reserved vacancy should be carried over to the next block of ten vacancies in case it cannot be filled up within any block of ten posts.
Thus, if no Scheduled Castes/Tribes/Backward Classes candidate is promoted against any of the first 10 vacancies the number of vacancies available to such candidates in the following block will betwo.
(g) In case an out of turn promotion has already been given to a candidate belonging to Scheduled Castes/Tribes or Backward Classes against a reserved vacancy and then in the same block it happens to be the turn of a candidate belonging 270 to the said castes/classes for promotion, such candidate should not be ignored on the ground that 10 per cent reservation has already been exhausted." Thereafter by another letter of March 18, 1964, the Government issued further clarification of their aforementioned com munications.
That clarification reads "To illustrate the above point if there is an official of the Scheduled Castes placed at a position say 73rd in a list prepared for promotion to the higher parts and a vacancy arises therein, he would have precedence over the other 72 officials to benefit out of the first vacancy that occurs on or after 12th September, 1963.
Ms turn would not be withheld merely for the fact that his number on the select list is not in the first ten." Respondents Nos. 1 and 3 to this appeal were both working in the Forest Department of the Government as Head Assistants.
Respondent No. 1 was senior to Respondent No. 3 Respondent No. 3 belonged to a Scheduled Caste.
Hence in view of the order of the Government, Respondent No. 3 was promoted tem porarily as Superintendent ignoring the claim of Respondent No. 1. 'Aggrieved by that order Respondent No. 1 moved the High Court of Punjab to quash the promotion of Respondent No. 3 and direct the Government to promote him as Superin tendent in the place of Respondent No. 3.
The High Court has quashed the promotion of Respondent No. 3.
The State of Punjab (now substituted by the State of Haryana) has brought this appeal after obtaining a certificate from the High Court under article 133(1)(c) of the Constitution.
In the opinion of the High Court reservation made for the .Scheduled Castes, Scheduled Tribes and Barckward Classes is not impermissible under the Constitution in view of article, 16(4) of the Constitution as interpreted by this Court in The General Manager, Southern Railway vs Rangachari.(1) But the Government has violated article 16(1) by reserving the first out of a group of 10 posts for the Scheduled Castes, Scheduled Tribes and Backward Classes.
The High Court was persuaded by the Counsel for the first respondent to visualise various hypothetical cases under which reservation of the type impugned in the present case could lead to various anomalies such as the person getting the 'benefit of the reservation may jump over the heads of several of his Seniors not only in his own grade but even in the higher grades.
They visualised the possibility of Head Assistant leaping ,over the heads of several seniors of his in the grade of Head (1) [1962] 2.S.C.R.586.
271 Assistants and thereafter in the grade of Superintent; subsequently in the grade of Under Secretaries, Deputy Secretaries and so on and so forth.
It is not the finding of the High Court that in any of the grades to which the impugned orders apply, the possibilities visualised by the High Court are imminent or even likely.
article 16(1) is an extension of article 14.
It provides "There shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State." But the equality contemplated by this clause is not an embo died equality.
It is subject to several exceptions and one of the exceptions is that provided in article 16(4) which says : "Nothing in this Article shall prevent the State from making any provision for the reservation of appointments or posts in favour of any backward class of citizens which, in the opinion of the State is not adequately represented in the services under the State.
" In Rangachari 's case(1) this Court ruled that the reservation contemplated by article 16(4) can be made not merely to initial recruitment but also to posts to which the promotions are to be made.
This is what Gajendragadkar J. (as he then was) speaking for the majority observed (at pp. 604 & 605) : "We must in this connection consider an alternative argument that the word posts must refer not to selection posts but to posts filled by initial appointments.
On this argument reservation of appointments means re servation of certain percentage in the initial appointments and reservation of posts means reservation of initial posts which may be adopted in order to expedite and make more effective the reservation of appointments themselves.
On this construction the use of the word posts appears to be wholly redundant.
In our opinion, having regard to the fact that we are construing the relevant expression 'reservation of appointments ' in a constitutional provision it would be unreasonable to assume that the reservation of appointments would not include both the methods of reservation, namely, reservation of appointments by fixing a certain percentage in that behalf as well as reservation of certain initial posts in order to make the reservation of appointments more effective.
That being so, this alternative argument which confines the word 'posts ' to initial posts (1) [1962] 2S.C.R.586.
272 seems to us to be entirely unreasonable.
On the other hand under the construction by which the word 'posts ' includes selection posts the use of the word 'posts ' is not superfluous but serves a very important purpose.
It shows that reservation can be made not only in re gard to appointments which are initial appointments but also in regard to selection posts which may fall to be find by employees after their employment.
This construction has the merit of interpreting the words ' appointments ' and 'posts ' in their broad and liberal sense and giving effect to the policy which is obviously the basis of the provisions of article 16(4).
Therefore, we are disposed to take the view that the power of reservation which is conferred on the State under article 16(4) can be exercised by the State in a proper case not only by provided for reservation of appointments but also by providing for reservation of selection posts.
This construction, in our opinion, would serve to give effect to the intention of the Constitution markers to make adequate safeguard for the advancement of backward classes and to secure for their adequate representation in the services.
" The extent of reservation to be made is primarily a matter for the State to decide.
By this we do not mean to say that the decision of the State is not open to judicial.
review.
The reservation must be only for the purpose of giving adequate representation in the services to the Scheduled Castes, Scheduled Tribes and Backward Classes.
The exception provided in article 16(4) should not make the rule embodied in article 16(1) meaningless.
But the burden of establishing that a particular reservation made by the State is offensive to article 16(1) is on the person who takes the plea.
The mere fact that the reservation made may give extensive benefits to some of the persons who have the benefit of the reservation does not by itself make the reservation bad.
The length of the leap to be provided depends upon the gap to be covered.
As observed by the majority in Rangachari 's case(1) : "The condition precedent for the exercise of the powers conferred by article 16(4) is that the State ought to be satisfied that any backward class of citizens is not adequately represented in its services.
This condition precedent may refer either to the numerical inadequacy of representation in the services or even to the qualitative inadequacy of representation.
The advancement of the socially and educationally backward classes requires (1) ; 273 not only that they should have adequate representation in the lowest rung of services but that they should aspires to secure adequate representation in selection posts in the services as well.
In the context the expression 'adequately represented ' imports; considerations of 'size ' as well as 'values ', numbers as well as the nature of appointments held and so it involves not merely the numerical test but also the qualitative one.
It is thus by the operation of the numerical and a qualitative test that the adequacy or otherwise of the representation of backward classes in any service has to be judged; and if that be so, it would not be reasonable to hold that the inadequacy of representation can and must be cured only by reserving a proportionately higher percentage of appointments at the initial stage.
In a given case the State may well take the view that a certain percentage of selection posts should also be reserved.
for reservation of such posts may make the representation of backward classes in the services adequate, the adequacy of such representation being considered qualitatively.
" It is true that every reservation under article 16(4) does in troduce an element of discrimination particularly when the question of promotion arises.
It is an inevitable consequence of any reservation of posts that junior officers are allowed to take a march over their seniors.
This circumstance is bound to displease the senior officers.
It may also be that some of them will get frustrated but then the Constitution makers have thouht fit in the interes 's of the society as a whole that the backward class of citizens of this country should be afforded certain protection as observed by this Court in A. Peeriakaruppan etc.
V. State of Tamil Nadu(1): "It cannot be denied that unaided many sections of this country cannot compete with the advanced sections of the Nation.
Advantages secured due to historical reasons should not be considered as fundamental rights.
Nation 's interest will be best served taking a long range view if the backward classes are helped to march forward and take their place in line with the advanced sections of the people.
" There was no material before the High Court and there is no material before us from which we can conclude that the impugned order is violative of article 16(1).
Reservation of appointments under article 16(4) cannot be struck down on hypothetical (1) [1971] 2 S.C.R.430.
807Sup.
CI/71 274 grounds or on imaginary possibilities.
He who assails the reservation under that article must satisfactorily establish that there has been a violation of.
article 16(1).
For the reasons mentioned above this appeal is allowed and the order of the High Court set aside.
Respondent No. 1 who was the petitioner before, the High Court is not represented before this Court.
In the circumstances of this case we make no order as to costs.
V. P. section Appeal allowed.
| IN-Abs | The appellant State issued an Order according to which reservation of posts for Scheduled castes.
tribes and backward classes was made applicable not only to initial recruitment but also to promotions.
Respondents 1 and 3 were in the 'State Government service and the former was the senior.
But since the latter belonged to a scheduled caste he was promoted over.
the first respondent as per the Order.
The High Court quashed the promotion on the basis that such reservation might lead to various anomalies.
In appeal to this Court, HELD : Article 16(1) provides for equality of opportunity to all citizens in relation to appointment to any office in the service of the State subject to the exception in article 16(4) that the State may make reservations in favour of backward classes.
The reservation contemplated by article 16(4) can be made not merely to initial recruitment but also to Posts to which promotions are to be made.
Every such reservation under article 16(4) does introduce an element of discrimination and promotion of junior officers over seniors; but the Constitution makers thought fit, in the interests of society as a whole, that backward classes should be afforded some protection.
If, however, the reservation under article 16(4) makes the rule in article 16(1) meaningless the decision of the State would be open to judicial review; but the burden of establishing that a particular reservation is offensive to article 16(1) is on the person who takes the plea.
[271 C, E, 272 D G, 273 D F] In the present case, there was no material from which it could be concluded that the impugned Order violated article 16(1).
The reservation could not be struck down on hypothetical grounds or on imaginary possibilities.
[273 H] General Manager, Southern Railway vs Rangachari, ; and A. Peeriakarupan etc.
vs State of Tamil Nadu, [1971] 2 S.C.R. 430, followed.
|
Appeal No. 2418 of 1966.
Appeal by special leave from the judgment and order dated February 19, 1963 of the Punjab High Court, Circuit Bench, at Delhi in F.A.0.
Appeal No. 123 D of 1961.
R. L. Agarwal, K. L. Mehta, section K. Mehta, P. N. Chadda.
M. G., Gupta and K. R. Nagaraja, for the appellant.
L. M. Singhvi, Badri Dass Sharma and section P. Nayar, for the respondent.
The Judgment of the Court has delivered by Shelat, J.
By this appeal, under special leave, the appellantcompany challenges the correctness of the judgment of the High Court of Punjab, dated February 19, 1963 refusing to set aside an umpire 's award, dated March 22, 1958.
The award was in respect of certain disputes between the company and the Union of India in the matter of disposals of the United States surplus war materials left by the Government of the U.S.A. at the end of the last World War.
These surplus materials, called the U.S. Surplus Stores, consisted of vehicles and other stores.
It was said that these were sold to the company by the Director General, Disposals through correspondence and sale notes.
These contracts of sale were subject to the General Conditions of Contract (Form Con. 117).
Cl. 13 of these General Condi tions provided that "In the event of any question or dispute arising under these conditions or any special conditions of contract or in connection with this contract the same shall be referred to the award of an arbitrator to be nominated by the Director General and an arbitrator to be nominated by the contractor, or in the 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 .
Upon every and any such reference, the assessment of the costs incidental to the reference and award respectively shall be in the discretion of the arbitrators, or in the event of their not agreeing, of the Umpire appointed by them.
" 285 Disputes having arisen between the parties both as regards the contents and the quantity of the vehicles delivered under the contracts, they were referred, in the first instance, to two arbitrators nominated by the parties, and ultimately to an umpire.
The disputes were crystallized into nine claims by the appellant company totalling Ks.
6,73,34,500/ , and several counterclaims by the Government of India.
At the end of the arbitration, the umpire, by his said award, disallowed all the claims made by the company, except one for which he awarded RS.
6,94,000/ and held, in respect of the counter claims filed by the Government of India, that the appellant company was liable to pay to the Government in all Rs. 36,23,682.50 P. and costs amounting to Rs. 5,40,544/ .
In the result, after deducting the claim allowed to the appellant company, the company was held liable to pay to the Government Rs. 34,70,226.50 P.
The award having been filed by the umpire in the Court of the, District Judge, Delhi and the Government of India having thereupon applied for a decree in term of the award, the company applied to the Court for setting aside the award urging several grounds for so doing.
The District Judge by an elaborate judgment declined to set aside the award.
He, however, held that the award suffered from an error apparent on the face of the award in respect of the appellant 's claim No. 111(a), and further held that the counter claims 11, IV, V and VI made by the Government were not covered by the reference, and consequently, the umpire had no jurisdiction to go into them.
Declining, however, to set aside the award, he remitted it for reconsideration of the aforesaid items and also for readjustment of the amount of costs in the evert of enhanced compensation being awarded to the company in respect of its claim No. 111(a).
Dissatisfied with the judgment of the court the company filed an appeal before the High Court.
The Union of India also filed certain coss objections.
The High Court heard the appeal and the cross objections together and by its aforesaid juggment dismissed both the anneal and the cross objections and upheld the judgment of the District Judge.
In support of the claim that the award was liable to be set aside, counsel for the company submitted the following six propositions for our acceptance : 1. that the contracts of sale entered into by the company were misconstrued by the umpire and such misconstruction appears on the face of the award: 2. that the umpire.
as also the High Court, failed to take into consideration several documents while deciding the scope of the sales; 286 3.
that in respect of claim No. VI and counter claim No. VI of the Government, the umpire acted beyond his jurisdiction as those question,,; did not fall within the scope of the reference; 4.
that the umpire did not act according to law but acted as a conciliator and based his award on mere conjectures and surmises; 5.
that his conclusion on ground rent awarded to the Government was based on no evidence; and 6.
that the costs awarded to the Government were altogether disproportionate.
Before we proceed to consider these propositions, it is necessary to ascertain the scope of, section 30 of the and the principles underlying that section.
The general rule in matters of arbitration awards is that where parties have agreed upon an arbitrator, thereby displacing a court of law for a domestic forum, they must accept the award as final for good or ill.
In such cases the discretion of the court either for remission or for setting aside the award will not be readily exercised and will be strictly confined to the specific grounds set out in sections 16 and 30 of the Act.
In Hodgkinson vs Fernie,(1) Williams, J. stated the principle as follows : "where a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law and fact .
The only exceptions to that rule are, cases where the award is the result of corruption or fraud, and one other, which though it is to be regretted, is now, I think, firmly established, viz., where the question of law necessarily arises on the face of the award, or upon some paper accompanying and forming part of, the award.
" This observation was recently cited with approval in Union of India vs Bungo Steel Furniture Pvt.
Ltd. (2) The principle is that the Court, while examining an award , will look at documents accompanying and forming part of the award.
Thus, if an arbitrator were to refer to the pleadings of the parties so as to incorporate them into the award, the Court can look at them.
In some cases, however, courts extended the principle and set aside the award on a finding that the contract, though only referred to but not incorporated into the award as part of it, had been misconstrued and such misconstruction had (1) (1857)(3)C.B.(N.S.)189, 202.
(2) [1967] 1 S.C.R.324.
287 been the basis of the award.
Thus, in Landauer vs Asser(1) the dispute between buyers and sellers of goods was as to who was entitled to certain sums paid upon a policy of insurance upon the goods.
This was referred to arbitration and the umpire made his award basing it on the construction he placed on the contract, namely, that as the parties to the contract were "by the terms thereof" principals, their interest and liability in insurance was defined to be the value of the invoice plus 5 per cent.
On an application to set aside the award, the Court of Appeal held that inasmuch as the umpire had referred to the contract and the terms thereof, it was justified in looking at the contract, and having done so, found that he had based his decision entirely upon the terms of the contract.
It also found that since the contract, if properly construed, did not justify the decision, the award was bad on the face of it and was liable to be set aside.
A similar view appears also to have been taken in F.R. Absalom Ltd. vs Great Western (London) Garden Village Society Ltd .
(2 ) where the award set out the relevant words and cl. 30 of the contract and also the conclusion of law on the meaning of those words.
Lord Russel said that since the award recited the contract and referred in terms to the provisions of cl. 30, thereby incorporating it into the award, and then stated the construction which the arbitrator placed upon that clause, the Court was entitled to look at that clause to ascertain if the construction placed by the arbitrator was erroneous.
The correctness of the decision in Landauer vs Asser(1) was challenged before the Privy Council in Chempsey Bhara & Co. vs Jivraj Balloo Spinning and Weaving Co. Ltd.(2) Lord Dune din,, however, did not expressly overrule it but rested content by observing that that decision was not binding on the Board.
But he formulated the principle thus : .LM15 " An error in law on the face of the award means, that you can find in the award or a document actually incorporated thereto, as for instance, a note appended by the arbitrator stating the reasons for his judgment, some legal proposition which is the basis of the award and which you can then say is erroneous.
It does not mean that if in a narrative a reference is made to a contention of one party that opens the door to seeing first what that contention is, and then going to the contract on which the parties ' rights depend to see if that contention is sound.
" (1) [1905](2) K.B. 184.
(2) (3) [1923] A.C.480.
288 The Privy Council upheld the award.
stating that it was impossible to say what was the mistake on the face of the award which the arbitrators had made as they had not tied themselves down to any legal principle which was unsound.
The mere fact that the court would have construed a document differently than the arbitrator would not induce the court to interfere unless the construction given by the arbitrator is such that it is against the well established principles of construction.
see Kelanton vs Duff Development Co.(1) I In an illuminating analysis of a large number of earlier decisions, including Landauer(2) and F. R. Absalom Ltd.(3) Diplock, L.J., in Giacomo Costa Fu Andrea vs British Italian Trading Co. Ltd. (4 ) recorded his conclusion thus "It seems to me, therefore, that, on the cases, there is none which compels us to hold that a mere reference to the contract in the award entitles us to look at the contract.
It may be that in particular cases a specific reference to a particular clause of a contract may incorporate the contract, or that clause of it, in the award.
I think that we are driven back to first principles in this matter, namely, that an award can only be set aside for error which is on its face.
It is true that an award can incorporate another document so as to entitle one to read that document as part of the award and, by reading them together, find an error on the face of the award.
" The question whether a contract or a clause of it is incorporated in the award is a question of construction of the award.
The test is, does the arbitrator come to a finding on the wording of the contract.
If he does, he can be said to have impliedly incorporated the contract or a clause in it whichever be the case.
But a mere general reference to the contract in the award is not to be held as incorporating it.
The principle of reading contracts or other documents into the award is not to be encouraged or extender.
(see Babu Ram vs Nanhemal & The rule thus is that as the parties choose their own arbitrator to be the judge in the dispute between them, they cannot, when the award is good on the face of it, object to the decision either upon the law or the facts.
Therefore.
even when an arbitrator commits a mistanke either in law or in fact in determining the matters referred to him, but such mistake does not appear on the face of the (1) [1] 1923 A.C.395 (2) [1905] 2 K.B.184 (3) (4) [1962]2 All E.R. 53, 62 (5) C. A. NO.
1 07 of 1966, Decided on 5 12 1968.
289 award or in a document appended to or incorporated in it so as to form part of it, the award will neither be remitted nor set aside notwithstanding the mistake.
In the light of the principle above stated, the first question calling for determination is, is there an error apparent on the award, in the sense that the umpire misconstrued the contracts of sale inasmuch as though those contracts were contained 'in sale notes as well as in several letters, he considered the sale notes only as containing the contracts of sale disregarding the corres pondence which had taken place between the company and the Director General, Disposals and his officers ? Such a question would undoubtedly be one of law.
But the disputes referred to the umpire contained disputes both of fact and law.
Ordinarily the decision of the umpire, even though it be on a question of law, would be binding on the parties.
The court would only interfere if the case falls within the exceptions mentioned by Williams, J. in Hodgkinson vs Fernie(1) and reaffirmed by Diplock L. J., in Giacomo Costa Fu Andrea ' vs British Italian Trading Co. Ltd.(2).
There were in all three separate sales to the appellant company,, which according to the respondents were incorporated in sale notes Nos. 160,.
161 and 197.
Before the sale note 160 was issued on July 11, 1946, it is a fact that the company had written a letter dated July 10, 1946 which was also endorsed by two officers of the Director General, Disposals.
The letter contained three clauses, the first of which stated that "M/s. Allen Berry will buy the Moran Vehicles Depot 'as is where is for Rs. 1,80,00,000/".
The two other clauses provided the manner and time of payment of the sale price.
But the letter commenced.
with the following words: "Pending detailed record of terms tomorrow the following are the broad heads of agreement, which will form the basis of sale of surplus vehicles.
" The next day, i.e., July 11, 1946, the Department issued sale note 160, which in clear terms stated that what was purchased were "all vehicles and trailers lying in Moran Depot", which meant that the vehicles sold were only those that were actually lying in that depot on July 11, 1946, and not those outside it or those borne on the records of that depot, as contended by the company.
It, however, appears from the judgment of the Trial Court (para 206) that on receipt of sale note 160, the company wrote a letter on July 11, 1946 in which it contended that "We have purchased the entire vehicle depot of Moran".
(1) ; ,202.
57) (2) [1962] 2 All ER 53, 68.
7SupCI/71 290 It appears that in view of this difference of opinion, a meeting ,of representatives of the parties, was held on July 23, 1946, the minutes of which, as recorded by the Assam Controller, U.S.A.S.S., read as follows: (2) (a) The vehicles and trailers sold to Messrs. Allen Berry and Co. Ltd., are deemed to, include all vehicles which were or should have been held in Moran Depot on the 10th July, also those which have 'been issued on a Memorandum Receipt as follows : (i) To the Americans, left behind by them in various camps and depots and not yet turned in by us.
(ii) Vehicles issued on Memorandum Receipt to military units assisting the U.S.A.S.S. Organisation.
(iii) Any surplus vehicles originally allotted to U.S.A.S.S. Units for operational purposes and now no longer required by them.
" On September 17, 1946, a secraphone message was sent from New Delhi to Calcutta which stated "We have sold U.S. Army surplus vehicles presumed to be borne on Moran list, that is those actually in Moran Vehicle Depot or those that were intended to be moved to that depot, which was meant to be parking depot for surplus U.S. vehicles in Assam area.
" On September 26 1946, the Director General, 'Disposals, wrote to the company that "The vehicles sold to you in Assam are those U.S. Army surplus.
vehicles actually in Moran Vehicle Depot or those that were intended to be moved to Moran Vehicle Depot.
Any mobile engineering equipment, such as mobile cranes, tracked tractors are, excluded from the sale to you.
" On December 10, 1946, the Controller issued a release order in respect of 1.
All vehicles and trailers lying in Moran Depot on 10th July 1946 including all United States Army Surplus Stores, excluding land and buildings lying within Moran Depot and transferred to the Government of India from the Government of the United States.
Vehicles in operational use in Calcutta and Assam as and when no longer required by the U.S.A.S.S. Organisation.
" 291 The question raised by counsel is that the umpire failed to consider all these documents while considering the scope and content of the contract of sale and relied on only sale note No. 160, dated July 11, 1946, that the contract was not contained in the said note 160 alone, and that therefore, he misconstrued the contract, and that that misconstruction, which is a point of law, is apparent on the face of the award, as it was made the very basis of the award.
The first three issues raised by the umpire were (1) whether the appellant was entitled to prove that any vehicles, stores etc.
other than those mentioned in the sale notes were sold to it; (2) whether the Government was bound by the clarifications, representation, explanations or assurances made or given by any officer or officers of the Department regarding the subjectmatter of the contracts of sale except those necessarily implicit in the sale notes; and (3) whether the Government sold any vehicles except those lying in Moran Depot on July 11, 1946, or those intended to be moved thereto.
The dispute between the parties, thus, clearly was that whereas the company claimed that the, sale was of all vehicles borne on the records of Moran Depot, irrespective of whether they were actually lying there on July 11., 1946 or not, the Government claimed that the company was entitled to those actually lying in the Depot.
According to the respondents, the contract of sale was to be found in the sale note, and therefore, any subsequent explanations or assurances given by any officer or officers of the Department could not vary or alter the terms of the contract.
These expanations and assurances were given, only to remove the misunderstanding of the company over the question of the scope and extent of the sale made to it.
The umpire set out part of the sale notes 160 and 197 in the award and then observed "the language used in these sale letters is to my mind perfectly clear, explicit and unambiguous and excludes the possibility of any vehicles, trailers or stores lying on the dates in question outside the locations specified in the sale letters having been included in the two sales.
The contention that they in fact include all vehicular stores in Assam in one case and in Bengal area in the other has been made in all seriousness and a good deal 292 of evidence both oral and documentary has been produced in support of or against such contention.
The point has also been argued at great length by learned counsel for the parties.
I have given the whole matter my most serious and earnest consideration and my view is that apart from the language of the two saledeeds ' being against such a contention, the evidence too considered as a whole does not support it.
Accordingly, I hold that the stores sold to the claimants in the case of Assam were those actually located in Moran Depot on July 10,1946 and in the case of Bengal those actually located in Jodhpur and other depots specified in the sale letter on July 31, 1946." He next held : "The alleged clarifications or representations made or explantions or assurances given by any officer or officers of the Disposals Department either verbally or in writing have been very carefully examined by me and I am of opinion that neither are they, considered as whole, capable of the interpretation sought to be put upon them by the claimants nor are the respondents bound by them.
They are not in accordance with law and do not amount to legal contracts binding the respondents.
" These passages clearly show that the umpire had considered, besides the sale notes, the oral and documentary evidence led by the parties as also the contentions urged on and as regards them by counsel for the company.
It is impossible, therefore, to uphold the contention that the various documents, i.e., the letter of the company dated July 10, 1946, 'the subsequent correspondence, minutes of the meetings which too place after the salenote 160 was issued etc. were not taken into consideration by the umpire while coming to his conclusion as to what actually was sold to the company.
The dispute, amongst other disputes, referred to the umpire and crystallized by him in the form of issues on the pleadings of the parties involved, as already stated, the question first as to what was sold, and secondly, arising out of that, the question whether besides the said sale notes 160 and 197, the subsequent clarifications or explanations were binding on the Government.
These were, no doubt, questions partly of fact and partly of law.
But questions both of fact and law were referred to the umpire and prima facie his findings on them would bind the parties unless, as explained earlier, the umpire has laid down any legal proposition, such as a construction which is made the basis of the award and is on the face of the award an error.
293 The point is, is this such a case ? True it is that this is not ,a case where a question of law is specifically referred to.
It is clearly a case falling in the category of cases, like Kalanton vs Du# Development Co. Ltd. (1) wherein deciding the questions referred to him the umpire has to decide a point of law.
In doing so, the umpire no doubt, laid down the legal propsition that the clarifications or assurances given subsequent to the dates of the said sale notes by an officer or officers of the department were not binding on the respondents nor could they affect the scope of the sales.
That answer the umpire, was entitled to give.
But the fact that he answered a legal point does not mean that he has incorporated into the award or made part of the award a document or documents, the construction of which, right or wrong, is the basis of the award.
The error, if any, in such a case cannot be said to be an error apparent on the face of the award entitling the court to consider the various documents placed in evidence before the umpire but not incorporated in the award so as to form part of it and then to make a search if they have been misconstrued by him.
This, in our understanding, is the correct principle emerging from the decisions which counsel placed before us.
In any event, this is not a case where the umpire, in the words of Lord Dunedin, "tied himself down to a legal proposition" which on the face of the award was unsound.
The award ,makes it clear in so many words that he took into.
account the entire evidence, including the documents relied on by counsel and then only came to the conclusion that it did not assist the company in its contention as to the scope of the sales.
Contentions 1 and 2 raised by Mr. Agarwal, therefore, cannot be upheld.
Contention No. 3 relates to 547 vehicles said ' to have been sold to the company under sale: note 197, dated August 2,/6, 1946.
There is no dispute that out of these vehicles the company removed 291 vehicles alleging that the delivery of the balance of 256 vehicles was withheld.
The company made a claim being claim No. VI for the price of these 256 undelivered vehicles.
The respondents contention was that the sale to the company was confined only to the U.S.A. Surplus Stores, that these vehicles did not fall within that category, but were Reverse Land Lease vehicles belonging to the Government of India under an agreement between the U.S.A. and India.
On these allegations the respondents laid counter claim No. VI claiming the price of the 291 vehicles admittedly removed by the company when they were lying in Jodhpur Depot, Calcutta.
The umpire found that the expression "Reverse Land Lease" related to the reciprocal aid articles referred to in the said agreement.
A reciprocal aid article, according to that agreement, (1) 294 meant an article transferred by the India Government to the U.S. Government under reciprocal aid under para 4 C of that agreement '.
The U.S.A. Government was deemed to have acquired as on September 2, 1945 full title over such articles except that such reciprocal aid articles incorporated into installations in India were deemed to have been returned to India Government from the date when the U.S.A. forces relinquished possession of such installations.
From the inventories produced before him, the umpire held that these 547 vehicles were incorporated into installations in India, and therefore, ownership in them vested in India Government on and after the U.S.A. forces relinquished possession of those installations.
They could not, therefore, be regarded ,is U.S. Surplus Stores which alone were and could be the subject matter of sale note 197.
Consequently, the company was not entitled to remove the said 291 vehicles which it did, much less could the company claim compensation for 256 vehicles which it alleged were not delivered to it.
In the result, the umpire allowed the Government 's counter claim No. VI, which was for the price of 291 vehicles unauthorisedly removed by the company from Jodhpur Depot.
The argument in connection with this part of the award was, firstly, that the findings of the umpire were vitiated as there was total lack of evidence on which they could be based, and secondly that in any event, the umpire had no jurisdiction to award compensation to the Government in respect of counterclaim No. VI.
The first part of the argument need not detain us as the finding that these vehicles formed part of reciprocal aid articles, the ownership in which vested in the Government of India and were therefore not U.S.A.S.S. was based on the agreement between the two Governments and the inventories produced before the umpire from which he could hold that they belonged to the Government of India from the date when the installations in which they were incorporated were relinquished by the U.S. forces, and that therefore, they could not form the subject matter of sale note 197 which related only to the U.S. Surplus St ores.
The second part of the argument, however, requires conside ration.
The question is whether the arbitration clause included.
a dispute relating to compensation in respect of the said 291 vehicles unauthorisedly removed by the company.
Cl. 13 of the General Conditions of Contract, quoted earlier, provides for reference to arbitration of all questions or disputes "arising under these conditions" or "in connection with this, contract".
Dr. Singhvi referred us to cl. 10 of these Conditions also but it is clear that it can in no sense apply to the dispute relating to, compensation.
But the words "arising under these conditions" ' 295 and "in connection.
with this contract" are undoubtedly wide and comprehensive.
it is, nonetheless, a question whether the dispute as to compensation on the ground of unauthorised appropriation of these vehicles by the company falls within cl. 13.
In Vidya Sagar Joshi vs Surinder Nath Gautam(1) the words "expenditure, in connection with election" used in section 77 of the Representation of the People Act, 1951 were construed to mean "having to do, with".
An arbitration clause wherein the words "in relation to or in connection with the contract" were construed not to contemplate a dispute raised by a contractor that he could avoid the contract on the ground that it was obtained by a fradulent misrepresentation.
(see Monro vs Bognor Urban District Coun cil(2).
But a claim for damages on the ground of negligence on.
the part of the defendant in re moving the plaintiff 's furniture against a clause for due diligence in removing it was held to fall, within the arbitration clause.
Woolf vs Collis Remo val Service (3) Counsel conceded that a dispute as to the interpretation of sale note 197 would fall under the arbitration clause.
If that is so, it must follow that the umpire was competent to decide whether the said 547 vehicles fell within the purview of the sale note or not.
If in determining that question he came to the conclusion that they did not, the obvious conclusion would be that the company was not entitled to take away 291 vehicles admittedly removed by it from the Depot.
If the company did that, would the question as to the return or of compensation in lieu of such vehicles, to which it was not entitled under the sale, be a question which arises out of or in connection with the contract ? Counsel went as far as to say that the umpire in deciding the company 's claim No. VI and the Government 's counter claim No. VI could decide that the company was not entitled to those vehicles, but could not take the next step either to direct the return of them or payment of compensation in lieu of those vehicles.
In our view, such an argument cannot be accepted.
The reason is that once it is found that he was competent to decide the dispute as to whether the said 547 vehicles were not the subject matter of the sale and 291 of them were removed unauthorisedly, he must, to do justice between the parties in respect of disputes referred to him, order the company either to return them or to pay compensation for them.
Since the first course was not possible after all these years, the second was the only and the obvious course.
The dispute raised by the respondents that 291 vehicles were not included in the sale was: co extensive with and connected with the dispute that the com (1) ; (3) [1947]2AllE.R.260.
(2) [1915] (3) K.B.167.
296 pany was bound to return them if it was found that they were not covered by the sale.
On this reasoning it is not possible to say that the umpire went beyond his jurisdiction either in rejecting the company 's claim No. VI or in accepting the corresponding counter claim No. VI of the respondents.
Contention 4 relates to 600 vehicles which had been taken out of Moran Depot for operational purposes, but which the company claimed were part of the sale under sale note 160.
The umpire held (I that those vehicles having been taken out of the Depot for operational purposes did not fall within the sale, and (2) in the alternative, that the evidence disclosed that a substantial number of vehicles in operational use were delivered to the company even though strictly speaking it was not entitled to them as they were not lying in the, Depot on.
July 10, 1946.
The umpire further held that if some of them per chance were not handed over, the respondents had sufficiently compensated the company by handing over several non operational vehicles from outside the depot to which the company was not entitled.
Counsel argued that this part of the award was vague and without any evidence to support it, and therefore, the umpire behaved in this respect more like aconcilliator than as an arbitrator.
Having held that sale note 160 covered only those vehicles which were actually lying in Moran Depot on July 10, 1946, it was not incumbent on the umpire to decide the number of operational vehicles outside the depot.
Consequently, if he was satisfied that even though the company was not entitled to the said 600 vehicles claimed by it, yet the authorities had delivered a substantial number of them, and for any deficiency, had also delivered non operational vehicles, there would be no purpose in going into the details of vehicles delivered to the company.
Even though, as the judgment of the Trial Court discloses (para 223), there was evidence, both oral and documentary, that the company had collected a number of vehicles lying at places outside the Depot, and the vehicles so collected were recorded by the company, yet the company had withheld the production of those records.
In view of these facts it is impossible to say that the umpire had acted without evidence, or that he behaved in the manner of a conciliator, or gave findings on conjectures and surmises.
Our interference was invited next on the question of ground rent on the ground that the amount of such rent was fixed by the umpire without any evidence.
There is hardly any substance in this contention.
The sites, on which the various depots were situated, were requisitioned by the Government under the 297 Defence of India Rules.
The Government had a statutory obligation, therefore, to pay to the owners of those sites compensation as provided by those Rules.
Under the contracts of sale the company was, bound to pay to the Government ground rent and other charges which the Government in its turn was liable to pay.
It is, therefore, not correct to say that the umpire could award only that amount which the Government had actually paid and that the umpire should, therefore, have taken an account from the Government.
It was never the case of the company that the Government had claimed ground rent higher than the compensation it was liable to pay.
The last objection was that the amount of costs awarded by the umpire to the respondents was disproportionate.
It appears from the award that the umpire fixed the amount of costs after considering the statements of expenses incurred by the parties for the hearing before him tendered by the respective counsel for the parties.
Considering the huge amounts claimed by the parties, the volume of evidence, both oral and documentary, adduced by them, the number of days occupied in recording that evidence and in arguing the case, we are not prepared to say that the discretion which the umpire.
exercised in the matter of costs was exercised in breach of any legal provision or unreasonably which can justify the Court 's intervention.
In our view, none of the six contentions urged by counsel can be upheld.
The result is that the appeal fails and is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | The Director General of Disposals, through correspondence and sale notes, sold to the appellant company, United States surplus was materials consisting of vehicles and other stores.
Disputes having arisen between the parties, both as regards the contents of and the quantity of the vehicles deliverable under the contracts, they were referred to arbitration as per cl. 13 of the general conditions of the contract between the parties.
The disputes consisted of claims and counter claims and the umpire after deducting the amount of one claim allowed to the appellant, held that the appellant was liable to pay to the respondent Rs. 34,70,226.50 and costs amounting to Rs. 5,40,544,00.
The award was filed in the District Judge 's Court and the appellant applied for having it set aside on various grounds.
The Court held that with respect to certain matters claimed by the respondent the umpire had no jurisdiction and remitted the award for reconsideration of those items and also for readjustment of the amount of costs.
The High Court confirmed the judgment of the District Judge.
In appeal to this Court, it was contended that the award was liable to be set aside, because : (1) the contracts of sale were misconstrued and the error appeared on the face of the award; (2) several documents bearing on the scope of the sales were not considered; (3) the umpire went beyond his jurisdiction when he awarded compensation to the respondent because the appellant removed certain vehicles; (4) that the umpire acted as a conciliator deciding matters on conjecture; (5) that the umpire fixed ground rent payable by the appellants without any evidence; and (6) that the costs awarded were totally disproportionate.
HELD : (1) When parties choose their own arbitrator to be the judge in the dispute between them, they cannot, when the award is good on the face of it, object to the decision either upon the law or the facts.
Therefore, even when an arbitrator commits a mistake either in law or in fact in determining the matters referred to him.
but such mistake does not appear on the face of the award or in a document appended to or incorporated in it so as to form part of it, the award will neither be remitted nor set aside.
Whether the contract or a clause of it is incorporated in award is a question of construction of the award.
The test is, did the arbitrator corn, ' to a finding on the wording of the contract.
If be did, he can be said to have impliedly incorporated the contract or the relevant clause but a mere general reference to the contract in the award is not to be held as incorporating it.
[288 F H; 289 A] Union of India vs Bungo Steel Furniture Pvt. Ltd. ; , followed.
283 Champsey Bhara & Co. vs Jivraj Balloo Spinning & Weaving Co. Ltd. , applied.
Kelanton vs Duff Development Co. [1923] A.% ' . 395 and Giacomo Costa Fu Andrea vs British Italian Trading Co. Ltd. , 62.
referred to.
2(a) The dispute in the present case being as to what was sold and as to whether besides the sale notes, the subsequent clarifications or.
explanations given by various officers of the respondent formed part of the contract and were binding on the respondent, and both the questions having been referred to arbitration, the umpires findings on them would bind the parties unless he laid down any legal proposition such as a construction which is made the basis of the award and is on the face of the award erroneous.
The award showed that the umpire had considered besides the sale notes the oral and documentary evidence led by the parties as also the contentions urged by counsel.
It could not, therefore, be contended that the several documents were not taken into consideration by the umpire.
[291 E F; 292 E H] (b) The umpire laid down the legal proposition that the clarifications or assurances given subsequent to the dates of the sale notes were not binding on the respondent and could not affect the scope of the sales; but the fact that he answered a legal point, which he had to decide while deciding the questions referred to him, did not mean that he incorporated into the award or made part of it a document or documents, the construction of which was the basis of the award.
If there was an error in such a case it could not be said to an error appearent on the face of the award entitling the court to consider the various documents placed before the umpire but not incorporated in the award so as to form part of it, and then to make a search if they had been misconstrued by him.
[293 B E] (3) Once it was found that it was competent for the umpire to decide that the appellant company was not entitled to keep certain vehicles which it had removed, he must, to do justice between the parties, order the appellant either to return them or to pay compensation for them.
Since the first course was not possible because of lapse of time the second was the only obvious course.
Clause 13 of the general conditions provides for reference to arbitration of all questions or disputes arising, under these conditions or in connection with this co tract, and these words are wide and comprehensive.
Therefore, the umpire did not go beyond his jurisdiction in accepting the respondent 's counter claim for compensation.
[295 D E] (4) Merely because the umpire held that even though the appellant was not entitled to some vehicles claimed by it, yet the authorities had delivered a substantial number of them.
without going into details, it could not be said that he bad acted without evidence or that he behaved in the matter as a conciliator, or gave findings on conjuncture and surmises, especially when the appellant withheld relevant evidence which was in its possession.
[296 E F] (5) Under the contracts of the sale.
the appellant was bound to pay to the respondent ground rent and other charges which the respondent in its turn was liable to pay the owners; and since it was not the appellant 's case that the respondent had claimed a higher amount there was no sub stance in the contention that the arbitrator fixed the ground rent without any evidence.
[297 A C] 284 (6) Considering the huge amounts claimed by the parties, the volume of evidence, adduced and the number of days occupied in recording that evidence and in arguing the case, it could not be said that the discretion of the umpire exercised in the matter of costs was exercised in breach of any legal provision or unreasonably.
[297 C D]
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Appeal No. 658 of 1967.
Appeal from the judgment and order dated June 27, 1966 of the Assam and Nagaland High Court in Civil Rule No. 296 of 1964.
Naunit Lal, for the appellants.
Sarjoo Prasad and section N. Prasad.
for the respondent.
307 The Judgment of the Court was delivered by shah, C. J.
On October 24, 1957 Rameshwar Agarwala hereinafter called the respondent applied to the Deputy Com missioner, Lakhimpur, for settlement of a tea garden for "special cultivation of tea".
By order dated March 11, 1964 the Government of Assam permitted settlement of the tea garden for special tea cultivation on payment of Rs . 3,86,008/ as premium.
The respondent failed to pay the amount demanded.
The State of Assam then put up the tea garden for auction.
The respondent moved a petition in the High Court of Assam for an order declaring that in fixing the amount of the premium at Rs. 3,86,008/the State acted illegally, and that the order was void and unenforceable at law because in fixing the amount of the premium the State acted without jurisdiction and the order directing auction of the tea garden for not depositing the amount demanded was also illegal.
The High Court, upheld the contention and ordered the State of Assam not to, give effect to the order dated March 31, 1964 calling upon the respondent to pay the amount due within two months of the order and the order dated November 26, 1964 directing that the tea garden be put up for auction.
With certificate granted by the High Court, the State of Assam has appealed .to this Court.
The tea garden belonged to the State of Assam.
The Govern ment of Assam in the absence of any binding statutory provision, could settle the tea garden on such commercial terms it could reasonably obtain.
The respondent applied to the Deputy Commissioner for settlement of the tea garden and requesting the State Government for early fixation of the amount of premium.
When the premium was fixed by the Government the respondent protested, contending that the action of the State was illegal Before the High Court it was contended by the Respondent that the power of the State Government to fix the premium for which it could lease the tea garden was restricted by Rule 40 framed under the Assam, Land Revenue Regulations.
The Rule reads "In addition to the land revenue payable under rule 17 and value of the timber assessed under rule 37, an applicant to whom a lease for special cultivation is granted shall be liable to pay premium.
The rate of premium shall be fixed by the State Government from time to time for each locality.
The reasons which persuaded the High to upheld the plea, raised by the respondent may be set out in their own words : "The only power which the Government has got, is to fix the rate of premium under Rule 40 of the Rules 308 under the Land Revenue Regulation and the question for us to consider is whether the order of the Government fixing the premium for settlement of this land for special cultivation is an order in conformity with Rule 40.
In our opinion, what Rule 40 provides is to confer upon the Government power to fix the rate of premium in every case which shall be payable for the settlement and it is only the Deputy Commissioner that is authorised to settle the land.
The whole purpose, of Rule 40 is to confer power on the Government to fix the rate of premium which will be valid for a particular locality and that the Deputy Commissioner has to make the settlement.
He is given the power to realise the premium fixed by the Government from time to time and to see that no document of lease is issued before the premium has been paid by the intending holder.
But Rule 40 does empower, in our opinion, the State Government to fix the amount of premium in the case of a particular settlement in a particular locality. . . the rate of premium for a particular locality and the Legislature when framing the rules never intended that the Government should be empowered to fixing the total amount of premium payable by the intending holder.
In our opinion, therefore, the order passed by the Government directing the authorities to offer the land for settlement in case the petitioners pay Rs. 3,86,000/ is not in conformity with Rule 40 and this order cannot be given effect to.
" The expression "locality" is not defined in the Act or in the Rules.
We see no warrant for the assumption made by the High Court that in settling the premium to be fixed in respect of its own property, the Government is bound to fix the premium generally in respect of a region.
The Government is by the Act or the Rules not disqualified from fixing the premium to be paid in respect of an individual tea garden.
In the absence of any indication to the contrary a tea garden may in our judgment be appropriately regarded as a locality within the meaning of Rule 40.
The power to settle a tea garden on payment of land revenue, value of the timber and premium is to be exercised according to the Rules.
The rate of premium may be fixed by the State Government according to its commercial value.
In the absence of any restriction imposed upon the State Government requiring that a general rate shall be fixed covering a specified area larger 309 than a tea garden there is nothing which prohibits the State Government from fixing the rate of premium having regard to the commercial value of the tea garden.
In the present case the Sub Divisional Officer reported that the price of the land of the Dirpai tea garden be valued at Rs.1 500/ per bigha and on that basis the State Government computed the premium to be paid in respect of the entire Jokai Tea Garden.
Fixation of a rate of Rs. 5001 per bigha in respect of the entire area of the tea garden may be regarded as a premium fixed for the locality of the tea garden.
The matter rested entirely in contract between the Respondent and the State Government.
There was an offer by the respondent for settlement of the tea garden.
He agreed to pay the land revenue payable under r. 17.
He also agreed to pay the value of the timber assessed under r. 37.
For settlement of the tea garden for special cultivation the respondent was also liable to pay premium.
The quantum of liability to pay land revenue was governed by r. 17 and value of the timber was governed by r. 37.
The liability to pay premium had to be fixed by the State Government.
In the absence of any restriction placed by the Rules upon the power of the St ate Government, we do not think that the High Court had any jurisdiction to compel the State to enter into a contract to settle the tea garden upon the respondent on payment of premium after determining a general rate for a region larger than the tea garden.
The High Court was in error in setting aside the order passed by the Government of Assam and in declaring that the offer to settle the land of the Dirpai Tea Garden on payment of Rs. 3,86,008/ was not in conformity with r. 40.
The High Court also erred in directing that auction of the land for nonpayment of the premium shall be set aside.
The appeal is allowed and the petition filed by the respondent will be dismissed.
The respondent will pay the costs in this Court and in the High Court.
R.K.P.S. Appeal allowed.
| IN-Abs | The first respondent applied to the Deputy Commissioner, Lakhimpur for settlement of a Tea Garden for "special cultivation of tea".
In March, 1964 the Government of Assam permitted the settlement on payment of Rs. 3.86 lakhs as premium.
Upon the respondent failing to make payment of the amount, the State Government directed the auction of the tea garden.
The first respondent thereafter moved a petition in the High Court for a declaration inter alia that the State Government had acted illegally in fixing the amount of premium.
The High Court allowed the petition holding that the order fixing the premium was not in conformity with rule 40 framed under the Assam Land Revenue Regulations which required the State Government to fix the rate of premium for a particular locality; it did not empower the Government to fix the premium payable by an intending holder in a particular case.
On appeal to this Court, HELD : The High Court was in error in setting aside the order passed by the Government of Assam and in declaring that the offer to settle the tea garden on payment of the amount specified Rs. 3,86,000 was not in conformity with rule 40.
There was no warrant for the assumption made by the _High Court that in settling the premium to be fixed in respect of its own property, the Government is bound to fix the premium generally in respect of a region.
The Government is by the Act or the Rules not disqualified from fixing the premium to be paid in respect of an individual tea garden.
In the absence of any indication to the contrary a tea garden may appropriately be regarded as a locality within the meaning of Rule 40.
The rate of premium may be fixed by the State Government acccording to its commercial value.
|
Appeal No. 595 of 1967.
Appeal from the judgment and order dated July 28, 1966, of the Assam and Nagaland High Court in Civil Rule No. 242 of 1964.
Naunit Lal, for the appellants.
D. N. Mukherjee, for the respondent.
299 The Judgment of the Court was delivered by Shah, C.J.
The Divisional Forest Officer, Kamrup Division, Assam invited tenders for the purchase of monopoly rights to quarry stone from certain areas, including Harengi Stone Quarry Mahal, for the period July 1, 1963 to June 30, 1964.
Mool Chand Sarougi hereinafter called 'the respondent ' submitted a tender accompanied by the requisite deposit of Rs. 100/ as earnest money, and offered the rate of Rs. 5.25 per rupee of royalty.
The tender, submitted by the respondent was accepted and for the minimum quantity of 1,25,000 c. ft. of stone allotted to the respondent out of the quarry he was to pay Rs. 31,250/ .
Intimation of acceptance of the tender was given to the respondent on July 13, 1963.
One Baputi Ram, a member of a scheduled tribe, appealed ' against the order of the Divisional Forest Officer accepting the, tender, to the Government of Assam and obtained a stay order.
After about three months he declined to prosecute the appeal and ' his appeal was dismissed.
The respondent then declined to, accept the settlement of the quarry.
The Divisional Forest Officer invited fresh tenders.
The offers made were not however accepted and tenders were invited again.
On January 10, 1964 a settlement was made for a minimum quantity of 50,000 c. ft. for the period from January 25, 1964 to June 30, 1964 for Rs. 10,000/ The Divisional Forest Officer, thereafter, sought to recover the amount of Rs. 31,250/ for which the tender of the respondent was accepted as arrears of land revenue in the manner provided by section 75 of the Assam Forest Regulation VII of 1891.
The respondent then moved a petition in the High Court of Assam for an order quashing the proceeding for recovery of the amount demanded.
The High Court held that the amount claimed was, not recoverable under the provisions of the Assam Forest Regulation, VII of 1891 and passed an order quashing the proceeding for recovery and issued a mandamus to the Divisional Forest Officer, Kamrup Division not to proceed with the recovery.
The State of Assam has appealed to this Court with certificate granted by the High Court.
Section 75 of the Assam Forest Regulation VII of 1891 pro vides : "All money, other than fines, payable to Crown under this Regulation, or under any rule made thereunder, or on account of the price of any forest produce, or of expenses incurred in the execution of this Regulation 300 in respect of any forest produce, may, if not paid when due, be recovered under the law for the time, being in force as if it were an arrear of land revenue.
" The amount claimed to be due from the respondent is not on account of the price of any forest produce, or of expenses incurred in the execution for recovery of any forest produce.
The amount is also not due in the execution of the Regulation.
So far there is common ground.
It was claimed, however, that the amount was due under rule 10 promulgated in exercise of power under the Regulation and on that account it was recoverable as an arrear of land revnue.
Rule 10 provides "No lease for any fixed period giving the right of removing India rubber, cane, kutcha or cutch, lac, agar, ivory, or any other forests produce shall be given otherwise than in accordance with the general or special orders of the Conservator who is empowered to authorise sales in respect of such leases, by auction, tender or any other method at such rates as he may decide in his discretion.
" The Rule in our judgment does not apply to recovery of the amount alleged to be due for failure to carry out the obligations ,of the tender by proceedings under the Assam Forest Regulation 1891.
It is again difficult to hold that stone is forest produce within the meaning of the Act.
In any event the Rule does not give rise to any liability to pay a sum of money.
It merely imposes a limitation upon the power of the officers of the Forest Department to grant leases in respect of certain forest produce.
Ile lease may not be granted except in accordance with the general or special orders of the Conservator who alone As empowered to authorise a sale in respect of such a lease.
It is a rule relating to the exercise of power to grant leases.
The High Court was, in our judgment, right in observing that the amount of damages for breach of the terms of the sale notice is not an amount due under the Regulation, or rule 10 made thereunder.
The appeal accordingly fails and is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | The Divisional Forest Officer Kamrup Division Assam invited tenders for the purchase of monopoly rights to quarry stone for the period July 1, 1963 to June 30, 1964.
The tender submitted by the respondent was accepted and for the minimum quantity of 1,25,000 c.ft. of stone allotted to the res pondent he was to pay Rs. 31,250/ On appeal being filed against the order accepting the tender the Government of Assam granted stay of the order.
When three months later the appeal was dismissed for non prosecution the respondent declined to accept settlement of the quarry.
Thereafter tenders had to be invited again and it was only on January 10, 1964 that a settlement was made for a minimum quantity of 5000 c.ft.
for the period from January 25, 1964 to June 30, 1964 for Rs. 10,000.
The Divisional Forest Officer then sought to recover the amount of Rs. 31,250/ for which the tender of the respondent was accepted as arrears of land revenue in the manner provided by section 75 of the Assam Forest Regulation VII of 1891.
The respondent moved a petition in the High Court for an order quashing the proceeding for recovery of the amount demanded.
The High Court allowed the petition.
holding that the amount claimed was not recoverable under the aforesaid Regulation.
The State of Assam appealed to this Court with certificate.
It was conceded that the amount was not 'recoverable under section 75 of the Regulation but reliance was placed on Rule 10 of the rules made under the Regulation, HELD The appeal must fail.
Rule 10 does not apply to recovery of the amount alleged to be due for failure to carry out the obligations of the tender by proceedings under the Assam Forest Regulation 1891.
It is again difficult to hold that 'stone ' is forest produce within the meaning of the Act.
In any event the Rule does not give rise to any liability to pay a sum of money.
It merely imposes a limitation upon the power of the officers of the Forest Department to grant leases in respect of certain forest produce.
The lease may not be granted except in accordance with the general or special order of the conservator who alone is empowered to authorise sale in respect of such a lease.
[300 E F]
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Appeal No. 2433 of 1966.
Appeal from the judgment and decree dated August 2, 1965 of the Bombay High Court, Nagpur Bench in Appeal No. 113 of 1959 from original decree.
V. section Desai, V. N. Swamy, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the appellants.
M. N. Phadke and A. G. Ratnaparkhi, for the respondents.
The Judgment of the Court was delivered by Shah, C.J.
Dawalatshah and Ranwirshah sons of Pratapshah instituted an action in the Court of the Additional District Judge Chanda, for a decree for possession of property immovable (including the Zamindari of Dhanora) and movable specified in the Schedules annexed to the plaint, and for an order for payment of mesne profits and also for recovery of the amount of compensation in respect of certain lands received by the defendants from the Government of Madhya Pradesh and for an order declaring 326 their right to receive the balance of compensation remaining to be paid.
The plaintiffs relied upon the following genealogy Gangashah Niru Bhakta Sakru Kajur Raju Thakur Thakur Thakur ThakurThakur Sitaram Tanba Chatturshah Thakur Thakur (dead) Nilkanthshah Pratapshah Dawaltshah Ranwirshab Gulab Lallshah (Platff (Platff.
Shah dead) No. 1) No. 2) (dead) Hanmantrao Amarshah Basu Chandarshah Karanshah Niranshah Died Dec. 9, (dead) (dead) 1950) Diwakarrao (Died Sept., 8,1932) Ballarshah Karansbah Dayaram Indersbah (Deft.
No. 1) (Deft.
No. 2) Govinda Budha Rama Laxman (dead,) The plaintiffs claimed that the property in suit originally belonged to Gangashah.
Gangashah had five sons: Hiru, Bhakta, Sakru, Kajur and Raju.
The branches of Sakru and Kajur became extinct a long time ago.
The branch of Hiru (who was 327 the eldest among the five sons of Gangashah) because extinct with the death of Amarshah on December 6, 1950.
The plaintiffs claimed the Zamindari held by Amarshah relying upon the rule of primogeniture, and the other estate of Amarshah as devisees under the will of Amarshah executed on December 3, 1950.
They submitted that the Dhanora Zamindari was granted to Sitaram ancestor of Amarshah as an impartible estate, devolving by the rule of primogeniture; that the Zamindari on that account devolved on the death of Amarshah upon Pratapshah and that on the death of Pratapshah and Zamindari devolved upon the first plaintiff.
The plaintiffs also claimed that the other property including Malguzari lands devolved upon them under a will executed on December 3, 1950 whereby Amarshah devised his estate in their favour.
Accordingly the first plaintiff claimed that he was entitled to the Zamindari on the death of Pratapshah on January 27, 1951 and the plaintiffs claimed the other estate of Amarshah as devisees under his will.
The plaintiffs submitted that Dayaram the first defendant took wrongful possession of the Zamindari and other property, movable and immovable of Amarshah.
The defendants by their written statement maintained that the genealogical table set up by the plaintiffs was incorrect, that by the order of the Governor of Madhya Pradesh dated November 9, 1951, the Zamindari was conferred upon the 1st defendant Dayaram as he was found suitable to hold the, Zamindari and the decision of the Governor was binding upon the plaintiffs; that the decision of the Compensation Officer regarding Malguzari lands which vested in consequence of the enactment of the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals Alienated Lands) Act 1 of 1951, had become binding and conclusive against the plaintiffs because no suit challenging the deci sion was instituted within two months from the date thereof and the plaintiffs were on that account not entitled to claim the compensation paid or payable in respect of the Malguzari lands; that Amarshah did not execute the will set up by the plaintiffs; and that Amarshah had made a will dated December 8, 1950 under which his estate was devised in favour of the defendants.
The Trial Court held that the Dhanora Zamindari was impar tible and was governed by the rule of primogeniture and Pratapshah father of the plaintiffs being the eldest member of the seniormost branch from among the descendants of the common ancestor Gangashah was entitled to the Zamindari; that the plaintiffs were entitled to receive compensation in respect of the Malguzari lands and the decision of the Compensation Officer did not operate to deprive the plaintiff of the right to those lands or compensation payable in respect thereof; that the will set up by the plaintiffs 328 dated December 3, 1950 was genuine and the plaintiffs were under the will entitled to the estate devised in their favour by Amarshah; that the will dated December 8, 1950, set up by the defendants was "a fabricated will" and conferred no right or title upon the defendants; and that the genealogical table set up by the plaintiffs represented the true relationship between the descendants of Gangashah.
In appeal by the defendants, the High Court of Bombay con firmed the decree of the Trial Court with a slight modification.
The High Court held that the genealogical table set up by the plaintiffs was correct, that according to the custom governing succession Dhanora Zamindari devolved upon Pratapshah on the death of Amarshah, and on the death of Pratapshah the first plaintiff became entitled to the Zamindari, that the order of the Governor recognising Dayaram as Zamindar was not binding and conclusive, for it was not shown that in making the order the Governor had acted in exercise of the power conferred by the Chanda Patent; that the order was contrary to the customs and the law governing the Zamindari; that the decision of the Governor did not oust the jurisdiction of the the Civil Court; that the will dated December 8, 1950 set up by the defendants was not genuine and the will set up by the plaintiffs dated December 3, 1950, was genuine; and that the plaintiffs ' suit with regard to Malguzart lands was not barred by the decision of the Compensation Officer.
The High Court accordingly confirmed the decree passed by the Trial Court in respect of the Zamindari replying upon the rule of inheritance incorporated in the Wazibul Arz of the Chanda District and by ' succession under the will dated December 3, 1950 in respect of the other property except as to certain occupancy lands held by Amarshah.
With certificate granted by the High Court the defendants have appealed to this Court.
Certain concurrent findings on which not much argument was advanced at the Bar may first be set out.
The High Court agreeing with the Trial Court on appreciation of evidence held that the genealogy set up by the plaintiffs represented the true relationship between the parties.
Again the High Court agreeing with the Trial Court held that the will dated December 3, 1950 set up by the plaintiffs was genuine while the will dated December 8, 1950 set up by the defendants was not genuine.
The argument that the High Court did not give due weight to certain important circumstances in reaching their conclusion relating to the will set up by the plaintiff is without substance.
The circumstances relied upon are that the writing instrument with which the body of the will was written and the writing instrument with which 329 Amarshah, it was claimed, signed or executed the will were different, that the will was not registered, that the appearance of the will was suspicious, that the will was unnatural because it devised the estate in favour of the plaintiffs after giving a life interest in favour of the testator 's widow Ratnabai, that the will had not been produced before the revenue authorities and before the Com pensation Officer when disputes in relation to the estate of Amarshah were pending before those authorities, and that it was produced for the first time nearly seven years after the death of Amarshah, and that the scribe who wrote the will did not belong to the village to which Amarshah belonged.
The Trial Court and the High Court have reached the conclusion that on the circumstances no suspicion as to the genuineness of the will dated December, 1950 arose.
It may be noticed that the plaintiffs were, at the date of their father 's (Pratapshah 's) death minors, and soon after Pratapshah 's death, their mother abandoned them and re married.
Thereafter no one a tended to the pending litigation.
Failure to produce the will before the revenue authorities was therefore not a circumstance in the view of the High Court, which militated against the genuineness of the will.
In the view of the Courts absence of registration, appearance of the will, the contents thereof, the dispositions, thereunder, and the fact that the writer of the will belonged to another village did not in the circumstances of the case give rise to any suspicion.
We do not think that sitting in appeal we would be justified in interfering with the conclusion recorded by the Trial Court and confirmed by the High Court on what is essentially a conclusion on a question of fact.
The will set up by the defendants is not proved to be a genuine will executed by Awarshah.
This again is a concurrent finding of the two Courts and must be accepted in this Court.
No, argument has been advanced ' to pursuade us to take a different view.
The rights of the parties must be adjudged in the light of these findings.
The dispute between the parties relates to three set of properties (a) Dhanora Zamindari (b) Malguzari lands; (c) Occupancy lands and movables.
The ancestors of the parties held an extensive Zamindari in the Chanda District.
After the advent of the British rule, in that region, the revenue authorities commenced settlement operations.
An inquiry was held by the Settlement Officer in connection with the lands held by the family of the parties and statements of some 330 members were recorded.
Chattarshah s/o Kajur stated that the Zamindari of Dhanora was standing in the name of his cousin Sitaram and that all the members of the family were joint and maintained themselves out of the income from the Zamindari.
In his statement Sakru admitted that the rule of primogeniture prevailed in the family.
He stated that Hiru was his eldest brother and Sitaram was the son of Hiru and the Zamindari was recorded in the name of Sitaram according to Awwal Haqq i.e. rule of primogeniture from ancient times, even though he was senior in age, and that there was no quarrel between him and Sitaram and that he and Sitaram were living jointly and were taking the income from the Zamindari.
The Settlement Officer made an order on November 2, 1867 that the "Zamindari is of ancient tenure and the present Zamindar Sitaram Thakur has proved his right to be Zamindar.
Subject to the conditions to be embodied in patent of proprietary right.
I confer proprietary right in the Zamindari of Dhanora on Sitaram Thakur".
The Settlement Officer observed that conferment of proprietary rights was subject to conditions to be embodied in a patent of proprietary rights.
It may reasonably be inferred that a formal grant was made in favour of Sitaram.
The form of the grant which is known as "Chanda Patent" is reproduced in Aitchison 's "Collection of Treaties, Engagements and Sanads" Vol.
II, pp. 573 574.
Under the Chanda Patent it :was declared that the tenure shall be indivisible, and non transferable (save to to the nearest male heir the transfer in such case being subject to the approval of the Chief Commissioner) the land shall be held by one person, the Zamindar or Zamindarin for the time being and shall be held on conditions of (i) loyalty (ii) good police administration and (iii) improvement and cultivation of the estate.
Clauses V, VI, VII of the grant relating to succession to the Zamindari held under the Patent : "V. Subject to the provisions contained in Clause VI, the order of succession shall be as under : On the death of the Zamindar, the estates shall devolve upon his eldest son.
In default of a son, and when adoption has not taken place, the succession should preferably devolve on the nearest male kinsman, the widow receiving a suitable Maintenance.
In the event of the first in order of succession being, in the opinion of the local Government, unfit to carry out the conditions of Clause IV, the Zamindaree 'shall devolve upon the nearest heir who possesses the required qualification.
331 VII.
The Zamindar, in the case of gross misconduct, shall be liable to removal by the local Government; and if such removal be ordered, the succession shall take place as if the Zamindar removed had died.
" Tenure of the grant is entered in the Wajibul arz.
The relevant recitals in the Wajibul arz are as follows PART 1 Rights and liabilities of Zamindar in relation to Government.
(1) Watan Zamindar 's Watan is not partible and it cannot be given to anyone other than quite close (the nearest), male heir.
Changes taking place in this way should have sanction of the Governor in Council.
The Zamindari shall be in the name of only one person and the Zamindari has been granted to the Zamindar in possession at present on the conditions of this remaining loyal to the Government, managing his estate properly and improving the cultivation.
(2) Heirs On the death of Zamindar the estate shall devolve upon his eldest son.
If there is no legitimate or adopted son, it shall devolve upon a very close (the nearest) male relative.
If there arises a dispute regarding right of inheritance, the Governor in Council will decide it in accordance, with the custom in that family.
If the Governor in Council finds that the first heir is unable to abide by the conditions stated in BAB (clause).
the Zamindari shall be granted to a quite close (the nearest) male heir possessing the necessary qualifications.
(3) Dispossessing the Zamindar and forfeiting his rights.
Governor in Council may dispossess the Zamindar on account of his behaviour and bad administration.
Such dispossession may be for a few days or permanent.
If it is for a few days, the Deputy Commissioner will manage the Zamindari on behalf of the Zamindar and if the order of dispossession is permanent, the Zamindar shall so to say be deemed to have died and the heir will get the right.
" The entries in the Wajibul arz substantially reproduce the terms of the Chanda Patent as set out in Vol.
II of Aitchison 's "Collection of Treaties, Engagements and Sanads".
One Major C. B. Lucie Smith made a report relating to the Land Revenue settlement of the Chanda District, Central Pro vinces, 1869.
At pp.
179 to 180 Major Lucie Smith has referred to the Zamindarees of the Chanda District.
He has stated under the head "Zamindarees".
332 "The Zamindarees were settled by me; and in order to explain the principles of settlement adopted if will be necessary to touch first upon the questions of tenure and history.
The weight of testimony goes to show that the Zamindars are the descendants of men on whom were conferred tracts of country, more or less wild with the object of their being brought under cultivation and order maintained.
Naturally, .
while, the law was weak and its administrators distant the Zamindar, as the lord on the spot, exercised large powers but powers apparently never recognised by either the Gand or the Maratta Government.
He was undoubtedly regarded as a noble, bound to furnish a small contingent when required by his sovereign ; but there is nothing to warrant to the supposition that he possessed an absolute right in the soil; indeed, as far as my experience goes, such a right is foreign to the ideas of the races of this part of India.
The rulers of the day evidently made and unmade Zamindars at their pleasure;. . .
Under these circumstances it appeared that the Chanda Chiefs, though the Nobles of the Country, possessed no absolute rights in the soil, and that it rested with Government to confer it; and in conferring it, to prescribe such conditions as might be deemed fitting.
A scheme of conditions to be embodied in the, patent of proprietary right, and in the administration paper of the Zamindarees, was therefore drawn up, based upon the usages actually existing from ancient times; and, with one exception, the proposed arrangements were sanctioned in their entirety by the Government of India, who directed that they were to be taken as a general model for those to be applied to the Zamindarees of the Bala ghat district and to the non feudatory Zamindarees of Chutteesgurh.
The provision not approved as that on the death of a Zamindar, the estate should in default of a son, devolve upon his widow.
This code of succession has obtained among the Chanda Chiefs from time immemorial, and is the rule not only among them but among all classes of landholders in the district.
It suits especially the character of the Gond women. .
Government, however, after weighing the arguments urged ', decided that it was conducive to the interests of 333 the Zamindarees that the, succession should devolve only upon a male member of the family, and the clause was altered accordingly.
" Pratapshah and the 1st defendant Dayaram were descendants of Gangashah and they were related to Gangashah in the same degree.
But Pratapshah was the descendant of Bhakta, and Dayaram was the descendant of Raju.
Bhakta was the elder of the two brothers.
It is recited in the Wajibul arz that the Dhanora Zamindari is impartible, that on the death of the holder it devolves upon his eldest son and in the absence of a legitimate or an adopted son it devolves upon the nearest male relative.
Devolution of, the Zamindari closely resembles the traditional rule of liberal primogeniture.
If the holder dies leaving him surviving no son legitimate or adopted, the Zamindari devolves upon a descendant from the common ancestor of the nearest degree and in the event of there more, descendants from the common ancestor being in the same degree, the descendant in the senior line is preferred.
Succession to the Zamindari is subject to the power of the Governor to dispossess a person found unfit to observe the conditions of loyalty, good police administration and improvement and cultivation of estate.
But if the nearest in the line of succession is not selected the estate must be given to the nearest heir who has the prescribed qualifications and is a successor to the Zamindar.
When the Zamindar is removed, succession takes place as if the Zamindar so removed had died.
By the use of the expression "nearest male relative" the test of propinquity alone may be applied and when there are two or more claimants equally removed from the common ancestor the eldest male member in the senior most line will be preferred.
In adjudging the plaintiffs claim the Court must determine whether Pratapshah father of the plaintiffs, was the nearest male relative of Amarshah.
On the death of Amarshah there were two male relatives they were Pratapshah father of the plaintiffs and the 1st defen dant Dayaram.
The contest between them had to be adjudged in the light of the rules of lineal primogeniture governing an impartible estate which are well established : Succession is governed by the rules which governs succession to partible property subject to such modifications only as flow from the character of the impartible estate; the only modification which impartibility suggests in regard to the right of succession is the existence of a special rule for the selection of a single heir when there are several heirs of the same class who would be entitled to succeed to the property if it were partible under the general Hindu law; and in the absence of a special custom, the rule of primogeniture furnishes a ground of preference.
334 Subramanya Pandya Chokka Talawar vs Siva Subramanya Pillai(1).
In determining a single heir according to the rule of primogeniture the class of heirs who would be entitled to succeed to the property if it were partible must be ascertained first, and then the single heir applying the special rule must be selected.
Counsel for the first defendant submitted that under the terms of the Chanda Patent the Zamindari devolves on the death of the holder on the male relative who is the senior most in age, and not on the eldest member in the senior line.
There is nothing in the Chanda Patent which supports that contention.
By the use of the expression "nearest male relative" the rule of primogeniture is prescribed, it is not intended to confer the estate upon the eldest male relative of the Zamindar.
Counsel also submitted that under the terms of the Chanda Patent and the terms recorded in the Wajib ul arz the Governor having the right to determine inheritance and the right to remove a person who is not loyal or does not manage the property or does not improve the cultivation or who is guilty of bad behaviour or bad administration, it must be assumed that the holder of the Zamindari has merely a life interest and on the death of the holder, the Governor re grants the land consistently with the rules of succession according to the law and custom amongst the members of the family but subject to the dominant purpose of good administration and loyalty to the Government.
Counsel for the first defendant relied upon certain circumstances which he claimed established that the interest of the Zamindar was restricted to his life and on his death there was resumption and re grant of the Zamindari by the Governor.
Counsel submitted that the Zamindari was impartible and develoved upon the nearest male heir, that the sanction of the Governor was necessary for transfer, and also for recording inheritance, that loyalty, good management and improvement of cultivation were the conditions for holding the lands and that if the behaviour of the Zamindar was found unsatisfactory or that he was not capable of good adminis tration he was liable to be removed.
On that ground, said Counsel, the Government alone was competent to decide a dis pute arising out of inheritance.
But the power to take extraordinary steps to protect the interest of the Zamindari by the removed of the holder does not restrict the title of the Zamindar to a mere life interest.
The incidents of the tenure are restrictions on the estate of the Zamindar, but those restrictions do not make him a mere life tenant.
Under the Chanda Patent the lands of the Zamindari held by the family were confirmed in 1867 in favour of Sitaram.
On his (1)I. L. R. at p. 325.
335 death they devolved upon Hanmantrao.
There is no evidence that any fresh grant was made.
On the death of Hanmantrao the lands devolved upon his son Diwakarrao who died on September 8, 1932.
On the death of Diwakarrao dying without leaving any male descendant there arose a dispute between Pratapshah and Amarshah.
Pratapshah claimed to be the adopted son of Diwakarrao and on that ground entitled to take the Zamindari.
An inquiry was held and it was decided that Pratapshah failed to prove the adoption set up by him.
On the death of Amarshah again without leaving any male lineal descendant disputes arose.
The evidence is not clear as to whether any formal grant was issued in favour of Sitaram.
There is no evidence that recognition of the heirs of the successive Zamindars was accompanied by the issue of fresh patents or grants.
Succession was merely recognised by the revenue authorities.
The argument that the grant was for life of the grantee is therefore not supported by the terms of the Chanda Patent, nor by the entries in the Wajib ularz.
nor by the history of the Zamindari.
The right to determine inheritance it is true vests in the Governor but the power is exercisable in accordance with and not in violation of the custom of the family.
In determining the heir the Governor is not granting afresh the Zamindari; he merely determines the successor in accordance with the custom of the family.
The right of the Governor to remove a holder who is disloyal or does not manage his estate properly or does not improve cultivation or is otherwise of "bad behaviour" or guilty of bad administration, does not involve a condition that the interest of the Zamindar is only for his life.
When a holder of the Zamindari is removed, the Governor is bound to hand over the Zamindari to the next heir in the order of succession if the Zamindar removed had died and the heir will get the right.
Counsel, then contended that in any event the decision of the Governor in 1950 declaring Dayaram to be the successor on the death of Amarshah was 'binding and conclusive and could not be reopened.
Counsel urged that Pratapshah and the 1st defendant Dayaram were related to the common ancestor in the same degree, and it was open to the Governor to select one of the two members of the family related to the last holder in the same degree even though the person selected did not belong to the senior most line.
But if succession to the Zamindari is governed by the rule of lineal primogeniture, selection of a member of a branch in preference to a member of the senior branch would be plainly illegal.
Again, the evidence does not warrant the view that the Governor purported to pass any order in pursuance of the provisions of the Chanda Patent or the rules of succession recorded in 336 the Wajib ul arz.
The order of the Governor is in the form of a memorandum addressed to the Deputy Commissioner, Chanda, ,dated November 9, 1951 and it states that "Government are pleased to recognise Shri Dayaram Bapu son of Ballarshah Bapu Raj Gond as the Zamindar of Dhanora Zamindari in the Carchiroli tahsil of the Chanda District till the date of vesting of the Zamindari in the State Government".
There is no evidence that the Governor made any enquiry to determine the successor of Amarshah.
An order by the Gover nor purporting to exercise powers under the Chanda Patent con templates a quasi _judicial inquiry.
The order does not show that any inquiry was made for determining the rights of the contesting claimants or that any notice was issued to them or that they were heard before the Governor decided the issue.
There is nothing in the pleadings in that behalf.
The Governor is invested with quasi judicial power, and if there be a dispute.
the dispute must be decided after holding an inquiry, and the decision must be reached consistently with the rules of natural justice and in accordance with the custom of the family.
A bald statement that the "Government are pleased to recognise Dayaram Bapu son of Ballarshah Bapu as the Zamindar of Dhanora Zamindari" does not disclose the reason for rejecting the claim of Pratapshah who according to the custom of the family was "the nearest male relative".
There is no evidence on the record that the Governor was even aware that there were other claimants and if he was aware what their claims were and that the Governor had considered those claims before recognizing the claim of Dayaram.
In the 'absence of any evidence that the order was made by the 'Governor in exercise of the power conferred by the Chanda Patent it is unnecessary to consider whether any order made by the Governor is in exercise of the powers 'of the patent excludes the jurisdiction of the civil court.
The decision of Governor was apparently reached without any inquiry and was plainly contrary to the rules of Hindu Law and the custom of the family in the light of which alone the Governor was by the express mandate competent to adjudicate the claim.
It is true that there were mutation proceedings in regard to the Zamindari before the Naib Tahsildar Garchiroli Tahsil.
The Naib Tahsildar by his order dated May 9, 1951 held that the dispute relating to the mutation was raised by Pratapshah, that Amarshah had died issueless, that the genealogical tree set up by Daulatshah son of Pratapshah was incorrect being unsupported by reliable evidence,, that copies of settlement of 1867 were mere statements of interested persons, that the genealogical tree filed by Dayaram resembled the genealogical tree filed by Pratapshah 337 and was held to be genuine; that Amarshah had clearly admitted in his statement that Dayaram was entitled to succeed to the Zamindari after him and that Dayaram was the nearest male kinsman to the deceased Amarshah.
This decision of the Naib Tahsildar proceeded upon a genealogy produced by Dayaram which on the findings of the Trial Court as well as the High Court in this case is incorrect.
The decision of the Naib Tahsildar in a mutation proceeding even as a piece of evidence has little evidentiary value when it is founded on a material piece of evidence which was untrue.
The proceedings were carried in appeal before the Deputy Commissioner.
The Deputy Commissioner confirmed the order by his decision dated August 8, 1951.
He also accepted the genealogy set up by Dayaram and held that there were no other nearer male descendants in the branch and that Pratapshah was one degree more removed than Dayaram.
In view of the infirmity attaching to the genealogy relied upon by the Revenue Officer that decision has also little evidentiary value.
The orders passed by the Governor and the revenue authori ties do not exclude the jurisdiction of the civil court to decide the question of kinship.
In that view we agree.
with the High Court that the Zamindari originally confirmed in favour of Sitaram must according to the tenure as recorded in the Wajib ul arz devolve upon the first plaintiff Dawalatshah to the exclusion of the first defendant Dayaram.
The right in Malguzari land was since the death of Amarshah extinguished by the Madhya Pradesh Abolition of Proprietary Rights (Estates, Mahals, Alienated Lands) Act 1 of 1951.
The Malguzari lands are by the devise contained in the will dated December 3, 1950 given to the plaintiffs.
Compensation in respect of the lands would therefore belong to the plaintiffs.
But it is urged that notwithstanding the devise, because of the order of the Claim Officer under Section 14 of Act 1 of 1951, the plaintiffs were not entitled to agitate the question of heirship.
It is enacted by section 3 of the Act that on and from a date to be specified by a notification by the State Government in that 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.
Section 4 sets out of the consequences of the vesting of the land in the Government by N irtue of the notification issued under section 3.
Section 8 provides for assessment of compensation payable to every proprietor, who is 8 L807SupCI/71 338 divested of proprietary rights.
The compensation is to be, determined in accordance with the rules contained in Sch.
Section 12 requires that a proprietor who is divested of proprietary rights by virtue of a notification issued under section 3 shall, within such period as may be prescribed, file a statement of claim in the prescribed form and specify the particulars mentioned therein.
Section 13 authorises the Compensation Officer to determine the amount of compensation.
Section 14 provides: "(1) If during the course of an enquiry by the Compensation Officer, any question is raised regarding the proprietary right in any property divested under Sec. 3 and such question has not already been determined by a court of competent jurisdiction, the Compensation Officer shall proceed to enquire summarily into the merits of such question and pass such orders as he thinks fit." (2) The order of the Compensation Officer under sub section (1) shall not be subject to any appeal or revision, but any party may, within two months from the date of such order, institute a suit in the civil court to have the order set aside, and the decision of such court shall be binding on the Compensation Officer, but subject to the result of such suit, if any, the Compensation Officer shall be final and conclusive".
Counsel for Dayaram urged that the Compensation Officer had decided by his Order dated August 30, 1951 that compensation in respect of the Malguzari land was payable to Dayaram and since no suit was filed by the plaintiffs for setting aside that decision, the order of the Compensation Officer became final and conclusive and could not be reopened in a suit filed more than six, years after that date.
We are unable to accept that contention.
The Compensation Officer is entitled to decide a question only regarding the proprietary right in the property divested under section 3.
He is not concerned with determination of any question relating to a private dispute between two or more persons who make competing claims in the matter of compensation, relying upon their respective titles.
A question regarding the pro prietary rights may in ordinary course be raised only in a claim against the State, and if that claim be decided against the claim ' ant in a summary inquiry held by the Compensation Officer, a suit to set aside the decision must be filed within two months from that date and if no suit is filed, the order becomes final and conclusive.
section 14 was enacted with a view to put an end to disputes with regard to the claims to proprietary rights which by 339 virtue of the notification issued under section 3 are extinguished.
It is not intended by an Order under section 14 to determine complicated questions of title by the adjudication of a revenue officer in a summary inquiry without even a right of appeal and to make his adjudication conclusive unless a suit be filed within two months from the date of the order.
That is also clear from the terms of section 35(7) of Act 1 of 1951 which provides "The payment of compensation under this Act to the creditors of a proprietor or to the proprietor in accordance with the prescribed manner shall be a full discharge of the State Government from all liability to pay compensation for the divesting of proprietary rights, but shall not prejudice any rights in respect of the said rights to which any other person may be entitled by due process of law to enforce against the person to whom compensation has been paid as aforesaid".
The Civil Court is declared competent to determine disputed questions with regard to title to 'compensation.
We agree With the High Court that section 14 of Act 1 of 1951 does not invest the Compensation Officer.
with jurisdiction to determine competing claims, of persons claiming proprietary rights to the property vesting in the Government by the operation of section 3 of the Act.
Section 14 is intended to determine only the proprietary rights in the land, qua the State.
Finally it was urged that the Trial Court granted Rs. 10,000/as mesne profits, and even though the, High Court disallowed the claim of the plaintiffs with regard to certain items no reduction was made in the total amount of mesne profits awarded corresponding to the claim disallowed.
Counsel for the plaintiffs concedes that the High Court was in error in not reducing the amount of mesne profits awardable to the plaintiffs.
He agrees that instead of the figure of Rs. 10,000/ awardable to the plaintiff Rs. 8,000/ should be substituted.
We modify the mesne profits awarded.
Subject to this modification, this appeal fails and is dismissed with costs.
K.B.N. Appeal dismissed.
| IN-Abs | Under the Chanda Patent and the terms recorded in the Wajibul Arz the Dhanora Zamindari was impartible and on the death of the holder it devolved upon his eldest son and in the absence of a legitimate or an adopted son it devolved upon the nearest male relative.
The succession to the Zamindari was subject to the power of the Governor to dispossess a person found unfit to observe the conditions of loyalty, good police administration and improvement of the estate.
The respondent instituted an action for possession of certain immovable properties including the zamandari and for recovery of compensation, in respect of malguzari lands, paid to the appellants in consequence of the enactment of the Madhya Pradesh Abolition of Proprietary Rights (Estate, Mahals, Alienated Lands) Act, 1951.
They claimed the Zamindari relying upon the rule of primogeniture and other estates as devisees under a Will.
The trial court decreed the suit and the High Court affirmed the decree with slight modifications.
in the appeal to this Court the appellants urged that (1) the Zamindari devolved on the death of the holder on the male relative who is senior most in age and not the eldest member in the senior line; (2) by the order of the Governor the Zamindari was conferred upon the first appellant as he was found suitable to hold the zamindari and since the Government had the power to determine inheritance and the right to remove a person, the holder of the zamindari had merely a life interest; and (3) the compensation officer had decided by his order under section 14 of the Act that compensation in respect of malqutari land was payable to the first appellant and since no suit was filed by the plaintiffs for setting aside that decision within the period specified, the order of the compensation officer became final and conclusive.
HELD : (1) By the use of the expression "the nearest male relative" the test of propinquity alone may be applied and when there are two or more claimants equally removed from the common ancestor the eldest male member in the senior most line will be preferred.
The contest between the parties had to be adjudged in the light of the rules of lineal primogeniture governing an impartible estate.
In determining a single their according to the rules of primogeniture the class of heirs who would 325 be entitled to succeed the property if it were partible must be ascertained first, and then the single heir applying the special rule must be selected.
By the expression "nearest male relative" it was not intended to confer be estate upon the eldest male relative of the Zamindar.
The High Court was, therefore, right in holding that the Zamindari devolved upon the first respondent to ' the exclusion of the first appellant.
[333 C F] (2) The power vested in the Governor to take extraordinary steps to protect the interest of the zamindari by the removal of the holder did not restrict the title of the zamindar to a mere life interest.
The power had to be exercised in accordance with the custom of the family and an order by the Governor purporting to exercise powers under the Chanda Patent contemplated a quasi judicial inquiry.
The order does not show that any inquiry was made for determining the rights of the contesting claimants.
[334 G] (3) Section 14 of Act 1 of 1951 does not invest the compensation officer with jurisdiction to determine competing claims of persons claiming proprietary rights to the property vested in the Government by the operation of section 3 of the Act.
Section 14 is intended to determine only the proprietary rights in the land qua the State.
[339 D E]
|
Appeals Nos. 589 and 590 of 1967.
Appeals by special leave from the judgment and order dated May 7, 1965 of the Calcutta High Court in Income tax Reference Nos. 183 and 238 of 1961.
C. K. Daphtary, B. P. Maheshwari and N. R. Khaitan, for the appellant (in both the appeals).
section C. Manchanda, section K. Aiyar, R. N. Sachthey and B. D. Sharma for the respondent (in both the appeals).
The Judgment of the Court was delivered by Grover, J.
These appeals by special leave from a judgment of the Calcutta High Court arise out of certain questions of law which were referred relating to the assessment for the assessment year 1956 57, the relevant accounting year being from September 1, 1954 to August 31, 1955.
The assessee owned a colliery called the Western Kajoria Colliery, hereinafter referred to as "colliery".
It entered into an agreement with another company on November 29, 1954 to sell the colliery to it.
According to this agreement the vendor was to sell and the purchaser was to buy as on and from September 1, 1954 all the underground rights etc of the colliery with the machinery and other articles detailed in the schedules annexed to the agreement.
It is not necessary to give the details of the other stock intrade which the purchaser was to purchase.
The sale was to be completed within one year from the date of the execution of the agreement.
According to clause 7 of the agreement pending completion of the sale or delivery of possession of the premises to the purchaser the vendor was to carry on business on behalf of the purchaser and run the said colliery as on and from September 1, 1954 on the account and at the cost of the purchaser.
The purchased was to get all the profits and was liable for all the losses from that date.
385 The price fixed for the colliery was Rs. 3,50,000.
The book, value of the assets was Rs. 4,80,290/ .
In the relevant assessment year the loss of Rs. 70,290/ was claimed by the assessee.
The Income tax Officer rejected the claim for deduction of the loss from the assessee 's other income on the ground that during the accounting period the assessee did not carry on the business of colliery since the transfer took place with effect from September 1, 1954.
After making adjustment for certain assets which, according to the Income tax Officer, were not entitled to depreciation he determined the figure of loss to be Rs. 11,257/ .
This loss was also disallowed.
The Appellate Assistant Commissioner upheld the order of the Income tax Officer.
The Appellate Tribunal, however accepted the contention of the assessee that it carried on business till November 29, 1954 but did not allow the loss as the Tribunal was of the view that it had resulted from a closing down sale.
There was another item of dividends received from certain shares held by the assessee during the relevant accounting year.
The Income tax Officer included these dividends in the Company 's income under section 12 of the Income tax Act, 1922, hereinafter called the "Act".
The assessee failed to satisfy the authorities that the income received on account of the dividends could be set off against the loss in business of earlier years brought forward.
The Tribunal made a reference of the following two questions under section 66(1) of the Act : "(1) Whether on the facts and in the circumstances of the case the sum of Rs. 11,257/ being a claim for loss on sale of assets on which depreciation was allowable in earlier years is allowable under Section 10 (2) (vii) in computing the total income of the assessee? (2) Whether on the facts and in the circumstances of the case dividend income was to be taken as income, profits and gains of business of the company and set off against losses brought forward from earlier years under section 24(2)?" Since certain other questions had been sought to be referred by the assessee in respect of which the Tribunal declined to make a reference the assessee moved the High Court and the High Court directed that the following questions be referred "(3) Whether in the facts and circumstances of the case, the interest income from Western Kajoria Collieries Ltd. is income taxable under Section 10 of the Indian Income tax Act or under Section 12 of the said Act ? 11 L807SupC.1171 386 (4) Whether on the facts and circumstances of I the case there was any material to hold that the loan of M/s Shri Vijoy Corporation Ltd. was an accommodation loan not advanced during the normal course of money lending business? (5) If the answer to question (4) is that the loan was a business loan whether the debt had become bad in the year of account and deductible in computation of the total income? (6) Whether in the facts and circumstances of the case the Tribunal was right in refusing to allow set off of earlier years business losses under section 24(2)?" The two references were dealt with together by the High Court.
On the first question the High Court was of the view that the sale was a closing down sale and the net result of the transaction was that the assessee was working the colliery from September 1, 1954 for and on account of the purchaser.
While recognising that the coal business was not stopped as from September 1, 1954 the High Court came to the conclusion that it was on account of the purchaser that the business was carried on and any profits ,or losses which might have resulted until the actual sale were to be those of the purchaser and the vendor was to get only the price fixed together with interest.
The first question was answered against the assessee.
The second question was also answered against the assessee on the view that no colliery business in the relevant year was carried on by it and therefore no question of set off could arise.
The third and the fourth questions were answered in accordance with the findings of fact given by the Tribunal and against the assessee.
The fifth question was not pressed and was not answered.
The sixth question was covered by the second question and therefore no answer was returned with regard to it as well.
In the present appeals we are concerned with the first and the second question.
It has been submitted on behalf of the appellant that the loss of Rs. 11,257/ was allowable under section 10(2) (vii) of the Act in computing the total income of the appellant.
The Tribunal had recorded a finding which was one of fact; that in the relevant accounting year the appellant did carry on the colliery business.
The finding of the Tribunal had not been challenged by the department by raising an appropriate question and therefore it was not open to the High Court to go against the finding of the Tribunal and hold that the business was carried on for and on account of the purchaser.
At any rate it was an un 387 disputable fact that the appellant carried on the business upto November 29, 1954 and it was only by virtue of the agreement made on that day that it agreed to treat the business as having been transferred to the purchaser with effect from September 1, 1954.
By means of the agreement it was not possible to alter the actual state of affairs, namely, the carrying on of the business by the appellant.
In our judgment there is a good deal of substance in the above contentions urged on behalf of the appellant.
The Tribunal had, in clear and unequivocal terms, upheld the contention of the appellant that it had actually carried on the business till November 29, 1954.
Section 10(2) (vii) provides that profits or gains shall be computed after making the allowance in respect of any such building, machinery or plant which had 'been sold etc.
the amount by which the written down value thereof exceeds the amounts for which the building, machinery or plant is actually sold or its scrap value.
The first provise requires that such amount should actually be written off in the books of the assessee.
It is difficult to see how all the conditions necessary for the allowance under the above provisions were not satisfied.
The colliery business was carried on by the appellant during part of the relevant accounting year.
The machinery and plant had been used for the purpose of the business.
The sale of the colliery took place during the accounting year.
The loss of Rs. 11,275/ was written off in the books of the appellant The present case appears to be covered by the decision of this Court in Commissioner of Income tax, Bombay City II vs National Syndicate(1) in which all the above conditions for the applicablity of section 10(2) (vii) were held to be, present.
It was said that there was no other condition to be found in the section Dr in the Act which had to be complied with.
There was nothing to show that the business of the assessee should have been carried on for the whole year or that the machinery or plant should have been used for the whole of the accounting period or if the assessee worked only for a part of the year and then sold out the loss that lie incurred was not a business loss.
The decisions which were relied upon by the High Court are hardly of much assistance in the matter and are distinguishable on facts.
The first question should have been answered in favour of the assessee.
On the second question once it is accepted that the colliery business was carried on for a part of the relevant assessment year the assessee would be entitled to get a set off under section 24(2) of the Act if the shares on account of which the dividends were received formed part of the assessee 's trading assets.
It is well settled by the decisions of this Court (see C.I.T. Andhra Pradesh vs Cocanada (1) 388 Radhaswami Bank Ltd.(1) that section 6 of the Act classifies the taxable income under the several heads but the scheme is that income tax is one tax and section 6 only classifies the taxable income under different heads for the purpose of computation of the net income of the assessee.
While sub s.(1) of section 24 provides for setting off the loss under one of the heads mentioned in section 6 against the profits under a different head in the same year sub s.(2) provides for the carrying forward of the loss for one year and setting off the same against the profits or gains of the assessee from the business in the subsequent year or years.
It was emphasised in the aforesaid decision that sub section
(2) of section 24 in contradistinction to sub section
(1) is concerned only with the business and not with its heads under section 6 of the Act.
Dividends are included in the meaning of income under sub section
(1A) of section 12 which is the residuary head.
Applying the principles adverted to before the amount of dividends would form a part of the income from business of the assessee if the shares were a part of the assessee 's trading assets and the assessee would be entitled to a set off as claimed against the loss from its business incurred during the previous years.
It does not appear to have been disputed at any stage that the shares formed part of the stock in trade of the share dealing business of the ass,see.
There could be no reason, therefore, for the assessee not being entitled to the set off claimed.
The High Courts have consistently taken the view that business loss carried forward from earlier years can be set off against dividend income derived from shares held as stock in trade.
(vide Commissioner of Income tax Madhya Pradesh vs Shrikishan Chandmal(2) and Commissioner of Income tax, Ahmedabad vs Bhavnagar Trust Corporation (P) Ltd.(,") The second question, therefore, 'should have been answered in favour of the assessee.
In the result the appeals are allowed with costs in this Court and the decision of the High Court is set aside only with regard to questions 1 and 2, the answers to which are returned as already indicated.
One hearing fee.
R.K.P.S. Appeals allowed.
| IN-Abs | The assessee entered into an agreement with another company on November 29, 1954 for the sale of its colliery.
It was provided in the agreement that pending completion of the sale or delivery of possession, the vendor was to carry on business on behalf of the purchaser and run the colliery as on and from September 1, 1954 on the account and at the cost of the purchaser.
In the course of the appellant 's assessment to income tax for which the accounting year was from September 1, 1954 to August 31, 1955, the Income Tax Officer, after making adjustment for certain assets which according to him were not entitled to depreciation, worked out the figure of loss at Rs. 11,257.00; however he rejected a claim to set off this loss against the appellant 's other income on the view that the assessee did not carry on the business of the colliery during the year since the transfer took place with effect from September 1, 1954.
The Appellate Assistant Commissioner upheld this order and, although the Tribunal, in appeal, accepted the assessee 's contention that it carried on business till November 29, 1954, it did not allow the loss on the view that it had resulted from a closing down sale.
In respect of the same year, certain dividends on shares received by the assessee were included in its income under section 12 but its claim to set off this income against the loss in business for earlier years brought forward, was disallowed.
The High Court, upon a reference made to it, held against the appellant on both these issues.
On appeal to this Court, HELD : The Tribunal had, in clear and unequivocal terms, upheld the contention of the appellant that it had actually carried on the business till November 29, 1954.
Section 10(2) (vii) provides that profits or gains shall be computed after making the allowances in respect of any such building, machinery or plant which had been sold etc.
, the amount by which the written down value thereof exceeds the amount 'for which the building, machinery or plant is actually sold or its scrap value.
The first proviso requires that such amount should actually be written off in the books of the assessee.
It is difficult to see bow all the conditions necessary for the allowance under the above provisions were , not satisfied.
The colliery business was carried on by the appellant during part of the relevant accounting year.
The machinery and plant had been used for the purpose of the business.
The sale of the colliery took place during the accounting year; and the loss of Rs. 11,237.00 was written off in the books of the appellant.
[387 C F] Commissioner of Income Tax, Bombay City II vs National Syndicate, ; followed.
384 Once it is accepted that the colliery business was carried on for a part of the relevant assessment year, the assessee would be entitled to get a set off under section 24(2) of the Act if the shares on account of which the dividends were received formed part of the assessee 's trading assets.
It was not disputed that the shares formed part of the stock in trade of the share dealing business of the assessee.
There could be no reason, therefore, for the assessee not being entitled to the set off claimed.
[388 B D] C.I.T., Andhra Pradesh vs Cocanada Radhaswami Bank Ltd., ; Commissioner of Income Tax Madhya Pradesh vs Shrikishan Chandmal, and Commissioner of Income Tax, Ahmedabad vs Bhavnagar Trust Corporation (P.) Ltd., ; referred to.
|
Appeal No. 133 of 1951.
Appeal by special leave granted by the Supreme Court on the 1st December, 1950, from the Judgment dated the 24th April, 1950, of the Central Government Industrial Tribunal, Dhanbad, in Appeal No. 1 of 1950, arising out of Order dated the 2nd February, 1950, of the Regional Labour Commissioner (Central) Dhanbad.
N. C. Chatterjee (section L. Chhibber, with him) for the appellants.
section P. Sinha (section N. Mukherjee, with him) for the res pondent.
December 12.
The Judgment of the Court was delivered by DAS J.
This appeal by special leave is directed against the decision dated April 24, 1950, of the Central Government Industrial Tribunal at Dhanbad confirming the decision dated February 2, 1950, of 430 the Regional Labour Commissioner (Central), Dhanbad, which had declared the one day strike by the appellants that took place on November 7, 1949, to be an illegal strike.
The relevant facts are as follows: On October 13, 1949, the appellants through the Secretary of their Union gave a notice to the respondents, under section 22(1) of the , that they proposed to call a one day strike on the expiry of November 6, 1949, for the fulfilment of demands, 16 in number, noted therein.
This strike notice was, in accordance with rule 85 of the rules framed under the , sent to (1) the Conciliation Officer (Central), Dhanbad, (2) the Regional Labour Commissioner (Central), Dhanbad, (3) the Chief Labour Commissioner, Department of Labour, Government of India, New Delhi, (4) Secretary, Ministry of Labour, Government of India, New Delhi, and (5) A.D.C., Dhanbad.
This notice was received at the office of the Regional Labour Commissioner (Central), Dhanbad, on October 15, 1949. 'The Regional Labour Commissioner (Central) held conciliation proceedings at Dhanbad on October 22, 1949, but the appellants, by their letter of the same date , declined to participate in the proceedings alleging that they were convinced that nothing would come out of the same and that the proceedings should, therefore, be considered "to be ceased.
" On the same day the Regional Labour Commissioner (Central), Dhanbad, addressed letter No. RLC/CON 5 (Token) 7910 to the Chief Labour Commissioner, New Delhi, stating that after receipt of the notice of strike he had issued notice to the parties for conciliation, that the employers ' representatives were ready to discuss the demands but the Union 's representative filed a petition in writing saying that they did not want to participate in the proceedings and that no fresh material had been placed before him to change his view and that he was not in favour of recommending a reference of the demand to the Industrial Tribunal.
The letter ended with a request that the Government 431 may be informed of the situation.
It appears that this report was received in the office of the Chief Labour Commissioner, New Delhi, on October 25, 1949.
Although the Chief Labour Commissioner, in his letter ' of November 17, 1949, to the Regional Labour Commissioner ( Central), Dhanbad, states that the contents of the latter 's report had already been communicated to the Ministry of Labour, a copy of the report was actually sent to and received by the Ministry of Labour only on that day.
In the meantime on November 7, 1949, the appellants about 700 in number, went on one day strike as per their strike notice.
Apparently the respondents contended that the strike was illegal and they made an application, under section 8 (2) of the Coal Mines Provident Fund and Bonus Scheme Act, 1948, to the Regional Labour Commissioner (Central), Dhanbad, for a deci sion on the question whether the strike was legal or illegal.
By his order dated February 2, 1950, the Regional Labour Commissioner (Central), Dhanbad, declared that the strike was illegal.
Being aggrieved by the aforesaid decision the appellants, under section 8 (4) of the last mentioned Act, preferred an appeal to the Central Government Industrial Tribunal at Dhanbad which, however, also held that the strike was illegal and that the conclusions arrived at by the Regional Labour Commissioner (Central) were correct and accordingly dismissed the appear The appellants thereafter applied for and obtained special leave to appeal to this Court.
The only question raised on this appeal is whether the strike was illegal.
Section 24 (1) of the Act provides, inter alia, that a strike shall be illegal if it is commenced or declared in contravention of section 22 or section 23 of the Act.
Section 22 (1) provides as follows: " 22.
(1) No person employed in a public utility service shall go on strike in breach of 'contract(a) without giving to the employer notice of strike, as hereinafter provided, within six weeks before striking; or 56 432 (b) within fourteen days of giving such notice; or (c) before the expiry of the date of strike specified in any such notice as aforesaid; or (d) during the pendency of any conciliation proceedings before a conciliation officer and seven days, after the conclusion of such proceedings.
" Notice of strike having been given in terms of clause (a) and 14 days having elapsed after the giving of such notice as required by clause (b) and the actual strike having taken place after November 6, 1949, being the date specified in the strike notice, the only other question for consideration is whether the strike took place during the pendency of any conciliation proceedings before a Conciliation Officer, and seven days after the conclusion of such proceedings.
Under section 20(1) a conciliation proceeding shall be deemed to have commenced on the date on which a notice of strike under section 22 is received by the Conciliation Officer.
In this case the strike notice was received by the Regional Labour Commissioner (Central) who is the Conciliation Officer, 'on October 15, 1949, and the conciliation proceedings, therefore, commenced on that date under section 20(1).
The relevant portion of sub section (2) of that section runs as follows: A conciliation proceeding shall be deemed to have concluded (a). . . . . . . (b) where no settlement is arrived at, when the report of the Conciliation Officer is received by the appropriate Government or when the report of, the Board is published under section 17, as the case may be, or (c). . . . . . .
The Regional Labour Commissioner (Central), who is the Conciliation Officer in this dispute, is required by section 12 to hold conciliation proceedings in the prescribed manner and, without delay, investigate the dispute and to do all such things as 433 he thinks fit for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute.
In this case the Regional Labour Commissioner (Central), held conciliation proceedings on October 22, 1949, but no settlement could be arrived at as the appellants declined to take part in the proceedings on the ground that they were convinced that nothing would come out of it.
That being the position, under section 12 (4) it became the duty of the Regional Labour Commissioner (Central) to "as soon ' as practicable after the close of the investigation, send to the appropriate Government a full report setting forth the steps taken by him.for ascertaining the facts and circumstances relating to the dispute and for bringing about a settlement thereof together with a full statement of such facts and circumstances.
and the reasons on account of which,in this case, a settlement could not be arrived at ".
Subsection (6) of this section.
requires that the report shall be submitted within fourteen days of the commencement of the conciliation proceedings or within such shorter period as may be fixed by the appropriate Government.
As already stated, the conciliation proceedings commenced on October 15, 1949.
The report, therefore, was to be submitted within fourteen days from that date.
, In point of fact the report was sent by the Regional Labour Commissioner (Central) to the Chief Labour Commissioner New Delhi, on October 22, 1949 (which was well within 14 days from the commencement of the conciliation proceedings), with the request that the Government may ' be informed of the situation.
Under sub section (4) the report has to be sent to the " appropriate Government " which according to the definition under section 2 (a) means, in relation to an industrial dispute concerning a mine, the Central Government.
The Regional Labour Commissioner (Central) did not send the report direct to Central Government but sent it to the Chief Labour Commissioner, New Delhi, in accordance with what has been called the usual course and routine of 434 official business.
Therefore,however, was received by the Central Government on or about November 17, 1949, and it is only on such receipt that the conciliation proceedings are to be deemed to have concluded according to the provisions of section 20(2)(b).
Prima, facie, therefore, the strike which took place .on
November 7, 1949, was during the pendency of the conciliation proceedings as held by the authorities below.
Shri N. C. Chattanooga, however, argues that in point of fact the conciliation proceedings came to an end when the appellants had withdrawn from the proceedings and the Regional Labour Commissioner (Central) had Bent his report.
It is by a legal fiction, introduced by section 20 (2) (b), that the conciliation proceedings are prolonged until the actual receipt of the report by the appropriate Government.
According to Shri N. C. Chatterjee the conciliation pro ceedings should be held to ' terminate when the Regional Labour Commissioner (Central) sent his report within fourteen days of the commencement of the conciliation proceedings.
The difficulty in accepting this ' argument is that while the word "send is used in section 12 (4) and the word " submitted in section 12(6), the word used in section 20 (2), (b)is " received ".
That word obviously implies the actual receipt of the report.
To say that the conciliation proceedings shall be deemed to have concluded when the report should, in the ordinary course of business, have been received by the appropriate Government would introduce an element of uncertainty, for the provisions of section 22 (1) (d) clearly contemplate that the appropriate Government should have a clear seven days ' time after the conclusion of the conciliation proceedings to make ' up its mind as to the further steps it should take.
It is, therefore, necessary that the beginning of the seven days ' time should be fixed so that there would be certainty as to when the seven days ' time would expire.
It is, therefore, provided in section 20 (2) (b) that the proceedings shall be deemed to have 435 concluded, where no settlement is arrived at,when the report is actually received by the appropriate Government.
Shri N. C. Chatterjee on the other, hand strongly urges, and not without some force, that on that construction it may be possible for the Government or its officers to withhold the report ' designedly or the report may be lost in course of transit or may be actually received after the expiry of the date fixed for the strike in the notice under section 22 (I).
Shri N. C. Chatterjee also points out that it will not be possible for the workers to know when the report is actually received and their right to strike may thus be taken away from them ' Shri N. C. Chatterjee contends that the Government cannot take advantage of its own wrong.
While we feel considerable force in Shri N. C. Chatterjee 's argument based on hardship we are bound to assume that the.
public officers concerned would act fairly and properly.
Further, it is not a case of the Government taking advantage of its own wrong as suggested by Shri N. C. Chatterjee, for here we are concerned with a dispute between the employers and the employees and there is no material before us to justify our attributing the misdeeds, if any, of the Regional Labour Commissioner (Central) or of the Chief Labour Commissioner, to the respondents, the employers who are entitled to take their stand on the language of the law.
The Court can only construe the statute as it finds it and if there is any defect in the law it is for other authority than this Court to rectify the same.
Shri N. C. Chatterjee also urges that the Regional Labour Commissioner (Central) should have, under section 12, sent his report to the appropriate Government, which in this cage means the Central Government, and he should not have sent the report to the Chief Labour Commissioner.
Assuming that that is the position then.
the fact will still remain that the Central Government did not receive the report and, therefore, the conciliation proceedings did not come to an end when the strike took place.
Shri 436 N. C. Chatterjee also suggests that the Chief Labour Commissioner should have returned the report to the Regional Labour Commissioner (Central) because under the law the report should not have been made to him.
He, however, did not return the,same to the Regional Commissioner but took upon himself to.for ward the same to the Labour Ministry.
In the circumstances, Shri N. C. Chatterjee urges, on the authority of Chaturbhuj Ram Lal vs Secretary of State for India (1), that the Chief Labour Commissioner must be deemed to be the agent of the Central Government for the purpose of receiving the report.
We adjourned this case in order to enable Shri N. C. Chatterjee to ascertain whether there was any delegation of authority in this behalf by the Central Government to the Chief Labour Commissioner.
Shri N. C. Chatterjee has not been able to discover any such delegation of authority.
It seems obvious to us that the Chief Labour Commissioner cannot possibly be regarded for this purpose as the Central Government.
In point of fact by a notification in the Gazette of India dated April 5, 1947$ the Chief Labour Commissioner has been appointed as a Conciliation Officer.
and, therefore, in conciliation proceedings conducted by him he has to submit his report to the Central Government.
It follows, therefore, that the Chief Labour Commissioner must be an authority separate from the Central Government.
According to rule 85 to which reference has been made the strike notice has to be sent, amongst others, to the Chief Labour Commissioner as well as to the Department of Labour of the Government of India, which again.
indicates that the two are different entities.
The Chief Labour Commissioner is, therefore, only the channel or post office through which correspondence between the Regional Labour Commissioner (Central) and the Central Government is to pass and he cannot possibly be regarded as an agent of the 'Central Government for the purpose of receiving the report.
The Chief Labour Commissioner (1) A.I.R. 1927 All, 2i5.
437 being the official channel the ruling relied upon by Shri N. C. Chatterjee can have no application to the facts of this case.
For reasons stated above we are of opinion that the conclusions arrived at by the authorities below on this point are correct and that this appeal must be dismissed.
In the peculiar circumstances of the case, however, we think that there should be no order as to costs and the parties should bear their own costs.
Before concluding we must draw the attention of the authorities concerned to the slack and unbusinesslike manner in which the matter was dealt with in the office of the Chief Labour Commissioner.
The Act requires that the Conciliation Officer must submit his report within 14 days from the commencement of conciliation proceedings and then on receipt of the report by the appropriate Government the conciliation proceedings are to be deemed to have concluded.
Although factually the conciliation proceedings terminate when a settlement is arrived at before the Conciliation Officer or when it is found that no settlement can be arrived at, the Act, by a legal fiction, prolongs the conciliation proceedings until the actual receipt of the report by the appropriate Government and goes on to provide that the appropriate Government must have seven days ' time to consider what further steps it would take under the Act.
Up 'to the expiry of this period of 7 days the Act permits no strike but after that period is over the employees are left free to resort to collective action by way of a strike.
Indeed, it is on the basis of these provisions that the date of strike has to be carefully selected and specified in the notice of strike to be given by the employees under section 22 (1) of the Act.
Thus, even a cursory perusal of the Act makes it clear that time is of the essence of the Act and that the requirements of its relevant provisions must be punctually obeyed and carried out if the Act is to operate harmoniously at all.
In this case the conciliation officer submitted his report on October 438 22, 1949, i.e., well within 14 days from the commencement of the conciliation proceedings as required by section 12 (6) of the Act.
The report was sent through what has been called the routine official channel.
Admittedly, it was received in the office of the Chief Labour Commissioner at New Delhi on October 25, 1949, but surprisingly it was not passed on to the Ministry of Labour, which is also in New Delhi, until about November 17, 1949.
The employees had no means of knowing when the report was actually received by the Central Government which is the appropriate Government in this case or when the period of 7 days after such receipt expired.
But in the belief, entertained, we think, quite legitimately, that the official business had been conducted regularly and promptly the employees went on strike on November 7, 1949, as previously notified. ' It now transpires that the report had not been actually received by the Central Government and, therefore, on the letter of the law, the strike must be hold to be illegal and the employees must face and bear the consequences of an illegal strike and may even be deprived ' of benefits to which they would otherwise have been entitled.
This hardship has been thrown upon the employees for no fault of their own but simply because of the callous indifference or utter inefficiency and slackness apparently prevailing in the office of the Chief Labour Commissioner which cannot be too strongly deprecated.
It is to be hoped that public officers would, in the discharge of their official duties in future, show a greater sense of responsibility than, what they have done in the case before us.
Appeal dismissed.
| IN-Abs | A conciliation proceeding cannot be deemed to have concluded under section 20 (2) (b) of the , in a case where no settlement has been arrived at, as soon as the Conciliation Officer sends his report.
It can be deemed to have concluded only when the report is actually received by the appropriate Government.
(1) ; 429 The Chief Labour Commissioner, New Delhi, is not, in the absence of any express delegation of powers by the Central Government, the agent of the latter for the purpose of receiving the report of a Conciliation Officer.
The appellants who had sent notice of their intention to strike declined to participate in conciliation proceedings which were initiated by the Regional Labour Commissioner, and the latter sent his report to the Chief Labour Commissioner, New Delhi, on October 22, 1949.
The report was received by the Chief Labour Commissioner on October 25, but a copy of the report was sent by the Chief Labour Commissioner, and received by the Ministry of Labour, only on November 17.
Meanwhile the appellants went on strike on November 7: Held, confirming the decision of the Industrial Tribunal, that under section 20 (2) (b) of the Act the conciliation proceeding held by the Regional Labour Commissioner concluded only on November 17 when his report was received by the Central Government, and as the appellants went on strike before that date, it was a strike during the pendency of conciliation proceedings and therefore illegal under section 22 (1) (d) of the Act.
The provisions of several sections of the , show that time is of the essence of the Act and the requirements of its relevant provisions must be punctually obeyed and carried out, if the Act is to operate harmoniously.
|
Appeal No. 2555 of 1966.
Appeal from the judgment 'and order dated March 16, 1966 of the Calcutta High Court in Income Tax Reference No. 76 of 1962.
section C. Manchanda.
G. C. Sharma, R. N. Sachthey and B. D. Sharma, for the appellant.
A. K. Sen, T. A. Ramachandran and D. N. Gupta, for the respondent.
775 The Judgment of the Court was delivered by Shah, J.
The respondent Company appointed one Harvey its Managing Director.
Under the terms of agreement, Harvey was to retire on attaining the age of 55 years.
The Company arranged to provide a pension to Harvey on retirement, and executed a deed of trust on September 16, 1948 appointing three trustees to carry out that object.
The respondent Company set apart in 1948 Rs. 1,09,643/ and in each of the six subsequent years Rs. 4,364/ , and delivered the various amounts to the trustees who were authorised to take out a deferred annuity policy to secure an annuity of pound 720 per annum payable to Harvey for life.
from the date he attained the age of 55 years, and in the event of his death before that date an annuity of pound 611.12 annually to his widow.
In its return for the assessment year 1949 50 the Company claimed that in the computation of its taxable income Rs. 1,09,643/ paid in 1948 to the trustees under the deed of trust were allowable as an amount wholly and exclusively,expended for the purpose of its business.
In the subsequent years of assessment the Company claimed allowance of the annual payment of Rs. 4,364/ .
The Income tax Officer disallowed the claim.
The Company disputed the decision and carried it to the Income tax Appellate Tribunal.
The Tribunal submitted a statement of case to the High Court of Calcutta on the question whether the payments . 'constituted 'expenditure ' within the meaning of that word in section 10(2)(xv) of the Indian Income tax Act, 1922, in respect of which a claim for deduction can be made subject to the other conditions mentioned in that clause being satisfied".
The High Court answered the question in the negative.
The view taken by the High Court was confirmed by this Court in appeal: Indian Molasses Co. (P) Ltd. vs Commissioner of Income tax, West Bengal(1).
This Court held that the expenditure deductible for income tax purposes is one towards a liability actually existing at the time, but a sum of money set apart which may be deemed appropriated to a purpose for which it was intended on the happening of a future event was not expended within the meaning of section 10(2)(xv) of the Act, until the event occurs, and since the Company had dominion through the trustees over the funds and there was a possibility of a trust resulting in its favour, by setting apart.
the funds no "expenditure" within the meaning of section 10(2)(xv) of the Indian Income tax Act, 1922, may be deemed incurred.
During the pendency of those proceedings the Company ar ranged to give an "enhanced pension" to Harvey and executed a supplementary deed of trust on October 29, 1954 and set apart an additional sum of Rs. 47,607/ to enable the trustees to take out an annuity policy in the names of the trustees in favour of Harvey (1) , 776 and his wife to cover the "enhanced pension".
The terms of the original trust deed were made applicable to the supplementary deed.
Harvey died in May 1955 (before he was due to retire) and in the return of its taxable income for the assessment year 1956 57 the Company claimed that Rs. 1,83,434/ being the total amount paid by the Company to the trustees in terms of the original trust deed dated September 'I 6, 1 94 8 and the supplementary deed dated October 29, 1954, be allowed as a permissible expenditure in the computation of the Company 's business profits in the previous year ending December 31, 1955.
The Income tax Officer disallowed the claim without assigning any reasons.
In appeal the Appellate Assistant Commissioner confirmed the order observing that the amount paid long before the commencement of the previous year were not admissible under section 10(2)(xv) of the Income tax Act, 1922.
The Income tax Appellate Tribunal in appeal reversed the order and allowed the claim of the Company holding that the amount of Rs. 1,83,434/ was "effectively disbursed during the accounting year" and was on that account an admissible allowance in the computation of the Company 's business profits.
At the instance of the Commissioner of Income tax, the Tri bunal submitted a statement of the case to the High Court of Calcutta on the following two questions : "(1) Whether on the facts and in the circumstances of the case, the sum of Rs. 1,83,434/ was an expenditure effectively laid out or expended during the accounting year 1955 within the meaning of section 10(2)(xv) of the Income tax Act ? (2) If the answer to Question No. (1) is in the affirmative, then whether the said expenditure of Rs. 1,83,434/ represented a revenue expenditure ?" The High Court of Calcutta recorded answers in the affirmative on both the questions.
With certificate granted by the High Court under section 66A(2) of the Indian Income tax Act, 1922, this appeal is preferred by the Commissioner of Income tax.
Answer recorded by the, High Court on the first question was, in our judgment, correct.
This Court had in the earlier decision Indian Molasses Co. (Private) Ltd. vs The Commissioner of Income tax( ') held that the Company had not parted with control over the amounts set apart between the years 1948 and 1954 for securing the 'pension benefit to Harvey, and on that account no amount was appropriated to make it expenditure within the meaning of section 10(2)(xv) of the Act.
At the date when different sums of money were set apart there was no existing liability and the sums (1) 777 of money set apart to meet an obligation which may or may not arise on the happening of a future event, the Company did not lay out or expend the sums within the meaning of section 10(2)(xv).
The amounts set apart became subject to the obligation to pay the pension arranged to be given only when Harvey died, and must be deemed expended then within the meaning of section 10(2)(xv) of the Indian Income tax Act, 1922.
But on the materials before us we are unable to answer the second question, for the Tribunal has found no facts on which the admissibility of the allowance may be determined, and the High Court has declined to allow the argument to be raised by the Commissioner that in the circumstances of the case the amounts expended were not admissible under section 10(2)(xv) of the Act.
Sections 10(1) and 10(2)(xv) of the Act, insofar as they are relevant, provide : section 10(1) "The tax shall be payable by an assessee under the head "profits and gains of business, profession or vocation, in respect of the profit or gains of any business, profession or vocation carried on by him." section 10(2) "Such profits or gains shall be computed after making the following allowances, namely (xv) any expenditure (not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assessee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation.
" Sub section (4A) of section IO which was added by the Finance Act of 1956 with effect from April 1, 1956, may also be read : "Nothing in sub section (2) shall, in the computation of the profits and gains of a Company be deemed to authorise the making of (a) any allowance in respect of any expenditure which results directly or indirectly in the provision of any remuneration or benefit or amenity to a director or a person who has a substantial interest in the company within the meaning of sub clause (iii) of clause (6C) of section, 2, or (b) any allowance in respect of any assets of the company used by any person referred to in 778 clause (a) either wholly or partly for his own purposes or benefit.
if in the opinion of the Income tax Officer any such allowance is excessive or unreasonable having regard to the legitimate business needs of, the company and the benefit derived by or accruing to it therefrom.
Explanation.
The provisions of this sub section shall apply notwithstanding that any amount disallowed under this sub section is included in the total income of any person referred to in clause ( a)." An amount proved to be expended by a tax payer carrying on business is (subject to sub section
(4A) of section 10), a permissible allowance in the computation of taxable income of the business, if it be established that the allowance claimed is (a) expenditure which is not of the nature described in cls.
(i) to (xiv) of section 10(2); (b) that it is not of the nature of capital expenditure or personal expenses of the assessee; and (c) that the expenditure was laid out or expended wholly and exclusively for the purpose of such business, profession or vocation.
The expenditure incurred by the Company is not allowance of the nature described in any of the clauses (i) to (xiv) inclusive of section 10(2), nor is it of the nature of capital expenditure or personal expenses of I the assessee.
In our judgment, the argument advanced before the High Court that the expenditure resulting from the setting apart of the money for securing an annuity to provide pensionary benefit to Harvey and his wife was of a capital expenditure was rightly negatived by the High Court.
To attract the exemption under section 10(2) (xv)it had still to beestablished that the amount set apart was laid out or expended wholly and exclusively for the purpose of the business of the Company.
On this part of the case there is no discussion in the orders of the taxing authorities and the Tribunal.
To recall, the Income tax Officer recorded no reasons for, disallowing the expenditure.
The Appellate Assistant Commissioner disallowed it on the, ground that it was not debited in the profit and loss account of the Company in the previous year.
The Tribunal assumed, and in our judgment erroneously, that this Court had in the earlier judgment pronounced upon the applicability of all the conditions of section 10(2)(xv) of the Act to the amount set apart when it became expenditure.
This Court did not express any opinion on that question.
, The language in which the question was framed in the earlier case clearly indicated that the enquiry contemplated was only whether the amounts set apart were expended and no other.
779 The judgment of this Court also does not imply that in the view of the Court if the setting apart of the amount was expenditure, the other conditions for the expenditure to be a permissible allowance under section 10(2) (xv) were satisfied.
It cannot be, assumed that because on the death of Harvey the amounts previously set apart were deemed expended, the outgoing was admissible as expenditure under section 10(2)(xv) read with section 10(4A).
The Tribunal considered two questions only : (1) whether the setting apart of the amounts amounted to expenditure within the meaning of section 10(2) (xv); and (2) if it was expenditure, whether it could be regarded as capital expenditure and not revenue expenditure.
On both the contentions the Tribunal decided in favour of the Company.
But before section 10(2)(xv) could be called in aid to support the claim of the company it had to be established that it represented expenditure laid out or expended wholly and exclusively for the purpose of the business, and that it was authorised under section 10(4A).
The High Court was of the view that because before the Tri bunal the question was not expressly raised that "the other conditions inviting the application of section 10(2)(xv) were not satisfied, the allowance was not admissible", the Commissioner was incompetent to urge that plea before the High Court.
In support of that view they relied upon the judgment of this Court in Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co. Ltd(1).
The High Court observed that before the Tribunal the plea that the expenditure was not laid out or expended wholly and exclu sively for the purpose of the business of the Company was not argued, and since the question raised and referred "was not wide enough to include that submission", the Commissioner could not urge it before them. 'We are unable to hold that the decision in Scindia Steam Navigation Company 's case( ') supports the opinion of the High Court.
The plea that the amount claimed to have been expended was not admissible as an allowance was raised by the Department.
The Appellate Assistant Commissioner had decided in favour of the Department and the order was sought to be supported before the Tribunal by the Departmental representative.
Granting that an aspect of the question was not argued before the Tribunal, the question was on that account not one which did not ,arise out of the order of the Tribunal.
In our judgment, the expression "question of law arising out of such order" in section 66(1) is not restricted to take in only those questions which have been expressly argued and decided by the Tribunal.
If a question of law is raised before the Tribunal, even if an 'aspect of that question is not raised, in our judgment, that aspect may be urged before the High Court.
The judgment of this Court in Scindia Steam Naviga tion Co. Ltd. 's case( ') does not only not lend any assistance to the (1) ; 780 view taken by the High Court, but negatives that view.
In that case certain steamships belonging to the assessee Company were lost during the World War 11 by enemy action.
The Government of India paid to the Company compensation which exceeded the written down value of the steamships.
The Department sought to charge the excess amount to tax under the fourth proviso of section 10(2)(vii) of the Income tax Act, 1922 inserted by the Income tax (Amendment) Act, 1946, which came into force in the yea of assessment.
The Income tax Officer held that the material date for the purpose of the fourth proviso to section 10(2)(vii) was the date when the compensation was in fact received and therefore the ' amount was assessable in the assessment year 1946 47.
At the instance of the Company the Tribunal referred the question whether the difference between the written down value and compensation was properly included in the total income for the assessment year 194647.
Before the High Court the Company for the first time raised the contention that the fourth proviso to section 10(2)(vii) did not apply to the assessment as it was not in force on April 1, 1946 and the liability of the Company had to be determined as on April 1, 1946, when the Finance Act, 1946 was brought into force.
The Commissioner of Income tax contended that the question did not arise out of the order of the Tribunal within ' the meaning of section 66 as it was not raised before nor dealt with by the Tribunal, and it was not referred to the Court.
The High Court overruled the objection.
This Court held that the High Court had jurisdiction to entertain the Company 's contention raised for the first time before it, that the fourth proviso to section 10(2)(vii) did not apply to the as sessment as the contention was within the scone of the question as framed by the Appellate Tribunal and was really implicit therein.
The Court in that case held that the question as framed was comprehensive enough to cover the question of the applicability.
of the fourth proviso to section 10(2)(vii) of the Income tax Act.
Venkatarama Aiyar, J., observed at p. 612 " Section 66 (I ) speaks of a question of law that arises out of the order of the Tribunal.
Now a question of law might be a simple one, having its impact at one point, or it may be a complex one.
trenching over an area with approaches leading to different points therein.
Such a question might involve more than one aspect, requiring to be tackled from different standpoints.
All that section 66(1) requires is that the question of law which is referred to the Court for decision and which the Court is to decide must be the question which was in issue before the Tribunal.
Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to those aspects (1) ; 781 of the question which had been argued before the Tribunal.
it will be an over refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 66 (1) of the Act.
" The second question raised in the present case, in our judg ment, permits an enquiry whether the amount claimed is an admissible allowance under section 10(2)(xv).
We are unable to hold that it is restricted to an enquiry whether the expenditure is of a capital nature.
The Tribunal did not consider whether the amount was laid out or expended wholly and exclusively for the purpose of the business of the Company.
Expenditure is admissible as an allowance under section 10(2)(xv).
if all the conditions prescribed thereby are satisfied and is authorised by section 10(4A).
We are unable to hold that the question framed and referred excluded an enquiry Whether the expenditure was wholly and exclusively laid out or expended for the purpose of the business of the Company.
Nor are we able to hold that because before the Tribunal stress was not pointedly laid upon the ingredients which enable an expenditure to be claimed and allowed, the question does not arise out of the order of the Tribunal.
The matter in dispute before the Tribunal was whether the Company was entitled to the allowance under section 10(2)(xv) ,of the Indian Income tax Act 1922.
The Tribunal considered whether the amount claimed to have been laid out or expended became expenditure within the meaning of section 10(2)(xv) on the death of Harvey, and whether it was capital expenditure.
They did not consider whether the expenditure was laid out or expended wholly and exclusively for the purpose of the business of the Company.
Since the Tribunal gave no finding on this part of the case, we are unable to answer the question on the materials placed before US.
The High Court was, in our judgment, in error in refusing to allow the argument to be raised that the requirements of section 10(2)(xv) were not satisfied, and the expenditure on that account was inadmissible.
Two courses are now open to us : to call for a supplementary statement of the case from the Tribunal; or to decline to answer the question raised by the Tribunal and to leave the Tribunal to take appropriate steps to adjust its decision under section 66(5) in the light of the answer of this Court.
If we direct the Tribunal to submit a supplementary statement of the case, the Tribunal will, according to the decisions of this Court, (New Jehangir Vakil Mills Ltd. vs Commissioner of Income tax, Bombay North, Kutch and Saurashtra( '); Petlad Turkey Red Dye Works Co, Ltd. vs Com missioner of Income tax( '); and Keshav Mills Co. Ltd. vs Commissioner of Income tax, Bombay North, Ahmedabad( '), be res (1) (3) 782 tricted to the evidence on the record and may not be entitled to take additional evidence.
That may result in injustice.
In the circumstances we think it appropriate to decline to answer the question on the ground that the Tribunal has failed to consider and decide the question whether the expenditure was laid out or expended wholly and exclusively for the purpose of the business of the Company and has not considered all appropriate provisions of the statute applicable thereto.
It will be open to the Tribunal to dispose of the appeal under section 66(5) of the Income tax Act, 1922, in light of the observations made by this Court after determining the questions which ought to have been decided.
There will be no order as to costs in this appeal.
| IN-Abs | The respondent company appointed a managing director who was to retire at the age of 55.
The company arranged to provide a pension to him on retirement, or a pension to his widow if he died before attaining the age of 55.
It executed a trust deed on September 16, 1948, and paid to the trustees certain amounts to enable the trustees to take out an annuity policy to cover the pension.
On October 29, 1954, the company arranged to give enhanced pension to the director or his wife and set apart an ,additional sum on the same terms.
The director died in 1955 before attaining the age of 55, and the company claimed, in the return of its taxable income for the assessment year 1956 57, the total amount paid by it to the trustees as a permissible expenditure in the computation of the company 's business profits in the previous year.
The Appellate Tribunal, held; (i) that the setting apart of the funds amounted to expenditure Within the meaning of s.10(2)(xv), and (ii) that it amounted to revenue expenditure and not capital expenditure.
The Tribunal did not however consider whether the outgoing represented expen diture laid out or expended wholly and exclusively for the purpose of the business and whether it was authorised under s.10(4A).
The Tribunal referred to the High Court two questions, namely : (1) whether the amounts constituted expenditure during the relevant accounting year 1955 within the meaning of the section and (2) whether it represented a revenue expenditure.
The High Court held in favour of the company.
When the Department sought to urge the plea that before the section could be called in aid, it had also to be established that the expenditure was wholly and exclusively for the purpose of the business and that it was authorised by s.10(4A), the High Court did not permit the plea to be raised as it was not expressly raised before the Tribunal.
In appeal to this Court, HELD : (1) The amounts set apart became subject to the obligation to pay the pension arranged to be given, only when the director died, and since he died in May 1955, they must be deemed to have been expended only then, that is during the accounting year 1955.
[776 H; 777 A B] 774 Indian Molasses Co. (P) Ltd. vs Commissioner of Income tax, West Bengal, , referred to.
I I (2) An amount proved to be expended by a tax payer carrying on business is a permissible allowance under s.10(2) (iv) in the computation of the taxable income of the business if it is established; (i) that the allowance claimed is expenditure which, is not of the nature described in cls.
(i) to (xiv) of section 10(2); (ii) that it is not of the nature of capital expenditure or personal expenses of the assessee; (iii) that the expenditure was laid out or expended wholly and exclusively for the purposes of such business; and (iv) that it was authorised under section 10 (4A).
[778 C F] (3) The expression 'question of law arising out of such order ' in s.66(1), is not restricted to take in only those questions which have been expressly argued before and decided by the Tribunal.
If a question of law is raised before the Tribunal, even if an aspect of the question was not raised, that aspect may be urged before the High Court.
In the present case, the second question as framed and referred, does not exclude an enquirY whether the expenditure was wholly and exclusively laid out or expended for the purpose of the business of the company.
It cannot be held that, because before the Tribunal, stress was not pointedly laid upon the ingredients which enable an expenditure to be claimed and allowed, the question did not arise out of the order of the Tribunal.
Therefore the High Court was in error in refusing to allow the argument to be raised that the requirements of section 10(2) (xv) were not satisfied.
[779 H; 780 A; 781 B F] Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co. Ltd. ; , explained and followed.
(4) Since the Tribunal gave no finding on that part of the case, a supplementary statement could be called from it, but such a supplementary statement would be restricted to the evidence on record and may result in injustice to the parties.
[781 F] New Jahangir Vakil Mills Ltd. vs Commissioner of Income tax, 'Bombay North, Kutch & Saurashtra, Petlad Turkey Red Dye Works Co. Ltd. vs Commissioner of Income tax and Keshav Mills Co. Ltd. vs Commissioner of Income tax, Bombay North.
Ahmedabad, , referred to.
(5) Therefore.
it is appropriate to decline to answer the second question on the ground that the Tribunal bad failed to consider and decide the question whether the expenditure was laid out or expended wholly and exclusively for the purpose of the business of the company and that it had not considered all appropriate statutory provisions.
and to leave it to the Tribunal to dispose of the appeal under section 66(5) of the Act [782 A C]
|
Appeal No. 1174 of 1967.
Appeal from the judgment and order dated August 22, 1966 of the Assam & Nagaland High Court in income tax Reference No. 3 of 1966.
Jagadish Swarup, Solicitor General, G. C. Sharma, R. N. Sachthey and B. D. Sharma, for the appellant.
T. A. Ramachandran, for the respondent.
The Judgment of the Court was delivered by Hegde, J.
The Commissioner of Income tax, Assam and Nagaland has brought these appeal by certificate.
The assessment with which we are concerned in this appeal is for the assessment year 1963 64, the relevant accounting year is the financial year 1962 63.
The assessee was the manager of a Tea Estate under the managing agency of M/s. Gillanders Arbuthnot & Co. Ltd. The said Co. had a Provident Fund scheme for its employees.
But that provident fund was not a recognised one.
The assessee retired during the previous year relevant to assessment year 1963 64 and received out of this provident fund an 439 amount of Rs. 27,948/ which represented the interest on the amount of his own contribution to the fund.
The Income tax Officer assessed this amount as the assessee 's income from other sources.
That order was confirmed in appeal by the Appellate Assistant Commissioner.
But on further appeal to the tribunal 'by the assessee, the tribunal came to the conclusion that the receipt in question being profits 'in lieu of salary ', the same was his salary as defined in section 17 of the Income tax Act, 1961 (to be hereinafter referred to as the Act); the same having not been assessed as his salary, the assessment order relating to that item of receipt was not legal.
At the instance of the Commissioner, the tribunal referred the following question of law to the High Court of Assam and Nagaland for its opinion: "Whether on the facts and circumstances of the case and having regard to the provisions of section 17 (3) (ii) of the Income tax Act, 1961 the amount Rs. 27,948/ representing the interest on the amount of the assessee 's own contributions to an unrecognised provident fund was assessable under the residuary section 56 of the said Act?" The High Court answered that question in the negative and in favour of the assessee.
While it came to the conclusion that the, receipt in question cannot be considered as salary as defined in section 17, in its view the same was exempt from payment of tax in view of section 17(3) (ii).
The Commissioner is challenging the above conclusion.
The receipt of Rs. 27,948/ is undoubtedly an income as defined by section 2(24).
The receipt of an interest on any investment is a gain made by the investor and therefore the same is "income".
The next question is whether the said income is exempt from tax or if it is not exempt under what head the same has to be brought to tax? Section 14 of the Act gives the heads of income.
They are (A) Salaries; (B) Interest on securities; (C) Income from house property; (D) Profits and gains of business or profession; (E) Capital gains and (F) Income from other sources.
The salaries are 'brought to tax under section 15 and "the income from other sources" is brought to tax under section 56.
In this appeal we are not concerned with the other heads of income The salary is defined in section 17 as including any "profits in lieu of or in addition to any salary or wages" [section 17(1)(iv)].
Subsection (3) of section 17 says : profits in lieu of salary" includes. 440 (ii) any payment. . due to or received by an assessee from an employer or a former employer or from a provident or other fund (not being an approved superannuation fund) to the extent to which it does not consist of contribution by the assessee or interest on such contributions.
" The contributions to recognised provident funds are dealt with by other provisions of the Act.
Herein we are concerned with the contribution to an unrecognised provident fund.
The learned judges of the High Court opined that the receipt by the assessee with which we are concerned is exempt from the payment of tax in view of section 17 (3) (ii).
In our opinion they were clearly in error in arriving at that conclusion.
Deductions from salaries are dealt with by section 16.
In view of section 17 ( I ) (iv), all receipts of profits in lieu of salary have to be considered as salary.
But then the question is what is meant by "profits in lieu of salary".
In defining the expression "Profits in lieu of salary", the legislature excluded from the scope of that expression any payments received by the assessee from a provident fund, his own contributions to the fund or any interest on such contributions.
From that it follows that the receipt of Rs. 27,948/ by the assessee in the relevant accounting year cannot be considered as salary though undoubtedly that is an income.
Section 17 has nothing to do either with deductions or with exemptions.
It is merely a provision defining the expression "salary".
As the income in question is not salary and the same cannot be said to be either interest on the securities; income from house pro perty; profits and gains of business or profession or capital gains.
it has to be considered as "income from other sources" and brought to tax under section 56.
Section 56 (I) provides that income of every kind which is not to be excluded from the total income under the Act shall be chargeable to income tax under the head income "from other sources" if it is not chargeable to income tax under any of the heads specified in section 1.4 items 'A ' to 'E '.
In our opinion the meaning of section 17(3) (ii) is plain and unambiguous.
Hence there is no need to call into aid any of the rules of construction as was sought to be done by the High Court.
The respondent was not represented before this Court.
We are obliged to Mr. T. A. Ramachandran for acceding to our request to appear on his behalf an amicus curiae and assist us at the time of hearing of the appeal.
441 For the reasons mentioned above we allow this appeal, dis charge the answer given by the High Court and answer the question referred to the High Court in the affirmative and in favour of the Department.
Under the circumstances of the case we make no order as to costs.
| IN-Abs | On the question whether an amount representing the interest on the amount of the assessee 's own contributions to an unrecognised provident fund was assessable under the residuary section 56 of the Income tax Act, 1961, HELD : The amount was liable to be assessed.
The receipt of an interest of any investment is a gain made by the investor and therefore the same is 'income '.
In view of section 17 ( 1) (iv), all receipts of profits in lieu of salary have to be considered as salary.
In defining the expression 'profits in lieu of salary ', the legislature excluded from the scope of that expression any payments received by the assessee from a provident fund, his own con tribution,; to the fund or any interest on such contributions.
Therefore this receipt cannot be considered as salary, though undoubtedly that is an income.
As the income in question is not salary and the same cannot be said to be either interest on the securities; income from house property, profits and gains of business of profession or capital gains, it has to be considered as 'income from other sources ' and brought to tax under section 56.
Section 56(1) provides that income of every kind which is not to be ex cluded from the total income under the Act shall be chargeable to Incometax under any of the heads specified in section; 14 item "A" to "E".
[43 9 C G]
|
Appeal No. 646 of 1967.
Appeal by special leave from the judgment and order dated December 1, 1966 of the Allahabad High Court in Civil Revision No. 721 of 1964.
J. P. Goyal and G. section, Chatterjee, for the appellant.
V. section Desai and B. R. Agarwala, for the respondent.
The Judgment of the Court was delivered by Shah, C.J.
On October 5, 1960 the appellant agreed to do certain construction work for the respondent on the terms and conditions of a "written tender".
Clauses 12 & 13 of the tender were : "12.
In the event of any dispute, arising out of this sub contract, the parties hereto agree that the matter shall be referred to arbitration by two Arbitrators under the of 1940 and such amendments thereto as may be enacted thereafter.
Notwithstanding the place where the work under this contract is to be executed, it is mutually understood and agreed by and between the parties hereto that this Contract shall be deemed to have been entered into by the parties concerned in the City of G Bombay and the Court of law in the City of Bombay alone shall have jurisdiction to adjudicate thereon.
" Disputes arose between the parties and the appellant submitted a petition to the Court of the Subordinate Judge at Varanasi for an order under section 20 of the Indian 10 of 1940 that the agreement be filed and an order of reference be made to an Arbitrator or Arbitrators appointed by the Court to settle the dispute between the parties in respect of the construction works done by him.
The respondent contended that the Civil Courts in Bombay alone had because of the terms contained in cl. 13 316 jurisdiction to entertain the petition.
The Trial Judge rejected that contention observing that the condition in cl. 13 that "the contract shall be deemed to have been entered into by the parties concerned in the city of Bombay has no meaning unless the contract is actually entered into in the city of Bombay", and that there was no evidence to establish that it was entered into in the city of Bombay.
The Trial Judge concluded that the entire cause of action had arisen at Varanasi and the parties could not by agreement confer jurisdiction on the Courts at Bombay, which they did not otherwise possess.
The High Court of Allahabad in exercise of its revisional jurisdiction set aside the order passed by the Subordinate Judge and declared that the Courts in Bombay had jurisdiction under the general law to entertain the petition, and by virtue of the covenant in the agreement the second branch of cl. 13 was applicable and binding between the parties and since the parties had agreed that the Courts in Bombay alone had jurisdiction to adjudicate upon the contract, the petition to file the arbitration agreement could not be entertained by the Courts at Varanasi.
Against the order of the High Court directing that the petition be returned for presentation to the proper Court, the, appellant has appealed to this Court with special leave.
Section 41 of the provides in so far as it is relevant : "Subject to the provisions of this Act and of rules made thereunder (a) the provisions of the Code of Civil procedure, 1908, shall apply to all proceedings before the court, and to all appeals under this Act.
" The Code of Civil Procedure in its entirety applies to proceedings under the .
The jurisdiction of the Courts under the to entertain a proceeding for filing an award is accordingly governed by the provisions of the Code of Civil Procedure.
By cl. 13 of the agreement it was expressly stipulated between the parties that the contract shall be deemed to have been entered into by the parties concerned in the City of Bombay.
In any event the, respondent have their principal office in Bombay and they were liable in respect of a cause of action arising under the terms of the tender to be sued in the Courts at Bombay.
It is not open to the parties by agreement to confer by their agreement jurisdiction on a Court which it does not possess under the Code.
But where two courts or more have under the Code of Civil Procedure jurisdiction to try a suit or proceeding an agreement between the parties that the dispute between them shall 317 be tried in one of such Courts is not contrary to public policy.
Such an agreement does not contravene section 28 of the Contract Act.
Counsel for the appellant contended that merely because the respondent carried on business in Bombay the Courts at Bombay were not invested with jurisdiction to entertain any suit or a partition for filing an arbitration agreement.
Section 20 of the Code of Civil Procedure provides : "Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction (a,) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b). . . . . . (c) the cause of action, wholly or in part, arises. "Explanation II.
A corporation shall be deemed to carry on business at its sole or principal office in India, or, in respect of any cause of action arising at.
any place where it has also a subordinate office, at such place.
" Plainly by the terms of section 20(a) read with Explanation II, the respondent Company was liable to be sued at Bombay where it had its principal place of business.
The argument of counsel for the appellant that the expres sion "corporation" in Explanation II includes only a statutory corporation and not a company registered under the Indian Companies Act is, in our judgment, without substance.
The Code of Civil Procedure uses the expression "corporation" as meaning a legal person and includes a company registered under the Indian Companies Act.
Order 29 of the Code of Civil Procedure deals with suits by or against a corporation and there is nothing in the Code of Civil Procedure that a corporation referred to under section 20 means only a statutory corporation and not a company registered under the Indian Companies Act.
Since an application for filing an award in respect of a dispute arising out of the terms of the agreement could be filed in the Courts in the City of Bombay, both because of the terms of cl. 13 318 of the, agreement and because the respondents had their Head Office where they carry on business at Bombay, the agreement between the parties that the Courts in Bombay alone shall have jurisdiction to try the proceeding relating to arbitration was binding between them.
The appeal fails and is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | On October 5, 1960 the appellant agreed to do certain construction work for the respondents company registered under the Indian Companies Act and having its principal place of business at Bombay On the terms and conditions of a written tender.
Clause 12 of the tender provided for arbitration in case of dispute.
Clause 13 provided that notwithstanding the place where the work under the contract was to be executed the contract shall be deemed to have been entered into by the parties at Bombay and the court in Bombay alone shall have jurisdiction to adjudicate thereon.
On disputes arising between the parties the appellant submitted a petition to the Court at Varanasi for an order under section 20 of the that the agreement be filed and an order of reference be made to an arbitrator or arbitrators appointed by the court.
The respondent contended that in view% of cl. 13 of the arbitration agreement only the courts at Bombay had jurisdiction.
The trial court held that the entire cause of action had arisen at Varanasi and the parties could not by agreement confer jurisdiction on the courts of Bombay which they did not otherwise possess.
The High Court at Allahabad in exercise of its revisional jurisdiction held that the courts at Bombay had jurisdiction under the general law and hence could entertain the petition.
It further held that in view of cl. 13 of the arbitration agreement the petition could not be entertained at Varanasi.
Against the order of the High Court directing the petition to be returned for presentation to the proper court, the appellant appealed to this Court by special leave.
The question that fell for consideration were : (i) whether the courts at Bombay alone had jurisdiction over the dispute; (ii) whether Explanation 11 to section 20(a) of the Code of Civil Procedure refers only to Government corporations and not to companies registered under the.
Indian Companies Act.
HELD : (i) The Code of Civil Procedure in its entirety applies to proceedings under the by virtue of section 41 of the latter Act.
The jurisdiction of the courts under the to entertain a proceeding for filing an award is accordingly governed by the provisions of the Code of Civil Procedure.
By the terms of section 20(a) of the Code .of
Civil Procedure read with Exp.
11th thereto, the respondent company which had its principal place of business at Bombay, was liable to be sued at Bombay.
[316 G] It is not open to the par ties by agreement to confer jurisdiction on any Court which it did not otherwise possess under the Code.
But where two courts have under the Code of Civil Procedure jurisdiction to try a suit of proceeding an agreement between the parties that the dispute between 315 them shall be tried in one of such courts is not contrary to Public Policy Such an agreement does not contravene section 28 of the Contract Act.
[316 H] Since in the present case the courts at Bombay had jurisdiction under the Code of Civil Procedure the agreement between ,the parties that the courts in Bombay alone shall have jurisdiction to try the proceedings relating to arbitration was binding between them.
[318 A] (ii) Order 29 of the Code of Civil Procedure deals with suits by or against a corporation and there is nothing in the Code to support the contention that a Corporation referred to under section 20 means only a statutory corporation and not a company registered under the Indian Companies Act.
[317 G H]
|
iminal Appeal No. 171 of 1968.
479 Appeal by special leave from the judgment and order dated September 13, 1967 of the Calcutta High Court in Criminal Reference No. 36 of 1967.
D. N. Mukherjee, for the appellant.
The respondent did not appear.
The Judgment of the Court was delivered by Dua, J.
The appellant, Basudev Hazra, was a leaseholder in respect of tolls of the public ferry at Sadar Ghat on the outskirts of Burdwan town for crossing the river Damodar.
This lease was for a period of three years (August 14, 1963 to August 13, 1966) : exhibit 2.
On November 30, 1964 Matiar Rahman Mandal filed a complaint against the appellant in the court of the Sadar Sub Divisional Officer (Judicial), Burdwan alleging that the appellant used to realise illegally 20 nP. per cart from the cultivators who used to drive their carts across the dry bed of the river.
The matter was reported to the S.D.O. who directed an enquiry.
This infuriated the appellant.
On November 29, 1964 the appellant realised double the amount of toll and on protest and refusal by the complainant he was threatened with violence by the appellant.
The Magistrate trying the appellant for offences under sections 23 and 24 of the Bengal Ferries Act, I of 1885 convincted him of both the offences.
The appellant was sentenced to a fine of Rs. 10/ under section 23 and to fine of Rs. 20/ under section 24 : in default of payment of fine in the former case he was to undergo simple imprisonment for ten days and in the latter for 20 days.
On the appellant challenging his conviction on revision in the Court of the Sessions Judge, the Additional Sessions Judge, Burdwan made a reference to the High Court recommending the appellant 's acquittal.
It was observed by the Additional Sessions Judge in his reference that according to the appellant 's defence the complainant 's party were in fact using the landing stage and the path constructed and repaired by him and, therefore, they were liable to pay the usual toll tax.
After reproducing section 24 he added : ".
the complainant 's case as it appears from the petition of complaint and also from the evidence of the three witnesses examined on the point, is that they do not take advantage of any of the facilities provided by the lessee and that the lessee demanded toll from them even though they were using their own path.
The defence as I have already stated, was that the pathway and the landing stage belonged to the lessee and that, therefore, he was entitled to collect toll.
Forgetting the defence for the moment, it seems to me that no conviction 480 u/s 24 can be sustained on the case of the complainant as it is." According to him the collection of money from the people using their own pathway might amount to extortion but it would not attract section 24.
We need not refer to the recommendation with respect to the appellant 's conviction under section 23 as this was accepted by the High Court and there is no appeal against acquittal under that section.
The High Court accepted the recommendation with respect to the conviction under section 23 and acquitted the appellant of that offence.
In regard to the; conviction under section 24 the High Court observed that the trial Magistrate had found (i) that the appellant had been realising toll charges in excess of the scheduled rate of 20 ps.
per cart and also realising such charges from persons who did not use the ferry and (ii) that though the complainant had not availed of the ferry and: had taken the cart over the sandy bed of the river 40 ps.
per cart were realised from him.
These findings of fact were held not open to re examination on revision.
The High Court added that realisation of 40 ps.
fell within the mischief of section 24 which forbids every lessee from realising more than lawful toll even in cases in which he is entitled to demand ferry charges.
Repelling the argument that the present was a case of extortion and it did not fall within the purview of section 24 the High Court, after referring to the complainant 's case, observed that it was a case of illegal realisation of toll in excess, when the appellant was not entitled to realise it at all and not a case of extortion under the Indian Penal Code.
The amount had been illegally demanded as a toll and that also ' in excess of permissible rate.
The reference with respect to section 24 was, as observed earlier, rejected.
The appellant has secured special leave to appeal under article 136 of the Constitution and his counsel Mr. D. N. Mukherjee has strenously contended that the realisation of 40 ps.
per cart from those who do not use the ferry can not as a matter of law fall within the mischief of section 24 of the, Bengal Ferries Act.
His contention in essence is that unless someone actually uses a ferry no charges realised from him for permitting him to cross the river, even if the demand is made by way of toll, can attract the provisions of section 24.
The contention though prima facie somewhat attractive does not stand scrutiny.
Section 24 reads as under : "Penalty for taking unauthorised tolls, and for causing delay : Every such lessee or other person as aforesaid asking or taking more than the lawful toll, or without due cause 481 delaying any person, annual, vehicle or other thing, shall be punished with fine which may extend to one hundred rupees.
" It is obvious that this section does not speak of taking toll in excess of the lawful limit only from those persons who use the ferry.
This Act was enacted for regulating ferries but that does not mean that an illegal demand, under the pretext of claim by way of toll under this Act when it is not legally claimable was not intended by the legislature to be prohibited and made punishable by the language of section 24, Shri Mukherjee drew our attention to section 5 of the Act in which "ferry" is defined to include a bridge of boats, pontoons or rafts, a swing bridge, a flying bridge, a temporary bridge and a landing stage.
According to him, this definition suggests that it is only when a ferry is used and excessive, charges realised that section 24 would be attracted.
The submission is difficult to accept.
This definition which is not exhaustive does not seem to us to control or otherwise to throw helpful light in the interpretation of section 24.
This section seems to have been designed in effect to protect the persons crossing the river against harassment and abuse of the privileged position which the lessee or other person authorised to collect the tolls of a public ferry occupies under the statute in the matter of control over the passage or pathway for crossing, fording or ferrying across the river.
Demanding or re ceiving more than lawful dues and unduly delaying persons, animals, vehicles or things.
in crossing the river are both rendered penal and punishable.
Whether the person from whom the amount is demanded or received is under no obligation to pay anything by way of toll while crossing the river bed or is bound by law only to pay 20 ps.
per cart as toll would thus be immaterial when payment is demanded or received on the pretext that it is due as toll when it is legally not so due.
In either case section 24 would seem to be attracted : this construction would serve to suppress the mischief at which this section appears to be aimed.
The question whether or not the appellant 's case falls within the mischief of extortion as defined under the Indian Penal Code is not strictly relevant to the point arising in the controversy because if the appellant 's case is covered by section 24 of the Act then he is liable to be punished thereunder.
His liability to be prosecuted under the Indian Penal Code cannot by itself in law exclude the applicability of section 24 to his case.
The Additional Sessions Judge was, in our opinion, not quite right in observing that the defence that the accused was entitled to claim the toll may be ignored, because defence of an accused person can legitimately be taken into consideration while assessing the value of the evidence and judging the guilt or innocence of the accused.
The appellant 's defence in this case would clearly tend to support the complainant 's case that the amount received was demanded as toll which was an unlawful 482 ,demand.
To exclude cases like the present from the operation of section 24 would unduly restrict its effectiveness and would indeed facilitate illegal recoveries prohibited by it.
To that extent it would defeat the object and purpose which this section is intended to achieve.
When the appellant 's counsel took us through the evidence we found that the appellant had also delayed the prosecution witnesses without due cause in crossing the river in violation of section 24.
It is, however, unnecessary to pursue this aspect.
Finally it may be pointed out that article 136 of the Constitution does not confer a right of appeal on a party.
It only confers a discretionary power on this Court to be exercised sparingly to interfere in suitable cases where grave miscarriage of justice has resulted from illegality or from misapprehension or mistake in reading evidence or from ignoring, excluding or illegally admitting material evidence.
The present case suffers from no such infirmity.
The appeal accordingly fails and is dismissed.
R.K.P.S. Appeal dismissed.
| IN-Abs | The appellant was a leaseholder in respect of tolls of a public ferry crossing the river Damodar.
The respondent filed a complaint against him alleging that the appellant used to realise illegally 20 np per cart from the cultivators who used to drive their carts across the dry bed of the river.
After hearing of the respondent 's complaint on November 29, 1964 the appellant realised double the amount of toll from the respondent.
The appellant was, thereafter convicted for offences under sections 23 and 24 of the Bengal Ferries Act, 1885.
In revision, the Additional Sessions Judge recommended acquittal of the appellant in respect of his conviction under both the provisions.
As to the conviction under section 24, according to the Additional Sessions Judge, the collection of money from the people using the river bed and not the ferry might amount to extortion under the Indian Penal Code but it would not attract the provisions of section 24.
Although the High Court accepted the recommendation with respect to the acquittal under section 23, it rejected the reference in respect of the conviction under section 24.
In the appeal to this Court by special leave, it was contended that the realisation of 40 np per cart from those who did not use the ferry could not as a matter of law fall within the mischief of s, 24.
HELD: dismissing the appeal.
Section 24 of the Bengal Ferries Act does not speak of taking toll in excess of the lawful limit only from those persons who use the ferry.
This Act was enacted for regulating ferries but that does not mean that an illegal demand under the pretext of claim by way of toll under this Act, when it is not legally claimable, was not intended by the legislature to be prohibited and made punishable by the language of section 24.
Demanding or receiving more than lawful dues and unduly delaying persons, animals, vehicles or things in crossing the river are both rendered penal and punishable.
Whether the person from whom the amount is demanded or received is under no obligation to pay anything by way of toll while crossing the river bed or is bound by law only to pay 20 ps per cart as toll would thus be immaterial when payment is demanded or received on the pretext that it is due as toll when it is legally not so due.
[181 C F] To exclude cases like the present from the operation of section 24 would unduly restrict its effectiveness and would indeed facilitate illegal recoveries prohibited by it.
To that extent it would defeat the object and purpose which this section is intended to achieve.
[182 A]
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Appeal No. 649 of 1967.
411 Appeal by special leave from the order dated May 4, 1966 of the Calcutta High Court in Income tax Reference No. 114 of 1965.
Jagadish Swarup, Solicitor General, Ram Panjwani, R. N. Sachthey and B. D. Sharma, for the appellant.
C. K. Daphtary, B. P. Maheshwari and K. R. Khaitan, for the respondent.
The Judgment of the Court was delivered by Shah, C.J.
Burlop Dealers Ltd. hereinafter referred to as 'the assessee is a limited company.
For the assessment year 1949 50 the assessee submitted a profit and loss account disclosing in the relevant year of account Rs. 1,75,875/ as profit in a joint venture from H. Manory Ltd. and claimed that Rs. 87,937/ being half the profit earned from H. Manory Ltd. was paid to Ratiram Tansukhrai under a partnership agreement.
The assessee stated that on June 5, 1948, it 'had entered into an agreement with H. Manory Ltd. to do business in plywood chests and in consideration of financing the business the assessee was to receive 50% of the profits of the business.
The assessee claimed that it had entered into an agreement on October 7, 1948, with Ratiram Tansukhrai for financing the transactions of H. Manory Ltd. in the joint venture, and had agreed to pay to Ratiram Tansukhrai 50% of the profit earned by it from the business with H. Manory Ltd. The Income tax Officer accepted the return filed by the assessee and included in computing the total income for the assessment year 1949 50 Rs. 87,937/ only as the profit earned on the joint venture with H. Manory Ltd. In the assessment year 195051 the assessee field a return also accompanied by a profit and loss account disclosing a total profit of Rs. 1,62,155/in the relevant account ear received from H. Manory Ltd., and claimed that it had transferred Rs. 81,077/ to the account of Ratiram Tansukhrai as his share.
The Income tax Officer on examination of the transactions brought the entire amount of Rs. 1,62,155/ to tax holding that the alleged agreement of October 1948 between the assessee and Ratiram Tansukhrai had merely been "got up as a device to reduce the profits, received from H. Manory Ltd.".
This order was confirmed by the Appellate Assistant Commissioner and by the Income tax Appellate Tribunal.
The Tribunal then stated a case under section 66(1) of the Income tax Act to the High Court of Calcutta.
The High Court agreed with the view of the Tribunal and answered the question against the assessee.
412 In the meanwhile on May 13, 1955, the Income tax Officer issued a notice under section 34 to the assessee for the assessment year 1949 50 to re open the assessment and to assess the amount of Rs. 87,937/ allowed in the assessment of income tax as paid to Ratiram Tansukhrai.
The assessee filed a return which did not include the amount paid to Ratiram Tansukhrai.
The Income tax Officer re assessed the income under section 34(1) (a) and added Rs. 87,937/ to the income returned by the assessee in the assessment year 1949 50.
The Appellate Assistant Commissioner held that the Income tax Officer was entitled to take action under section 34(1) (a) of the Income tax Act 1922 after the ,amendment in 1948, and to re open the assessment if income had been under assessed owing to the failure cf the assessee to disclose fully and truly all material facts necessary for the assessment.
He confirmed the order observing that the assessee had misled the Income tax Officer into believing that there was a genuine arrangement with Ratiram Tansukhrai and had stated in the profit and loss account that the amount paid to Ratiram Tansukhrai was the share of the latter in the partnership, whereas no much share was payable to Ratiram Tansukhrai.
In appeal against the order of the Appellate Assistant Com missioner the Income tax Appellate Tribunal held that the assessee had produced all the relevant accounts and documents necessary for completing the assessment, and the assessee was under no obligation to inform the Income tax Officer about the true nature of the transactions.
The tribunal on that view reversed the order of the Appellate Assistant Commissioner and directed that the amount of Rs. 87,937/ be excluded from the total income of the assessee for the year 1949 50.
An application under section 66(1) of the Indian Income tax Act for stating a case to the High Court was rejected by the Tribunal.
A petition to the High Court of Calcutta under section 66(2) for ,directing the Tribunal to submit a statement of the case was also ,rejected.
The Commissioner has appealed to this Court.
Section 34(1) of the Indian Income tax Act, 1922, as it stood in the assessment year 1949 50 provided: "If (a) the Income tax Officer has reason to elieve that by reason of the omission or failure on the part of an assessee to make a return of 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 413 chargeable to income tax have escaped assessement for that year, or have been under assessed.
(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 in 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 under assessed.
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, 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 re assess such income, profits or gains" The Income tax Officer had in consequence of information in his possession that the agreement with Ratiram Tansukhrai was a sham transaction reason to believe, that income chargeable to tax had escaped assessment.
Such a case would appropriately fall under section 34(1)(b).
But the period prescribed for serving a notice under section 34(1) (b) had elapsed.
Under section 34 (1 )(a) the Income tax Officer had authority to serve a notice when he had reason to believe that by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the year, income chargeable to tax had escaped assessment.
As observed by this Court in Calcutta Discount Co. Ltd. vs Income tax Officer, Companies District 1, Calcutta and another(1).
"The words used are "omission or failure to disclose fully and truly all material facts necessary for his assessment for that year".
It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment.
What facts 'are material and necessary for assessment will differ from case to case.
In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion.
From the primary facts (1) 41 ; , 200. 414 in his possession whether on disclosure by the assessee, or discovered by him on the basis of the facts disclose, or otherwise, the assessing authority has to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable".
We are of the view that under section 34(1) (a) if the assessee has disclosed primary facts relevant to the assessment, he is under no ,obligation to instruct the Income tax Officer about the inference which the Income tax Officer may raise from those facts.
The terms of the Explanation to section 34(1) also do not impose a more onerous obligation.
Mere production of the books of account or other evidence from which material facts could with due diligence have been discovered does not necessarily amount to disclosure within the meaning of section 34(1), but where on the evidence and the materials produced the Income tax Officer could 'have reached a conclusion other than one which he has reached, a proceeding under section 34(1) (a) will not lie merely on the ground that the Income tax Officer has raised an inference which he may later regard as erroneous.
The assessee had disclosed his books of account and evidence from which material facts could be discovered : it was under no obligation to inform the Income tax Officer about the possible inferences which may be raised against him.
It was for the Income tax Officer to raise such an inference and if he did not do so the income which has escaped assessment cannot be brought to lay under section 34(1) (a).
The appeal fails and is dismissed with costs.
K.B.N. Appeal dismissed.
| IN-Abs | For the assessment year 1949 50 the assessee submitted a profit and loss account disclosing a certain amount as profit in a joint venture and claimed that half of this profit was paid to R under a partnership agreement.
The Income tax Officer accepted the return and included only half of the profit in the joint venture in computing the assessee 's total income.
In the next assessment year the assessee filed a return accompanied by a profit and loss account and claimed that it had transferred half the profit to R as his share.
But the Income tax Officer on examination of the transactions brought the entire amount of profit in the joint venture to tax, holding that the partnership agreement was got up a devise to reduce the profits received from the joint venture.
This order was confirmed by the Tribunal and the High Court.
Meanwhile, the Income tax Officer issued a notice under section 34 of the Income tax Act, 1922 to reopen the assessment for the assessment year 1949 50 and to assess the amount allowed in that assessment as paid to R. The Income tax Officer re assessed the income under section 34(1) (a) and added that amount to the income returned by the assessee in the assessment year 1949 50.
The Appellate Assistant Commissioner confirmed that order but the Tribunal reversed.
The High Court, on reference, answered in favour of the assessee.
Dismissing the appeal by the Revenue, HELD : Under section 34(1) (a,), if the assessee has disclosed primary facts relevant to the assessment, he is under no obligation to instruct the Income tax Officer about the inference which the Income tax Officer may raise 'from these facts.
The terms of the Explanation to section 34(1) also do not impose a more onerous obligation.
Mere production of the books of account or other evidence from which material facts could with due diligence, have been discovered does not necessarily amount to disclosure within the meaning of section 34(1); but where on the evidence and the materials produced the Income tax Officer could have reached a conclusion other than the one which he has reached, a proceeding under section 34(1) (a) will not lie merely on the ground that the Income tax Officer has raised an inference which he may later regard as erroneous.
The assessee had disclosed his books of account and evidence from which material facts could be discovered.
It was 'for the Income tax Officer to raise the necessary inference and if he did not do so the income which has escaped assessment cannot be brought to tax under section 34(1) (a).
[413 C] Calcutta Discount Co. Ltd. vs Income tax Officer, Companies District 1, Calcutta & Anr. , 200, referred to.
|
Appeal No. 1223 of 1967.
Appeal from the judgment and decree dated March 5, 1964 of the Allahabad High Court in Income tax Reference No. 71 of 1959.
section K. Mitra, B. B. Ahuja, R. N. Sachthey and B. D. Sharma, for the appellant.
Ram Lal and A. T. M. Sampat, for the respondent.
The Judgment of the Court was delivered by Shah, C.J.
The respondent who is the Karta of a Hindu Un divided Family entered on behalf of the family into a partnership with one Devi Sharan Garg to carry on the business of 407 manufacturing and selling pharmaceutical products and literature relating thereto.
On July 27, 1946 the partnership was dissolved .
The assets of the firm which included goodwill, Machinery, furniture, medicines, library and copyright in respect of certain publications were valued at the date of dissolution at Rs. 2,50,000/ .
The respondent was paid a sum of Rs. 1,25,000/ in lieu of his share and the business together with the goodwill was taken over by Devi Sharan Garg.
In proceedings for assessment of the respondent for the year 1947 48 the Income tax Officer sought to bring an amount of Rs. 70,000/ to tax as capital gains.
The contention raised by the respondent that no part of the amount of Rs. 1,25,000/received by the respondent represented capital gains was rejected by the Income tax Officer, Appellate Assistant Commissioner and the Income tax Appellate Tribunal.
The Tribunal however reduced the amounts capital gains brought to tax to Rs. 65,000/ .
The Tribunal referred the following question to the High Court of Allahabad under section 66(1) of the Indian Income tax Act, 1922 "Whether on a true interpretation of sub section (1) of section 12 B of the Income tax Act, the sum of Rs. 65,000/ has been correctly taxed as capital gains".
The High Court answered the question in the negative.
Against that order, with certificate granted by the High, Court, this appeal has been preferred.
Section 12 B(1), insofar as it is relevant provides "The tax shall be payable by an assessee under the head "Capital gains" in respect of any profits or gains arising from the sale, exchange or transfer of a capital asset effected after the 31st day of March 1946 .
and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange or transfer took place Provided.
Provided further.
Provided further that any transfer of capital assets . .
on the dissolution of a firm or other association of persons. . . shall not for the purposes of this section, be treated as sale, exchange or transfer of the capital assets; 408 Liability to pay capital gains arises under section 12 B(1) if there be a sale, exchange or transfer of capital assets.
There was no sale or exchange of his share in the capital assets of the firm by the respondent to Shri Devi Sharan Garg.
Nor did he transfer his share in the capital assets.
The assets of the firm included the goodwill, machinery, furniture, medicines library and the copyright in respect of certain publications.
A large majority of the assets were incapable of physical division, and the partners agreed that the assets be taken over by Devi Sharan Garg at a valuation, and the respondent be paid his share of the value in money.
Such an arrangement, in our judgment, amounted to a distribution of the assets of the firm on dissolution.
There is no clause in the partnership agreement providing for the method of dissolution of the firm or for winding up of its affairs.
In the course of dissolution the assets of a firm may be valued and the assets divided between the partners according to their respective shares by allotting the individual assets or paying the money value equivalent thereof.
This is a recognized method of making up the accounts of a dissolved firm.
In that case the receipt of money by a partner is nothing but a receipt of his share in the distributed assets of the firm.
The respondent received the money value of his share in the assets of the firm; he did not agree to sell, exchange or transfer his share in the assets of the firm.
Payment of the amount agreed to be paid to the respondent under the arrangement of his share was therefore not in consequence of any sale exchange or transfer of assets.
To persuade us to take a different view, reliance was placed on behalf of the Revenue upon James Anderson vs Commissioner of Income tax Bombay City(1).
In that case the assessee held a power of attorney from the executor of a deceased person, in the course of the administration of his estate.
He sold certain shares and securities belonging to the deceased for distribution among the legatees.
The excess realized by sale was treated by the Income tax Department as Capital gains.
The contention of the assessee that since the sale of the shares and securities fell within the purview of the third proviso to section 12 B (1) it could not be treated as a sale of capital assets within the meaning of section 12 B(1) was rejected by this Court.
This Court observed that the object of the third proviso to section 12 B(1), in providing that "any distribution of capital assets under a will" shall not be treated as sale, exchange or transfer of capital assets for the purpose of section 12 B was that as long as there was distribution of capital assets in specie and no sale, there was no transfer for the purposes of that section, but if, there was a sale of the capital assets and profits or gains arose therefrom, the liability to tax (1) 409 arose, whether the sale was by the administrator or executor or a legatee, and that the expression "distribution of capital assets" in the third proviso to section 12 B(1) meant distribution in specie and not distribution of sale proceeds.
That case has no application.
There was no distribution of capital assets between the legatees : the assessee had pursuant to the authority reserved to him from the executor of the deceased person sold the shares and securities, and from the sale of shares and securities capital gains resulted.
In the case in hand there is no sale and payment of price, but payment of the value of share under an arrangement for dissolution of the partnership and distribution the assets.
The rights of the parties were adjusted by handing over to one of the partners the entire assets and to the other partner the money value of his share.
Such a transaction is not in our judgment a sale, exchange or transfer of assets of the firm.
In Commissioner of Income tax, Madhya Pradesh, Nagpur & Bhandara vs Dewas Cine Corporation(1) in dealing with the meaning of the expressions "Sale" and "sold" as used in section (10) (2) (vii) of the Income tax Act, 1922, this Court observed that the expression "sale" in its ordinary meaning is a transfer of property for a price, and adjustment of the rights of the partners in a dissolved firm by allotment of its assets is not a transfer for a price.
In that case the assets were distributed among the partners and it was contended that the assets must in law be deemed to be sold by the partners to the individual partners in consideration of their respective shares, and the difference between the written down value and the price realised should be included in the total income of the partnership under the second proviso to section 10(2) (vii).
This Court observed that a partner may, it is true, in an action for dissolution insist that the assets of the partnership be realised by sale of its assets, but property allotted to a family in satisfaction of his claim to his share, cannot be deemed in law to be sold to him.
We therefore agree with the High Court that the question referred must be answered in the negative.
The appeal fails and is dismissed with costs.
G.C. Appeal dismissed.
| IN-Abs | The respondent who was the karta of his Hindu undivided family entered into partnership with one D to carry on the business of manufacturing and selling pharmaceutical products etc.
On July 27, 1946 the partnership was dissolved.
The assets of the firm which included goodwill, machinery, furniture etc. were valued on the date of dissolution at Rs. 2,50,000 and the respondent was paid the sum of Rs. 1,25,000 in lieu of his share and the business together with the goodwill was taken over by D.
The question in income tax proceedings was whether the transaction was one of sale liable to capital gains tax under section 12B(1) of the Income tax Act.
The assessing and appellate authorities held against the respondent.
The High Court in reference, however, held in his favour.
The revenue appealed.
HELD : There was no clause in the partnership agreement providing for the method of dissolution of the firm or for winding up of its affairs.
In the course of dissolution the assets of the firm may be valued and the assets divided between the partners according to their respective shares by allotting the individual assets or paying money value equivalent thereof.
This is a recognised method of making up the accounts of the dissolved firm.
In that case the receipt of money by a partner is nothing but a receipt of his share in the distributed assets of the firm.
The respondent received the money value of his share in the assets of the firm; he did not agree to sell, exchange on transfer his share in the assets of the firm.
Payment of the amount agreed to be paid to the respondent under the arrangement of his share was therefore not consequence of any sale, exchange or transfer of assets.
[408 C E] James Anderson vs Commissioner of Income tax, Bombay City, and Commissioner of Income tax, Madhya Pradesh and Nagpur & Bhandara vs Dewas Cine Corporation, 68 I.T.R. 240, distinguished.
|
minal Appeal No. 162 of 1967.
Appeal by special leave from the judgment and order dated May 3, 1967 of the Patna High Court in Criminal Appeal No. 40 of 1965.
840 E. C. Agrawala, for the appellants.
B. P. Jha, for the respondent.
The Judgment of the Court was delivered by Hegde, J.
This appeal by special leave is directed against the decision of single judge of the High Court of Judicature at Patna setting aside the acquittal of the appellants and convicting them under sections 379/149, I.P.C. as well as under section 143, I.P.C. The appellants were prosecuted before the Munsiff Magistrate, 1st Class, Arrah for dishonestly cutting and removing the paddy crop in plots Nos. 340 and 346 pertaining to khata No. 82 in village Ibrahim Nagar District Shahbad.
The complainant 's case is that those lands belonged to him and the appellants unlawfully trespassed into that property on November 19, 1961 and harvested the rice crop.
The appellants pleaded not guilty to the charge.
The learned trial magistrate held the appellants guilty and convicted them as mentioned earlier.
In appeal the learned District Judge, Shahbad acquitted the appellants.
He felt unable to rely on the prosecution case for three different reasons.
Firstly he came to the conclusion that the witnesses who spoke about the occurrence are all interested witnesses and it is unsafe to place reliance on their testimony.
He secondly came to the conclusion that there was considerablE delay in filing the complaint and the delay in question has not been explained by the prosecution and that circumstance throws doubt on the prosecution case.
Lastly he held that the non examination of the police inspector who is said to have come to the place of occurrence at the time of the occurrence and seen some of the appellants ' harvesting the crop casts further doubt on the prosecution case.
The High Court differing from the 1st appellate court held that there was no delay in filing the complaint nor was the non examination of the police inspector a circumstance that went against the prosecution.
It did not deal with the finding of the 1st appellate court that it is unsafe to place reliance on the evidence of P.W.s. 1 to 4 as they were interested witnesses.
It is true that the powers of the High Court in considering the evidence on record in appeals under section 417, Cr.
P.C. are as extensive as its powers in appeals against convictions but that court at the same time should bear in mind the presumption of innocence of accused persons which presumption is not weakened by their acquittal.
It must also bear in mind the fact that the appellate judge had found them not guilty.
Unless the conclusions reached by him are palpably wrong or based on erroneous view of the law or that his decision is likely to result in grave injustice, the High Court should be reluctant to interfere with his conclusions.
If two 841 reasonable conclusions can be reached on the basic of the evidence on record then the view in support of the acquittal of the accused should be preferred.
The fact that the High Court is inclined to take a different view of the evidence on record is not sufficient to, interfere with the order of acquittal.
The learned appellate judge has come to the conclusion that P.Ws. 1 to 4 are interested witnesses and it is unsafe to place reliance on their testimony.
It is established in evidence that P.Ws. 1 to 3 are interested witnesses.
They are the enemies of the appellants.
This aspect of the case was not considered by the High, Court at all.
The occurrence Is said to have taken place on November 19, 1961 but the complaint in respect of the same was filed on November 27, 1961.
The explanation given by the complainant for this inordinate delay was that he laid information about the occurrence before the police on the date of the occurrence itself; he was.
expecting the police to take up the investigation; as the police did not take up the investigation, he filed the complaint on 27th November, 1961.
This explanation has been rejected by the 1st appellate court.
The complaint said to have been filed by the complainant has not been summoned nor proved.
No satisfactory proof of any such complaint has been adduced before the court.
If a complaint tinder section 154 had been filed, the same would have been registered and a final report under section 173 submitted.
None of those documents have been summoned much less proved.
Curiously enough, the learned judge of the High Court says that if the learned Sessions Judge had looked into the diary of the magistrate, he would have found reference to the complaint filed by the complainant.
In this Court we requested the Counsel for the State to look into the original records and inform us whether there is any reference to a complaint filed by the complainant.
After examining the records, he told us that there is no such reference.
We do not know how the learned judge formed the impression that there was some reference in some record about the information laid before the police.
In fact in this Court Counsel for the State told us that what had happened was that before the occurrence, the com plainant appears to have filed an application before the police mentioning that there was an apprehension of breach of peace.
The delay of about 8 days in filing the complaint in a case of this nature throws a great deal of doubt on the prosecution story.
It was the duty of the prosecution to explain the delay satisfactorily.
Failure of the prosecution to do so undoubtedly is a circumstance of considerable importance.
According to the complainant, as the appellants were reaping the crop the Police Inspector happened to come there and that he 842 had seen some of the appellants harvesting the crop.
If that be so the Inspector of Police would have been an extremely important witness.
His evidence would have been useful in determining the guilt of the accused.
He is a disinterested person.
No explanation was given for not examining him.
Strangely enough the learned Judge of the High Court opined that there was no purpose in examining the inspector when he had failed to investigate the complaint made before him.
As seen earlier, the alleged complaint appears to be an imaginary one.
Therefore the inference that the inspector of police was guilty of dereliction of duty was unwarranted.
In view of our above conclusion, it is unnecessary for us to consider the question of law canvassed by Mr. E. C. A agarwal, learned Counsel for the appellant.
But as the same has been argued we shall go into it.
The appeal before the High Court was brought after obtaining special leave under sub section
(3) of section 417, Cr.
It appears that during the pendency of the appeal, the complainant died.
It was contended before the High Court and that contention was repeated before us that the appeal abated in view of the death of the complainant.
This contention was rejected by the High Court.
In support of that contention, Counsel for the appellant relied on two decisions one of Allahabad High Court in Nehal Ahmad vs Ramji(1) and the other of Madras High Court in Thothan and anr.
vs Murugan and ors.(2) The first decision has no application to the facts of the present case.
That was an appeal under section 476 (B) of the, Cr.
It is true that the Madras decision was rendered in an appeal under section 417(3) of the Cr.
In our opinion, the learned single judge of the Madras High Court erred in thinking that the decision of the Allahabad High Court lent any support to his conclusion that an appeal filed under section 417(3), Cr.
P.C. abates on the death of the complainant.
The question of abatement of criminal appeals is dealt with by section 431 of Criminal Procedure Code.
That section reads "Every appeal under section 41 1 A, sub section 1 ) or section 417 shall finally abate on the death of the accused and every other appeal under this Chapter (except an appeal from a sentence of fine) shall abate on the death of the appel lant.
" From this section it is clear that an appeal under section 417 can only abate on the death of the accused and not otherwise.
Once an appeal against an acquittal is entertained by the High Court, it becomes the duty of the High Court to decide the same irrespective of the fact the appellant either does not choose to prosecute it (1) A.I.R. 1925 All.
(2) A.I.R. 1958 Mad 624.
843 or unable to prosecute it for one reason or the other.
The argument that while introducing sub section
(3) into section 417, Cr.
P.C., the Parliament overlooked the provisions.
contained in section 43 1, does not deserve consideration.
The language of section 431 is plain and unambiguous.
Therefore no question of interpretation of that provision arises.
In view of our finding on the merits of the case, we allow this appeal, set aside the judgment of the learned single judge of the High Court and restore that of the Sessions Judge.
The appellants on bail.
Their bail bonds do stand cancelled.
V.P.S. Appeal allowed.
| IN-Abs | The appellants were prosecuted for dishonestly cutting and removing the paddy crop of the complainant.
The complaint was filed 8 days after, the incident.
The trial court convicted them.
The appellate court acquitted them on the grounds.
: (1) that the prosecution witnesses were unreliable; (2) that there was considerable delay in filing the comPlaint for which no explanation was given; and (3) the Inspector of Police who was alleged to have been an eye witness of the occurrence was not examined.
The complainant filed an appeal to the High Court under s.417(3) Cr.
During the pendency of the appeal the complainant died.
The High Court set aside the acquittal and convicted the appellants.
In appeal to this Court, HELD : (i) The question of abatement of criminal appeals is., dealt with by s.431 Cr. P.C., and according to that section an appeal under s.417 can only abate on the death of the accused and not otherwise.
Therefore, once the appeal against acquittal is entertained by the High Court, it becomes its duty to decide it on merits even though the com plainant died.
[842 G H] Thothan vs Murugan, A.I.R. 1958 Mad. 624, overruled.
(ii) Unless the conclusion that the accused were not guilty, reached by the first appellate court, was palpably wrong, or was based on an erroneous view of the law or that the decision was likely to result in grave injustice, the High Court should be reluctant to interfere with that conclusion.
If two reasonable conclusions can be reached on the basis of the evidence on record then the view in support of the acquittal of the accused should be preferred.
[840 H, 841 A] (iii) In the present case, the prosecution witnesses were obviously , interested witnesses being the enemies of the accused, and the explanations given by the complainant for the delay in filing the complaint and the non examination of the Inspector of Police were false, therefore, the High Court erred in interfering with the order of acquittal.
[841 B C]
|
iminal Appeal No. 137 of 1970.
Appeal by special leave from the judgment and order dated February 6, 1970 of the Calcutta High Court in Criminal Appeal No. 5 of 1964.
O. P. Rana, for the appellant.
section P. Mitra and Sukumar Basu, for the respondent.
The Judgment of the Court was delivered by Sikri, C.J.
In this case special leave was limited to the question of sentence only The relevant facts for determining this point are as follows : The appellant, Vivian Rodrick, was tried by the High Court of Calcutta, in exercise of its original jurisdiction, having been committed to stand his trial by the Presidency Magistrate as early as July 31, 1963.
The substance of the charges against the appellant were as follows : 547 (i) that on January 13, 1963 the appellant was a member of an unlawful assembly guilty of rioting, being armed with deadly weapons and as such punishable under section 148, I.P.C.; (ii)that on January 13, 1963 the appellant committed the murder of one Vincent D 'Rozaric and thereby committed an offence punishable under section 302, I.P.C.; and (iii)that on January 13, 1963 the appellant was in possession of explosive substances for unlawful object and thereby committed an offence under section 5 of the Explosive Substances Act.
Four other persons, Stanley Rodrick, Ranjit Mandal, Simon Das and Ranjit Biswas were also tried jointly with the appellant and ,convicted under section 302 read with section 149, and also under section 148, I.P.C. The jury returned a unanimous verdict of guilty against the appellant and on September 4, 1964 the Presiding Judge convicted the appellant under section 302, I.P.C., and sentenced him to death.
At the trial the appellant was also convicted for offences under section 148, I.P.C., and section 5 of the Explosive Substances Act, and sentenced to, rigorous imprisonment for two years and three years respectively.
The terms of imprisonment were directed to run concurrently.
The appellant filed a petition of appeal under section 411A, Cr.
P.C., on September 7, 1964, challenging his conviction and the sentences imposed on him.
The High Court, by its judgment dated September 19, 1967 in Criminal Appeal No. 5 of 1964, confirmed the conviction and sentences imposed on the appellant.
In considering the question of sentence the High Court observed that "the murder was a premeditated and cold blooded one.
There was not the slightest provocation from the side of the deceased.
This is undoubtedly a fit case for capital punishment.
No question of showing any leniency on the ground of tenderness of age arises as the appellant is now aged about 35 years.
" It was urged before the High Court that the sentence of death should be reduced to rigorous imprisonment for life on account of the long delay that had taken place in hearing the appeal.
Although the High Court regretted the delay and the consequent mental suffering undergone by the condemned prisoner, it felt that the "delay in executing the death sentence was not by itself a sufficient ground for which the court should exercise its jurisdiction to commute the death sentence to one of imprisonment for life.
" The appellant sought leave to appeal to this Court against the judgment of the High Court on October 21, 1967, and the same 548 was refused on January 8, 1968.
Having obtained special leave, the appellant filed an appeal to this Court (Criminal Appeal No. 190 of 1968).
By its judgment dated April 30, 1969, this Court set aside the the judgment and order of the High Court, dated September 19, 1967, and remanded the appeal to the High Court for fresh disposal and hearing in accordance with law and in the light of the observations contained in this Court 's judgment.
This Court in its judgment in Cr.
No. 190 of 1968 observed, regarding the four other co accused, as follows "Though the conviction was for an offence under section 302 read with section 149, I.P.C., curiously they were sentenced to varying terms of imprisonment, and none of them challenged their conviction in appeals.
" On remand the appeal was again dismissed by the High Court on February 6, 1970.
Chakrabarti, J., with Whom Amaresh Chandra Roy, J., agreed, again considered the question of Sentence and held that although there had been a delay of more than five years in executing the death sentence that was not by its, If sufficient ground for commuting the death sentence.
The High Court referred to Nawab Singh vs The State of Uttar Pradesh(") and Piare Dusadh vs King EMperor(2).
As the High Court did not find any extenuating circumstances whatsoever that 'would .justify its taking a lenient view in the matter, it left to the State Government to take a decision as to whether it should, on account of inordinate delay in executing the sentence, exercise its powers under section 402, Cr.
The learned counsel for the appellant contends that the matter should not have been left to the State Government.
In Nawab Singh vs The State of Uttar Pradesh("), which has been referred to by the High Court in its judgment dated February 6, 1970, it is observed "It is true that in proper cases an inordinate delay in the execution of the death sentence may be regarded as a ground for commuting it, but we desire to point out that this is no rule of law and is a matter primarily for consideration of the local Government.
If the Court has to exercise a discretion in such matter, the other facts of such case would have to be taken into consideration.
In the case before us, we find that the murder was a cruel and deliberate one and there was no extenuatin circumstance whatsoever which would justify using ordering a commutation of the death sentence.
" (1) A.I.R. 1954 S.C. 278.
(2) 549 It seems to us that the extremely excessive delay in the disposal of the case of the appellant would by itself be sufficient for imposing a lesser sentence of imprisonment for life under section 302.
Section 302, I.P.C., prescribes two alternate sentences, namely, death sentence or imprisonment for life, and when there has been inordinate delay in the disposal of the appeal by the High Court it seems to us that it is a relevant factor for the High Court to take into consideration for imposing the lesser sentence.
In this particular case, as pointed out above, the appellant was committed to trial by the Presidency Magistrate as early as July, 31, 1963, and he was convicted by the Trial Judge on September 4, 1964.
It is now January 1971, and the appellant has been ' for more than six years under the fear of sentence of death.
This must have caused him unimaginable mental agony.
In our opinion it would be inhuman to make him suffer till the Government decides the matter on a mercy petition.
We consider that this is now a fit case for awarding the sentence of imprisonment for life.
Accordingly we accept the appeal, set aside the order of the High Court awarding death sentence and award a sentence of imprisonment for life.
The sentences under section 148, I.P.C., and section 5 of the Explosive Substances Act and under section 302, I.P.C., shall run concurrently.
V.P.S. Sentence modified.
| IN-Abs | The accused was committed to trial in July 1963 and was convicted and sentenced to death on September 4, 1964.
The appeal to the High Court under section 411A, Cr.
P.C., was finally dismissed on February 6, 1970.
The High Court left it to the State Government whether it should reduce the sentence on account of inordinate delay.
In appeal to this Court on the question of sentence, HELD : Section 302, I.P.C., prescribes two alternate sentences, namely, death sentence or imprisonment for life.
When there has been inordinate delay in the disposal of the appeal by the High Court, it is a relevant factor for the High Court to take into consideration for imposing the lesser sentence.
[549 A B] In the present case, the appellant has been for 6 years under the fear of sentence of death, which must have caused him unimaginable mental agony.
In view of the excessive delay it is a fit case for awarding the lesser sentence instead of leaving it to the Government to decide the matter on a mercy petition.
[549 B D] Nawab Singh vs State of U.P., A.I.R. 1954 S.C. 278, referred to.
|
Appeal No. 1467 of 1967.
Appeal from the judgment and order dated July 1, 2, 1965 of the Bombay High Court in Appeal No. 69 of 1963.
V. A. Seyid Muhammad and section P. Nayar, for the appellants.
C. K. Daphtary, Anil B. Diwan, Suresh A. Shroff, Ravinder Narain and O. C. Mathur, for the respondent.
section J. Sorabjee and O. C. Mathur, for the intervener.
The circumstances leading up to the filing of the writ petition may be mentioned. ', The respondents own a textile mill at 508 Elphinstone Road, Parel, Bombay where they manufacture, inter alia, grey cloth.
They also have a factory situated at Tulsi Pipe Lane Road, Bombay for processing grey cloth into various other .goods like leather cloth, book binding cloth and other coated fabrics.
Under section 3 of the Central Excise and Salt Act, 1944 (hereinafter to be referred as the Act) duty is Imposed on all ,excisable goods produced or manufactured in India at the rates set forth in the First Schedule to the Act.
Item 19 of the First Schedule includes cotton fabrics.
Section 3 of the Act provides that excise duty is to be collected in such manner as may be prescribed by rules made under the Act.
On cotton fabrics additional excise duty called handloom cess is also imposed under the additional Duties of Excise (Goods of Special Importance) Act, 1957 and Khadi and other Handloom Industries Development (Additional Excise Duty on Cloth) Act, 1953, respectively.
Under :section 37 of the Act, the Central Government has made rules called the Central Excise Rules, 1944 (hereinafter to be referred as the ,Rules).
Rule 8 gives power to the Central Government to exempt by notification subject to such conditions as may be specified therein any excisable goods from whole or any part of duty leviable on such goods.
Accordingly the Central Government issued a notification exhibit A dated January 5, 1957 exempting cotton fabrics mentioned therein wholly from excise duty.
hem No. 2, related to 'leather cloth and inferior or imitation leather cloth ordinarily .Used in book binding '.
The exemption granted in respect of this item and another item was withdrawn by the Central Government with effect from July 30, 1960 by notification exhibit D dated July 29, 1960.
There does not appear to have been any controversy before the High Court that the two notices dated November 3, 1961 and the notice dated December 2, 1961 related only to goods falling under item No. 2. of the notification exhibit A. The respondents between July 4, 1958 and July 30, 1960 manufactured grey cloth in the textile mill and sent some of those items to their factory for being processed and manufactured into leather cloth and imitation leather cloth.
During the material period the company used to manufacture grey, cloth and used to store them in a bonded godown.
Periodically they used to send to the factory such quan tities of grey cloth as were required after filling in the necessary forms prescribed by the rules and after obtaining the necessary permission in the manner prescribed by the rules from the Excise Inspector Incharge of the textile mill.
The respondents had, however, not obtained the requisite licence and so they paid excise duty on grey cloth manufactured in their mill during the period July 4, 1958 and July 30, 1960 manufactured grey cloth in the manufacturing leather cloth and imitation cloth.
The respondents later on obtained the necessary licence with the result that 509 they became entitled to remove the grey cloth manufactured at their textile mill to their factory without paying excise duty on the grey cloth at the time when the goods were removed.
The grey cloth so removed after September 30, 1959 and before July 30, 1960 used to be kept in the bonded godown.
Those goods were removed to the factory after filling up the necessary forms and obtaining the permission of the Excise Inspector Incharge of the factory.
The grey cloth after it was processed and made into leather cloth or imitation leather cloth was again stored in another bonded godown in the factory and they were removed by the company as finished products after filling in form A.R.I. prescribed by the rules.
There is again no dispute that in each of these A.R.I. forms the company had shown and made a declara tion that the excise duty payable on the goods governed by the forms was 'nil '.
Under the heading 'Assessment Memorandum. ' in the said form the particulars regarding rate of duty and amount of total duty payable on the goods referred to in the form had to be filled up and signed by the Excise Inspector.
There is no controversy that in each of the A.O.1.
forms filed by the respondents during the period July 4, 1958 and July 30, 1960, the Excise Inspector Incharge, Leather Cloth Division has made an assessment in the appropriate portion of those forms showing the rate of duty and the amount of total duty payable as "nil ' and has affixed his signature under such 'Assessment Memorandum '.
Therefore, it will be seen that all the goods removed by the, respondents during the said period were shown by them as not liable to pay any excise duty and were also assessed by the Excise Inspector as not liable to pay any duty.
Later on, the excise authorities appear to have entertained some doubt whether the goods covered by these A.R.I. forms were of the description exempted under item No. 2 of the notification exhibit A.
Some correspondence took place between the department and the respondents.
On November 3, 1961, the second appellant issued two notices marked exhibit G.
The first notice issued under rule 10A required the respondents to pay a sum of Rs. 1,07,146,39.
In the particulars of demand it was stated that the amount represented duty on leather cloth manufactured out of (i) non duty paid cloth and (ii) duty paid cloth cleared without payment of duty from October 1, 1959 to March 31, 1960.
The second notice of the same day issued under rule 9 called upon the respondents to pay a sum of Rs. 1,502,24 representing the extra processing duty on leather cloth manufactured out of duty paid cloth from July 4, 1958 to September 30, 1959.
These two notices were followed by the first appellant by issuing a letter of demand dated December 2, 1961, exhibit H, calling 510 upon the respondents to pay up the amount as per the notice issued by the second appellant.
The respondents were advised that if they are aggrieved with the decision they may go up in appeal to the Collector of Central Excise, Bombay.
The respondents sent a reply dated December 28, 1961 exhibit I, contesting validity of the notices dated November 3, 1961 and December 2, 1961.
They objected to the demand on the ground that the notices were illegal and neither rule 9 nor rule 10A gave power to the authorities to issue such notices.
They further contended that the demands were barred by time.
The respondents also addressed a letter on the same lines to the Central Board of Revenue.
As there was no favourable response from the appellants they, filed the writ petition, out of which these proceedings arise, in the High Court to quash Exhibits G and H. The respondents contended before the High Court that neither rule 9 nor rule 10A gave power to the appellants to issue the demand notices.
Their stand was that if at all it was rule 10 that applied and as the demands have been made long after the period of three months prescribed in the said rule, the notices were illegal and void.
On behalf of the appellants it was urged that rule 10 has no application as that rule will apply only when duties and charges have been 'short levied '.
As initially no amount has been levied in this case, rule 10 has no application.
According to the appellants the rule applicable was rule 10A.
Alternatively it was contended that if rule I OA did not apply, the demands made by them were amply covered by rule 9(2).
The learned Single Judge accepted the contention of the res pondents and held that rule 10 applied and as the demand notices had been issued long after the expiry of three months, exhibit G and H, the notices, were illegal and void.
In this view the learned Single Judge quashed the said notices.
On appeal the Division Bench confirmed the order of the learned Single Judge.
This is a convenient stage to refer to the relevant rules.
They are rules 7, 9, 10, 10A, 52 and 52A(1).
We have already referred to the fact that the rules have been made by the Central Government under section 37 of the Act.
Those rules, referred to above, are as follows : "(7) Recovery of Duty : Every person who produces, cures, or manufactures any excisable goods, or who stores, such goods in a warehouse, shall pay the duty or duties leviable on such goods, at such time and place and to such person as may be designated, in or 511 under the authority of these Rules whether the payment of such duty or duties is secured by bond or otherwise.
(9) Time and manner of payment of duty: (1) 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 in these Rules or as the Collector may require and except on presentation of an application in the proper form and on obtaining the permission of the proper officer on the form; Provided that such goods may be deposited without payment of duty in a store room or other place of storage approved by the Collector under rule 27 or rule 47 or in a warehouse appointed or licensed under rule 140 or may be exported under bond as provided in rule 13; Provided further that such 'goods may be removed on part payment of duty leviable thereon if the Central Government, by notification in the Official Gazette, allow the goods to be so removed under rule 49; Provided also that the Collector may, if he fit instead of requiring payment of duty in respect of each separate consignment of goods removed from the place or premises specified in this behalf, or from a store room or warehouse duly approved, appointed or licensed by him keep with any person dealing in such goods an account current of the duties payable thereon and such account shall be settled at internal, not exceeding one month and the account holder shall periodically make deposit therein sufficient in the opinion of the Collector to cover the duty due on the goods intended to be removed from the place of production, curing, manufacture or storage.
(2) If any excisable goods are, in contravention of sub rule (i) 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, whether such demand is delivered personally to him, or is left at his dwelling house, and shall also be liable to a penalty which 512 may extend to two thousand rupees, and such goods shall be liable to confiscation.
(10) Recovery of duties or charges short levied, or erroneously refunded When duties or charges have been short levied through inadvertence, error, collusion or mis construction on the part of an officer, or through misstatement as to the quantity, description or value of such goods on the part of the owner, or when any such duty or charge, after having been levied, has been owing to any such cause, erroneously refunded, the person chargeable with the duty or charge, so short levied, or to whom such refund has been erroneously made, shall pay the deficiency or pay the amount paid to him in excess, as the case may be, on written demand by the proper officer being made within three months from the date on which the duty or charge was paid or adjusted in the owners account current, if any, or from the date of making the refund.
(10 A) Residuary powers for recovery of sums due to Government Where these Rules do not make any specific provision for the collection of any duty, or of any deficiency in duty if the duty has for any reason been short levied, or of any other sum of any kind payable to the Central Government under the Act or these Rules, such duty, deficiency in duty or sum shall, on a written demand made by the proper officer, be paid to such person and at such time and place, as the proper officer may specify.
(52) Clearance on payment duty When the manufacturer desires to remove goods on payment of duty, either from the place or a premise specified under rule 9 or from a store room or other place of storage approved by the Collector under rule 47, he shall make application in triplicate (unless otherwise by rule or order required) to the proper officer in the proper Form and shall deliver it to the officer at least twelve hours (or such other period as may be elsewhere prescribed or as the Collector may in any particular case require or allow) before it is intended to remove the goods.
The officer, shall, thereupon, assess the amount of duty due on the goods and on production of evidence 513 that this sum has been paid into the Treasury or paid in the account of the Collector in the Reserve Bank of India or the State Bank of India, or has been despatched to the Treasury by money order shall allow the goods to be cleared.
52A (1) Goods to be delivered on a Gatepass No excisable goods shall be delivered from a factory except under a gatepass in the proper Form or in such other form as the Collector may in any particular case or class of cases prescribe signed by the owner of the factory and countersigned by the proper officer. " Dr. Syed Mohammad, learned counsel for the appellants urged that going by a plain reading of rule 10, it is clear that the said rule will apply only to cases : (1) when an assessment has been made that same amount is due as duty and(2) when the said amount so assessed has been paid by the party concerned.
In this case, he pointed out, there has been, no doubt, an order of assessment passed when the goods were cleared by the party, but that order of assessment was not one making the party liable to pay any duty, on the other hand, it was an order of 'nil assessment ' under which the party was to pay no duty whatsoever.
In consequence of such assessment, no duty having been paid, it cannot be stated that there has been a short levy for any of the reasons mentioned in rule 10.
According to the learned counsel rule 10 will apply only when there has been an assessment making the party liable to pay some ,duty and that amount so assessed has also been actually paid or adjusted by the party, as the case may be.
When later on it is found that the amount so levied and paid falls short of the correct amount that ought to have been levied and paid by the ,party, rule 10 will stand attracted.
In this connection he placed very great reliance on the concluding part of rule 10 where a period of three months by way of limitation has been provided for calling upon the party to pay the deficiency and the period of three months is to be calculated "from the date on which the duty or charge was paid.
He stressed that the use of the expression "paid" clearly indicates that some duty must have been actually paid by a party on a particular date and if that were not so, it would be difficult to calculate the period of three months within which a party can be called upon to make good the deficiency.
The counsel also urged that the word 'levy ' in rule 1 0 means actual collection and that short levy, therefore, denotes that full duty has not been collected.
He also urged that rule 10A covers all cases of short levy or non levy for any reason whatsoever and the notices issued by the appellants in this case are legal and valid.
He finally urged that even if it is held that rule 10A does not 514 apply , the notices could be sustained under rule 9(2) in as much the respondents have removed the goods without payment of duty in contravention of rule 9(1).
The mere fact that one of the notices issued on November 3, 1961 refers to rule 10A is not ,on that ground invalid when the authorities have ample.
, power to issue, such notices under rule 9(2).
Mr. Daphtary, learned Counsel for the respondents and Mr. Sorabjee, learned counsel for an intervener, have both contended that the notices issued by the appellants squarely come under rule 10 and as they have been issued beyond the period of three months, they have been rightly held to be invalid and illegal. 'Though the words used in rule 10 "duty or charge so paid", reading the rule as a whole it is clear that the rule does not contemplate that any amount should have been levied as a duty and that the said amount should have been paid. 'Me word "paid" has only been used to provide a starting point of limitation of three months.
Though the ordinary meaning of the expression "paid" is that some amount should have been actually paid as such, both the counsel pointed out, that the said word should be construed in the context in which it appears.
So read, it is pointed out that the proper interpretation to be placed on the word "paid" is that it has been used to denote the stage or time when the duty or ,charge ought to have been paid.
Such a reading will not do any violence to the language of rule 10.
It is further pointed out that the expression "short levied" in rule 10 will cover cases not only levy of smaller amount that what is due but also of making the party not liable to pay any duty.
In one case the short levy will 'be the difference of the amount actually levied and the correct amount due; and in the other case the short levy will be the entire amount of duty that is found to be actually due by a party.
Ile counsel further pointed out that rule 10A will apply only to those ,cases where no specific provision for collection of duty or any deficiency in duty has been made by the rules and that will apply also to any other sum of.
any other kind payable to the Central Government under the Act or the Rules.
In this case, as the party admittedly has been assessed to 'nil duty ' by the officers concerned and allowed to remove the goods, the specific provision for recovery of any short levy is specifically provided for by rule 10, which will exclude rule 10A.
On these grounds, both the ,counsel urged, that the High Court was right in holding that rule 10 applies and that the notices having been issued beyond the period of three months are illegal and invalid.
We are not inclined to accept the contention of Dr. Syed Mohammad that the expression 'levy ' in rule 10 means actual collection of some amount.
The charging provision section 3(i) specifically says "There shall be levied and collected in such, a 515 manner as may be prescribed 'the duty of excise.
It is to be noted that sub section (i) uses both the expressions ,levied and collected" and that clearly show that the expression "levy" has not been used in the Act or the Rules as meaning actual collection.
Dr. Syed.
Mohammad is, no doubt, well founded in his contention that if the appellants have power to issue notice either under rule 10A or rule 9(2), the fact that the notice refers specifically to a particular rule, which may not be applicable, will not make the notice invalid on that ground as has be held by this Court in J. K. Steel Ltd. vs Union of India(1) : If the exercise of a power can be traced to a legitimate source, the fact that the same was purported to have been exercised 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 (2 ) and Afzal Ullah vs State of U.P.(3).
In this case, the officer who issued the two notices is competent to make demands under both rules 9(2) and rule 10 A.
But in order to sustain the validity of the demand either under rule 9(2) or rule 10 A, the appellants will have to go further and establish that the demands can be justified under either of the rules.
Before we deal with the contentions of the learned counsel we may state that rule 10 A was incorporated because of the decision of the Nagpur High Court in Messrs Chhotabhai Jethabhai Patel vs Union of India(4).
The assessees in that case were a firm of tobacco merchants and manufacturers of bidis holding licence under the Central Excise Rules.
On the introduction in Parliament of Bill No. 13 of 1951 on February 28, 1951, the assessees paid the requisite duty on tobacco stored by them under the declared provision read with sections 3 and 4 of the Provincial Collection of Taxes Act, 1931.
The assessees cleared tobacco from the warehouse between March 1, 1951 and April 28, 1951, after obtaining clearance certificates from the Range Officer, Central Excise.
The rate of duty payable on un manufactured tobacco was increased by the Finance Act of 1951.
On June 4, 1951 a demand was made by the Range Officer, Central Excise at the increased rate and the assessees therein were asked to pay the said increase.
The assessees challenged the demand before the High Court under article 226 of the Constitution on various grounds.
The Nagpur High Court held that rule 10 did not apply and that the demand was invalid.
(1) [1969] 2 S.C.R.481.
(3) ; (2) ; (4) I.L.R. 516 After the decision of the Nagpur High Court, the Central Government by a notification dated December 8, 1951 amended the Central Excise Rules, 1944 by the addition of a new rule 10 A.
On the basis of this rule in respect of the same assessees a further and fresh demand was made for payment of duty as per ' the Finance Act, 1951.
The assessees challenged the validity of the demand on the same ground as before.
The Full Bench of the Nagpur High Court rejected the assessees ' contention and held that rule 10A covers a case for increased levy on the basis of a change of law.
This decision was sought to be challenged before this Court but without any success.
In fact this Court in Chhotabhai Jethabhai Patel and Co. vs The Union of India and another(1) specifically rejected the assessees ' claim regarding non applicability of rule 10A stating that it had been specifically designed "for the enforcement of a demand like the one arising in the circumstances of the case".
The decision of this Court is an illustration of certain types of cases to which rule 10 A will apply.
This now takes us to the question of proper interpretation to be placed on the expression "short levied" and "paid" in rule 10.
Does the expression "short levied" mean that some amount should have been levied as duty as contended by Dr. Syed Mohammad or will that expression cover even cases where the assessment is of 'nil duty ', as contended by Mr. Daphtary.
What is the meaning of the word "paid" in rule 10 ? It is contended on behalf of the appellants that it means "actually paid", whereas, according to the respondents ', it means "ought to have been paid".
Taken literally, the word "paid" does mean actually paid in cash.
That means that a party or an assessee must have paid some amount of duty whatever may be the quantum.
If this literal interpretation is placed on the expression "paid" in rule it is needless to state that it will support in a large measure the contention of Dr. Syed Mohmmad that rule 10 contemplates a short levy in the sense ,that the amount which falls short of the correct amount has been assessed and actually paid.
In our opinion, the expression "paid" should not be read in a vacuum and it will not be right to construe the said word literally, which means actually paid.
That word will have to be understood and interpretted in the context in which it appears in order to discover its appropriate meaning.
If this is appreciated and the context is considered it is apparent that there is an ambiguity in the meaning of the word "paid".
It must be remembered that rule 10 deals with recovery of duties or charges short levied or erroneously refunded.
The expression "paid" has been used to denote the starting point of limitation of three months for the issue of a written demand.
The Act and the (1) [1962] Supp.
[2] S.C.R. 1.
517 Rules provide in great detail the stage at which and the time when the excise duty is to be paid by a party.
If the literal construction that the amount should have been actually paid is accepted, then in case like the present one on hand when no duty has been levied, the Department will not be able to take any action under rule 10.
Rule 10 A cannot apply when a short levy is made.
through error or misconstruction on the part of an officer, as such a case is specifically provided by rule 10, Therefore, in our opinion, the proper interpretation to be placed on the expression " 'paid" is "ought to have been paid".
Such an interpretation has been placed on the expression "paid" occuring in certain otherenactments as in Gursahai Saigal vs Commissioner of Income tax, Punjab(") and in Allen vs Thorn Electrical Industries Ltd. (2 .
In Gursahai Saigal vs The Commissioner of Income tax, Punjab(1), the question arose as follows : In certain assessment proceedings under the Indian Income tax Act, 1922, an assessee was charged with interest under subsection (8) of section 18A of that Act.
Under that sub section interest calculated in the manner laid down in sub section (6) of section 18A was to be added to the tax assessed.
Sub section 3 of section 18A dealt with cases of a person who has not been assessed before and he was required to make his own estimate of the tax payable by him and pay accordingly.
Sub section (3) of section 18A was applicable to the assessee in that case.
However, he neither submitted any estimate nor did he pay any advance tax.
Under sub section ' (6) of section 18A it was provided : "Where in any year an assessee has paid tax under sub section (2) or sub section (3) on the basis of his own estimate, and the tax so paid is less than eighty Per cent of the tax determined on the basis of regular assessment simple interest at the rate of six per cent per annum from the 1st day of January in the financial year in ' which the tax was paid up to the date of the said regular assessment shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty per cent." This sub section is to apply to cases where tax has been paid ' by an assessee according to his own estimate but that estimate was on regular assessment found to be deficient.
Further, interest has to be calculated from 1st January of the Financial Year in which tax mentioned therein was paid and calculation has to be made on the short fall between the amount paid and eighty.
per cent of ' the tax which was found payable on regular assessment.
Subsection (8) of section 18A provided : (1) ; (2) 1968 1 .Q.B. 487.
518 .lm15 "where, on making the regular assessment the Income tax Officer finds that no payment of tax has been made in accordance with the foregoing provisions of this section, interest calculated in the manner laid down in sub section (6) shall be added to the tax as determined on the basis of the regular assessment.
" The assessee in that case did not dispute that sub section(3) ,of section 18A applied to him and that he should have made an estimate and paid advance tax.
He also admitted that he never made an estimate nor did he pay any advance tax whatsoever.
While admitting that sub section (8) of section 18 A applied to him, the assessee contended before this Court that since he had not paid any tax at all, it is not possible to calculate interest in the manner laid down in sub section (6).
According to the assessee 'there was no 1st day of January of a financial year in which the tax was paid and there was no question of a short fall between eighty per cent of the tax payable on regular assessment and the ,amount paid because he. had paid nothing.
While rejecting the said contention this Court held : "The proper way to deal with such a provision is to give it an interpretation which, to use the words of the Privy Council in Mahairam Kamjidas 's (case) (1) makes the machinery workable utres valeat potius quam pereat".
We, therefore, think that we should read sub section (6) according to the provision of which interest has to be calculated as provided in subsection (8) in a manner which makes it workable and thereby prevent the clear intention of sub section (8) being defeated.
Now, how is that best done? As we have earlier said sub section (6) deals with a case in which tax has been paid and therefore it says that interest would, be calculated "from the 1st day of January in the financial year in which the tax was paid".
This obviously cannot literally be applied to a case where no tax has been paid.
If however the portion of subsection (6) which we have quoted above is read as "from the 1 st day of January in the financial year in which the tax ought to have beep paid", the provision becomes workable.
It would not be doing too much violence to the words used to read them in this way.
The tax ought to have been paid on one or other of the dates earlier mentioned.
The intention was that interest should be charged from January 1, of the financial year in which the tax ought to have been paid.
Those, 519 who paid the tax but a smaller amount and those who did not pay tax at all would then be put in the same position substantially which is obviously fair and was clearly intended.
" Regarding the further contention that there was no short fall, as no tax has been paid it was observed : "With regard to the other question about there being no shortfall between eighty per cent of the amount of tax found payable on the regular assessment and the amount of tax paid in a case where no tax was paid, it seems to us the position is much simpler.
If no tax is paid, the amount of such shortfall will naturally be the entire eighty per cent.
We also think that the case before us is very near to Allen 's case.(1)" The above decision establishes two propositions : (1) though the expression used was "paid" it is open to read it as "ought to have been paid" having regard to the context in which it appears and to make the provision of law in which that expression appears workable; and (2) the short fall will be the entire eighty per cent referred to subsection (6) of section 18A.
Applying the above principles to the case on hand, the expression "paid" in rule 10 can be reasonably read as "ought to have been paid".
Similarly even in cases where there has been a nil assessment due to one or other of the circumstances mentioned in, rule 10 and if subsequently it is found that duty is payable, then the entire amount of duty should be considered to have been short levied.
The literal meaning of the expression "paid" as actually paid in cash has again not been adopted by the Court of Appeal in Allen vs Thorn Electrical Industries Ltd.(2).
Having regard to the context in which the said expression appeared in the particular provision which came up for interpretation, the Court of Appeal construed the expression to mean "contracted to be paid".
Therefore, the contention of Mr. Daphtary that the expression "Paid" should be construed as "ought to have been paid" and even when no duty has been assessed, the entire duty when subsequently assessed will be a short levy, which is also supported by the decision of this Court in Gursahai Saigal vs Commissioner of Income tax, Puniab(3) has to be accepted.
It follows that in order to attract rule 10, it is not necessary that some amount of ' duty should have been assessed and that the said amount should have also been actually paid.
That provision will apply even to cases where there has been a nil assessment in which case the entire duty later on assessed must be considered to be the duty (1) , 16, 17.
(2) (3) ; 520 originally short levied.
There is also no difficulty in calculating the period of three months.
As pointed out above, the Act and the Rules provide very elaborately the stage and the time when the duty is to be paid and if that is so that must be considered to be the stage or time when the duty ought to have been paid and if so the period of three months will run from the time when the duty ought to have been paid.
Dr. Syed Mohammad referred us to certain decisions of the High Courts where a demand has been sustained under rule 10 or rule 10A.
We have considered those decisions.
In some of those decisions there has been a short levy due to the reasons mentioned in rule 10 and the demand also has been issued within the period of three months and hence the notice had been sustained under rule 10.
In other cases, it was specifically held that the demand covered by the notice issued under rule 10A has not been specifically provided for by any other rule and the demand therefore, was valid.
These decisions, in our opinion, do not in any manner advance the case of the appellants and we do not think it necessary to deal with them individually.
We may point out that if the contention of Dr. Syed Moham mad that in order to constitute short Levy, some amount should have been assessed as payable by way of duty so as to make rule 10 applicable, is accented the result will be rather anamolous.
For instance if due to collusion (which means collusion between a party and an officer of the Department) a sum of Rs. 2/ is managed to be assessed by way of duty when really more than thousand times that amount is payable anD if the smaller amount of duty so assessed has been paid, the Department will have to take action within three months for payment of the proper amount of duty.
On the other hand, if due to collusion again an order of nil assessment is passed, in which case no duty would have been paid, according to the appellants rule 10A will apply.
We do not see any reason to distinguish the above two cases one ' 'from the other.
Both are cases of collusion and if an assessee in collusion manages to have a petty amount of duty assessed and paid he can effectively plead limitation of three months under rule 10.
Whereas in the same case of collusion where no duty has been levied there will be no period of limitation.
In our opinion, that will not be a proper interpretation to be placed on rule 10A by us.
By the interpretation placed by us on rule 10, the position will be that an assessee who has been assessed to a smaller amount as well as an assessee who has been assessed to nil duty will all be put on a par and that is what is intended by rule 10.
The above reasoning leads to the conclusion that rule 10A ,does not apply to the case on hand.
Then the question is whether 521 the demands could be justified under rule 9(2).
Even here we find considerable, difficulty in sustaining the notice under this rule.
Sub rule (1) of rule 9 provides for the time and the manner of payment of duty.
In this case there is no controversy that whenever goods were cleared by the respondents, necessary applications had been made to the officer concerned and the latter had passed orders of assessment to nil duty.
To attract sub rule 2 of rule 9, the goods should have been removed in contravention of sub rule (1).
It is not the case of the appellants that the respondents have not complied with the provisions of sub rule 1.
We are of the opinion that in order to attract sub rule 2, the goods should have been removed clandestinely and without assessment.
In this case there is no such clandestine removal without assessment.
On the other hand, goods had been removed with the express permission of the Excise authorities and after order of assessment was made.
No doubt the duty payable under the assessment order was nil.
That, in our opinion, will not bring the case under sub rule (2).
That sub rule (2) is a penal provision is shown from the fact that apart from the duty payable, the party is also made liable to a penalty and he also incurs the risk of the goods being confiscated.
That rule 9(2) applies only to cases where there has been an evasion from payment of duty is clear from the decision of this Court in J. K. Steel Ltd. vs Union of India(1).
Though on certain other aspects there was a difference of view amongst the learned Judges, on this aspect the decision is unanimous.
There is absolutely no material placed before us by the appellants which would justify the issue, of the notice under rule 9(2).
To conclude rule 10A does not apply as the specific provision for collection of duty to cases like the one before us is specifically provided by rule 10 nor does rule 9(2) apply to the case on hand.
The proper provision under which action should have been taken if at all is rule 10.
The demands having admittedly been made long after the expiry of the period of three months, referred to in the said rule, it follows that the demands were not valid.
The High Court was justified in striking down the notices dated November 3, 1961 exhibit G as well as the demand dated December 2, 1961 under Et.
The appeal fails and is dismissed with costs.
V.P.S. Appeal dismissed.
| IN-Abs | Under r. 8 of the Central Excise Rules, 1944, made under the Central Excise and Salt Act, 1944 the Central Government issued a notification exempting cotton fabrics from excise duty.
The respondents owned a textile mill and factory.
They manufactured grey cloth which was removed from the mill and kept in a godown and later removed to the factory for being processed into leather cloth which was stored in another godown in the factory, from where it was taken Out as finished product.
The removal at each stage was done after filling the prescribed forms and with the permission of the Excise Inspector Incharge.
In each of the forms filled by the respondents upto July 30, 1960.
the Excise Inspector had made an assessment showing the rate of duty and the amount of total duty payable as 'nil '.
Later, the excise authorities thought the goods were not of the description exempted under the notification and on November 3, 1961, two notices were issued calling upon the respon dents to make certain payments, one under r. 10A and the other under r. 9 of the Rules.
The respondents protested and filed a writ petition in the High Court.
The High Court held that the proper rule applicable was r. 10 but that as the demand notices were not issued within 3 months .Is required by that rule, the notices were illegal and void.
In appeal to this Court, HELD : (1) Rule 10A cannot apply when a short levy is made ,through error or misconstruction on the part of an officer as such a case is specifically provided for by r. 10, because, r. 10A deals with residuary powers and does not apply when specific provision for collection of duty is provided or by other rules.
[516 H; 517 A: 521 D] (2) The proper provision under which action should have been taken, if at all, is r. 10.
Under r. 10, when duties or charges have been shortlevied through inadvertence, error, collusion or Misconstruction on the part of an officer, the person chargeable with the duty or charge shall pay the deficiency on written demand being made within three month from the date on which the duty or charge was paid.
Though the words used are 'short levied ' and paid, in order to attract r. 10 it is not necessary that some amount of duty Should have been assessed and that the said amount should also have been actually paid.
It will apply even duty later on assessed must be considered to be the duty originally short levied.
1519 F G; 520 E F; 521 D E] (a) The expression 'levy ' is not used in the Act or the Rules as meaning actual collection, because, section 3(1) of ' the Act use.
,,, both the 'levied ' and 'collected '.
1514 G H] 507 (b) The expression 'paid ' in r. 10 should not be read in a vacuum and it will not be right to construe it literally as 'actually paid '.
The word will have to be understood and interpreted in the context in which it appears.
If the literal construction is accepted, then in a case where an assessee, in collusion, manages to have a very petty amount of duty assessed, he can, if he paid the amount, effectively plead limitation of three months, but, when no duty has been levied there would, be no period of limitation, a result which would be anomalous.
Therefore, the proper interpretation to be placed on the expression 'paid ' is 'sought to have been paid. ' (c) This interpretation will not cause any difficulty in calculating the period of three months.
The Act and the Rules provide very elaborately the stage and the time when the duty is to 'be paid and that must be considered to be the stage,or time when the duty 'ought to have been paid ', and the period of three months will be counted from that time.
[519 G H] Gursahai Saigal vs C.I.T. Punjab, ; followed, Allen vs Thorn Electrical Industries Ltd. , referred to.
(3) Rule 9 does not also apply to the facts of the case.
Rule 9(1) provides for the time and manner of payment of duty.
To attract r. 9(2) the goods should have been removed in contravention of sub r.
(1), that is, clandestinely and without assessment; but in this case there is no such clandestine removal without assessment.
Moreover, sub r.
(2) is a penal provision applicable where there is evasion of payment of duty, since the party is also made liable to a penalty and confiscation.
[520 G H; 521 A C] J. K. Steel vs Union. ; , followed.
Therefore, the demands having been made long after the expiry of the period of three months referred to in r. 10, the demands are not valid,
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